Asia Centre

In this interview with a journalist on the Nanfang Zhoukan, the historian Qin Hui, professor in the department of History at Qinghua University and an expert on the peasant question in China^[1], talks about the question of peasant organisations (农民组织, nongmin zuzhi) in contemporary China.

In the wake of the "Canton consensus" which was initiated during the Forum on the development of rural China, Qin Hui talks about the debates taking place on the Chinese intellectual scene in a global historical perspective, and ponders the singularity of such organisations in the Chinese political context.

Initially, Qin Hui remarks that at present only the elected committees of villagers (村委会, cunweihui) are present in the countryside, having replaced the peasant assemblies (农会, nonghui), the traditional form of peasant organisation, which was the cradle of Maoist political culture. Among the intellectuals who call for the formation of new peasant organisations, the main argument put forward is that they are necessary to defend the democratic rights of the peasants. This is a purely rhetorical argument since the committees are elected by the peasants and prevail over all the other forms of organisation. What need can there then be to create new peasant organisations?

In answer to this question, Qin Hui ponders the function of the committees of elected villagers and their legitimacy. Does the fact that they are elected mean that they should replace any other form of organisation? In other words, is election the source of all forms of legitimacy and representativity ? By analogy, Qin Hui ponders the coexistence in the West of democratic governments with civil societies composed of numerous organisations of citizens (公民组织, gongmin zuzhi).

He recalls that democratic government and organisations of citizens are not the same thing, but the latter are the only basis on which democracy can be built. The task of democratic government is to represent a common authority (in the sense that it is accepted by all), whereas the organisations of citizens represent the power of each individual. Thus, without the existence of these independent organisations, citizens have no means of asserting their own particular demands, and this is how they form the basis of any democratic government. Using this analogy, Qin Hui suggests "breaking" the monopoly of the elected village councils, since the existence of peasant organisations should make it possible to advance specific demands.

At this point in the talk, the journalist does not turn his questions towards the definition of the powers and the administration of government in China, but opts for an even more theoretical line of questioning: Is democracy a denial of freedom? Is freedom of association more important than democracy?

To Qin Hui, the answer is clear. As he sees it, the central question in China today is indeed that of freedom of assembly, rather than the more abstract one of democracy, for the peasant organisations are not in any way political bodies. However, he points out, this does not mean that there are no problems connected with the absence of democracy in rural China.

The peasant organisations are not in any way democratic bodies, because if 10% of the peasants want to create an organisation, nobody can reprimand them on the pretext that they are only a minority. Likewise, if 90% of the peasants want to join similar organisations, the latter cannot use their decision-making power to override the minority.

Qin Hui is determined to clearly separate these two problems, explaining that the peasant organisations are necessary to protect the interests of their members, while the government — represented by its officials at local level — exercises public authority. While the peasants can organise freely, and although the officials are not democratically elected, the peasant organisations cannot claim to take on a legal representative role. Conversely, if the peasants are not free to organise, despite the officials being democratically elected, the latter cannot assume all the rights of the peasants.

At the close of the Plenary Session of the 16^th Central Committee assembled in Beijing between October 8 and 11 2006, the notion of "a harmonious society" was firmly installed in the political jargon of the Hu-Wen partnership.

The Plenary session's final communiqué, and the favourable press coverage which accompanied it ("Social formula of hope" as the China Daily put it^[1]) show that a political consensus has been established about the urgency of social problems. "A harmonious society" had thus become "an essential quality" of socialism with Chinese characteristics.

The communiqué identifies income differentials, corruption, pollution, and access to education and health care as being the principal "contradictions", and proposes, by 2020, "real respect for and protection of civil rights, an increase in family property under an orderly and reasonable system of redistribution, and job security and social security for the rural and urban population"^[2].

But how, beyond making declarations, can a harmonious society be created in China? While symptoms such as corruption and income differentials are obvious, the answers are the subject of debates, one of which is reported in the liberal journal 21 Shiji Jingji Baodao.

The authors brought together three analysts for a debate about this question: Ding Ningning, director of the social development department of the Development and Research Council (a research centre subordinate to the Prime Minister's office), Wang Dongjing, director of the economics department of the Party's Central School, and Liu Fuyuan, deputy director of the macroeconomic research department in the NDRC.

The discourse of these three researchers, who have close ties with the country's decision making authorities, is swathed in Marxist quotations and argues for a prudent beginning of democratic reform, which consists of strengthening an independent judicial system and increasing public participation. Without going so far as advocating a multiparty system, they nonetheless refer to "the necessity for the reform of the political system" (Wang Dongjing) and for "moving towards a democratic system" (Liu Fuyuan).

As they see it, the fundamental problems are as follows:

1.       Income differentials. While this is not a recent subject, debate about it remains constant. However the discourse is often limited to the necessity for increasing the incomes of the most disadvantaged in China, in particular the peasants and nongmingong (worker peasants), by establishing a minimum  wage, or through public allowances: the present imbalances are the result of the market economy and cannot be corrected by a dose of social protection. However, the authors assert that these inequalities are due to the illegal enrichment of some businessmen and to the takeover of public property, which is then perpetuated in a system of accumulation of wealth by a small minority. Indeed, Deng's call to "let a part of the population grow wealthy first" has now been reformulated with a correction: "grow wealthy honestly", so that wealth will spread to "those who work diligently".  But this is not the case in reality. The original accumulation was carried out by the State and its distribution was thus only partial. Whence also the "hatred of the rich". The solution is therefore not only to increase the incomes of the poorest, but also to guarantee access to public goods and services such as education, health care, social security, etc. Not only the distribution of wealth needs to be revised but also that of public goods and services, without however sacrificing economic efficiency "in the name of social equity". The authors wonder why the maintenance of infrastructure in urban areas is paid for by the public finances, while in the countryside it is paid for by the local population. This imbalance is therefore linked above all to the definition of the role of government, and its ability to provide the population, over and above a minimum income, a minimum standard of living.

2.       This problem is closely linked to the question od demographics and therefore of employment. In the West, the economic transition and the rise in living standards were essentially produced by the reduction of the agricultural sector. The rural sector, however, does not benefit from an education system on a level with that of the urban system, nor from a social and medical network. But the problem is not limited to the position of the peasants. The demographic problem is twofold: on the one hand the demographic structure is such that the Chinese baby boomers (born after 1958 and after the Cultural Revolution) are, at the moment, all in the job market. In terms of the present situation, they are likely to retire at 52 years old: a twenty-year retirement without any pension funds and with a family reduced to a single child who will be unable to take on all the burden. On the other hand the abundance of labour remains a problem in this transition stage. In the West, demographic growth was accompanied by territorial expansion and widespread migration, which is impossible in China^[3]. While in Western economies an unemployment rate of 4% is considered to be full employment, in China that would amount to 24 million unemployed!

Moreover the job market, which at present is saturated in China, restricts the possibility of a rise in wages: firstly the law of supply and demand imposes low labour costs; secondly any attempt to introduce a minimum wage protected by a contract could be subverted by the growth of an unofficial and illegal market, encouraged by jobseekers prepared to accept less favourable conditions than those stipulated by the law.

Lastly, in relation to corruption, to the links between officials and economic players and to the increasing role of interest groups in the Chinese political system, the researchers also favour a greater role for judicial control, because at present "the higher up you go politically, the weaker the judicial control".

Finally we get back to the State and its role, and just beneath the surface, its nature itself. The authors all agree that the State plays an inappropriate role in the management of economic regulation: it will perhaps be impossible to break the seamless link between officials and businessmen which is inherent in the Chinese system, but it should be counterbalanced by a redistribution of public goods and services and by new ideas about the allocation of public funds.

The authors believe that the monopolies should not necessarily be broken, particularly if it's a question of replacing them with local monopolies and an interruption in services. "Even the monopolies can be regulated" and can be subjected to inspection by the media and the population. Liberalisation is not the objective to be desired at any price, and the authors do not consider the existing monopolies to be the source of the problem. Indeed, they maintain that it is not in the sectors where the monopolies operate that salaries are the highest, but it is the protection and thus the power given to them by the State which causes difficulties.

Thus the State should take up a clear position in the management of national security (without the latter being any more precisely defined), of social equity, of public goods and services, and in the measures against poverty, but should with draw from the management of all the other sectors (有进有退, youjin youtui) and, above all assess its own role in the country's economic activity. The authors conclude that the real changes to be made are therefore the following:  firstly a redefinition of what constitutes political merit (the assessment and promotion of cadres should be linked to services rendered to the population rather than to GDP growth), secondly the pursuit of democratic reform, and lastly "the leadership should go through training at the lowest grades".

Indeed a fundamental contradiction needs to be resolved: "How is it possible to promote responsible leaders in a system of collective leadership, and to promote officials through a democratic process within the Party? ".

The recent and numerous difficulties experienced by the Chinese stockmarket have received abundant coverage in the Chinese economic and financial press over the last few years. The leading magazine Caijing, for example, has regularly criticised the malfunctioning of the stockmarket in scathing articles which have often been reprinted in China Analysis ^[1].

For several months the stockmarket has become bullish again.

One of the main problems of the Chinese stockmarket was its "system of share distribution" (股权分制), which restrained the circulation of shares; these were divided into several categories, from "normal" or circulable shares, to those which are tradeable only between state bodies. This system had many disadvantages, including the difference in price between tradeable and non-tradeable shares in the same company (同股不同价) and the differences in rights between tradeable and non-tradeable shares (同股 不同权). A major reform of the system was launched in the summer of 2005, the biggest upheaval experienced by the two mainland stockmarkets (Shanghai and Shenzhen) since their creation in the early 1990s.

Bullish again

The stockmarket has since begun to rise, putting an end to four bearish years. In their article, Liu and He review this renewed (and as they see it, permanent) growth, and congratulates themselves on the reforms.

The various indicators of the state of the market are claimed to speak volumes. Indeed, from 998 points before the reforms (one of the worst performances in its history) the Shanghai Stock Exchange (SSE) has since risen astronomically[2]. What's more, Liu and He emphasise that this major growth has happened despite falls in the price of stocks linked to oil, gold, copper and agricultural products, which generally boost the market.

They also note that the growth of the market mainly depends on the profitability of the biggest companies listed on the mainland stockmarkets: Sinopec, Baogang, Shenbao’an, Midea, Sichuan Changhong, and the Shenzhen Development Bank.

Moreover the price earnings ratio^[4] of G shares was 21 in September, while shares were being traded at an average of 5.30 yuans. Net profits rose by 8.9 % during the first six months of 2006.

Is the Chinese market becoming "normal"?

A certain amount of anxiety and uncertainty nevertheless remains. Firstly, the reasons for this growth are not clear. In particular, Liu and He fear that it may be due to an accumulation of speculative bubbles (as was the case during the 1990s).

On September 6, the dollar was worth 7.9425 RMB and on November 10, 7.8645, fairly high levels in comparison with previous years. The authors of the article fear that uncontrolled and rapid growth in the value of the yuan (which is still far from being the case) could have as a consequence the formation of another bubble on the stockmarket. They refer to the very high value of property shares, which on the SSE were up 3.85 on September 6 (the day of the announcement of the rise in the yuan), as against 1.24 points for the SSE as a whole.

Moreover, Liu and He have trouble understanding why the stockmarket has not managed to benefit from the strong growth in the Chinese economy over the last four years. They complain that shareholders have not been able to benefit from this growth through the stockmarket.

Zhou Fanlin's more critical point of view is enlightening in this respect. He reminds us that there is no necessary correlation between the movements of the stockmarket and those of a country's GDP. He cites the example of the Dow Jones Index, which rose twelvefold between 1982 and 2000, a much greater increase than that in US GDP. He explains that the reason the stockmarket has not followed China's GDP growth for five years is that its objectives were not "balanced" (端正^[5]).

A stockmarket should make it possible 1) to obtain financing for the best companies; 2) to broaden the financial system, and 3) to provide investment opportunities. Zhou, however sees the Chinese stockmarket as "a bizarre phenomenon (奇怪现象) : it often prefers to favour companies which need funds (需要资金) and neglect the "good companies" (优质企业).

While the ICBC's[6] IPO was the biggest in stockmarket history (19.87 billion dollars on the Hong Kong and mainland markets) it is no exception to the rule. Zhou recalls the announcement by the Central Bank of an increase of 0.5 points in the compulsory reserves of commercial banks, soon after this IPO. He cites the results of studies which assess the sums frozen by this measure at 150 billion yuans, an amount very similar to the funds raised by the ICBC. To some specialists (Zhou does not name any names or quote any study in particular), this measure came at just the right time, in a context of excess liquidity, to freeze capital. He goes further and asserts that the ICBC used its reserves to attract capital.

What are the prospects?

Unsurprisingly, Liu and He display great optimism about the future of the country's stockmarket. They believe that shareholders will benefit from the renewed growth in the stockmarket: dividents will spread to the whole of society, which will make it possible to stimulate domestic consumption. What's more, the return of a healthy stockmarket should make possible renewed confidence in these institutions. Thus the Chinese should begin to redirect their colossal savings (here assessed at 15,000 billion yuans) towards the stockmarket, which should set up a virtuous circle. These conclusions can rightly be seen as premature, however.

In a rather roundabout article, Wang Yizhou examines Chinese national security during the phase of peaceful development^[1] and invites us to some in-depth thinking. Peaceful development, he emphasises, must be approached through an overall and multidisciplinary grasp of a complex system in which security, while its essential objectives have not changed in any way, has in this very particular phase changed in that it now has "content and particularities it did not have previously".

And yet the priorities remain the same.

To a China whose self confidence grows as the world sends back echoes of its successes, and even of its mere size endowed with an astonishing growth ratio, the question of Taiwan is still the "most constraining factor for Chinese national security ". As for the necessity for protecting economic development by maintaining the peaceful environment, the author also hastens to cite it as the inescapable framework of any security enterprise.

But, beyond these highly familiar general ideas, Wang Yizhou succeeds in providing an interesting description of this phase of "stategic opportunity", emphasising firstly that it depends on internal construction and not on external temptations. This despite "what some people believe" who, on reading him, might favour a sort of adventurous opportunism aimed at settling some territorial disputes to China's advantage. This description hinges on a clear vision of various logical stages in the evolution of the parameters affecting China's status:

-          Progressive dynamics which will gradually bring China closer to the developing countries, while encouraging the world to show her increasing expectation and attention;

-          Predictable as it is, this economic opening out drags behind it the inertia of its own demographic mass, which will continue to affect Chinese expansion;

-          An equally predictable trend, but with a negative connotation, is that challenges in energy security and external security are likely to become more serious;

-          Following a les enegetic rate of progression, defence modernisation "will be relatively slow and will have to show determined acceleration";

-          Going through peaks and crises in what could otherwise amount to one and the same linear progression, the question of Taiwan and the Sino-Japanese territorial disputes should "for several years, become more worrying^[2]";

-          And lastly the "theory of the Chinese threat" will not fail to have noisy recurrences.

The author concludes that a "traditional analysis of national security" is impossible, and that it is necessary to think in terms of Grand Strategy (大战略), including both military factors and political, economic, social and diplomatic elements^[3]. Among the many trains of thought mentioned (including the particularities of great power relations, and the classification of dangers by urgency and degree of gravity), two elements particularly attract attention:

-          The necessary emergence of a "new spirit […] which puts man at the forefront of its concerns", in order to protect from nontraditional security dangers the community of Chinese citizens (中国公民群体), in which are included expatriate workers, tourists and students;

-          The mention made of the international duties which fall to China as a great power.

This approach makes it possible to determine five major national security objectives:

1. Maintaining "limited intensity in the frictions" (presented as as being insurmountable) between great powers and "keeping them under control".

The analysis of great power relations is not new and settles for a description of the "pyramidal structure" of a unipolar world dominated by the United States, whose presence in Asia constitutes an eventual threat, but not an immediate one, given current American concerns. The Sino-Japanese dispute can, for its part "be kept under control", and there is hardly any mention of India or Russia.

2. Settling the question of Taiwan, "the most important challenge awaiting China".

Basing himself on the disastrous Russian precedent, Wang Yizhou warns against the extreme danger of making the slightest concession to supporters of Taiwanese independence, and thus opening a real "Pandora's Box", since "Tibetan, Oighour and Mongolian independence movements" would not fail in turn to threaten China with the "syndrome of disintegration".

While recognising that Chinese forces "even when compared to the forces of the island alone do not have overwelming global superiority" he thus notes the existence of a window of greater vulnerability, during which it would be unhoped-for for that "the excesses [of the independence movement] might succeed in placing [China] in a situation of resort to force". But the necessary dissuasion by the PLA^[4] must be accompanied by real reflection about a "process of integration […] in the long term (长期的 “收编”过程), which is to be preferred to "hand to hand combat where everything would be settled at a stroke" (毕其功于一役”的短兵相接).

3.Resolving the disputes over sovereignty^[5] in order to assure the stability of the international environment. Noting that their number is a logical outcome of the China's size, the author emphasises that while most terrestrial disputes have been settled, maritime disputes are still numerous and that many of them are rather of a trilateral nature (with the United States  or ASEAN being party to them). Also "safeguarding sovereignty is not a matter that can be settled with a few slogans^[6]", and "this being the case, an appropriate reduction in land forces is inevitable", the "defence of the national territory entrusted to the armed forces must be renewed in its content and its point of view". Mention is then made of an aircraft carrier and of the "corresponding naval planning". This paragraph, which concludes with the usual calls not to reveal one's strength too early, is interesting above all for its outline of the turning towards the open sea which comes after it.

4.Guaranteeing overseas^[7] interests, in the sense of an « extension of national security  (拓展中的国家安全内涵) :

Conceived in a manner concentric to the national territory, they demand "efficient safeguarding of the security of the lives and possessions of Chinese citizens", the guaranteeing of international transport (oil and gas pipelines, cargo ships and oil tankers) and the stability of the regions of interest to China. The threats envisaged are new (shipwreck, blockade, a surprise attack on an oil-rig or a pipeline, etc.), and the West is taken as the measure of the ability to react. Possible answers include escorting Chinese ships in dangerous zones, the sending, in case of a crisis, of naval vessels "in order to urgently evacuate Chinese nationals or students during a catastrophe, or the anchoring of Chinese forces in international waters close to the State concerned in order to send a dissuasive signal", the taking of "preventive strike measures" (预防性打击措施) in case of a "sudden international crisis which strikes a serious blow at Chinese citizens". No geographical limits are set here, and on the contrary China has to "extend its field of vision to the whole world^[8] ».

5.Lastly, taking on the international responsibilities which are incumbent on it as a great power.

Conceived as an extension of the first four objectives which "represent the essential aspects of national security" these "international responsibilities which are China's as a great power" must also help to sideline the "theory of the Chinese threat" and allow the armed forces to "apprehend and adapt to all external missions in all geographical environments and climatic conditions". Wang Yizhou in fact makes a long list of (good) deeds^[9] of which, he admits, China is hardly capable at present, but which "suffice to establish long term objectives and to underline the difficulty of the task". To reinforce the boundary between this and the first four objectives, the author notes that such responsibilities can sometimes be partly contradictory to the interests and real objectives of security, without, unfortunately, providing any illustration of his remarks. The vagueness of this approach no doubt betrays the converging of several aims at stategic level: gradual integration of the notion of "responsible stakeholder" (counterbalancing the "theory of the Chinese threat"), the highly domestic armed forces' need for the feedback of experience, and the reinforcing of international status (which is more credible in that it imposes duties rather than rights).

Voters in the two autonomous municipalities of Kaohsiung and Taipei elected their mayors and and town councillors in an election held on December 9 2006. In Taipei, Hau Long-bin, the designated successor of the previous mayor, Ma Ying-jeou, was elected with 53.81% of the vote, while his opponent, former Prime Minister Hsieh Chang-ting, the candidate of the Progressive Democratic Party (PDP), received 40.89% of the vote. In Kaohsiung, Chen Chu, former Minister of Labour in the Su Tseng-chang government, managed to keep the city in the fold of PDP with a majority of 1,114 votes (49.91%) over her Kuomintang opponent, Huang Chun-ying, (49.27%) who had already lost in 2002.

These are surprising results if one takes into account the dismal political standing in which the PDP found itself during 2006^[1]. According to Wu Yu-shan the results reflect the weight of structural political factors on the behaviour of voters in the two main municipalities in the north and south of Taiwan: a dividing line which marks the existence of different political dynamics in the North and the South, which the author dubs "one coast, two countries"^[2]. The Liberty Times, a daily whose allegiance is to independence, sees the PDP's good results as revealing the desire of Taiwanese voters to protect a Taiwanese national identity.

According to Wu Yu-shan, these municipal elections were a direct continuation of the previous election, which took place in December 2005, and which had witnessed a comfortable victory for the Kuomintang^[3] : the presidential majority and the PDP were caught up in corruption scandals implicating close allies of President Chen Shui-bian, the popular movement led by Shih Ming-teh against the President had met with  major success, and the corruption scandal in connection with the Kaohsiung metro made possible Kuomintang hopes of victory in both North and South. As the editorial in the Liberty Times notes, the Parliamentary opposition was facing the election in a highly favourable political context. However Wu Yu-shan notes with interest that identical political information produced diametrically opposed reactions in the North and in the South. As he sees it, to voters in the North, the scandals about corruption in the presidency of the Republic deprived the government and the PDP of all credit, while to voters in the South, it was the repeated attacks of a partisan press against the family and the person of the President of the Republic which were perceived as intolerable, which is the point of view taken by the Liberty Times. Thus the affair of the illegal use of special municipality of Taipei funds in which, just before the election, the incumbent mayor of Taipei, Ma Ying-jeou was implicated, was deemed in the North not be comparable with the alleged actions of Chen Shui-bian, and in the South to be further justification for voting in support of the presidential majority.

Wu Yu-shan dismisses an explanation based on the individual behaviour of the candidates. He notes that Hau Long-bin had just joined the Kuomintang, had held a ministerial post in a presidential majority government and had to face the independent candidacy of Soong Chuyu, while Hsieh Chang-ting, one of the bosses of the PDP, could exploit his considerable experience of election campaigns to play on the split in the Kuomintang vote. To voters in the South, Chen Chu was mired in faction fighting and did not have the complete support of former mayor Hsieh Chang-ting^[4], while Huang Chun-ying, the Kuomintang candidate, was in a strong position since the previous municipal election which he had lost to Hsieh Chang-ting by three percentage points.

Wu Yu-shan considers, on the contrary, that it is the influence of a dividing line between North and South which explains the results of this election. He sees it as a manifestation of the fundamental structure of the Taiwanese political landscape.

First he provides a historical analysis of local elections in Taiwan to emphasise the permanency of an entrenched vote for the PDP in the South. In 1997, during the major defeat of the Kuomintang, the North and the South had gone over to the PDP, while the Kuomintang had only managed to hold on to the Centre and the East.  Four years later, the North went back to the Kuomintang but the Centre and the South remained in the hands of the Greens. Another four years on, the PDP lost the North and the Centre again, but kept the South of the island. Wu Yu-shan concludes that there is permanent support for the PDP in the South, while putting forward the argument that the North is liable to shift, depending on the ideological postions taken by the Kuomintang. This is a situation which Wu Yu-shan refuses to describe as "Green South, Blue North" and which he analyses, on the contrary, as the product of a collective unconscious (zhongshu quxiang) built around attachment to the values of "Taiwaneseness" (benturentong) and around a certain mistrust of the Kuomintang, against which the individual behaviour of the candidates has only a limited influence. According to Wu Yu-shan, this factor, which he deems to be structural, will continue to influence future elections in a direction which will not necessarily be favourable to the Kuomintang.

Wu Yu-shan then sharpens his analysis with a description of how the political parties exploit these structural rigidities. He considers the relationship between electoral support and government performance in order to explain why the PDP has a pool of captive votes and why the disintegration of this relationship only underlines the political power of support for Taiwanese independence, with a certain limitation, however: the danger of estrangement from voters in the centre. For the Kuomintang, the electoral role of its ideology has declined, and the party can only rely on its performance to attract votes, a situation which presents a number of difficulties since performance is difficult to control, and the way in which it is judged by the voters is not fixed. It is for this reason that political pressure on Kuomintang candidates is stronger.

The editorial in the Liberty Times places its analysis of the results of the election in exactly the same the framework as that made by Wu Yu-shan. According to the latter, Taiwanese voters in the South wished to protect the values of a Taiwanese identity by voting for the PDP in the face of the mistrust (bu fang xin) aroused by the Kuomintang and its positions deemed to be too close to China, and this despite the opposition's attempt to capitalise on the PDP's failure in government. This is a point of view which clearly confirms the accuracy of Wu Yu-shan's structural analysis, according to which the 2006 municipal elections only confirmed a situation which already existed.