The Reform of State Owned Industry "Smashing the Iron Bowl"

A detailed analysis of the process of urban reform and the resistance of the working class.


Reform of state owned enterprises

Size and importance of the State Owned Sector of the economy, the purpose of the "reforms" management structure and bureaucratic resistance.

Structural consent
Party organisation in the factories, activists and the workforce, the command structure in the factories

What's in the bowl ?

Benefits of the Iron Rice Bowl for the workers, housing allocation and the factory welfare.

Urbanization and migration

An investigation into the size of the Urban population, migration controls, the floating population, the unemployed as a reserve army of labour.

The Phoenix rises

Scientific management, Taylorism, piecework, Stakanovism.

The Collective Economy

What is the Collective economy, how are the workers conditions?

Labour in the 1980s

Party policy on Labour, employment, unemployment and women workers.

The New Contract Labour System

The contract labour systems explained, the extent of their introduction, their use against the workers.

The Official Unions

Workers discontent, the role and function of the All China Federation of Trade Unions, attempts to reform the ACFTU.

The Socialization of Welfare

Social security reform, the division between the factory and the welfare, unemployment benefit and pensions

Institutionalizing inequalities

The increasing officially allowed inequality

The Workers of Tiananmen and the birth of New Egalitarianism

Tiananmen Student protests of 1989, the workers' protests, the formation and ideology of the Beijing Autonomous Workers' Federation, the split with the students protestors.



by Qiu Lihua
Originally a Masters dissertation for the School of Oriental and African Studies London University 1993. This report is slightly amended and will in future contain links updating the data. However the author believes there are no changes of substance needed and that the study provides a useful introduction to the main socio-economic contradiction which will shape the future of China.

Reform of state owned enterprises

The large and medium state owned enterprises in China number 11 000, whilst only constituting 2.9 % of all industrial enterprises, they produce nearly half of China's industrial output and pay 67 % of all tax revenue. These industries are predominantly involved in energy, transport, steel, chemicals and heavy machine production. (Beijing Review hereafter BR.p.13 vo135 no46) State owned industries with a workforce of over 500 account for 41 % of industrial employees, produce 52 % of the gross value of industrial output and account for 70 % of fixed assets. (World bank hereafter WB.1992 p 16)

Heavy industries were given priority in the extensive growth of the means of production promoted since Liberation. Thus the bureaucracy in heavy industry pulls enormous political weight, for example the managers in the major iron and steel industrial plants have a cadre rank above some provincial governors. ( Shirk Political Economy of Reforms in Post Mao China hereafter PERPMC. p 208 ) As a result the interests of these industries within ministries and the central bureaucracy predominate in economic policy.(ibid.,p221 )

The reform of the state owned enterprises is intended to eliminate loss making companies and weaken the influence of central authority over production, personnel, investment and marketing decisions, through creating autonomous enterprises operating in the market. Reforms of these industries have been promoted since the late 1970s with the aim of decentralising power and raising the productivity of labour. The main complaint of the reformers is that powers granted to managers were not put into practice due to, 'a relatively passive attitude', on the part of both managers and officials. ( BR. p14 vo135 no46)

Decentralisation of power gave local authorities a larger role in these enterprises and had the side effect of promoting 'cooking in separate kitchens', a reference to local economic activity without consideration for wider national interests, "the local authorities have become in a sense, the executives of a local holding company whose interests are closely allied with those of their factory managers."( Shirk op.cit. p.219 )

A cloak of "managerial independence" conceals the pivotal role of the Party organisations. Case studies of thirteen state owned enterprises in the mid 1980s revealed that their enterprise directors and enterprise Party secretaries were in all cases in the core group of the same party committee and the same applied to their respective deputies. In all cases the director and party secretary were appointed by one and the same party organisation, that being a national or local party committee responsible for exercising supervision over the enterprise. (Granick Chinese State Enterprises hereafter CSE., p.230 ) These organs of the Nomenclatura concentrate "appointment authority, supervisory authority and property rights over the enterprise activities". . "in the same hands." (ibid.p.231) According to an editorial in the China Daily the, "Regulations on transforming the Operational Mechanism of State Owned Industries" passed by the State Council in 1992 faced bureaucratic obstruction from local authorities who are busying themselves by speculating on stocks and real estate "in the fond hope of getting rich overnight", and covetous of their powers are hindering the decision making autonomy of enterprise managers. The reorganization of government departments into companies has not worked out according to plan either resulting in a mere change in name. Some managerial staff were accused of having dragged their feet. (China Daily.hereafter CD. Commentary P4 20 Aug. 1993) Since the early 1980s the system of administration was set up known as the 'director responsibility under the leadership of the Party committee.' Granick's case studies found that this committee consisted of five or six people who were all full time Party functionaries or directors and occasionally their deputies. (Granick op.cit.,p.234)

This system expanded directors' powers over 'part of the managerial line hierarchy that functions at the individual factory or workshop level.' Managerial authority was bolstered further in 1987 after which one man leadership was widely introduced and directors were given appointment authority over their deputies and shop superintendents. (ibid.p.237)

The Party committee is now supposed to be divorced from production and administrative work, playing instead a supportive role in these areas by helping enterprise administration by establishing a chain of command in production and administration with the director as its head and in "teaching the cadres and workers to obey the director's command." (Ma Hong ed. Modern China's Economy p.129)

Structural consent

The Chinese working class is the, ' creation of the industrial drive created by the Communist Party and state'which mobilised the workers into organisational forms fashioned by the state itself these forms penetrate the grass roots of the workplace and community. (Walder Communist Neo-Traditionalism hereafter CNT.p85) The forms adopted have explicitly excluded both the independent interests of the workers or any private interest groups. The party is organized "down to the workshop and its members and loyal associations dominate leading positions from top to bottom." (ibid CNTp88) Thereby enabling both the neutralization of worker demands and their mobilization for party policy and plan. Authority relations inside China's state owned enterprises are a pattern of relationships in which the party struggles tirelessly and systematically to secure consent from the workforce.

In the factory hierarchy the lowest point at which there are full time supervisory staff and a Party branch secretary is the workshop. Here we find the lowest full time representative of the management the shop director. At this level decisions about rewards and penalties are made unilaterally by the shop officials which then receive the rubber stamp from staff departments. Below the full time bureaucracy of the party and shop director is the production group composed of no more than twelve workers represented by a 'group leader' or 'chargehand' (elected from above!) who transmits information about workers morale and behaviour upwards and communicate demands from above to their co-workers. These group leaders hold some weight through the discretion that they can exercise over recommendations for bonuses and rewards. They balance between the management and the workers acting as brokers between the two.
One factor of significance in relation to shop floor control of the labour force is the low proportion of full time foremen of any description relative to the workforce. Granick argues that the more skilled workers of Germany and France require less supervision than the Chinese workers yet have ratios of 1:25 and 1:16 respectively, (full time foremen to workers ) whereas in China there are no full time foremen.

The "lowest level full time line manager in our sample Chinese enterprises may be thought of as responsible for at least double the number of manual workers as is the West German foreman." (Granick op.cit., CSE. p.241) This form of organization places essential decisions affecting the lives of workers in the hands of shop directors and to a lesser extent group leaders, creating arbitary bureaucratic power. As a means of organizing the labour process this is inefficient. It also leaves considerable scope for workers to harass the group leaders and activists when they side with the management and party against the workers.

The Party runs an apparatus which corresponds to the enterprise administration structure yet is independent of it, membership may be as high as 15-20 % of the workforce. (A figure provided by Reichman in Walder CNT.,op.cit.p88 )

At the lowest level there are cells as part of branches; cell heads are on the workshop branch committee, the heads of branch committees constitute the enterprise party committee, whose secretary is the enterprise's top political official. The party has a "separate hierarchy of communication , command and discipline." Its meetings are out of bounds for non members and information is a privileged secret for insider's ears only. The party extends it's influence over the non party workers through "activists" often members of the youth league who are cultivated by party members as possible candidates for membership and later for leadership positions Activists may equal party numbers and are shop-floor agents of party policy. ( ibid.p.88-9)
Factory consent is secured through the medium of these activists who act as a buffer between the managers and the whole workforce. They are cultivated from above as loyal agents of party and managerial authority through the provision of money, status, mobility opportunities and the like. They are on the frontline of the antagonisms generated by management policy on the shop-floor. (ibid. p.246-7)

"When activists engage in public displays of approval they are siding publicly with the Party, taking a stand that isolates them from other workers and often earns them their enmity as well." ( ibid., p.249 )

The activist layer are shunned by the ordinary workers for their 'arse licking' and their reporting on other workers.

"In reality the workers didn't hate the party leaders as much as the activists who report on them." (An ex- employee of a state owned factory quoted in Walder ibid. p167)
They face harassment both psychological and physical, such as beatings, being sent to Coventry, or having their clothes burnt. This 'arduous struggle' is part of a 'testing through hardship', a 'rite of passage' into the Party ranks.

' The antagonism displayed towards activists is a reflection of a deeper social fact: that activists have sided politically with the Party and management, that they have entered into a special relationship with representatives of the Party and act routinely against the interests of the group as a whole, and that they will eventually become leaders themselves.' (ibid.)
The role of the Party and of activists altered in the 1980s as greater powers were given to managers who were no longer subject to persistent Party interference. The activist from being cast as a party arse licker, is now seen more as a norm breaker who works full out. Noting a decline in antagonism towards activists because now they are paid 'according to work', Walder nevertheless explains that "the informal persecution of activists continues as before perhaps made sharper in recent years by the growing importance of incentive pay and the perception that activists now harm the pay packet of the other workers by inviting managers to raise quotas." (ibid., p.239 )

The branch secretary is now assigned a subordinate role to the managerial elite. The smashing of the iron rice bowl whilst being forcibly advocated by the Party, is presented to the workforce as the act of market forces over which the party should and aims to exercise only limited control. "Hence that double system of protection that justice has set up between itself and the punishment it imposes. Those who carry out the penalty tend to become an autonomous sector; justice is relieved of responsibility for it by a bureaucratic concealment of the penalty itself." ( Foucault Discipline and Punish p10)

Now the focus of party work is to support the management through dissipating shop-floor discontent and ideologically persuading the workers of their managers wisdom and thus to sustain morale and unity. The party relied less on direct ideological persecution, mobilisation and campaigns characterising the Cultural Revolution. Instead it stressed the need to raise the productivity of labour and "emancipate the mind" from ancient egalitarian superstitions.
The shift from ideologically based authority patterns to ones based on the ability of the enterprise to raise living standards and increase productivity, created a corresponding system of obedience and loyalty to management and the enterprise which is repaid on occasion by, "elaborate displays of concern over workers' material life." ( Walder op.cit.,CNT.,p. 239 )
The internal hierarchy within state enterprises creates a particular association of interests, those at the top to retain their position of authority must maintain adequate welfare for the workers
"..the family motive is prominent in most enterprises Minimum levels of worker welfare must be attained before managers can indulge in other motives , such as an expansion drive." (Tidrick et al. World bank 1987 hereafter WB., 87.,p.40)

Perhaps management hopes that accumulated hatred caused by increased labour intensity and insecurity is overwhelmed by such displays of love and affection. Or should one view the matter with the eyes of one Fredrick Engels who when countering the philanthropic garb of the English bourgeoisie hurled the following accusations ?.

" As though you rendered the proletarians a service in first sucking out their very life blood and then practising your self~complacent, pharisaic philanthropy upon them, placing yourselves before the world as mighty benefactors of humanity when you give back to the plundered victims the hundredth part of what belongs to them." ( Engels , Condition of the Working-Class in England p.278 )

What's in the bowl ?

The Iron Rice Bowl is the term commonly given to the job security, conditions and welfare system in China's State Owned Industries. The Iron Rice Bowl subsidies for employees of state industry exceed the total wages bill. (Walder op.cit.CNT.p.61-2)

Here is a list of ingredients which make up the average bowl. Access to company, "housing, ration coupons for major consumer durables; (such as cloth and coal ) subsidized food and staple goods and the delivery of major social services and medical care. The enterprise also administers state labour insurance welfare provisions, and social security and provides a wide variety of subsidies, supplementary payments, and even loans." (ibid p.60 ) ( note: the data provided by Walder provides the above information from a 1969 source however whilst the exact contents of the rice bowl today are different in quality the range of contents are roughly the same)

Whereas in the United States in 1982 45 % of the family budget was spent on housing utilities, transport and medical care this constituted only 5.2 % of the spending of urban families in China.(ibid.,p.60) State enterprises control 54% of the urban housing stock with 29% being city-owned. The construction of urban housing has increased the supply available to the workforce,( ibid.p238 ) access to city housing may be negotiated by the enterprise on behalf of employees and grants for repairs made available. (ibid.p.65) Housing space is perhaps the most contentious issue in the Iron Rice Bowl. Small wonder when one considers that over 40% of urban couples have to sleep in the same room as their children and over 20% had to share a bed with their children over 7% had to share the same bedroom as their parents or parents-in-law. (Zha Bo Australian Journal of Chinese Affairs 1992 issue.28 p.17)
Until the 1980s the distribution of housing was manipulated by factory cadres to provide for the loyal and their families. This hidden abuse has given way to a more transparent abuse in which allocation has become a public spectacle and nepotism far more obvious. (Walder China Quarterly hereafter CQ no.127 Sept.,1991 p.480)

The material contents of the rice bowl are supplemented by superior access to scarce goods that enterprises provide through various exchanges negotiable between companies and organisations. (Walder CNT op.cit. p.63-4 ) Although the price reforms of the 1980s placed the purchase of many consumer goods outside of the factory based direct distribution system ( ibid.p.225) high prices in the private sector meant that state subsidies were still an important components of the rice bowl. In China the majority of urban family expenditure is on food which is only partially provided or subsidized by the state. Farm land owned or leased by state enterprises produced 500 million kilos of grain and 1.5 billion kilos of vegetables in 1981 which was given away or supplied at subsidized rates in canteens Banquets and holiday food supplies may be laid on at Chinese new year or other special occasions.(ibid.,p.64 ) The value of clothing subsidies may equal a months wage, cold weather subsidies may be provided through wage supplements or fuel subsidies , and hot weather subsidies may be provided for drinks or ice lolies. (ibid.p.62)

Perhaps the two most significant benefits are psychological in that employment is for life and that your children will also inherit your job or one like it during your spell in the afterlife. This inheritance right is a measure that was first introduced only in 1978. (Granick in 1991 p.274)

Urbanization and migration

"Migration between the countryside and cities has long remained unchanged. Though this has prevented cities from becoming overcrowded , it has also impeded the development of a commodity economy." (Li Chengrui A study of China's Population 1992 p225)
Since Liberation in 1949 until the late 1970s population mobility was controlled with the aim of developing the backward interior and frontier lands and establishing a stable basis for the planned development of urban areas. The Hukou or household registration system was established as the means to restrict entry to the cities and control unwanted migration. As such the register was a precondition for the planned allocation of labour for it functioned to keep the peasants on the land, and to guarantee the supply of labour in the cities by withdrawing all other options available to it. (Dutton Policing and Punishment in China p229) In both the U.S.S.R. and China the planned economy was based on the stabilization of the labour force. The allocation of labour by plan shattered 'commodified' labour which Marx, Engels and Lenin considered to be at the centre of the system of capitalism. (Dutton op.cit. ,p.227 )

This stabilization of population and labour in urban industrial areas under planned economy was designed to forge an organic labour force.

The official workforce in cities and towns is estimated to be 114 million, of which 76.5% work in state owned units. (Li Chengrui op.cit.p64 ) The total industrial labour force grew from 60.9 million in 1978 to reach 96.6 million in 1988.

The figures for rural non-agricultural workers in non-state firms grew by 65 million from 1978-1987 to reach 87 million. Of these 10 to 24 million are unaccounted for in statistics on the national labour force.(WB.1992 op.cit.p16)

Such discrepancies running into tens of millions pervade Chinese statistics and are problems of categorisation methodology. For example the extent of urbanisation is measured in China by two inadequate means, leading to a huge statistical and human discrepancies. The official figure for urban was linked to the allocation of grain by the state, recipients were labelled "non-agricultural". This calculating method is the basis for an urban population of between 206 and 217 million, included are those who reside in towns of over 3000 people, in which 70 % are non agricultural, or 85 % non- agricultural for conurbations of between 2500-3000. (Li Chengrui op.cit.ppl70-l)

There is another method of calculation used to categorize urban which incorporates all officially designated urban places providing the basis for an urban population of 49.6 % for 1988 or over 500 million. (Guldin Urbanizing China p.3) The designation of urban in this case incorporates rural areas which have come under city and town administrative authority and thus distorts the figures upwards. (Li Chengrui op.cit.p171)

It appears that the urban population might be nearer to 300 million for 1988 or between 26-7 % of the total. (Guldin op.cit p52) However even this figure ignores the temporary migrants or what are called the floating population of the cities and the large numbers who whilst not residing in towns or cities are employed there.

The peasant youth are restive confronted with modernity through word of mouth and mass communications they are straining at the leash of the migration controls. A survey in 1979 of students at an agricultural middle school revealed that only 6 % wanted to become farmers and yet 90 % were bound to remain condemned , ( M.Whyte Urban China in The Cambridge History of China vol.15.,p.677) 'to eat in order to work, to work in order to eat, and besides that to be born to bear, and to die', a peasant, ' elemental , senseless , biologic '. (Trotsky quoted in Joravsky , Russian Psychology p206)

The ex-peasant 'immigrants' who are absent from the household register books reach an estimated one third of the total population in small cities and towns in Jiangsu province. (Fei xiaotong quoted in Dutton op.cit.p.331) Some of this drift migration to small cities is tolerated migration into big cities is controlled more strictly . The problem for the government was how to control the influx so that it could be used to provide what Marx called the reserve army of labour. As the head of the Central Party School Ni Ding hua admitted in 1988 with these words,
"The existence of a reserve army of labour will enliven job competition and stimulate labourers initiative . This will help to better adapt workers to the needs of the social economy." (Quoted in Pat Howard , Rice Bowls and Job Security : The Urban Contract Labour System in The Australian Journal Of Chinese Affairs Jan.1992 hereafter AJCA.p114) By 1989 the number of the so called 'permanent' temporary residents reached over a million in Beijing and 60 million in all China's cities, of whom 70% are unemployed rural migrants. (Dutton op.cit.p333)

The household registration system nearly collapsed under pressure of the reforming economy's swelling labour migration, legal and illegal. The significance of the register has diminished as housing welfare and subsistence distribution mechanisms, were paralleled by the proliferation of free markets. Here eeking out a life is not dependent on coupons and stamps from officials , but on the exchange of labour for cash. "In a situation in which more and more migrants are flowing into the cities, problems of shelter and housing are becoming especially serious. Parts of some of China's larger cities are beginning to take on the appearance of other large Third World cities with large squatter colonies of self-built shacks and shanties." ( Guldin op.cit.p31)

The cities have faced a huge influx, the migrants were the new urbanites often young, unemployed and potentially criminally inclined. The control of rising crime and delinquency led to the introduction of the personal identity card the more effectively to police a people on the move. The registration burden of the 1980s led to the devolution of registrative and policing functions, locating illegal immigrants and wider questions of social order have been combined at the street level with the policing of the fertility of women under the ambit of neighbourhood committees, which act as empowered agencies of state control, policy implementation, morality and ethics. (Dutton op.cit.pp334-337)

The Phoenix rises

In Stalin's time Stakanov was presented to the workers as a hero, he reorganised the division of labour and raised the work tempo and quotas by rationalizing the work process, work rhythms and rest were to be decided 'democratically' by the self compulsion of material rewards and penalties.

In the 1920s Russian scientific management theories such as 'psychotechnics' attempted to devise technologies of labour organisation which like a rifle were not to be seen as being class based but neutral. They criticised Taylorism for leading to a capitalistic mechanisation of man. The leading psychotechnics intellectual I.N Shpil'ren was subsequently inspired by Stalin's technologies for mental reorganisation to confess the error of his thought. The idea of using human labour for it's machine like qualities, as a means of maximising the continuity of the flow on the production line was revitalised after Stalin's death. (ibid.p344)

In China Stakanovite piece work was prevalent in the 1950s personified by 'iron man Wang', at its peak some 42% of state employees were paid by the piece. However the system was abolished after the Great Leap Forward only being revived in 1979. (Granick China Quarterly hereafter CQ. no.126. 1991 p283)

The economic liberalisation of the 1980s gave birth to dictatorial labour processes akin to Taylorism. So called 'scientific management' became in vogue amongst academic and policy making circles and were widely practiced by management, production norms were raised and labour discipline was based on the principle, of 'rewarding the good and punishing the bad.' (A.Chan

In 1987 arch reformer Zhao Ziyang condemning egalitarianism and proposed that thought and practice change so that "..where possible we should introduce piece-rate wages and wages based on work quotas, maintaining strict control over product quality and work quotas." (Quoted in Leung Wing-yue Smashing the Iron Rice Bowl p71)

As Marx explained
"Given piece-wage it is naturally the personal interest of the labourer to strain his labour power as intensely as possible; this enables the capitalist to raise more easily the normal degree of intensity of labour." (Marx Capital vol.l.l p519)
The piece rate system rose from covering only 1% of all state sector personnel in 1978 to cover 11% by 1985 probably being more widespread in smaller scale enterprises with low profits. (Granick op cit.CQ.June 1991 no.126.pp283-4)

A survey of 25 factory directors carried out in 1988 revealed that five-sixths of them had discharged workers and that although the sackings were only of between 1 to 30 workers, the interviewees would have preferred "complete freedom " to sack and 22 of the sample would dismiss an average of 18 % of the labour force (Kevin O'Brien CQ.Dec.1992 no.132.pp1095- 6) if only they had "complete freedom!"

Instead of this Western Capitalist "freedom" to sack, the directors interviewed expressed gloomy images of labour reform, on the one side a few raised fears for social stability given that the unemployed,"would have no means to survive"(ibid.) but larger proportions mentioned the pressures that the managers would come under to reinstate sacked workers, both from supervisors (one third of respondents) and from the workers themselves (four ninths of respondents) who spoke of probable arguments, harassment, violence or even death for directors and their families in such circumstances. O'Brien makes his personal opinion on these matters clear when he writes that obstacles to sacking workers "make it a courageous act for a manager to exercise authority over personnel."( ibid )

The Shougang iron and steel company is seen as an example of a successful turnaround from a centrally planned State Owned factory to a profitable venture in which everybody benefits Beijing Review reporter Wu Naitao discovered a key factor in it's success in that, "Everyone is Involved" this means that all workers have the responsibility to fulfils a personal and factory contract, this turned the company fortunes around, in return the staff received an average 30% rise in income in the last year. A loss maker became a model profit maker. This contract spreads responsibility for the fulfilment of targets including personal and workgroup goals, enterprise taxes and profits, as well as production and export quotas all of which are written on each employees handbook . The targets require Stakanovite intensity.

"Generally speaking targets are ambitious with some aiming at historically high records. Workers should spare no effort to achieve them. This objectively requires people to work intensively rather than laze about." (long live journalistic objectivity!) ( BR.vol.36,no.30 July 26 1993 p23)

This sounds rather similar to Hungarian conditions described by Kornai
" There is a widespread very industrious and self driven stratum of the Hungarian population that opts for hard work almost up to the biological limit of capacity or even beyond it in order to get consumption goods . Certainly this is one of the secrets of the so called 'Hungarian wonder '" (Quoted in Granick Job Rights in the Soviet Union p.268

One worker in another Beijing steel mill described his working conditions. "It's an hour by bus each way from where I live . I give the mill ten hours of my life every day .1 lived in a factory dorm for a while - six to a room , and incredibly noisy " " My job is stoking the furnace . It's unskilled work : you just keep on shovelling coal in . You are sweating from the moment you start . It's 50 to 60 degrees centigrade in there all year round."(Quoted from Zhang Xinxin ed, Chinese Lives p137) So now we know why some workers get ice lolly supplements in the summer months!

Back at Shougang being late has been abolished a fringe benefit which was at times enjoyed by 3-400 workers a day When management started its reform of labour, "many employees felt exhausted under pressure and unable to stand it" but the management were able to strictly employ a dazzling array of penalties and reward the few with enviable bonuses. (B.R op.cit. vol.36.p23)

The rudeness and ambivalence found in service sectors in the Soviet Union was prevalent in Chinese services too. Chinese analyses have piled the blame for this on the shoulders of the "Iron rice bowl" evidently you can only get someone to say 'I hope you enjoy your meal, have a nice day' if you can demote or fire rudeness out of service workers. The assignment of labour certainly generates frustration on a grand scale amongst such workers, the arbitrary nature of assignments imprisoning of the soul in drudgery and tedium for life. (Parrish & Whyte , Urban Life in Contemporary China p.100) The magic wave of the market wand is to link the unit of living labour to the impulses of exchange and profit , thus on the sale of this commodity my being depends.

The Collective Economy

The urban collective economic sector employs 19 million people. As state sector employment declines some economists are arguing that collectives may become 'the main force 'in the economy. Some confusion or dispute seems to exist as to how to categorize these enterprises in the theoretical framework of the ' socialist market economy'. In an article in the China Daily one sentence defined them as, a 'lower form of public ownership', then one paragraph further on it is stated that State ownership and collective ownership can coexist and co-develop 'and there is no question of which of the two is more advanced.' A little further on one reads that Xiao Liang an economist said, 'it is not right to regard collective economy as merely a lower form of public ownership.' ( CD 18.8.93 p4)

Clearly the workers in state sector Iron Rice Bowl employment rank collectives as low or high depending on working conditions, welfare rights and wages. Where wages are higher some workers, particularly young workers were envious of collective employees, but generally they were reluctant to abandon their security and welfare rights which were clearly 'more advanced'.(Walder argues that the existence of some high wage collectives in the urban areas has created widespread dissatisfaction amongst state employees and the demoralisation which set in led to a decline in labour productivity. CQ. no.127.Sept 1991 pp477-8)

Whilst formally the enterprises are supposed to be owned by the whole workforce 'enterprises' assets are not really owned by their employees , though they are under their names.' In urban collectives government departments still assign the directors of these enterprises. (CD 18 8 93 op.cit.p4) The system of piece work payment is widespread in collectives, and privately owned small and medium sized factories. Here we find 'sweat shops' and 'flashbacks to a nineteenth-century Dickensian industrial revolution.' (A.Chan AJCA Jan.1993.Chan op.cit.pp42-3)

Wenzhou a city of just over half a million inhabitants in Zhejiang Province was presented as a national model for economic development in 1986-7. Private enterprises became the dynamic force behind economic growth. By 1988 non state enterprises were producing 41% of industrial output value and undertook two thirds of passenger and freight transport (Forster in China Information hereafter CI. vol.5.,no.3.,1990)

Forster notes that the distinction between private and collectively owned enterprises is blurred, with a fifth of private enterprises registered as collectively owned enterprises in order to avoid high taxation rates. (ibid.)

Many big private enterprises 'bought a red hat' by registering as a collective in order to pay less tax, secure access to subsidized inputs and conceal their capitalist nature. In order be designated as a collective an enterprise must distribute a minimum 10% of assets to staff, or part of the profits as bonuses. In Liaoning Province in 1988 a quarter of private enterprises were found to have been camouflaged with collective or even state owned status. In suburban Shanghai thirty percent of big private enterprises were registered as collectively run. In model Wenzhou in 1987 over half of all rural collective enterprises were found to be in fact private firms. (Ogdaard in

Household industries have mushroomed based on low level technology and supplied by waste materials out of which are fashioned commodities for sale . Here the market determines the price of labour, working conditions 'bring to mind Karl Marx's graphic descriptions of the sweat shops in Dickenisian England. Conditions in Button factories in Qiaotou near Wenzhou are described thus
"dingy workshops work a twelve hour day with female child labourers receiving wages of RMB 5 a day. The employees work a seven-day week with no breaks during the day, and are forced to endure a primitive, noisy, dark and unhealthy working environment . There are no trade unions here to ensure the observance of even the most basic work conditions." (Forster in CI. 1990, op.cit.p60)

Forster also observed that, "At a meter factory in Liushi it was apparent that an industrial accident had caused eye injuries to several workers . When the supervisor was in earshot , it was obvious that they were too frightened to tell us what had happened " .." exploitation was severe merciless , and unameliora ted by protection from the law or any form of organized labour ." ( ibid. p 62 )

In township enterprises a majority of which are defined as collectively owned employ 105 million people (CD.p4.18. 8. 93 ) Here wages are , ' most often decided by the will of their managers '. 'The working conditions of employment are currently quite low , their working hours are not regulated and there is no medical or retirement insurance for most of them .' the 'entrepreneurs are usually poorly educated and once the profits begin to roll in they often indulge themselves instead of further promoting their business (CD.,3.9.93.,p.4 )

Labour in the 1980s

According to Walder the control of unemployment in urban areas could only be solved by a three pronged strategy. Firstly the control of migration to the cities , secondly by the control of fertility, and thirdly by expanding labour intensive industries.(Walder op.cit.,CTN p36) the planning system in 'communist ' China incorporates each of these three means of exercising demographic and economic and political authority

The 1980s were years of sharply conflicting labour policies they began with fears that the return of the youths 'sent down to the countryside' for Cultural Revolution and the rising numbers of urban 'delinquents' were undermining social stability.

In 1981 a demonstration of the unemployed in Shanghai was dealt with by the army. Social stability still seemed insecure 'delinquency', was spreading. As one veteran PLA cadre remarked .."There are now more prostitutes more rapes and robberies. A large part of them have been committed by unemployed people. Many youths now dare to kill people steal guns and even rob state banks."(Quoted in G.White in Sept.1987 p373) In January 1980 Deng Xiaoping spoke out for a policy to solve the urban unemployment problem. The methods applied were twofold the expansion of the commercial, service, cooperative and private sectors and the easing of employment channels. (through labour service companies, recruitment by enterprise managers and by setting up shop on your own or as part of a cooperative) ( See ibid.pp.369-70)

These measures were stabilising the employment situation by mid 1981 to the extent that within the upper reaches of the State Planning Commission and the Chinese Academy of Social Sciences calls for concentration on labour productivity were placed alongside the employment issue and the idea of introducing fixed term contracts as a means of undermining the Iron Rice Bowl was mooted by early 1982. Those in official circles who opposed the contract system being introduced were of the opinion that the question of the productivity of labour was approachable from different perspectives namely improved training and the use of advanced technology as well as the more effective use of labour power. (ibid.pp 371-2)

There has been a constant conflict between the demand to raise the productivity of labour and the need to expand employment to maintain social stability.

An undermining of the social status of women in work has accompanied profit and loss calculation. Women in the employment market faced greater pressure to accept traditional role definitions in the workplaces, on grounds of the special physiological biology of women. (that they are in fact women) No longer were women regarded as in the Cultural Revolution, when they considered at least in official rhetoric as able to do any thing that men can do.

Managerial autonomy over employment decisions made the special physiological nature of women the open or concealed basis for systematic discrimination in employment. Managers know that women will get married have children, welfare demands and require labour protection. Womens' dexterity and special skills are emphasised in determining womens' occupational avenues and part time work is seen as the means of combining the work mother role in suitable proportions. (Honig &Hershatter Personal Voices. pp250-263)

Sex has become the primary determinant in employment, managers complain that they are forced take on too many women. (Granick in op.cit.p272) Employers act on the belief that female labour is 'high cost and low efficiency'. In Shanghai birth costs paid by enterprises average a minimum of 1500 yuan and one or two years wages as paid leave are provided after the birth. Proposals being discussed are aimed at socialising the welfare costs associated with childbirth and providing a child nursing insurance system, thus reducing the costs to enterprises.

Women account for 70% of those recently made unemployed in Shanghai, they are shocked that employment insecurity should fall so heavily on their sex. With the deepening of market-oriented reform and the revision of the social economic structure, "there follows a change in the demand for female labour." (CD.19.8.93.p4)

Thus the green shoots of Chinese capitalism have encouraged the flourishing of a market in sexual relations, sons of worker families are "losing out in the competition for brides to sons of rehabilitated capitalists" (M.Whyte Marxism and Capitalism in the People's Republic of China p49) and the bosses of many karoke halls, ballrooms and coffee shops "trying every means to make profits have 'lured or forced ' their female staff 'to provide sex services."
"A police officer said some of the bars sold food and drinks by day and sex by night."( CD.20.7.93.p3)

The New Contact Labour System

The new labour contract system was first experimented on workers in the Shenzhen special economic zone and Shanghai as far back as 1980. In Shenzhen limited term contracts are the rule for all labour. Labour mobility here is higher than elsewhere in China attracting workers from the whole country yet even amongst the glitter there is no adequate infrastructure of social security. However the growth in the application of the contract labour system was plodding in comparison its frantic promotion by 1988 8 million or 8.3 % of state workers were on the new contracts. (P.Howard AJCA Jan.1992 p98)

The allocation of labour was subject to change in 1986, as a means of undermining the Iron Rice Bowl newly hired workers were no longer given jobs for life, instead they were put on an average three year contract aimed at increasing managerial powers to discipline "poor performers" although at the time of writing this was in practice seldom used for this purpose as most contracts were automatically renewable. (WB.1992 op.cit.p8)

There are two types of new contract ones between one and five years and ones between five and ten years duration. There is great scope for variation in its practice contracts are of longer duration and are more secure in Shanghai and Beijing. The longer term contracts are effectively treated as permanent iron rice bowl jobs , although the universalization of contract labour is the avowed aim of Beijing's major. (P.Howard AJCA.p.98) Shorter contracts are the point at which the managerial perogative has become a bowl smashing yard.

Contract labourers whilst officially equally to permanent workers in terms of welfare and workplace rights face all sort of discrimination, from being excluded from medical treatment and being sacked for illness, to being given menial dirty and dangerous jobs whilst being excluded from joining the union and workers' congress. (ibid.pl00)

Take the garment industry in which the labour force required is relatively unskilled, the market is subject to fashion fluctuations and as a large export industry demand is dependent on international markets. In Guangdong this sector has an annual turnover of labour of almost fifty per cent. (ibid p105)

In new factories in Xiamen and Shenzhen there are often no permanent employees, management exercise strict control of the pace of work and amount of overtime as well as laying workers off at times of slack demand. (ibid.p107)

Those subject to the new contracts (he tong zhi gong) in many cases find themselves working in conditions akin to the old (he tong gong ) contract labourers, who are predominantly migrant labourers who are forbidden from urban registration rights. Such workers face systematic exclusion from particular branches of employment, in 1988 one million rural labourers were expelled from the cities.(ibid. p104)

Urban workers suspect the institutionalisation of this older second class contract . (he tong gong)(ibid.p101)

Temporary and seasonal labourers who normally are excluded from enterprise benefits, were to be granted contracts under the State Council regulations of 1986 however the implementation has been patchy.(ibid.p100)

Thus far it appears that rather than undermining the Iron Rice Bowl privileges of the permanent workforce. The new labour contract system has created a new "dual-track system within its own structure , with its distinction between long and short term contracts and the handling of skilled and unskilled workers."(ibid.p105) Like the treatment of workers in capitalist countries.
Managerial perogatives to discipline the workforce have been liberally applied by transferring "surplus workers" within the factories, or into training and cooperatives linked to the factory, these transfers when utilised as a whip may entail a loss of an array of welfare rights and bonuses. (WB.1992op.cit.p8-9)

The contract system contributed to a decline in work morale because it signified the accusation that state workers are 'shiftless and unproductive' and threatened to sack them unless they pulled their boots up. (Lichtenstein China at the Brink p73)

The allocation of labour through social and political connections the inheritability of employment in state enterprises as well as the connection between work and housing, have all combined to undermine the spread of a labour market, what Lichtenstein calls,"effective wage competition Such competition would place a lid on wage increases since employees could always be found to work at a lower wage rate" (ibid.p65)

The Official Unions

Anita Chan mentions several times that workers have taken action in the Peoples Republic. Immediately after Liberation when the Communist trade union attempted to represent the workers interests in capitalist factories against party policy, which then led to the fall of Li Lisan, in the Hundred flowers movement, in various factional groupings and 'quasi-political parties' in 1967 and in the 1989 protests. (A.Chan in AJCA Jan.1993 op.cit.pp32-3)

Chan argues that there are "three broad sectoral interests in Chinese society revolving around the issues of industrialization and modernization." (ibid.p46)

She divides them into the 'Conservative' and 'Technocratic Social Engineers and the Labouring Classes the Socially Engineered and their Allies'. The All China Federation of Trade Unions (hereafter ACFTU) is an imposed representative with virtually no clout inside what Chan calls the 'Corporatist' structure. The ACFTU in the 1980s was to assert itself within the bureaucratic apparatus attempting to gain powers to intervene in administration and in the drafting of legislation relating to workers interests. Inside state enterprises they have gained in bureaucratic status, and through staff and workers councils have a right on paper to supervise the management. (ibid.p53)

Chan makes an appeal to the workers to 'effect changes within the existing state corporatist structure, just as the technocratic-managerial reforming social engineers have been exploiting bureaucratic channels.' (ibid.p59)

However the fact is that until now the ACFTU have played an insignificant role in articulating workers' grievances in enterprises inspite of their jostling for positions of power and influence in the bureaucracy. Granick's study of state enterprises shows that when workers have been dismissed the trade union did not raise a whisper of protest. Local authorities representing the workers' official residence area were far more likely to intercede against the enterprise decision. The Union when it did see fit to represent individual complaints would merely 'forward on the grievance either to the manager or Party secretary.' The Union acted more as a welfare organisation than a workers' organisation, dealing with housing, running competitions, distributing bonuses, organising cultural events, propagandising and promoting production enthusiasm (Granick CSE.op.cit.p238)

In 1988 the rise in inflation caused a fall in living standards for over half of urban families and 25-30% were living a life of subsistence according to the Vice Chairman of the ACFTU. (J.Wilson Studies in Comparative Communism Autumn 1991 'Polish lessons' p270) Strikes and go slows had spread since 1987 due to 'tensions unleashed by the economic reforms'.

At the 11th Congress of the ACFTU, in order to pre-empt any independent workers movement from emerging the began to call for 'drastic changes'. (ibid.p271) But the new assertiveness of the ACFTU failed to establish it as the representative of the workers movement in 1989 when it played a sideline role. The union did however express support for the main student demands for a face to face dialogue between the students and the Government as well as donating 100 000 yuan for medical services at the time of the hunger strike. (ibid.p274)

Their banner turned up on the occasional demonstration but they organised nothing themselves. The 1989 upheaval sharpened the awareness of the threat of explosive discontent and the Unions increasingly are seen as a possible medium for diffusing conflicts. A China Daily report suggested that the ACFTU arbitrate and mediate with management.

'Trade unions should become real worker's organizations to negotiate with management and to protect individual worker's interests. Through constructive dialogue enterprises can carry out their policies more healthily and smoothly Otherwise, work may suffer resulting in low efficiency and even the collapse of the enterprises.' (CD.30.8.93.p4)

Arbitration of Labour Disputes

In 1987 arbitration committees were given the go ahead to alleviate disputes arising from sackings and the contract system. In the past six years one million disputes have been dealt with. Disputes relating to welfare and working conditions which were until now handled by letters of complaint, are to be regulated in future by " arbitration committees armed with laws and decrees ..".

The scope of arbitration has been expanded to include the private sector and joint ventures. A wave of labour disputes have been most concentrated in Guangdong where 1098 disputes (one eigth of the national total last year ) were dealt with by arbitration. There are worrisome signs that wage delays in private and township enterprise and the results of the contract system are "driving up labour disputes".

In one recent legal case enterprise dismissals were rejected because, "the decision was made without the endorsement of it's trade union and the employee's congress." (CD. 9.8.93 p4)
In Shenkou the Industrial District Union received 196 official complaints between 1983 and 1987 concerning breeches of state regulations regarding working hours, holidays, and human rights violations including five cases of management personnel hitting workers. (A.Chan pp81-2)

Although on statute the working week is 48 hrs with a maximum overtime of 48 hrs a month there are no regulations to penalise offending companies , many impose compulsory overtime In one reported case workers were being forced to work between 62 and 74 hrs a week.( ibid.p.81)

The Socialization of Welfare

Byrd and Tiddick in their study for the World Bank have argued that the 'socialization of welfare' is an essential precondition for greater enterprise autonomy, as otherwise the internal dynamics of 'family firms' will make greater spending on welfare consume the enterprise's profits. If losses are to mean the loss of company welfare then government fears to facilitate greater enterprise which might destabilize the internal factory hierarchy; which has been given responsibility for creating the new market based apparatus of efficiency. As arbiters of pauperization, the management would face revolt from the victims. (WB.op.cit. 1987 p41)

The need to safeguard social stability is cited as the reason why the reform of labour, personnel and wages need to 'coincide with social security system reform.' This has made the state press for redundant workers to be reassigned to alternative employment. "This is the best solution for the time being , but should not be considered a long-term solution . Since the trend is for the labour force to be subject to market forces" (BR. p16-17 vo1.35 no46.16.11.92)

Therefore the correct term to describe the status of many of these reassigned workers would be, people waiting for unemployment.

The State is now setting up an urban social security system and encouraging the development of urban labour markets, in expectation of accelerated action to close money-losirg state enterprises . The unemployment insurance system is due within two years and is to cover all urban employees who lose a job State firms are said to have a surplus labour force cf 20-30% in the collectively owned sector the same, their combined wages and benefits are estimated to exceed 60 billion yuan. (p102 Rice Aust.)

The director of the Labour ministry's Employment Department advocates universal urban unemployment insurance, (which presently covers only workers in state owned enterprises on permanent contracts 74 million of their 108 million employees) and monitoring and retraining of the unemployed. Fearing scroungers the director explained,
"If a job-loser feels complacent with the dole of (sic) unemployment insurance and reluctant to look for a job he or she will lose protection ". (CD.14.B.93.p.l)

The last six months have seen 1.4 million State and public sector job go whilst the, 'private sector including foreign invested firms increased their staff by more than 300,000 in the last six months.' ( CD.25.8.93.p3) The total number of urban jobs available shrank by 1.135 million in the first six months of 1993 and the numbers 'waiting for jobs' rose by 9.1% in the last year to reach 3.6 million.(CD.28.7.93.p3)

Of the urban unemployed some 650 000 receive between 70-80 yuan ($14 US) in unemployment benefits paid for by contributions from both government and corporations. This is said by officials of the ministry of labour to be enough to cover the minimum daily living expenses'. (CD., 1.9.93.p3) How this 'minimum' level was determined was unfortunately left unexplained.
Pension insurance covers 85 million urban workers and 17 million retirees and is available at contributions of 1-3 % of income. The scheme provides for employees who have paid at least five years contributions. A scheme aimed at providing socialised accident and death insurance is being experimented on 6.5 million subjects. The fund 'has relieved enterprises of the financial burden of the injured.'

Enterprises pay premiums related to danger and injury and death history. Last year saw rising deaths and serious injuries in industry, totalling 14,698 and 10,800 respectively. (note it easier to be killed than be injured i.e. most serious injuries result in death) (CD.20.7.93.p3) On the open market there is neither an iron wheel chair nor an iron coffin.

Institutionalizing inequalities

In China's state owned industries the power relations established by the party created a system in which the allocation of food and housing ,the distribution of goods and services , access to educational opportunities , and the structure of the labour force are important factors in considering stratification and inequality. (Wortzel Class in China p105)

Income inequalities until the early 1980s were based on a set of grades. Those for cadres on a one to thirty scale, in which wages at grade thirty might be as low as 23 yuan a month and the wage of the C.C.P. General Secretary at grade one would be 580 yuan. (Table 10 ibid.p109) In 1983 wage grades for workers were set on eight grades the lowest at around 30-40 yuan and the highest at about 110-120 yuan a month, with technical and educational staff able to earn up to three times the workers wage. (Table 8&9 ibid.p106-7)

The grade system has been adjusted to cater to the needs of entrepreneurial accumulation. Those managers and directors who support the reforms and are 'inside' the avenues to accumulation are being lavished with wealth. One legal example will suffice here, under the asset responsibility system directors' rewards are allowed to reach 1000 times the average worker's pay. (WB.1992.op.cit.p.11)

The Workers of Tiananmen and the birth of New Egalitarianism

The upheavals in China's cities in spring 1989 saw the creation of a workers movement with its own identity as a class , whilst the workers movement emerged at the tail end of the newsgripping student protests its emergence coincided with the introduction of martial law The decision to organise the Beijing Autonomous Worker's Federation (hereafter BWAF) and the decisive role it played in the repulsion of the first attempt to send in the army to occupy Beijing, (Walder AJCA Jan. 1992 p3) threatened to provide an organisational means of enacting a revolution.

The political identity of the BWAF is of particular importance when we consider the future of China's industrial reform it appears that large proportions of the urban population shared their general political ideology. They approached the bread and butter issues of the working class calling for worker's representation in industry and supervision by the workers of the party.
The BWAF saw the working class as 'the most advanced class having a 'special role' to 'correctly' lead the democratic patriotic movement. (ibid.p25)

The Federation's structure had "no leadership posts only a hierarchy of committees and methods of electing and recalling members." (ibid.p26)
"The leadership were not interested in wielding power and were very clear".. that.. "nobody had to be any more powerful than anyone else." (ibid.p26)

The anti-elitism of the workers extended their conception of political enemies to include opposition to Zhao ziyang and the reform factions of the party who they considered all to be part of one faction the 'harm the people faction'. (ibid.pp21-2)

They viewed the Deng years as years of the victimisation of the working class. The Beijing Workers' Self Governing Coalition issued scathing attacks on the economic competence of the Government
"you leaders have made a complete mess of it. You excuse yourselves by claiming that 'having no experience in building socialism , we are taking a billion people across the river with us by feeling for rocks step by step ... ' Well you have made quite a lot of people 'feel for rocks' for quite a few decades already. How much headway have you made ? What about those who followed you but did not find the rocks, did they not all drown? You officials are playing with people's lives The decade of reform has no direction and no goals. Where do you plan to lead the billion people? Is there one official who can answer that? You said that 'let it be white or black a cat that catches mice is a good cat.' Well, let us ask you something. What if both white and black cat try to catch the same mouse wouldn't there be a fight? This would definitely lead to confusion and conflict, causing deepening rifts. The outcome would be that the official cat gets fatter and fatter and the people's cat gets thinner and thinner. Is this the kind of cure you prescribe for the nation?" (Chinese Sociology and Anthroplogy fall 1990.p59)

The BWAF claimed to have costed the privileges for upper officials
" Based on Marx's Capital, the rate of exploitation of workers. We discovered that the 'servants of the people' swallow all the surplus value produced by the people's blood."
Transferring central powers to enterprise managers had resulted an increase in the power in the hands of local bureaucracies and Party cadres.

"The meddling that resulted took the form of corruption profiteering and nepotism, and added enormously to inflationary pressures." (Lichtenstein op.cit.p12)

In the view of the BWAF inflation was caused neither by a, "two tier price system or insufficient scope for free market activity. It is directly due to the fact that China is ruled by incompetent, corrupt and self serving dictators." (Walder op.cit.AJCA.p20)

The BWAF blamed inflation on the corrupt trading practices of officials who through monopolising power over supplies , demand extortionate prices to fill their own pockets. (ibid.p. 21) The BWAF demanded price stabilization, an end to forced sales of treasury bonds to workers, investigations of official incomes and privileges, an end to discrimination against women in hiring practices and the right to freely change jobs. (ibid.p17)

Their view of democracy proposed that the federation would supervise the Communist Party, and the legal representatives of state and collective enterprises, as well as protect the workers in other firms. One Union activist explained their conception of democracy in terms of worker control of factory regulations and administration 'rules should be decided upon by everybody'. Independent organization of the workers was to bring an end to one man rule in the factory and arbitrary decisions in work units. (ibid.p18)

The BWAF felt alienated 'not only from the political system but to a considerable extent also from the student leaders and intellectuals.' ( ibid.p15)

The student were criticised for the hierarchy of titles bestowed on their leaders privileges in allocating tent sizes, and for being like 'capitalists' for 'stumbling into chaos over money'. The union in contrast immediately counted any donations openly declared the sum and its intended use. (Activists quoted Walder ibid.p26)

Whilst allied with the student movement , as a result of being spurned by student activists they became openly critical of the students' methods of struggle , finding student attitudes a hindrance to the workers cause . Thus when the union advocated a general strike for May 28th the students rebuffed it demanding the union play a supportive rather than leading role in 'their' protest as a result that, "after May 28th we didn't advocate sympathy for the students any more." (Activist quoted in Walder ibid.p24)

Han Dongfang and Li Jinjin two prominent activists in the Beijing workers movement coauthored , "The Joint Declaration (which) was one of the most radical and uncompromising documents of the entire 1989 prodemocracy movement. It called for a special court to be set up to try Li Peng and other 'enemies of the people' within the leadership, and it urged all officials in the Chinese People's Liberation Army to turn their guns on their oppressors." It threatened that the workers would (use all peaceful means including strikes to achieve their goals and added..."With our blood we will reconstruct the walls of the Paris Commune." (Black And Monro Black Hands of Beijing.p369)

The political radicalism of the BWAF had widespread support amongst the Beijing's population it "was unprecedented and no doubt greatly alarmed officials who favoured a violent crackdown. The military operation of 4 June, launched despite the rapidly dwindling numbers of students and citizens on the square , was probably motivated in large part by these officials' mortal fears of a workers' insurgency." (Walder op.cit. AJCA.pp27-8) The workers federation was the subject of the most cruel repression, they were the first on square to be quelled all those executed were either workers, peasants or unemployed, and incarceration conditions are far worse for workers than for students. (J.Wilson op.cit.p274)

The rise of a workers movement in the Tiananmen protests may be seen as a precedent for future social conflict either in alliance with students and intellectuals or as an independent movement. BWAF had transformed the character of the student movement in a few weeks and after martial law was declared they were effectively challenging for state power.

"Throughout vast areas of the city the masses had taken over the governance of Beijing into their own hands. It was the kind of spontaneous urban revolution that Karl Marx had said would inaugurate a communist society. And it was precisely the kind of spontaneous mass movement that had always terrified the rulers of communist states." (Lee Feigon China Rising p213)
The ironic tone of Harvard University Fellow Jeanne Wilson is well placed when she writes "In a world in which Marxism is increasingly considered to have lost its relevance , the Chinese case may still lend credence to Marx's analysis of the role of the proletariat as a motive force in history." (J.Wilson op.cit.p279)<BR>


With the insecurity of employment promoted in the reform years has come a clearly visible system of legal and illegal wealth accumulation. The officially sanctioned rising inequity created feelings of unfairness and this not just amongst those who have lost out for prosperity is a relative concept. The methods for determining the present distribution of wealth and power have disenfranchised many who had gained by accommodating themselves to the old 'red' rules of play and aims to disenfranchise many more.

The constituency of reform opponents include "groups such as the poorly educated and unskilled in general, workers in state factories ( and particularly in unprofitable factories ), peasants with weak family labour power, bureaucrats and intellectuals facing retirement age members of the military threatened with demobilization, and in general those who have few entrepreneurial skills and no extensive networks of personal contacts that they can use to their advantage in the new environment " (Whyte Marxism and Capitalism in The PRC p48)
However it is not the remnants of disenfranchised 'reds' that were behind the rupture in industrial relations and the participation of the workers in the so called 'counter-revolutionary rebellion' of 1989. Rather the rising numbers of individuals who were raking in money in the private sector, increasing inequality between cadre and worker wage levels, managerial threats to employment security, and a sharp decline in the influence of the party at shop-floor level, all combined to shift the focus of antagonism in the factories away from the Party and activists and thereby to unify the workers against 'factory cadres as a group 'leading to ' a heightened awareness of their collective interests'. (Walder p482) The constituency for what I call the' New Egalitarianism' was in the making.

E-mail to the author is welcome

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