It is estimated that about a quarter of all state workers in the city had been laid off by 1994; that’s probably too few to prevent the ailing state-owned sector from dragging the economy into collapse and taking the country along with it. For decades China's industries simply followed the government’s economic plan; they never learned how to keep proper accounts, be efficient, or turn a profit. Almost half of them lose money; they are kept afloat by government debt, and generally they employ far more workers than they need. Gao Shangquan, formerly a vice-minister of China’s powerful State Commission on Economic Restructuring, now a professor at Beijing University and the director of an economic think tank, told me recently that he calculates the number of redundant workers still clogging China’s state industries to be around 24 million.
Some observers have been impressed not by how much worker unrest China has seen but by how little. China’s reformers managed to appease many laid-off state workers in past years by furloughing them on reduced salaries, with benefits, rather than firing them outright. However, the plight of the workers appears to be getting worse. Chinese government statistics indicate that in 1998 the ranks of state workers fell by almost 20 million, a huge reduction over previous years. Admittedly, this figure is difficult to interpret, because part of the change may simply be due to the reclassification of furloughed workers as no longer employed by the state. But the government does anticipate additional large layoffs in textiles, steel, railroads, coal mining, and the military over the coming months.
Thomas Rawski is a China specialist in the economics department at the University of Pittsburgh. “Employment growth in other sectors has stalled, and government policies to boost employment are ineffective,’’ he told me not long ago. “And yet the reform process can’t be undone. The lower levels of government have already been told they can lay off workers. Even if the policy makers at the top change their minds, it’s too late to reverse direction.”
While the Tiananmen generation reflects on the past promise of democracy, a new generation of Chinese students, both at home and abroad, is looking ahead to the overwhelming challenges facing China in its risky bid to move toward a market-based economic system. Unlike their predecessors, these young Chinese tend to favor working within the limits set by the regime. Like their predecessors, they are dreamers—but they're keeping at least one eye open. They know that in the short term the crux of China's future is those 24 million excess workers. To their credit, though many of them are studying in the United States, they are keen to return to China and make a difference.
Yet the system within which they are so eager to work is hopelessly mismanaged. Perry Link, of Princeton, and his colleague Liu Binyan, one of China's most seasoned independent journalists, wrote a scathing critique of Chinese "reform" for The New York Review of Books in 1998. They used the research of an unorthodox economist named He Qinglian, whose work made a bad joke of the idea that economic reform in China has led to anything that deserves to be called progress. Officials in charge of implementing economic change were never made accountable to the people through accompanying political reforms, so the entire system became corrupt. The result, the economist showed, has been not the production of wealth but simply its transfer. The growing "free" market in China is mostly about well-connected entrepreneurs speculating with public funds, pocketing the profits, and assigning the losses to the state. When Chinese workers pen Marxist manifestos and take to the streets against their new capitalist oppressors, it is these government opportunists about whom they are up in arms.