OF THE WEST
is this weak foundation more obvious than in the west of the country.
father has not been paid in three years,” said one Chongqing Commercial
Institute student from a town near Chengdu, the capital of Sichuan
Province. “He is now using his savings and is waiting for the wages
promised by his factory.”
father and most workers like him have no clue about the WTO. Throughout
western China state sector employees find themselves with cut-back
hours, low wages – if any at all – and little opportunity for other
employment. But they have cheap housing, cheap medical care and
a retirement package – all of which will disappear with WTO membership,
either by self-induced reductions in the benefits or by the efforts
of a foreign enterprise to make things more streamlined.
downtown Chongqing last May, hundreds of factory workers who hadn’t
been paid in months stopped traffic from then suburb of Sha Ping
Ba to the city center – one of the busiest routes in this
newly created Province of 32 million souls. Teachers in one of the
richer universities in the Province, Southwest Normal University,
have wages so low that they open up dumpling stands on the roadside
to supplement their income. In a previous article I mentioned Chongqing’s
Stickmen, which is an army of bamboo stick wielding peasants who
do any physical labor for a little cash.
stickmen are part of the 100 million “floaters” who come to the
cities looking for extra work. They join the 7 million unemployed
and the 40 million underemployed who are scouring the urban landscape
for cash. Imagine the fun everyone will have when the state owned
enterprises start going belly up and spewing forth barely educated
men and women into the labor market.
people speak reverently of going to the East to find jobs – leaving
the country is not within the realm of possibility. For students,
however, going abroad is a possibility, albeit a distant one. Most
students from the west try and head to Shanghai or Guangzhou to
find work: the students studying in the west who are from the East
will head back as soon as possible.
just isn’t any work in the west. Suining, a city between Chengdu
and Chongqing in Sichuan Province, is experiencing a mass exodus.
Young, old, male, female – all are headed to Chengdu or Chongqing
for work, many search in vain. Suining is like any of the thousands
of small towns in western China: rife with frustration and poverty,
scarce in jobs or opportunity.
"Great Strategy to Develop the West" was formally announced
in 1999, but it began when the central government turned Chonging
municipality into Chongqing Province in 1997. The new Province,
now the industrial center of the west, receives funds and mandates
from the central government, instead of Sichuan Provincial government.
The Great Strategy is supposed to bring peace, prosperity and gainful
employment to the people of the west.
do so, it plans to accomplish the following three things: 1) improve
the infrastructure by building roads, bridges, telephone lines,
sewer pipes, gas lines, railroad tracks etc. 2) Develop the high
tech industry by creating special zones and “high tech parks” were
computer-heads can get busy. 3) Create lots and lots of policy and
new regulations to “facilitate foreign investment.”
and Stickmen help with task number 1. They dati (Chongqingese
for “work your butt off") eight to twelve hours a day for about
25 yuan ($4) a day. The word “coolie” comes from these guys – ku
means suffer and li means power, kuli is used
to describe a menial worker. Peasants line up for these jobs and
consider themselves lucky to have one.
wages come in short bursts which means so does the construction.
Instead of waiting around for promised pay like the factory workers,
the peasants pick up stakes and look somewhere else. The highway
from downtown Chongqing to the northern suburbs has been under construction
for two years now – it might be finished next year, or it might
not. The new road from northern Chongqing into Sichuan, which looks
and feels as if it hasn’t been repaired since the Japanese bombed
the area during WWII, has been one year in the making. I make the
trip too often, and more often than not, picks and hammers and tractors
lie collecting yellow dust.
of task number 1 is the Small Town Program of the development strategy.
The program is designed to urbanize the countryside and bring the
underemployed and unemployed peasants and floaters into the industrial
sector i.e. onto an assembly line. But the Small Town program also
suffers from a lack of funds as well as “irrational planning” as
one graduate student put it.
want to draw in all the peasants, but they have no houses for them
to live in,” he said.
are very vague about the amount of money the government is putting
into the Strategy, perhaps because they are fervently hoping the
solicitations that appear in the China Daily every day for
foreign investment in construction projects will prove fruitful
– if they are, the government can continue with its plans to spend
$30 billion on preparation for holding the 2008 Olympics, while
foreigners foot the bill for the Strategy.
number 2 is well on the way. Both Chongqing and Chengdu have large
hi-tech bazaars and development zones that sell every electronic
gadget you can imagine as well as stacks of pirated music, software
and games. The Chongqing Hi-Tech Industry Development Zone covers
12 square kilometers and was established in 1991. More than 4000
enterprises have registered along with more than 300 foreign-funded
ones and they reached an income of 12.5 billion yuan in 1999. The
plan is to get 60 billion by 2010 and 120 billion by 2015. Net bars
dot the landscape and a large swath of the population owns a cell
phone. The cell phone bit is in part due to the exorbitant domestic
fees charged by China Telecom and in part due to the state-sanctioned
competition between the 136-, 1300-, 1302- and 1305- divisions of
China Mobile (the numbers are the first digits of a cell phone number),
which has lowered prices.
bars are full all night long, most of the day, even during lunchtime
and dinnertime, a meal routine which is adhered to quite rigidly
in China. Most (Chinese) westerners don’t have personal computers,
but they do have VCD machines and the latest foreign movies are
available at low prices (and low quality, due to the haphazard piracy)
in even the most dismal backwater town. So, Chinese outside of the
cities can access most electronic and Internet services, even if
they do have to wade through a road of mud to get to the rental
terms of policy and regulations, western China is truly starting
from scratch. Whereas the eastern cities have dealt with foreign
businessmen (in the modern sense) since the Opium War, the west
didn’t have foreign investment until the 1980s. Before policy could
be created, it had to be destroyed. Thousands of local regulations,
fees, taxes, commissions and tolls had to be swept away to make
the investment environment more hospitable. The most current set
of regulations, developed in 1995, has undergone so many modifications
and “improvements” that it is an ongoing process. Every year a new
taxation policy is developed for foreign firms and new privileges
are created with the growth of the foreign community.
the words of bureaucrat Chen Huo Lin, involved in the drafting of
policy towards foreigners and foreign businesses due to his English
skills: “Every day a piece of policy leaves our office.”
new regulations deal mostly with taxation of foreign-funded and
joint venture enterprises and the extent to which foreigners can
own an enterprise. But rules about how to go about investing in
petroleum exploration and exploitation, whom to apply to for permission
to invest, what the Mineral Resources Law of the People’s Republic
of China entails and how to go about following it all have to be
created and made clear to the bewildered investor. China’s ability
to regulate foreign investment is critical to reining in the short
term costs of WTO membership and to attaining power in the WTO.
AROUND A BAD FOUNDATION
the west’s lack of “a good foundation,” everyone from the student
to the businessman to the bureaucrat sees WTO membership as a necessity
and a boon. Although fully aware of the massive unemployment that
will come as a result, the benefits of much needed structural reforms,
better allocation of resources and larger market access are considered
worth the price.
government knows about the unemployment problem and they will solve
it in a step by step manner,” says Tong Jiang Hua, an Applied Economics
major at Southwest Agricultural University.
Huo Lin echoes those sentiments, as does Wei Xie, a Chongqing businessman.
of the government’s strategy to solve the problem is to commit to
whatever the WTO demands, then use domestic regulations to swerve
around the commitments and keep a tight rein on foreign enterprises.
Applications and registrations are two favorite ways to keep the
government involved in the economy as much as possible. The Telecommunications
Industry, for example, is scheduled to open 5-6 years after entry,
but foreign enterprises must register and apply at the Ministry
of Information, notorious for its tight grip on Internet startups
way is to “give preference to overseas Chinese and our compatriots
in Taiwan and Hong Kong,” as a report by the New Chinese Academy
of Social Sciences put it. This is in violation of the commitment
to purchase and sell goods according to commercial considerations,
but China views a Hong Kong takeover of a Chinese company in a much
more positive light than a takeover by a US company.
are also certain clauses which can be used to protect domestic industries
such as WTO’s "Escape Clause" and the "Infant Industry
Protection Principle." The Chinese version of the commitments
to be met and the WTO version differ in that the Chinese government
sees leeway for the protection of domestic industries and describes
entry as a slow step by step process, whereas the WTO and the US
see it as a complete and thorough reform of the industry with a
transition period of 5-7 years.
Chinese government is justified in wanting to hold on to the economy
as much as possible.
countries became as powerful as they are by relying on the power
of the government to force open markets and keep tariff walls high
during the previous colonial and imperialist years. The US “safeguard
measures” in place against “dumping” by the Chinese textile industry
are a current example.
that China’s membership application is held up and Congress is set
to debate trade issues again, the pressure is on China to bow to
WTO demands and remove all government protection from domestic industries.
When China finally does become a member, the WTO and the US will
be keeping a sharp eye on the government to make sure all demands
are met. If the US dominated WTO is too strict with China in the
face of a domestic crisis, Sino-US relations could get ugly real
a crisis could never happen in China,” said Wen Dou Lin, a journalist
for the Youth Daily. “The government would never let it happen.”
is exactly what the club of drooling foreign businessmen is afraid
520 S. Murphy Avenue, #202
Sunnyvale, CA 94086
Contribute Via our Secure Server
Credit Card Donation Form
Contributions are now Tax-Deductible