Podcast: Play in new window | Download | Embed

In the last three decades, a remarkable change has transformed the face of the world’s most populous country. The figures are mind-boggling. Since 1980, China’s Gross Domestic Product has increased by over 3000%, from $300 billion to over $10 trillion. This boom has been fueled by the remarkable rise of China’s manufacturing sector, symbolized by the ubiquitous “Made in China” mark on seemingly every factory-made product. In 1988, China’s global trade was valued at $200 billion. Today it is worth over $4 trillion.

This has led to a now-familiar narrative: from a primarily poor and agrarian country, China is now increasingly urban, with a burgeoning middle class enabled by the Chinese Communist Party’s relaxation of rules on private capital. This, we are told repeatedly, has led to more people being “lifted out of poverty” than ever before in the history of the world.

REPORTER: “China is honoring former leader Deng Xiaoping for engineering the countries rapid economic growth. Chen Wei Xiao is from Deng’s home province of Sichuan. He says Deng’s economic reforms made life better for ordinary Chinese.

CHEN WEI XIAO (translated): We’re eating well and we have nice clothes to wear. It’s a well-off society, everything is good. I’m very happy.

REPORTER: Chen was a tourist in the southern city Shenzhen. The city was China’s first special economic zone, which offered preferential treatment for foreign investors and exporters wanting to cash in on the countries cheap labor.”

(Source: China Marks 30 Years of Economic Progress | Time reference – 01:25)

DANIEL BELL: “(The) thing that they’ve (Chinese Communist party) done over the past 3 decades is lifting hundreds of millions of people out of poverty and I think that that’s a good achievement. In the past 10 years there’s been more attempt too secure the interests of disadvantaged people and of relatively poor people in the country side.”

(Source: Communist Party of China lifting millions out of poverty: analyst | Time reference – 02:01)

As compelling as this narrative is, it does not tell the whole story. While no one can deny that the country as a whole is significantly wealthier than it was three decades ago, the masses of poor itinerant workers remain largely impoverished, dividing their lives between long hours in sweatshop-like factories and restless nights in squalid, overcrowded company dormitories.

TED KOPPEL: “For the time being China’s most significant contribution to the global economy remains cheap, reliable, labor. Anyone who’s ever worked an assembly line can tell you about the pressure and the boredom and the fatigue. ”

(Source: The People’s Republic of Capitalism Part 1 | Time reference – 02:42)

REPORTER: “Conditions in the factories have often been harsh. Poor safety, illegally long working hours, cramped accommodation, few breaks and little leave.”

(Source: China’s female workforce: Factory girls | Time reference – 02:59)

ANN SALTER: “An undercover investigation into the world’s largest electronics company Samsung by the human right organization, China Labor Watch, has revealed that abuse of workers is rife in factories either owned by Samsung or in those that makes parts fro Samsung products. Eight factories were investigated including six directly operated by Samsung and two supplier plants by spies posing as workers or interviewing workers.

They found forced and excessive child labor, excessive overtime, exhausting working conditions and wide-spread verbal and physical abuse.”

(Source: Samsung accused of inhumane factory conditions| Time reference – 03:10)

This story–the story of the brutal conditions that make the world’s cheap plastic products possible and the desperation of the workers who make them–has threatened to burst through the bubble of first world ignorance before. In 2012, the issue of the suicide problem at electronics manufacturer Foxconn–with over one million employees across China and 400,000 in Shenzhen alone–became headline news when it was brought to the public’s attention by Mike Daisey and his one man show, “The Agony and the Ecstasy of Steve Jobs,” which detailed his experience traveling to Shenzhen with an interpreter and interviewing the company’s workers.

MIKE DAISEY: “In my first two hours of my first day at that gate, I met workers who were 14 years old, I met worker who were 13 years old, I met workers who were 12. Do you really think Apple doesn’t know?”

(Source: Beyond Broadway: The Agony and the Ecstasy of Steve Jobs | Time reference – 04:23)

When Daisey’s story was eventually found to contain errors and fabrications, the issue of Foxconn’s treatment of its workers disappeared from the news cycle. But the reality underlying that story, a reality of long hours and poor pay and suicide nets, disappeared with it.

BILL WEIR: “The suicide nets went up the in Spring of 2010, when 9 Foxconn workers jumped to their deaths in the span of 3 months. A total of 18 employees took their own lives or tried too in recent years.”

(Source: Apple Chinese Factory Foxconn Nightline | Time reference – 05:02)

REPORTER: “Some striking news, an employee of Foxconn Technology Group attempted to kill himself by cutting his veins Thursday in South China’s Schenzhen City. He survived after medical treatment.

Now the suicide attempt came after 12 Foxconn employees had tried to end their lives and 10 had succeeded by falling from building so far this year.”

(Source: Foxconn Dark Story: 1 Million Workers,90 Million iPhones,17 Suicides | Time reference – 05:16)

STEPHEN COLBERT: “A tragic state of affairs and in response Foxconn has taken action to ensure the mental health of their employees…by making them sign a pledge vowing not to kill themselves. Done and done!”

(Source: Apple iPhone – Foxconn factory workers commit suicide | Time reference – 05:36)

BILL WEIR: “While the average worker building electronics in the U.S. today makes over $23 an hour and works 41 hours a week, most of the people at Foxconn earn just over $2 an hour and strive for a 60 hour work week.”

(Source: Foxconn: An Exclusive Inside Look | Time reference – 05:50)

RICHARD BILTON: “Shifts have overtime built-in so workers regularly do more than 60 hours a week. More than Apple’s guidelines.”

(Source: Apple accused of failing to protect workers | Time reference – 06:04)

So if the workers at the bottom of China’s economic miracle have seen very little of the benefits of that miracle, the question is: who has? The answer, perhaps unsurprisingly, is that a small group of families, all related to a small cadre of politicians and bureaucrats surrounding Chinese leader Deng Xiaoping during the country’s transition out of Maoism in the 1970s, have reaped the lion’s share of this new wealth. And they did so by cutting a deal with the corporate, financial and banking elite of America who were searching for a way to move the US manufacturing base offshore.

In order to understand this part of the story, we must first understand the history of China to know that this is not the first time the country was colonized to serve wealthy foreign interests. In the 18th century, Europeans developed a taste for various Chinese goods, including silk, tea, and porcelain. The trade for these goods was largely one way; China was not so interested in European goods. As a result, more and more of Europe’s silver bullion found its way into China and stayed there. To correct this trade imbalance, the British East India Company hit upon a Machiavellian solution. It used intermediaries in Turkey and India to smuggle opium into China, where opium dens became commonplace and the effects of opium addiction ravaged the Chinese countryside. By 1838 as many as twelve million addicts populated the opium dens, many idle and unemployed, some selling their family into slavery to afford their habit. When Chinese Special Imperial Commissioner Lin Zexu was dispatched to Canton (now modern-day Guangzhou) to stop the opium trade, the British responded by sending warships and expeditionary forces to wreak havoc on Chinese ports and coastal cities. This, the First Opium War, led to a decisive British victory and the Treaty of Nanjing, which ceded Hong Kong to the British, as well as forcing open five major port cities to British trade, including Guangzhou, Xiamen, Fuzhou, Ningbo, and Shanghai.

This began an era that Chinese nationalists later called the “Century of Humiliation.” The Qing dynasty had itself been humiliated, and unequal treaties like the Treaty of Nanjing undermined traditional Chinese trade restrictions, foreign relations, and even the country’s legal system. China had become yet another outpost of the British empire, still autonomous, but as integral to Britain’s trade interests as any of its colonies.

With the communist revolution of 1949, China once again retreated into its “Middle Kingdom” status, severing its diplomatic and economic ties to Britain, the United States, and the other western powers that had long held such power over it.

As Professor Michel Chossudovsky of the Centre for Research on Globalization explains, however, those ties were to be formed once again less than three decades later.

1976 is the major landmark date for the transition. Zhou Enlai dies in early 1976. He was very much a go-between the two factions within the Communist Party, the Left and the Right, the Capitalist Roaders and so on and then Mao Zedong passes in September. Immediately after the death of Mao Zedong there is a regime change where the so-called ‘Gang of Four’, the four major leaders within the State apparatus were in effect displaced, arrested, demonised and in fact these were supporters of Mao Zedong. This coup could not have taken place while Mao Zedong was still alive and the Western media celebrated and reverberated the position of the Chinese Communist Party.

Then there was a period of transition with a new leader Hua Guofeng which lasted approximately a year to 2 years and Deng Xiaoping made his comeback in 1977-78 and in 1978 they established the free-trade zones which was very crucial and subsequently of course in 1979 Deng Xiaoping travels to America and also makes the statement and expresses his anti-Soviet position and he said ‘How do we tame the polar bear?’ so to speak.

Then in the early 80’s you had some important landmark decisions, one I think was in 1983, (it) was the new Chinese Constitution which abolishes the People’s commune which ultimately was still how they managed to inscribe economic policies within the Constitution is quite unusual in some regards.

Then in the following year in 1984 they extend the special economic zones to much broader areas in what were formerly the treaty ports of the Colonial or semi-Colonial period. Now that of course is very important because of what they were restoring in the same cities. We’re talking about Jianjing, Quanzhou, Shanghai of course and what they do is they restore areas where foreign companies can come in and invest. It’s much more directed towards broader industrialisation and technology. It’s not limited simply to assembly lines and (those) types of operations but that was of course very crucial.

Now I should make a flashback to the 19th century because in the wake of the Opiums Wars which started in 1839 and without getting into the complexities of this war, there was a treaty and there were subsequent treaties. The treaty of Nanjing is 1842 which opens up China to Western merchants and investments subsequent including railways, public infrastructure and so on and it puts China’s trade under the control of the colonisers, in particularly Britain (who) controlled the customs. Now that particular structure was used as a model to restore the relationship to foreign capital in the wake of the Mao’s death, what we might describe as the post-Mao era. They use in fact the same terms, the ‘open-door policy’ and now the ‘open-door policy’ is an American concept. Which was part of a treaty, it’s the treaty of Wan Xia? which was signed shortly after the Treaty of Nanjing. And so there they reinstate the structures of trade which prevailed prior to 1949.

The ringleaders of this transition are known in China as the “Eight Immortals,” Communist Party members who rose to prominence after the death of Mao Zedong in 1976 and centering on Deng Xiaoping, who survived a party purge during Mao’s reign and took over leadership of the country in 1978. These eight figures oversaw the “opening up” of the Chinese economy to Western financial and business interests, including a June 1980 meeting of Rong Yiren, chairmen of then newly-established state investment firm CITIC and David Rockefeller in Chase Manhattan’s Wall Street headquarters. The meeting, attended by the chief executives of nearly 300 corporations, charted a course for economic and technical cooperation between the economies of China and the US. In the following years, scores of Fortune 500 companies established headquarters in Beijing’s new “Central Business District” and foreign direct investment in China increased from almost nothing at the time of the transition in the late 1970s to $128 billion last year, making the country now the top destination for foreign direct investment in the world.

As a result, the descendants of the Eight Immortals now enjoy immense personal wealth and largely maintain the role of stewards of the Chinese economy. A 2012 Bloomberg special investigation examined 103 descendants and spouses, finding that the families have diversified from control of state-run conglomerates into real estate development, private equity and technology. 26 of those descendants, known as the “Princelings,” ran important state-owned companies or help top positions in them, with three of the most important heading or running companies with access to $1.6 trillion in capital. The almost unimaginable wealth of these elite families stands in stark contrast to the lives of the itinerant factory sweatshop workers in their company dormitories and even sharper contrast to the Party’s officially espoused ideals about equality in the “People’s Democratic Republic” of China.

The contrast between this ruling class and the average Chinese worker is not lost on the Chinese themselves. Although the Eight Immortals are still revered as founders of the modern nation, there is growing resentment of the extremely wealthy “Princelings” and their command over the lion’s share of the economy. There is also a growing nationalist sentiment that are eager to see the country assert itself on the international stage, in defiance of the American paymasters who made the transition possible.

Professor Michel Chossudovsky notes this tension within the Chinese leadership’s own ranks:

China is in some regards an industrial colony, I use that quote en-quote, but at the same time it is an upcoming power on the global stage. I should mention that that emerged also in the wake of the Cold War, where China’s alignments vis-a-vis the Russian Federation had changed dramatically to what they were during the Cold War era. In the late 90’s particularly in the wake of Deng Shaoping and the change of government in the Russian Federation. In other words when Vladimir Putin became President there we have consolidation of an alliance between the Russian Federation and the People’s Republic of China and the development of the Shanghai Cooperation Agreement and so forth.

Another very important dimension, in the late 90’s ironically just after Deng Shaoping passed there’s an increased confrontation in the Taiwan straits. Of course there was always confrontation in the Taiwan straits but then it was at that point that China developed it’s military cooperation agreements with Russia and started to build-up naval facilities in the South China Sea to counteract U.S. threats and then of course we had a very major shift in geo-political relations. I would say as of the late 90’s early 200’s, early 21st century. Which is increasingly towards confrontation between China and the United States but I should qualify that because when you go to China you have a very pro-American intelligentsia. The people’s in the universities and so on, the School of Journalism at Xinhua University is supported by Bloomberg, people at the Academy of Social Sciences are very much tied into Western values so on and so forth.

So that in fact I would say that the leadership is profoundly and very much divided. America is very much visible. Western capitalism is very visible throughout China but at the same time it’s more at the political and geo-political level that there’s confrontation. And I think that the Chinese say ‘Well we’re a capitalist economy in our own right, we’re not going to be a subordinate colony of the West’, but if you look at the actual mechanics of foreign trade they still are, because they’re producing commodities for the world market and they are sort of feeding the non-productive structures of Western capitalism.

The growing tensions in the South China Sea and the Asia-Pacific generally are real, they are palpable, and they are impossible to miss. The world is being prepped for a confrontation of some sort between the world’s superpower and its growing rival in the East. But this confrontation, like every major world conflict before it, is largely bankrolled and even encouraged by the financiers and businessmen on both sides who cooperate with each other.

For the time being, China continues its role as America’s neo-colonial outpost, a manufacturer of the cheap products that the US increasingly relies on and a willing recipient of the US Federal Reserve Notes and Treasuries that represent the paper promises of the current world economic order. The only question is how long this relationship will last, and what it will look like when it ends.