BOOK REVIEW Smashing a Middle Kingdom
myth Transforming Rural China:
How Local Institutions Shape Property Rights in
China by Chen Chih-jou.
Reviewed
by Macabe Keliher
There are books about China
and more books about China; they fill libraries and
decorate bookshelves; they tease us about the country's
booming growth, or about its coming collapse; they talk
of poverty and pollution, or riches and prosperity; they
paint in bold and pretentious strokes of colors and
cultures and ideas. They say this is China; they say
these are the Chinese. And they disagree.
The
only thing one can make out of this contradiction (found
even within single volumes) is that for all practical
intents and purposes, there is no one China, no plenary
country of continuity from east to west, no uniform
Middle Kingdom from north to south. Social and economic
dissimilarity really are as vast as the Gobi Desert, and
not even a single national policy can hold it together
in homogeneous development.
So much
misunderstanding abounds about the great land - in the
international literature and media, and even among
policy makers - that it permeates debate and
scholarship, leading to erroneous views and conclusions
about China's economic, political and social
development. If the newspapers are not generalizing
about layoffs in Hebei, then US politicians are pointing
to village elections heralding democracy, or economists
praising recent growth figures. Like no other country
its size, China is a diversity of micro-economies, which
are not necessarily interconnected or related.
Chinese disunity Hail the brilliance
of Chen Chih-jou. He has smashed this common
(mis)understanding of China in a book that is nothing
short of revolutionary in how we must come to understand
China: in disunity. "Although authorities in Beijing may
hand down a set of rules by which local governments from
the South China Sea to the northern steppe plains must
carry out - whether it be privatization or village
elections - when central policy filters down to the
different localities, it takes on different forms
according to local conditions," Chen writes.
Chen is a Duke University-trained sociologist,
and now a research associate at Academia Sinica,
Taiwan's premier research institution. He spent seven
years in the Chinese countryside conducting research on
economic and social development - no small feat in
itself as outsiders are not welcome by provincial and
state authorities, especially a Taiwanese who could be
accused of spying. Yet his illicit adventures, which he
entertainingly details in the introduction, built a
strong web of relationships and trust with local
officials and entrepreneurs, which, he says, allowed him
to hold "between my fingers everything that had made
[the Chinese countryside] go round over the past 20
years ... the secrets of China's economic reforms; the
corruption, the nepotism, the contradictions, and the
evidence of the wealth grabbed by the elites at the
expense of the people."
This exhaustingly
well-researched thesis and complex bit of scholarship is
laid out in surprisingly engaging prose. After spending
the first few chapters on the literature and academic
outline of the study, Chen launches into a highly
readable narrative of each of his regions, bringing out
the intimate character of the local institutions and the
people, which are the backbone of Chen's theory.
This is one of the most insightful books on
contemporary China, and arguably the most important.
Transforming Rural China: How Local Institutions
Shape Property Rights in China takes two
economically successful regions in coastal China and
shows how they have developed very dissimilar economies
and societies from each other despite a uniform national
policy.
In Fujian province, the economy and
society is one of individual entrepreneurs, who usually
employ a handful of migrant laborers from other
provinces to sew clothes in their living room. In
contrast, the Jiangsu province economy is driven by a
few large manufacturing plants, which provide jobs for
the villagers. In the case of the former, the government
had to assimilate the entrepreneurs into the Communist
Party, whereas in Jiangsu, party officials became the
capitalists and continued to exploit the people.
The story is as follows: In the late 1970s,
before the first wave of economic reforms, all of China
hid under an umbrella of uniform state regulations and
economic control. When Deng Xiaoping launched economic
reforms, allowing a semi-free market to rise along with
limited forms of entrepreneurship, different areas began
to grow in drastically disparate ways, which, Chen
argues, only intensified over the next 20 years due to
endemic factors such as local cliques or social
organizations. As ownership restrictions loosened in the
1990s, and outright privatization was accepted, then
ordered, many parts of the country posted double-digit
economic growth rates, including both Fujian and Jiangsu
- Chen's areas of study - but were doing so under very
different economic models. It was thus, writes Chen,
that a "single policy of shareholding or privatization
turned into disparate economic development in different
areas of China".
Local
institutions Chen credits local institutions for
the diversity. The Chinese economy over the past 20
years, Chen writes, "came under the control of local
institutions that could vary widely in shape, size and
power, from one end of the great country to the other.
Because of the sometimes rigid control of these local
institutions, which allowed them to be flexible to
central policy in their own right, the local, and thus
national, economy changed and grew."
These local
institutions refer specifically to social groups or
organizations unique to a certain village or province,
and which exert a disproportionate amount of control
over the social and economic development. In Fujian,
they are the family lineages. Chen's study focused on
the Lin family of one village, which acts as the moral
and political authority of the village, controlling
finances and infrastructure projects. In Jiangsu, the
local institutions are the party elites. A close group
of party officials run their village and the local
economy through centralized power and ownership schemes.
Villagers have no say, they also have no voice, to say
nothing of the right to vote.
These distinct
local institutions - one from the grassroots, and one
from the top - are the very substance of which China is
made, and on which its economy runs. The key to
understanding China and what makes it tick, according to
Chen, are the characteristics of each locality. "An
analysis of state policies and bureaucratic institutions
is not sufficient to explain local and economic
development, particularly local diversity in development
patterns," Chen writes.
What free
market? Economists and institutional investors
often point to the many different economies within
China, to be sure, but erroneously credit what they say
is China's burgeoning free market. China does not have a
free market, as Chen aptly shows through unprecedented
investigative research. Property rights and companies
are not bought and sold in open auction, rather given
away at a fraction of their asset value to officials and
cronies. Contracts are not awarded in free competition
to the best company, but through an intricate web of
connections. Indeed, Chen writes, "village party
secretaries ... have become profit-driven capitalist
bosses, who have affected, and will continue to affect
China's economic development."
China cannot be
compared to the once communist bloc countries of Eastern
Europe and the former Soviet Union, as so many pundits
try. Rather, in China we find an array of separate
economies run by local institutions: "local elites who
exploit social and economic capital, drawn from their
local networks, in order to increase their power and
wealth." It is very much, as Chen says, "the wealth
grabbed by the elites at the expense of the people."
The consequence of this is not China's slow
creep from state-controlled economy into full blow
capitalism, but rather the lack of opportunity for
social mobility and the deepening of class disparity.
Those who reaped benefits under the controlled economy
are the same ones who do so now; the people - the masses
- continue to be exploited by them, only today under the
guise of economic development.
The free market
also eludes Fujian province, which has only recently
shed itself of corrupt local party officials with the
advent of former Chinese president Jiang Zemin's
revision to the constitution allowing capitalists into
the party. Instead of an Adam Smith-type model of
buying, selling and distribution, one finds a complex
web of transactions grounded in lineage, traditions and
values.
Transforming Rural China is an
adroitly profound analysis of the Chinese countryside
and its recent development, and has enough to say about
the diversity of China's economic structure to posit a
new understanding of capitalism in developing countries.
Finally, a book about China as it is.
Transforming Rural China: How Local
Institutions Shape Property Rights in China by Chen
Chih-jou. (Routledge); 212 pages, US$104.95.
Macabe Keliher is an independent
historian and journalist, and regular contributor to
Asia Times Online. His website is www.macabe.net
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