Made In China

Made in China Economic Globalization in the Formerly Socialist State

Sam Reynolds Global History IV Term Paper February 27, 2008

I.

Introduction China has long been on the cutting edge, a leading world power in militarily, political, and economic forces. Today the rising challenges of globalization have brought opportunity to the country, however much of the major economic opportunity is seen by relative few. After a series of reforms in the last half of the twentieth century, the People’s Republic of China has moved to a kind of state-capitalism over its highly socialist past, and large multinational corporations have both formed domestically and have moved in from abroad. Though corporate globalization has brought an enormous economic boom to China, the majority of this wealth is consolidated to the politically powerful and economically affluent elite class, leaving a large portion of China’s 1.3 billion residents a poor, peasant proletariat, exploited by the worst of both socialism and state-capitalism. II.

Causes After WWII, China’s government and economy came to be controlled by the communist party. The promotion of socialist ideals to the people was somewhat intended to create a sense of community and induce sharing among neighbors. However through greedy government officials and other corruption, the people began to loose the resources they were entitled to, until they had become as poor or poorer that they had been under imperial reign. (Riskin) Under such dire conditions some will share what they have like good communists, while others learn of greed, self-survival, and economic Darwinism. As mentioned the country underwent a series of reforms in the late 1970s and early 1980s that resulted in the Chinese economy taking on capitalist characteristics, such as stock markets, corporations (though in some cases state-owned), and international “free trade.” (Gabriel) Those who learned how to best survive under the socialist system, typically those with political power, could now legally use the tactics and habits of self-service that they had developed. (Nanto) Governmental corruption is well known to exist in socialist states; this corruption does not vanish overnight with the appearance of commercialism and enterprise. (Gabriel) It should be noted that many who benefited in the socialist system now continue to hold political power, and many additionally now have corporate interests, through stock or otherwise. (“Still in Mao’s Shadow”) Officials and politicians have pushed for privatization not only domestically but have aggressively pursued international trade for profit−globalization. (Wu) The push to privatization in comes not only internally, but from Washington, Tokyo, as well as the general international voice of capitalism. The major motivating factor in pressuring China to become capitalist was no doubt the conclusion that the nation of over one billion people was a largely untapped treasure house of goods and services to be profited from, were it not for those pesky, ideological communists. And so the foreign political Page | 2

capitalist giants, backed by their own corporations, added pressure to China’s leaders to open up to trade. Trade agreements were solidified when the nation became a member of the World Trade Organization (WTO) in 2001. (“Member information: China and the WTO”) The WTO has received both praise and criticism around the world for its work, which particularly focuses in developing nations. The stated goal of the WTO is “to help producers of goods and services, exporters, and importers conduct their business” in international markets, by way of creating and enforcing agreements between its members, such as reducing tariffs or other barriers to trade. (wto.org) The one of the main criticisms of the WTO is that it favors large multinational Western-based, profit-oriented corporations, which through WTO regulations often gain a great deal of access to a much less developed economy, which in many cases accusations of exploitation are prominent. (Larn, Street) The World Bank is also a large international financial organization that works in developing nations, and again has drawn much criticism. (Uvin) It works by loaning nations large sums of money−in the amount of often millions or even billions of US dollars−that are theoretically used to spur growth and development, and through the “trickle-down theory” promote poverty reduction and increased living standards for all. (worldbank.org) Criticism for the Bank comes in the form that loans are used as leverage to impose policies or other political ends that favor Western interests, as it is a largely US directed institution. (Uvin) It is not in dispute then that China’s accession to the WTO and the World Bank has created a new conduit through which multinationals much more easily reach its rapidly growing economy; whether or not it is beneficial or harmful is subjective to one’s viewpoint, and this will next be discussed. III.

Effects Environmental concerns should not be regarded as ‘special’ concerns, because changes in this area will ultimately directly or indirectly affect us as well, as we ourselves have proven to be a force in the ecosystem and climate; China then, accounting for approximately a sixth of the human population will have a dramatic effect on the environment for better or worse. The country’s environmental standards are much lower than many Western countries’ and what regulations exist are commonly overlooked, not necessarily out of ignorance but in an attempt to not hamper economic development. As a result China has become an attractor for polluting factories, as multinationals have intentionally relocated their polluting operations to the nation. (Li) Additionally, energy has been called the key to development, especially in industry. The majority of China’s energy production, as in the United States, relies on either coal or petroleum, both fossil fuels. The damage the burning of these readily abundant products cause include carbon dioxide, a primary contributor to global warming, and acid rain, a Page | 3

toxic threat to agriculture, water supply, and the natural ecosystem. (“China”) The political implications of globalization are extensive, as political forces nearly always follow the economic. As mentioned, institutions such as the World Bank and the WTO may to some extent influence policy decisions, and specifically those related to business. (Larn, Wu) Further, it can be expected that corporations that have traveled half way around the world to make a profit will yield whatever political muscle they have, through lobbying in their home country or otherwise, to promote that end. (Street) As China becomes evermore privatized, it should be expected that more and more policy will be linked to commercial interests. A growing class inequality has been an issue since the economy was reformed thirty years ago, and today still concerns some Chinese protesters, whose demonstrations occasionally even turn violent. And despite promises of wealth and democracy, much of the rural interior sees little if any of the benefit that some on the more urban eastern coast do. (Riskin) As happens in societies throughout history−both socialist and capitalist−the poor are left behind as the most powerful of society grow wealthier. As a result of the denying the poor adequate resources, the poor are struck with a great array of issues, often including a lack of or insufficient nutrition, healthcare, and education, and thus in many ways the quality of life is reduced. As mentioned above much of China’s poverty is found in the rural interior, where many are considered at or below the “poverty line.” (“Country Brief”) There is great discrepancy among estimates for the exact number as there is a great variety of definitions of what constitutes poverty in China. Most experts agree that the number of Chinese living in “extreme poverty”−less than US$1 per day−has fallen since the early 1980s. However it is possible to make the argument that because one is living above $1 per day does not necessarily mean they have come out of poverty, nor does it in itself prove that the trend is typical of the entire economic strata. Additionally, the accuracy of the figure (originally put out by the Chinese government and published by the World Bank) has been called into question over if it properly reflects inflation figures, nutritional data, and income versus expenditure ratios. While estimates are disputed, poverty rates (again, people living on less than $1 a day) tend to fall around 12 to 15 percent, with estimates as high as 25 percent of the rural population. Poverty in urban areas (supposedly where the economic boom is occurring), though apparently lower than rural rates, seems to be on a steady rise. (Riskin) Labor issues are often brought about in poorer communities, where the destitute are more desperate to work regardless the nature or conditions of the labor. Though some small progress has been made in the last decade, child labor has long been an issue. Workers must show identification cards showing that they are at least 16 years old, the legal working age, when applying for a job. Many desperate parents, unable to pay school tuition, must send their children to work at a much younger age in order to Page | 4

supplement their insufficient incomes just to feed themselves. Education foregone, many children forge identification cards in order to be hired and support their family; thus it is difficult to get an estimate of child labor occurrence, though some estimates are as high as ten percent of those under the age of 16 hold fulltime jobs. (Carroll) It is common for underage workers to be employed for toiling, unhealthy, or hazardous work for industrial factories, cheaply producing products that are to be sold for hundreds of times the production cost though multinational corporations from abroad. (“As China’s Economy Grows…”) IV.

Possible Solutions For some, a solution to economic globalization may seem not at all warranted, for perhaps ideological reasons or contentment with the present hegemony. However for others, there may be a questioning of motives of those who exploit the poor for personal and nationalistic gains. And if those actions are found to be in contempt, then the question is raised, what are we, or rather the Chinese people, to do about it? Option 1: Continue reform process. China may perhaps be going through transitional issues, but given enough time a true democratic system will prevail, and the Chinese people through the ballot and reform will decide what to do about economic globalization. After all, it has only been a relatively short time−30 years−since the first reforms were implemented, and many of the leaders from before this period are still in power, so once their time is up perhaps the country may see change all on its own. Option 2: Encourage China’s leaders to discontinue WTO and World Bank membership. Trade should be decided on China’s own terms, not by international deliberation, perhaps biased toward corporate interests. If some honest leaders truly have their people’s interests at heart, then perhaps they will realize what privatization is doing and will implement measures to counter this. Perhaps, contrary to WTO regulations, if China were to tax to foreign multinationals operating in their country, the income could be used to fund ‘safety nets’ for the poor. Option 3: Revolution. The people cannot wait for delayed, bureaucratic intervention governed by corrupt officials who may have their own personal gains at heart, if they act at all. As the corporate towers rise up, they watch the people fall. V.

Best Possible Solution Though drastic, the quickest, most thorough solution to stop the people’s exploitation would be to take control of matters for themselves through a seizure of the elite class. This solution offers the chance to effectively remove the institutionalized exploitation through both profitbased corporations as well as the corrupt state. Though it would ultimately be decided by the Chinese people, the revolution could be anarchist or anarcho-communist in nature, which would not necessarily allow for the return of corrupt officials. A revolution however has at least two challenges Page | 5

worthy of consideration; to remove such an extensive and powerful ruling class, a revolution may become violent, and such a geographically large country could have issues with reunification. However, it is unlikely that any good number of China’s leaders will act decisively for the people’s true interests in the foreseeable future, thus waiting for a result from them while tens of millions of people waste away in squalor is most likely a futile effort. It would not be wise though to completely rule out reform, as it seems any revolution would be sometime in the future; reform measures may save the country from violent overhaul, or make a revolution more peacefully transitional. In any case, with a ‘clean slate,’ a more democratic system could create the existence of a power “of and by the people.” VI.

Conclusion It must be realized that any given policy implemented, including continuing the current trend, in the most populous country on the planet may affect the lives of tens or even hundreds of millions of individuals for better or worse. Although there is sure to be plenty of controversy and disagreement upon economic globalization in China, hopefully the implementers of any policy will remember that the Chinese people are as human as they themselves are.

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