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Tuesday, May 28, 2024

Widening wage differentials in China. Is this Socialism? Is this a problem?

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Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

There is a familiar narrative about China. In 1949 China was the “Sick Man Of Asia”. Today, China is just a few years short of being the largest economy in the world. Since 1979 and the implementation of the Reform Policy China has been on the front foot. 500m+ people lifted out of real poverty. 140m Chinese tourists travelled overseas in 2019. The people of China “have never had it so good” as they have a choice that was never available to their parents, let alone their grandparents. Now the people can choose where to work, where to travel and which restaurant to eat at and which film to go and see. They can travel to holiday spots and there is a gaiety and celebration about the quality of their lives.

It does not mean that China lives with abundance or enjoys surpluses or that they do not face the daily problems of living in an increasingly consumerist society. Bureaucracy can be heavy handed. Lifts in high rise buildings may not work. Buses remain full to overcrowding and the roads are always plagued by heavy traffic. And day to day things can go wrong. So, let’s not get carried away with China’s undoubted achievements. Life maybe better but problems remain.

President Xi Jinping may have announced at the end of 2020 that extreme poverty has been beaten and no question that is an immense achievement for which the Party should be rightly praised but it is only “Extreme Poverty”. There is still poverty in China. Last year China was the only major economy to show positive economic growth of 2.3% not withstanding – Covid 19 not withstanding and by the end of 2021 it is anticipated that the growth will be around 6%+. It reflects well on governance, administration, planning, and the choice of growth strategies. It also reflects well on the people who are the daily generators of growth. But the problem with success is that it conceals mistakes. The celebration of achievement can turn heads, make people smug, lead to complacency and allow errors and mistakes to become embedded. Generally the Party remains aware of these kinds of problems and urges its people not to slow down but to seek greater progress, and lift even more people out of poverty.

So what are the problems – not the day to day issues that always surface but the bigger issues which, if left unaddressed, can fester and cause serious problems and into this category comes the issue of wage differentials. This is an economic issue but a political issue as well. So, first question – Why differentials? After all China is a socialist country led by a Communist Party that acknowledges the leading role of Marxism-Leninism. And does not a Communist Party aim for equality? And is not equality undermined by wage differentials which have the effect of dividing people according to income into the well-off and the not so well-off?  And does not that phenomenon, undermine the socialist base of the country and send a challenge to the heart of its political purpose?

So, is there a case for wage differentials? Is there a case for Billionaires? Is China creating a Them and Us society which stirs resentment and internal division and animosities. Is China constructing a society in the 21st Century which is at odds with the 19th Century goals of Karl Marx and Friedrich Engels?

A classless and completely equal society is a dream. It is something that exists in books but not in reality – not for the 21st Century at least. It is a long way off. The first task is to build a society that provides for its people and China is doing just that. The people are better off than they have ever been before. So far so good. People need to be fed and clothed and given the opportunity to enjoy a prosperity that has never been previously available. Now we start to ask questions about China at the end of the Cultural Revolution. Politics had been in command and chaos had reigned. Political purity did not put food in the stomach or shirts on the back. Slogans exalting the ideas of Marx or Mao may sound good at a political rally but they did not bring about a better life and in 1976 the Left Wing political experiment had run its course. Politics was discredited and the Party was in danger of losing its leading purpose of serving the people. The Party is nothing if the people struggle to eat and dress. Politics needed to be rescued. There had to be another way and Deng Xiaoping led the way.

Deng said “I don’t mind whether it is a black cat or a white cat that catches the mice”. What he meant was “I don’t mind whether it is socialism or capitalism that produces prosperity”. The Great Experiment Was On. The challenge had been laid down. The test is “What Works”. Leftism or Militant Socialism had had its chance. Now was the time to make way for something different which put the people first, and not politics first, and gave something tangible back to the people. Shoes not sandals. Cars not cycles. Modern living accommodation with hot and cold running water and central heating and food in the shops and a choice of clothes to wear and all-round better life style.

And that involved Decentralisation; greater freedom to the local areas to fashion their own future, flexible economic models; the opportunity to the enterprising to bring their commercial talents into play and own their own companies and employ their own labour and make profits and enjoy their profits. Capitalism and Socialism together but not rampant or free of rules or responsibilities. And here the Party had to be in control and not the market. So, wage differentials came into play, and billionaires must be allowed to be rewarded, but without being able to control the market or flaunt their wealth by conspicuous and indulgent behaviour. Capitalism was not free. There were fetters and restraints and the Regulator always has the final word as Jack Ma has discovered.

So is this the New Economic Policy of the USSR in 1922-24 – One Step Back and Two Steps Forward? Historians will pronounce on this in the future – for today the Party showed flexibility and common sense. The people had to see the benefits of the Party Leadership and the Communist commitment – growth and prosperity was the order of the day and remains the priority. Remember the two key words – Prosperity and Stability. The time will come in the future to address the differentials as the Party will not allow Capitalism to triumph over Socialism and the billionaires but that is for tomorrow not today – maybe nearer the centenary of the founding of the People’s Republic of China in 2049.

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