STABILITY AT THE EXPENSE OF REFORM?

By Willy Wo-Lap Lam

More than twelve years after Deng Xiaoping launched the open door policy, the Chinese leadership has still not solved the contradiction between stability and reform. Whenever the Chinese Communist Party’s (CCP) mandate of heaven seems in doubt, the Politburo would pull out the stops to maintain stability, even at the expense of reform.

The outbreak of labor unrest in the Daqing Oilfield and other cities in the rust-belt northeast provinces has shaken the leadership of President Jiang Zemin to the core. Until the workers at Daqing were cowed by the regular army as well as the para-military People’s Armed Police (PAP), Jiang and members of the Politburo Standing Committee received daily reports of the protests.

Jiang’s response was not much different from that of Deng at the height of the demonstrations by students and workers in 1989: deploy all necessary forces to maintain stability. The president and party chief pointed out at an internal meeting in late March that the party and state’s top priority until the end of the year was “weiwen,” or safeguarding stability.

WORKER UNREST

While unrest among both workers and peasants first became common in the late 1990s, there are several reasons why Beijing is particularly worried this time around. First, while there was no evidence of interprovincial links, demonstrations and clashes with police took place last month simultaneously in more than a dozen provinces and major cities. They included Ningxia, Xinjiang, Sichuan, Hubei, Hunan, Henan, Liaoning, Heilongjiang, Guangdong, Beijing and Shenzhen.

Moreover, underground labor unions are sprouting all over the country. And workers in Daqing and the Liaoning city of Liaoyang demonstrated a high degree of willingness to sacrifice all in support of their labor leaders. An internal party report on Daqing made much of the fact that “the workers seem not afraid to risk their lives.” Moreover, the leadership is understood to be worried that labor organizations in America and Europe had been in contact with the wild-cat labor unionists in the northeast provinces and other parts of China.

Even more disturbing for Beijing is the possibility that the disaffected peasantry might join hands with angry workers. After all, Premier Zhu Rongji has reiterated that the one major failure of his administration is an inability to improve the livelihood of farmers. Zhu also admitted that unemployment and other rural woes might worsen significantly after the country’s accession to the World Trade Organization.

QUELLING THE FIRE

Very much in keeping with Deng’s so-called “double-fisted policy,” Jiang has recommended a carrot-and-stick policy. Orders have gone out from the CCP General Office to all provincial and municipal leaders asking them to do all they can to prevent “the spark from the heaven from setting the whole plain ablaze.”

Regional cadres have been told to try conciliatory measures first. This means if workers about to hit the streets could be persuaded to call off their action by monetary inducements that local administrations can afford, placatory steps should by all means be taken. In fact, last month senior leaders begun a huge pacification campaign to tell workers and peasants that Beijing is aware of the plight of the “disadvantaged sectors.”

And in late March and early April, Politburo Standing Committee members including Jiang, Zhu, Vice President Hu Jintao, Vice Premiers Wen Jiabao and Li Lanqing went to the provinces to spread the message of central-level concern for laborers and farmers. For example, while touring Guangxi Province early this month, Hu asked local cadres to “solve the livelihood problems of poor people as soon as possible… and to convey the care of the party and government to thousands of homes.”

The leadership also realizes, of course, that there is no way the central coffers could meet the demands of disgruntled workers, particularly those over 45 years of age. The latter want compensation–in terms of a decent pension and medical benefits–for the long years they worked for the state at artificially low, “socialist” wages. The State Council recently calculated that it needed at least 600 billion yuan to fully “pay back” such workers.

Should persuasion fail, Beijing is ready to call in the troops–as it did in the Daqing Oilfields. From a series of meetings held last month by the People’s Liberation Army and the PAP, it is apparent that the use of brute force to crush labor unrest will remain a long-term state policy. The Liberation Army Daily reported that various PLA and PAP divisions had vowed to uphold their role of being “an important force in safeguarding social stability.” The officers also pledged to do their best to ensure the success of the 16th CCP Congress this autumn, which will witness a changing of the guard in the top echelons.

THE RIPPLE EFFECT

The stress on stability above all else is bound to have a detrimental effect across the board. Again, Jiang has to rely on the armed forces–the “tools of the dictatorship of the proletariat” or in Deng’s words, “the loveliest people of them all”–to extend the CCP’s mandate of heaven. And as a reward for their special service to the state, it is likely that the generals will at least keep their share of Politburo and Central Committee seats at the 16th Congress. The paranoia about underground workers’ cells means despite pressure from international labor and human rights watchdogs, Beijing will keep denying work hands their basic right to organize.

Western diplomats in Beijing said unrest among workers and farmers might also jeopardize Jiang’s plans to revise the Communist party constitution at the 16th Congress. For example, Jiang has proposed that the charter be changed to allow private businessmen and professionals to be recruited into the party. CCP cadres and members with proletariat backgrounds, however, have opposed the special deal for the “new classes,” saying the latter’s rise will be achieved at the expense of laborers.

Economic reform, particularly the restructuring of state-owned enterprises (SOEs), could slow down because of fears that more drastic steps to cut redundant staff would fuel further protests. “Zhu has been criticized for moving too fast in his bid to turn around loss-making SOEs in three years,” said a Western diplomat in Beijing.

For the 73-year-old Zhu, however, the most pressing concern is to wrap up his last year in office without incurring major mishaps. And to ensure that workers’ wrath can be kept at bay, the premier is using to every trick in the book to attain a 7-percent growth rate. To critics of Beijing’s strategy of incurring huge budget deficits to spur growth, Zhu has explained that a lower development rate will mean the state cannot generate enough new jobs to head off unrest.

Last month, Zhu told his intimates that China needed to maintain a high clip of development for the coming eight to ten years. Zhu was referring to the fact that because of demographic changes, the annual number of young men and women entering the job market might start to level off in about a decade’s time. Western economists, however, have argued that Zhu is being too optimistic–and that Beijing has underestimated the adverse impact of WTO accession on the unemployment rate.

Willy Wo-Lap Lam, one of Asia’s best known journalists and authors, is a senior China analyst at CNN’s Asia-Pacific Office in Hong Kong.