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China's Gilded Age

A journey through a country bursting with new wealth but besotted by corruption and threatened by a split between its prosperous cities and its stagnant rural areas

by Xiao-huang Yin

RECENTLY I took a six-week journey across China. It was my first trip back since I came to the United States to study, in 1985. In the course of my visit I saw -- I felt -- the perturbations of profound and chaotic social change. China's stunning hurtle from a centrally planned economy to a free market has set off an economic explosion and generated tremendous prosperity. Its economic growth was 13 percent in 1993, and average personal income in urban areas has doubled since 1985. With the state-owned sector accounting for less than 30 percent of total economic output, the socialist system is becoming an empty shell. Across China the lines between the state and private economies are blurring. At the largest national department store in Shanghai, a symbol of Chinese socialist business, customers now bargain for better prices. The counters within the store have been contracted out to shop clerks, who decide the prices. Dual ownership has in essence turned this state enterprise into a private business. Asked if such a practice is an example of China's "socialist market economy," a professor of economics at Nanjing University, where I taught in the early 1980s, replied, "Nobody knows what the concept means. It is only rhetoric, and it can mean anything but socialism."

With capitalism unleashed and investment from overseas stimulating the economy, China has become a land of opportunity. Rags-to-riches success stories fill people's conversation. Zhao Zhangguang, an herbalist whose "101" hair-stimulating lotion has sold extremely well around the world, has become one of China's richest men. In 1993 alone his net profits reached up to $50 million. Even some of my relatives have become millionaires. A distant cousin who was a high school teacher until 1986 told me modestly that he had made "a little money" by opening a factory that produces bristle brushes for export to America. He drove me to his new summer house in his new Mercedes-Benz 500SEL, one of his three luxury cars. "This is China's Gilded Age," a former colleague of mine commented sarcastically. "These Chinese Carnegies and Rockefellers are more successful than their American counterparts -- they made more money within a shorter time."

To be sure, not everyone gets rich quick, but the economic boom has brought most urban Chinese a huge improvement in their standard of living. Color TV sets, refrigerators, and VCRs, considered luxuries when I lived in China, can be found in almost every working-class urban household -- at least in the prosperous coastal cities. For the first time in my life I saw some overweight people in my home town of Yangzhou. With fax machines, satellite television, computer modems, and radio talk shows, the Chinese are well informed about events in the outside world. They may even know as much as the average American about happenings in the United States. Hillary Clinton's health-insurance program, the gay-rights movement, and daily prices on the U.S. stock exchanges are familiar matters throughout China.

Of course, China is far from being an open and free society. Last August the government announced that it had sentenced a journalist, Wu Shishen, to life imprisonment in Beijing for his alleged selling of an "internal document" to a Hong Kong magazine for about $870. However, in other aspects of life the state has relaxed its control. In 1985, when I was last in China, the campaign against "spiritual pollution" was still under way, and it destroyed the careers of many intellectuals. One of my colleagues in Nanjing was sent to the countryside to receive "re-education" for his "unhealthy soul." He was accused of looking closely at the breasts of a woman student while he talked excitedly about graphic sexual portrayals in the fiction of Saul Bellow. Now the government seems to put fewer restrictions on popular culture and even risqué material from the West. In a hair salon a few blocks from my old home in Yangzhou glossy posters of naked girls cover the walls. Entering the shopping center of Jinling Hotel, in Nanjing, I was astounded to see a Playboy Bunny calendar welcoming customers. I was particularly struck by the sight because at Occidental College, where I have been teaching, there was a heated debate among students over whether the magazine should be removed from the college library.

Hearing my astonishment at the government's new tolerance of looser sexual mores, a friend of mine smiled. "The authorities now consider sex socially permissible and morally acceptable," he said. "It may be because the government feels that when people are interested in sex, they have less time to concern themselves with other issues."

I DO not know how accurate my friend's comments are, but a recent study by the Xinmin Evening News, in Shanghai, indicates that the number of couples engaged in premarital or extramarital affairs in China is skyrocketing. Meanwhile, the quest for democracy has waned. Gone are the days when enthusiasm for political reform was the prevailing emotion in society. Having tasted the fruits of prosperity, ordinary Chinese are now more interested in making money. They fear that radical political reform may cost them their new wealth. A recent opinion poll conducted by the Shenzhen Commercial Daily discovered that 88 percent of residents in Beijing were concerned with inflation, and 81 percent with social stability. Only 42 percent showed some slight interest in politics. Perhaps the most obvious manifestation of this trend in social thought is the change in certain formalities. Until the end of the 1970s "tongzhi" ("comrade") was the standard form of address used by one Chinese to another. In the post-Mao 1980s the term "xiansheng" ("sir") gained popularity. Today "laoban" ("boss" or "manager") has become fashionable.

Similarly, the catchword "canzheng" ("participate in political reform") has been replaced by "xiahai" ("plunge into the sea"), which refers to going into business. Many of my former colleagues in Nanjing have plunged into the sea, hoping to make their fortunes. A friend of mine who was a classicist by training, and who liked to argue with me about the origins of parliamentary democracy, has become a cosmetics salesman -- a job that I can hardly associate with his background and interests. When I mentioned this, he laughed. "Well, I have taken an indirect course to fight for democracy," he said, "because the growth of independent wealth, whether legitimate or ill-gotten, will surely erode the Party's control of the people." He may not be representative of China's educated elite, but many scholars seem to share his view that the most prudent course for intellectuals who champion the cause of democracy is to accommodate the economic demands of the masses.

Of course, people have not forgotten the Tiananmen Square crackdown of 1989, but they now believe that the best prospect for democracy in China is "peaceful evolution" -- the Asian model, emphasizing social stability and economic prosperity rather than radical political changes, which many Chinese see as dangerously volatile. A restaurant owner who was sitting next to me in a train to Zhengjiang admitted that he had no intention of risking his good life by embracing the abstract notion of democracy. "You know, democracy is a luxury," he continued, after I bought him a bottle of Tsingtao beer. "Only people who have enough food on their dinner table can afford democracy. Look at the Russians: the root of their problem is that there is too much freedom but too little bread."

Indeed, the social upheaval and the rise of neo-Nazism as a result of unemployment and poverty in Russia -- China's "Big Brother" in the 1950s -- have caused great doubt about the wisdom of radical political change. Ordinary Chinese observe with dread that the Russian economy has sharply declined since the collapse of the old system, and that Russian society is violent and perpetually unstable. Horrible stories of Russian girls engaging in prostitution in China are widely circulated and reported in Chinese newspapers. In a crackdown last summer about a dozen Russian women in Guangzhou (Canton) were arrested for what a police spokesman called "doing pornographic business." The miserable experience of these Russian girls is recounted vividly by Cheng Naishan, a feminist writer in Shanghai. In her recent short story "White Russians, Red Russians," she tells how a daughter of a Russian aristocrat who fled to China after the Russian Revolution ended up as a prostitute in Shanghai. Now she is appalled to learn that a group of Russian girls, recruited by a posh hotel in Shanghai, have become the same kind of "Russian Miss" as was found in those pre-1949 days.

For many Chinese, the Russian lesson appears to be that only after a nation achieves a relatively high level of economic prosperity can it afford the fruit and the perils of democracy. The argument, which presumes that as prosperity rises the prospect of democracy expands, has been proved correct by what has happened in other East Asian nations. In the long run, as China's newly emerged middle class gains strength, it will demand more political power. When that happens, there will be a new enthusiasm for democracy.

HOWEVER, the sybaritic ethos does not mean that there are no signs of political liberalization in China. The power of the National People's Congress -- China's legislature -- has increased significantly since the 1980s. The People's Congress was a rubber stamp in the Mao era, but its role expanded considerably when Peng Zhen, a former Beijing mayor and one of China's "Eight Elders," became its chairman, in 1983. Because government officials at all levels now have institutionalized nomination and tenure, the legislature has more say in decision making. Official appointments at the local level must now be approved by a majority vote of the local people's congresses, giving rise to confrontations between the legislatures and the local government bureaucracies. In many cases local people's congresses vote down candidates nominated by the government. In my home town last year the nominee for director of the municipal energy bureau was rejected three times by the city's people's congress, because of his lack of professional training. The legislature and the municipal government were locked in a struggle for almost six months; finally the government changed its candidate. Since 1984 a dozen faculty members from Nanjing University have been elected to the local people's congress. Nostalgic for the days when the government was relatively incorrupt, these representatives are the most vocal critics of the tainted local Party bosses and the scandal-ridden government bureaucracy. They also care about issues that are linked with daily life, such as food prices, environmental protection, and traffic problems. Thus the people's congresses, at least those at the grassroots level, serve as a channel for ordinary Chinese to express their concerns.

WHEREAS enthusiasm for democracy has ebbed in China, corruption is flowing throughout the land. Financial scandals, which are widespread, highlight the chaos in Chinese society. Official statistics indicate that 30 percent of state enterprises, 60 percent of joint ventures, 80 percent of private businesses, and almost all shop owners regularly cheat on their taxes. Bank officials have embezzled billions of dollars in state funds and then fled overseas. It is an open secret that many government officials have deposits in foreign banks and own property abroad. It was widely rumored that not long ago a top-ranking Chinese official bought, through a relative, a multimillion-dollar mansion in Beverly Hills -- an impressive house even by Hollywood standards.

The proportion of Party members involved in bribery and embezzlement has reached levels that were inconceivable in the days when revolutionaries dominated the Communist Party. The government journal Fortnight Chat last July revealed that during the first three months of last year the number of cases of bribery and embezzlement involving more than a million yuan (at the time, about $175,000) had doubled from the previous year, with one Party member embezzling more than $6 million. Almost certainly with the assistance of Party cadres at the highest level, Shen Taifu, the general manager of the Great Wall Company, stole about $200 million from state funds and individual investors within five months. Rumor has it that members of Premier Li Peng's family were involved in the scandal.

The widespread corruption in China reflects a deep social, political, and psychological crisis in the nation. The gunshots at Tiananmen Square marked the end of the revolutionary phase of the Communist movement. Chinese leaders now openly acknowledge that the Party has changed from a "proletarian vanguard" into a ruling body. As a result the Party rank and file feel that they are no longer restrained by orthodox ethics. Many see the economic pluralism as providing them with an opportunity to loot. A fear that economic reform may falter at any time and a lack of confidence that the society will remain stable over the long term further impel the rush to get rich quick. Mao's slogan "Serve the people" has been thrown away, and the new motto for Party cadres is "Make the best use of power you can while still in office."

Recently the Chinese government has inaugurated a new anti-corruption campaign, but few people believe that this round will be any different from earlier ones. "This is the fifteenth time I've seen the government launch such a campaign since 1980," an old friend of mine told me cynically. "What they do is shoot a few small fliers [petty officials] but let the big tigers [senior cadres] run away." Others believe that since corruption is rampant and exists at every level of society, a complete cleanup is impossible -- it would cause turmoil and upset the government's weak control over the pace and direction of economic growth. "The Party leaders simply cannot afford to have a real crack down," a college professor remarked to I me, "because it is too costly. They can stay in power only if China has enough stability to guarantee economic progress."

There is some truth in these comments. Indeed, corruption has become an integral part of daily life in China. Graft and the loosening of controls allow the entrepreneurial spirit of those with ability to flourish. Moonlighting often brings people more income than their official pay. With their extra money ordinary Chinese can now display their personalities and reclaim their private lives. Perhaps this is, why public outrage over corruption is not so strong as abroad I had heard it was. There is even a rather tolerant attitude toward graft, especially among the professionals who have benefited from the market economy. In their eyes, corruption is inevitable in the transition from totalitarianism to authoritarianism. "Corruption is a price that China has to pay for the changes from a centrally planned economy to a market system -- it is the grease that can lubricate the political machine in a changing society," an economics professor in Nanjing preaches to his students. A popular ballad sums up the situation nicely: "Of the 1.2 billion [people], one billion are corrupted. We join forces to cheat the Party and government." A close friend of mine said, "As long as it brings along changes and prosperity, it is tolerable. In any case, I'd rather live in a corrupted but free and prosperous society than a purified but stifling and stagnant land."

OF course, not everyone would agree with his view. For those without skills or authority, it is infuriating to live in such a corrupt society. One of my relatives, a retired worker, had an operation last spring. Although she was fully covered by the state medical insurance, she had to pay bribes to virtually everyone involved in her treatment, from the surgeon to the cleaning woman. The bribes amounted to twice her monthly pension. Tourists in China often become victims of minor graft. For example, I was overcharged many times in restaurants, hotels, and shops. Even in my home town I was cheated by a taxi driver, who almost beat me up when I pointed out his dishonesty. The Chinese revolution of the fifties and sixties succeeded in breaking up the old agglomerations of power and wealth, and achieved a new way of distributing wealth -- a social leveling -- in a nation that historically had huge disparities between rich and poor. Until Deng Xiaoping's push for economic reform in late 1978, Chinese society was relatively egalitarian, although this goal was met at the cost of intellectual freedom, individual aspiration, and economic growth. With prosperity, however, problems familiar from Chinese history have reappeared, old ways of viewing power and wealth are common once again, and traditional disparities are resuming. Corruption and the widening income gap also spotlight a rising problem in Chinese society: rural poverty.

WHILE personal income levels are rising rapidly in cities, the countryside, where 80 percent of China's population lives, is falling behind. A recent study of living standards in Shenzhen, Guangzhou, and Shanghai reports that the average annual income in the three cities has reached $1,200. But in Guizhou, a remote southwestern province, villagers earn only about $40 a year. Nationwide the average annual income of peasants is about $135.

I was struck by the gulf between the prosperity of urban centers and the poverty of rural areas when I took a bus along a winding dirt road to Xiao county, in North Anhui Plain. If coastal cities reflected China's stirring and optimistic mood, what I saw in North Anhui was just the opposite. What is the cause of rural poverty? Some villagers blame the corruption of local officials. But government officials in the major cities are just as greedy as those in the villages -- perhaps more so, since the spoils are greater. The real problem is that the government has failed to raise the prices of farm products to keep up with those of manufactured goods. In the first half of 1993 the prices of fertilizer, fuel, and other farming necessities rose nearly twice as fast as those of farm commodities. Now the more grain a peasant produces, the less profit he makes. Villagers in coastal areas usually develop their land for fruits, vegetables, and other cash crops that cater to urban needs. They also make money in township mills, property speculation, and service industries. As a result, more than half of their annual income comes from nonagricultural sources. But peasants in inland areas are denied such advantages. Investment rarely comes in, because the lack of highways and railroads makes it difficult to transport goods produced inland to the great metropolises or to overseas markets. The various barriers will take years to remove, but they all contribute to the peasants' poverty and deepen the gulf between bustling urban China and depressed rural China.

To be sure, rural poverty is an old problem. But peasants now feel a more intense agony because they know that city life in coastal areas has improved, and they want to live better too. Grievances and jealousy are producing hatred, and the resentment felt by the have-nots can be striking. In August an explosion and a big fire occurred in Shenzhen, China's special economic zone across from Hong Kong. More than a dozen people were killed, and hundreds were wounded. "It served them right," I heard a migrant peasant worker from Henan say bitterly in a small restaurant near Shanghai. "These bastards have made too much money by exploiting us."

A more subtle manifestation of rural grievance is that many villagers now hang Mao's picture in their houses. When I asked if they really missed the Great Leader, an old woman hesitated and then said, "No one likes the old days." She quickly added in a louder voice, "But under his leadership at least we all lived the same kind of life. Chairman Mao put the interests of us villagers first. Now the leaders have forgotten us. We are no longer treated the same way as the town folks." At one time the Party was led by men who had all been born in rural families and had lived many years among villagers -- and Mao did make peasants the centerpiece of his Marxist plan for revolution. The leaders of the current regime, however, have no roots in the countryside. As an educated and technocratic elite, they show neither concern for nor understanding of the grievances of peasants.

Surprisingly, I found growing prejudice among urban residents against peasants. A Shanghai taxi driver insisted that migrant peasant workers were all potential "criminals." In my home town peasant beggars from Anhui slept right on the sidewalks, but no one paid any attention to them. When I mentioned this to my friends, they shrugged and replied, "So what?" Some of them even argued that peasants in inland areas live in poverty because they waste money and because the lack of efficiency there turns diligent workers into layabouts.

The peasants are equally prejudiced against city people, especially the educated elite. To some extent their distrust is understandable. Throughout the brief history of the People's Republic, villagers have often suffered from the enthusiasm of urban intellectuals who used rural China for "grand experiments," betrayed its interests, disregarded its traditions, and treated peasants like stepping-stones toward more-ambitious goals. Under the nonsensical order of the Party cadres rice was planted in the cold, dry north and wheat was planted in the humid, warm south. The results were disastrous. In fact, it was the overweening confidence of urban intellectuals in their own particular abstractions that inflicted an enormous economic disaster on rural China during the Great Leap Forward at the end of the 1950s, resulting in the deaths of millions of peasants. Resentment still runs deep today.

The rural grievance has become more complicated as it mingles with the growing sentiment of the interior regions. During the past few years China's inland provinces saw the economic boom and the development clearly bypass them. As a petty cadre from Gansu, a poor northwestern province, complained to me, "You know, the relationship between us inlanders and you guys on the coast is just like that between underdeveloped countries and industrial nations. We supply you with raw materials and cheap migrant labor, but you turn around and sell us secondhand products at high prices. The gap bleeds us inland people of capital and resources. You robbed us of everything, from money to women!"

Such complaints are most alarming. Mixed with the rising tide of regionalism, rural grievances can be explosive. Rumors of peasant riots circulate widely. Indeed, the government confirmed that last June about 10,000 peasants rioted against the authorities in Renshou county, in Sichuan province. Rebellions have broken out in poverty-stricken inland regions throughout modern Chinese history, from the Taiping Rebellion to the Communist movement in Yan'an. Unrest in the remote countryside shook the foundations of the empire and brought down the old regime.

Themselves once organizers of the peasant revolution, old Party leaders are aware of the volatility of rural grievances. Wan Li, a former chairman of the National People's Congress and a close friend of China's paramount leader Deng, warned recently that if poverty persists among the peasants, another Chen Sheng-Wu Guang Rebellion will break out. He was referring to a famous peasant rebellion that took place some 200 years before the birth of Jesus. The rebellion triggered a series of civil wars and thus caused the collapse of the mighty Qin dynasty, founded by China's first Emperor, Qin Shihuang. Since historians often compare the Communist regime to the Qin dynasty and Mao to the whirlwind dictator Qin Shihuang. the parallel between rural unrest today and the peasant rebellion then presents an ominous lesson for the current regime.

The Party has taken action to soothe the peasants' wrath. Last summer it issued orders to reduce the taxes and fees levied on peasants. But there is no clear sign so far that these widely publicized policies differ from previous propaganda. Much depends on how determined the current regime is to solve rural problems and whether any real improvement occurs in the countryside. Unless the boom extends inland, China's long-term political stability and economic development will remain in doubt.

Despite the gloomy scene in the countryside, I made an encouraging discovery that is worth mentioning. The imbalance in the ratio of male to female babies in rural areas may not be as serious as people abroad have heard. Statistics show that China's sex imbalance at birth reached 114 males to 100 females in 1992. Most demographers believe that the disparity is caused by the ancient practice of female infanticide. But this does not seem to be the case. Stepped-up prosecution of infant killers and severe punishment have helped to curtail the practice. The disparity may, rather, have been caused by the underreporting of female births in villages. Chinese law requires the registration of births with local family-planning programs. To get around strict child quotas, villagers often fail to register the births of their daughters. They ship the girls off to be raised by relatives until a son is born. In a village near Baoying, in northern Jiangsu, I found seven such "ghost children." Their presence would have been unthinkable in the past, because the government controlled food distribution. But villagers now have their own land, so their livelihoods no longer depend on the state and they can afford to have more children.

WHAT will happen after the eighty-nine year-old Deng Xiaoping, China's de facto Emperor, dies? It is rumored that he is battling prostate cancer and suffering from Parkinson's disease. A widely circulated political joke says that now the most powerful person in China is not Deng but his daughter, because it is she who decides what her father is to know and to say.

How China after Deng's death can combine a capitalist economy with its legacy of communism is anybody's guess. Most Chinese agree that the economic reforms may continue and outlast Deng's political system. There is a great risk of chaos in the prospect, however, as indicated by a rising tide of regionalism, the widening gap between rich and poor, and the mutual distrust between the cities and the countryside. People wait in uneasy anticipation. The looming future may hold continued economic prosperity along with political freedom, but it may also hold an eruption of upheavals and disunity like that after the collapse of the Manchu Empire, in 1911. In any case, China's prospects are extremely uncertain.

When I asked about China's future at a party with my friends, no one answered. Obviously they didn't want to be bothered by such a question, at least not during our happy celebration. "Great disorder leads to great order," a historian finally said, murmuring a slogan of Mao's from the Cultural Revolution. After a long pause he added drily, "Let's hope for the best but prepare for the worst."

Return to Flashback: China's Gilded Age

Copyright © 1994 by Xiao-huang Yin. All rights reserved.
The Atlantic Monthly Group; April 1994; Foreign Affairs; Volume 273, No. 4; pages 42 - 53.

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