The Chinese Manufacturing Juggernaut

http://www.npr.org/blogs/money/2012/01/13/145184551/the-friday-podcast-the-secret-document-that-transformed-china

http://books.google.com/books/about/Growing_out_of_the_plan.html?id=LzzgQP0BX34C

In my experience, most popular discussions about the Chinese manufacturing juggernaut often lack in either historical context, or feature no discussion as to why Chinese employees will work a 12 hour shift at Foxconn to produce iPhones.  In short, the Chinese Communist Party has staked its legitimacy on both economic growth, and nationalist pride, and, to date, has been successful with both.

In a previous blog post I quoted Thomas Campanella, who said to discuss the Chinese urban revolution is to trade in superlatives.  This is only partly true.  In reality, to discuss any part of China is to trade in superlatives.  In a process that started when Mao Zedong stated in 1949 that the Chinese people have finally stood up, to Deng Xiaoping, in a break from the ideological struggles under Mao that destroyed millions of lives, starting the Reform Era in 1979 with the pragmatic slogan that, “It does not matter whether a cat is black or white, as long as it catches mice, it is a good cat.”  In the ensuing years collective farms were broken up, freeing hundreds of millions of people from farm labor the countryside.  Some of the earliest Capitalist reforms in China were thus outside of the cities, with the Chinese Communist Party knowing that any reforms needed to benefit the countryside first.  China’s octogenarian leadership, themselves veterans of the Revolution and Long March, knew their revolution from 1905-1949 was peasant led, and thus were wary any potential unrest among the 800,000,000 rural residents.  In the 1980s, still not ready to part with the command economy, the urban industries that had received the bulk of government investment still dominated the economy.  In the countryside, the excess labor that was created by de-collectivization, were allowed to create rural industries.  It was in these early manufacturing centers that the foundation for China’s growth was laid.  Further reforms led to the opening to the West, and the establishment of Special Economic Zones for foreign manufacturers.  The size of the State sector of the economy was frozen in size, and the private economy was allowed to expand—a process that Barry Naughton calls “growing out of the plan(ned economy).”

By the late 1980s the Chinese economy was over-heating, and runaway inflation created turmoil in the cities.  The austerity measures put in place to cool the economy helped fuel the Tiananmen Square protests of 1989.  The brutal crackdown that ensued was largely motivated by the leadership’s acute fear of chaos and turmoil from masses of people.  The reforms and economic expansion resumed in 1992, now with the CCP making a caustic bargain with the population on the whole—political reform was off the table, but that the CCP will secure economic expansion.  Thus, the CCP as it exists today, is solely focused on economic expansion as its raison d’etre.  The CCP has crafted its image as being the only party capable of delivering the goods to the population.  The population, for its part, has largely stayed away from demanding political reform, content with economic rights and an expanding private realm.

It is in the context that the Chinese economy has expanded with breathtaking speed.  The last 30 years has seen the largest movement out of poverty in world history take place in China as the peasant population came from subsistence living to relative affluence.  It is easy to forget that prior to 1979, China suffered through a series of famines and internal upheavals—and prior to 1949, foreign interference and colonial subjugation.  As long as the economy continues to expand, and as long as there is no clear group of economic losers, the CCP will continue to claim, and receive, legitimacy to govern.  For many of those Foxconn employees, the conditions are an improvement over the prospects in the hinterland of the provinces further west, from whence many come.  And for most Chinese, especially those with memory of the pre-Reform era, there is broad based support for the nature of expansion.  Most Chinese view the country’s rise with pride, as having finally stood up.  This growth is following what is referred to as the “Centuries of Humiliation, referring to the 18th and 19th Centuries.

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