The following article appears in Proletarian Revolution No. 74 (Spring 2005).


Enter the Dragon: China’s New Proletariat

This article was written by a reader of Proletarian Revolution in China. In detailing the superexploitation of China’s peasant/proletariat, it confirms our analysis that “socialist” China has always been a country ruled by an oppressive statified capitalist class. (See our articles in PR 53 and PR 70.) China’s recent drive to industrialize as described here further confirms an old Marxist precept: the capitalists are driven by the laws of their own system to create, expand and empower their own gravedigger, the proletariat.

There is a specter haunting China, the specter of the mingong – the migrant peasant worker. In only the last 15 years, hundreds of millions of peasants freed from the land have streamed into the major urban centers and transformed the landscape of the entire east coast. In the largest construction boom in recorded history, where cranes droop like flocks of perched storks in all directions across the skylines of Shanghai, Beijing, Guangzhou and dozens of new supercities, a queer specter, half-peasant and half-worker, ekes out an existence in the pre-fab nooks and crannies within the nether regions of the towering forest of skyscrapers and megamalls. It toils from dawn to dusk, does not speak the local languages yet moves mysteriously in the night. It is China’s growing, young proletarian dragon. And let the capitalists be forewarned: when it learns to stand, it is going to shake the world.

In the current historical period, an incredible convergence of the interests of the world’s crisis-ridden capitalist classes of the West and those of the Beijing Stalinists has led to an unprecedented exploitation of resources and human labor in China. Growth in China, with its expected double or triple-digit returns, is the current motor of the world economy. Much of the liquidity that abounded with the central banks’ cutting of interest rates throughout the world has made its way to China, lately in particular to the Yangtze River Delta around Shanghai. The flood of foreign investment and colossal infrastructure spending has spurred growth rates of over 9 percent a year in China and given new life to the sluggish economies of the West.

This turn of events would have seemed unimaginable but 10 or 20 years ago. China was considered to be one of the most backward and inward-looking nations on the planet. But it was precisely because of its backwardness and decades of Stalinist autarky that it was to become the new key link in the imperialist chain: the Chinese Stalinists, with the support of imperialist capital infusion, hoped to stave off a terminal crisis in their bankrupt economy with a capitalist growth bonanza, while the Western multinationals hoped to prop up their dwindling rates of profit with supercheap Chinese labor. A tacit deal was made and the Chinese “miracle” gave them a collective – yet temporary – sigh of relief. China’s reality not only verifies the Trotskyist understanding of its economy as statified capitalism; it also demonstrates the impossibility of ever considering it to be a socialist or workers’ state.

While a few million Chinese new rich flaunt BMW’s and Louis Vuitton handbags in a form of conspicuous consumption unimaginable in the West, hundreds of millions of workers and peasants labor around the clock for the equivalent of U.S. $2 a day. The yawning gap between the urban, eastern metropolises and the impoverished countryside, the dwelling place of some 800 million people, has stretched the limit. In the last few months alone, worker and peasant uprisings from Sichuan to Henan to Chongqing, not to mention strategic Guangdong province, have forced the Chinese Communist Party (CCP) to issue special directives to its organizational committees far and wide to maintain the rule of the CCP. And above all, it is the mingong who is set to play a strategic role in the coming storm because of its size, social power and objective interests.

“One Country, Two Systems”: China’s Hukou Caste System 1958-80

It is impossible to develop an analysis of this new proletariat or lay out a program without an understanding of China’s residence system. Known by its Chinese name, hukou, this “household registration” system was officially adopted in 1958 to stem the growing tide of peasant migration into the cities. Previous attempts at dissuasion formulated in a series of laws had failed, so “registration” was transferred to the Public Security Bureau.

All citizens were assigned a hukou according to their place of residence, and that hukou essentially tied them to a definite administrative region. Since distribution of basic necessities like food and clothing was strictly rationed through the (urban) work unit or agricultural collective, population mobility was extremely limited. Those possessing an urban hukou received a monthly salary and the social benefits of their work unit, including housing, education, medical care, etc., and a subsidized ration coupon system was adopted to offset the costs of industrialization.

The rural or “agricultural” hukou, on the other hand, simply served to confine its possessor to a life of back-breaking labor without enjoying the same benefits as the urban dwellers. Throughout the ebbs and flows in its evolution over the course of the last five decades, the hukou system has fundamentally served the purpose of perpetuating this two-tiered citizenship within Chinese society.

The codification of this urban-rural dualism left an indelible stamp on the achievements of the revolution and undercut the instinctive class solidarity which had been forged between the urban proletariat and the poor peasants. The famed “iron rice bowl” – the job and benefit guarantees for state workers – was a real, if transitory, gain of the revolution, but it was only meaningful as an urban phenomenon. In the twenty years spanning 1958 to 78 hukou state policy became increasingly restrictive and China’s rate of urbanization had even dropped.

This counter-urbanization was enforced not only through policing rural-to-urban migration, but also through periods of forced mass migration to the countryside. After a brief respite in the late 1950’s to allow for recruitment of workers during the industrialization period, the aftermath of the Great Leap Forward led the government to close down many state-owned enterprises to deal with the crisis and forcibly relocate 20 million workers back to the countryside. This only aggravated the unfolding catastrophe of the Great Famine, which remained predominantly a rural phenomenon.

During the Cultural Revolution (1966-76) millions of “intellectual youth” were relocated to remote farmlands to “receive education from the impoverished peasants.” The victims were not only Mao’s factional opponents (Liu Shaoqi, Deng Xiaoping and their tens of thousands of supporters) but also some millions of Red Guards who answered his messianic call after they had outlived their usefulness in helping to crush his opposition.

Contrary to the Maoist mythology surrounding these orchestrated campaigns and the blind support offered by the starry-eyed Western left at that time, these population transfers had nothing to do with “education” or “culture”, but were initiated to ease the growing burden weighing on the urban social infrastructure. In fact, towards the end of the Cultural Revolution the constitution was amended to abolish altogether the items referring to population mobility. In 1977, stricter new regulations ensured that rural hukou holders who married urban ones would have to continue to work in the rural area and, significantly, that any child born of mixed hukou marriage would be classified as “rural.”

Such blanket legislation was clearly aimed at the millions of “intellectual youth” who spent years toiling on peasant communes and wished to bring their (predominantly female) spouses and children back to the city. It also revealed the darker underbelly of the Stalinist cult of the family, which pandered to the patriarchal traditions of the countryside, considering women as “spilled water on the ground.” If children in Stalinist China couldn’t inherit their father’s urban wealth, at least they could inherit their mother’s rural poverty!

Not until 1980 did the CCP loosen the hukou system in step with the growing reform and opening-up policy of Deng Xiaoping. And here too the hukou system was to serve Chinese – and indeed foreign – capitalism very well, as we shall see.

Opening-Up and Hukou Reform

After consolidating control of the CCP hierarchy in the aftermath of the disaster of the Cultural Revolution, the pragmatists around Deng Xiaoping launched a string of reforms in the late 1970’s and early 1980’s that aimed to create a more dynamic mixed economy. While much is made of the consequences of the creation of the Special Economic Zones, initially it was the reform in agriculture that generated the greatest growth.

The Peasant Commune system was broken up, and there was an allocation of land to individual households, codified in the Household Responsibility System. The prices of agricultural products were increased by 20 percent and a rural market was established for selling sideline products from private plots. Though grain procurement was still enforced, a quota system was established whereby any surplus could be sold on the private market.

Between 1978 and 1985 the rural market doubled and agriculture was completely de-collectivized. The townships and villages that had taken over administrative control operated in a quasi-private sphere and didn’t need government approval for hiring and firing. Because of the high cost of credit and the low cost of labor, these administrative units were forced to develop a more productive allocation of resources, eventually coalescing into the Township and Village Enterprises (TVE’s) that were to mushroom during the 1980’s.

The surplus labor freed from the breakup of the communes, overwhelmingly Han Chinese, was partially absorbed by the TVE’s, but naturally a great many peasants began migrating towards the smaller towns and even the cities. The government began to relax restrictions on non-farm activities within the villages and allowed farmers to engage in domestic trade and transport, adopting the slogan “leaving the land but not the village.” By encouraging this rural-to-rural migration they hoped to thwart the spontaneous drift to the cities. In 1984 the state authorities loosened the hukou restrictions and began to allow rural migrants to register in the small towns with the proviso that they had obtained a certificate of employment.

It is important to stress that even though this reform affected some tens of millions of rural migrants, the social infrastructure of the small towns could not be compared to that of the big cities. The urban-to-rural income disparity maintained an incredible ratio of 3 to 1 in the 1980’s. On top of this, their situation was still precarious and their access to the welfare infrastructure was limited. For example, they had to buy food on the more expensive open market, as they couldn’t use the local ration coupon system. Nonetheless, in comparative terms their lot improved with this reform, which served as a magnet for millions of peasants leaving their plots of land.

It wasn’t until 1997 that the Ministry of Public Security gave the migrants residing in small towns full legal status as urban hukou holders. The big cities kept the caste walls firmly intact; only in 1998 did they allow selective migration of some rural new rich who invested in city property or, in some cases, the rural spouses of urban returnees and their children – 20 years after the fact!

By 1995 the TVE’s had absorbed some 135 million rural workers and made up one-third of China’s industrial output. But they had reached their peak. Whereas between 1984 and 1988 rural enterprises had created an average of 10.8 million jobs a year, by 1994 they could only create half of that average. As the TVE’s began to lose steam the demand for low-wage workers was picking up in the booming metropolises on the eastern seaboard. By 1988 there were already 5 million “illegal” rural workers in the cities doing the so-called 3D jobs (dirty, demeaning and dangerous) that local urban workers shied away from. This occupational segregation between “native” urban workers and rural “outsiders” doing 3D jobs was to become a defining characteristic of the Chinese “miracle” and marks a striking parallel with the typical division of labor in the imperialist metropolises.

As in the capitalist West, this reserve army of labor not only did the 3D jobs but also served as ballast to hold down the upward pressure on urban wages and create a useful artificial division within the working class. With the massive layoffs from the state-owned enterprises which accelerated in the late 1990’s, the growing army of “outsiders” became a favored target of those who feared losing their urban privileges in the ensuing economic dislocation. Naturally the Stalinist capitalists, like their western counterparts, exploited these fears to maintain the strict hukou regulations in force. In fact, in supercities like Shanghai, Beijing, Guangzhou and Wuhan, these restrictions have even been tightened in the last few years, bucking the trend of the smaller-scale cities, where there has been a loosening of hukou enforcement.

The Capitalist Bonanza

Rural-to-urban migration patterns began to change with the initiation of the Special Economic Zones (SEZ’s) in 1980. The cities of Shenzhen and Zhuhai (bordering Hong Kong and Macau respectively), as well as Shantou and Xiamen, first saw the trickle of foreign capital from ethnic Chinese in Hong Kong and Taiwan.

Within a few years these SEZ’s were joined by a dozen port cities, stretching south from the Northeast along the coast of the Pacific Rim. While the southeastern Pearl River Delta (PRD) in Guangdong province remained the principal benefactor of foreign investment for many years, there has been a gradual shift towards the Yangtze River Delta (YRD).

First, many of the Taiwanese investors who ran labor-intensive sweatshops in the PRD relocated to the YRD after the Asian financial crisis in 1997 to climb the capitalist food chain. They set up a silicon valley just west of Shanghai, which came to replace the one formerly based in Taiwan, hoping to add value to their reduced labor costs. Shanghai is currently host to almost half the resident Taiwanese on the mainland, some 400,000 people, and is now to Taiwan what Shenzhen was to Hong Kong: a platform for a wholesale relocation of industry. The YRD has become the largest production base for electronic products in the world.

The YRD also grants easier access to China’s growing domestic market. The Guangdong PRD region became hampered in this respect since it had mostly produced goods for export, while the YRD, developing later, developed a more harmonious infrastructure, with easier access to the interior. Recently business executives and party officials in the PRD region have been promoting a Pan-PRD project to counter the spectacular rise of the YRD, called “9+2” (nine southern and central provinces plus Hong Kong and Macau), but it remains to be seen whether the PRD can challenge the YRD’s hold on the internal market.

Another reason is political. The southeastern region, bordering the former colonies of Hong Kong and Macau, was always considered to be most prone to outside, Western influence, with closer links to the Chinese diaspora. Though this was definitely an asset for economic development, it was considered a political liability that would have to be checked. Shanghai did not share these liabilities and had been tightly integrated into Beijing’s political dominion.

A final but not unimportant reason is that an increasingly high level of proletarian concentration began to threaten the “economic miracle” in the PRD, and the capitalists started to set up shop elsewhere to dilute the strength of worker unrest. Thus over the years, the flow of rural-to-urban migration gradually increased and radiated upwards along the eastern seaboard to follow the bulging capital infusion. More than 100 million migrant workers now work in multi-national corporations and the associated urban clusters from the PRD to the YRD to the Bohai Rim around Tianjin and Beijing in the North.

These corporations can take many forms, including joint ventures and wholly-owned foreign enterprises; some are Chinese contractors or subcontractors who act as a front for Taiwanese capital. Originally investment followed a stricter geopolitical pattern, and it was suspected that Hong Kong, Taiwanese and Korean capital would carve out separate spheres of influence in the PRD, across the Taiwan Strait and the Northeast. But now the trends are quite diffuse, especially with the entry of Japanese and then European and American capital.

Though global foreign direct investment (FDI) had contracted from U.S. $1,388 billion to 560 billion from 2000 to 2003, in China in the same period the FDI had increased from 40 billion to 53 billion, and in 2004 shot up to 60 billion, a 50 percent increase in 3 years! If we take one example, that of General Motors, we can see the trend clearly. While General Motors is currently suffering a 50-year low in sales in the U.S. market, their Chinese market has come to represent a whopping 25 percent of their global profits (up from 7 percent only a few years ago), and they have committed a further 3 billion to expansion in China. The influx of foreign capital has been so pronounced, and growth rates so high, that the Chinese government last year introduced various measures to cool down the economy and prevent the much-feared “hard landing.”

Caste Walls In The “Forbidden Cities”

Unlike in countries like Mexico, where new “special economic zones” became the permanent residence of migrating waves of workers, in China under hukou law the migrants did not have the right to reside in the cities. Starting in Shenzhen in the early 80’s, the local municipal governments issued temporary one-year residence permits and provided temporary lodging in dormitories flanking the factories and construction sites. The employers would be responsible for documenting the workers and would pay the associated fees to the government. In practice this meant that many migrants went unregistered and became part of a circulating “black (undocumented) hukou” population living in constant fear of the police.

This dormitory labor regime precluded family migration since other family members couldn’t live in the dormitories and most certainly couldn’t afford to rent apartments available on the limited free market. The hukou caste system also meant that, as “rural” residents, they did not have access to any elementary health care nor to education for their children. Nor could “non-residents” register marriages or births. Despite some experiments with a medical system mandated by the local governments of Shenzhen, Zhuhai and Dongguan, it was found that only 150 workers in a toy factory of 1000 were registered with it. The gap in the cost of living between the countryside and the big city also limited their mobility and purchasing power even when they did have time to venture outside the dormitory.

The conditions in these dormitories have been well documented by Pun Ngai, a professor at the University of Science and Technology in Hong Kong, who herself spent six months working in one of the factories in Shenzhen. Writing about China Wonder Garments, a Hong Kong-owned company situated in the middle of the global subcontracting chain in Shenzhen, she explains:

The dormitory building of three stories was just adjacent to the production building, which required only two minutes walk to the shop floor, thus easily facilitating a just-in-time labor system for just-in-time production. Each dormitory room housed 12-16 workers and was very crowded, lacking ventilation, adequate lighting, and absolutely no private or individual space. No kitchen, toilet or bathroom was provided in each room, and thus the workers in each floor had to share common toilets and bathrooms at the end of the corridor. ... The dormitory building was built to accommodate 500 workers only, but in China Wonder, it always had more than 600 workers.

The dormitory regime also cloaks a whole web of social oppression that keeps the machines humming to the tune of capitalism’s frenzied production cycles. Those lucky enough to get a job in the big city are generally recruited through an informal familial network that extends back to the native village. Each new recruit is under incredible social pressure within the dormitory to uphold the reputation of the work ethic of their extended family, and each “family” carves out a niche to peddle influence for the right to enlist others in the chain of migration.

Over time the dormitory system develops a self-regulating familial labor discipline linked to the fortune of the native village. Here the patriarchal traditions of the countryside project their authority within the sealed caste walls of the dormitory with the blessing of the employers. The predominantly female workers in the textile industry are to spend the best years of their youth as prisoners of the machine before reaching the “marrying age” of 25, when they will return to the countryside.

Though their wages are calculated monthly, the majority of the migrant workers are paid in a lump sum at the end of the year, and a good chunk of their paltry wages is in fact brought back to the village every year during the one holiday to which they are entitled, the Chinese lunar New Year. This returning migrant income represents at least half of the total rural income, which has come to reinforce the village’s dependency on migrant income and thus on the lifeblood of the chain of migration. Delayed and/or non-payment of wages, a phenomenon which affects 25 percent of migrants, is the one issue which the local governments and the Chinese ACFTU union federation try to address – to head off an explosion of unrest.

“We Have Been Nought, We Shall Be All”

And so, the logic of international capitalism’s race to the bottom has led it to the vast untapped reservoir of cheap labor opened up by the Chinese Stalinists. Despite their hypocritical pronouncements over “human rights” abuses, they have seized upon the most inhumane institution set up by the CCP, the hukou caste system, and turned it into a prop for a rate of exploitation unparalleled since the dawn of capitalism. Indeed, a key feature of early capitalism in its rawest form is being replicated on a gigantic scale: the costs of the reproduction of labor, those of education and social welfare, are borne entirely by the rural communities from which this new proletariat has emerged. Sometimes even the costs of labor aren’t being paid.

Linked by social position to the urban proletariat and by blood to the poor peasantry, the mingong is a bastard creation of capitalism in its death agony, a modern wretched of the earth that suffers unimaginable superexploitation in the interests of a handful of Chinese and international capitalist parasites. But that is precisely why it is the stuff of nightmares for its rulers. Long ago Marx wrote that the modern proletariat under capitalism is fundamentally an object for exploitation. But when it becomes conscious of its historic destiny, when it becomes a subject in history, it is transformed from a class in itself into a class for itself. Thus begins a struggle for power.

The mingong’s struggle for democratic and civil rights cannot be waged in the name of that same Western capitalist “democracy” which enslaves it. The struggle for the democratic and civil rights of the mingong intersects with the struggle for their liberation as a class and is inseparable from the class struggle of the Chinese proletariat as a whole. The very entry of the mingong into the arena of class struggle will galvanize the “native” proletariat and find a ready echo within the impoverished masses of the countryside, already seething with unrest. Indeed, particularly in this era of globalization, and given the size and strategic weight of the Chinese proletariat, the approaching theater of class struggle in China bears a world-historic significance. The wretched of the earth, the Chinese proletarian dragon, will now take the stage.