The government starts selling off state-owned houses to their occupiers, as a means of raising income and giving people incentives to improve their homes. At the same time it fights inflation and puts limits on government spending. No, this is not Thatcherite Britain but capitalist China, where all too familiar economic problems exist. Nor is the comparison with Britain an unwelcome one, as People’s Daily has sung Thatcher’s praises and commended her personal willpower and reliance on individual responsibility. China’s own version of perestroika (but without glasnost) makes the different varieties of capitalism ever less distinct.
It is ten years since the post-Mao economic reforms began. Individual enterprises had greater power delegated to their managers, and then the system of contracted responsibility meant greater emphasis on the market to determine prices rather than central decision. Now, in the so-called “third wave” of reform, certain enterprises are being merged — that is, loss-making concerns are being taken over by more profitable ones. In ever more explicit acknowledgement that the profit system operates in China, individual factories are now viewed as commodities to be bought and sold. The way in which people are treated in a profit-oriented economy is highlighted by an admission that men are often preferred as employees to women, since the latter produce less surplus value (owing to longer breaks and maternity leave).
Houses in the Chinese countryside are usually owned (and indeed, built) by the occupiers, but those in towns and cities are nearly all state-owned. Rents are extremely low (around 3 per cent of a tenant’s monthly income) as part of the social wage but there is a housing shortage and the building industry naturally makes no profits. Overcrowding is appalling, sometimes a family of grandparents, parents and child will have to live in a single room. Nearly half of urban households have access only to a shared lavatory, and over a quarter do not even have their own tap water. It remains to be seen how many will want to buy such palaces. The other problem will be fixing a price for the sold-off homes, as the present market price would be way beyond what ordinary workers could afford. It may even be decided to raise rents in order to encourage buying.
The Chinese health service is in no better shape, with the contradictions now patent between a system supposedly run for the benefit of all and one where profit and loss considerations are decisive. Hospital treatment is not free, but fees are very low, and well below the actual cost of treatment. However, the method of subsidy is such that the more patients a hospital treats, the more money it loses. So some hospitals now turn away patients, even in emergencies. According to one recent report from the south-west of China, doctors and nurses fought in the operating theatre over who should have the gallstones being removed from one patient — gallstones are a valuable ingredient in traditional Chinese medicines, and provide a convenient way for staff to augment their meagre incomes. Capitalism really does put a price on everything.
Just as in Russia, there is a flourishing black market in China: corruption and profiteering have become a way of life for some, and a part of everyday life for many more. Cigarette prices have been increased, with the unintended side-effect that private dealers take advantage of the fact that prices vary from place to place: they buy up popular brands and re-sell them at a profit in more expensive areas. Imported cigarettes are also subject to price speculation. High-quality liquor (costing over a month’s wages per bottle at the new higher prices) is bought mainly by firms and various other organisations, presumably as perks for top employees or potential bribes. Such institutional “living it up” has been particularly frowned on, the government having ordered a reduction of spending and prohibited the use of top-class hotels for receptions and banquets.
In the first nine months of 1988, the retail price index rose 16 per cent. Economics spokesmen have complained that the economy is “overheating”, with industrial output racing ahead of the production of energy and the capacity of the transport system. In a so-called planned economy, the number of state-run construction projects has had to be curtailed drastically. And a rise in imports has created a massive trade deficit.