Fidgety over Pockets of Protests

By Pushpa Adhikari, IPS, 25 January 1999

BEIJING, Jan 25 (IPS) - The growing protests by Chinese taking to the streets, protesting corruption to taxation, are the product of societal friction unleashed by the wrenching process of economic reforms in the country.

Taking place in a nation that frowns on open public dissent, the demonstrations are mostly directed against housing and financial anomalies, and growing unemployment.

Excessive taxation, levied by corrupt local officials, has been the subject of violent protests by farmers in different parts of China, such as a Jan 8 protest in Daolin township in Hunan province reportedly involving thousands. Similar protests were reported in Jiangsu and Shanxi provinces.

While exact figures are hard to come by, the Chinese official media has reported at least four protests in Beijing last month. Reports also say small protests take place in the provinces one or twice a week.

So far, the government is willing to tolerate demonstrations as a means of releasing social tensions, without allowing any fundamental challenge to its authority.

Aware of the consequences of brewing discontent for social stability, the government is also heeding some of their complaints.

For instance, the Chinese has pushed back to the end of the year the July 1 deadline for scrapping new subsidised government housing. It also modified grain reforms to boost prices and help cash-strapped farmers.

Local governments were also told to curb the prevalence of selling small state-owned enterprises, which Beijing said had exerted a negative impact on local economic development and social stability and the relocation of laid-off workers.

Unemployment is already an area of concern for the government. By the end of 1999, some 11.5 million urban workers would have been laid off, two-thirds of them former employees of state-owned companies, the object of streamlining that has led to closures and lay-offs.

Official statistics show that 169,600 workers were laid off from state-owned firms last year in Beijing alone.

While the process of opening up and market reforms is aimed at modernising the country, it in many ways leaves the Chinese government with lesser state power in hand to control the consequences, say, of closures or sale of losing state enterprises, or reining in abuses done in the reform process.

For instance, the government's decision to sell off losing enterprises has given local officials a golden opportunity to exploit the power in their hands.

As a result thousands of state factories across the mainland are being sold, often at below market prices, to their managers and senior staff. Many benefit from the absence of strict rules governing such sales, and from the collusion of corrupt bureaucrats.

Such cases of corruption have triggered protests in different parts of the country.

One example is the sale of Yuanmei cement plant in the Southwest province's Chuxiong county, which was annulled when the workers filed a petition against it. This has become a unique example of confrontation between the authorities and the workers, something rare in China in the past.

With a fixed assets worth 5.5 million U.S. dollars and 550 workers, the plant had the capacity to produce up to 130,000 tonnes of cement annually. In March 1998, in the line with a nationwide policy, it set up a committee to decide how to turn the plant into a stockholding company.

Since the committee was headed by the plant's deputy manager, it gave a report saying the plant had a net worth of 829,000 dollars and proposed a sale at that price. After some formalities with the county government, the committee head himself bought the plant.

The new owner laid off almost 70 percent of the workers and cancelled company housing and health and insurance benefits, then demanded a huge sum from workers for their risk insurance fund.

After the workers launched a strong protest, the county government annulled the sale and set up a new committee to work out how to sell the plant.

This is one of the obstacles to reform: a widespread climate of corruption and a destructive, get-rich-quick attitude that has led to the sale of state-owned enterprises by cadres who show least concern for laid-off workers or for new productive capacity.

In many ways, these incidents show the bumps in the reform process emerging as China celebrates the 20th anniversary of its reform and opening up policies.

The present government has been pursuing the policies set forth by Deng Xiaoping to modernise agriculture, industry, science and technology -- but is paying the price of the same leader's urge to build wealth first and worry about the consequences later.

Corruption and its consequences add to the already heavy social cost that the rationalisation of the bloated state sector is producing in China.

The government recently announced that the 1998 registered unemployment rate in urban areas stood at 0.66 percent, which met the target of keeping the rate below one percent.

The government has opened more than 900 reemployment service centres to assist unemployed workers. According to official statistics, more than 60 percent of the 169,600 Beijing workers laid off from state-owned firms last year have been reemployed.

But the government will face rising unemployment pressure this year, when some 11 million young people enter the job market for the first time.

So, it does not help that local officials have been misusing their power and creating irritation among the public, said a Communist Party official in Beijing, who asked not to be named.

Whether it is the case in Gouyuan village in Jiangsu province where villagers protested against taxes, or Zizhou county in Shanxi province where farmers sued officials who tried to collect excessive taxes, these will draw the government's attention, he added.

In the previous years, such cases had never been reported, so the local corrupt officials were having benefit of doubt, he said. While the government has been advocating to reduce the farmers' taxes, local officials have been asking them to pay more so the farmers have no way but to protest.

Chinese President Jiang Zemin, also general secretary of the Communist Party, acknowledges the existence of corruption.

In a recent session of the party central committee, he said: Some party members and officials have become indifferent to party discipline under the new circumstances and a slack-off in discipline has become a problem for some party organisations.