J-10
01-15-2008, 06:24 AM
http://www.theaustralian.news.com.au/story/0,25197,23046185-21147,00.html
Myth of China's new middle class
Rowan Callick | January 14, 2008
MANY people looking from outside at China's development, especially in this pivotal Olympic year, are searching for a floor of familiarity.
They want to be able to find the middle class in China's contemporary social change, David Goodman says in his own chapter of The New Rich in China: Future Rulers, Present Lives, which he edited recently and is to be issued soon.
He says China's transformation is seen as hopeful by those who see an equation between industrialisation and economic development on the one hand and the emergence of a peace-ensuring liberal democracy on the other.
"The argument that these people are 'just like us' is very seductive, especially if it is delivered without any hint of irony," Goodman writes.
But he argues convincingly that the new Chinese middle class is largely the creature, though not wholly intentionally, of the ruling communist party rather than the fruit of an upwelling of economic autonomy or free thinking.
Australia is unusually well blessed with a corps of academic China-watchers of extraordinary insights.
Goodman, a professor at the University of Technology, Sydney, is one of the top echelon, which has generally contrived to free itself of the burden commonly placed on academics in other Western countries, of aligning themselves "for" or "against" the ruling Chinese communist party, or even for or against China.
He was in Beijing last week talking about his intriguing new book which challenges quite a few shibboleths of the global business world, especially of those businesses seeking to sell products or services in China without having an operational base there to gain a longer-term sense of what's really happening on the ground.
Goodman says a parallel is often drawn between China's development since its reform era began 30 years ago and the period of industrialisation in Europe and the US.
At first the new bourgeoisie in the West were a new middle class created by the process of industrialisation. As this process deepened, the modern state became more complex, producing managerial and professional classes, which formed a new middle class that neither owned capital nor controlled the state, but derived income and status from service and management.
The demand for a widening of the franchise and the emergence of liberal democracy during the first half of the 19th century in northern Europe are often seen as necessary results of the emergence of the bourgeoisie, Goodman says.
And the ensuing managerial revolution in the first half of the 20th century is "part and parcel of the development of mass society, mass politics and the welfare state".
The assumption of middle- class behaviour, especially in patterns of consumption, "is to be expected as a function of globalised commercialism," with Gucci, Loewe and Louis Vuitton brands targeted at the wealthy consumer in Shanghai and Beijing, as well as in Milan and New York.
But Goodman insists China's "new rich categories of entrepreneurs are less the new middle class than a future central part of the ruling class". They are quite unlike the 19th-century European bourgeoisie in the extent to which they have emerged from and retain close relationships with the established political system.
For this is not China's first wave of modernisation, as often presumed by those who believe Deng Xiaoping conjured this remarkable industrial machine from an imploded peasant nation.
Goodman points out that in the Republican era (after 1912) there were sustained attempts at modernisation in various parts of China under both warlord rule and colonial influence.
Much of this economic activity was externally owned or sourced, so parts of the economy were considerably better integrated into the world economy by the early 1920s than they would be again until the 1980s.
The establishment of the People's Republic of China in 1949 then underwent renewed and sustained modernisation and industrialisation.
And managerial and professional jobs multiplied, so that during the 1950s the people who filled them became "the backbone middle classes" of the new party-state in China.
Many in these classes were purged during the Cultural Revolution of 1966-76, but as they and their families were then restored, "so, too, middle-class reputations rose again".
Some of this group transformed themselves into new-style entrepreneurs during the 1980s, especially as opportunities loomed large to gain from their privileged access to assets.
And what of the entrepreneurs who have emerged more recently?
Goodman highlights "the close associational links between the new entrepreneurs and the party-state; they are neither independent of nor excluded from the political establishment, which on the contrary seeks actively to incorporate them if there is no pre-existing relationship".
This was the chief innovation of Jiang Zemin, who retired as leader five years ago.
He opened the doors for capitalists to join the party.
Many observers wrongly interpreted this as meaning they would take over the party. Instead, of course, the situation is the reverse.
Goodman says the reallocation of state assets over the past couple of decades "sometimes left less than clear distinctions between ownership and management".
In Hangzhou, an entrepreneur was asked if the state assets he controlled had been paid for.
The response was clear: "There's no need. These were previously the assets of all the people, and we are the people."
Goodman believes that even the massive income differentials now being officially conceded (the Asian Development Bank describing China as having one of the biggest wealth gaps in the world today) are understated because of the extent to which business people in China, who tend to be incorporated in the party-state apparatus, enjoy "cost-less (to them personally) access to resources and effectively subsidised income not available to others".
The pattern of economic development in the People's Republic fits more closely that of Germany, Japan and Russia during the late 19th century than that of Britain or the US, he says.
"In those countries, the state played a central role in industrialisation, as opposed to the laissez-faire capitalism of the earlier European experience based on the protection of the individual outside the state."
Goodman says that in China today, "where new entrepreneurs did not already participate formally in the activities of the party-state, particularly at leadership levels, they have now found themselves fully incorporated; and many new entrepreneurs would appear to depend on family networks of influence grounded in the party-state", even extending to small-scale businessmen in the private sector.
Many of these new entrepreneurs have come from the ranks of the professional and managerial middle class. Others, more truly independent, are required to co-operate with the party-state "if they desire to maintain a growth trajectory".
This may mean they are expected to take up a local leadership position, perhaps to surrender some equity to a government body. This is part of what Goodman sees as "a growing imperative for successful business people to join the party".
A common generational pattern is that leading cadres are recruited from the peasantry on intellectual merit, then as they retire their children become business people, "building on the local relationships and networks of influence that their parents have developed". So in China, "ownership, management and control are intertwined in ways that cut across previous analyses of middle (or indeed any other) class behaviour".
And promoting the new entrepreneurs and the new rich as "the new middle classes" fits well the ideological constraint of today's rulers against celebrating conspicuous wealth. All China's classes are increasingly portrayed as middle. It's just that some are decidedly more middle than others.
Myth of China's new middle class
Rowan Callick | January 14, 2008
MANY people looking from outside at China's development, especially in this pivotal Olympic year, are searching for a floor of familiarity.
They want to be able to find the middle class in China's contemporary social change, David Goodman says in his own chapter of The New Rich in China: Future Rulers, Present Lives, which he edited recently and is to be issued soon.
He says China's transformation is seen as hopeful by those who see an equation between industrialisation and economic development on the one hand and the emergence of a peace-ensuring liberal democracy on the other.
"The argument that these people are 'just like us' is very seductive, especially if it is delivered without any hint of irony," Goodman writes.
But he argues convincingly that the new Chinese middle class is largely the creature, though not wholly intentionally, of the ruling communist party rather than the fruit of an upwelling of economic autonomy or free thinking.
Australia is unusually well blessed with a corps of academic China-watchers of extraordinary insights.
Goodman, a professor at the University of Technology, Sydney, is one of the top echelon, which has generally contrived to free itself of the burden commonly placed on academics in other Western countries, of aligning themselves "for" or "against" the ruling Chinese communist party, or even for or against China.
He was in Beijing last week talking about his intriguing new book which challenges quite a few shibboleths of the global business world, especially of those businesses seeking to sell products or services in China without having an operational base there to gain a longer-term sense of what's really happening on the ground.
Goodman says a parallel is often drawn between China's development since its reform era began 30 years ago and the period of industrialisation in Europe and the US.
At first the new bourgeoisie in the West were a new middle class created by the process of industrialisation. As this process deepened, the modern state became more complex, producing managerial and professional classes, which formed a new middle class that neither owned capital nor controlled the state, but derived income and status from service and management.
The demand for a widening of the franchise and the emergence of liberal democracy during the first half of the 19th century in northern Europe are often seen as necessary results of the emergence of the bourgeoisie, Goodman says.
And the ensuing managerial revolution in the first half of the 20th century is "part and parcel of the development of mass society, mass politics and the welfare state".
The assumption of middle- class behaviour, especially in patterns of consumption, "is to be expected as a function of globalised commercialism," with Gucci, Loewe and Louis Vuitton brands targeted at the wealthy consumer in Shanghai and Beijing, as well as in Milan and New York.
But Goodman insists China's "new rich categories of entrepreneurs are less the new middle class than a future central part of the ruling class". They are quite unlike the 19th-century European bourgeoisie in the extent to which they have emerged from and retain close relationships with the established political system.
For this is not China's first wave of modernisation, as often presumed by those who believe Deng Xiaoping conjured this remarkable industrial machine from an imploded peasant nation.
Goodman points out that in the Republican era (after 1912) there were sustained attempts at modernisation in various parts of China under both warlord rule and colonial influence.
Much of this economic activity was externally owned or sourced, so parts of the economy were considerably better integrated into the world economy by the early 1920s than they would be again until the 1980s.
The establishment of the People's Republic of China in 1949 then underwent renewed and sustained modernisation and industrialisation.
And managerial and professional jobs multiplied, so that during the 1950s the people who filled them became "the backbone middle classes" of the new party-state in China.
Many in these classes were purged during the Cultural Revolution of 1966-76, but as they and their families were then restored, "so, too, middle-class reputations rose again".
Some of this group transformed themselves into new-style entrepreneurs during the 1980s, especially as opportunities loomed large to gain from their privileged access to assets.
And what of the entrepreneurs who have emerged more recently?
Goodman highlights "the close associational links between the new entrepreneurs and the party-state; they are neither independent of nor excluded from the political establishment, which on the contrary seeks actively to incorporate them if there is no pre-existing relationship".
This was the chief innovation of Jiang Zemin, who retired as leader five years ago.
He opened the doors for capitalists to join the party.
Many observers wrongly interpreted this as meaning they would take over the party. Instead, of course, the situation is the reverse.
Goodman says the reallocation of state assets over the past couple of decades "sometimes left less than clear distinctions between ownership and management".
In Hangzhou, an entrepreneur was asked if the state assets he controlled had been paid for.
The response was clear: "There's no need. These were previously the assets of all the people, and we are the people."
Goodman believes that even the massive income differentials now being officially conceded (the Asian Development Bank describing China as having one of the biggest wealth gaps in the world today) are understated because of the extent to which business people in China, who tend to be incorporated in the party-state apparatus, enjoy "cost-less (to them personally) access to resources and effectively subsidised income not available to others".
The pattern of economic development in the People's Republic fits more closely that of Germany, Japan and Russia during the late 19th century than that of Britain or the US, he says.
"In those countries, the state played a central role in industrialisation, as opposed to the laissez-faire capitalism of the earlier European experience based on the protection of the individual outside the state."
Goodman says that in China today, "where new entrepreneurs did not already participate formally in the activities of the party-state, particularly at leadership levels, they have now found themselves fully incorporated; and many new entrepreneurs would appear to depend on family networks of influence grounded in the party-state", even extending to small-scale businessmen in the private sector.
Many of these new entrepreneurs have come from the ranks of the professional and managerial middle class. Others, more truly independent, are required to co-operate with the party-state "if they desire to maintain a growth trajectory".
This may mean they are expected to take up a local leadership position, perhaps to surrender some equity to a government body. This is part of what Goodman sees as "a growing imperative for successful business people to join the party".
A common generational pattern is that leading cadres are recruited from the peasantry on intellectual merit, then as they retire their children become business people, "building on the local relationships and networks of influence that their parents have developed". So in China, "ownership, management and control are intertwined in ways that cut across previous analyses of middle (or indeed any other) class behaviour".
And promoting the new entrepreneurs and the new rich as "the new middle classes" fits well the ideological constraint of today's rulers against celebrating conspicuous wealth. All China's classes are increasingly portrayed as middle. It's just that some are decidedly more middle than others.