China: “China Copes With Globalization” report

Reforms "worse than shock therapy"

According to some researchers in China, the effects of the ruling "communist" party’s reforms have in some cases been worse than the so-called "shock therapy" imposed by the IMF and World Bank on Eastern Europe and the former Soviet Union in the 1990s.

This claim – backed up by powerful documentary research – was made by author and scholar Dale Wen at a packed public meeting in Hong Kong last night.

"China’s poverty reduction claims are highly misleading," explained Dale Wen, at the launch of her new report China Copes With Globalization. "During the pre-reform era (i.e. the period of Mao’s bureaucratised top-down planned economy) health care, education and other social services were not included in GDP figures. So, yes, today people have more money but never before have so many had no access to healthcare and schooling."

Poverty reduction: a myth?

The implications of this are enormous, given that the global poverty reduction claims of imperialist agencies such as the World Bank and WTO are largely based on the alleged improvements made in China in the last two decades. Should the Chinese statistics be called into question, then the progress in reducing poverty trumpeted by these agencies could be exposed as wild exaggeration, if not complete fabrication.

To back up her claims, the author has compiled a mountain of official statistics. For example, during the 1970s, 70 percent of children in rural areas (where two-thirds of the population live) finished high school. By the end of the 1990s, the figure had slumped to just ten percent. Rural education is in a state of collapse as a once-free service is charged for at such exorbitant rates that it has been put out of the reach of many peasant families. Rural teenagers are forced by the regression of the rural economy into the industrial slave army of the cities.

As is well known, these migrant workers work a seven-day week and twelve hour day, for appallingly low wages. "There are even quotas for toilet visits: twenty visits allowed per month, a maximum of 100 minutes per month, or the worker is fined," she explained.

State industries taxed to death

Foreign corporations enjoy huge privileges inside China, through tax-breaks and a host of other incentives. According to Wen, this means the actual tax rate is two to three times higher for China’s state-owned enterprises (SOEs), than for privately-owned or foreign-owned enterprises. In one case she cited, an SOE was being taxed at the rate of 86% of its operating surplus. "How would Microsoft perform if it was taxed at such a rate?" she exclaimed. These arguments demolish the myth, expounded by some ’left’ supporters of the Chinese ’model’, that China’s state sector exerts a tight control over foreign and private capital.  

Perhaps the most shocking feature of capitalist restoration in China is the effect on the health service. In 1978, the World Health Organisation in its report Health for Everybody held China’s health service up as a model for the rest of the world. But the so-called reform era has seen a shift from one of the best healthcare systems to one of the worst (fourth from the bottom in a comparison of 191 countries in the WHO’s 2005 report).

"China has become a leader in healthcare privatisation," Wen told the meeting. For example, average life expectancy is now 78 years – approaching the level of developed countries – but among the 800 million-strong peasantry, the figure is 66 years – twelve years lower! This is lower than the national average 30 years ago.

Different model

Wen presents two main explanations as to how this colossal shift of wealth and power from the poor to the rich has been achieved in China. The first, she says, is the social capital built up by the CCP regime in the pre-reform era, when China had a "strong egalitarian policy". The second is that the shift has been carried out in disguise – under the misleading title "socialism with Chinese characteristics" – which, she argues, very few people realised would end up in the neo-liberalism of today. "This was probably not Deng Xiaoping’s intention”.

“Before 1992, a different model was in operation – that of South Korea and the Asian Tigers," she explains. The Chinese government was in control of foreign capital and the private sector was regulated. But this has changed, she points out, since 1992 and the turn to radical ’reform’. According to some of Beijing’s ’new left’ intellectuals, aspects of the post-1992 ’reform’ (a euphemism for capitalist counter-revolution) process have been "more radical even than shock therapy".

Six million prostitutes

The effects of the return to capitalism have been most severely felt by women. The break-up of Mao’s rural communes resulted in men obtaining the contracts for farm land resulting, in Wen’s words, to the "restoration of the patriarchal system".

"This was a big setback for women. It’s no accident that young women are the first to leave the village, there’s no future for them. Even if there wasn’t equal pay in practice [in the Mao era] rather than improving, it has moved in the opposite direction since then. There are six million prostitutes in China, according to government statistics."

Women workers were the most severely affected by capitalist downsizing of the state sector. Twice as many women have lost their jobs than men. In total, employment in the SOEs declined from 110 million in 1995, to 66 million in 2002.


As a keen follower of developments in China, I must confess that Dale Wen’s half-hour presentation left me in a state of amazement. Her 48-page report, available from the International Forum on Globalization (IFG), is a must for anyone wanting to understand what is really happening in China. The author’s father was one of China’s pioneer rocket scientists, – a fact which underlines the political ferment in Chinese society today, even among an important layer of intellectuals. That is not to say that the report offers any clear answers on where to go from here. The author speaks about the need for a "new model" without further elaborating. But for those fighting for democratic rights and independent unions in China, and fighting for socialism worldwide, her report is a devastating weapon.

To order Dale Wen’s report "China Copes with Globalization" go to

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