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China's Reforms: The Wuxi Story

Based on a 30-year micro-study of economic reforms in Wuxi city and Hela township, this paper points out that development through political urbanisation the Wuxi way may achieve fast economic growth but has its social, environmental and political costs. It traces the three phases of reforms the region has passed through, attaining a spectacular rise in gross domestic product and household incomes. But later developments have negated some of the achievements of the earlier stages of reform. It proposes that the authorities initiate genuine grass roots democracy so that local people will have the power to decide on matters that affect them.

SPECIAL ARTICLE

China’s Reforms: The Wuxi Story

Manoranjan Mohanty

Based on a 30-year micro-study of economic reforms in Wuxi city and Hela township, this paper points out that development through political urbanisation the Wuxi way may achieve fast economic growth but has its social, environmental and political costs. It traces the three phases of reforms the region has passed through, attaining a spectacular rise in gross domestic product and household incomes. But later developments have negated some of the achievements of the earlier stages of reform. It proposes that the authorities initiate genuine grass roots democracy so that local people will have the power to decide on matters that affect them.

For my research on Wuxi during the last three decades, I owe an enormous debt to many institutions and scholars in India and China. I am especially grateful to the Indian Council for Social Science Research, the Chinese Academy of Social Sciences, the authorities of Wuxi city and Hela township and above all to my colleagues at the Institute of Chinese Studies, Centre for the Study of Developing Societies, Delhi, for supporting my study. I am, however, responsible for all the statements made in this paper.

Manoranjan Mohanty (dr_mohanty@yahoo.com) was at the University of Delhi, and is now co-chairperson, Institute of Chinese Studies and Durgabai Deshmukh Professor at the Council for Social Development, New Delhi.

T
his article is based on a micro-study I carried out over a 30-year period, which gives a picture of the nature of r eforms that have taken place in the economy, society and polity of China. The area is Wuxi, located between Shanghai and Nanjing, which happens to be a relatively developed region of coastal China that has experienced rapid economic growth and urban construction. This was a typical success story of China’s reforms with visible prosperity both in the urban and rural areas and with conspicuous infrastructural development. Yet here too several socio-economic, environmental and political problems have cropped up during the past decade. Thus the story of Wuxi and the history of its erstwhile Hela commune may be a good window to look at the course of China’s reforms and draw some lessons for development theory.

My objective in this essay is not so much to assess in a comprehensive way the economic growth profile of the area as to understand the steps that were taken at different points of time to reorganise the administrative structure, reformulate economic policies and intervene in managing the problems which arose. China being a vast country with great diversity, this micro-study c ertainly does not claim to be a representative one. Moreover, the methodology used in this work is mostly based on field-level discussions with villagers and officials at various local levels.1 Interview-based information has been put together with published statistical data and both have been interpreted with reference to the national policy documents of the Communist Party of China (CPC) and the Chinese government, and a few relevant studies conducted within or outside China.

Besides being a tourist attraction because of its location by the side of the Taihu lake and its proximity to the Yangtze river with the historic Grand Canal passing through it, this middle-size city of 4.5 million people (2007) has been rising in the recent years as one of China’s global info-cities. Wuxi had also been well known in academic circles because of surveys conducted by China’s most famous sociologist the late Fei Xiaotong in the 1930s and 1950s, which showed how sharp disparities in land relations documented earlier had been transformed through land reforms and cooperatives in the 1950s. Fei pointed out that in traditional China the production of silk and its marketing had supplemented grain production in a m ajor way, contributing substantially to poverty alleviation on the one hand and development of light industry on the other. He welcomed the reforms in the early 1980s, which revived rural industries.2 In this process, the role played by the state was significant, both historically and in the post-liberation period. Thus, Wuxi represented a model of development combining agriculture with rural industry, with state policy energising local households through land reforms and economic incentives and linking the rural economy

june 27, 2009 vol xliv nos 26 & 27

with the urban economy for mutual benefit.3 The new rural economy in the first decade of reforms during 1979-89 not only substantially increased peasant income but also financed much of the facilities for health and education. This development experience created socio-economic conditions that paved the way for grass roots democracy while shaping a new countryside where the peasants had rapidly increasing purchasing power. This new rural m arket became the springboard for China’s industrialisation and attracted foreign investment. That model of “reform and open door”, crystallised in the 1980s, looked promising until the early 1990s, when export-oriented production and the focus on achieving a higher growth rate became the main preoccupation of the leadership and created an altogether different milieu. At the end of 30 years of reforms, Wuxi looked prosperous with high-rise buildings, new real estate colonies for people working in Shanghai, multi-lane highways linking Shanghai with Nanjing and Hangzhou, and many new hi-tech industries set up by the world’s top corporations. But its

Table 1:Annual Average Rate of Growth of Selected Indicators during Five-Year Plans in Wuxi (%)

Five-Year Population GDP Gross Gross Light Heavy Grain Average
Plan (FYP) Output Output Industry Industry Produc- Annual
Value of Value of tion Wages of
Agriculture Industry Staff and
Workers
First FYP 1952-56 1.9 4.6 0.4 8.1 6.8 32.2 0.8 0.6
Second FYP 1957-60 0.9 0.5 -1.7 2.1 -0.4 18.9 8.2 1.6
Readjustment
period 1961-1965* 2.2 16.1 16.8 19.0 15.0 30.1 17.4 -2.5
Third FYP 1968-72 1.5 5.0 -1.5 12.7 7.8 23.1 -1.2 0.1
Fourth FYP 1972-76 1.2 9.7 5.0 12.0 10.6 13.2 6.6 0.7
Fifth FYP 1976-80 1.4 14.2 0.2 15.5 14.3 13.2 3.4 6.0
Sixth FYP 1981-85 0.7 16.6 6.2 19.5 14.1 18.6 3.4 9.7
Seventh FYP 1986-90 1.3 10.6 5.9 15.3 12.1 14.3 1.7 17.1
Eighth FYP 1991-95 0.5 24.6 9.7 36.2 28.3 28.2 -0.1 24.0
Ninth FYP
1996-2000 0.3 11.8 2.9 9.4 22.9 21.1 -3.7 8.8
Tenth FYP 2001-05 0.7 14.3 0.6 18.8 16.7 32.3 -10.6 16.8

* Readjustment policies worked until 1965 after which the Cultural Revolution campaign was launched in 1966 and continued officially until 1976. Source : Constructed on the basis of data in Wuxi Statistical Yearbook, 2005.

pride, the Taihu lake, was so polluted with algae that in 2007 supply of water from it to the surrounding cities was suspended for two weeks.4 Hela and many former villages disappeared with high-rise buildings taking their place. Silk production went further inland with more chemical treatment of the fabric. With many rural industries closing down and growing unemployment in cities, peasants who had migrated to Shanghai and other towns in the past decade had to head back to their villages or former villages to fall back on land (if available) and other local resources in 2008-09. The “three rural problems” (sannong wenti: low productivity in agriculture, low rural income, and underdeveloped infrastructure, especially in health, education and agriculture), which were openly discussed all over China since 2000, were very much evident in this otherwise prosperous area as well. It should be pointed out that the rate of growth not only of gross domestic product (GDP) but also average wages in Wuxi over the 30-year period was substantial (Table 1). People’s lifestyles, in many ways, resembled those of advanced western cities. Well integrated with the world economy, the city bene fited greatly but it also caused some suffering with the onset of the global economic crisis. The Wuxi story is the story of contemporary China,

Economic & Political Weekly

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which has been an economic success but with serious social, political and environmental problems. Stories such as Wuxi’s may indeed have prompted the Hu Jintao leadership to announce the concept of “scientific development” to r eorient policies at the 17th Congress of the CPC in 2007, which i ncluded the launch of new initiatives such as “building a new s ocialist countryside.”5

1 Wuxi and Hela: The Place and the People

The place of our case study is Hela (in Pinyin, using the Beijing dialect, it is written as Helie but in the Wuxi dialect pronounced as Hela, which we use here). The Hela People’s Commune was renamed the Hela Xiang in 1983 (a xiang, translated as a township in English, was the traditional rural unit below the county till 1958). It was one of the 10 xiang of the suburban district (jiaoqu) of Wuxi in Jiangsu province of China. It has been subject to further r eorganisation as a part of the urbanisation process during the r eform period. After Wuxi was declared a fully open city by a State Council decision in 1985, it took steps to set up special development zones that provided advanced infrastructure facilities to foreign capital.6 The infrastructure facilities have developed rapidly to cope with the demand generated by the growth of the Shanghai-Pudong area since the late 1990s. The Shanghai-Nanjing Expressway, which passes through Wuxi, was constructed in record time in the 1990s, considerably reducing the travel time to Shanghai’s Hongqiao International Airport and subsequently to the new Pudong International Airport. Several new bridges and waterways have also been constructed. The utilisation of all kinds of waterways – small and big canals, rivulets and rivers and lakes

– is an important part of the modern communication system in Wuxi as it was in the past.

In 1983, Jiangsu like several other provinces underwent an administrative reorganisation and was divided into prefecture-level cities (shi) – each city having both urban and rural areas. The guiding principle for this was the idea that cities must serve the countryside and that the countryside must serve the cities. To integrate rural development with urban development, the city leadership was given a key role. Hence the jurisdiction of cities was expanded to include rural counties. This new framework represented a major change over the commune system where the rural entity had maintained a distinct character as an integrated unit of the political economy. The new system entailed an institutional initiative in rural-urban integration. In the 1980s, it maintained a balanced strategy, trying to fulfil both rural and urban demands. In the 1990s and later, however, it moved in the direction of what we may call “political urbanisation” under which the entire economic and social process was oriented towards fulfilling targets of urban growth under the leadership of the party and the state.

After this reorganisation at the provincial level, Wuxi Shi consisted of its metropolitan districts and three counties (xian). The counties were Wuxi county, Jiangyin county and Yixing county. Subsequently two of these counties became county-level cities (shi) and Wuxi county ceased to exist as such with most of its units merging with the metropolitan districts and other areas of the two other counties. Thus Wuxi shi is the greater urban-rural area covering 4,650 square kilometres. It should be noted that rural county governments aspire to become cities so that they have greater f acilities for industrialisation and the building of infrastructure besides new construction for residences, commerce and production. This does not mean that a city will not have any rural areas within it. Actually there are many rural administrative units or xiang within the jurisdiction of a county-level city. But it is equally true that a xiang aspires for the status of a town

light industry also changed radically to 51.6: 48.4. Large and m edium-size enterprises were 32% of the total with 48% small enterprises and the remaining raw material processing units.9 Rural enterprises contributed two-thirds of the total output value of the whole city. During the period 1981-91, TVEs registered a yearly 22% rise in their output value and the

Table 2: Wuxi: Changing Composition of or zhen for similar urban privileges. (See Ap-Employed Workforce (1980-2004) Wuxi region acquired a special reputation for

Selected Employed Primary Secondary Tertiary

pendix (p 319) on the administrative structure their success. Wuxi has trade relations with

Years Workforce Industry Industry Industryin China and India.) In many rural counties, (Totalin % % %123 countries and regions. The Wuxi Munici

Million)

there may be both xiang and zhen. Xishan city pality and each county-level city have their

1980 2.056 49.6 38.3 12.1

was merged mainly with urban districts in own import-export corporations which auton

1985 2.367 25.8 56.3 17.9

2001 (Table 8). As of 2004 Jiangsu province omously engage in foreign trade as per the

1990 2.449 22.2 58.6 19.2

consisted of 13 cities at the prefecture level, 106 1995 2.379 16.5 57.2 26.3 stipulations of the central foreign trade regu

entities at the county level, of which 27 were 2000 2.210 22.7 48.1 29.2 lations. During the 1980s, a large number of

county level-cities – two of them, Jiangyin and 2004 2.674 12.8 54.8 32.4 quality products in textiles, silk, light indus-Source: Compiled from Wuxi Statistical Yearbook, 2005, p 47.

Yixing, in Wuxi – and 54 urban districts, of try, machinery, electronics, agricultural and

which four were in Wuxi. In Jiangsu province, out of 1,410 township (xiang)-level e ntities, 1,019 were already designated as towns (zhen) and 281 had become street communities or sub-districts (jiedao), of which Hela was one.7

2 Rising GDP, Growing Unemployment and Disparity

The early 1990s are a good dividing line for the history of China’s reforms and it holds good for Wuxi’s story as well. During the 1980s, the focus was on rural reforms and in Wuxi the catalytic role in this was played by township and village enterprises (TVEs). The commune system had been replaced by the Household Responsibility System (HRS) under which land was contracted to households on a long-term basis for cultivation. The amount of land depended on the number of members in a household. The total cultivable land was thus equitably distributed among households. The family now engaged only a part of its labour in agriculture and the vast surplus labour was deployed in TVEs. This development not only increased household incomes but also allowed the collectives, which owned the enterprises, to invest part of their profits in health, education and in improving agriculture itself. This pattern was radically changed

sideline products (fishery, animal products, processed foods and so on) were exported to many countries. During the 1990s, however, the Wuxi leadership decided to refocus its strategy on exports and launched a vigorous plan to attract foreign investment. It succeeded in getting as many as 73 of the Fortune 500 companies to invest in 138 projects as of 2007.10

The ownership system of enterprises underwent a steady process of change during the reform period with the rise of private enterprises leading to changes in the structure of employment (Table 4). Collective units, which provided jobs to 2,11,800 persons, nearly a third of the total number employed in 1980, provided employment only to 42,300 in 2004. In the case of the state-owned units too there was a decline in employment of workers from 3,80,300 to 2,09,000, but they were still a substantial source of employment. On the other hand, the private ownership system in the economy had grown substantially with nonpublic units employing 2,76,000, which was more than the state and collective units put together. This sector had employed only 22,500 in 1985 and experienced rapid expansion after 1992 when Deng Xiaoping called for expanding the market economy during

Table 3: Wuxi: Demographic and Economic Trends

a fter 1992 when the orientation of China’s 1952 1970 1980 1990 1997 2000 2004 Remarks

r eforms was fixed on export-led growth. This is when strict administrative steps were taken to promote political urbanisation.

In 1995, Wuxi’s population was 4.3 million with 1.06 million living in the metropolitan districts. Wuxi was designated by the central government as one of the 15 key economic centres in China and one of the 13 relatively

Population (million) 4.32 4.34 4.47 Growth rate of non-agricultural
Of which Non-agricultural 1.83 2.79 population is high
Employment (workforce) 2.32 2.21 2.74
GDP (billion yuan) 96.00 120.02 235.00 Fast growth
Primary Industry 4.55 4.8 5.18 Agriculture not growing much
Secondary Industry 56.3 68.31 135.35 Industry growing rapidly
Tertiary Industry 35.0 46.89 94.47 Also growing fast
Gross output value
of light industry 66.46 72.60 134.49 Growing fast

large cities, besides being one of the 10 major Gross output value of heavy industry 75.68 105.30 323.01 Growing faster

tourist centres. Its industries during the 1980s

Grain output

and early 1990s included textiles, machinery,

(million tonnes) 0.85 1.23 1.46 1.53 1.57 1.27 0.81 Declining substantially

electronics, light industry, metallurgy, petro-

Oil bearing crop chemicals, building materials, food process-(thousand tonnes) 2.40 13.73 18.5 41.7 39.3 59.1 36.7 Clearly not encouraged

ing and pharmaceuticals. In 1995, the GDP of Aquatic Products 8.18 10.7 19.18 66.59 81.6 102.5 113.9 Slow progress of a traditional (thousand tonnes) strength

the whole city was 78.1 b illion yuan.8 In the

Silkworm cocoons (tonnes) 5,465 6,124 5,658 2,304 1,139 1,115 603 Disappearing fast

decade of the 1980s, the average annual rate

Tea ( tonnes) 327 1,010 2,023 5,870 4,992 4,898 4,680 Continues to be an important

of growth of industrial output in Wuxi was as

produce

high as 15%. The ratio of heavy industry to Source : Wuxi Statistical Yearbook, 2005, pp 10-11.

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his southern tour to Shenzhen and other Special Economic Zones (SEZs). Table 4 shows the major expansion of self-employed urban labour. Their number was minuscule in 1980, only 1,300, which

Table 4: Changing Ownership System and Employment Pattern (Million persons)

Year Employment Staff and In In Urban In Other Urban Rural
Workers State-owned Collective Forms of Self- Labourers
(Total) Units Units Ownership employed
1980 2.056 0.592 0.380 0.211 0.0013 1.463
1985 2.367 0.740 0.452 0.265 0.022 0.0097 1.618
1990 2.449 0.798 0.480 0.269 0.048 0.016 1.639
1995 2.379 0.783 0.444 0.205 0.133 0.044 1.551
2000 2.210 0.593 0.320 0.086 0.186 0.108 1.509
2004 2.746 0.527 0.209 0.0423 0.276 0.598 1.564

Source: Compiled from Wuxi Statistical Yearbook, 2005, pp 47-48.

grew to 5,98,800 in 2004, again recording a sharp rise after 1992. But what remained constant was the massive proportion of rural labourers to urban ones. It was 14,66,500 rural to 5,14,900 urban

Table 5: Trends in Average Annual Wages of in 1978 and was still
Workers and Staff (1952-2004 , Yuan) Year Total Wuxi Urban Jiangyin Districts City Yixing City 15,64,100 to 5,27,400 in 2004. In other words, rural
1952 507 529 401 355 labourers were facing a
1957 508 568 420 429 new situation of having to
1962 5515 580 466 451 find work when employ
1970 504 523 478 463 ment in the collective en
1978 550 574 512 493 terprises shrank substan
19801985199019952000 699 1,113 2,449 7,192 10,966 724 1,137 2,550 7,488 11,988 656 1,086 2,335 6,998 9,685 639 987 2,119 6,153 8,835 tially in the 1990s. Some of them found jobs in the private sector while many went in for self-employ
2004 20,442 21,295 20,252 15,956 ment. But a large number
From 1952 to 2000, areas which became a part of remained unemployed or
Xishan city and then merged with urban districts were included in the total for Wuxi. were in search of jobs.
Source: Compiled from Wuxi Statistical Yearbook, 2005, p 51. Thus whereas the eco

nomy recorded impressive growth in GDP, the rural population, including many in the city, faced an employment crisis.

Several important trends in incomes are noticeable if we look at them over a 50-year span (Table 5). First, there was near stagnation of wages from 1952 to 1977, which was as low as around 500 yuan but grew 40 times to 20,442 yuan in 2004.11 Of course, the prices of commodities were low and collective social services were available to all. And there was an egalitarian environment. Therefore, to characterise this situation as “collective poverty” and deride the achievements of the first three decades is not fair. But the amenities of living were indeed minimal and the infrastructure was poor. Second, the 1980s witnessed a massive growth of income from 550 yuan in 1978 to 2,449 yuan in 1990. This was the period of rural reforms, especially collectively owned rural industries. Thereafter progress was remarkable, crossing the 10,000-yuan mark in 2000. Thus Wuxi accomplished much more than Deng’s stipulation of a fourfold increase – the target being $1,000 that he had set for China’s per capita income in 1980. Third, incomes in the relatively rural areas of Jiangyin and Yixing were not too far behind those in the urban districts until the late 1990s when disparities began to widen faster. If we look at the annual average wages of staff and workers in 2004 in terms of where they were employed, those who worked in state-owned units got 23,879 yuan, almost double that earned by collective units (12,674 yuan), and those

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who worked in the private sector got 18,725 yuan, about one and a half times the wages of the collective workers. That was the average picture while some in foreign-owned companies or the joint sector earned much more than workers in the state-owned units. But the average annual earning of government employees in Wuxi was 31,525 yuan – higher than those working in enterprises (17,955 yuan) and in other institutions (25,538 yuan).12

Living standards improved rapidly during the reforms period as was evident from rising incomes as well as expanding savings (Table 5). At the same time, the urban-rural gap sharply widened during the 1990s even though incomes in both areas grew s teadily. Per capita savings deposits, which were substantial from 1985 onwards, exceeded per capita earnings in 2000 and r emained so thereafter.

Wuxi’s pattern of development has been to urbanise its village communities. Therefore the townships (xiang) were allowed to become towns (zhen). Even the ones that remained after 1999 ceased to exist by 2004. But villagers’ committees continued within the towns even though their number declined when many of them became street (jiedao) committees or village (cun)-level towns. Table 8 points out that villagers’ groups corresponding to the production teams of the commune period continued to exist and perform a crucial role at the village level such as undertaking collective production contracts. They were more functional units than substantive units of self-governance.

Table 6: Living Standards of Urban and Rural We get a picture of the Residents (1978-2004 , Yuan/per capita)

state of income inequality in Wuxi from Table 6. Year Disposable Income of Urban Residents Net Income of Rural Residents Per Capita SavingsDeposits of
Nearly a quarter of the 1978 340 181 Residents 39
population earned below 1980 456 239 65
4,000 yuan while almost 1985 958 698 302
the same proportion was in 1990 1,833 1,496 1,337
the above 10,000-yuan 1995 5,763 3,976 4,708
level. More than 40% were 2000 8,603 5,256 12,763

2004 13,588 7,115 25,943

in the middle-income group

Source: Wuxi Statistical Yearbook, 2005, p 74.

of 4,000 to 8,000 yuan. There were rich people in all the districts and cities and inequality was pervasive. Table 7 shows disparate incomes in the rural areas.

The suburban district where Hela is located reflected many of the features of Wuxi city as a whole but as a critical d ecision-making unit

– just as a district in India – at the grass roots level, reveals some a spects of the reforms story not c aptured at the large city level.

3 The District: Urbanisation of the Rural

The process of political urbanisation meant reorganisation of units both at the upper level of xian (county) and qu (districts) as well as the lower levels of xiang and cun. As mentioned earlier, Jiangsu province was divided into 13 shi in 1983. The Chinese character shi is used for cities at every level, so one has to find out each time at which level that city is located. For example, Beijing and Shanghai are provincial-level cities. Wuxi, Nanjing, Hangzhou are prefecturelevel cities. Then there are county-level cities such as Yixing and Jiangyin within Wuxi. A metropolitan or urban area can also be a shi or city. For rural China, the entity above the xiang level is the xian (county). In olden days the whole of Wuxi city was the Wuxi Xian (County). From 1983 to the early 1990s Wuxi had four d ivisions: Wuxi metropolitan area along with a suburban district, The reason behind such complex intermixing of rural and Wuxi county and two cities – the county-level cities of Jiangyin Shi u rban entities is the reality that the urbanisation process has and Yixing Shi . In 2004, Wuxi county ceased to exist and was inte-p roceeded at a fast pace in contemporary China. The declaragrated with the metropolitan area with many districts (qu). Again tion of an area as urban changes the nature of land ownership.

there were two kinds of The economic planning acquires industrial direction. Land use

Table 7: Proportion of Per Capita Annual Net Income of Rural Households (2004) districts in the metropoli-is subject to commercial and other regulations. The history of

Income Level Wuxi Urban Jiangyin Yixing

tan area – shi qu (urban Hela’s changing status from a grain-producing, mulberry-

Yuan ( Total) Districts City City

districts) and qu which planting, silkworm-raising commune across the Liangxi river

Below 2,000 5.50 4.00 6.00 8.00 2,000-3,000 6.50 6.00 8.00 6.00 were at the level of the from Wuxi town to an industrial and commercial hub with a 3,000-4,000 11.00 10.50 6.00 17.00 zhen (town) located in the modern residential neighbourhood integrated with the new

4,000-5,000 10.25 12.00 6.00 11.00 xian or the rural county. Wuxi city reflects the corresponding administrative change. It 5,000-6,000 11.00 10.50 8.00 15.00 Just as a shi (city) can is important to note that the same process has taken place even 6,000-7,000 11.75 10.50 11.00 15.00

exist at different levels, so in remote areas of rural China. Whenever I asked local leaders

7,000-8,000 8.75 8.00 11.00 8.00

can a zhen. There are about their development plans, they said that they looked

8,000-9,000 8.50 10.50 10.00 3.00

xiang-level towns called f orward to obtaining an urban status from the higher authorities

9,000-10,000 5.25 4.50 9.00 3.00

zhen and there are cun so that their land value would increase and they could set

Over 10,000 21.50 23.50 25.00 14.00

(village) towns also called up industries.

Source: Wuxi Statistical Yearbook, 2005, p 91.

zhen. There may be small Hela as a xiang was part of the suburban district when I first urban centres which may not have the legal status of a xiang or visited Wuxi in 1979. So we start with the development process in cun but may be also called a zhen or a town. In a xian or rural the suburban district and then turn to the unfolding of the reform county there can be both xiang (township, which is a rural entity) process in Binhu district, where Hela was relocated first as a zhen

and then as a jiedao (street or sub-district).

Table 8: Wuxi: Administrative Divisions (2004)

Di Qu/District Zhen/Town Jiedao Ban Zhumin Cunmin Area Sq Km Land Area The main objective with which the subur

shichu/Urban Weiyuanhui/ Weiyuan hui/ Out of the

Sub-district Neighbour-Villagers’ Total Area

ban district started its reforms was that it

Office hood Committee

should serve the city and benefit by it. There-

Committee

Wuxi city 59 24 453 1,061 4,787.61 1,502.08 fore, producing vegetables and foodgrains to Total (Rest being water) supply the city besides producing a certain Shi Qu/ amount of grains for its own consumption was

Urban districts 22 24 298 337 1,622.64 510.44

a component of its economy. At the same time,

Chongan district (metropolitan area) 6 34 8 17.59

development of rural enterprises was encour-

Nanchang district (metropolitan area) 6 60 No villages 22.43

aged as part of the national policy to contrib-

Beitang district (metropolitan area) 5 60 Do 31.02

ute to economic development. The district

Xishan district 8 Relatively 33 117 454.36

rural area government devised its strategy in such a way

So no jiedao that industry and commerce develop rapidly, Huishan District 6 Do 16 134 327.12

and agriculture be supported out of the collec-

Binhu District 5 4 78 72 631.50

tive’s profit from this development. One of the

New District 3 3 17 6 138.63

considerations underlying this strategy was Shi that every year more and more agricultural

(County Level city) 37 Relatively

rural area, land was taken over for the construction of in

formerly Xian 155 724 3,164.96 991.63

dustrial and commercial enterprises. Since the

Jiangyin city 16 Relatively

district enjoyed autonomy in its economic

rural area,

d ecision-making, it could utilise its resources,

formerly Xian 64 312 987.53 194.87

Yixing city 21 Relatively including land, for the most profitable pur

rural area, poses. So in the 1980s much land was diverted formerly Xian 91 412 2,177.43 796.76

from agriculture to industrial construction.

Source: Wuxi Statistical Yearbook, 2005, pp 6-7.

and zhen. Within a xiang (township) there may be cun as well as cun-level zhen. Similarly within a zhen (town at the xiang level) there can be rural areas or cun and u rban areas or zhen (towns at the cun level).

A metropolitan area’s urban districts are divided into streets or neighbourhoods (jiedao), now designated as urban sub-district office (jiedao banshichu), and neighbourhoods are further divided into residents’ committees (zhumin weiyuanhui). But the other districts in the metropolitan area may have both jiedao (subdistricts) as well as zhen.

Because of collective ownership of land, such diversions were easy. According to Chinese law, land in designated urban areas belongs to the state and land in rural areas belongs to the collectives.

The following figures indicate the high rate of growth achieved by the suburban district during the period of high growth.13

1978 1986

Total Output Value (million yuan) 220 1,600 13,239

GNP (million yuan) 110 – 3,890

GNP per capita (yuan) – 12,727 24,072

june 27, 2009 vol xliv nos 26 & 27

The story of the development process in the suburban district was typical of the areas in eastern China which took full advantage of the national policy on reforms. Before 1978, the main f ocus was on grain production. During the Cultural Revolution period, those who paid greater attention to industry, commerce and household production were criticised as “capitalist-roaders”. The state had fixed quotas for grain production by each level. This resulted in an inadequate supply of vegetables to city. There was a large labour force engaged in agricultural production. The production cost remained high while the variety of products was limited. Many such problems are pointed out by post-reform l eaders while referring to the commune period. But it should be mentioned that while stress on grain production was undoubtedly there, diversification and development of appropriate rural industries were definitely encouraged in the early 1960s and were part of the overall commune policy.

With the reforms after 1978, the countryside was asked to develop on its own and supply vegetables and other farm products to the city. Operating under the HRP, the suburbs diversified their economies and developed agriculture, industry and commerce.

During the first phase of the reforms, 1979-84, rural enterprises experienced rapid growth. The suburbs took advantage of

Table 9: Government Organisations in Rural Areas (1999-2004)

Level of Organisation 1999 2000 2001 2002 2003 2004

Township (Xiang) government 10 1 1 1 1 0

Town (Zhen) government 107 101 93 91 84 59

Villagers’ committee Cunmin Weiyuanhui 2,080 1,821 1,540 1,355 1,272 1,185

Villagers’ group 25,198 25,183 24,834 24,392 24,122 23,561

Source: Wuxi Statistical Yearbook, 2005, p 165.

a cheap labour force, both from local sources as well as from across the Yangtze river – the area in southern Zhejiang which was relatively less developed. To their advantage, enterprises hired retired technicians from the industries of Shanghai and Suzhou. As mentioned earlier, Wuxi had a tradition of industry and commerce. Being the home of the Rong family, the suburban district was already connected with national and international trade. It also acquired a lot of second-hand machines to launch its enterprises. Once rural industries sprang up, members from practically every peasant household went to work in them. Every xiang and every cun tried to set up new enterprises in the early 1980s.

The second phase of reforms in the suburban district started in 1985 and lasted until 1991. Now, the effort was in upgrading the quality of production. The cadres had already accumulated some s ecuring capital from the national and international market. Thus during the second half of the 1980s, as district party leaders proudly proclaimed, the suburban economy changed from simple processes and technology to large-scale and modern production. During this period many joint ventures with foreign investment came up in different xiang, including Meilido Hotel, Hela’s threestar hotel with Australian collaboration.

The third phase was one of rapid market development after Deng’s speeches during his southern tour in early 1992. Initiative, investment and competition were the new creed. Rural enterprises diversified and vastly increased their production in the wake of fierce competition in the market. In the suburban district of Wuxi, there had been greater demand than supply of various kinds of goods in the initial year of reforms. Now the situation was reversed. The market had more of all kinds of goods than there was demand; the result was the various enterprises faced more competition. The competition involved collective enterprises owned by the xiang and cun, state-owned enterprises and an increasing number of private enterprises. By now indications of an emerging crisis were visible. The collectively owned rural enterprises found it difficult to compete in the new environment.

The 1990s saw significant changes in the forms of ownership of enterprises. The suburban district encouraged the organisation of shareholding companies. Unlike in Guangdong Province where private ownership grew very fast, in the Su Nan (south of the Yangtze river) region, collective enterprises still continued to be the main form of ownership. But they too opened themselves to shareholders. Shares could be theoretically bought by their own workers and the members of the xiang, but soon it was more prosperous enterprises, companies and entrepreneurs from outside the township and even outside the country who took over ownership. Of 1,200 enterprises, 680 units possessing more than three million yuan in assets were ready for a change in ownership in 1996.

Opening to the national and the world market was the policy after the Fourteenth Party Congress in 1992. In this process, many enterprises went bankrupt because their products were of a low quality and they failed to compete in the market. Some loss-making companies were sold to private individuals or to other collectives and companies. When the Fifteenth Party Congress focused on the reform of state-owned enterprises in 1997, the policy on the transformation of collective enterprises was already in operation and thousands of rural enterprises had been sold to private entrepreneurs. Thus, the “reform and open door” policy continued into a new stage of market-oriented development in the 1990s in the suburban district and Wuxi’s urbanisation process proceeded with a further reorganisation of the district. A substantial part of the suburban district, including Hela, was merged with Binhu district and was later made into urban districts.

experience in running enterprises; managers Table 10: Profile of Towns in Binhu District (2004)
were trained and workers developed skills on Zhen/Town Total Employed Land Cultivated Financial Grain Remarks
the job. Hence a good foundation had already been laid. Farmers had acquired technical skills Population (2004) Persons Area (Hectare) Area (Hectare) Revenue (Million yuan) Output(Tonne)
in a variety of economic activities. Their experi- Hela 43,911 23,514 4,700 760 27.78 3,490 Small area for crops
ence of managing rural collective enterprises Huazhuang 89,046 43,518 5,329 1,933 43.51 10,693 Larger town, More crops
was compared with that of state-run enterprises Taihu 58,036 34,804 4,212 779 47.01 5,458 Less crops, more income
and many lessons were learnt so that these could be managed better. The availability of cheap labour and land now needed to be inte- Mashan Hudai 30,402 34,404 19,885 18,224 4,788 5,509 842 120.21 818 13.74 3,294 5,870 Less crops, high level industrialisation, high income Less crops, more land used for nonagricultural purposes, still less income
grated with the use of modern technology, Source: Jiangsu Statistical Yearbook, 2005, pp 614-615.
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4 Hela: From Rural Commune and Township to Urban Neighbourhood

In 1978, the suburban district had 15 communes. When the r eforms began, the Meiyuan commune was merged with Hela in 1979 so that the entire western suburban area would become an integrated unit. By 1983, the commune structure was fully replaced by the xiang administrative structure. From 1983 to 1999, Hela was one of the 10 xiang (rural townships) of the suburban district of Wuxi, after which it acquired the status of a zhen (town). In the next step in the process of urbanisation, it became an urban neighbourhood or jiedao (street or sub-district) in 200414 (Table 12).

A closer look at the situation in Hela township in 1996 gives us an idea about the effects of the first 15 years of reforms, after which the process of political urbanisation was accelerated to meet export-oriented growth targets. In 1996, Hela had an area of 36 square kilometres with a population of 33,000 in 11,500 households. The township consisted of 13 cun or administrative villages (formerly production brigades) and 97 zeran cun or n atural villages/hamlets (formerly production teams). With the serpentine Liangxi river on its south, the Huiquan Hill on its east and the Li Yuan (Peach Garden) and the Taihu lake on its west, many of Wuxi’s beautiful spots were in Hela.

Table 11: Economy and the Workforce of Towns (Zhen) in Binhu District (2004)

Hela Huazhuang Taihu Mashan Hudai
Town Town Town Town Town
Total households (hu) 12,698 23,925 17,978 9,015 11,967
Total population 43,911 89,046 58,036 30,402 34,404
Workforce 23,514 43,518 34,804 19,885 18,224
Persons employed in primary industry 2,334 8,577 2,383 686 2,791
Employed in secondary industry 16,093 26,734 27,192 13,833 10,573
Employed in tertiary industry 5,087 8,207 5,229 5,336 4,860
GDP (million yuan) 2,021 2,920 3,962 2,700 1,051
Out of which
Primary industry 32.84 96.1 51.02 60 51.12
Secondary industry 896 2,174 2,172.96 1,680 810.59
Tertiary industry 1,092.16 650 1,198.6 960 190.06
Total financial revenue (million yuan) 277.85 435.18 470.14 1,202.17 137.42
Average net income per farmer (yuan) 6,855 7,342 8,060 7,337 6,861
Arable land (ha) 760 1,933 779 842 818
Total output of grain (tonne) 3,490 10,693 5,458 3,294 5,870
Total power of farming machinery (Kw) 5,728 12,060 7,071 5,510 8,749
Total Electricity consumed (million Kwh) 111.37 191.12 487.57 2,065 9,708
Source: Compiled from Wuxi Statistical Yearbook, 2005, pp 186-192.

Waterways, hills, residences, factories and fields are what comprise Hela township.15 The waterways linked the Taihu lake with the Grand Canal and were used both for navigation and fishing. Long rows of fully loaded boats are strung together and driven by a single motor. The fish brigade – it was still called a brigade with the status of the cun – is on the western bank of the Linagxi river. The Xi Mei road, which links the Mei Yuan park with the Xihu park, runs parallel to the Jiangxi river. The Helakou (or Hela gate) near the eastern end of the xiang was earlier the entrance to the rural township from the city. It has become a constantly growing business area of the city. What was a quiet area in 1979 had in 2008 become a bustling activity centre signalling the steady expansion of the metropolis.

The villages around the Helakou have naturally lost land to the city and have opted for faster industrialisation and commerce. For obvious reasons, the adjoining villages are relatively more prosperous compared to the ones that are farther from the city centre. Hela Xiang’s richest villages are Liqiao, Xiemin and Sunjiang. They not only set up plants to provide ancillaries for city industries and the larger market, but also shops, restaurants and hotels early in the reform years. Thereafter, many modern industrial units have come up in this area.16

The western part of Hela is an expanse of hills, the largest among them being the Longshan (Dragon Hill) range with Hengshan (Straight Hill) and Xishan (Copper Hill) on its south and north respectively, besides a number of smaller hills. In the late 1970s, the hills were full of pine trees and tea plantations. Some slopes were also covered with mulberry trees for raising silkworms. The picture since the late 1990s is very different. The hills have been cleared for quarries, thus presenting a sight of bare slopes. Much of the mulberry land, which sustained silk production, was first used for orchards or later cleared for new industrial plants. It was argued that mulberry could be planted in more interior villages rather than in the suburbs, which could be used for more profitable purposes.

A concrete road laid in the mid-1980s goes through the Hengshan pass by the side of Dong Hengshan village or hamlet to the crematorium of the xiang. Further down this road, across the hills, lies Qingxing village, the farthest from the metropolitan area. This is the only village where foodgrains, that is, rice and wheat, continued to be the major products till the late 1990s. Like other villages, Qingxing launched projects for industrialisation and commerce in the late 1980s and achieved rapid growth. But throughout the 30-year period, the per capita income of this village has remained the lowest in the xiang. It has its agricultural fields, hills and quarries on which rural enterprises have come up, and vegetable farming. But in the same time, other villages have made even further progress with their export-oriented industries and this western-most cun continues to lag behind in per capita GDP terms. The leaders of the township always pointed to this case as an example of an agriculture-based economy being the cause of backwardness.

The southern border of Hela on the coastline of the Taihu lake was full of orchards, of tangerine, peaches and pears, and numerous fish ponds in the 1980s and 1990s. This began to change in the late 1990s. In 1996, green hills slopes occupied 16,000 mu (1,066 hectares), fish ponds 3,000 mu, only 1,360 mu was used for growing vegetables and 800 mu as orchards. The landscape changed dramatically during the third decade of reforms and factories, hotels, residential colonies and commercial buildings have come up on agricultural fields, the hill slopes and even filled ponds.

During the first 15 years of reforms, the phenomenal rise in family incomes resulted in two waves of house construction in the villages. The first wave took place in the early 1980s soon a fter the reforms began and the commune’s restriction on house

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building was withdrawn. Most of the households quickly built new houses to provide reasonable accommodation to the secondgeneration members of the family.17 During my visits to the villages in Hela between 1980 and 1993, I found most families steadily improving their housing conditions and increasingly living in newer houses fitted with modern facilities. Whereas the kitchens earlier mainly used coal, now they had gas and electric cooking systems. Earlier they carried the night soil from latrines to the field to use as manure. Now they had flush latrines. Washing machines and colour televisions were very common in the early 1980s and more and more families acquired refrigerators and air-conditioners by the end of the decade. Earlier having a bicycle was a luxury, now more and more families had bought light motorcycles, and later, some even owned cars.

After 2003 the situation started changing

if they work in urban enterprises. For certain purposes, the family is regarded as a rural household with some of its members as urban workers. It gets highly complicated when one tries to work out per capita output or per capita income. If this is complicated for the suburban area, it is not so easy in a rural county (xian) e ither. This is because there are zhen and urban enterprises in the rural county as well. Even in the case of responsibilities and privileges, an urban-rural differentiation may be difficult. For s ecurity purposes, all citizens, irrespective of where they work, are covered by internal security zones. For health and educational facilities, some items are common wherever they be, but for some purposes such as paying fees or availing themselves of social services the practice may vary from place to place. Migrant labourers from Wuxi’s rural areas working in Shanghai are not eligible for health and education facilities

Table 12: Administrative Status of Hela

very fast. Multi-storeyed apartment com-there because they still carry the hukou

People’s commune (Renmin Gongshe) 1958-1983

plexes gradually came up once a village be-from Wuxi. When migrants from north of

Township (Xiang) 1983-1999

came an urban neighbourhood. The restric-the Yangtze river come to Wuxi to work,

Town (Zhen) 1999-2003 tions on using agricultural land no longer Street/subdistrict (Jiedao) since 2004 they face the same problem. Thus, the

applied in the new situation. In 2008, when h ukou system and the urban-rural identity I looked for my old contacts, they were hard Table 13: Population of Helaproblem complicate the characterisation of

Population Households Workforce

to find.18 the population. One has to see the context

1979 (Xiang) 21,236 6,778 11,042

There were strict environmental regula-in which a quantitative description of a

1980 19,672 6,607 9,337

tions to prevent pollution of the Taihu lake group is presented. Above all, one has to

1985 18,400 5,000 8,436

and the rivers. As per the regulation of the carefully check whether the per capita

1993 33,000 11,500

State Council of China, the construction of figure is per capita labour in an enterprise

2001 (Zhen) 36,000

certain kinds of industries within five kilo-or a territorial unit or per capita in terms of

2004 (Jiedao) 43,911 12,698 23,514

metres of the lakeside was prohibited.19 Still there has been alarming evidence of pollution of the Taihu. As mentioned earlier, the algae pollution increased year after year until it assumed scandalous proportions during the summer of 2007. Certain kinds of fish were not breeding the way they used to because toxic levels continued to rise. The water management system seems to have been upset in the past two decades and every one or two years there are severe floods in this area.

People and Their Work

Before we look at the population figures a clarification is called for. Because of the hukou (residency permit) system, during the xiang period, Hela’s population figure did not include residents in the quarters provided by the city government which were in the territory of Hela. They worked in city-run factories and offices though they lived in houses in the suburban area. Nor did it i nclude members of rural families who worked in the city and had acquired a city residency registration. Though they had houses in the village, they were enumerated as city workers. This presents serious problems for statistical calculations. For example, take the case of a family where the husband is a worker in a city-run enterprise and the wife in a xiang or cun-run factory; the husband would be counted as a part of the urban population and the wife, as a part of the rural population. Because of having a house in the village, their household would be counted as a rural household, actually peasant household. With the introduction of the HRP, their land can be contracted and subcontracted while they may not work on it. Yet maintaining a piece of land in the village continues to be a much-desired asset for most people even

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population of an area. We have to keep all these in mind while examining the statistical data on China’s r ural situation.

The population of Hela Xiang declined in the 1980s from more than 21,000 in 1979 to more than 18,000 in 1985 and further by the end of the decade. This was not due to a negative rate of population growth but because the status of members changed from rural to urban workers. In the 1990s, with the expansion of economic activities in the township, the number continued to rise. When Hela became a town (zhen) more land was allotted for industrial, commercial and residential purposes. Finally when it was incorporated as a city street (jiedao), urban housing in Hela was not restricted any more. In 2006, Hela had a new profile with many new modern housing colonies and more and more people living in them.

Women workers constituted 52% of the workforce in the 1980s. In the 1990s, it was reported to be 50%. This change r eflected a changing trend in employment. Initially more and more women joined rural enterprises while men were either e ngaged in agriculture and fishing or in city enterprises. In my interviews with local leaders they admitted that as technical competence became more essential, male workers were p referred by enterprises.

The decline in the xiang population was initially because of the city absorbing more and more peasants from it into urban jobs. This was partly because of an agreement between the xiang and the city that whenever the city acquired any xiang land, the new enterprise had to provide employment for at least one person for each mu of acquired land. Often the job was given to the affected family or the village unit. Besides, some city workers had moved to the government apartments, thus reducing the population registered with the xiang. No doubt a strict adherence to family planning norms, especially the policy of one-child families as well as late marriage, had their impact on the population figures. Employment opportunities, however, rose dramatically in the late 1980s and early 1990s with the launching of many new enterprises and further diversification of the suburban economy. Rural income continued to rise substantially. So migration to the city was not on a massive scale. The xiang gave a number of f acilities to its members which the city enterprises could not a fford until the early 1990s. The idea of living in a spacious p ersonal house, close to one’s relatives in one’s ancestral place, while earning a good income was still attractive. That, however, changed in the late 1990s.

Over these years there was a dramatic change in the occupations of the villagers. In 1979, as many as 80% of the workforce was engaged in agriculture, fisheries and other sidelines while only 20% were engaged in small industries in the commune. B esides grain production, the villagers also grew vegetables and mulberry while being engaged in silk-worm culture, pig-raising, and the poultry, dairy, horticulture and tea businesses. At that time, as many as seven production brigades (later cun) were mainly engaged in producing foodgrains. This drastically changed with the coming of the new economic strategy. The suburban areas were now encouraged to switch to industries and cash crops to benefit from their proximity to the city. In 1985, the composition of the workforce was very different – 6,400 workers or 75.9% in rural industries, 1,500 or 17.8% in fisheries, 250 or 2.9% in vegetable growing and the remaining 286 or 3.04% in grain production. It should be noted that many members while working in the factories also looked after their land in their spare time. The picture further changed in the 1990s with less and less people engaged in agriculture. In 2004, a little less than 10% of the workforce was engaged in primary industries (farming, fishing and animal husbandry) while 68.44% were engaged in secondary industries and 21.63% in the tertiary sector. Since the late 1980s, commerce has emerged as a major sector of the economy. The expanding sector of development in this area has been what is called the third industry (di san ye), referring to tourism, travel, hotels, restaurants, and entertainment. In Wuxi’s scenic environment, this sector has e xpanded very fast, attracting foreign investment and the d eployment of modern technology.20

The Production Trends

The first spurt in production in Hela township took place during 1979-84 when the value of industrial output reached 100 million yuan. It rose to 270 million yuan in 1987 and more than 600 million yuan in 1995. Meanwhile, the composition of the economy changed significantly. In 1995, rural industries accounted for 63%, commerce 35% and agriculture and sideline production 2% of the total output value. After the announcement of the Ninth Five-Year Plan in 1995, Hela decided to raise the proportion of the tertiary sector to 49% and reduce rural industry to 49%, while agriculture and sideline production remained at 2%.

In 1996, Hela had 185 TVEs, of which 20 were owned by the township and the rest by villages. In addition, there were 16 s pecialised enterprises that were autonomous and professionally managed. Together they possessed fixed assets of 750 million yuan. The Hela leadership described the township’s new path of development as a three-in-one policy, “Taking agriculture as the gold medal enterprise, taking industry as the backbone of the economy and building the third industry (tertiary sector) as the superior enterprises (youshi qiye).” The local conditions warranted that line of thought. The rural industries of Hela were d escribed as standing on six pillars – electronics, machinery, light industry, textiles and garments, chemicals and metallurgy. The authorities were never tired of mentioning the quality of their products – 50 products having won quality awards at the provincial and national level, 20 of them such as electronic components, printing machines, kitchen devices, centrifugal pumps, umbrellas and gloves being exported to Hong Kong, south-east Asia and western Europe. Besides these, the 280 items manufactured in Hela included electric cells, elevators both for passengers and goods, bearings, cast iron tubes, water pumps, woollens and toothpaste.21

As indicated earlier, the tertiary industry has developed very fast. In 1996, there were 285 commercial units and five market complexes. Mention must also be made of Entertainment City, Wuxi Roast Duck Restaurant, Tang Dynasty Food Street and Unique Wuxi Taihu Pets Centre beside the Meilido Hotel. There were five joint ventures in Hela involving foreign investment. The township has also gone abroad and set up two hotel resorts on the Australian coast.

On the agriculture and sideline front, Hela township produced 1,25,800 tonnes of vegetables in 1996. In horticulture, it produced, among other things, honey peach in 800 mu. It achieved the status of a “sparkling project” under which one tonne of fish was produced for each mu of fish pond while maintaining ponds on 3,000 mu. The township also has a dairy farm with 100 milch cows and 1,000 pigs and a duck farm with an annual production of 500 million birds. In all, 12 components of sideline production were managed in the xiang.

The annual per member income in Hela Xiang grew threefold to 1,100 yuan between 1979 and 1983 and rose further to 1,592 yuan in 1986. Ten years later, the figure was not available, but it was not less than 4,000 yuan. In other words, the average real income of a member of the township rose nearly 10 times in less than 20 years of rural reforms. The xiang authorities explained that now families had diverse sources of income: agriculture, sideline production, and private commerce, besides wages from village, township and state enterprises.

It is also clear that income disparities are large. In 1996, some members of the township were getting as low as 600 yuan per year and some as high as 600,000 yuan. This trend widened further in the next decade. However, there is unmistakable evidence of a dramatic rise in people’s living standards as also of economic growth in the township as a whole. Hela, which was a suburban commune, has grown into a xiang with a prosperous economy and a new landscape, and is fast developing into an urban neighbourhood. Starting primarily as an agricultural suburb with

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s cenic beauty, it has become the hub of modern industry and commerce in 30 years.

5 The Wuxi Story: Implications for Development Theory

The 3,000-year-old town on the Taihu Lake has transformed i tself over 30 years from one which had a rural silk industry base into a medium-size global city of electronics and services. Broadly speaking, it went through three phases of development. During the first phase, from 1978 to the early 1990s, diversifying the r ural economy by promoting TVEs, modernising the textile industry and expanding facilities to attract foreign investment were the main trends. That was a period that witnessed the fast rise of rural incomes.

The second phase, from the early 1990s to 2001, was a period of accelerated opening up to foreign capital and major investment by foreign companies. This was the time numerous Japanese companies, including all the top ones, lined up to locate their enterprises in Wuxi in a variety of industries ranging from electronics to entertainment and service industries. This period also saw expanding linkages between Wuxi’s economy and that of Shanghai and Pudong. The third phase began with China’s e ntry to the World Trade Organisation (WTO) in 2001 and saw further expansion of foreign capital investment in Wuxi. After Hu initiated a “scientific outlook on development” and called for a balanced and proportionate strategy aimed at ensuring environmental sustainability and social justice, Wuxi decided on a new set of priorities during the Eleventh Five-Year Plan beginning in 2006. The new emphasis was on quality rather than quantity in growth, and the “deepening” of reforms rather than their “widening” or adding more and more private and foreignfunded enterprises. An emphasis on innovation and more attention to science and technology, and a greater stress on improving the environment and saving energy in the production process were the new thrust areas. Building Wuxi into a new info-city and an eco-city was the new mantra of development. In the 1990s, an “open economy” or foreign direct investment and trade had become the “engines” of development of Wuxi as indeed the whole Chinese economy. In the post-2002 period too that trend continued until the world economic crisis hit all countries, i ncluding China, in 2008.22

But during this period there was a clear attempt to address specific social and environmental issues. The phenomenon of call centres has grown very fast in recent years and many kinds of outsourcing of services are located in this city. The per capita GDP of Wuxi, which had reached $3,000 in 2003, had risen to $7,000 in 2007 and was poised to reach $10,000 in 2010. However, Wuxi’s Eleventh Plan acknowledged that

the problems of employment, income distribution, social security, public service, social safety and disaster relief that concern people’s economic, political and cultural rights very much, have gradually become the major concerns of government officials who intend to make all citizens benefit from social development.23

There were three aspects to Wuxi’s reforms strategy, (1) political urbanisation as the method of rural-urban development, (2) a leading role played by the state and the collective economy in spearheading the overall process of development, and (3) controlled

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integration with the global economy as a major factor in d evelopment. In each case there were economic gains with some socio-political and ecological costs.

First, political urbanisation as a principle of the territorial r eorganisation of Jiangsu province was a continuous process. The province was divided into prefecture-level cities, of which Wuxi was one. Rural counties such as Wuxi county, Jiangyin county and Yixing county became county-level cities. Then townships or xiang like Hela first became urban towns or zhen and then subdistricts of the urban district. The urban status allowed the e nforcement of different rules to take over land for real estate development and commercial and industrial units. This brought economic gains. But the villagers’ rights over their land no longer existed. The democratic process of multi-candidate elections at the village level under the Grass-roots Government Law of 1998 ceased to apply.24 The village-level unit was no longer in charge of the local environment. The district-level and city-level organisations had taken over these responsibilities. They also had to fulfil nationally set goals of production declared by the central government and pursued at each level by the CPC unit.

The element of democratisation that was indicated by the emergence of the village (cun) as the basic unit of people’s selfdevelopment, which was further enhanced by the introduction of multi-candidate competitive elections after 1998, now suffered a reverse. Towards the end of the 1980s it was hoped that the township and village would emerge as active units of grass roots d emocracy and development. But that process was stalled with the new preoccupation with growth. In the 1980s, Hela township had its own autonomous corporations managing agriculture, industry, fisheries and sideline production. Twenty years later, their economic activities were under the control of big corporations with Wuxi city or higher authorities playing a supervisory role. Village-centred politics had important implications for women in village enterprises. In most of the villages, at least 25% of the members of the representative conference were women. In a village party branch at least two of the five members were women.25 After the township became a street committee and the village became a neighbourhood committee, the functions of these bodies were reduced mainly to overseeing civic peace, law and order and health and family planning.

Second, Wuxi was an example often discussed at the national level of the “su-nan model” or the model to the south of the Yangtze river, where the collective economy played a decisive role in i ntegrating agriculture with rural industries, the rural economy with the urban economy, the local economy with the national and global economies, and the public sector with the private s ector. Fei had enthusiastically commended this model. The township and village governments and their collective enterprises led this process. The result was that during the 1980s there was an extraordinary rise in peasant income, an expansion of f acilities for health and education, and vast opportunities for the employment for women. From the 1990s onwards, the political leadership of the state and collective units continued but with the changed political line of export-oriented growth. The administrative structure of political urbanisation now enforced a top-down leadership to direct local units in production and management.

Earlier it had been a general political direction from the u pper level to the lower levels. The “su-nan model” was now overturned for all practical purposes. The local collectives at the township and village levels became mechanical agencies of the higher level. Even if the local units wished to continue with rural industries, they could not do so for they could not fulfil the standards set by the centre. Thus the urban-rural terms of trade, which were for a short period favourable to the countryside, were once again turned against the rural population to promote urban growth.26

During the high point of TVEs in the 1980s, women were major beneficiaries because even as middle-school graduates they got employment in local enterprises. In many factories of Wuxi, women constituted over 50% of the workers.27 However, the wages were not equal for men and women as it was said that they were linked to quantity of production. This phenomenon continued in most enterprises throughout the reform period and has been raised frequently by the All-China Women’s Federation (ACWF) with the leadership. The retirement age also differed for men and women with women retiring five years before men, who retired at the age of 55 in most enterprises. Women’s employment opportunities shrank considerably in the 1990s and the ACWF of Wuxi started new training programmes in 2001. These were mostly in sectors such as restaurants, tourism, domestic services and accounting.28 At the village level, the new emphasis in the work of the ACWF was on promoting education among women and on health and family planning, the latter being a continuing point of attention. The positive trend of progress towards equal opportunity, access to diverse spheres of employment and political participation that was noticeable in the 1980s seems to have slowed down in the 1990s. A growing number of discussions on these issues at the national level took place after the Fourth World Congress of Women in Beijing in 1995.29 TVEs in particular and the diversified rural economies in general had unleashed forces of democratisation and social development. Rural health and e ducation had got a boost with nearly universal access to social services because of the allocation of collective income to these sectors. But 30 years later, citizens complain about medical treatment having become too expensive and the education system b eing too disparate in quality.30 The consequences of this have been particularly adverse to women.

Third, the “open door” was no doubt an important strategy for China’s successful emergence as a global economic power. I ndeed, that was a principal component of Deng’s basic line of “Reform and Open Door” adopted by the Third Plenum of the Eleventh Central Committee of the CPC in December 1978. Wuxi’s geographical location between the Taihu lake and the Yangtze river and its proximity to Shanghai had made it a well-connected city with the outer world throughout China’s modern history. Silk production and the silk trade had complemented agricultural production before 1949. During the 1980s, the expansion of rural industries was the key to the region’s rapid development. To produce goods for export, these enterprises invited foreign capital, which initially maintained the momentum of rising income of the local population. In the 1990s, the transition took place to a mainly export-oriented economy as a part of the new growth strategy. The vision of Wuxi as a modern service industry centre facilitated by foreign capital excited the city’s leadership and fi tted well with the growth strategy of the Jiang Zemin era. The J apanese, who had a special fascination for Wuxi from the days of their occupation of the region during the Sino-Japanese War in the 1930s, poured in huge amounts of capital. The light industry city was now at a new stage of technological development and integration with the global economy was a positive factor that helped it.

But the terms of the integration of the local economy with the global economy were governed by the new elites of the area and the country as a whole and not by the common people. The choice of industries did not take into account its effects on the environment until crises acquired serious proportions. Whether employment opportunities for local people grew adequately to absorb them was not a consideration. The gains made by women in the 1980s when job opportunities had expanded were not preserved and there were increasing retrenchment of both men and women – often women were the first to be fired. The combination of agriculture, rural industry, light industry and modern service industries was now replaced by a new economy where the leading role was played by service industries. When China formulated policies to respond to the world economic crisis after its exports fell significantly in 2008-09, the Wuxi leadership launched an exercise in April 2009 to reorient its production plans. The plan was to produce for the local market and China’s domestic market rather than rely excessively on the world market. Even in the case of exports, there was a new thinking to reduce dependence on the European and North American markets.31

The Wuxi story, which may be an important window to China’s reforms, tells us a few important things about contemporary development theory. First, development through political urbanisation the Wuxi way may achieve fast economic growth but has its social, environmental and political costs. The alternative may be politically integrating rural and urban areas, each having its distinct characteristics, combining democratic self-governance with sustainable socio-economic development. Second, in terms of the role of the state and collectives, there is the need to actively e ncourage a combination of public, private and cooperative forms of ownership but with a clear leadership role played by the public sector. The danger of an authoritarian leadership wielding state power to sometimes promote state and collective ownership and sometimes private ownership or the market economy has been exposed. Therefore, there is simultaneously the need for democratic institutions at the grass roots level to formulate development strategies so that appropriate forms of production and m anagement can be designed to achieve economic, social and environmental objectives at the same time. The framework of a “socialist market economy” as practised during the last two decades did not ensure that. It was so elastic that it was used to justify the development of profit-making enterprises, mainly to achieve high growth rates rather than fulfil socialist objectives. Third, the globalisation process that integrates local production with the global market has to be critically monitored to empower local institutions and groups to decide the terms of their integration with the world market. Only then can there be a fair balance between autonomy and integration of the local and regional p olitical economies with the global economy.

june 27, 2009 vol xliv nos 26 & 27

Notes Wuxi Baotong Electronics Co, a Sino-Japanese See also “Our City Makes Great Efforts to Stabi

1 In 1979, I was hosted by the Ministry of Education and the PRC and in 1985, 1987, 1993 and 1996 by the Chinese Academy of Social Sciences. In subsequent years, whenever I had some conference in China, I extended my trip to Wuxi for a few days by directly approaching the Wuxi Foreign Affairs Bureau. I had an interpreter on most occasions though sometimes I managed on my own. During the 1980s and 1990s, I was always accompanied by a local official or a scholar from the host Institute.

2 Fei Xiaotong, Peasant Life in China (1939, 1945), K egan Paul, London. He describes the study as “a descriptive account of the system of consumption, production, distribution and exchange of wealth among Chinese peasants as observed in a village” and stresses the “equal importance of the traditional and the new forces” in explaining the process of change, 1. See also Fei’s Chinese Village Close-Up (1983), New World Press, Beijing, which contains the abridged version of the 1936 study and reports on Fei’s visits in 1946, 1957 and 1980 in addition to a research group’s findings in a 1980 survey of the village by his colleagues at the CASS.

3 Lynda S Bell, One Industry, Two Chinas: Silk Filatures and Peasant-Family Production in Wuxi County, 1865-1937 (2001), Stanford University Press, Stanford, California. She argues that “local elites continued to ally with the state for a ssistance, protection, and legitimacy whenever possible”, 11.

4 “Wuxi Water Back to Normal after Pollution Crisis”, People’s Daily online (15 June 2007).

5 For a discussion of the 17th Party Congress line, see Manoranjan Mohanty, “Grappling with the Success Trap in China”, Economic & Political Weekly (3 November 2007).

6 They include the Jiangsu Yixing Economic Development Zone, Yixing Environment Technology Industrial Park, Liyuan Hi-Tech Industrial Development Zone, Wuxi Hi-Tech Industrial Development Zone, the Wuxi-Singapore Park and the Wuxi Taihu National Tourist Resort Zone, and also the Huishan Economic Development Zone and Xishan Economic Development Zone.

7 China Statistical Yearbook, 2006 (2006), China Statistics Press, Beijing, 3. 8 $1= 6.83 yuan; Rs 49.67 in April 2009. 9 Data from interviews with city cadres.

10 “Wuxi: A General Introduction by the Wuxi CPC Committee” (30 December 2008) http://xcb. chinawuxi.gov.cn

11 Even during the commune period, township enterprises had sprung up, making considerable profit for the collectives. The profit was said to be 10 million yuan in 1958, and it rose to 109 million yuan in 1970. Robert Terrel (2001), The Jiangsu Miracle: Modernising China’s Most Economically Developed Province, New World Press, Beijing,

164. 12 Wuxi Statistical Yearbook, 2005 (2005), China Statistics Press, Beijing, 56. 13 Data collected from interviews with district cadres. Annual Report of the Hela Xiang Director to the Xiang People’s Congress (1996). While the 1986 data was collected in the course of an interview with Jiang Hanling, Deputy Director of the Suburban District on 12 October 1986, the 1996 data was procured through discussions with Zhang Weinan, Deputy Director of the District in October 1996. 14 Interestingly, a 1985 publicity brochure of Hela described itself as Hela Gongsi in Chinese and Hela Corporation in English. This indicates changing the terms of discourse radically from the commune of Marxist ideology to a modern corporation in a capitalist market economy. 15 We will refer to Hela as a township (xiang) as it was still referred to as such by the people in 2008. Only officials describe it now as jiedao or street. 16 In 2001, the following major enterprises were

listed in the Hela Xiang brochure as inviting f oreign investments:

joint venture that had achieved a sales volume of 14 million yuan in 1999 and exported products to Hong Kong, Taiwan, south-east Asia and western 23 Europe.

Wuxi Lutong Electronics Technology Co Ltd, a

p rivately owned enterprise. Wuxi Taihu Machinery Factory, set up in 1966 its 24 assets were worth 12.5 million yuan and its products had a nationwide market and in south-east Asia. A factory designated by the Ministry of Railways for purchases, it had 152 workers in 1999.

Wuxi Jiangnan Printing Machine Plant, launched 25 in 1980, manufacturing printing and packaging machines. 26

Wuxi Dajishan Industrial Instrument Factory, collectively owned by the xiang, producing kitchen appliances, stainless steel measuring instruments, and medical instruments. It had a market in China and south-east Asia.

Wuxi Xingdi, a leatherwear company owned by a Taiwan merchant since 1993, producing ticket wallets and the like for export to Europe and south-east Asia.

17 In the middle of 1980, I lived in one such house in 27 Da Ding village in Hela, as a guest of Lao Mo (Madam Mo) of the Ding household.

18 The old village Da Ding Cun had ceased to exist. 28 My old contacts Ding Maoshen and his wife Lao Mo were living in an apartment of a multi-storey 29 building while their two sons had been allotted apartments in other buildings and their grandson was waiting for his allotment. All this was in exchange for the family house they had owned in their village until it was demolished for the construction of new buildings.

19 Because of the threat of pollution caused by 30 chemical and other manufacturing industries, there was a conscious emphasis on commerce and tourism from the late 1990s onwards. Thirty Years of Reforms and Opening Up, http://chinawuxi.gov. cn (30 December 2008).

20 Report on the Work of Government by Mayor Mao Xiaoping at the fifth Plenary Session of the 13th Municipal People’s Congress, http://chinawuxi. gov.cn (29 December 2008).

21 Interview with Hela Party Secretary in September 1997.

22 Wuxi’s employment situation suffered setbacks in the wake of the global economic crisis. “Wuxi Party Secretary Yang Weize Discusses Plans with Leaders 31 of Twelve Enterprises Severely Affected by the G lobal Economic Crisis”, Wuxi Daily online (17 April 2009).

Appendix: Local Structures in Contemporary China and India

lise and Promote Employment”, Wuxi Daily o nline

(13 April 2009). “Wuxi Embarks on the Formulation of the 11th Five-Year Plan for Development in the Year 2020”, Wuxi government press release, Wuxi Daily

o nline (17 December 2008). See George Mathew, “Local Government System in India and China: Learning from Each Other” in Manoranjan Mohanty et al (eds.), Grass-roots

D emocracy in India and China: The Right to P articipate (2007), Sage, New Delhi. In the villages of Hela and Lihong I found that this

was the case in 1980, 1985 and 1987. An expert on Wuxi had hoped in the early 1980s that the city would now on contribute to rural development and had said, “After more than 30 years dependence on the rural area, which is t otally disproportionate to its repayment, the city must move along a path of development which a llows it to make a contribution to the rural area”. Chi-hsien Tuan (1987), Wuxi City and Wuxi

C ounty – An Analysis of a Pilot Census, New World Press, Beijing, 128. In the Wuxi Silk Factory, for example, I noticed

that of the total 1,570 workers, as many as 81%

were women in 1980 to 1985. Interviews with Wuxi Women Federation leaders in September 2001.

Political leaders in Wuxi, however, took a different view of this. During interviews in 2001 and 2005, they said that the new prosperity of the families gave women the choice of staying at home and leading a comfortable life. Women F ederation leaders, however, agreed that women faced new difficulties in the new environment.

Individuals had to pay at least 50% of their health care expenses in 2005. With only 2.7% of GDP d evoted to healthcare and on other idices taken into account, China ranked 188th in providing fair healthcare among the countries of the world. I G Cook, TJB Dummer, “Changing Health in C hina”, Health Policy, 67 (2004), 329-43.

UNDP, Human Development Report 2007/2008 (2007), Palgrave Macmillan, New York, 262. Mortality under the age of five declined sharply in China from 120 per 1,000 in 1970 to 27 per 1,000 in 2005. In 2005, maternal mortality was 45 per 1,00,000 live births in China against 450 in India, 263.

“Wuxi Party Secretary Yang Weize Discusses Plans With Leaders of Twelve Enterprises Severely Affected by the Global Economic Crisis”, Wuxi Daily online (17 April 2009).

India China

States 28, Union Territories 7 Provinces 22, Autonomous Regions 5, Central Municipalities 4, Special Administrative Regions 2

Divisions Prefectures (Shi) Regions 333, Cities 283

Districts 625 Rural: Counties (Xian) 2,862 Urban: County-level cities (Shi) 374

Zilla Parishad County representative Congress Mandatory elections since 1993 County party committee

Sub-divisions Urban districts (Qu) 852 Street/Subdistrict committees (Jiedao weiyuanhui) 5,904 Residents’ committees (Zhumin weiyuanhui)

Blocks/Taluks Townships (Xiang): Rural 43,258 Towns (Zhen): Urban 19,883 Mandatory elections since 1993 (People’s Commune until 1979-83) (Panchayat Samitis) Xiang representative congress (About 6,000) Xiang party committee, lowest level of government

Gram Panchayats Villages (cun), Village-level towns (Zhen) (About 2,65,000) Villagers’ committees (Cunmin weiyuanhui) Lowest level government (Cluster of villages/hamlets) (Cluster of villages/hamlets) (About 6,20,000) Mandatory elections Competitive elections at all levels since 1993 only at village level since 1998 Gram Sabhas Village representative conference

Guiding role of the village party branch (Production brigade until 1979-83)

Pallis/hamlets Work groups (production teams until 1979-83) at hamlet level

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