Out of Mao's Shadow

by Philip P. Pan

  of coal produced, four to five miners were killed. By comparison, in Russia and India the fatality rate was less than one death per million tons of coal produced, and in the United States and Britain, it was less than 0.05.

  When a coal miner dies in an accident in China, the government requires the owners of the mine to pay compensation to his family. At the time I visited Anyuan, the amount ranged from $1,200 to $6,400, the equivalent of a few years of a miner’s salary. But coal was the lifeline of the soaring economy, the cheapest and most readily accessible source of energy. It fueled the expansion of industry, powered the mills and the factories, kept the lights and the air-conditioning on in the cities. The ever-rising demand for coal made the officials and businessmen who controlled the mines wealthy, so they pushed output beyond capacity and their miners beyond fatigue. Compared with the flow of profits, the official price placed on the life of a coal miner was a pittance, so it often made more financial sense for a mine boss to let workers die than to invest in safety measures and equipment.

  THE COMMUNIST PARTY once condemned such ruthless economic logic as the province of coldhearted capitalists, but now it presided over an economic system in which the abuse of workers was common—and it depended on that system to stay in power. Before Mao’s death, the party justified its rule by presenting itself as the “vanguard of the proletariat” leading the nation to a socialist utopia. But the catastrophes of Mao’s rule shattered that illusion, and Deng charted a radical new course to rescue the party, gambling that people would overlook the failure of communism as an ideology if Communists could make them richer. He hoped to unleash the power of free markets and private enterprise while preserving the party’s monopoly on power, to grant the people economic freedoms while continuing to restrict their political rights. He called it “socialism with Chinese characteristics,” but it was really just authoritarian capitalism—and it worked. By the time Deng died in 1997, he had succeeded in remaking China, lifting two hundred million people out of poverty and leaving his nation more prosperous and more stable than it had been in over a century. But in the process, the party adopted a form of capitalism that could be as exploitative as anything Marx—or Mao—ever envisioned. Market forces generated wealth and prosperity, but unrestrained by democratic institutions, they also produced grim work conditions. Barred from setting up trade unions or organizing strikes, coal miners and other workers had little leverage against bosses with access to the world’s largest labor pool. Without a free press or independent courts, workers had nowhere to take complaints against employers who refused to pay them or exposed them to health hazards. Without elections, they had no way to remove corrupt officials who colluded with businesses instead of enforcing labor regulations.

  No one benefited more from the shift to capitalism than party officials and those with connections to them. The party’s betrayal of its founding ideology, the logic-defying contortions that the propagandists used to explain the reversal, the blunt calculus that holding on to power was an end that justified any means—it all bred a cynicism in the party ranks, and access to the riches of the booming economy quickly warped the party-state. As official corruption rose to obscene and unprecedented levels, the party apparatus came to resemble an organized crime network, with its own fiefdoms, factional rivalries, and unwritten rules governing the distribution of spoils. The idealism that once motivated many party officials, however misplaced and misguided, was gone. The party grew addicted to fast economic growth, because it enriched its members and their friends and kept them loyal, but also because it was necessary to sustain the authoritarian system. After the disasters of Mao’s reign and the Tiananmen massacre the leadership could point only to their ability to deliver prosperity to placate the public and keep demands for political change at bay. A slowdown could threaten everything.

  But maintaining fast growth carried political risks as well. It would require dismantling the bloated state economy—the legacy of decades of irrational central planning—and that would mean shutting down thousands of factories and laying off tens of millions of workers. The state sector employed more than 110 million people in 1995, or nearly two-thirds of the urban workforce, yet it accounted for barely a third of the nation’s industrial output. The banks were drowning in bad loans to state firms, loans that would never be repaid but that the banks kept approving because party officials were afraid to let factories go under. It was a precarious moment for the leadership. The privatization of state industry had not proceeded smoothly in Eastern Europe and Russia after the collapse of the Soviet Union, and it promised to be even more difficult in China, where the party still paid lip service to Marxist rhetoric about state ownership of the means of production. But doing nothing could jeopardize growth, so the order went down to get rid of money-losing state firms or find a way to make them profitable. Only the largest enterprises in strategic industries would remain in state hands.

  Party leaders were careful never to use the word “privatization” to describe what they were doing. After all, the party had long maintained that workers were “masters of the enterprise,” that the factories belonged to them. So how could they be privatized? And who would get the proceeds? Better to avoid such questions, the leadership decided, and just say the factories were undergoing “reform” or “restructuring.”

  There was no shock therapy, no attempt to force a painful set of reforms through before entrenched interests could stop it. Party leaders moved slowly, hoping to give the flourishing private sector time to expand and absorb the workers losing their jobs. In the late 1990s and into the new century, the government was laying off five million to six million workers every year. By 2002, some forty million jobs had been eliminated, representing more than one out of every three positions in the state sector. Almost all the workers who lost their jobs were unprepared for the new world they faced. Many had never had to look for work before. The state had always assigned them jobs. Their “work units” had always provided housing, health care, and schools for their children, and in exchange for their service on behalf of socialism, they had been promised job security and retirement pensions. Now, suddenly, they were left to fend for themselves.

  Party officials meanwhile were more interested in profiting from the process than in helping ordinary workers. Across the country, managers conspired with officials to force factories into bankruptcy and pick up state assets at fire-sale prices. Workers stopped receiving wages and retirees stopped receiving pension payments, sometimes for months or years at a time, as managers embezzled company funds.

  It was a volatile mix—mass layoffs and rampant corruption—and it triggered a wave of labor unrest unseen in China since the Communists themselves were fomenting a revolution. In the winter of 2001, I sat with two thousand workers occupying a textile mill in Dafeng, about 150 miles north of Shanghai, because corrupt officials had emptied their pension funds, stolen their factory, and slashed their salaries. Three nights in a row, police tried to expel them, dragging women out by the hair, jabbing others with electric batons. When I visited on the fourth night, management cut off the heat, and as the temperature neared freezing, the workers huddled together and wrapped themselves in thick blankets. “We know this is dangerous,” one woman told me. “But it’s too late to be scared now.” The scene was repeated in cities and towns across the country as millions of desperate workers risked arrest by staging protests and organizing strikes. The number of “mass incidents” recorded annually by the Ministry of Public Security climbed fourfold in the second half of the 1990s, and by 2003 the security forces were trying to contain an average of nearly 160 demonstrations a day. Several took place in Anyuan. Not long after the dedication of the Mao statue, thousands of retired miners blocked traffic around a government building. Another group climbed to the top of a building and threatened to commit suicide.

  The party had studied how the Solidarity labor movement in Poland contributed to the fall of the Soviet Union, and its own history was a reminder o
f the revolutionary potential of worker frustration. So the leadership ordered officials to take these protests seriously and be vigilant against the emergence of any independent labor group. Long ago, Mao and his comrades had demonstrated that the Communists could organize a labor movement. Now, his successors were trying to prove they could crush one.

  THE LABOR UNREST reached its climax as a political threat in the spring of 2002. The setting was Liaoyang, an old industrial city in Liaoning Province on the plains to the northeast of Beijing, in the southern part of what was once known as Manchuria. This was China’s industrial heartland, an area rich in oil and coal, located near the Korean border with ice-free access to the Yellow Sea. Russian and Japanese occupation at the beginning of the last century resulted in the early development of heavy industry in the province, and after the Communist revolution, state planners made the region the most industrialized and urbanized in the country. In the late 1950s, factories in Liaoning produced more than two-thirds of the nation’s iron and more than half of all its steel, and cities like Liaoyang—home to a dozen military manufacturers and a renowned chemical plant—took pride in their prime position in the national economy. But if the stretch of northeastern China from the Great Wall to the Siberian border was once an economic showcase, the region is now the country’s rust belt, a place left behind by the boom.

  With the advent of capitalism, the state factories that dominated the area were exposed as inefficient money-losers, and as the party pressed ahead with market reforms, the local economy faltered. Unemployment rose to alarming levels, with as much as 30 to 60 percent of all state workers in the rust-belt cities either laid off and unable to find jobs or else clinging to positions in factories that could no longer pay them. The situation in Liaoyang was as bleak as in any city. A string of state enterprises went bankrupt; others teetered on the brink of failure. Miles of empty brick factory buildings lined the streets, the wind whistling through their broken windowpanes. In front of crumbling housing projects, on the sides of dusty roads, clusters of the unemployed gathered in informal labor markets, holding in their hands or hanging on their necks simple handwritten placards advertising their skills: welding, electrical repair, carpentry, cooking, sewing, and so on. They were members of one of the oldest working-class communities in the nation, men and women who had been hailed as proletarians, persuaded of “the superiority of socialism,” and promised lifetime job tenure and benefits. Now, just to feed their children and support their aging parents, they were begging for work.

  Their frustration erupted on a cold Monday morning in March while the party’s national legislature was in session in Beijing. City leaders woke to urgent reports describing thousands of workers massing outside the Liaoyang Ferroalloy Factory, or Liaotie, a large iron alloy producer that had recently been declared bankrupt. As the demonstrators marched up Democracy Road, one of the city’s main thoroughfares, thousands of other workers from failing textile, chemical, piston, instruments, leather, and precision tool plants joined them. By the time the crowd reached their first destination, the municipal courthouse, there were as many as thirty thousand protesters. They called for the city’s chief judge and chief prosecutor to come out and explain what was being done to fight corruption, and when there was no response they moved down the street to the city’s legislature and demanded the resignation of its chairman, one of the most powerful party officials in Liaoyang. By early afternoon the workers were converging in front of city hall. The Liaotie contingent carried white sheets that had been sewn together and hand-painted with slogans in black ink. “We want food! We want work! We don’t want bankruptcy!” one declared. “The army of industrial workers must eat!” said another. When the workers carrying the banners arrived at city hall, the crowd let out a loud cheer. Outside the front gate, the protesters asked for a meeting with the mayor or the city’s party chief, but the government sent word that only a few low-level officials would see them. The workers refused the offer and instead announced that the protests would continue the next day.

  At first glance, party leaders in Beijing might have dismissed the demonstration in Liaoyang as just a routine outbreak of labor unrest, indistinguishable from any of the hundreds of protests nationwide that local officials managed to contain every week. But what happened in Liaoyang on March 11 should have raised alarm bells for several reasons. There was the explicit demand for the resignation of the chairman of the local legislature, whom the protesters accused of corruption, whereas most labor demonstrations focused on economic grievances. There was the fact that workers from at least seven different factories participated in the action, a significant departure from the pattern of single-factory protests that the party was accustomed to handling. And finally, there was a fateful miscalculation by the security services. Worried that the workers were planning to block the trains, the authorities in Liaoyang had deployed police to the railways instead of along the protest route or around city hall. The minimal police presence emboldened the workers the next morning, when they again turned out in large numbers.

  There was little doubt the Liaotie workers had the party’s attention the second day. When they arrived downtown, they found the government buildings surrounded by riot police, and as they rallied outside city hall again, they received word that a delegation of senior city officials was willing to meet and negotiate with their representatives. For more than an hour the workers debated how to proceed. Some were wary. If they went inside, they would be identifying themselves to the authorities as organizers of the largest labor demonstrations that the city had ever seen—and putting themselves at risk of arrest. But others argued that the time for caution had passed. They had gone without pay for as long as two years and suffered drastic cuts in benefits. They had watched officials steal from their factory and force it into bankruptcy. They had complained to the government and their complaints had been ignored. Now they had discovered they were not alone. Workers from across the city were standing in solidarity with them. If they were ever going to demand change, this was the time to do it. And so, from the cheering crowd assembled in the streets, a dozen men and women emerged, made their way past the cordon of riot police, and disappeared into city hall.

  Among the first to step forward was Xiao Yunliang, a tough-talking loading bay worker at Liaotie who played a leading role in organizing the protests. “At the time, we weren’t afraid,” he recalled years later, after he was arrested and sent to prison. “Of course, we knew we were taking a risk, but we weren’t afraid. Rather, we were excited, moved by the vast ranks of workers, by this feeling that we couldn’t be stopped.”

  HE WAS FIFTY-FIVE at the time of the protests, rough-hewn with graying hair, and he had the solid yet weary look of a man who had spent his life doing manual labor. Xiao was neither the most educated nor the most eloquent of the worker leaders—he had never finished elementary school—but he was the kind of person who held a grudge, and his grievances against the party had been building for a long time. As a child growing up in the countryside outside Liaoyang, he suffered through the famine of the Great Leap Forward, eating leaves and grass to survive. As a young man he enlisted in the military and became a party member, but in the Cultural Revolution the state sent him to work at Liaotie. There he found managers more interested in political struggle than iron alloys, and when he questioned their priorities, they put him in a holding cell at the factory for seven months. Thirteen years later, when the prodemocracy demonstrations erupted in Tiananmen Square, Xiao followed the events in Beijing closely and hoped for a change. After the massacre, he quietly cursed the party.

  These feelings of political discontent hardened into more rebellious views as factories in Liaoyang, including Liaotie, began to fail and lay off workers in the 1990s. Critical to the evolution in Xiao’s thinking was his friendship with a former steelworker named Yao Fuxin, who lived down the street. Yao was a heavyset man in his late forties, with a round, pudgy face and piercing eyes, and Xiao often saw him walking in the neig
hborhood with a shortwave radio to his ear, trying to get better reception of foreign news broadcasts such as the Voice of America. Yao’s wife had worked at Liaotie until losing her job in the layoffs, and the couple lived in a room behind a tiny convenience store that they owned. In the evenings after work, Xiao would visit them, and they would sit in the store and pick over the problems at Liaotie and other state factories, sometimes talking late into the night. Yao was no intellectual—when the party disbanded the Red Guards, he was among the millions of teenagers sent to the countryside instead of finishing high school or going to college—but he was a clear thinker, and Xiao usually agreed with what he had to say. While other workers grumbled about the transition to capitalism, Yao blamed their troubles on the political system. There was nothing wrong with market reform itself, he argued, but in a one-party state, those with power enjoyed unfair advantages in the economy while ordinary people were more vulnerable to abuse. In a one-party state, there were no checks against the power of government officials, no channels for the public to curb their excesses. In a multiparty system, he said, officials would never get away with what they were doing to the factories in Liaoyang.

  In the late 1980s, as the state-owned steel-rolling mill where he worked was faltering, Yao had tried to strike out on his own in the free market. He borrowed money from friends, bought a small truck, and for a while he made a decent income on the side by renting out his services hauling goods around the city. But he and other independent drivers soon found themselves squeezed by local officials who were more interested in collecting taxes and fees than encouraging entrepreneurial activity that threatened the state transport firms they had relationships with. Frustrated, Yao responded by organizing hundreds of truck drivers to converge on city hall in their vehicles and appeal for relief. The government rebuffed them and punished Yao by taking away his job at the steel mill. After his wife lost her job too in 1993, the couple used their savings to start the convenience store.