People's Democracy

CPI(M) CC Delegation’s Visit to People’s Republic of China – III

Transforming Socialism From Primary To An Advanced Stage

GROWTH POLE: A view of Tianjin city, a symbol of massive economic advances being made by modern China

Sitaram Yechury

FOLLOWING two days of intense discussions with the Communist Party of China (CPC) leadership in Beijing, the CPI(M) delegation proceeded to visit Tianjin. As noted earlier, accepting our request to visit an area that is developing, the delegation was taken to China’s northern province. Tianjin is crucially located, commanding influence throughout north China’s 12 provinces, major cities and autonomous regions. Tianjin historically has been the entry point of British and other European colonialists. The British landed at the Tianjin port and proceeded to colonise China alongwith other European powers. Tianjin is also closely associated with the life of Comrade Chou Enlai. The delegation visited a very well-preserved and interesting museum on the life and work of Chou Enlai which, in fact, constitutes a glorious chapter in the history of modern China.

A DEFINITE PLAN

The visit to Tianjin only confirmed that the CPC has embarked on the process of modernising social China on the basis of a definite plan, contrary to the deliberate disinformation campaign by liberalisation pundits in India that China has abandoned planning and relies exclusively on “market forces”. Readers will recall that the CPI(M) in its 14th Congress resolution on certain ideological issues had concluded that it is erroneous and unscientific to pose the issue as Plan vs Market. In all commodity producing societies, markets need to exist for an exchange of commodities. Market by definition needs to exist under socialism. However, unlike under capitalism where market forces alone determine economic decisions, under socialism, market indicators must strengthen/correct the plan process. Under socialism, a planned economy, the market needs to be subsumed by the plan process. 

Deng Xiaoping receives Namboodiripad, general secretary of the Communist Party of India (Marxist), in April 1987. Yechury is seen shaking hands with Xiaoping

In fact, way back in 1987, I had accompanied CPI(M)’s then general secretary, EMS Namboodiripad, to attend the 70th birth anniversary celebrations of the leader and architect of the Korean Revolution, Kim Il Sung. On our way back from Pyongyang, we stopped at Beijing for a few days at the invitation of the CPC. Deng Xiaoping and EMS Namboodiripad were old friends. The CPC re-established relations with the CPI(M) under Deng’s leadership in 1983 by inviting a delegation led by EMS Namboodiripad which signed the protocol with the CPC. During the course of discussions and a banquet, I remember, Deng unfolding his vision of the transformation of socialist China from its primary or primitive stage to an advanced socialist society. He told us that they began this process dedicating the decade of the 1980s for the development of the south. In the 1990s, the focus would be the development of the east with Shanghai and Pudong as its core. The first decade of the 21st century would be dedicated to develop the north, with Tianjin as its core. The next decade would be devoted for developing the west and in the decade after the concentration would be on the development of central China. After this, Deng informed that for two decades, China as a whole will develop to reach a modern socialist society and economy surpassing the levels of developed capitalism. Visiting Tianjin, we could actually see this process in action (see box).

STUPENDOUS ADVANCES

The Tianjin Binhai New Area consists of the Tianjin port, the Tianjin Economic and Technological Development Area (TEDA) and the Tianjin Free Trade Area (TFTA). Its GDP from a modest 11.2 billion yuan in 1993 soared to 160.8 billion yuan in 2005, i.e., an average of 20.6 per cent annual growth rate. The per capita GDP is an astonishing $14,200. The Foreign Direct Investment (FDI) reached $15.9 billion, foreign trade volume jumped from $500 million to $18.5 billion – a 36-fold increase. 152 of the Fortune 500 companies have already invested in this area with their production units. This development has already taken place and the target is to double the GDP of 2005 to reach 320 billion yuan by 2010, averaging an annual growth rate of 17 per cent. Such is the scale of the economic advances that the modern China is targeting and achieving.

During the course of our visit, we had the opportunity to see the port, the fourth largest in China and the seventh largest in the world. The production units that we visited also gave some insights about how the Chinese are dealing with FDI and also the many myths and disinformation that are spread in India concerning China. At the outset, it should be noted that there are no Special Economic Zones (SEZs) in China today where exist restrictions on movement of people or where labour laws and other laws of the land are not applicable. Twenty years ago, at the Special Economic Zone of Shenzen in the south, such restrictions were in place for a few years, but have ceased to exist since the decade of 1990s. The CPC tells us that they continuously learn from their experience and they have now concluded that such restrictions or sanctions are not necessary. Today, in the whole of China, there exist a total of 54 Economic Development Areas (EDAs). None of these are a “state within state” as propagated. Every single law operates in all the EDAs. 

Except for few, very few, all FDI in China is through joint ventures. We visited a Toyota motor factory that produces 220,000 cars per annum employing 12,000 people. Except for few technical and managerial staff, all the workers are Chinese. This is a 50:50 joint venture between Toyota and two Chinese companies. Secretary of the CPC branch and Chief of the trade union of this unit gave us a guided tour of the factory. All workers are members of the trade union and in every enterprise, unions and party branches exists. Similar was our experience at a very high-tech chemical factory that we visited which is again a 50:50 joint venture. 

QUESTION OF LAND

The bulk of the land on which this remarkable development is taking place was once a marshy swamp land. All land in China is government property. Even the peasants are given land on a contract for a specified period. So the question of acquiring land from the peasants simply does not arise. Further, China has less arable land than India and, hence, is extremely strict and cautious about transfer of such agricultural land. Lest it leads to a decline in food production.

In those rare cases where because of such industrial development, some peasants who were cultivating are now being denied, there is a complex scheme of providing them with alternative economic activity. In the first instance, such peasants are provided with a state built and furnished alternate housing which has to be made ready before the land is acquired. Further, every such person who was once dependent on farming is now provided with alternative employment. Such people are given the necessary training and the relevant skills by the state authorities at no cost. The Chinese, in fact, state that some of the former farmers are today in a better economic condition than other constituents of the society. Many have refused to work even though offered jobs, being more than content with leasing a part of the housing accommodation on rent to others and living off this income. We, in fact, had to ask the party chief whether they were not promoting laziness and inactivity as a result! 

EMPLOYMENT, WORK CONDITIONS & TAXATION

This, however, is not to say that there are no problems with conditions of employment. The migrant workers that came into such areas often have a wage structure that is much below that of the local inhabitants. However, every single worker has to be provided accommodation even if it means a dormitory accommodation to begin with. These necessarily have to be equipped to serve wholesome meals at affordable prices and after a period of time upon the ending of the contract if they are re-absorbed, then they have to be provided with proper housing. Those who are not re-employed will be trained by the local government at its expense and looked after, by paying a subsistence allowance, till they find alternate employment.

At all places we visited, all employment was under the contract system. The contract carries obligations on part of the employer as well as the employee. The employer has to abide by the law of the land, i.e., existing labour laws. The social security provisions are made by both the employer and the local government. In the Tianjin area, we, in fact, found a situation where, far from crowding unemployment, there is a growing demand for workers and people are being encouraged to come and settle here. Skills are being provided, through training centres, by the local government. 

Another area which is often compared wrongly in India is in the field of tax exemptions or concessions given to the FDI in China. During the initial years of reform, China, we were told, used to give a tax holiday for the first two years to any enterprise followed by a three-year period where 50 per cent of the tax was to be paid. This has now been reduced to one year of tax holiday and the following year of 50 per cent tax. From the third year onwards, all enterprises in China have to pay the full tax. Even in free trade areas, where there are no duties on imports or exports, a value added tax of 12 per cent has to be paid. In Tianjin, the financial revenue rose from 2.36 billion yuan in 1993 to 31.7 billion in 2005. Thus, the disinformation that China’s economic development is because there are no taxes on the FDI is obviously yet another malicious campaign.

Therefore, on all the major issues of dispute regarding SEZs in India – land acquisition; tax concessions; labour laws and strict adherence to the law of the land – the situation in China is far from the “truth” that the pundits of neo-liberalism in India would want us to believe.

Box item:

The speeding up of Tianjin Binhai New Area (TBNA) construction has been written into China's 11th Five Year Plan and is an important move in the overall development arrangement of the whole country. Therefore, facing a window of strategic opportunity extending to the next 20 years. TBNA is expected to become "the Third Growth Pole" for Chinese economy to powerhouse the economic development of Bohai Sea Rim as well as that of the whole North of China.

1) Entering 21st century, Chinese government incorporates the development of Tianjin Binhai New Area (TBNA) into the national overall strategic move aiming at the Chinese regional development and it will bring along the development of Bohai Sea Rim and go further to radiate and push forward the North and Northeast economies of China, thus making the third wave of formation of a growth pole designed to solve the imbalance of economic development between the south and north of China.

2) In 1990s, Chinese government chose to develop Pudong of Shanghai to fuel the fast development of Yangtze Delta, making the second wave of formation of a growth pole in Chinese economy. And China stepped into the economic and political prosperity.

3) In 1980s, Chinese government chose to develop Shenzhen to powerhouse the fast development and rising up of Pearl River Delta, making the first wave of formation of a growth pole in Chinese economy.