DAV Wk 5 China From Socialism to A Consumer Centric Dynamic Market Questions

Description

With specific references to the video, how does the focus of this course differ from standard narratives of post-Mao China since 1976? For instance, what topics have we covered that the documentary does not? And vice-versa: what does the documentary cover that we have spent less time on? Think about these different wavs to study (and teach) history.
 POST
This course differs from standard narratives in post-Mao China by focusing more on drivers of events and the motivations of China and its government/economy/climate impact. Where as I would say standard narratives focus more on specific events, like the Tiananmen Square Massacre, or the movements of people in the government, and other single specific occurrences. For instance some topics that we have covered that the video didn’t or didn’t go much detail into are: China’s impact on climate change, China’s consumerism habits and relationship with capitalism, how pre-Mao habits/trends continued into post-Mao China (the video does touch on this a little but more about governmental affects it had, rather than societal impacts). To flip it now the video covered more specific events along with a couple other topics that we haven’t covered as in depth like: the Tiananmen Square Massacre, Hu Yaobang’s death,  other protests, music trends (rock guy in video), Deng’s visit to America and what it represented (we have talked about the affects of Chinese markets opening to the outside world though), the Beijing note wall, how certain populations felt about the government- the video talked to farmers, college students, city dwellers, journalists, and more. Another big thing the video covered that we haven’t covered as much is living in Chinese communism, the video had a whole section of the video labeled “Born Under The Red Flag.” Both methods of teaching history have their benefits and downfalls, focusing more on events can cause one to lack the big picture of societal/economic, but allows one to know what has really occurred in time and allows for one to know what is considered as major events by people of the history one is covering. Focusing on more of the big picture really allows for one to know the true “why’s” of history and what is going on in the background, but this information isn’t as relevant sometimes because why is it worth knowing why things are happening if you don’t know what happened. That is why I really liked professor Gerth assigning this video in this module, I was able to look at events and think of all the “why’s” that event may have happened and it allowed me to engage with the video so much more. The video also crossed into topics we have covered as well, one being the economic development zones, I remember the farmers and non-coastal people being really jealous about them, feeling closed off to the world.R5 CHINA GOES,
SO GOES THE WORLD
Houu C hinese C o n su m ers
fire Transform ing Everything

KfiRL GERTH
HILL AND LUANG
n DIVISION OF FORRAR, STRAUS AND GIROUX
NEW YORK
CONTENTS
INTRODUCTION
3
1. NO GOING BRCK?
19
1*3
2. WHO GETS WHRT?
3 . MRDE IN TRIWRN
65
M. STRNORRDIZING RBUNDRNCE
91
5. BRRNOING CONSUMER CONSCIOUSNESS
6. LIVING IN R WORLD OF FRKE5
7. EXTREME MARKETS
111
133
157
B. ENVIRONMENTAL IMPLICATIONS
181
CONCLUSION: THE CHINESE INK BLOT
201
Notes 209
Further Readings and Resources
Acknowledgments
Index
239
243
247
vll
M * STANDARDIZING ABUNDANCE
Before you can have a consumer culture, of course, there must be
something to buy. When I first visited China in the mid-1980s, my
Chinese friends would tell me there were only two words I needed to
know when it came to shopping: mei you, or “we don’t have any,” the
most common response one heard from store clerks. Worse than hav­
ing little choice was having nothing to choose from at all. When I
arrived in China to study, things had improved a good deal, but short­
ages remained a fact of everyday life. At the time, most Chinese un­
doubtedly would have viewed the fare available at our student cafeteria
as sumptuous, but I certainly didn’t. Although the food cost almost
nothing, I would gladly have paid extra for something more edible
than the stringy chicken and adulterated rice we were served. Though
my Chinese fellow students were accustomed to it, they were also
aware of the extremely low quality of the food, especially as vegetables
grew scarcer by spring. My Chinese roommate back then developed a
theory: the student protests that broke out across college campuses
each spring were inspired not by the students’ stated high-minded
reasons (that year, a desire to elect their own student representatives)
but by the quality of the available food.
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This, too, changed rapidly with the coming of economic reforms.
A decade later, urban Chinese were beginning to have access to super­
markets, twenty-four-hour convenience stores selling foods and snacks,
and (perhaps the most revolutionaiy change in a country formerly
plagued with famines) all-you-can-eat buffets. Since the mid-1990s,
this plenty has spread outward to smaller Chinese cities and down­
ward to the less affluent.
While a few decades ago there was little to buy and even fewer
places to buy it in China, the country’s urban areas have since under­
gone not only a transition from scarcity to abundance but also a rev­
olution in how things are sold. At Walmart supercenters, 7-Eleven
convenience stores, traveling peddler carts parked outside high-rises,
and even among the permanent shops lining the lanes up to Buddhist
and Confucian temples, the Chinese today are never far from opportu­
nities to shop. They have seen a stunning increase in the number of
products available to buy and of places to buy them; exercising con­
sumer choice among an abundance of items is now an everyday activity
for the Chinese, just as it is for consumers in the United States and
other developed nations. And urban Chinese love to shop. According
to a 2008 survey, they have come to spend on average nearly ten hours
a week doing it (while Americans spend slightly under four), and two
in five called shopping their favorite leisure activity. Such retailing op­
portunities are the primary mechanism by which market economies
expand consumption and translate consumer desires into economic
realities.
Although this retail revolution has taken place across the full range
of consumer goods and services, perhaps in no area of Chinese life has
the transformation been more obvious and dramatic than in how the
country now meets the most essential of human needs, food. As late
as the 1980s, grocery shopping was a time-consuming and grim expe­
rience as customers faced long lines and uncertain supplies. What
little was available to buy was unattractively packaged and sold by
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unmotivated and unhelpful workers ever ready to respond to inquires
with mei you. At the advent of the Reform Era in 1978, city dwellers
spent 58 percent of their income on food, most of it on staples such as
rice and locally available vegetables. Today they spend only about a
third of their income on food, and have many more varieties of food­
stuffs to select from, including frozen foods, snacks, wines, carbon­
ated drinks, and imported fruits and vegetables, all of them attractively
marketed, packaged, and displayed. Consumers are no longer limited
to shopping for food in state-run stores and mom-and-pop shops,
but can choose from a variety of superstores, supermarkets, discount
stores, and convenience stores. Such retail options, almost nonexis­
tent until the early 1990s, now represent a third of urban food mar­
kets, and they are spreading. According to the China Chain Store and
F ranchise Association, the number of supermarkets in China expanded
from just one outlet in 1990 to approximately sixty thousand just ten
years later, an expansion that only accelerated after China formally
joined the WTO in 2001. By 2003, these supermarkets were generat­
ing an estimated $71 billion in sales. This metamorphosis from dingy
state-run stores to brightly lit international chain stores staffed by po­
lite and helpful uniformed attendants at computerized checkouts is a
particularly telling and vivid example of the retail revolution (or “WalMarting”) transforming the everyday consumer experience in China.
Its history also provides a vivid example of China s larger shift from a
centralized to a consumerist economic model and the lifestyles it
made possible.
From Shortages to Rbundance
China s decision to allow consumers to decide where, when, and how
much to buy and to eat marked a dramatic reversal of the Maoist-era
model. After the Communist Revolution in 1949, the new govem93
RS CHINA GOES. 5 0 GOES THE WORLD
ment at first permitted the existing private, family-run shops to con­
tinue, but within a few years its socialist reforms begin to centralize
retailing by creating a system of unified administration and monopoly
supply—that is, a state-owned distribution system. All urban staple
food shops fell under the control of the Staple Food Bureau, which
supplied all state-owned stores with nearly identical items at identical
prices. To purchase food in these stores required not only cash but
also, as I discovered when I tried to buy that bicycle at the Nanjing
Friendship Store, local ration coupons. Even when supplies were avail­
able, a purchaser could buy only a limited amount. Prices and supplies
were set from above and fixed. The lack of competition showed, and
these stores quickly became notorious for their lack of service, variety,
innovation, and respect for local preferences. Packaging served only
the functional purpose of separating and protecting products—and
did even this poorly, as damage rates exceeded 10 percent. Clerks
often applied labels haphazardly and even incorrectly before placing
goods on shelves. Consumers, separated from the merchandise by a
wall of salespeople and counters, had to request products from inat­
tentive clerks, who rarely let buyers examine goods before purchasing
them. Indeed, clerks often were responsible for maintaining their stocks
and therefore had a disincentive to take items out of their protective
cases and packaging for customers to inspect.
V
But starting with the economic reforms in 1978, the state began a
rapid withdrawal from managing the retail sector, ending its monop­
oly over the procurement of commodities and relaxing state control
over prices. In effect, China began moving away from a command econ­
omy, where the government decides how much of what is produced,
and reintroduced markets, where consumer demand determines pro­
duction. The first to benefit were farmers, who began growing and
selling their surplus produce. But as private ownership, country fairs,
and urban marketplaces reappeared, other small retail entrepreneurs
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STANDARDIZING ABUNDANCE
also emerged, the very ones who became Chinas first post-Mao newly
well-off. In towns and cities across China, such small-scale businesses
became critical participants in the réintroduction of mass retailing
and therefore of consumerism. Of course, these budding entrepre­
neurs also needed to have something to sell, and in December 1978,
the Communist Party leadership restored “private plots” (though not
private ownership of the land) and permitted the reestablishment of
markets, both in the abstract economic sense and in literal market­
places. The state now allowed producers to sell their privately grown
produce directly to consumers or private middlemen and not exclu­
sively to the state, let alone at state-set prices. Motivated by the oppor­
tunity to make a profit, farmers began to grow more. And as agricultural
production boomed;so did rural incomes.
Markets tend to beget more markets and consumption more con­
sumption, so retail offerings quickly spread beyond agricultural produce.
Between 1980 and 1985, the number of individually owned mini-stores,
stalls, and booths selling goods rose from one million to six million, and
by 1986, sixty thousand local marketplaces had opened across China. To
give but one example, during this period Shenyang, the capital of Liao­
ning province in northeast China, established ten large open-air mar­
ketplaces and thirty-four smaller ones throughout the city, which
together served three million urban residents and another two million
in the surrounding area. The largest of these, the Bei Hang Agricultural
Market, was as large as an American football field.
The story of the Bei Hang Agricultural Market encapsulates the
tumultuous twentieth-century history of selling things in China. First
established in the 1920s, after 1949, Bei Hangs fate was tied to the
CCP s on-again-off-again policy of using market mechanisms in gen­
eral and marketplaces in particular. It was allowed to operate until
1957, when it was abolished as part of the collectivization of farming,
the creation of giant communal farms. But after the dramatic failure of
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the Great Leap Forward and after the subsequent Great Famine,
Chinas leaders reversed their position toward small-scale market­
places, making it legal for those living on communes to have small pri­
vate plots and to grow some extra vegetables for sale, and reestablishing
Bei Hang in 1960. Six years later, however, the market was outlawed
again as the Cultural Revolution re-vilified material incentives, calling
the use of money and personal profit to motivate people “capitalistic.”
With the advent of economic reforms. Bei Hang was officially re­
reopened at the start of 1979, and within two years became one of
forty-four large marketplaces hosting more than five thousand ped­
dlers across the city. Dan Dejun, a longtime Bei Hang vendor, remem­
bered the policy shift as it appeared in newspaper political cartoons.
In late 1978, the newspaper printed a cartoon with someone riding a
bicycle with two basketfuls of produce. Over the cyclist s head was the
caption “Speculator.” A month later, the identical cartoon was run, but
“Speculator” was replaced with a large red flower, signaling the Com­
munist Partys endorsement of such commercial activity.
Because few Chinese had refrigerators and all had a tradition of
buying fresh meat and produce, more than half a million began shop­
ping at Shenyangs forty-four marketplaces every day, immediately
reintroducing choice and consumer control. Within a few years, every
resident of Shenyang, and those in cities like it across China, had ac­
cess to similar open-air marketplaces. Even state-owned enterprises
such as hotels and restaurants began going to such markets to buy at
least part of their supplies. Indeed, this reemergent market culture
spread so quickly and widely that state-owned shops and agricultural
communes began selling their own surplus produce in such market­
places, although the latter still had to meet their hefty state quotas
before they were allowed to sell anything and keep the profits. During
the early years of the reforms, the contrasts between state-owned and
private retailing were quickly and easily visible.
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STANDARDIZING ABUNDANCE
This réintroduction of mass retailing, beginning with these local
produce marketplaces, signaled the restoration of choice, an end to
chronic shortages, and a shift toward the perception of plenty. It also
signaled a change in everyday influences on ones purchasing deci­
sions. In state stores, the Chinese had had to rely on employees to
select the particular items they could buy. As one woman recalled, ‘T
could only buy my favorite candies at a state-owned food store in Tian­
jin. I could not chpose the flavor and wrappings of candies I wanted.
My favorite flavor was lemon, but shop assistants only grabbed ran­
dom candies in a big jar. I was very disappointed that in the large pile
of candies there were only a few lemon ones.” But at marketplaces,
buyers could choose which piece of fruit or clothing item they wished
to buy. The reestablishment of private buying and selling, then, also
restored the power of choice to the consumer (and, as we shall see, ex­
plains the simultaneous reemergence of branding and advertising to
coach consumers on what to buy). But although marketplaces usually
supplied much higher quality items than the state stores, they did so
at higher prices. True, Shenyangs inspectors joked that they could
identify goods originally obtained at state stores rather than private
marketplaces by their dirty appearance, poor presentation, and low
quality. But along with improved quality came steady price rises, sow­
ing discontent among those earning fixed salaries. I vividly recall, for
instance, the anger of my Chinese roommate who in 1986 declared it
an abomination that many of these new entrepreneurs, including the
guys running the noodle stands that ringed the campus, earned more
than he would as a university professor.
I don’t recall, however, my roommate’s complaining about his new­
found ability to buy hot noodle soup at all hours or to enjoy the newly
available fruits, vegetables, and other products from faraway provinces
now available in Chinese cities such as Nanjing. Where products were
absent or in short supply, peddlers now had an economic incentive to
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meet demand, and soon goods were moving across the country to
wherever they would fetch the highest price. Perhaps its not surpris­
ing that many of his classmates decided that if they couldn’t out-eam
these peddlers, they’d join them. The original vendors at marketplaces
such as Bei Hang were mostly migrant laborers, former prisoners, and
farmers from the surrounding area—that is, those with low social and
economic standing. But a decade or so later, such vendors included
college graduates.
The ongoing creation of integrated markets for products spanning
the country also helped transform China from a country of shared
scarcity and immobility under Mao to one with circulating people and
products. The Bei Hang market, for instance, within a couple of years
of its reopening, hosted peddlers from nearly all of China’s provinces
and regions, and the variety of goods sold there expanded rapidly; the
development of national markets for regional products soon ensured
that fresh produce from southern China, which enjoyed later harvests,
was being transported north. Dual-track prices (that is, one price dic­
tated by the state and the other determined by the private market)
further undermined state provisioning, as suppliers now had an in­
centive to hold back their best products from the state to sell on the
market, hastening the end of state-run shops.
The experience of shopping changed in other ways as well. While
state stores had sold products at prices fixed by the state, the advent
of markets brought a gradual return to bargaining. At first both sellers
and buyers were reluctant to haggle, behavior that had been discour­
aged as “capitalistic” and, given fixed prices, had been unnecessary dur­
ing the previous decades. But within a few years nearly every customer
at markets such as Bei Hang tried to bargain for lower prices. The end
of fixed prices and the new diversity of goods also made comparison
shopping important again, although state-owned stores continued to
provide a reference point for what was a legitimate price. Likewise,
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choice made every consumer his or her own quality-control expert,
requiring heightened vigilance—particularly in a retailing environ­
ment awash in fakes. Not surprisingly, the uneven quality of goods led
to the careful inspection of products by potential buyers. Few con­
sumers now buy goods without the opportunity to inspect them; every
piece of fruit and every seam is checked.
The end of fixed prices also saw the return of the image of the
“cunning merchaijt” (jianshang). In traditional Chinese culture, mer­
chants were generally viewed as making money not, like most Chi­
nese, through hard agricultural labor in the hot sun or even making
things by hand, but rather by manipulating prices and information.
Even before the Communist Revolution, in the early twentieth cen­
tury merchants were often portrayed in popular culture as treasonous,
helping to sell imported products from the imperialist powers, espe­
cially Japan, who then dominated China. Then, as now, not everyone
sold the same product at the same price. Now price has again become,
like so much else in China, relational, with premiums demanded from
foreigners and anyone unfamiliar with the market or the seller. In this
environment, no wonder bargaining quickly reemerged as the quin­
tessential marketplace experience. Although the subsequent standard­
ization of shopping and prices in large retail stores doesn’t leave much
opportunity for haggling, in smaller shops and even in mid-tier depart­
ment stores one might still ask for and perhaps get a discount. What
something should cost has once again become the source of endless
conversation in China: “What did you pay for that?” has become—
after the traditional greeting, “Have you eaten?”—the second most fre­
quently asked question in the country.
One way to measure this initial stage of China s expanding com­
mitment to consumerism is that between 1981 and 1991, the number
of retail outlets more than quadrupled, from 2.02 million to 9.24 mil­
lion, and the number of people working in the retail sector doubled,
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from 7.63 million to 21.99 million. Consumerism, in short, has grown
more entrenched on both sides of the counter. The experience of ex­
panding consumer choice necessarily means that millions of Chinese
are also experiencing the seller side of sales, especially as the Chinese
government pushes its economy toward developing a service sector to
match its manufacturing prowess.
The Retail Revolution
In 1992 the Chinese leadership under Deng Xiaoping recommitted
their country to pursuing a market- and consumer-driven model of
economic development, including gaining full membership in the
WTO. The latter meant meeting the demand of foreign governments
and multinationals for greater access to Chinese consumers, which
would also require the expansion of retailing opportunities and strate­
gies. And just as they had with cars, Chinese leaders recognized that
one way to finance rapid reform and create domestic demand for
goods and services was to invite foreign investment without surren­
dering complete control. Where shortages had been a way of life, now
the issue was clearly consumerist: how to entice people to buy and
consume more, shifting control from suppliers to consumers. This
new era of mass marketing in China began with formerly dreary stateowned stores experimenting with marketing techniques they were
learning from the Taiwanese and others. Even such seemingly small
changes as Beijings Number One Department Store on Wangfujing
handing out free samples belied a fundamental shift: rather than
dampening desire in an environment of scarcities, stimulate it. Like­
wise, signs, billboards, and other public advertisements informing and
enticing potential buyers appeared in urban centers. Overnight, Chi­
nese cities began to glow with neon lights advertising Becks beer and
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Oreo cookies. Major shopping streets such as Nanjing Road in Shang­
hai, once drab and dull, again began to resemble Hong Kongs Golden
Mile at night, with families and couples strolling the streets window­
shopping and responding to street vendors. Across the country, cen­
tral planners introduced nearly identical pedestrian shopping malls
modeled on Wangfujing in Beijing, Binjiang Avenue in Tianjin, and
Shangxia Jiu Pedestrian Street in Guangzhou.
During the lijte 1990s, Chinese retailing underwent intensified
expansion and consolidation. Although the central government tried
to limit foreign investment, local governments began to ignore central
controls and encourage such investment. Soon international retail gi­
ants such as Carrefour, Metro, and Walmart began to aggressively
expand across the country, further transforming the retail environ­
ment. This process continued to accelerate after 2004, the end of the
three-year transition period following Chinas entry into the WTO,
as remaining restrictions on the ownership, location, and number of
branches of chain stores were abolished. Chinese retailers such as Wumart and Lianhua have countered this spread of these international
companies with their own mergers and acquisitions and become in­
creasingly like their competitors: larger chains of bigger stores using
advertising to promote established brands promised at lower prices.
Several of the largest Chinese-owned chains are still state-owned, in­
cluding Beijing Hualian Group and Dalian Dashang Group, further
ensuring that China will not simply surrender its retailing industry to
foreign companies. And these outlets are no longer limited to big
coastal cities. To achieve economies of scale, first-mover advantage,
and lower labor and land costs, both international and domestic retail
chains are rapidly pushing beyond the major coastal cities and into
interior second- and third-tier cities.
As with the spread of cars, the expansion of supermarket and con­
venience store chains has benefited from political decisions at both
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the local and national levels. Some local governments, for instance,
have facilitated the transition to supermarkets by closing down tradi­
tional street markets, often with the pretext that they were unhygienic.
In some cases, local officials have converted traditional large, indoor
‘wet” markets selling produce and meat into supermarkets. At the na­
tional level, China’s Ministry of Commerce launched a five-year plan
in 2004 to develop a retail network of chain supermarkets and conve­
nience stores in small towns, pushing the supermarket format into the
country’s vast rural hinterland. And all of this urban-rural national in­
tegration is aided by the massive road-building under way in China—
the same roads carrying those millions of new automobiles also have
trucks supplying new regional and national distribution networks.
With them has come the demise of many medium- and small-size
retail establishments and family-operated shops across the country.
Supermarkets are rapidly gaining a competitive edge over these tradi­
tional retailers, as they offer a cleaner, more comfortable, convenient,
and predictably standardized shopping environment, places where
the experience of buying bananas or canned yams is nearly identical
whether the items are purchased in the northeastern city of Dalian or
the southwestern town of Dali. Likewise, a younger generation is in­
creasingly unfamiliar and uncomfortable with unbranded commodity
consumption; China’s youngest consumers want to shop in Walmart
and Wumart. As a young man told me, “China’s wet markets are gener­
ally very dirty, so I don’t like to go to them. The things for sale at super­
markets are much more trustworthy, though more expensive.” Of
course, Walmart and other retailers have responded to this percep­
tion by using techniques such as loss leaders, selling some common
items at cost or below to stimulate sales, and the perception of “every­
day fair prices,” to quote the catchphrase Walmart uses in China. When
Walmart first arrived in Nanjing, for instance, the store became syn­
onymous with “eggs” and “rice” for selling those two items even more
cheaply than a nearby wet market.
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STANDARDIZING ABUNDANCE
Beyond cheaper staples, imported foods, until recently a rarity in
China, are also now widely available, where everything from Washing­
ton apples to California wines and from Thai lychees to New Zealand
butter are stocked on Chinese supermarket shelves. The same applies
to many international food brands, such as Kelloggs cereals, Hormel
sausages and hot dogs, Nestlé and Danone milk products, and Sldppy
peanut butter, many of which are manufactured locally, sometimes
with imported ingredients. Following Chinas entry into the WTO,
the fragmented domestic marketing system still hindered the transfer
of products to consumers, but supermarket chains have begun to
change this situation by introducing modem procurement systems
into China, thereby providing consumers with a larger and more uni­
fied market. These chains have created their own massive distribution
centers that draw products from across China and around the world
and move them to individual stores around the country, from which
the Chinese are quickly learning.
Chewing with Confidence and Convenience
The recent history of rice, that quintessential Chinese commodity, of­
fers a striking example of the transformation of the experience of buy­
ing and consuming in China. Before the price reforms of the early
1990s, consumers bought generic rice at govemment-set prices from
state-run grain shops. Local farmers, who were forced to “sell” their
grain at set prices, unsurprisingly tended to sell their worst rice to the
state, which also practiced little quality control. This rice was often
broken and unevenly colored and unpolished and, worse still, often
contained stones or bugs. During my own earliest experiences as a
student in China, the first time I discovered a black bug in my un­
polished white rice? I lost my appetite for rice for the next couple of
meals. As I gradually assimilated to eating state-procured rice, I began
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to simply pick out the bugs and continue eating. But I still had to
chew gingerly, as I often bit into tiny rock granules. Chewing rice with
confidence is a relatively new experience for the Chinese and visitors
alike.
Within a decade of my first encounter with a black bug, however, the
country had established a very competitive rice industry built around
brands, types, quality, origins, and prices. This competitive environ­
ment allowed consumers across China access to varieties of rice and
catered to regional preferences. Beijing supermarkets, for instance,
now supplied local buyers with the most widely preferred japónica
variety (short- to medium-grain) and brands of rice grown and trans­
ported from distant counties in the country’s northeastern provinces.
Indeed, the current availability of japónica rice throughout China
illustrates how food markets and brands are becoming national, some­
times even eroding regional differences in tastes and preferences.
Southern Chinese, who traditionally preferred long-grain indica rice,
now often eat japónica rice, particularly in wealthy areas such as Shang­
hai and Zhejiang province. The rise of branded rice has also addressed
growing concerns about food safety. Rice brands often seek and adver­
tise government-designated “green food” seals, which certify the re­
duced use of chemicals during production and a relatively pollution-free
factory environment. Since 2001, new labeling regulations’for foods
containing genetically modified organisms have also been in place.
Today more young Chinese live away from their family home, work
long hours, and need to manage two-career families. In short, like their
counterparts worldwide, Chinese consumers increasingly demand con­
venience and predictability. And, as elsewhere around the globe, these
expectations have fueled the rise of convenience store chains. Chi­
nese today are rarely far from places to buy something to eat. These
stores were first introduced into China in the mid-1990s by one of
Japan s largest chains, Lawson. By 2004, there were nearly five thou-
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sand identical Lawson convenience stores in China, over half of those
in Shanghai, where convenience stores now so blanket the city that
many blocks host several. As elsewhere, convenience stores carry all
the basics that people run out of or need more of at the last minute:
bottled water and juices, alcohol, magazines, salty snacks, prepared
lunch boxes, newspapers, and cigarettes. And, following the Japanese
model, they have, expanded to offering many other time-saving ser­
vices such as photocopying and accepting payment for telephone, gas,
and electrical bills. By 2004, the Japanese-owned 7-Eleven chain, the
worlds largest convenience store operator, also had stores in south
China and had formed a joint venture with two Chinese companies to
open the first twenty-four-hour outlet in Beijing. Five years later, the
company had nearly six hundred stores in China.
To gain the economies of scale that make them profitable, conve­
nience store chains like Lawson and its Chinese equivalents such as
Wumart have opened as many outlets as manageable, thereby dra­
matically altering urban Chinas nightscape. The former darkness of
most city streets is being replaced with bright fluorescent fights, and
more people are out late picking up milk or a snack, browsing the
magazines and newspapers as they do so. Nonetheless, these retailers
are finding that convenience is not always enough to draw shoppers.
During Beijings long winters, for instance, 7-Eleven finds its stores
largely empty and unprofitable; what they offer is not inducement
enough to brave the cold. And despite national efforts of mass retail­
ers to lure customers away from traditional wet markets, many Chinese
cling to the perception that these carry fresher, cheaper goods, espe­
cially fruits and vegetables. Thus wet markets, though greatly reduced
in number, have not disappeared, even in cities such as Shanghai and
Beijing. Indeed, many shoppers continue to purchase fresh produce
from these markets, supplementing them with weekend trips to the
supermarket for other items.
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RS CHINR GOES, 5 0 GOÈS THE WORLD
But such traditional preferences are not the most likely check
on the seemingly endless expansion of retailing in China. Rather, as
Chinese and multinational chains compete over smaller and smaller
markets, some economists and observers worry that China hasn’t yet
a sufficiently large middle class with enough disposable income to
justify this expansion and consolidation. But even if many of these
stores end up like some of Chinas spectacular shopping malls—huge,
empty spaces, monuments to misplaced hopes for demand that never
materialized—they will, for better and for worse, have transformed
the everyday experience of shopping for hundreds of millions of
Chinese. For the average shopper, the shift from simply not having
enough to having a bewildering range of choices is captured in the
transition in common Chinese expressions regarding food from chibaole to chihaole to chiqiaole: from the simple objective of‘eating to fill
your belly” to the pleasures of “eating plenty of rich food” to the pres­
ent situation requiring consumers to “eat skillfully.” For as we shall see
later, navigating the now dense markets overflowing with new products
while avoiding food scandals, fakes, and misinformation is indeed a
learned skill.
Just as it would be difficult for most Chinese to go back to using
a public toilet, it would be similarly difficult for them to return to
shopping in a poorly lit neighborhood wet market after becoming ac­
customed to driving a car to a Walmart and never worrying about avail­
ability or the need to haggle overprices. Retailing, then, is transforming
the ways Chinese see the world. The idea that one would walk into a
Walmart to find it was out of toilet paper or into a McDonald s to find
it had sold out of hamburgers becomes unthinkable. In short, modem
retailing turns the population into consumers who are independent
(they get to choose), rational (they must comparison-shop), and indi­
vidualistic (they have access to a variety of items and stores to suit
every consumer taste).
106
STANDARDIZING ABUNDANCE
Famine to Feast
Perhaps no irony better highlights the changed world for the Chinese
consumer than the fact that increasing numbers of them are using this
new abundance of choices to overeat, perhaps even to an early grave.
Food has always defined differences among Chinese in at least two
ways: who could afford to eat meat divided China by economic class,
and rice-eating custinguished southern Chinese from their wheat
noodle-eating northern compatriots. As noted, national chains have
accelerated the integration of national and even international markets,
bringing not only a wider variety of traditional foods but more meat
and processed food’to consumers across China. Similarly, when fastfood restaurants first arrived in Chinese major cities, they were novel­
ties visited infrequently; now, as the thousands of KFCs, McDonald ses,
and their Chinese equivalents popping up across urban China confirm,
they play a wider role in urban lifestyles. The result: Chinese eat much
more oily, fatty, salty, and sugary foods. City dwellers, for instance, eat
twice as much meat as they did in the 1980s. Accompanying the in­
crease in calories are expanding waistlines, a problem compounded by
sedentary office work and the displacement of the bicycle as the pri­
mary means of transportation. Twenty years ago one rarely saw fat Chi­
nese teenagers; now they’re commonplace. While twenty years ago
the idea of fat camps for overweight children would have been consid­
ered absurd, now they are widely advertised. It doesn’t help that pudgy
babies have traditionally been viewed as healthy and that anyone bom
in the 1960s or earlier is old enough to remember famine. The new
food options, along with economic inequality, have expanded the tra­
ditional distinctions made through food to include who can afford to
contract “lifestyle diseases” such as cancer and diabetes, which the
World Health Organization estimates could kill as many as eighty mil­
lion Chinese in the fiext decade.
107
RS CHINR GOES. SO GOES THE UJORLO
The effects that economic inequality has had on the Chinese diet
are clearly written on Chinese bodies. For instance, urban residents
eat twice as much protein as their less affluent rural counterparts, mostly
from poultry, eggs, and shrimp, which translates into height differ­
ences. Urban residents stand, on average, 4.6 centimeters higher, be­
coming a symbol of the inequality between urban and rural consumers
and even a source of discrimination. But these diet changes have also
included increased consumption of fats. Over the past ten years the
number of Chinese suffering from high blood pressure increased by a
third, and hypertension now afflicts a fifth of those over eighteen. In
major cities, where the shift toward Western-style diets has been most
marked, nearly a third of adults are overweight, and one in ten is obese.
The trends for urban children are even more alarming. By the end of
the 1990s, childhood obesity in the country as a whole had increased
from 4 to 6 percent; but in urban areas, the percentage of overweight
urban children had risen from 15 to 29 percent.
Overconsumption is visible in other ways. In the Mao era, extrav­
agant banquets and other opportunities to overeat were for most Chi­
nese nonexistent or exclusively for special occasions such as New Years
festivals and weddings. The notion of “leftovers,” even less of “doggie
bags,” had not yet arrived. Now doggie bags are common, and dis­
carding leftovers is even more routine. Shanghai alone throws away
two thousand tons of food every day, and Beijing discards sixteen hun­
dred tons. Despite water shortages across the country, water, too, is
wasted in new ways. In one egregious and widely publicized example,
a Harbin brewery—in a bit of poorly considered consumer outreach—
used ninety tons of beer to create a fountain in a downtown square;
the stunt required not only eighteen tons of barley and rice but also
eighteen hundred tons of clean water.
Food waste is also embedded in Chinese customs. The difference
now is that what was once an affectation of a very select wealthy and
108
STANDARDIZING RBUNDANCE
powerful few has become a status-gaining gesture for the ever more
numerous aspiring middle classes. Wu Mingzheng, a manager of a
Hangzhou export company, explaining why he ordered sixteen dishes
at a four-star restaurant for a table of business contacts, few of whom
touched much of the food, said that “if there aren’t enough dishes or
the guests don’t have enough to drink to their heart’s content, every­
one will think I api cheap and it may affect our business dealings.”
This scene is repeated hundreds of thousands of times a day across
China. According to a survey conducted in Zhejiang province, 70 per­
cent of those taking guests out to dine decline to take away leftovers.
Officials make periodic attempts to discourage overconsumption.
In 2008, Zhang Xinshi, a city official in Jiangsu province, for instance,
charged in his blog that “China was the most wasteful consumer of
food and beverages,” adding that Chinese should emulate other coun­
tries and have fewer but better dishes. His conclusion was backed by
stories of waste from around China. In the northeast city of Harbin,
one reporter estimated that the city’s twenty thousand restaurants dis­
carded at least four hundred tons of food a day. Although she found
waste in all restaurants, she also discovered that the more expensive
the restaurant, the more the waste. In many cases, more than half the
food went to waste, particularly by those dining at public expense. But
in all cases at least a fifth of the food was left behind. In response,
Zhejiang provincial authorities launched a campaign to urge consum­
ers to avoid “unscientific and uncivilized” consumer practices such as
deliberately wasting food and hosting extravagant wedding celebra­
tions. But platitudes and a few specific policies have done little to
counter an ancient cultural practice suddenly put within reach of mil­
lions more Chinese.
Obesity and waste are just two of the clearly unexpected and un­
desired consequences of the increasingly unleashed and prodded
Chinese consumer. ‘And as has proven true elsewhere in the world,
109
R 5 CHINR GOES. SO GOES THE WORLD
the new consumer culture is more likely to produce market reactions—
from increased sales of diabetes medication to food delivery services—
than it is ever to be reformed. Thanks to the introduction of modem
retailing practices, though, one thing we know for sure is that the
Chinese are unlikely ever again to be far away from opportunities to
consume as much and as frequently as they can afford—for better or
for worse.
THE CAMBRIDGE
HISTORY OF
COMMUNISM
*
VOLUME III
Endgames? Late Communism in
Global Perspective, 1968 to the Present
*
Edited by
JULIANE FÜRST
University of Bristol
SILVIO PONS
Università degli Studi di Roma “Tor Vergata”
MARK SELDEN
Cornell University
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Gerth, Karl. (2017). “Make Some Get Rich First: State Consumerism and Private Enterprise in the Creation
of Postsocialist China.” In J. Fürst, S. Pons, & M. Selden (Eds.), The Cambridge History of Communism
(The Cambridge History of Communism, pp. 447-448). Cambridge: Cambridge University Press. doi:
10.1017/9781316471821.019
18
Make Some Get Rich First: State
Consumerism and Private Enterprise
in the Creation of Postsocialist China
karl gerth
HIEA students: How do the specifics here relate to the David Harvey
reading on neoliberalism? What are the forces transforming China
that we read about here?
Who created postsocialist China? Starting in 1978, conventional histories
explain, bold national leaders led by Deng Xiaoping, who took power
that year, initiated a major transformation of Chinese society and foreign
relations, known as the “market reforms and opening” or simply “the
reforms” and “the reform era.”1 Leaders once again permitted small private
plots for farming and small-scale private enterprises. Millions of farmers
became better off. And millions of “self-employed, household-run businesses” (hereafter, I use the Chinese term, getihu) responded to the policy
change from the top by establishing everything from dumpling stalls to
interprovincial agricultural produce transport. Thanks to the policy changes
initiated by Deng Xiaoping, conventional histories continue, these private
farmers and businesspeople helped transform China from a land of socialist
economic stagnation and consumer deprivation to one of dynamic markets
and consumer plenty.
In recent years, scholars have challenged the Deng-led narrative of the
postsocialist era by highlighting changes from below, experiments and risks
taken first by local farmers, even in secret, and then by mom-and-pop private
businesses in the countryside and cities.2 Even the Chinese Communist Party
(CCP) now sanctions such grassroots interpretations of change. The 48-part
TV biopic, Deng Xiaoping at the Crossroads of History (2014), heavily emphasizes
1 “Reform” (gaige) or “reform and opening” (gaige kaifang) are the terms used by the
Chinese government for the major policy changes that began in the late 1970s.
I periodically place the term “reform” in quotations to flag the word as reflecting the
party-state’s promotion of the “policy changes,” a more neutral term.
2 See Kate Xiao Zhou, How the Farmers Changed China: Power of the People (Boulder:
Westview Press, 1996).
449
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k ar l ge r t h
the commune where unauthorized decollectivization and private farming on
household plots began. Hundreds of millions of people living in the countryside on rapidly disbanding communes led the way, as the chapters in this
book by Carl Riskin as well as Mark Selden and Ho-fung Hung detail. At the
same time, this biopic also narrates stories of local entrepreneurs such as the
student who sold Chinese crepes, or jianbing, from a cart in Beijing in the late
1970s and early 1980s.3 In these newer bottom-up interpretations, local
change – rural and urban – paved the way for national change. Stated
differently, change often came despite rather than as a result of national
policies.
Yet bottom-up interpretations of the post-1978 era have two shortcomings of
their own. First, they mention but do not explain the critical role of the Chinese
state in promoting, condoning or, at the very least, looking the other way
during the reintroduction of grassroots privatization of the state-controlled
economy, that is, the rebirth of the market economy populated by small-scale
businesses that gave way to the state capitalism and profit-oriented, massive
corporations in the 1990s.4 Local and national policy implementation was
critical. Important initiatives came from below, but they flourished with the
approval and direction of China’s communist leadership. Second, such interpretations still focus on Chinese people in their capacities as workers and
producers and, therefore, on production as the driver of history. But momand-pop shop proprietors and soon other merchants also changed China in
their capacity as highly touted leading consumers in the mass media and
popular imagination – the figurative Joneses that other Chinese wanted to
catch up with, let alone keep up with. Although the vast majority of getihu
remained poor, their desires, and the unintended consequences of their struggles to fulfill those desires, transformed China in the 1980s. And the state was
central to the creation of institutions that promoted and protected consumerism and consumers, particularly getihu.Consider how more and more people learning
to want more and more things and to judge
others through things is changing China.
3 Thanks to Matthew Wills for suggesting I look at Deng Xiaoping at the Crossroads of
History and for other suggestions on sources. See Chris Buckley, “Xi Jinping the Hidden
Star of a TV Series About Deng Xiaoping,” sinosphere.blogs.nytimes.com/2014/08/27/
xi-jinping-the-hidden-star-of-a-tv-series-about-deng-xiaoping/?_.
4 I follow sociologist Ho-fung Hung’s use of the term “capitalism” and his preference for
seeing capitalism in China as a modified version of capitalism rather than a unique one
that will challenge the existing global order. Hung distinguishes between markets and
capitalism: “Whereas a market economy is grounded on exchange and competition
among small producers, concerned more about livelihood than profit, capitalism is
driven by profit maximization and wealth accumulation” (Ho-fung Hung, The China
Boom: Why China Will Not Rule the World [New York: Columbia University Press,
2015], 8).
450
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Make Some Get Rich First
My focus here is on the evolving processes through which the state
reauthorized and promoted market economy and consumerism, and the farreaching consequences of the reemergence of small-scale private enterprise,
long suppressed by the state, in postsocialist China. In the 1980s – that is,
a decade before the widespread return of multinational corporations (MNCs)
and the concurrent Chinese state attempts to create consolidated domestic
competitors in the 1990s – the heart of revived markets and consumerism was
the state-managed creation of a new class of local entrepreneurs, the getihu,
and the revalorization of “bourgeois lifestyles,” as they had been labeled and
attacked during the previous decades, associated with modestly successful
getihu.5 In my account, this state-sponsored consumerism, or simply “state
consumerism,” becomes a primary force transforming postsocialist China.
The postsocialist state directly and indirectly promoted this consumerism;
but Chinese society also embraced consumerism, as it had done even during
the height of the socialist era and despite the anti-consumerist rhetoric of that
time. This does not mean that the Chinese state now embraces any and all
consumerism as the new driver of the economy. Indeed, as an endless stream
of Chinese and foreign economic reports point out, the Chinese state has
been slow to shift from an economy centered on exports and state investment
to a domestic-consumption-led economy.6 In fact, state policies have taken it
in the opposite direction by dismantling the social welfare state of the socialist
era for those largely in cities lucky enough to have jobs at state-owned
industries, making it more difficult to transfer wealth – and therefore
purchasing power – into the hands of hundreds of millions of Chinese
consumers.
A critical feature of the 1980s was the tension between how to benefit
from and simultaneously restrain capitalist cultural influences and imports –
that is, limit what had previously been labeled and attacked as “bourgeois
consumerism.” This tension helps explain the transitional policies underlying
the early postsocialist era such as the creation of SEZs (Special Economic
Zones), the promotion of Chinese cultural alternatives to popular imports,
and the periodic mass campaigns such as the “Anti-Bourgeois Liberalization”
5 For an overview of Chinese efforts to build competitive MNCs, see Peter Nolan, Is China
Buying the World? (Boston: Polity Press, 2013).
6 One such report to gain Chinese and international attention is World Bank
and Development Research Center of the State Council of the People’s
Republic of China (eds.), China 2030: Building a Modern, Harmonious, and Creative
High-Income Society (Washington, DC: World Bank, 2012). The complete report
is available at www.worldbank.org/content/dam/Worldbank/document/China2030-complete.pdf.
451
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k ar l ge r t h
of the late 1980s and the “Anti-Spiritual Pollution” of 1983 – which included
attacks not only on pornography, but also on new hairstyles, clothing and
facial hair. But quickly changing national and local realities made yet another
radical policy shift away from markets and consumer-led economic and social
development less possible or likely. Take the ties of trade. The “reform”
mantra had a second half: “market reform and opening to the outside world,”
that is, encouraging trade and investment from capitalist countries. Between
1971 and 1975, international trade tripled, with the vast majority of that trade
conducted with noncommunist countries (85 percent). The trade deficit rose
so quickly that imports were sharply curtailed in 1975, briefly slowing China’s
new strategy of importing capital and technology to speed economic development. China was so committed to foreign trade and foreign direct investment (FDI) by the end of the 1970s that some labeled the policies the
country’s “great leap outward.”7 Consequently, a better sign for China’s
new direction at the end of 1978 than the oft-cited Third Plenum and
reemergence of Deng was the announcement on 15 December 1978 that the
United States and China would establish formal diplomatic ties at the start of
the new year.
Throughout the 1980s imported capital, products and culture continued to
spread quickly. There was significant growth of FDI, particularly into the
successful SEZs located in Guangdong and Fujian provinces, but also the
influx of foreign products and brands, rapidly expanding the consumerism
that had survived throughout the entire socialist era. By 1984, for instance,
Volkswagen, IBM, Gillette, Coca Cola, Beatrice Foods and many other
MNCs had operations in China. Trademark registrations provide a useful
measure of the shift from a few to a plethora of branded products in China.
In 1980, the Chinese government received 20,000 trademark applications,
a number that by 1993 had reached 132,000.8 In every area of Chinese life,
new brands appeared, greatly expanding the vocabulary of a revived
consumerism.
In addition, the state encouraged the advertising industry, the manufacturer of modern desire and disseminator of this vocabulary of consumerism.
Above all, in China’s postsocialist society, advertising created alternative
narratives of the good life, narratives centered on personal happiness through
acquisition and consumption rather than politics and work. Branded products
7 Carl Riskin, China’s Political Economy: The Quest for Development Since 1949 (Oxford:
Oxford University Press, 1987), 259–60.
8 China State Council Information Office, White Paper, “New Progress on China’s IPR
Protection,” Xinhua, 21 Apr. 2005.
Note the connection with Harvey here: consciousness formed via
individual consumption rather than, say, collective activities such as
452
politics.
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Make Some Get Rich First
spread hand in glove with advertising during this period. When David
Ogilvy, dubbed the “Father of Advertising,” visited China in the early
1980s, he was struck by the near-absence of advertising. Print advertisements
looked like specification sheets, containing little more than detailed, technical
information about a product and no evocative images. The few commercials
on Chinese television mostly featured industrial products such as electric
motors rather than consumer goods. The rare big billboard proclaimed the
latest in communist propaganda. Ogilvy noted that the most important
advertising medium in China was radio, “the communal speaker system
reaching 75 percent of the population” that would broadcast advertisements,
one right after another, twice a day. There were fewer than seventy ad
agencies in all of China, with a quarter of those producing advertisements
for Chinese goods overseas.9 The change was staggering, even to contemporary observers. By the late 1990s, advertisements, along with brands, were
everywhere.
Advertising and brands created new meanings in the marketplace but also
contributed to tremendous consumer anxiety, a historical driver beyond the
direct control of central planners. But policymakers helped create this new
force: The implementation of the “household responsibility system”
devolved the risks and rewards of household agricultural work and local
enterprises, usually in market-oriented versions of the former collective
enterprises, from the state to family leaders and enterprise managers.
This policy change sanctioned the first wave of economic winners, most
conspicuously decollectivized farmers with access to urban markets for their
crops. The policies also created anxious losers, people disadvantaged by
policy changes that, for example, undercut the security of state-sector
workers.10
Thus the 1980s saw the postsocialist rebirth of the consumer marketplace closely associated with China in subsequent decades, namely,
countless consumer-product scandals in China and abroad. Over the
course of the 1980s, policymakers replaced fixed prices and distribution
via state “work units” (danwei) with market prices and individual Implications
purchases. This environment created new consumer issues, including ?
resentment and fear of unfair pricing, sales of imitations through deceptive
9 David Ogilvy, Ogilvy on Advertising (London: Prion Books, 2007), 187–88.
10 According to Frederick Teiwes and Warren Sun, Deng lagged behind even Hua
Guofeng in supporting the household responsibility system: Paradoxes of Post-Mao
Rural Reform: Initial Steps Toward a New Chinese Countryside, 1976–1981 (New York:
Routledge, 2015), 4.
453
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k ar l ge r t h
packaging, food adulteration, false advertising claims, product liability,
and warranty issues. Reemerging markets became sources of media
scandals and popular panics and rumors. For instance, in the summer of
1985, a scandal erupted over the sale of supposedly dirty imported used
clothing that was sold as new. A Beijing textile and clothing association
investigation concluded that the clothing was not only filthy but also
came from sick people. That winter twenty cities and counties participated
in operations to search and destroy the offending clothing, called
“foreign trash.”11 Why would the state want people to think
of themselves as “consumers”?
Amid the growing
number of market-related consumer scandals, it was
unsurprising to see the state initiate a top-down “consumer movement” to
further push policies designed to protect the interests of Chinese people as
consumers with individual or family interests rather than as citizens participating in setting a national agenda. Indeed, in the 1980s, the Chinese term for
“consumer” became much more popular. State-promoted consumerism
helped develop the idea of Chinese people as “consumers” in the academic,
bureaucratic and social spheres. In 1979, the government invited the
American consumer advocate Ralph Nader for a two-week visit to China.12
China’s most important consumer association, the Chinese Consumers’
Association (CCA), was established in 1983 as a quasi-state-sponsored
consumer protection organization. By the end of the 1990s, the CCA had
3,000-plus local branches across China, had accepted over 6 million consumer
complaints and had established a nationwide complaint hotline. Local
consumer-protection efforts also began in the 1980s. In 1987, the northeast
city of Shenyang passed the first local consumer-protection laws, and dozens
of provinces and cities quickly enacted similar ones. The Shanghai Supreme
Court agreed to accept consumer lawsuits in 1986, and an individual
consumer won a case in the Nanjing Intermediate Court in 1987 against
a department store over a defective television. In Sichuan, four people were
given death sentences for selling a poisonous beverage that killed twenty-five
people.
As the state embraced consumerism during the 1980s, the CCP recast itself
as defender not of workers, farmers and others previously exploited by
capitalism and imperialism but rather of new middle-class consumers.
11 For an account of a peddler who sold such clothing in Beijing, see Sang Ye, China
Candid: The People on the People’s Republic (Berkeley: University of California Press,
2006), ch. 1.
12 Randall E. Stross, Bulls in the China Shop and Other Sino-American Business Encounters
(New York: Pantheon, 1990), 257.
454
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Make Some Get Rich First
The party-state established regulatory agencies such as the National
Administration of Industry and Commerce (similar to the US Federal
Trade Commission), which regulates trademarks and advertisements; the
Commodity Inspection Bureau, which creates standards and requires companies to add product warnings and maintenance information; and the China
Standards Bureau (similar to the US Consumer Product Safety Commission).
Beginning in 1986, China officially established a yearly Consumer Rights Day
in China (15 March). In short, new forms of state administration reflected the
importance of consumers and consumerism.
The State of the Market, the Market of the State
The Chinese state did more than simply create institutions to manage
and promote the market economy and consumerism. Its involvement in
constructing markets determined who got rich first, that is, who got to
consume what. In the 1980s, the state’s role in making some rich first was
more subtle, leading scholars such as the Massachusetts Institute of
Technology business school professor Yasheng Huang to interpret the
1980s as a hopeful decade of mom-and-pop-led entrepreneurial capitalism.
In contrast, during the 1990s, state-owned enterprises (SOEs) became profitoriented corporations much more directly linked to the state; the resurgence
of state control over the economy crushed entrepreneurial capitalism and
created the “state capitalism” of China that dominates the Chinese economy
down to the present. But this critical state role was there throughout the
1980s, even as markets displaced state provisioning. To paraphrase Honoré de
Balzac, behind every new Chinese fortune, even the comparatively modest
mom-and-pop fortunes of the 1980s, there was a state policy making some
rich (and others poor).
State policies deregulating prices, for instance, created instant winners and
losers. It was a dramatic change. By the end of the 1980s, the idea of price
stability, a hallmark of the socialist era, had become a legacy. Inflation
returned. Initially, the postsocialist era saw a shift from fixed prices, strictly
controlled and unchanging, to three types of price policies: prices set by the
government, prices set by businesses but fixed within a range, and prices set
entirely by the market. Such policies created consumer problems, giving rise
to the perception that prices were unfair and manipulated by the politically
connected and ruthless rather than determined simply by naturally occurring
“free markets.” By the middle of the 1980s, with most prices no longer fixed
by the state, an intensive market culture of negotiation, instability and
455
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k ar l ge r t h
uncertainty emerged. Market culture seemed to pop up everywhere, with
self-employed peddlers (i.e. getihu) on every corner of city streets and commerce in formerly commerce-free places.
Despite the romanticization of the early postsocialist era as a “Golden
Age for free markets,” the state played a critical role in constructing those
markets. From the start of the postsocialist era, the state facilitated the
success of non-state-owned enterprises (non-SOEs): local township and
village enterprises (TVEs), a marketized extension of the former collective
whose numbers grew from 1.5 million in 1978 to 12 million by 1985.13 TVEs
were successful not because the state left the these businesses to live or die
in free markets but rather because the state implemented a dual-price
structure in the early postsocialist era that effectively forced SOEs to
continue to sell at low prices but allowed TVEs to sell at higher market
prices. Moreover, very few TVEs had to pay taxes, unlike SOEs.14 They
also did not have the extensive health and welfare costs of workers at
SOEs. As a consequence of state policies favoring TVEs, rural production
and incomes grew rapidly in the first years of the new era, peaking in 1985.15
In other words, the first to get rich – namely, farmers with access to
markets and those profiting from TVEs – were the direct beneficiaries of
state policy, not of state withdrawal from the economy, as Yasheng Huang
famously argued.16
The state also indirectly structured market opportunities. The Chinese
market was still fragmented in the 1980s as a direct consequence of
socialist-era policies, when the central-planning philosophy emphasized
local and regional self-sufficiency for nearly all products. This system
created an inefficient transportation infrastructure and local governments
that protected state- and collectively owned businesses. With the existence
of only a handful of national brands and products, many of them holdovers
from the presocialist era, this fragmentation created opportunities for
13 TVEs were not necessarily owned by local governments and former communes, but
tended to be located in townships and villages, the successors to teams and brigades.
Ownership varied. See Yasheng Huang, Capitalism with Chinese Characteristics
(New York: Cambridge University Press, 2008).
14 Wang Hui, “The New Criticism,” in Wang Chaohua (ed.), One China, Many Paths
(New York: Verso, 2003), 67.
15 Martin Hart-Landsberg and Paul Burkett, China and Socialism: Market Reforms and
Class Struggle (New York: Monthly Review Press, 2005), 45–50. Agricultural incomes
grew by 15 percent a year from 1978 to 1984, but slowed to 2 percent by the end of
decade.
16 Huang, Capitalism with Chinese Characteristics. My critique draws on Joel Andreas,
“A Shanghai Model?,” New Left Review 65 (Oct.–Nov. 2010), 63–85.
456
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Make Some Get Rich First
small-scale enterprises to make and move local products between subnational internal markets.17
Many of the provisioning policies of the socialist era lingered on into the
1980s and early 1990s, maintaining a state role in structuring consumerism.
Even in cities, the state still subsidized consumption, though often indirectly.
Some Chinese consumers could afford higher levels of consumption because
the government supplied, or at least heavily subsidized, essentials, including
food, and ensured availability via a rationing system. The government also
heavily subsidized necessities, such as housing, clothing and transportation.
True, as China moved to a market economy, such subsidies for urbanites
with jobs at SOEs, known as the “labor aristocracy,” were reduced and
eventually eliminated. In 1988, for instance, work units started selling housing
to their occupants. But even here, the state policy ensured these were sold in
ways that limited price and ensured affordability, allowing these early postsocialist consumers to buy other things.
The state also subsidized consumerism directly via the generous expense
accounts of employees of ministries, the armed forces, schools, state-owned
enterprises and other public organizations. This consumption was estimated
at US$ 16.6 billion in 1994, of which about one-quarter remained unreported,
and included products such as automobiles, furniture, electrical appliances
and office supplies as well as health care and entertainment. In 1993, for
example, the Chinese imported some 100,000 cars; expense accounts paid for
99 percent of them.18 But these benefits also extended more modestly to
urban workers. During the early postsocialist era, consumption was often
done not through the individual or the family but rather via work units. SOEs
used resources to buy consumer goods such as video recorders, TVs, radios
and many other products for factory leaders and even workers as in-kind
bonuses in lieu of cash.19
17 Many stories of early getihu were involved in moving products between different parts
of China. For examples on how such getihu supplied Shenyang in the 1980s, see Liu
Zhiqing, “Ziyou gouda: guanyu getihu jingji quan de baogao he sikao” [A Land of
Freedom: A Report and Reflections on the getihu Economic Circles], initially published
in Yalujiang zazhi 9 (1988), reprinted in Wang Lingxu (ed.), Ziyou guodu: gongshang getihu
shenghuo jishi [A Land of Freedom: A Record of the Business getihu Economy]
(Shanghai: Shanghai Academy of Social Sciences Press, 1993).
18 Rick Yan, “To Reach China’s Consumers, Adapt to Guo Qing,” Harvard Business Review
72, 5 (Sep.–Oct. 1994), 66–74.
19 Sociologist Andrew Walder has demonstrated in his now classic work that
perks sustained the clientelist system at the heart of Chinese society: Communist NeoTraditionalism: Work and Authority in Chinese Industry (Berkeley: University of California
Press, 1986).
457
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k ar l ge r t h
State policies indirectly shaped consumerism by creating ideal conditions
for smuggling. Reminiscent of presocialist-era treaty ports, SEZs modeled
on East Asian export zones were set up to lure foreign businesses and
export-oriented Chinese enterprises with lower tax rates, fewer labor and
environmental regulations, and duty-free imports. The regulations allowed
duty-free imports to foreign companies and Chinese work units, which
were expected to import supplies and raw materials and then export
finished products to earn hard currency. At a time of high tariffs, this was
an extremely valuable market advantage. In reality, SEZs created ideal
conditions for speculators and smugglers who, for instance, imported
cars for as little as US$ 8,000 duty-free and then sold them for US$
20,000–30,000 in Beijing and Shanghai.
Hainan Island, a newly created province and SEZ, became a natural
haven for smugglers and corrupt officials in 1980. As in the socialist era,
Chinese work units continued to send delegations on “business trips” to
make opportunistic purchases and buy whatever they could find, which
would later facilitate luxurious lifestyles for cadres but also ease transactions between work units by using smuggled goods as bribes.20
The same forms of smuggling and black-market activities occurred in
other SEZs. For instance, although set up to promote exports, the vast
majority of Shenzhen’s products (approximately 70 percent) were
sold on the domestic market rather than exported, often on the black
market and for hard currency.21 The most notorious outcome was the
high-profile smuggling case of 1985, when smugglers used navy ships to
transport foreign cars, TVs, video recorders and motorcycles into the
duty-free port of Hainan.
The People’s Liberation Army (PLA), another part of the Chinese state,
also shaped consumerism. For instance, the PLA owned 20,000 enterprises by
the end of the 1980s and was finally forced to divest from commercial activity
in 1998, though not before earning the nickname “PLA, Inc.”22 These
activities should be seen partially as a socialist era holdover. Even during
the Cultural Revolution decade (1966–76), the supposed height of anticapitalist modernity, General Lin Biao had instructed the PLA to become
20 Jim Mann, Beijing Jeep: The Short, Unhappy Romance of American Business in China
(New York: Simon & Schuster, 1989), 145–46.
21 Hart-Landsberg and Burkett, China and Socialism, 49.
22 See Cao Haili, “1998 nian Jiang Zemin xuanbu ‘Jundui bu zai jing shang’ zhenjing
shijie” [News of Jiang Zemin Declaring “the Army Is No Longer in Business” Shocks
the World], in Yinbiao song 1998 kaishi [Exploding Start from 1998] (Beijing: Shijie zhishi
chubanshe, 1999).
458
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Make Some Get Rich First
a “big school,” training workers and farmers in agriculture and sideline
production. In the first years of the Cultural Revolution, most army units
in the PLA became self-sufficient in meat and vegetable production. By 1971,
as many as 600,000 soldiers were involved in industrial production. Markets
created opportunities to sell their product and the “military-business complex” grew especially quickly in the 1984–89 period, when the PLA moved
into light consumer goods, manufacturing everything from baby carriages to
pianos and washing machines. Likewise, the PLA became an export powerhouse, with its factories exporting hundreds of products, including more than
30 million pairs of shoes by the mid 1980s.23
Thus the earliest, highest-profile consumers in the postsocialist era
included the PLA and others connected with the government and party.
Their consumption had political implications. The PLA military-industrial
complex was at the heart of the dual-track price system and “official
racketeering” scandals of the 1980s, a central complaint during the 1989
Tiananmen demonstrations. PLA units and soldiers used their special access
to government-subsidized scarce goods, which they then resold on the open
market for quick profits. This was especially problematic in the late 1980s, as
China transitioned from price controls to market prices, sparking instant
inflation, itself a big incentive for consumers to spend before the money
lost its value. PLA corruption was also used to fund unauthorized building
projects such as officers’ quarters, personal automobiles, feasts and countless
other forms of consumption.24 Corrupt consumption became ubiquitous.
It also became politically useful. With participation so common, nearly
all cadres were vulnerable to accusations of corruption, as forms of consumption became telltale signs of bourgeois lifestyles and/or corruption. Prime
Minister Zhao Ziyang’s love of golf, for instance, was used as indisputable
evidence of his bourgeois tendencies during the conservative counterattack
surrounding the post-Tiananmen crackdown in 1989.25 Indeed, high-end
consumption by officials (and their children) remains as politically dangerous
today under President Xi Jinping and his anti-corruption campaigns as it was
in earlier periods.
These state policies impacted on everyday consumerism. Fear of inflation
in the mid 1980s, for instance, spurred a specific form of consumption.
23 James C. Mulvenon, Soldiers of Fortune: The Rise and Fall of the Chinese Military-Business
Complex, 1978–1998 (New York: Routledge, 2001), 47–48, 57.
24 Ibid., 61.
25 Seth Faison, South of the Clouds: Exploring the Hidden Realms of China (New York:
St. Martin’s Press, 2004), 97–100.
459
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k ar l ge r t h
Consumers feared that the lifting of price controls would also lift prices,
making their savings worth less. “Panic purchasing” (qianggou feng) ensued,
especially for alcohol and cigarettes in August 1988, when price controls
were lifted.26 Consumers also sought to convert their cash into consumer
goods as quickly as possible as a hedge against inflation, creating consumer
binges for TVs, washing machines, refrigerators and cassette recorders.
One American reporter in China at the time, James Mann, described the
result as a consumer “frenzy.”27 Once again, though, such frenzies had also
existed in a different form in the socialist era of shortages. Consumers then
feared that they would miss out on the limited opportunities to buy something rather than because they worried about inflation, which had been
nearly nonexistent in the socialist era. Or they coveted the product on offer,
especially hard-to-obtain famous brands of bicycles and watches, which
helps explain the devotion to those same brands in the postsocialist era
when they have become readily available. When the Japanese wristwatch
manufacturer Seiko, a brand that had continued to have underground
appeal throughout the socialist era, opened a store in Beijing, it attracted
5,000 visitors a day.28
The consumer situation changed dramatically in the 1980s in Chinese
cities, from one in which products of any quality were in short supply to
one in which there was a glut of low-quality domestically made products,
a glut exacerbated by the easy availability of higher-quality, competitively
priced smuggled goods, especially in the free-for-all early days of the postsocialist era. Despite massive efforts, in the early 1980s, local governments
fought a losing battle against smuggled foreign goods, especially with the
simultaneous emergence of private peddlers. But by the mid 1980s officials
claimed the tide had turned against smugglers, reflecting broader changes in
the market.29 A massive increase in products led to the market shift in the mid
1980s from a sellers’ market to a choosy consumers’ market. The 41 million
wristwatches produced in 1985 represented a nearly 10 percent increase
over the previous year. Other previously hard-to-buy products such as
bicycles saw bigger increases, growing by 13 percent between 1984 and 1985
to 32 million. The production increases were even greater for washing
machines, refrigerators, cameras, cassette recorders and other previously
26 For a description of the panic purchasing by a Xinhua reporter, see Chen Yun,
“Xinhuashe bei pi” [Xinhua Criticized], NewsQQ (28 Oct. 2009), news.qq.com/a/2009
1028/000576.htm.
27 Mann, Beijing Jeep, 144. 28 Stross, Bulls in the China Shop, 249.
29 “Customs Brings Smuggling Under Control,” Xinhua News Agency (3 Aug. 1986).
460
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Make Some Get Rich First
unavailable consumer goods.30 In major cities such as Tianjin, by 1985 most
homes had a black-and-white TV (and 16 percent had a color TV, up from
none at the start of the decade). While under 10 percent had refrigerators, the
percentage of households with refrigerators was growing quickly, up from
zero at the start of the decade.31
Unsurprisingly, as pent-up desire for previously hard-to-acquire goods
was finally met, consumers began to want new things, creating an inflation
of desires, another driver of postsocialist social and economic change
well beyond the control of national leaders. By the mid 1980s, the
“Three Big-Ticket Items” of the socialist era (bicycles, wristwatches and
sewing machines) had been replaced with the “Four Big-Ticket Items”:
color TVs, double cassette recorders, double-door refrigerators and washing machines. As an official for the Ministry of Commerce said, “People
are buying products they didn’t dare dream of a decade ago. They think
they are essential to a better way of life.”32 Such desires extended to other
products associated with a bourgeois lifestyle: carpets, pajamas and even
wallpaper.
Geti Who? State-Supported Grassroots Change
in Postsocialist China
The most important contribution of the Chinese state to revived consumerism was its role in reinvigorating the class of those who wanted – and could
afford – the must-have items such as refrigerators and TVs as well as the new
consumer luxuries such as blue jeans and disco dancing. Beginning in the
1970s, millions of new getihu became a primary force spreading not only
private enterprise but also the corollary, the revived consumerism made
possible by economic success.33 In 1978, there were only 150,000 private
30 “1985 Economic, Social Statistics Revealed,” Xinhua News Agency (28 Feb. 1986).
31 “Tianjin Residents Possess More Consumer Goods,” Xinhua News Agency (26 Feb. 1986).
32 “Consumers More Affluent, More Demanding,” Xinhua News Agency (8 Oct. 1986).
33 At first, getihu were the only category of people allowed to engage in private-sector
activity. To avoid ideological debates over capitalism existing in an avowedly
socialist economy, they were limited to fewer than eight employees, not including
the owner and family members, a seemingly artificial limit but actually drawn from
Marx (Susan Young, Private Business and Economic Reform in China [Armonk, NY:
M. E. Sharpe, 1995], 5). But in 1987 Beijing allowed for a second classification of
private entrepreneur – the siying qiye, or “private enterprise,” with more than seven
employees. Once again, this measure simply legalized what had already been
happening at the grassroots level; private enterprises had already exceeded the
seven-employee limit. See Susan McEwen, “New Kids on the Block,” China
Business Review 21, 3 (May–Jun. 1994), 35–39.
461
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k ar l ge r t h
businesses; a decade later, there were more than 14 million getihu.34
These numbers grew so fast in part because legalization of getihu effectively
recognized – and attempted to regulate – private economic activity that was
already occurring.35 In contrast to the socialist-era revolutionary ideology of
equality, in which displays of wealth were at times deemed crimes against
the state or, at the very least, an indication of “thought problems,” this
accelerating privatization of the economy symbolized by the spread of getihu
immediately produced new classes of relatively prosperous Chinese who
demanded Coke, Pierre Cardin shirts and countless other new consumer
goods. Of 1,490 getihu households in a single district of Tianjin by 1984, for
example, 946 had acquired televisions, 433 cassette recorders, 90 refrigerators
and 48 motorcycles.36
The simple existence of modestly well-off people who profited from
market transactions and manifested their new economic power in consumerism reflected a profound transformation in China. At the end of the socialist
era and into the 1980s, China had been egalitarian relative to capitalist
countries. But it was also desperately poor, and the income gap was large
between the richer cities and the countryside, which was squeezed to support
cities via low state-set prices for agricultural products and state subsidies for
urban housing, welfare and medical care. At the same time, the “household
registration system” (also known in English by its Chinese name, hukou)
posed obstacles to rural residents seeking better-paying jobs in cities even as
the rural migrant population surged. But, as a result of new social and
economic policies making possible gains for the newly well off, starting in
the 1980s and becoming more pronounced in the 1990s, China became
a much more visibly unequal country.37
Different classes of China’s newly prosperous and wealthy consumers
emerged at various stages of the postsocialist policies.38 After farmers and
those connected with successful TVEs, the first group to appear was the
34 Young, Private Business, 6.
35 Ole Bruun, Business and Bureaucracy in a Chinese City: An Ethnography of Private Business
Households in Contemporary China (Berkeley: Institute of East Asian Studies, 1992), 48.
36 Marcia Yudkin, Making Good: Private Business in Socialist China (Beijing: Foreign
Languages Press, 1986), 30.
37 See Carl Riskin, “China’s Human Development After Socialism,” in this volume; and
Andrew Walder, China Under Mao: A Revolution Derailed (Cambridge, MA: Harvard
University Press, 2015), 331. China was the most inegalitarian socialist country in the
1970s, with a Gini coefficient of 0.33, a number that peaked at 0.491 in 2008 and then
trended downward. Of course, 0.33 is not a high level.
38 Xiaowei Zeng, “Market Transition, Wealth and Status Claims,” in David
S. G. Goodman (ed.), The New Rich in China: Future Rulers, Present Lives (London:
Routledge, 2008), 53–70.
462
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Make Some Get Rich First
small-scale household entrepreneurs (the getihu), who led China’s initial
service and petty retailing revolution. As many of the 17 million young people
“sent down to the countryside” before and during the Cultural Revolution
decade returned to Chinese cities seeking work, the Chinese government
officially recognized that massive urban unemployment had to be addressed,
but it was not prepared to allocate massive state resources to solve the
problem. In February 1979, the Central Committee of the CCP approved
a report by the State Administration for Industry and Commerce that advised
the central government to allow unemployed people with urban “household
registrations” to start their own private businesses, but restricted such businesses to repair, services and handcrafts. Initially, as leaders felt ambivalent
about abruptly reembracing private enterprise, getihu were forbidden to hire
workers, a restriction that was quickly ignored and gradually changed as the
range and size of private businesses expanded.39 Virtually every business
surveyed by Ole Bruun in Chengdu in the late 1980s had employees that
were not, as they were required to be, registered. Such “employees” seldom
included workers hired off the streets but rather were neighbors, distant
relatives and former coworkers.40 By 1985, getihu numbered nearly 10 million.
Roadside bicycle-repair shops, food stalls and fruit vendors appeared
everywhere. In the countryside, home to three-fourths of these new
enterprises, individuals set up fishing ponds, restaurants, repair shops and
other small businesses.
Getihu pushed economic changes into unauthorized areas by playing
a role in the black markets mentioned above. For instance, enterprising
people contracted formerly collectively owned boats to conduct smuggling
operations. In the mid 1980s, two such boats alone were discovered by
customs officials to have 10,000 wristwatches, while two other boats stopped
by Guangzhou officials had more than 2,000 Japanese cameras.41 Moreover,
as limits on the number of allowable employees expanded, so did the
numbers employed in the private sector, reaching more than 18 million by
1988.42
39 Chen Guanren, “‘Wenge’ you Zhongguo shoujia siying fandian: Yuebin fandian”
[Yuebin Restaurant, the First Privately Owned Restaurant in China After the
Cultural Revolution], initially published in Zhongwai shu zhai 3 (2010), 32–35, www
.zwszzz.com/DCFB/bkview.asp?bkid=191395&cid=630477.
40 Bruun, Business and Bureaucracy, 62.
41 “Guangdong Smuggling Cases Fewer but Bigger,” Xinhua News Agency (21 Mar. 1986).
42 The trends and statistics for the establishment of getihu are summarized in Wu Nan,
“Gaige kaifang hou de xiahai jingshang yanjiu” [A Study of the Trends of Going into
Business After the Start of the Reform and Opening Era] (M.A. thesis, Liaoning
University, 2011).
463
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k ar l ge r t h
The early years for getihu were a time of anxious consumerism, as a local
saying in Chengdu conveyed: “What your stomach contains, no one can take
away from you.”43 They feared yet another policy reversal on private enterprise, cognizant that any reversal might close their businesses and confiscate
their earnings. One peddler even worked his anxieties into the name of
his business. In September 1980, in the Yangpu District of Shanghai, an
unemployed youth set up a stall named the “Long and Short Pavilion”
(Changduan ting) selling dumplings and snacks. The proprietor explained
that “the business will last a long time if the policy stays in place; it will be
short-lived if the policy changes.”44 This anxiety constrained consumption.
According to the sociologist Thomas Gold, who conducted interviews with
getihu in the 1980s, most “had little confidence in the life expectancy of the
policy that spawned them. They therefore set out to earn as much money as
they could, consuming it aggressively in the expectation that their halcyon
days were numbered.”45 After decades of state-sanctioned attacks on private
enterprise as “tails” of capitalism, unsurprisingly, this newly affluent group
was accorded low social status. While some getihu became better off than
state workers, few became part of the newer, wealthier aristocracy that began
to emerge by the late 1980s.46
The richer among the new wealthy were generally much more directly
connected to the state than those who began as getihu. A second and more
successful group among the wealthy consumers emerged with the reforms of
1985, when the government allowed state enterprises to sell their surplus
products and keep the profits. As noted, this promptly created a dual-track
price structure for commodities: a lower price for quotas earmarked for the
state and a higher market price, often 200 or 300 percent higher. Tens of
millions of Chinese exploited these price differentials, the most successful
being the politically connected, especially the children of high-ranking
officials, the “princelings” (or the “princeling party”), holding provincial
and national offices, who used their connections to gain control over public
resources and to ensure state buyers even for bad products. Such speculation
43 Quoted in Bruun, Business and Bureaucracy, 44.
44 Chen Guanren, “‘Wenge’ you Zhongguo shoujia siying fandian: Yuebin fandian.” See
also Zhang Xutang, “Cong Weimeiguan dao Changduan ting yi 20 nian guanyu get
canguan de baodao fengbo” [From Delicious to the Long and Short Pavilion: 20 Years
of Reporting on getihu Restaurants], Xinwen jizhe zazhi 6 (2000), 52–53.
45 Thomas Gold, “Urban Private Business and China’s Reforms,” in Richard Baum (ed.),
Reform and Reaction in Post-Mao China: The Road to Tiananmen (New York: Routledge,
1991), 94.
46 Zhahui Hong, “Mapping the Evolution and Transformation of the New Private
Entrepreneurs in China,” Journal of Chinese Political Science 9, 1 (Spring 2004), 26–27.
464
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Make Some Get Rich First
within this dual-track price structure became known as “official racketeering,” and its practitioners were labeled profiteers or wheeler-dealers. During
the 1980s, this racketeering generated as much as 600 billion yuan in profits,
while those who got rich by it were labeled parasites, responsible for the rapid
inflation that followed the price reforms of the late 1980s. As noted, such
official racketeering, rather than only or primarily a lack of political freedom
and vague ideas of “democracy,” was a leading complaint fueling the
Tiananmen Square demonstrations of 1989.
But those early state-connected wheeler-dealers were poor compared to
the land speculators who gained their riches starting in the late 1980s.
The latter became China’s first billionaires. As with official racketeering,
land speculators relied on political connections to gain the right to purchase
choice parcels of land and secure loans from state-owned banks. Chinese land
developers are seen by most Chinese as completely dependent on state
connections. They use connections so that they need pay only a small
fraction of the value of land expropriated from urban residents and farmers
in areas surrounding cities and obtain unsecured low-interest loans from state
banks to finance construction. According to one report, 90 percent of China’s
billionaires (measured in yuan) are princelings, including nearly all of
the richest developers in China – nine of the top ten real estate magnates
and thirteen of the richest fifteen owners of construction companies in
Shanghai.47 Many Chinese blame this group for the inflation of the late
1980s and the inflated Chinese housing market thereafter, which has made
home ownership prohibitively expensive and slowed the spread of a broader,
middle-class consumerism.48
Although not as directly dependent on state connections as subsequent
wealthy groups, even modestly successful getihu also had forms of state
support, including crucial but subtle local official and state media support.
Such was the case with the woman credited with opening Beijing’s
first private restaurant in the aftermath of the Cultural Revolution on
30 September 1980. Liu Guixian lived near the famous shopping street of
Wangfujing in Beijing with her husband Guo Peiji, a cook at a state-owned
engine factory. The couple had five children, none of whom had jobs or even
47 “90 Percent of China’s Billionaires Are Children of Senior Officials,” China Digital Times
(2 Nov. 2006).
48 Outside the timeframe of this chapter is a fourth category of the new rich: former
managers of state-owned enterprises (SOEs) who became wealthy during the rapid and
notably corrupt conversion of public enterprises into private and stockholder-owned
companies beginning in the late 1990s. See Minxin Pei, “How China Is Ruled,”
American Interest 3, 4 (Mar.–Apr. 2008), 44–52.
465
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k ar l ge r t h
job prospects. Liu heard a news story about a couple in northeast China
selling dumplings (baozi) on the street that they had made themselves.
As with other early getihu, Liu’s business had state backing. Cadres at
Beijing’s Dongcheng District Industrial and Commercial Bureau wanted to
comply with national directives and help launch new businesses as well as
endorse such getihu as examples for others to follow. When Liu Guixian went
to submit an application, although there was as yet no official license, the
cadres allowed her to start the restaurant despite not having an official license
to issue.49
Official permission was not the only obstacle. Liu Guixian also lacked the
ration coupons necessary to stock her restaurant. After a local reporter
covered her story, she was given grain and oil rations by a stranger. But she
still needed a longer-term solution to secure supplies. Once again, the state
helped. Beijing’s Dongcheng District Industrial and Commercial Bureau
dispatched a senior cadre of the bureau, a man identified only as a Mr. Suo,
under pressure to implement the policy, to help find a solution. Mr. Suo
went to the Dongcheng Food Bureau to reassure them that the restaurant
was a pilot project and had official permission. Eventually the food bureau
gave Liu special permission to buy grain, flour and oil. Mr. Suo also helped
her secure a 500-yuan bank loan by cosigning, and this at a time when
private bank loans were extremely rare. He even helped her select an
appropriate name, steering her away from her initial choice, “Green
Flower” (Cuihua), which sounded like a traditional brothel name, in
favor of “Pleasing Guests” (Yuebin). By National Day on 1 October 1980,
the restaurant was ready to open. Despite rain, the line for a seat at the four
tables stretched out the door. By the time she closed, the restaurant had
made more than 40 yuan in profit, a sum roughly equal to her husband’s
monthly salary.
Repeating the pattern of “reforms” following on-the-ground realities,
although the business was technically against the rules limiting the scope of
private enterprises to service and repair, Liu Guixian’s restaurant received
tacit state endorsement in the state media when Wang Daren, a reporter of
Beijing Evening News, publicized the new venture. National and international
media attention followed. News of a privately established restaurant
attracted American Embassy officials, who made a regular reservation.
The US Embassy even made a promotional map and distributed it to other
49 For the basis of the story, I rely on Chen Guanren, “‘Wenge’ you Zhongguo shoujia
siying fandian: Yuebin fandian.”
466
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Make Some Get Rich First
embassies. With those group reservations, Liu and her husband made
thousands in profits each month. As they recalled the magnitude of their
new wealth, they earned enough every day to buy the once-coveted but hard
to obtain Flying Pigeon brand bicycle.
As with getihu around China, Liu and her family encountered other
problems, especially the envy and animosity of neighbors. Most people on
her street disapproved of her opening a restaurant. One person believed that,
as a private businessperson, Liu was by definition a “capitalist” opposed to the
CCP. Another neighbor suggested Liu was a spy for foreign countries.
Reflecting the widespread uncertainty about national policies, neighbors
warned her that she would regret it someday and that the government
would eventually close private businesses such as hers. The stigma extended
to her family. Classmates of her youngest son stopped visiting after the
restaurant opened. The boy also was given the cold shoulder by neighborhood children; another child called him “a pioneer in the restoration of
capitalism” (zibenzhuyi fubi ji xianfeng).
Reversing decades of anti-capitalist news coverage, the state media
attempted to teach Liu’s neighbors and everyone else of the legitimacy
of private enterprise in a “socialist” country.50 The publication of such
articles in state newspapers signaled official support for the changes underway even before policy officially sanctioned them.51 Private restaurants in
other Chinese cities had raised similar issues for policymakers and confronted the same problems well before the Pleasing Guests restaurant
opened in Beijing. On 12 July 1980, months before Pleasing Guests debuted,
for example, Chen Guigen, an unemployed youth in Shanghai, overcame
his fears of being labeled a “capitalist tail” and opened a private restaurant
named Delicious. To encourage others to follow Chen’s example, the
next day Zhang Xutang, the director of news at a leading newspaper,
Wenhui bao, published a front-page story, and a month later the People’s
Daily picked up the story. His restaurant created a public debate on issues
such as: Should private restaurants be legal? If private restaurateurs get rich
first, would it affect Chinese socialism? Could Chen Yungen, the younger
brother of Chen Guigen as well as a chef at a state-owned restaurant,
work for his older brother’s private restaurant in his own time?
The Shanghai City Hall Office of Finance and Trade convened meetings
with related departments including labor, industry and commerce, tax,
50 Yudkin, Making Good, 27, 42.
51 Zhang Xutang, “Cong Weimeiguan dao Changduan ting yi 20 nian guanyu get canguan
de baodao fengbo.” See Wenhui bao (13 Jul. 1980) and RMRB (10 Oct. 1980).
467
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Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/9781316471821.019
k ar l ge r t h
house management and food bureaus to discuss conflicts and issues raised
by Delicious. Official policy on private restaurants eventually caught up
with local realities. On 4 November 1980, the Beijing government decided
to allow individuals t…
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