Jeremy Wallace

Some quick notes before heading off to Zouping’s largest firm (Weiqiao):

1. Always drink beer in China if must needs drink. It is very low in alcohol content and (usually) the flavor is fine.

2. After seeing how terribly Chinese politicians here treat themselves, I wonder how Mao and Deng and the others held on for so long and kept power into their 80s. The officials here are constantly smoking and downing baijiu (white alcohol/white lightning) as if it were water.

3. It is clear how development can happen in a place like Zouping. There is a tremendous amount of capital already in place, lots of business acumen around for help in case of trouble, it is on a major highway 30 minutes away from two cities with a combined population of 5 million plus, and the highway (and a train) goes all the way to the port in Qingdao for shipping. Thus a local government or business can get capital, buy land from the governments or at least give money to the governments to give to farmers working the land, and then set a factory and take advantage of the surplus labor in the country. But what about a locality without any of these advantages? Why should anyone live in some of these remote locations that seem to serve no economic purpose? What responsibility does a compassionate government have to provide for those who choose to live in those places? What about the calculus of a rationally acting single party state? It likes development as a signal of its competence but does not want the cities to be overrun with workers willing to work for nothing.

4. Workers will work for little to nothing. Hopefully I will get a picture of the work that they do to hide extra twigs on a bundle of lychees so that people will have to pay more (on the order to 2-3 yuan ($.25-.35)) when they pay by weight. Labor productivity and shadow wages here are miniscule for those not in the large factories.

5. Thus the question becomes what will happen when the last vestiges of the planning economy come off the rails with (1) the WTO entering full force and (2) reform of the household registration (hukou) system. There was discussion of the elimination of the hukou at the 2005 NPC in March. It didn’t happen because of public security bureau protests. Will we see a massive migration to the largest cities? Will we see ghettos that are more natural for a country with this level of economic development? The hukou system is what has kept “China from becoming India” in this sense. What happens when it finally disappears? The Chinese government (see ‘Progress’ post below) does not seem (publicly) to keep good track of migrants and can have no idea what will happen when it lifts the hukou. The experiments that have been done do not bode well.

From Fei-Ling Wang in the September 2004 China Quarterly, p. 121:

“The majority of the over 100 million migrants or “floating population” still appear to be unable to change the location of their hukou permanently. In Ningbo, Zhejiang province, a national model of the hukou reform, only about 30 thousand migrants, less than 2 per cent of the two million migrants from the countryside (who constitute one-third of the city’s total population) are expected to qualify for local hukou during the reform. … A key problem has been the difficulty for a migrant to find a stable job in the city, which has already been plagued by high unemployment for years.”

Urban registration and employment are so valuable that rural migrants are willing to trade off a slightly higher probability of getting a hukou but with a much higher probability of unemployment than in other large cities.

6. I’m impressed here by the number of firms here that are capital rather than labor intensive. Xiwang’s corn processing plant has more workers than a comparable factory in the US would have but it is mostly a series of building full of vats and other equipment for food processing. Weiqiao is supposed to be the exception in Zouping. Apparently they employ over 100,000 people making clothes. There is a non-trivial probability that some piece of clothing that we (you and me) are wearing was made there.

7. It is still a male dominated society, which won’t surprise anyone given its long history; however, Jiang Qing’s brief reign of terror signalled not the improvement of the chance of women taking power but rather the dangers of what would happen if they did, I’m afraid. Zouping has no female party secretaries. Then again, the controlling shareholder of the hotel where we ate lunch with Prof. Oi’s “old friends” was a woman. So maybe capitalism without quotas will serve women better than communism did with too many of them.