Transcript 'State-building in China, 1644-1994'

State-building in China,
1644-1994
Kent G. Deng
LSE
Academia Sinica, September 2010
A. Outline
• 1. The Issue and Importance of statebuilding in Chinese recent history.
• 2. Periodoisation of China’s state-building.
• 3. The differences made by state-building
and state-builders.
• 4. ‘Unnecessary changes’, 1644 to 1994.
1. The Issue and Importance of statebuilding in Chinese recent history
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Three key questions:
a. Who made changes (social stratum)?
b. Why were changes made (ideology)?
c. How were changes made (means and
resources)?
• d. Were changes all that necessary and rational
(growth and development, especially living
standards)?
2. Periodisation of state-building
Five periods can be identified to capture conditions and
changes in China’s state-building:
(1) 1644 to 1711 (before Kangxi’s decree to fix the total
tax revenue) when a Confucian state was rebuilt,
(2) 1712 to 1849 when the Confucian state matured and
then withered,
(3) 1850 to 1920 when Social Darwinian states
emerged,
(4) 1921 to 1977 when the Social Darwinian state
developed into a party-state, and
(5) Post-1977 when a market-friendly party-state
emerged.
Notion of the ‘Qing Confucian state’
• a. Voluntary power-sharing with the
Chinese
• b. Confucian Social mobility
• c. Confucian land-holding rights
• d. Confucian proto-welfare state
• e. Confucian ‘small and cheap’ state that
withered voluntarily
• Contrary to Marx’s speculation about ‘the Asiatic Mode of
Production’ and Wittfogel’s hypothesis of ‘Oriental
Despotism’not only did the Qing economy expand but
also China’s ‘human development index’ (HDI) was
respectable: there were life expectancies comparable to
those of Western Europe, adult literacy rates that were
the envy of the rest of Asia, and standards of living
respectable by the world standards.
• Remarkably, all these were achieved with an
unprecedented population growth and limited progress in
technological change.
Who actually controlled the Qing state?
• It has become very clear that after 1700 the
degree-holding Confucian literati controlled the
Qing state, not the Manchu warrior. The vast
majority of the literati were Han Chinese.
• All Manchu emperors were strictly educated by
Han Chinese scholars.
• So, all the claims made by the Taipings in the
mid-19th century and Sun Yat-sen’s Nationalist
Movement in the early 20th century were
groundless.
Distribution of appointments of
Governors, 1644–1911
Total
Han Chinese
Manchu
Mongols
Han % share
Manchu % share
Mongols % share
335
234
96
5
69.9
28.7
1.4
How big was the Qing bureaucracy?
• Any efficient organisation needs minimum
size. The absolute limit is a one-man
team.
• Without modern technology, the smaller
the size the less efficient an organisation.
• So, small can mean inefficient and weak.
Ratios (c. 1800)
Gentry/officials ratio
Sub-official functionaries/officials ratio
Gentry/ sub-official functionaries
Population-officials/sub-officials ratio
Soldiers-officers ratio
Population-armed forces ratio
These ratios indicate a small and weak state.
60:1
33:1
2:1
400:1
300:1
510:1
How efficient was the Qing state?
•
•
•
•
•
•
Despite all the claims about the Qing commercialisation and commercial
success, a large proportion of the soldiers living allowance and official
salaries were paid in kind in the form of stipend rice.
The rice was collected annually from 8 provinces as a special tax.
Due to the constant lack of resources, the collection of this tax was usually
done by tax-farming with the help of the local gentry.
In the process, more than 10 times of the targeted 4 million shi was
collected by various agents as economic rents. The true cost of the stipend
rice was much higher than the market price for rice in Beijing.
Beijing was fully aware of what was going on in those provinces but was
powerless to stop the stipend rice–related corruption. It did nothing until the
1880s.
Again, tax-farming indicates an inefficient state.
Costs of tax-farming with rice (in silver)
Total cost in silver: 63.3–64.7 million tael
Actual cost for the target: 7.2 million tael
Extra rice collected: 12.9–14.3 million tael
Extra cash collected: 43.2 million tael
Total extras: 56.1–57.5 million tael
Amount received by Beijing: 11% of the total
How free was the Qing population?
a) State dependence on the peasantry
b) Rural autonomy (freedom)
c) Family landholding rights (freedom)
d) Production freedom
e) Market freedom
f) Educational freedom
What did freedom do to China’s economy?
•
•
•
•
•
By definition, Chinese freedom under the Qing was “producers’ freedom at
the grassroots.”
China’s grassroots freedom led to micro-level diversification in an
‘industrious revolution’ of self-exploitation (seen from family farming,
weaving, marketing and so forth).
Diversification has its limit: it may maximise output and income but is
powerless in changing a given production possibility frontier. Rather, it
constantly tries to strike a better trade off between different products. So,
such diversification was opposite to a high level of specialisation and
division of labour at macro level.
Moreover, the range of choices for micro-level diversification was extremely
limited: it was confined with materials available on which some value was
added by hand.
Furthermore, there was no sense of profit-making. Diversified families had
limited incentives to produce for a greater market let alone to ‘over-supply’
that market. This is because the very concept of diversification avoids such
over-supply. It is about to supply thinly to many niches. In contrast, modern
capitalism is all about the economies of scale and scope to reduce cost per
unit. The Qing micro-level diversification lacked the economies of scale and
scope. It did not reduce cost per unit, at least not quickly enough.
Simultaneous and Ubiquitous
Social Unrest, the 1850s–60s
Notion of a Social Darwinian state
• a. The demonstration effect of the 1840 Opium
War and the following aggressions: ‘ the state
power comes from the barrel of the gun’.
• b. The rise of autonomous ‘governor-lords’ after
1850, Zeng Guofan, Li Hongzhang, Zuo
Zongtang, Zhang Zhidong and many others.
• c. The rise of independent warlords after 1916
(after Yuan Shikai).
Zeng Guofan
Hunan Army
Zeng Guoquan
Li Hongzhang
Old Hunan
Anhui Army
Zuo Zongtang
New Hunan
Yuan Shikai
Northern New Army
Feng Guozhang
Zhili Sect
Duan Qirui
Zhang Zuolin
Anhui Sect
Fengtian Sect
Chiang Kai-shek
Huangpu Military Academy
Notion of a Party-state
• a. It was an anti-democracy minority rule.
It operated on a personal cult, selfdeclared teleology, a loyal army and a lot
of foreign aid.
• b. This new type of state was exported
from the Soviet Union with Soviet support
with money, weapons and advisers.
• c. It began with Sun Yat-sen and ended
with Mao Zedong.
Notion of a market-friendly party-state
• In exchange for legitimizing the party’s rule and
ending exploitation:
• a. To re-build law and order and social harmony.
• b. To resume supply of the well-educated
bureaucrats.
• c. To resume economic rights, incentives and
freedom for ordinary people via the market.
• d. To promote foreign trade and FDI.
• e. To build ‘a comfortable material life for all’
(xiaokang).
3. The differences made by statebuilding and state-builders.
• GDP growth
• Population growth
GDP benchmark
• There are two credible GDP growth rates:
0.9 % a year from 1750 to 1830, and 1.2
% a year from 1887 to 1936, averaging
1.05 % a year.
• This 1.05 % growth rate can be used as
China’s long-term expectant benchmark
rate.
•
1830
1887
1914
1936
1946
1952
1962
1972
1977
1982
1992
2000
GDP index (I)
100
93
121
167
76
167
282
310
394
1,304
6,555
21,690
Benchmark (II)
100
181
240
303
336
358
397
441
463
489
543
590
I/II
1.00
0.51
0.50
0.55
0.23
0.47
0.71
0.70
0.85
2.67
12.07
36.76
The ratio between the GDP index and the expectant
benchmark (I/II) measures China’s growth performance
over time.
Population benchmark
• China’s population growth rate in the early
period from 1766 to 1812 was 1.2 % a
year. It slowed down to 0.5 % a year from
1812 to 1833.
• If the average rate of 0.85 % a year is
used as the benchmark.
• China’s GDP grew faster than population
by 0.2 % a year (1.05 – 0.85).
•
1833
1887
1911
1928
1936
1946
1949
1952
1962
1972
1977
1982
1992
2000
Census records
398.8 million
377.6
368.1
451.8
479.1
455.6
540.0
574.8
673.0
867.3
947.7
1,016.5
1,171.7
1,267.4
Index (α)
100
95
92
113
120
114
135
144
169
217
238
255
294
319
Benchmark (β)
α/β
100
158
194
223
239
260
267
274
298
324
338
353
384
411
1.00
0.60
0.47
0.51
0.50
0.44
0.51
0.53
0.57
0.67
0.70
0.72
0.77
0.78
The ratio between the GDP index and the expectant
benchmark (α/β) measures China’s growth performance
over time.
By 1978,
China’s GDP was 15–50 percent lower than
the benchmark.
China’s population was 30–50 percent short
of the benchmark.
And, China’s per capita GDP growth was at
least 30 percent below the benchmark.
Mao’s legacy
• Mao’s legacy is not life expectancies, or
living standards, or industrialisation.
• His legacy is 700 million very low paid and
landless peasants who have no strong
incentive to stay in farming or invest in
agriculture.
• This made the dynamics of Arthur Lewis
dualism deadly easy during Deng’s
reforms.
Deng as ‘Mao in reversal’
•
Cashing in China’s comparative advantage
Consumer revolution
Economic freedom
Efficient resource allocation
Fast technological change
Fast urbanisation
Firms and workers’ incentives
Freeing from budget constraints
Freeing from excessive and wide poverty
Freeing from low level equilibrium
Freeing from man-made famine
Freeing from negative GDP growth
Higher income for ordinary people
Modern economic structure
Private property rights (de facto)
Mao
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Deng
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
4. ‘Unnecessary changes’, 1644 to 1994.
• Unnecessary changes refer to those whose
outcomes damaged producers and investors’
incentives to produce more and better and
invest more and wider. They also harmed
ordinary people’s material life.
• So, the most unnecessary changes were the
Taiping and Maoist ‘experiments’.
• The Qing Confucian welfare state was still the
longest-standing. It was far from perfect but
worked nonetheless.
Extra Information
Maoist alteration of Chinese factors of production
• State ownership replaced private ownership.
• State economic planning replaced market signals. There was no
realistic costs and returns to guide production and investment
decisions.
• There was a looming issue of principle-agency problem and
coordination problem in the bureaucracy.
• The entire working population (including workers and farmers)
became proletariats.
• Material rewards were minimal for producers which in turn removed
incentives to produce.
• The Maoist state resorted to coercion to incentivise the economy.
But coercion did not work in the long run.
• Then, Mao launched his full-scale attack on human nature. He was
doomed to fail.
Mao’s fake industrialisation
• There is a common misconception: Mao
pushed China towards industrialisation.
• Evidence: Unclear weapons and heavy
investment in heavy industry.
• But, China’s industrial workforce was
frozen under Mao’s rule.
Maoism: heavy industrial bias (growth rates)
Heavy industry (A)
1953–7
1958–62
1963–5
1966–70
1971–5
Average
36%
54%
46%
51%
50%
47%
Light industry (B)
7%
7%
4%
4%
6%
6%
A:B
5.1
7.7
11.5
12.8
8.3
7.8
Untrustworthy official data
• With 47% per year growth, the heavy
industrial sector would triple its size every
three years.
• Maoism ruled China for 29 years, the
heavy industrial sector would increased
71,150-fold. If so, by 1978, China would
have been a super-power.
Low growth in industrial workforce
Workers (mln) (I)
1959
45.5
1964
36.4
1969
40.9
1974
59.1
Annual (%) 1.76
Total population (II)
672.1
705.0
806.7
908.6
2.03
I/II
6.8%
5.2
5.1
6.5
In 1975, at least 77% of China’s workforce working in the
agricultural sector, not too different from 1880.
This workforce was allegedly produced about half of
China’s GDP. In comparison, currently, China’s industrial
workforce (50% of all employment) only produce about
65% total GDP)
Mao’s fake development
• There is a common misconception: Mao
saved China from economic uncertainty
and crises and made everyone equal.
• Also, allegedly, Mao had Chinese life
expectancies doubled.
• Evidence: State ownership and economic
planning
Life expectancies, the red herring
• As far as we know, in 1965, China’s infant
mortality rate was 165 per 1,000. The same level
of infant mortality applied in 2004 only to the
poorest countries on earth with low life
expectancies of around 40. They include
Afghanistan, Angola, Liberia, Niger, Sierra
Leone and Somalia
• Clearly, these is a base line problem. Mao’s spin
doctors must have picked up 20 as the base line.
• According to the statistics of the World Health
Organization, To reach life expectancies of 70
years, a country’s infant mortality rate must be
lower than 25 per 1,000 with an average of 40.6
hospital beds for per 10,000 people.
• In 1980, China had 5 hospital beds every 10,000
population, the same level as current-day
Afghanistan (4 hospital beds for per 10,000
population, in 2001), Cambodia (6 beds for per
10,000, in 2004), Guatemala (5 beds for per
10,000, in 2003), Myanmar (6 beds for per
10,000, in 2000), Somalia (4 beds for per 10,000,
in 1997), and Yemen (6 beds for per 10,000, in
2003).
• Mao’s China needed a miracle to reach life
expectancies at 70.
• Now, the United Nations has re-figured a 55%
increase in China’s life expectancies under Mao
from 1950 to 1975. It means that Mao’s life
expectancies were not 70 but 54.
• It is known that The East Asian post-war
average increase in life expectancies was 24
percent (capitalist Hong Kong, South Korea,
Singapore and communist Outer Mongolia,
North Korea, and Vietnam). Mao’s life
expectancies were likely to be 43.4 years.
• This level (43.4 years) fits well with the
benchmark of the World Health Organization:
infant mortality of 165 per 1,000 for life
expectancies at 40 years).
Agriculture declined
• Total Output, 1952–77
Current price Index 1952 price Index
Gross annual growth
2.7%
–1.4%
Net annual growth
0.7%
–3.4%
Growth rate declining under Mao
Food availability seen from food
exports (in 10,000 tons)
•
South China
China’s total
Pre-collectivisation
• 1953–5
688.5
Post-collectivisation
• 1956–60
1,950.5
• 1961–5
669.5
• 1966–70
942.0
145.5
• 1971–5
952.5
• 1976–8
–22.8
North China
204.3
892.8
–472.0*
–2,013.5
–796.5
1,478.5
–1,344.0
–1,159.0
–1,106.4
–206.5
–1,129.2
Low living standards
• Poor provision of public goods
• Perpetual rationing at the subsistence
level
• Decline in wage purchasing power
• People were worse off than before
Poor provision of public goods
• The case of The 1959–62 Great Leap
Famine when 30-40 million Chinese died:
• (1) No rural social welfare or disaster
relief.
• (2) Mao’s government exported amount of
food enough to sustain at least 38 million
people for a year (see the next slide).
• Note: There was not severe China-wide
natural disaster for the famine period.
Rural food rationing (Rural South
China, raw grain)
Age
2–5
6–10
11–15
15+
Per year
60 Kg
90
190
210–40
After processing
40 Kg
60
127
140–60
Urban food rationing (kg cereals
per month per person)
0–3 years
10+
University students
Office clerks
Heavy physical workers
Shanghai
Beijing
1955
3.5
12.5
16.0
14.0
20.0
1955
4.0
13.8
17.5
15.1
22.0
1979
3.5
12.5
16.0
14.0
20.0
1979
4.3
15.0
17.0
15.0
22.5
• In 1978, China-wide urban benchmark daily
calorie intake was 2,009 of which 1,750 came
from cereals (83 % of all calories).
• The rest 27 % calories were mainly made of
vegetables.
• The following non-grain items and quantities
were rationed for each calendar month
(which helped little in daily terms):
Eggs Pork Sugar Bean-curd
4
250g 100g 300g
Bean noodles
50g
Rationing of consumer durables
Retail prices =Starting wage
“Phoenix” bicycle
156 yuan
5.0 months
“Shanghai” wrist watch
120
4.0
“Butterfly” sewing machine 187
6.0
Total
463
15.0
Savings after food bills
37.5
Urban low wages
1957
1961
1965
1970
1976
1978
Nominal wage
637
537
652
609
605
644
Index
100
84
102
96
95
101
Real wage Index
637
100
493
77
539
85
429
67
327
51
310
49
Decline in wage purchasing power
•
Average family (persons)
Pre-1949
6.9 (100)
1957
4.5 (65)
1964
5.8 (84)
1970
–
1977
4.5 (65)
Dependents (persons)
4.0 (100)
3.3 (83)
3.4 (85)
2.5 (63)
2.1 (53)
The Chinese consumed more in
the 1930s
Daily calories
China-wide average
Beijing wage-workers
Shanghai wage-workers
Wuhan wage-workers
2,537
2,670
3,008
3,500
% of 2,009 calories
126
133
150
174
Consumption per capita, 1937
versus 1952–2000
•
Grain
Oil
Meat
Fish
Housing (U)
Housing (R)
1937
1957
1966
1978
2000
(Kg)
307.0
203.1
190.5
195.5
366.0
(Kg)
–
2.4
1.8
1.6
23.4
(Kg)
13.6
1.6
7.1
1.2
38.3
(Kg)
0.5
4.3
–
3.4
33.9
(M2)
–
4.5
–
3.6
20.3
(M2)
–
11.3
–
8.1
24.8