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Economic Focus
China at a cross-roads
IXTY WORKERS DIED in
S textile factory fire at
Fuzhou, China in early December. The factory was a joint venture' with Taiwanese capital. This terrible tragedy follows the death of 81 people killed in Shenzhen in a similar fire. The factory's doors had been locked to 'stop theft and unauthorised breaks from work.
Chinese workers are experiencing capitalism in the raw in the special economic zones established by the government. In parts of the coastal provinces of Guangdong, Fujian and other selected areas, foreign investors take advantage of cheap labour to amass profit - at a cost. In Guangdong there was a 60% rise in deaths from industrial accidents in 1991.
There is a huge migration from
growth has been 46% per year.
Foreign direct investment into
China has been rising. In 1992
it was $11 billion. Last year it
was an estimated $18 billion and
$83 billion has been pledged in
new contracts.
Cheap labour is the attraction.
The share of labour intensive
manufactures in total Chinese
exports has risen from 36% in
1975 to 74% in 1990. Capital in-
tensive manufactures have fallen
from 50% to 19% in the same
period. Twenty-five per cent of
exports go to the US and 19% to
the European Union. China is
now the thirteenth largest ex-
porter in the world.
The gross value of industrial
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China
the th largest exporter
in the world.
is now irteenth
Shenzhen in Guangdong province has experienced meteoric growth. In 1979 it had a population of 320,000, now it is 2.2 million. Its average production
12 • Economic Focus
By Pete
Watson
the rural areas.
output from the state (excluding collective, individual and other forms of production) has declined from 60% in 1985 to less than 50% in 1992. But the march is anything but 'orderly.
Loosening the ties of the plan of production has lit the fires of inflation. By the second quarter of 1993, it was running at over 20% in the cities and rising. The government launched an austerity programme in response, raising interest rates and closing up to 1,000 new development zones. Yet inflation will still dog the economy in 1994.
Change is also hitting the country. The government is lifting state controls on agricultural prices and allowed the sale of surpluses on the market. Peasants can lease their own land under contract. One effect of this is the move towards producing profitable crops, leading to shortages in essentials. China has recently suffered a shortage of cotton.
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Capitalism in the raw.
•Nine hundred million people, three quarters of China's population, live in rural areas: 333 million work on the land out of 690 million people of working age. One study estimates that 130 million rural people cannot be sustained on the land. Attracted by the city, a huge migration is currently taking place. The government recently forced thousands camping around Beijing railway station to return home.
The Chinese revolution of 1949 was an heroic event that freed millions from capitalism. It never, however, brought in a genuine democratic socialist state. A dictatorship was erected upon a nationalised planned economy. Nevertheless big improvements in living standards were made by Chinese workers and peasants.
The reforms won by the revolution, jobs for life and a decent welfare system, present a social barrier confronting the pro-marketeers. One tractor factory manager complained in the Chinese Economic Daily that there were 40,000 workers at the plant but they also had to sustain 100,000 relatives and 20,000 retired people. We have to take care of everything - how they eat, drink and sleep', he moaned.
Plans are being laid to separate welfare from the workplace. This will be an attempt to also separate workers from a job and welfare for life. Battles can be
expected as the state seeks to destroy this iron rice bowl.
Foreign capital is entering countries such as China and Malaysia at an increasing rate. But this is happening at the expense of industry at home. The movement of investment towards cheaper labour is 'hollowing out' industrial capacity in Japan, South Korea and elsewhere. This may well lead to greater prospects for class conflict in these countries. D
tion from OPEC. Splits and divisions in this organisation are likely.
Even
bia
feeling the financial pinch.
Saudi
Arabia is now
OPEC seeks to control production to maximise revenue for its members. However its membership, of less developed countries, can never compete with the main imperialist powers nor can it buck the market of capitalism. Every annualised fall of one dollar in the oil price leads to a loss of $5 billion in OPEC members revenue.
Even Saudi Arabia is now feeling the financial pinch. Countries with a poor domestic economy will be hit hard. Iran and Nigeria in particular may face further social unrest because of falling oil prices. J
ver a barrel
AST YEAR SAW a 20%
drop in oil prices. Currently
oil is trading at only around $14 a barrel. Some believe that the price has reached rock bottom and is stabilising. 1wo factors may however lead to a further collapse of prices down to below $10 a barrel.
The first is the continuing stagnation of world production. Oil fuels industry: economic recession therefore reduces the demand for oil.
Greater amounts of oil are also now coming onto the world market.
Producers outside the Organisation of Petroleum Exporting Countries (OPEC) have developed new output from the North Sea. The former Soviet Union and China are also seen as cheap sources.
During 1994 Irag may be able to start exporting again. It has the second largest oil reserves in the world and will demand a large quota of produc-
Iran: social unrest treate-s i a
==05
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