Speaker: Prof. WEN Tiejun, 温铁军
Executive Dean, Institute of Advanced Studies for Sustainability, Renmin University of China
Executive Dean, Institute of Rural Reconstruction of China, Southwestern University of China
Presentation
The first ThinkIN China event of 2014 took place during a week when Beijing’s air pollution reached ‘orange’ alert levels. With clouds of smog encircling Bridge café, Professor Wen Tiejun’s message of deindustrialisation, struck a particularly pertinent note. Wen argued that China’s megacity model of development is not sustainable, not merely because of the critical environmental situation, but also for reasons related to China’s economic and social structure. Throughout his talk, Professor Wen drew on global examples, making a compelling case for the rebuilding of rural China, guiding us through a history of reforms from Deng Xiaoping until the present day, and giving practical suggestions for China’s future. These included projects such as his own Rural Reconstruction volunteering organisation, China’s first free farmer’s training centre – the Yanyangchu Countryside Construction Institute in Hebei Province -, which he held up as a model for social action in China.
Professor Wen began by discussing the unique crises that have been faced by party leadership since 1978, and the effect of government responses on China’s rural/urban structure. The professor emphasised that China’s government has always intervened in the economy, and that similar policies are key to redressing the imbalance between urban and rural areas of China. Professor Wen identified the 3rd Party Congress as a point in many administrations at which challenges were faced and reforms initiated or deepened. In the era of Deng Xiaoping, 40 million educated youths returned from the countryside in need of jobs and housing. In 1989, President Zhao Ziyang faced low investment and economic depression, culminating in political unrest. In the years following 1992, Jiang Zeming faced a new challenge – China’s significant foreign reserve deficit. This was addressed by the use of the unlimited state bank loans, which carried out any demands of the state and could not be bankrupted.
The 1997 Asian Financial Crisis struck, bringing with it a new set of challenges. Overseas demand decreased, and China faced overproduction. Professor Wen compared this to the Great Depression of 1929-1933. Where in that instance, the depression contributed ultimately to the Second World War, China managed to avoid this outcome and continue to increase its growth. In Professor Wen’s view, this was achieved based on think tank policy analysis, which concluded that the answer was not to turn to free market reforms, but to policies based on Roosevelt’s New Deal. They should close down the market, turn over the surplus industrial capacity into internal demands, and look inwards to focus on China. At this stage, China could very much be described as an investment-driven economy, not one driven by domestic or foreign demand.
This trend of increasing investments continued under Hu Jintao and Wen Jiabao leadership. One of the major challenges faced by Hu and Wen was that of how to rebalance between poor, inland China, and wealthy, coastal China. Between 1999 – 2009, trillions of RMB were invested in the development of areas of China, with considerable success in delivering key infrastructural goals, such as electricity, roads, telephone, internet and water. The effects of this investment were appreciable in the wake of the 2008 global financial crisis. As foreign consumption dropped sharply, 2.5 million workers were made redundant in Chinese coastal areas. However, China avoided the violence and protest seen in several areas of Europe. These workers returned to the countryside – and the newly built up rural infrastructure meant the countryside could absorb them.
For the new leadership under Xi Jinping, Professor Wen predicts a continuation of these well-tested policies. At his 3rd party congress, Xi addressed more than 60 items for reform, among them the assets bubble, “townisation”, the debt crisis, and de-industrialisation.
It is Professor Wen’s view that China now faces an era of necessary de-industrialisation, and de-urbanisation. This process began in western countries in the 70s when idustry was relocated to the developing world. It is this step that China must now take. Next, “townisation”, a term describing towns becoming the standard unit of settlements, bridging the sharp divide between urban and rural, which began in the West in the 1980s. In China, this would allow people to find work locally, rather than families being broken apart by the need to travel east for work. In developed countries, typically there are few megacities, and no slums. While China has so far avoided slum formation, according to Wen’s assessment based on experience in India and South America, liberalism ineluctably forces rural people into slums in the cities. Living conditions in China’s cities are already sub-optimal: a third of developed China is heavily polluted. This is a problem faced by megacities worldwide, suggesting that this pollution is a problem particular not to China, but to this mode of urbanised development.
Following on from this, Professor Wen went on to discuss China’s economic and social structure. Economically, the professor explained that one of China’s greatest strengths is that its natural resources, financial assets and debts form a pyramid structure, with natural resources by far the largest and debts the smallest. In his assessment, this is far healthier than the structure of western economies. In terms of social structure, one important particularity is that 90% of China’s lower classes may be counted as petty bourgeoisie, rather than proletariat, as virtually all became landowners following land redistribution post-1949. This stabilised the country, meaning that until recently the vast majority of Chinese people lived on their own land in the countryside, with only 11-12% of the population remaining in cities. This stalled the challenges of urbanisation for some decades.
Overall, 60% of Chinese society consists of a rural petty bourgeoisie, 30% of the decentralised middle class, and the remaining 10% forms the higher class, which tends to control and manage state assets through the State owned enterprises (SOEs). Recently, however, the new era of financial capital has reached China and the biggest disruptions are caused by the middle classes. Until recently, such heavy investment in state enterprises meant there was little room for a private sector. Now, however, there are 30 million private enterprises, whose leaders see the advantage in setting up private banks to finance them – a change to the state bank system that has been so crucial in allowing China’s development.
To conclude his speech, Professor Wen spoke about his own Rural Reconstruction organisation, in which he aims to continue with the historic rural reconstruction movement through the training of the new generation, and the mobilization of volunteers. Their projects include eco-architecture, recycling materials, and turning peasant organisations into cooperatives. The result is that citizens participate in eco-agriculture, rural areas gain much needed infrastructure, and the organisation has become one of the largest voluntary networks in China, with branches in hundreds of cities and universities.
Q&A
The first question posed by an audience member asked what obstacles de-urbanisation and rural reconstruction face. Wen emphasised the numerical and ideological strength of the Rural Reorganisation network, with more than 200,000 students mobilised and hundreds of peasants’ organisations. He stated that faced with opponents, he does not argue, merely waits for the strength of his convictions and the reality of the situation (which not even the staunchest opponents can ignore) to do the convincing for him.
This was followed by a question about responses to government investment in infrastructure – did this face opposition, and what impact did the investment make? Professor Wen stated that while government investment is a significant factor, this alone cannot close the gap between rural and urban areas. Involvement from society, such as from organisations like his own, is also necessary. He reiterated the detrimental effect a capitalist system is likely to have on the countryside. Since outside markets can provide higher profits, the countryside will be marginalised as capital flows out towards the cities. However, in China, the government has invested, giving the countryside the chance to improve itself. Since 2005, almost all its items of social policy are covered in the countryside, including free education and access to healthcare.
Another audience member asked why the mainstream scholars and intellectuals still favour megacity construction, and whether or not the reason behind it was to attract large scale investment. Wen agreed that this was the main motivation: a megacity generates profit and endless business opportunites, regardless of harm to the environment. Wealthy interest groups continue to influence the media in favour of megacities because they stand to profit from this arrangement.
Taking the discussion in a different direction, one audience member asked what opportunities there are for foreign entrepreneurs in rural China. Professor Wen explained that much of the countryside consists of grey areas not covered by formal institutions. Transitional costs are higher, there is little transparency and no democracy. These areas are for small and medium local businesses. What’s more, the goal in building up these areas is to create opportunities for local businesses, not for foreigners or urban residents. Unfortunately, the mainstream has difficulty in accepting this, and keeps trying, failing and losing money in setting up modern systems in rural China.
In response to a question about civil society, the professor made it clear that, since the middle classes so recently emerged from the lower classes, he does not feel China is ready for a fully-fledged civil society. He would not try to duplicate NGOs or civil society movements within China. Rather, his organisation is trying to set up new way of organising for marginalised classes which is wholly voluntary.
Finally, Professor Wen responded to a question about the utility of rural reconstruction by noting that in the future huge numbers of people will begin returning to the countryside. Now, China is beginning to see ‘love your hometown’ movements, the first generation which is returning to the countryside. This will work only if the countryside is invested in and facilities will be readily accessible outside of megacities. Furthermore, as China begins to relocate manufacturing to other countries, urban workers will face redundancy. This is why people are reluctant to sell land. De-urbanisation is a phenomenon that will occur naturally. It is imperative that there should be adequate facilities to meet this wave of people returning to the countryside.
(Report by Coirle Magee)