Revolutionary Legacy, Power Structure, And Grassroots Capitalism Under The Red Flag In China 1108474926, 9781108474924

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 1108474926,  9781108474924

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Revolutionary Legacy, Power Structure, and Grassroots Capitalism Under the Red Flag in China Why do political elites in authoritarian regimes, even within the same country, engage in different levels of predatory behavior, whereby some foster vibrant capitalism and others suffocate the innovative private sector? This book proposes a theory of localized propertyrights protection under authoritarianism. By combining in-depth fieldwork with archival research and quantitative data analysis, Qi Zhang and Mingxing Liu discuss the post-1949 conflicts between dominant and marginalized factions in the Chinese province of Zhejiang. These conflicts resulted in systemic vulnerabilities among the marginalized local cadres, thus motivating them to form alliances with their grassroots constituents. They therefore provided their constituents with quasi-public goods, such as property-rights protection, to increase their odds of political survival. Zhang and Liu argue that this framework can apply both to the Mao era and to the current reform era, and it also can be extended beyond China to a wider context. qi zhang is Associate Professor at China Center for Economic Studies under the School of Economics at Fudan University, China. He received his Ph.D. in Political Science at Northwestern University, USA and another Ph.D. in Economics at Peking University, China. He is the author of numerous articles appearing in academic and business journals, including Political Behaviour, Journal of Contemporary China, Studies in Comparative International Development, and Journal of East Asian Studies. mingxing liu is Professor at the China Institute for Educational Finance Research at Peking University, China. He received his Ph.D. in Economics at Peking University in China. He has published numerous academic articles in leading journals, including the American Political Science Review and Comparative Politics.

Revolutionary Legacy, Power Structure, and Grassroots Capitalism Under the Red Flag in China qi zhang Fudan University, Shanghai

mingxing liu Peking University, Beijing

University Printing House, Cambridge CB2 8BS, United Kingdom One Liberty Plaza, 20th Floor, New York, NY 10006, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India 79 Anson Road, #06–04/06, Singapore 079906 Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781108474924 DOI: 10.1017/9781108657501 © Qi Zhang and Mingxing Liu 2019 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2019 Printed and bound in Great Britain by Clays Ltd, Elcograf S.p.A. A catalogue record for this publication is available from the British Library. Library of Congress Cataloging-in-Publication Data Names: Zhang, Qi, 1975 February 15– author. | Liu, Mingxing, 1972– author. Title: Revolutionary legacy, power structure, and grassroots capitalism under the red flag in China / Qi Zhang, Mingxing Liu. Description: Cambridge, United Kingdom ; New York, NY : Cambridge University Press, 2019. | Includes bibliographical references and index. Identifiers: LCCN 2018045101 | ISBN 9781108474924 Subjects: LCSH: Political culture – China. | Capitalism – Political aspects – China. | Elite (Social sciences) – Political activity – China. | Decision making – China. Classification: LCC JQ1516 .Z4359 2019 | DDC 306.20951–dc23 LC record available at https://lccn.loc.gov/2018045101 ISBN 978-1-108-47492-4 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

To our parents, Fuchuan Zhang and Yuanxiu Zhang and Junsong Liu and Guizhou Lü

Contents

List of Figures

page x

List of Tables

xi

Acknowledgments List of Abbreviations 1

Introduction 1.1 1.2 1.3

1.4

1.5

Introduction Why Zhejiang Province? Characteristics of the Zhejiang Model Existing Hypotheses and Explanations 1.3.1 The Policy and Institutional Perspective 1.3.2 The Historical-Legacy Perspective 1.3.3 The Endowment Perspective Our Explanation and Hypothesis 1.4.1 The Incentives and Motivations of Local Politicians 1.4.2 The Issue of a Credible Commitment to Protect Property Rights 1.4.3 Political Survival, Power Structure, and Economic Growth: A Theory of Localized Property Rights Protections Relevant Literature and the Theoretical Value of the Zhejiang Model 1.5.1 The Behavior of Political Elites under Authoritarianism (I) Information Paucity, Signaling, and Policy Choice (II) Formal and Informal Institutions 1.5.2 Coping Strategies of Businessmen and Endogenous Property Rights Security

xiii xv 1 1 8 12 13 17 19 20 20 23

28 35 35 35 40 41

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2

Contents

Revolutionary History in Zhejiang Province and Its Political Consequences 2.1

2.2

2.3

3

The Dog That Did Not Bark: Grassroots Resistance to Socialist Agricultural Collectivization 3.1 3.2 3.3 3.4

4

A Transformative Change in the Early 1950s: From New Democracy to the General Line for the Transition Period High Politics and Policy Uncertainties during Agricultural Collectivization in the 1950s Collective Resistance in Rural Zhejiang: Leaving the Collectives Rural Resistance in Zhejiang: Individual Household Farming

United in the Cultural Revolution: The Return of Capitalism 4.1 4.2 4.3

5

The Communist Revolution in Zhejiang Province (1922–1949) 2.1.1 The Party Center Falls, the Local Guerrilla War Begins (1922–1937) 2.1.2 Local Guerrillas Take Root during the Anti-Japanese War (1937–1945) 2.1.3 The Heyday of the Local Guerrillas during the Civil War (1946–1949) The Post-1949 Power Structure in Zhejiang 2.2.1 The Victory of the Communists 2.2.2 The Post-1949 Power Distribution: The Guerrillas versus the Southbound Cadres Clashes of the Titans: The Guerrilla Cadres versus the Southbound Cadres in the 1950s 2.3.1 1949 as the Beginning 2.3.2 Local Cadres in Retreat in the Early 1950s: From Land Reform to Agricultural Collectivization

From the Great Leap Forward to the Four Clean-Ups The Cultural Revolution in Zhejiang: Fighting for Survival The Economic Consequences of the Cultural Revolution: Capitalism Redux 4.3.1 Agrarian Extremism: Apparent or Real? 4.3.2 Black Markets and Underground Businesses

Capitalism with Zhejiang Characteristics: Crossing the River by Feeling for the Stones during the Reform Era 5.1

The Political Situation after the Cultural Revolution

44 45 45 50 54 56 56 58 69 69 76 83 83 88 100 112 130 131 155 182 189 193 204 207

Contents 5.2

5.3

6

Agricultural Decollectivization amidst Political Uncertainty: The Spread and Legitimization of Individual Household Farming (1977–1982) 5.2.1 Elite Cleavages and Spontaneous Local Initiatives 5.2.2 Agricultural Decollectivization in Zhejiang Entrepreneurial Capitalism in Zhejiang after 1976

Beyond Zhejiang: The Zhejiang Model versus Jiangsu Province 6.1 6.2 6.3

6.4

6.5

7

ix

Revolutionary History and the Power Structure in Jiangsu The Cultural Revolution in Jiangsu and Its Economic Consequences Historical Legacy, Power Structure, and Economic Development: Hypothesis, Variables, and Estimation Specifications Estimation Results 6.4.1 The Rise of Non-state Industry during the Cultural Revolution 6.4.2 The Non-state Sector during the Cultural Revolution and Long-Term Economic Growth How Zhejiang Differs from Jiangsu

Discussion and Conclusions: Rethinking the Power Structure, the Government–Business Relationship, and the Future of the Private Economy

Appendices Appendix 1 Measuring Local Guerrilla Strength in Zhejiang Appendix 2 Test of the Spatial Distribution of Withdrawals from Collectives Appendix 3 The Intensity of Local Armed Struggles in Zhejiang: A Test Appendix 4 Placebo Tests and Matching Estimations on the Effects of Power Structure Placebo Test I Placebo Test II

Bibliography Index

212 212 222 234 265 267 270

275 282 282 287 291

294 311 312 315 318 325 325 326 328 345

Figures

1.1 Mechanism of the LPRP theory page 34 2.1 The distribution of power on the Zhejiang Provincial Party Standing Committee (1950–1990) 65 2.2 Local strength in the county party committees (1949–1966) 66 2.3 Contrast of local cadre strength in the administrative system of the county governments (1950–1966) 68 4.1 The distribution of the time interval (in months) between January 1967 and the official establishment of the local revolutionary committee 181 4.2 Comparison of per capita GDP (yuan) between Zhejiang and the national average (1952–1976) 183 5.1 Distribution of the time interval between September 1980 and when the county authority endorsed baochan daohu 234 6.1 Composition of Jiangsu’s Provincial Party Standing Committee (1949–1989) 269 6.2 Power configuration in Zhejiang and Jiangsu provinces 277

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2.1 The geographical distribution of members of the Seventh Central Committee (April 1945–September 1945) and the Eighth Central Committee (September 1956–April 1969) page 62 2.2 County power structure after the military conquest (1949–1950/1951): the distribution of key posts on the county party committees and in the county administrative governments 72 3.1 Share of gross industrial output value by ownership (%) 85 3.2 Geographic distribution of withdrawals from collectives (1956–1957) 107 4.1 The numbers of party cadres subject to various disciplinary punishments in Xiaoshan county (June 1957–October 1958) 142 4.2 The numbers of rural party cadres subject to various charges in Xiaoshan county (October 1958–February 1960) 144 4.3 Composition of the leadership of the Zhejiang Provincial Revolutionary Committee (March 1968–January 1971) 165 4.4 Yueqing County Revolutionary Standing Committee (August 1968) 175 4.5 Zhejiang’s economic growth (1953–1976) 184 4.6 Changes in the output shares of different ownerships in various counties (1966–1978) 200 5.1 Spontaneous adoption of household responsibility: guerrilla counties versus non-guerrilla counties (December 1978–September 1980) 232 5.2 Wenzhou’s economic growth during the Eight Big Kings affair (1980–1986) 240 6.1 Share of total industrial output of different ownership types (%) 274 xi

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6.2 6.3 6.4 6.5 6.6 A1.1 A1.2 A2.1 A3.1

A3.2

A4.1 A4.2 A4.3

List of Tables

Descriptive statistics Effects on the non-state share of industrial output Effects on non-state industrial output Effects on long-run economic development Effects on public spending (1998) List of counties: guerrilla and non-guerrilla counties Summary statistics for GC and LCS The test results of withdrawals from collectives (summer 1955–1957) Test results: dependent variable is RC_time (the time interval, i.e., the number of months, between January 1967 and the month when a revolutionary committee was formed in a county) Test results: dependent variable is LGRC_Time (the time interval, i.e., the number of months, between January 1967 and the month when the leading group of a revolutionary committee was formed) Effects on total industrial output (1952–1965) Effects on state-owned industrial output (1965–1998) Matching estimation: effects on economic performance (1978–1998)

279 283 285 288 290 313 314 316

323

324 325 326 327

Acknowledgments

For political scientists and economists, the incentives of the political elite and their policymaking and decisions are some of the most fascinating issues. The manner in which the political elite make decisions and for what reasons are particularly intriguing but perplexing in the context of dictatorship or authoritarianism, thanks to the secret and violent nature of authoritarian politics. We have been thinking about these issues for nearly a decade, and, in this book, we tackle them against the backdrop of private sectoral development in China’s Zhejiang province. We had the help of numerous friends, colleagues, and family members, without which our thinking could never have borne fruit, let alone taken the form of this work. We want to give our special thanks to Victor Shih for his insightful academic advice and ardent encouragement throughout various stages of this research. We have known him since 2002, at Harvard Square in Boston. It was he who introduced us to the area of Communist politics and political economy under authoritarianism. His work on Chinese elite politics, including his research in Faction and Finance, made a particularly deep impression on us. We would also thank many scholars at Northwestern University, especially Will Reno, James Mahoney, Dennis Chong, and Edward Gibson, for their invaluable methodological and career advice. Our friend Zhang Dong provided immense technical support for this research. We are particularly grateful for his selfless help. We owe many people a great debt of gratitude for the aid we received during our field investigations and interviews in Zhejiang and during different phases of this research. They include incumbent and retired government officials and party cadres from the village to the city levels, party historians, private entrepreneurs and businessmen, social activists, and ordinary villagers. They provided us with a wealth of information related to history before and after 1949 and helped clear

xiii

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Acknowledgments

the various obstacles standing in the way of our field survey and interviews. We have been blessed to get to know them and overcome the countless restrictions and uncertainties inherent in the political factors surrounding this research. Our research has also benefited greatly from exchanges with our colleagues and from the support offered by many friends, including Tao Qian, Shiyuan Pan, Longshou Chen, Kaomeng Ni, Xiwang Dong, Zhiyun Li, Bin He, Scott Gehlbach, Pierre Landry, Shugang Zhang, Ran Tao, Jianming Yang, Justin Yifu Lin, Jiangnan Zhu, Zhigang Yuan, Lei Shi, Jun Zhang, Rong Wang, Bin Xu, Qiang Yang, Ming Lu, Zhao Chen, Yongqin Wang, Yuan Zhang, Zonglai Kou, Jianfeng Wu, Ting Li, Xingmin Yin, Weilin Zhou, James Kung, Li Han, Huihua Nie, Qijing Yang, Huiwen Li, Hongjun Zhao, Xiang Zuo, Yuhua Wang, Xin Sun, Linke Hou, Yiping Wu, Feiyue Li, Jiancai Pi, Xi Weng, Weiwen Fan, Na Li, Min Qian, and many others. We are grateful for our editors Joe Ng and Gemma Smith at Cambridge University Press for their interest in this project and for guiding us through to the finish line. We are particularly thankful for the helpful and constructive comments of the anonymous referees. One of these referees not only pored over the whole manuscript but also gave detailed professional advice on our revisions and spoke highly of the theoretical contributions our work makes to the field. We appreciate such valuable feedback, which was tremendously encouraging for junior political scientists and economists like ourselves. Finally, we are indebted to our spouses Xuanjuan Chen (Qi’s wife) and Ying Song (Mingxing’s wife). Their understanding and company have been our greatest support.

Abbreviations

CBEs CC CCP CCRBA CRWD DFC DID FDI GC GDP HRS HSC HSF IV LPRP LSC MAT MFC NFA NGC PLA PPC PPSC RC RDA SME

commune and brigade enterprises Central Committee Chinese Communist Party Central China Revolutionary Base Area Central Rural Work Department dominant-faction county difference-in-difference foreign direct investment guerrilla county gross domestic product household responsibility system high-stage collective Haiyan Shirt Factory instrumental variable localized property-rights protection low-stage co-operative mutual aid team marginal-faction county New Fourth Army non-guerrilla county People’s Liberation Army provincial people’s congress provincial party standing committee revolutionary committee “regionally decentralized authoritarianism” hypothesis small and medium-sized enterprise

xv

xvi

SOE TFA TVE WBOPBC

List of Abbreviations

state-owned enterprise Third Field Army township and village enterprise Wenzhou Branch Office of the People’s Bank of China

1

Introduction

1.1 Introduction No matter how much Karl Marx abhorred capitalism, one of his observations was indeed correct: capitalism entails secure private ownership of the means of production which is separate from the producers (Marx 1990). Contemporary social scientists go a step further by pointing out that the rise and development of capitalism largely depends on well-functioning institutions that can constrain predatory behavior by governments and safeguard property rights—features that are often found in well-functioning democracies (Acemoglu, Johnson, and Robinson 2001; Ansell and Samuels 2014; North and Weingast 1989). Insights about the importance of the security of property rights for capitalism are echoed by the development of the private sector in China since the late 1970s,1 when the market-oriented economic reforms were officially launched. As of 2005, there were 29.3 million private businesses, employing over 200 million people and accounting for 49.7 percent of GDP (China Daily, December 14, 2005). By the end of 2014, there were 19.8 million firms of various ownership, with registered capital totaling 136 trillion yuan. Among these firms, there were 16.54 million private businesses (i.e., 85.8 percent of the total number of firms), with registered capital worth 69.3 trillion yuan (i.e., 50.8 percent of the total registered capital).2 These figures reflect 1

2

Unless specifically stated, in this volume the private sector refers to domestic privately owned enterprises; it excludes Sino-foreign joint ventures or firms owned by investors from Hong Kong, Macau, and Taiwan. Cited from Zhang Wei (2015, 6). It is worth noting that there are no official Chinese statistics about the size of the private sector. There are a number of estimates, depending on how private firms are defined and what data are used. For a relevant discussion, see Huang (2008).

1

2

Introduction

improvements in the institutional and business environments for the private sector. Regardless of the numbers, however, the private sector still lives under the shadow of a strong party-state, either the sovereign state or its local agents, which intentionally renders the private sector subservient to the state sector and entices predatory governmental officials to abuse their public power to encroach on private interests, e.g., the demolition of the homes of villagers and urban residents and illegal seizures of the assets of private entrepreneurs. Worries began to spread among investors, scholars, and policymakers in 2004, as macroeconomic policymaking was primed to look out for state-owned enterprises (SOEs) and other national champions deemed by the central government to be strategically important to the state, at the expense of private companies. This trend is referred to as guojin mintui (国进民 退), literally translated as “while the state advances, the private sector retreats.” Two well-known examples illuminate the weakness of private ownership vis-à-vis the state. One is the case of Jiangsu Tieben Iron Co. Its founder, Mr. Dai Guofang, was supported by the local government in Changzhou city to initiate a large investment project to produce steel and iron. However, in 2004 the project was halted by the central government, which was making efforts to rein in excessive investments in order to slow down the overheated economy. Officials from nine ministries launched a probe into the company and determined that Dai Guofang and other executives, in their efforts to promote progress, had violated several rules, including those governing land-use rights and financing. The official Xinhua News Agency published a long list of Tieben’s wrongdoings that had been discovered by government investigators. Although many of these problems were actually tied to local government officials who had circumvented central-government land and lending rules by subdividing land and issuing project loans based on small individual plots, it was Dai Guofang and some of his deputy executives who were detained in April 2004 for alleged crimes such as bribery, tax fraud, and cooking the books to obtain bank loans. It was only after Dai had been in custody for two years that his case was reopened in 2006. However, by then the prosecutors had reduced the charges against him to forging receipts to evade taxes, and even the tax fraud allegations did not stand up under close examination because the receipts used as evidence were actually forged by one of Tieben’s

Introduction

3

upstream suppliers. Nevertheless, Dai Guofang was still sentenced to six years’ imprisonment.3 The second case is that of Wuhan East Star Airlines. Its boss, Mr. Lan, had started East Star Airlines, one of the first private airline companies in China, to complement his real-estate, tourism, telecom, and other businesses. As a result, he became one of China’s most highprofile entrepreneurs. In 2005, Lan Shili, with a net worth of 2 billion yuan (around US$300 million), was ranked number seventy on Forbes’s list of entrepreneurs in mainland China. However, Lan’s business expansion was hit by the 2008 financial crisis, leaving him with a sea of debts and forcing him to take out high-cost loans from the Rong Zhong Group, a private loan shark, by signing a mandatory equity-transfer agreement that stipulated that if Lan Shili did not pay back the money within two years, he would have to transfer his stake in East Star Airlines to Rong Zhong. At this time, however, the vice governor of Wuhan city requested that Lan Shili sell his major stakes to the China National Aviation Holding Company, a national champion, because its investments were regarded by the city government as administrative achievements. When Lan Shili refused the deal, China National Aviation Holding Company suspended takeoff clearances for East Star Airlines and Lan was soon imprisoned for alleged tax evasion. In August 2009, China National Aviation Holding Company was forced to file for bankruptcy.4 This stifling atmosphere culminated in Chongqing’s “Smash the Black” campaign from 2007 to 2011. After Politburo member Bo Xilai was sent from Beijing to assume the position of party secretary of Chongqing city in 2006, he began plotting his return to the center of power. Bo took advantage of the resentment of the masses toward how the political elite had become rich and he mobilized the masses to smash

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4

For a detailed account of the Tieben case, see “Economic Shift Rouses Defunct Steel City,” February 6, 2011, at http://english.caijing.com.cn/2009–02-06/110 053406.html, accessed April 20, 2018. For a detailed account of the East Star Airlines case, see “East Star’s Lan Shili: ‘Entrepreneurs Have to Be Bold to Do Big Things,’” March 24, 2014, at www .forbes.com/sites/knowledgewharton/2014/03/24/92014/#405d11b28f42, accessed April 20, 2018. Also see the lecture by Chen Youxi, “Shichang jingji de queli yu jingji xingfa chonggou” (The Relationship between the Market Economy and Economic Crimes in Criminal Law, 市场经济的确立与经济刑法的重构), March 14, 2014, at www.glawyer.net/article/205.html, accessed April 20, 2018.

4

Introduction

the city’s “bad elements,” including corrupt and non-co-operative officials as well as private businesspeople. Based on his attacks on these “mafia forces” and his state-centered economic scheme, Bo devised his so-called “Chongqing model” in the hopes of winning a seat on the Standing Committee of the Politburo. To be sure, among the countless victims of the “Smash the Black” campaign, private entrepreneurs were attacked mercilessly, as many were charged with illegal actions, such as organizing mafia groups, and as a result they received unduly heavy and illegal punishments. As one blog post in the Wall Street Journal points out, In the course of the campaigns in Chongqing, more than 3,300 people were detained, many were tortured, and the former police chief along with 12 alleged triad leaders were executed. In addition, hundreds of millions of yuan were reportedly confiscated from private enterprises. In one case, the bank accounts of a real estate developer were allegedly seized and the funds were transferred to an account controlled by the police and then on to companies controlled by the police . . . In another case, noted Beijing rights lawyer Li Zhuang was sentenced to prison for trying to defend Gong Gangmo, a businessman accused of having ties to organized crime. Gong was convicted of gang-related crimes, sentenced to life imprisonment, and, according to Li, over 100 million yuan of his assets were confiscated. Li quoted unofficial estimates of over 900 million yuan ($147 million) as the value of confiscated assets that “flowed into state coffers during the Chongqing crackdown.”5

The above examples suggest that even today, the legal and institutional environments surrounding the private sector and private entrepreneurs are far from ideal in the sense that private investors often face discrimination and restrictive state policies. Worse still, the security of private property rights and proprietors is subject to predatory officials 5

See Stanley Lubman, “In Mess Bo Left, an Opportunity for Beijing,” October 25, 2013, Wall Street Journal, at https://blogs.wsj.com/chinarealtime/2013/10/25/inmess-bo-left-an-opportunity-for-beijing, accessed April 20, 2018. In fact, Gong Gangmo’s case was even more worrisome and frightening than the description in the Wall Street Journal. Mr. Gong was tortured to confess crimes that he had not committed. After his lawyer, Li Zhuang, uncovered evidence of torture and reported the evidence to the court, Bo Xilai arrested Li Zhuang and sentenced him to eighteen months in prison for perjury. See the presentation by Li Zhuang in Hong Kong at www.youtube.com/watch?v=NPz98dytX-0, accessed June 30, 2018. Also see Sharon LaFraniere and Jonathan Ansfield, “Crime Crackdown Adds to Scandal Surrounding Former Chinese Official,” New York Times, March 26, 2012, at www.nytimes.com/2012/03/27/world/asia/bo-xilais-chinacrime-crackdown-adds-to-scandal.html, accessed April 20, 2018.

Introduction

5

who may covet their fortunes and are in a position to be able to crush them. In fact, many private entrepreneurs resent the fact that political officials and governments at various levels treat them in much the same way as one feeds pigs, i.e., they let private enterprises grow rapidly simply to appropriate them after they have become sizable. The security of property rights is not a new problem. It has long existed in China, even at the beginning of the reforms, when the situation was much more serious than it is today. In fact, throughout the 1980s the private sector and private entrepreneurs were considered second-class citizens compared to the state sector.6 In addition, together with those government officials who sympathized with them, they have always been the main targets of political purges and of policy tightening. Ordinary citizens who pursued individual or private business were not only economically and politically marginalized, but also faced huge policy uncertainties as well as security risks, including potential imprisonment and persecution (see Chapters 3–5). Therefore, if there was any economic miracle in the reforms, it was that, despite the uncertain and risky political and policy milieu, private entrepreneurship and the private economy survived, grew, and ultimately flourished. Therefore, an intellectual challenge for scholars is to attempt to explain how capitalism could survive and grow in the world’s largest remaining Communist regime, one that originally intended to suppress non-socialist elements and that has no history of traditional freedoms, rule of law, transparent decision making, and so forth and therefore lacks a credible commitment to steer state cadres clear of opportunistic behavior.7 In short, due to threats arising from either state dominance in which unchecked state rulers are the grabbing hand or due to state weakness in which local agents of the state engage in predatory behavior, or both, there was no security of property rights at all. In the

6

7

As Huang (2008) argues, until the mid-1990s China’s political and legal systems officially discriminated against the non-state sector. Even today, because all land belongs to the state rather than to private owners, government officials can requisition land from peasants or evict urban residents and give the land to businessmen, who, in most cases, are urban real-estate developers, in exchange for a share of the profits. Large public infrastructure projects are announced without examination or approval by the public. In all likelihood, officials extract rents from small entrepreneurial traders. Even some large and well-known private enterprises often suffer from land grabs by the state or their private assets may be expropriated by the government.

6

Introduction

absence of growth-promoting institutions, as emphasized in the literature, how was Chinese entrepreneurship preserved and how was its private economy able to boom in spite of the extractive environment in which it was situated? Our analysis begins with a meaningful and compelling fact regarding the stunning expansion of the private sector: the success of capitalism is spatially unbalanced across different localities. Not only did local institutional innovations deviating from orthodox socialism—such as the emergence of individual farming, wearing red hats (戴红帽子, i.e., false collective ownership by private entrepreneurs) (see Chapter 5), and so on—begin earlier in some places than in others, but also even today there are no obvious signs that variations in size and dynamics among different localities are about to converge. In 2005–2006, for example, more than one-half of private investment exceeding 5 million yuan went to the coastal provinces, whereas the western provinces received less than 20 percent of private investment. In terms of exports by private enterprises, more than one-half of total exports came from firms in Guangdong and Zhejiang provinces (Huang Mengfu 2007). According to a newly published list of the 500 largest private firms ranked by sales, 28 percent are found in Zhejiang, 18 percent in Jiangsu, 11 percent in Shandong, 8 percent in Guangdong, and the remaining 35 percent in other provinces.8 Apparently the private economy did not become equally prosperous in all provinces. In fact, as we will discuss at length later, even within individual provinces the private economy could differ substantially. Thus this volume seeks to answer the following question: Given the same political and institutional environments lacking a credible commitment by the government to both the security of private proprietors and the security of private property rights, how has capitalism been able to become increasingly strong in some places but not in others? To answer this question, we choose Zhejiang province to unravel our analysis at the county level. We do not attempt to answer questions such as why the private economy developed faster during X period than during Y period, or why Province X has a more developed private 8

Private firms in Tibet, Hong Kong, Macau, and Taiwan are not included in the list. See www.china.com.cn/cppcc/2015–08/25/content_36409969.htm, accessed August 25, 2015.

Introduction

7

sector than Province Y, and so forth. Rather, we seek to explore the spatial variations of private economic development at the county level within a province, namely Zhejiang province, and how these geographical differences have been generated. Thus our core question is why the private economy is more developed in some counties of Zhejiang province than it is in other counties of Zhejiang province. We will build on this question below. Based on the Zhejiang experience, we propose a theory conceptualized as localized property-rights protection to explain why the development of capitalism in China is primarily a local phenomenon and why outcomes can vary substantially across different localities. First, we argue that in an authoritarian regime featuring a strong and extractive state, some political elites may have an incentive to form alliances with their grassroots constituents, to refrain from predatory behavior, and to shield local capitalist practices from state predation in exchange for political support, thus paving the way for the thriving of capitalism in such jurisdictions. Second, for such an incentive to be activated and for the alliance to come into being, one key condition is elite cleavages that exclude or marginalize some local officials from the patron–client networks formed by higher-level elites. This leaves those who are marginalized unlikely to expect protection from powerful patrons to secure their political survival; instead, they have to mobilize support from outside the regime, e.g., by forming coalitions with local grassroots constituents, in order to withstand pressures from the more dominant factions. In other words, it is the elite cleavages within the regime that necessitate the formation of a symbiotic relationship between the marginalized elites and their potential constituencies through the formation of an alliance to withstand pressure from the more dominant factions. Third, among the factors that have an impact on the intensity of the elite cleavage and its outcomes, the national political and policy environments will affect the need on the part of the marginalized elites to win over grassroots support, what they can provide to their potential supporters, and therefore the viability of their coalition. As a result, the materialization of localized property-rights protection is a dynamic process because the strategies the marginalized elites adopt to build a coalition and the methods through which they implement such strategies will change during different periods in response to changes in factors beyond their control. By the same token, however, the role of

8

Introduction

localized property-rights protection should not be exaggerated. At best, localized property-rights protection is viewed as a spatially limited solution to, rather than a substitute for, the lack of national provision of property-rights security.

1.2 Why Zhejiang Province? Characteristics of the Zhejiang Model Private economy is the trump card for Zhejiang’s development 民营经济是浙江发展的制胜法宝 Xia Baolong (2016), former provincial party secretary of Zhejiang province

In August 2008, we had a conversation with a senior city government official during our field survey in Hangzhou, the capital city of Zhejiang province. We asked the government official to provide an introduction to the provincial government policies with respect to private enterprises. He looked at us in surprise and said, “Your question is out of step with the times. The overwhelming majority of enterprises in Zhejiang today are privately owned enterprises. Now we are focusing on how to enhance the overall business environment, including that of small and medium-sized enterprises [SMEs], not merely that of private enterprises or state-owned enterprises.” He paused for a moment and then emphatically concluded, “the ownership bias [against private firms] is gone forever!” In some ways, what he said does indeed reflect Zhejiang’s apparent institutional advantage in terms of private-property security that has cultivated a prosperous private sector. In fact, in terms of private-sector development, Zhejiang stands out among China’s thirty-one provinces. For instance, if we take the industrial sector as a benchmark, according to the 2004 National Industrial Census Zhejiang’s private industry ranked either first or second in the country by all measures (employment, total sales, fixed investments, etc.). As of 2006, there were 2.2 million private enterprises, which employed more than 8.7 million workers, had total sales of 98.5 billion yuan, and exported 25.1 billion yuan-worth of products (Huang Mengfu 2007, 372–373). Contrary to the widespread impression that the private sector in Zhejiang mainly consisted of individual household businesses and small and medium industries, Zhejiang has been home to more than

Why Zhejiang Province?

9

one-third of China’s 500 largest privately owned companies. In Taizhou alone, a medium-sized city in the province, fifteen of China’s top 500 privately owned companies had established their headquarters, which is equivalent to the total number of the top 500 privately owned companies located in the entire province of Guangdong.9 An army of millionaire investors from Zhejiang have descended upon the rest of China to finance various economic activities (Tsai 2002), ranging from traditional industries, such as manufacturing, transportation, and so forth, to large infrastructure projects. The growth of the private sector ultimately enriched the province, but when the economic reforms officially commenced in 1978, Zhejiang was still a relatively poor province, with per capita GDP ranking thirteenth in the nation. Since 2005, however, Zhejiang has become one of the richest provinces in the country in terms of per capita GDP, following only Beijing, Tianjin, and Shanghai.10 Zhejiang’s achievement has been so spectacular that not only have scholars exalted the Zhejiang model as a desirable future for the benign development of Chinese capitalism, as revealed by the above quote by Xia Baolong, but also some politicians have even heaped high praise on the province partly to reveal their economic savvy.11 However, the dazzling recognition showered on Zhejiang’s economic achievements during the reform era distracts researchers and policymakers from some more important and meaningful post-1949 phenomena that are indicative of the true meaning of the Zhejiang model. First, it is noteworthy that development of the private sector in Zhejiang, though on the whole very impressive, has been spatially unbalanced. In the southern and eastern regions, such as Wenzhou, Jinhua, and Ningbo, the private sector has consistently thrived, whereas in the northern and southwestern regions, such as Quzhou and Huzhou, large SOEs and collective firms dominated the economy

9

10

11

This is based on 2007 figures. See http://biz.zjol.com.cn/05biz/system/2007/08/ 08/008679195.shtml, August 8, 2007, accessed April 20, 2018. Also see http:// baike.baidu.com/view/6987950.htm, accessed April 20, 2018. For an introduction to the performance of Zhejiang’s economic growth before and after the reforms, see Huang (2008, 57–58). A recent example is Bo Xilai, former head of Chongqing municipality and a rising political star until his downfall in 2011, who led a visiting team consisting of leading Chongqing officials to Zhejiang in 2008 to study its development experience.

10

Introduction

until the mid-1990s. The intra-provincial heterogeneity of the private economy in Zhejiang is the main analytical subject of this book. Second, not only was Zhejiang’s private capitalism prosperous during the reform period, but it also enjoyed vibrant growth even during the Mao period (1949–1976), when the top leadership attempted to impose a pure socialist economy throughout the country (see Chapters 3 and 4). In the mid-1950s, Mao’s agricultural collectivization met with strong resistance from peasants in Zhejiang in the form of their withdrawal from the collectives (nao tuishe 闹退社). In the 1960s and 1970s, some regions of Zhejiang saw the spontaneous emergence of household responsibility. Despite Mao’s explicit wish to stamp it out, individual household farming, which later came to be known as household responsibility, was never completely eradicated by the authorities in parts of Zhejiang. Instead, during the 1970s it spread to a vast number of regions in the province. Beginning in the early 1960s, black markets also proliferated in many counties. Most astonishingly, our field research provides strong evidence that the private sector made its greatest strides during the Cultural Revolution, marked by the prevalence of petty commodity production by individual households in the Wenzhou region beginning in the late 1960s and the dominance since the 1970s of commune and brigade firms (社队企业), the predecessors of the well-known township and village enterprises (乡镇企业) of the reform period in the Ningbo region. Simply put, the tail of capitalism was never completely cut off by the party-state in Zhejiang. Hence, it was the early beginning of capitalism in the province during the reform period rather than any distinct development after the reforms that endowed Zhejiang with the vibrant private sector that exists today. As expected, those places where the private economy thrived after the reforms were also where capitalist activities had been resilient during the Mao period. In other words, local private businesses in Zhejiang have shown a strong path-dependence nature. Zhejiang’s capitalism not only indicated its vitality in the midst of political hostility during the Maoist era, but even after 1978 and until Deng Xiaoping’s 1992 Southern Tour (南巡), the private sector in Zhejiang faced an environment filled with political uncertainties that was unfavorably disposed to free markets (see Chapter 5). A close examination of the economic history of Zhejiang suggests that the vigor of Zhejiang’s private sector today likely has had little to do with support from the provincial leadership, as such positions were

Why Zhejiang Province?

11

seldom held by reform-minded figures. Many local officials whom we interviewed complained that Zhejiang had lacked a reform-minded leadership during the early 1980s. A senior government official in Wenzhou told us that from his perspective the provincial authorities did not provide any substantial support to Wenzhou’s private economic development throughout the 1980s. A local party historian made a similar comment: “We lagged behind other provinces in pursuing the reform policies in the late 1970s and the early 1980s because we had no Wan Li-like figure in the provincial leadership.”12 Rather, the majority of provincial leaders were either staunch advocates of Maoist economic policies such as Tie Ying or political acrobats like Li Zemin. Indeed, between 1978 and 1992, in almost every national political movement aiming at eradicating capitalist elements, Zhejiang’s provincial leadership showed no hesitation to clamp down on private economic activities. Yet somehow, as in the years prior to 1978, capitalism in Zhejiang ultimately survived the hard times and prevailed economically. In contrast, it was rare to see such resilience and adaptation by the private sector in other provinces when there was a lack of a reformistminded provincial leadership (see Chapter 5). Given the salient role of local governments and officials in China’s local economy and society, a natural conjecture is that local grassroots-level officials, like county and township cadres, withstood the pressures from above to protect local capitalism. But this guesswork comes with yet another puzzle: why did they have either the incentive or the capacity to do so? Thus getting Zhejiang’s story right has important analytical implications for understanding the nature of the Chinese political economy. It reminds us that not only must we explain how the private economy was able to thrive and even outperform the state sector in a socialist economic system that had been devised to discriminate against and

12

Interview by the authors, August 2008. Wan Li was the provincial Party secretary of Anhui province from 1977 to 1980. He is credited with permitting the earliest reforms of the Maoist agricultural system in Anhui province, whereby farmers spontaneously divided up the communal lands and assigned them to individual farmers. Wan Li also allowed peasants to grow agricultural products independently of the state plan and he encouraged them to sell their surplus products on the market. Due to Wan Li’s reform measures, provincial grain output rose dramatically. Wan has been immortalized in the following folk saying: “If you want to have more grain, look for Ziyang; If you want to eat rice, look for Wan Li” (要吃粮,找(赵)紫阳;要吃米, 找万里).

12

Introduction

suppress nonsocialist elements, but we also need to explain its spatial patterns and the persistence of the private economy. To be more specific, in this book we attempt to answer the following questions: (1) Why were capitalistic elements in Zhejiang during the Mao era never completely eradicated by the state and why did they remain well preserved in some counties but not so in others? (2) Why did the private economy become increasingly stronger during the reform period in some counties, whereas it lacked momentum in other counties? (3) Did the spatial variations of the private economy within Zhejiang province result from the heterogeneity of behavior by local cadres? Namely, did local cadres in some locales choose to protect and promote private businesses, whereas their counterparts in other localities did not? (4) If the answer to the third question is “yes,” then given the highly homogeneous nature of the Chinese political system as well as the hostility toward the private sector by both the central and the provincial leaderships, why did local elites, despite the associated risks, have an incentive to protect the private sector from encroachment by the state?

1.3 Existing Hypotheses and Explanations Happy families are all alike; every unhappy family is unhappy in its own way. Leo Tolstoy

In recent years, social scientists, including both political scientists and economists, have paid an inordinate amount of attention to China’s black box and have made substantial efforts to explain China’s economic model. Their work has significantly advanced our understanding of the causes and consequences of China’s (private) economic growth. In this section, we will review the existing scholarship on China’s economic growth and its institutional foundations. Such research uncovers many hypotheses that specify those factors that account for China’s seeming exception to orthodox theory which presupposes that over the long run good institutions and favorable social

Existing Hypotheses and Explanations

13

and geographical conditions are prerequisites for economic growth, and that identify those channels that link such factors with economic performance. In the next section, we will examine the strength and/or weakness of these explanations, and then supplement them by introducing our own hypothesis.

1.3.1 The Policy and Institutional Perspective The Top-Down Approach The top-down method views the business environment surrounding the private economy and its development as the direct or indirect result of changing national development strategies, state laws, regulations, and other macroeconomic and political settings. These formal national institutional changes were intentionally created or adjusted to create a more congenial business environment for the private sector (Shirk 1993; Lin, Cai and Li 2003). For example, since the late 1970s the central government has abandoned its exclusive emphasis on ideology and instead taken a practical approach to develop its economy; individual businesses and private firms have been declared legitimate; the ceiling limits on the number of workers employed by private enterprises have been removed; the areas that were once off-limits to private investors have now been opened; and so forth. Moreover, private property rights were legally acknowledged and in 2002 private entrepreneurs, or capitalists, were allowed to join the Chinese Communist Party (CCP) (Dickson 2003).13 The central government has also designed a system that combines a centralized nomenklatura system with regional economic decentralization (Xu 2011). The CCP uses meritocratic standards to evaluate and promote cadres, thereby motivating regional administrators and local 13

A recent noteworthy example of the top-down approach is provided by Yasheng Huang (2008). Huang divides the entire reform period into two subperiods: the 1980s and the 1990s, and he attributes the development of the private sector during the two subperiods to the corresponding economic policies adopted by the state leadership. He argues that on the whole policy in the 1980s was liberaloriented so the private economy developed relatively quickly. In contrast, in the 1990s policy underwent a huge shift to an urban-centered strategy, which relied on large-scale SOEs. As a result, the private economy was stifled and lost its momentum. This policy orientation did not change until the Hu Jintao–Wen Jiabao leadership assumed power in 2003. Huang’s comparison of the situation of China’s private capitalism during the two periods provides a powerful causal explanation to bridge the changes in macro-level political-economy policies and changes in the microeconomic outcomes.

14

Introduction

cadres to compete with one another to generate economic growth in order to win career promotions (Li and Zhou 2005; Xu 2011; Chen, Li, and Zhou 2005; Landry 2008). For example, fiscal decentralization, beginning in the mid-1980s, provided local officials with incentives and opportunities to promote non-state enterprises, including private firms and collectively owned township and village enterprises (TVEs), into high-profit and high-tax-margin industries (Qian and Weingast 1997; Oi 1999). The development of TVEs was good preparation for the later development of private enterprises. In fact, almost all TVEs were rapidly transformed into private enterprises by the late 1990s. Similar to the role of decentralization, the fiscal recentralization in the 1990s has also been emphasized. Susan Whiting (2001) argues it was the combination of this policy reorientation with other institutional changes and external shocks, including national banking reforms and the Asian financial crisis which occurred during the same period, that hardened the budget constraints of local governments, forcing them to make efforts to promote the development of the private sector because they then had fewer resources to support the non-private sector. Other scholars note that the effects of the fiscal recentralization were mediated by the economic strategies of local governments to cope with the mounting fiscal pressures. They point out that since the mid1990s, local governments have become increasingly dependent on urbanization to promote growth, whereby they provide cheap land and well-functioning infrastructure to attract manufacturing firms and promote residential and commercial properties (Su and Tao 2017). The Bottom-Up Approach In comparison, the bottom-up method places more emphasis on the informal coping strategies of private entrepreneurs or local officials in response to the formal institutional setting, and attributes the quality of the business environment as well as the resultant development of the private sector to the success or failure of such strategies in dealings with the state. For example, Huang (2007) compares the development of the private economy in Jiangsu with that in Zhejiang. Both Jiangsu and Zhejiang are coastal provinces, but Jiangsu’s economy is dominated by the foreign direct investment (FDI) sector, whereas Zhejiang has a more developed private economy. Huang’s explanation is that, as opposed to Zhejiang, Jiangsu has a strong state-owned bias so the private economy is more likely to be subject to weak protection of

Existing Hypotheses and Explanations

15

private property rights. To overcome this state-owned bias, private enterprises are forced to engage in FDI by moving their assets abroad and then investing in China registered as foreign firms because foreign capital, despite the fact that most of the FDI is domestic private capital, is perceived by a majority of Chinese as having a high social status and enjoying more property security vis-à-vis suppression by government officials. In contrast, Zhejiang’s private business owners do not have to worry about a so-called state-owned bias and thus there is no need for them to engage in disguised FDI to avoid the uncertainties brought about by insecure property rights. Kellee Tsai (2007) also points out that when facing an unfriendly, and sometimes even hostile, formal institutional environment, private capitalists will use myriad strategies to circumvent the restrictions and constraints imposed on them by the formal institutions. Examples of such coping strategies include private enterprises “wearing red hats,” whereby private business owners disguise themselves as managers of collective firms (Oi and Walder 1999), pool funds via underground financing (Kellee Tsai 2002), and participate in politics to maintain political safeguards (Li, Meng, and Zhang 2006). Local officials, who are involved in day-to-day interactions with non-state actors, find these grassroots strategies more effective than the formal institutions and therefore they are willing to tolerate the grassroots strategies or to adapt the formal institutions to reality. This interaction between state and non-state actors, along with coping strategies on the part of non-state actors, at the local levels eventually contributes to the gradual shifts, elasticity, and durability of the formal institutions at the national level. An illustrative example is the revival of individual household farming and its spread to the entire country. As Yang (1996) argues, brave local initiatives, such as spontaneous individual farming under the socialist collective farming system, broke through the iron cage of state planning in the early 1980s. The achievement of individual farming in boosting agricultural production tilted the political balance in favor of the reformists in Beijing and bolstered their determination to promote the market-oriented reforms. According to the bottom-up perspective, local people and officials, rather than decision makers in Beijing and their high-ranking subordinates in the provinces, are the true heroes of China’s economic miracle. Regardless of state repression, China’s massive population guarantees

16

Introduction

a steady supply, in Weberian terms, of entrepreneurs with a spirit of capitalism. These businesspeople—from self-business owners in the countryside, to small-time street peddlers, to itinerant garbage recyclers, to wage earners employed by firms, to metal traders and engine repairers—exist far below the radar of the central government but they support everything at the top. Grassroots-level cadres, who constitute the main body of China’s bureaucratic system, allow various experiments, legal or illegal, to take place under their administrative purview, test the adaptability and flexibility of formal institutions, and send signals about the appropriateness of formal institutions to higher authorities in order to set the stage for future institutional changes. The inclinations of local people and cadres to venture into unauthorized activities and their capacities to adapt to the changing world provided the momentum for China’s economic growth. The analytical attraction of the policy perspective is apparent. The top-down approach, for example, seems to be well suited to China because it explains theoretically why and how the national leadership initiated the economic reforms by relying on the bureaucratic system in an authoritarian country, thus providing potential entrepreneurs with opportunities that previously did not exist. The approach is also largely fact-based due to the visible synchronous movement between the economy and politics at the macro level. It is undeniable that the first wave of the big-bang growth of Chinese capitalism, represented by the spread of individual household farming in the countryside, occurred after the 1978 3rd Plenum of the Communist Party’s Eleventh Central Committee when Deng Xiaoping came to power and sent a strong signal that the economic reforms had commenced. It is also common knowledge that the private economy was hit substantially hard in the two years subsequent to the 1989 Tiananmen Square event and it did not regain momentum until Deng’s 1992 Southern Tour formally eliminated any political threat to private entrepreneurs. An important caveat to the top-down approach is that in large part it downplays, whether intentionally or unintentionally, the experimental nature of China’s economic reforms. Deng Xiaoping himself accurately described his reform approach as “crossing the river by feeling for the stones” (摸着石头过河): the sweeping changes of the prior thirty years were not generally mapped out by some smart politicians in Beijing. In fact, many of the revolutionary institutional innovations originated

Existing Hypotheses and Explanations

17

at the grassroots level and only later were sanctioned or adopted by the center—for instance, adoption of the (private) household responsibility system (HRS) in rural areas, the rise of the TVEs, and so on. In this sense, it is more plausible to combine the top-down approach with the bottom-up approach to provide a persuasive explanation for the progress of the reforms and the growth of the private economy. Although the policy perspective to a large extent explains the ebbs and flows of the private economy throughout the country, its analytical weakness is also obvious when the geographic heterogeneity of the private economy is considered. For example, according to the topdown account, changes in formal national institutions should have produced similar changes in the development of the private economy throughout the country. But such a prediction does not match the spatial variations of the private economy. The bottom-up account, however, neglects the fact that not all localities initiated or espoused local experiments at the same time. In retrospect, some places were sufficiently bold to make the first move and to lead the tide of history, whereas others did not make any changes until official sanctions were endorsed, and some even temporized and resisted the institutional innovations. Relatedly, this approach falls short of analytical leverage when attempting to explain why local officials in some locations were more likely than their counterparts in other locations to tolerate or to support the coping strategies adopted by private entrepreneurs. Moreover, it tends to assume, incorrectly, that local officials throughout the country have a similar capacity to make independent economic and political decisions, to interact with non-state sectors, to enforce formal laws and regulations, and to bargain with their superiors and supervise their subordinates.

1.3.2 The Historical-Legacy Perspective Many scholars turn to the historical legacies inherited from the Mao period, such as patterns of state investment (Oi 1995; Perry and Wong 1985; Whiting 2001; Yang 1996). These accounts purport to explain how central and provincial investments made prior to the reforms empowered or constrained local officials across different localities and in different ways during the reform era. For example, Whiting (2001) attempts to explain the striking regional variations in property rights that characterize China’s rural industrial sector. Her study

18

Introduction

focuses on three localities: Wenzhou, Wuxi (an industrial city in Jiangsu province), and Shanghai. She finds that throughout the mid1990s publicly owned firms dominated rural industry to varying degrees in Wuxi and Shanghai, whereas privately owned firms dominated in Wenzhou. The regional variation, she argues, was the result of choices by local officials, who were constrained by distinct local resource endowments embodied by state investments inherited from the Maoist period. Oi (1995) makes a similar argument. She argues that local cadres in the post-Mao era retained the bureaucratic capacities inherited from the Maoist state, coupled with sufficient institutional incentives formed after the reforms, which enabled local governments to treat enterprises within their administrative purview as one component of a larger corporate whole (she calls this “local corporatism”) and thus eventually led to the massive upsurge in rural industry on the edges of agriculture and state industry. Similar to Susan Whiting, but from a different perspective, Qian and Xu (1993) and Xu and Zhuang (1998, 183–212) argue that as of 1978 China had inherited an economic structure from the Mao era that was conducive to marketization and therefore non-state sectoral development. They compare the Chinese economy to a multidivisional (M-form) organization and the Soviet economy to a unitary (U-form) organization. Fearing military invasion, Mao encouraged local self-sufficiency and many planning and administrative powers were transferred to provincial cadres. During the reform era, since provinces and the counties in them had relatively diversified economies, competition often emerged between rival producers of the same goods. Deliberate redundancy left the system less vulnerable to shocks by reducing the costs of transitional disorganization and the risks of disruption when Beijing conducted localized experiments. Finally, the M-form structure enabled central leaders to use yardstick competition to evaluate the relative performance of local officials. All of these features inherent in the M-form economic structure inevitably spurred the growth of the private economy. The historical-legacy analyses are effective to explain the crossregional/-provincial variations in economic performance. However, they still leave some important questions unanswered. First, benefiting from state investment is not the same as the state intervening in the local economy. A locality receiving few state resources may be subject to tight state controls over the private economy, and vice versa. Receiving little state investment is a common feature in many counties

Existing Hypotheses and Explanations

19

in Zhejiang, but there is still heterogeneity in private-sector development. For example, Ningbo received large state investment (in the form of infrastructure) relative to Wenzhou and Taizhou, but it was also graced with a flourishing private sector. Both the Ningde area in Fujian province, which borders Wenzhou, and Wenzhou itself are mountainous districts. In most of the post-1949 period, both had poor infrastructure, such as ill-kept roads and railways; were geographically close to Taiwan; and received little investment from the state. Despite these similarities, Ningde is much poorer than Wenzhou. These contrasts show that there are limits to the impact of state investment. Moreover, the historical-legacy perspective generally neglects the fact that the variations in the development of capitalism across locales were not merely a new phenomenon that took place after 1978 but instead one that had emerged long before 1978. In fact, during the radical Mao era, private economic activities were well preserved in some places under the protective umbrella provided by local cadres. Furthermore, those places where the local private economy successfully survived from 1949 to 1978 were also the places where capitalism developed more rapidly than elsewhere after 1978. Most current research focuses merely on the variations in the private economy across localities after 1978, therefore it is subject to an endogeneity problem in which both the historical legacies of the pre-reform era and the situation for the private economy in the post-reform era are actually results caused by other omitted explanatory variables.

1.3.3 The Endowment Perspective Many researchers attribute the various local economic models to varying geographical conditions in different localities and other idiosyncratic social and cultural features (Alan Liu 1992; Parris 1993; Cao Zhenghan 2006). We call this an “endowment perspective” because it is the natural (geographical) or social (cultural) endowment that plays a key role in shaping the profile of the local private economy. In this account, poor geographical conditions not only inspire an entrepreneurial spirit among local people to engage in business in order to live better lives but also lead to fewer central interventions in order to leave room for the private economy. In fact, in some places it was the centuries-old tradition of doing business that made possible the revival and boom of capitalism after 1978.

20

Introduction

The endowment perspective resonates with the literature that describes geography and culture as key factors underlying cross-country differences in economic performance. Such endowment factors have a special fascination for many scholars, from Montesquieu (1989), to Weber (1992), to recent researchers such as Diamond (1997), Sachs (2001), and Putnam et al. (1993). The problem is that the relationship between the endowment factors and the outcome variable, in this case economic performance, can seldom be regarded as causal (Acemoglu, Robinson, and Johnson 2005). In addition, as Yia-Ling Liu (1992) remarks, they do more to explain why the private economy developed more rapidly in some localities after 1978 than why the private economy was able to survive before the reforms. Nor do they fully explain why huge economic heterogeneities exist within Zhejiang, even though different regions share more or less similar geographical conditions and cultural traditions.

1.4 Our Explanation and Hypothesis 1.4.1 The Incentives and Motivations of Local Politicians The starting point for our analysis is to rethink why local officials in Zhejiang are motivated to be tolerant and supportive of the local private economy in spite of the associated political risks. This is not an idle question because, on one hand, the well-received wisdom is that had there been no acquiescence, tolerance, or encouragement by local cadres, it is likely that the coping strategies contrived by private entrepreneurs to circumvent formidable state policies and regulations could not have taken effect; on the other hand, however, few efforts have been made to explain this question of motivation. In this regard, a commonly accepted claim is that local officials offered protection to private entrepreneurs in return for economic interests (Haber et al. 2003; Haber 2006). This claim is well grounded in the political-economy rent-seeking theory and backed by the ubiquitous crony capitalism and rampant corruption that prevailed in the developing world in general, and in China in particular. But this claim does not explain why local officials in Zhejiang who in many cases chose to side with the interests of private businesses actually took huge the political risk of losing their jobs or being purged without receiving matching economic compensation from businessmen. Apparently, when analyzing the incentives and behavior of local politicians, it is

Our Explanation and Hypothesis

21

inadequate to focus only on the economic rationale; instead, we should incorporate a political rationale into our theoretical reasoning. Other well-known research focuses on the regional-competition hypothesis, or what is called the “promotion tournament” hypothesis (Li and Zhou 2005; Zhou Li’an 2007) or the “regionally decentralized authoritarianism” (RDA) hypothesis (Xu 2011), which pays more attention to the political concerns of local politicians. The core logic is that the central government uses the appointment and promotion of subnational government officials as powerful instruments to induce regional officials to follow central-government policies regarding, for example, economic growth and fiscal revenue generation (Lü and Landry 2014), and local governments and officials compete with one another to show their competence to their supervisors in order to receive promotion. In light of this account, local governments, under competition pressures from other localities, should be willing to promote the private economy in their respective jurisdictions if the private sector is more efficient relative to the state sector. The RDA hypothesis relies on several shaky assumptions. For example, it assumes that the central government has an overwhelming objective that can be well defined by quantitative targets, e.g., economic growth. It also assumes that central-government policy preferences and priorities are clear and common knowledge to all local officials. However, these assumptions largely contradict the nature of a single-party regime such as China. For one thing, it is difficult to believe that rulers rely exclusively on some objective criteria to promote their subordinates, thereby forfeiting the discretionary power on the part of patrons to manipulate the recruitment and appointment of lower-level officials. As shown in the literature on the trade-off of an autocrat between the loyalty and the competence of her subordinates, recruitment of competent officials in authoritarian countries is usually not feasible due to rulers’ fears of coups or betrayals by competent officials (Debs 2007; Egorov and Sonin 2011; Zakharov 2016).14 In the Chinese case, there is ample evidence to 14

In fact, similar scenarios may occur in a democratic context as well due to partisan politics, though the severity of the problem may differ (see Carpenter 2001; and Hollyer 2010). In the literature on corporate governance, corporate leaders tend to appoint those who pose no threat to their authority (Burkart, Panunzi, and Shleifer 2003; Prendergast and Topel 1996) or to avoid hiring a manager with formidable ability that may be used for rent seeking rather than for managing the firm (Glazer 2002).

22

Introduction

suggest that the growth–promotion link is at best not robust or does not exist at all (Guo 2007; Tao Ran et al. 2010). In fact, as we show in this book, local Zhejiang cadres who were successful in boosting the local economy also failed to advance their political careers due to their sidelining from the dominant factions in the province. Second, a basic feature of high politics both before and after the economic reforms is that central leaders always had divergent opinions with regard to policy orientations and priorities. Moreover, central leaders, including both Mao Zedong and the post-reform leaders, seldom revealed their true intentions to their peers in the center, let alone to local politicians. Policy signals that they sent out were often characterized by ambiguous language and at times even were contradictory (see Chapters 3–5), thus aggravating rather than alleviating the political uncertainties that plagued lower-level officials.15 As a result, whether local officials can read the true meaning of messages from above and respond to such signals in an appropriate manner constitutes a necessary precondition to securing their political lives. Based on their career experiences and political knowledge, local officials’ interpretations of and responses to the same policy assigned from above may vary considerably. A third thread of literature posits that local officials may be more effective in responding to local needs and harnessing the potential of local development when they are embedded in their communities (Ostrom 1990; Evans 1995). For example, local officials belonging to certain lineage groups or clans feel compelled to support local communities through the provision of more public goods (Lily Tsai 2007; Xu and Yao 2015). However, embeddedness per se does not necessarily lead to positive outcomes, such as the provision of more public goods or better protection of property rights. In fact, there is abundant contrary evidence that shows that local elites who have close connections with their communities may draw on their social status, moral advantage, and power to capture rents at the expense of local interests. Rather than protect property rights, they are likely to co-operate with 15

It is not rare in authoritarian regimes that autocrats intentionally use ambiguous language and send mixed signals to their subordinates. One reason is to cheat or mislead their rivals. Another reason, which is very likely when there is no immediate threat or challenge to the incumbent autocrats, is to monitor the responses of other ruling elites in order to test their positions and loyalty.

Our Explanation and Hypothesis

23

the predatory state to extract rents from local society and share them with other political elites (Mattingly 2016). Given these polarized views, it is very likely that the role of embeddedness is contingent on other contextual factors that have not been explored in existing scholarship.16 We believe that in reality local political elites do not simply consider their economic interests, as depicted by the rent-seeking theory. Nor do they implement directives and orders from above in a way simply to cater to their superiors, as suggested by the promotion tournament hypothesis or the regionally decentralized authoritarianism hypothesis. As Bueno de Mesquita et al. (2003) point out, all political elites, whether in democratic or autocratic regimes, are self-interested and their actions are intended to be politically beneficial to themselves. Based on this insight, we argue that political elites in China, including local officials in Zhejiang province, are primarily concerned with their political survival. Political survival is the necessary condition for political elites to achieve other personal goals. Only by remaining in power and holding on to their positions can political elites pursue their personal interests, from fame to fortune. If they lose their power, they lose everything. The goal of this book, therefore, is to analyze why local officials in different localities in Zhejiang, even though they were all concerned about political survival and faced the same state mandates, had varying attitudes toward the private sector and accordingly followed different economic strategies to secure their political interests.

1.4.2 The Issue of a Credible Commitment to Protect Property Rights It is natural to postulate that if local cadres in Zhejiang province chose to give a helping hand to private entrepreneurs, this was first and foremost because doing so could enhance their likelihood of political survival. This leads to two deeper questions, both related to the credibility issue emphasized in the political-economy literature. First, being motivated to support the private sector is not the final story. As noted 16

In China, for example, local cadre positions at grassroots levels were staffed by those who had more or less social and blood relationships with the residents of the communities in which they lived. Nevertheless, as the Zhejiang case shows, their attitudes toward local private businesses and their policy implementation behavior could vary significantly in different localities.

24

Introduction

above, it was not only after the reforms that local cadres provided a protective umbrella to private capitalists; in fact, they had been playing similar roles long before 1978. In other words, such motivations and incentives were persistent and long-lived, serving as a credible commitment to the long-term growth of the private economy. To be sure, Zhejiang is not unique in having some local officials who dared to be tolerant of capitalism on certain occasions. In fact, we can easily find examples in other provinces as well where local officials supported such initiatives prior to the reforms. The most famous examples include the promotion of responsibility farmland (责任田) in Anhui province in the early 1960s under Zeng Xisheng (Yang 1996) and the experiment of contracting output to individual households (包 产到户) in Anhui in the early 1980s under Wan Li (The History of Rural Reform in Anhui Province 2006). Similar examples can be found in Sichuan province, Guangdong province, Jiangxi province, and others, under different circumstances and during different periods (Du Runsheng 2005). However, if we look a bit closer, the non-Zhejiang local initiatives only lasted for short periods and local officials did not have long-lasting motivations to support them. In fact, in all of those cases the local officials dared to allow peasants to pursue what were illegal activities at the time because they received their licenses from the provincial authorities who had the tacit consent of the top leaders or support from their patrons in Beijing.17 Once the political atmosphere changed, these local officials quickly changed their tune to keep in step with the new political agenda and they put an end to the local initiatives. This is how they differed from the local officials in Zhejiang, where the “coping strategies of local people,” as referred to by Kellee Tsai (2007), remained alive in many localities for a much longer period, thus revealing that a pro-capitalism stance had indeed taken root among the local 17

Zeng Xisheng, for example, reported to Mao on three occasions about his proposal to implement the responsibility farmland system before he proceeded with the plan. Although Mao did not commit himself on this issue, Zeng mistakenly thought he had received Mao’s tacit permission. This eventually proved to be a fatal miscalculation that would later cost Zeng his career in Anhui. As Mao denied the legitimacy of the responsibility farmland system shortly after Zeng embarked on his bold initiative, the system was brought to an immediate end (Xiao Donglian 2011, Chapters 8, 9). In contrast, Wan Li’s experiment in Anhui definitely won Beijing’s endorsement (Zhang Guangyou and Ding Longjia 2006).

Our Explanation and Hypothesis

25

elites. In other words, regardless of the associated political risks, longlasting support from the local elite in favor of local economic interests is key to understanding the Zhejiang model. The second question to be considered focuses on the political credibility of the protections provided by Zhejiang local cadres. First, local elites must make sure that their motivations, however genuine and honest, are trusted by the local people. Only then would would-be private entrepreneurs have reason to believe that the local elites did indeed want to protect their economic interests, and only then would the risks that their private investment might be confiscated by the state in the future be sufficiently slim that the private investment could continue. Second, those who venture into private business must not be imprisoned or persecuted for political or ideological reasons. As Huang (2008) puts it, a potential private entrepreneur would not dare to invest until he/she believed that both the security of the proprietor and the security of the property were guaranteed. However, given China’s unconstrained political system and its poor political credibility and policy predictability records, especially during the Mao era, it was expected that winning the people’s trust would be difficult, if not impossible. How was this commitment problem solved? Huang (2008, Chapter 1) provides a way out by making the conjecture, based on the recognition that Deng was different from Mao, that it was Deng’s return to power in 1978 that sent a clear and strong signal to ordinary people that the policy orientation of the state had changed. This led to the explosion of entrepreneurship in the early 1980s, particularly in rural China. Huang’s assumptions have some credibility. In all economic aspects, Deng was surely different from Mao, and there is no doubt that the shift in the policy orientation of the top leader removed the shackles stifling China’s economic development. However, the extent to which Deng’s return to power in the late 1970s ushered in an explosive response from peasants in the early 1980s is not as clear-cut as claimed by Huang. The debates revolving around the policy orientation at the center in the late 1970s sent ambiguous signals to party leaders in the various provinces (see Chapter 5). Few senior provincial officials, except for those experienced politicians who had rich knowledge about high politics and were highly sensitive to changes in the balance of power at the top, much less ordinary peasants, could make accurate

26

Introduction

judgments about changes in the political atmosphere in Beijing.18 Moreover, even after the economic reforms were officially launched, before 1992 private entrepreneurs were still treated as second-class citizens, compared with the state sector and the collective sector. They could be subject to political repercussions during the frequent ideological campaigns that targeted the private sector. Obviously, this policy vacillation was detrimental to private entrepreneurs in terms of having stable expectations about their investment decisions. In addition, whether or not the signals from the center were clear, the de facto effect was still conditional on how local officials responded to them. Again, due to varying local vested interests and different political environments across the various localities, the responses of local officials to central policies often varied considerably. While some provinces demonstrated strong adaptability to the new opportunities, other provinces were staunch advocates of the old system. As far as the HRS was concerned, Hu Yaobang and Zhao Ziyang toured sluggish provinces, scolding their leaders, and sending teams to expose and “rectify” foot-dragging cadres (Cai and Treisman 2006) in order to facilitate the spread of the HRS. In Heilongjiang and Hebei provinces, for example, only after conservative leaders Yang Yiceng and Jin Ming, who persistently resisted contracting output to individual households (baochan daohu 包产到户), were removed did this new farming system spread to these two provinces (Du Runsheng 2005, 130–132). Even within Zhejiang province, some counties authorized implementation of baochan daohu before the provincial authorities indicated its official position, whereas other counties continued to wait until the political risks had subsided (see Chapter 5). In sum, given the fact that local elites in practice were in charge of local policy implementation and their reactions to central directives were heterogeneous, whether entrepreneurship was implemented depended not only on whether there had been a change in the macro-political environment but also on whether the commitment of the local elites was regarded as credible. In the real world, the latter likely carried more weight in the decision making of potential entrepreneurs. In addition, Huang Yasheng’s optimism about Deng’s return to the center of power overlooks the path-dependent nature of private 18

At the time, even Deng Xiaoping seldom publicized his policy preferences on sensitive issues such as the HRS (see Chapter 5).

Our Explanation and Hypothesis

27

capitalism in Zhejiang. If it was Deng who instilled confidence among potential private entrepreneurs in order to boost private investment, then how can we explain the resilience of capitalism prior to Deng’s return to power in the late 1970s, especially the high tide of capitalism that took place during the Cultural Revolution (see Chapter 4)? Although Deng Xiaoping deserves credit for bringing about fundamental changes in China’s political and economic systems, there must have been other factors as well that accounted for the confidence of local people in the security of property rights in Zhejiang. Finally, the perception of the motivations of local elites by local people does not suffice to meet the credibility criteria. The second aspect of the political-credibility issue is that local elites must be politically strong and sufficiently adaptive so that they are able to effectively resist radical state policies without jeopardizing their political life. China’s political system today still remains highly centralized and higher-ups still have the power to punish subordinates whom they dislike or to remove them from their positions. When local elites maneuvered enforcement of formal institutions to foster economic activities that deviated significantly from the preferences of the higher authorities, they were actually assuming considerable political risks and the consequences could have been fatal. Therefore, unless local cadres were able to defy the pressures from the state, e.g., by having powerful patrons to rely upon or by having reliable forces with whom they could form alliances, it would have been difficult for them to continue their pro-capitalist moves in the face of such political pressures. As a result, even if they genuinely intended to provide a helping hand, their commitment was not credible. The above analyses suggest that the private-economy issue in Zhejiang can be reduced to two questions: first, why were local cadres motivated to be the guardians of local capitalism, or alternatively under what circumstances did the protection of private property rights by local cadres coincide with their political interests? Second, why did the motivations of local cadres to protect private property rights remain unchanged over the long run, and under what circumstances were their motivations sufficiently strong that they could continuously defy formal institutions in favor of the local private economy? Again, substantial intra-regional variations in private-sector development and its provincial path-dependent nature provide much leverage to answer these two questions.

28

Introduction

1.4.3 Political Survival, Power Structure, and Economic Growth: A Theory of Localized Property Rights Protections It has been widely noted that in democratic and quasi-democratic contexts political elites resort to mobilizing supporters to achieve their business interests. In particular, when current institutions are inadequate to protect elite interests, they will seek support from extrainstitutional forces, including other social groups (Yue 2015). Examples include, but are not limited to, corporate CEOs recruiting grassroots supporters to act on their behalf (Walker 2009), American bankers mobilizing local communities to defend their business interests from outside competition (Yue 2015), the Mexican political elite creating a number of institutions to accommodate the demands of political outsiders in exchange for their support (Haber et al. 2003), wealthy and resourceful elites in post-Communist Central Asia initiating mass mobilizations to protect them from a predatory regime (Randitz 2012), and so forth. On the basis of successful collective actions, the public can assist political elites or bail them out of serious situations. In other words, if existing institutions do not work for the local elites, or if they work against some elites, they may ally with and mobilize those disadvantaged social forces, who will provide an additional source of support to the elites to further their interests. The above observation sheds light on the mechanism of property rights protection and the resultant spatial variations in economic performance within an authoritarian state. In authoritarian regimes there is no credible commitment to power sharing among the ruling elites (Svolik 2012), and elites at various levels consist of competing factions (Nathan 1973; Shih, Adolph, and Liu 2012). However, there likely exist some elites who are endowed with relatively few political resources and are marginalized by the regime. In such cases, the marginalized elites cannot rely on established patron–client networks within the regime to advance their careers and they are vulnerable to attack from the dominant factions. Therefore, they must solicit support from lower-level bureaucrats or even grassroots constituents,19 namely 19

By grassroots constituents, we are not necessarily referring to “the people,” although in some cases that may be the case. Grassroots constituencies could also include community-level political or commercial elites who may further mobilize individual members of the community. In the context of China, this includes township- to street-level officials or merchants. An analogous example occurs during democratic transitions, when the opening is the result of a division

Our Explanation and Hypothesis

29

forces that are at the periphery of the power hierarchy or even outside the regime. In order to consolidate grassroots support, the marginalized elites must make political or economic concessions to their grassroots constituencies. Given the weak status of the marginalized elites within the regime, as well as the limited resources at their disposal, cultivating clientelistic networks by continually providing benefits to particularistic groups becomes a costly strategy (Bueno de Mesquita et al. 2003). Alternatively, a primary concession may be a commitment against expropriation or extraction, i.e., by providing quasi-public goods such as property rights protection in order to create a wide base of social support. We refer to this mechanism as “localized property-rights protection” (LPRP). It is localized in the sense that property rights security is geographically bounded under the jurisdiction of marginalized elites. As a result, localities governed by politically marginalized elites tend to have more property rights security as well as better economic performance in the long run. In contrast, in localities governed by politically dominant factions, the careers of elites depend on protecting the existing patron–client networks woven by powerful patrons. Hence, they will place a priority on the policy preferences of their higher-level patrons and will implement policies in favor of their interests, regardless of the potential adverse effects on the local economy or on property rights security, resulting in declining economic performance over the long run. Elite cleavage constitutes a necessary condition to build a coalition between the marginalized elites and their grassroots constituency. Of equal, if not more, importance is the capacity of the marginalized elites to organize their mass constituencies for collective action, e.g., protests, strikes, or passive resistance against state policies, which can increase the costs of predatory actions by higher-level governments by escalating the costs of policy implementation via the threat of social instability (Yia-Ling Liu 1992). Such collective actions enhance the bargaining power of the marginalized elites and render them indispensable problem solvers, thus providing them with additional power. In order to co-ordinate mass collective actions in a local community, the marginalized elites must first be able to overcome the collectivebetween soft-liners and hard-liners within the authoritarian regime. Soft-liners are motivated to obtain public support and to make concessions to democratic principles to defeat the hard-liners (O’Donnell and Schmitter 1986).

30

Introduction

action problem in order to assume a leadership role in the coalitionbuilding process. Elites are more likely to solve such a problem if structural conditions facilitate the formation of a collective identity to unite them. As we show in Chapter 2, in Zhejiang it was the combination of the long Communist revolutionary experience prior to 1949 and vulnerability in the provincial political arena after 1949 that formed a united and well-organized provincial guerrilla organization.20 In the meantime, marginalized elites must subtly mobilize their grassroots supporters in order to avoid incurring harsh reprisals by the regime. Therefore, elite cleavages, whatever their origins, must not endanger authoritarian rule. In fact, under most circumstances the alliance between the marginalized elites and their grassroots constituents will only shield them from potential attacks by the dominant factions rather than directly challenge the power and policies of the dominant elites. In this way, the marginalized elites strike a balance between minimizing the risks of being charged with disrupting the existing political order and implementing their political survival strategies. Ultimately, the viability of the alliance is also contingent on the overall political environment, which determines the extent to which the marginalized elites can seize the “window of opportunity” to pursue their own interests (see Chapters 4 and 5). Compared with the marginalized elites, entrenched elites from dominant factions have less of an incentive to ally with grassroots elites and to protect their economic interests, especially non-state economic activities in a socialist state. For one thing, their political careers largely depend on loyalty to high-level patrons. Political mandates motivate them to follow the latest political signals emanating from the higher authorities and even to carry out radical policies to display their loyalty. In addition, entrenched political elites have an incentive to maintain their vested interests through “distributional coalitions” (Olson 1982). In a country with a socialist economy, entrenched elites monopolize the state sector and can deliver benefits to political allies and crucial constituents (Shleifer and Vishny 1998). Yet capitalist development may empower social groups and thus pose a serious threat to entrenched interests (Acemoglu and Robinson 2006). Finally, unlike modern capitalism, which is underpinned by the rule of law, protection of capitalist activities afforded by a local alliance is at 20

Such a scenario in Jiangsu province is illustrated in Chapter 6.

Our Explanation and Hypothesis

31

best an implicit contract between the marginalized elites and their supporters, which is enforced neither by independent third parties nor by threats by the grassroots supporters that they will vote the marginalized elites out of office (Weimer 1997; Frye 2004; Myerson 2008). Instead, such an alliance is sustained by compatible incentives between marginalized local elites and their supporters. In fact, as long as the power status of the marginalized elites persists, grassroots support will remain indispensable, thus perpetuating the demand by marginalized elites for popular support. Because of their vulnerability to attack, especially when they are only loosely connected to higher authorities and have difficulty signaling credible loyalty, it is a risky strategy for the marginalized elites to demonstrate loyalty to the dominant factions at the expense of their grassroots constituencies. Nor is it possible for them to simultaneously please the dominant factions as well as their grassroots supporters because of the incompatibility between the political mandate of eradicating capitalist practices and the popular desire for improved economic well-being through capitalist activities. In sum, elite cleavages and the resultant importance of winning grassroots support help to solve the credible-commitment problem. In this book we apply the LPRP theory to the viability of the private sector and its spatial variations within Zhejiang province. Since the LPRP hypothesis suggests that local elite cleavages provide a catalyst for an alliance between local marginalized elites and their grassroots constituents, in which the latter are afforded credible protection of property rights in exchange for their support, we need to dissect the post-1949 political power structure in Zhejiang to identify the motivations and incentives of local elites with varying power statuses within the regime. As detailed in this book, Zhejiang’s post-1949 power structure was shaped and affected by a combination of the pre-1949 revolutionary experience and the post-1949 political campaigns, including the Cultural Revolution, among others. To be specific, the pre-1949 revolution in Zhejiang caused local political elites to be divided into two opposing political groups: the southbound cadre group and the local guerrilla cadre group. In the ensuing post-1949 power struggle, the local guerrilla cadre group was marginalized due to a lack of powerful patrons at both the provincial and central levels. As a result, after 1949 the political survival of the local guerrilla cadres, who were the backbone of the lower-level cadres

32

Introduction

at the county level and below, could not rely on the vertical patron–client networks that the southbound cadres enjoyed, thus subjecting them to formidable political uncertainties and insecurities. In fact, local native officials were often the victims of political campaigns engineered by the local southbound leadership during the Mao period until the Cultural Revolution. To guarantee their political survival, the guerrilla cadres had a stake in winning the popular support of local people, thus motivating them to protect local economic interests from encroachment by radical state policies in exchange for grassroots political support. Therefore, in counties where guerrilla cadres were strong (hereafter referred to as “guerrilla counties”), in return for sustained popular support, they actively protected potential local entrepreneurs from hostile state regulations and permitted a wide range of private economic activities. The mutual protection between local cadres and their grassroots constituencies in these counties provided a credible commitment to private property rights, permitted widespread underground private economic activities prior to the 1980s, and gave these counties a head start in private economic development before the reforms were finally launched by the central government in the late 1970s. The de facto alliance between local guerrilla cadres and local private economic interests formed during the Mao era continued to play a role in boosting the development of capitalism during the reform period. In contrast, in counties governed by the southbound group (hereafter referred to as the “non-guerrilla counties”), which was the politically dominant faction in the province, the careers of the local elite depended on pleasing their high-level patrons. Therefore, they imposed policies in line with the latest political trends at the higher levels and even enthusiastically carried out predatory policies to demonstrate their loyalty to their patrons, regardless of whether they were detrimental to local economic interests. As a consequence, these officials were actively engaged in sterilizing the socialist economy of any nonorthodox tendencies and therefore their counties had a relatively weaker private sector before and after the reforms. Despite the divergent incentives between the cadres in the two camps, intra-provincial economic differences did not become pronounced until the onset of the Cultural Revolution. Before the Cultural Revolution, the central government in Beijing did not only

Our Explanation and Hypothesis

33

impose clear top-down authority and make unambiguous policy demands on local governments. In addition, the non-guerrilla group monopolized all political resources and had a clear mandate to eradicate the private sector, thus leaving little space for the marginalized guerrilla group to protect the private sector, and hence the alliance between the politically marginalized guerrilla cadres and their grassroots constituents remained dormant. The situation changed dramatically, however, when divisions within the dominant non-guerrilla faction were aggravated and when even national leaders were overthrown for being “counterrevolutionaries,” e.g., during the Cultural Revolution between 1966 and 1976 (MacFarquhar and Schoenhals 2006). It was only during the Cultural Revolution that the formal command structure of the ruling regime was disrupted, stemming largely from the chaos in which both provincial and national elites were preoccupied with factional infighting. Thus the Cultural Revolution provided a window of opportunity for local elites to openly organize and recruit supporters to engage in power competition, and thus the political importance for the marginalized elite to win support from below became more urgent. This provided much more political agency to grassroots-level officials and enabled the marginalized guerrilla groups to fully implement their strategy in their respective jurisdictions, i.e., providing economic benefits to their grassroots constituencies in exchange for the latter’s political support. In fact, before the Cultural Revolution, local cadres only went through the motions of policy implementation, such as perfunctorily pursuing state policies or simply turning a blind eye to underground capitalistic activities, and so on (see Chapter 3). During the Cultural Revolution, local cadres were able to allow a much more comprehensive range of capitalist activities across the board, and they even encouraged local people to launch private or collective enterprises in order to enrich themselves (see Chapter 4). As a result, it was during the Cultural Revolution that efforts by local cadres to promote local capitalism reached a high point. Accordingly, it was also during the Cultural Revolution that the first wave of explosive entrepreneurship appeared in many guerrilla counties. In other words, it was not until the Cultural Revolution that there was a better institutional environment for the guerrilla counties and therefore they could pursue more private-sector development than the non-guerrilla counties, which

34

Introduction

Pre-1949 revolutionary legacy

Post-1949 provincial power structure

Local officials have different motivations to protect private rights, stemming from their status in the power structure

Local officials implement different economic strategies to secure their political survival

Spatial variations of (private) economic performance

Figure 1.1 Mechanism of the LPRP theory

were firmly tied to the large state sector and to weak property rights.21 The provincial power structure created in 1949 remained basically unchanged, despite the temporary shocks during the Cultural Revolution. In fact, the provincial leadership that had been toppled during the Cultural Revolution regained power in the mid-1970s and continued to dominate the top provincial positions throughout the 1980s. In addition, as the factional leaders of the first generation began to retire, they elevated their close protégés to top provincial positions. Officials from the marginalized groups were still discriminated against at the provincial level. In light of this, the incentives for the marginalized elite remained unchanged in the 1980s—they were motivated to protect and nurture the local economy. At the same time, due to the more accommodative national policies toward private industries during the reform era, local officials in the guerrilla counties were freer to carry out their preferred economic strategies. Moreover, some high-ranking politicians risked their future career prospects by jumping on the bandwagon of the market-oriented reforms, thereby encouraging local initiatives to circumvent or challenge state regulations against private businesses (see Chapter 5). Eventually, compared with the non-guerrilla counties, the guerrilla counties developed a more vibrant private economy during the reform era and therefore experienced faster economic growth. The logic of the LPRP theory is illustrated in the flow chart in Figure 1.1. The LPRP framework, combined with the political and economic history of Zhejiang province, generates two testable hypotheses regarding the private economy and its spatial variations in Zhejiang: 21

The same logic applied when confusing policy signals emanated from Beijing, e.g., during the economic reforms in the 1980s when local elites employed the rhetoric of the powerful, making a commitment to reform to advance their own interests.

Relevant Literature

35

H1: Relative to local officials in non-guerrilla counties, local cadres in guerrilla counties were more motivated to protect local economic interests, but the differences in economic performance between the two types of counties were not significant until the Cultural Revolution. H2: Long-term economic growth in the guerrilla counties following the Cultural Revolution was better than that in the non-guerrilla counties. The following chapters will compare the private sector and the general economic performance in the two types of counties in Zhejiang province during different periods from 1949 to the late 1990s to examine the validity of the two hypotheses. In Chapter 6, we will discuss whether the logic derived from the Zhejiang case can apply in a wider context. One lesson we can learn from the Zhejiang case is that when historical shocks create a power structure in which the power status of the political elite differs considerably, as a rational response the marginalized elite are likely to seek political support from below to guarantee their political life. As in Zhejiang, they may do this by generating formal or informal growth-enhancing institutions to deliver visible economic benefits to their constituents, thus insuring robust longterm growth. In fact, in provinces experiencing similar conflicts between the local guerrilla cadre group and the non-guerrilla cadre group, the Zhejiang-style development story was repeated over and over again. In Chapter 7, we will discuss whether the effect of the LPRP remained valid after the late 1990s, especially how rising private entrepreneurial forces reshaped the role of the LPRP to adapt to a new national political environment and policy orientation.

1.5 Relevant Literature and the Theoretical Value of the Zhejiang Model 1.5.1 The Behavior of Political Elites under Authoritarianism (I) Information Paucity, Signaling, and Policy Choice How political elites behave under authoritarianism, as well as their impact on the economy, has long been an intriguing topic in the literature. Many scholars believe that because there is no rule of law or effective checks and balances to hold politicians accountable for

36

Introduction

their behavior, political elites in authoritarian regimes tend to plunder rather than to generate wealth, and thus they are unable to guarantee long-term stable returns to potential investors by promising not to expropriate their assets, and therefore in the long run they fail to deliver robust economic growth (Acemoglu and Robinson 2006; 2012; Keefer 2004). But empirical studies find that authoritarian countries show great volatility in their economic performance, even greater than that of democratic countries (Almeida and Ferreira 2002; Henisz 2000). On average, democracies perform no better than autocracies in terms of their economic growth rates (Barro 1996; Minier 1998; Przeworski et al. 2000). These findings suggest that robust long-term growth is possible under authoritarianism, at least in some authoritarian regimes. Examples include the newly industrialized countries after World War II, such as the four little dragons, whose economies took off even though they were not democratic at the time. China since the late 1970s provides yet another example showing that private capitalism under Communist rule created prosperity, at least compared with the situation before the reforms. If property rights security is a precondition for long-term growth, then why do political elites in authoritarian regimes have an incentive to refrain from expropriating assets and to provide property security to business elites? The existing literature on authoritarian regimes suggests that there is one mechanism that explains the emergence of property-rights protection in authoritarian settings. McGuire and Olson (1996) and Olson (1993) argue that dictators with a long-term horizon are sufficiently motivated to provide good governance because they expect to receive big gains from economic growth. An implication of the benevolentdictator argument, or the “stationary-bandit theory,” according to Olson, is that the ruling elite will provide property rights protection and will implement growth-enhancing policies, whereas such policies are likely to be blocked by vested interests in a democracy (Boix 2003; Przeworski et al. 2000). The ruling elite are also likely to install a meritocracy-based nomenclature system to appoint and promote subordinates on the basis of their work performance, thereby generating an environment of regional competition among local officials to boost investment and growth (Edin 2003; Li and Zhou 2005; Xu 2011). Although a dictator with an infinite time horizon indeed has a strong interest in maximizing economic growth, such conditions rarely hold in

Relevant Literature

37

real life because dictators always face a constant threat of being toppled. In fact, unlike democracies, the political survival of politicians in authoritarian regimes is subject to a commitment problem, namely the ruling elites are likely to destroy their power-sharing arrangements to expand their own power by encroaching on the power of their allies, as has been witnessed by numerous military coups, assassinations, purges, and so forth in authoritarian countries (Bueno de Mesquita et al. 2003; Haber 2006; Svolik 2012; Tullock 1987). As political survival becomes the dictator’s primary concern, allies and subordinate officials are likely to compete to demonstrate their loyalty rather than provide secure property rights in order to receive an appointment or a promotion (Reuter and Robertson 2012; Bueno de Mesquita et al. 2003). Conventional wisdom suggests that autocrats engage in repression and buy off loyalty—“carrots and sticks”—to secure their personal political life as well as the survival of the regime (Wintrobe 1998). The former is to punish those dissidents and challengers through the use of violent means. The latter is to resort to distributive politics or a patronage system to distribute payouts among supporters in exchange for their loyalty. A fatal problem threatening the effectiveness of employing carrots and sticks, however, is the pervasive secrecy in authoritarian politics, whereby no one knows for sure who are their friends and who are their foes, how strong they are, what moves they are taking, and so forth (Shih 2010; Svolik 2012). To attenuate this problem, powerful patrons in authoritarian regimes must devise various effective methods to discover such information, e.g., by encouraging their subordinates to demonstrate loyalty to them. This makes the demonstration of loyalty to one’s patrons a central task for clients in all echelons of the bureaucracy and inevitably elicits competition among the clients, which we refer to as a “loyalty tournament.” Shih (2008), for example, finds that during the 2001–2005 period, China’s top leadership intentionally carried out the national propaganda campaign of the “Three Represents” to determine who were its loyal followers among the provincial party leaders. Reuter and Robertson (2012) find that Russia’s authoritarian leaders use regional and national elections as an informational mechanism to assess the political loyalty of their governors. Similarly, Svolik (2012) argues that many authoritarian countries establish seemingly democratic institutions, e.g., legislatures, elections, and so forth, to mitigate the information asymmetries between dictators and other ruling elites.

38

Introduction

Our research complements the literature in two ways. First, unlike current scholarship which tends to assume that all subordinates in authoritarian regimes have the same motivation to show loyalty to their patrons, we show that political elites likely differ in terms of their incentives to display loyalty, which is contingent on their heterogeneous power status in the factional power structure. This is because sending loyalty signals not only is an exhausting job in a psychological sense, but also consumes huge economic resources, leading to massive misallocations of resources and to waste.22 In some circumstances, this can cause economic disruption or even disaster.23 The socioeconomic costs associated with the display of loyalty, however, make it credible, rather than cheap talk, especially when such costs jeopardize the interests of their potential grassroots supporters. In other words, when elite cleavages beget factionalism, demonstrations of loyalty by local politicians should first and foremost be viewed as a decision based on the trade-off between demonstrating loyalty to one’s patrons and cultivating a grassroots political foundation. Those elites who are included in the dominant factions and who rely on established patron–client networks within the regime to secure their political livelihood have strong motivations to demonstrate their loyalty by carrying out policies that are in line with the preferences of their patrons, even at the cost of social interests. In contrast, when marginalized elites are only loosely connected to the higher authorities so they have ex ante difficulties in credibly signaling their loyalty, and when signaling loyalty causes great waste 22

23

In the context of China, examples include launching propaganda campaigns to flatter powerful political figures, giving lucrative government contracts to the friends and family members of high-level power holders, and building flashy infrastructure projects in order to court the higher-ups with ambitious economic visions. One example is the Great Famine, part of the 1959–1961 Great Leap Forward movement. Kung and Chen (2011) argue that those party elites who had the greatest incentives to receive promotions into the top echelons of the party hierarchy made the greatest efforts to carry out Mao’s radical grain procurement policy, so that they would look good in front of Mao. Such actions led to higher death rates in the provinces under their jurisdictions. In their case study of the local fiscal system in a Chinese province, Su Xueyan et al. (2015) show how local leaders used seemingly absurd policies with little economic rationale to test their subordinates’ loyalty by observing how they carried out the policies of the local leaders. Li and Zhang (2018) employ a formal model to describe the mechanism through which signaling loyalty to patrons can lower the efficiency of resource allocations, including taxation and investment in public goods.

Relevant Literature

39

and misallocations of economic resources that could otherwise be used to benefit their own supporters, it is a risky strategy for the marginalized elites to demonstrate loyalty to the higher-ups at the expense of their constituencies. In the context of Zhejiang, for example, local cadres always faced the incompatible choice between courting the power holders and meeting popular desires for improved economic well-being through capitalist activities. Therefore, in an environment in which local political elites are not included in the dominant factions and they have to consolidate their political foundation from among their grassroots supporters, at equilibrium they will invest fewer resources in costly loyalty demonstrations and more resources in promoting local economic welfare through broad-based economic growth. Second, by focusing on local alliances and their economic consequences in Zhejiang, this research echoes the growing emphasis on subnational analyses in comparative politics (Snyder 2001; Rithmire 2014) and in recent applications to China (Lü and Landry 2014; Wallace 2015). If, for some reason, factional affiliations are spatially determined, i.e., officials in some specific regions are well connected to powerful patrons but those in other regions are excluded from such networks, then we should see divergent patterns of economic development and growth across the different localities. In the China case, vibrant non-state-sector growth is concentrated along China’s coastal area, including Zhejiang, Jiangsu, Fujian, and Guangdong (Kellee Tsai 2002; Oi 1999). But even within this area, there is considerable variation in non-state-sector development across localities (Whiting 2001). Researchers have identified local-level political factors as key independent variables, including the idiosyncratic backgrounds of regional leaders (Cai and Treisman 2006), policy changes and historical legacies (Oi 1995; Whiting 2001), and local officials’ ability to maneuver vis-à-vis the central government (Kellee Tsai 2002; Heilmann 2009).24 Our analysis shows that “socialist legacies,” as well as local discretionary power to implement policies, can be endogenous, and we attribute this to the alliance between a segment of the political elite and social forces that tie the grabbing hands of local agents in the authoritarian state (e.g., Duvanova 2013; Markus 2012; Haber, Razo, and Maurer 2003).

24

For a review of scholarship on China’s regional variations, see Rithmire (2014).

40

Introduction

(II) Formal and Informal Institutions Recent scholarship emphasizes the role of formal political institutions, e.g., legislatures, multiple parties, elections, and so forth, as a way to credibly tie a dictator’s hands against predatory actions, at least against a small group of elites (Gandhi and Przeworski 2007; Magaloni and Kricheli 2010; Svolik 2012). One central assumption of institutionalized authoritarianism is that the institutions, once established to materialize power sharing among ruling elites, indeed make binding and credible commitments to potential investors to ensure that their economic and political investment will not be expropriated in the future (Gandhi 2008; Wright 2008; Gehlbach and Keefer 2011). However, even in an institutionalized one-party system such as the Soviet Union or China, the credibility of formal institutions to restrain themselves is dubious as there is no independent third party to enforce contracts among key actors (Svolik 2012). During Stalin’s Great Purge and Mao’s Cultural Revolution, even the dictators’ erstwhile allies were removed without mercy. Millions of landed gentry and entrepreneurs in China and the Soviet Union faced death or destitution during the class struggles (Montefiore 2003; Dikötter 2013). In addition, many authoritarian countries are weak states lacking a sufficient state capacity to enforce the rule of law or to supervise the predatory behavior of low-level officials. This means that even if rulers are committed to protecting property rights, this is still insufficient for firms to have property security (Markus 2012; Gans-Morse 2017). Compared with the scholarship that highlights the role of formal institutions in authoritarian countries, there is a long academic tradition that suggests that using informal institutions at all levels of society is a central characteristic of the Leninist system (Easter 1996; Nathan 1973). In this light, some scholars emphasize elite–mass linkages through which local cadres connect and collude with businessmen and ordinary people to weaken state control over local society and the economy (Yia-Ling Liu 1992; Oi 1985). For example, Oi (1985) argues that local cadres often colluded with their local constituents in a form of clientelism against the state’s rapacious grain procurement during the Mao period. Similarly, YiaLing Liu (1992) argues that even in a Communist state such as China, despotic power was fragmented at the local levels as native cadres, constrained by local social values, often refused to carry out radical state policies. Lily Tsai (2007) argues that even when formal

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accountability is weak, local officials may be subject to unofficial rules and norms that establish and enforce their public obligations. These informal institutions of accountability can be provided by encompassing and embedding solidary groups, such as village temples and lineages. Kellee Tsai (2007) details how local economic and political elites in China worked together, using informal adaptive institutions, to evade or appropriate formal institutions. All of these scholars emphasize the importance of social ties and clientelism as different types of elite–mass linkages to neutralize the repressive effects of formal institutions on the local economy. Our analysis suggests that to a large extent the rosy elite–mass relations described by many researchers are primarily conditional on conflicting intra-elite relations, and that they follow a quid pro quo principle: only when the elite cleavage marginalizes a portion of the political elite such that they cannot rely on existing institutions to secure their political interests do they turn to the masses outside the regime, i.e., providing property rights protection in exchange for political support from the masses. If the elite as a whole is united so that no elite cleavage can be exploited, it is more likely that, instead of being the guardian of the local community, local officials will resort to various strategies, e.g., divide and conquer, cooptation, and so forth, to eliminate the autonomous social forces in order to extract maximum rents for their own benefit (Malesky, Nguyen, and Tran 2014; Mattingly 2016; Chong, Liu, and Zhang 2016).

1.5.2 Coping Strategies of Businessmen and Endogenous Property Rights Security A substantial amount of research has recently paid attention to the coping strategies used by businessmen and investors, which can vary in different political, economic, and cultural backgrounds, to protect their property rights. For example, borrowing from Hirschman (1970), entrepreneurs can choose to “exit,” i.e., invest abroad or shift assets overseas, or select “loyalty,” i.e., offer monetary payments or an equity stake in a firm to politicians in exchange for the politicians’ self-constraint from encroaching on their property rights (Kaufmann, Kray, and Zoido-Laboton 1999; Haber, Razo, and Maurer 2003).

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Introduction

Other scholars have emphasized the mechanisms that lead to de facto checks and balances against potential predatory forces, especially the role of alliances among different social groups and political actors to provide property rights protection. Seminal work by Greif (2006) reveals that the co-ordination of merchant guilds was able provide a check on rulers in medieval Europe. Even the canonical British case points to a channel through which the gentry and creditors could secure their property by forming an alliance with other social groups to restrain the Crown from expropriating their assets (Stasavage 2003; Rajan and Zingales 2004). In the contemporary world, work by Markus (2012) on Russia and Ukraine, for example, has shown that alliances between local companies and stakeholders, such as foreign investors, labor, and local communities, can be a key ingredient for property rights protection against predation by local political actors. Based on experiences in the post-Communist Eurasian countries, Duvanova (2013) suggests that post-Communist businesses coalesced into various associations as a way of protecting their interests against predatory regulatory authorities. In the theory developed by Haber, Razo, and Maurer (2003) and Pepinsky (2009), the strategy of the incumbent elites to win support from wellorganized social forces gave them an incentive to build alliances with those forces by offering selective property rights protection to gain economic rent. These models assume that the organized groups providing political elites with critical political support or economic rent are able either to enforce sanctions and to limit the discretion of government actors, or to view businesses as autonomous social forces having the necessary opportunities and resources to protect their property rights. Such explanations, however, cannot apply to a Communist state such as China because the party leaves little room for sufficiently strong social forces to deter government predation (Hoff and Stiglitz 2004). This was especially true during the Mao era and during the early stages of the reforms when private businessmen had few or no options to take the initiative to confront the strong party-state. Despite the existence of such an omnipotent state, the analysis in this book suggests that as long as there is a heterogeneous power status within the existing power structure, an alliance between the marginalized elites and their grassroots constituents, including private businessmen and entrepreneurs, can exist due to the factional conflicts between the elites and the

Relevant Literature

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strategy of the marginalized elites to guarantee their own political survival. We have pointed out that an alliance results in localized property rights protection as quasi-public goods provided by the marginalized elite in exchange for support from their grassroots constituents. In Chapter 7 we will discuss how the effectiveness and viability of this alliance are contingent on factors that are beyond the control of the alliance, and how changes in these factors can result in various different forms of government–business relationships.

2

Revolutionary History in Zhejiang Province and Its Political Consequences

Who are our enemies? Who are our friends? This is a question of the first importance for the revolution. Mao Zedong (1965a, 13)

On July 1, 1921, thirteen people, including Mao Zedong, who would later serve as the chairman of the People’s Republic from 1949 to 1976, held a secret meeting on a boat on Nanhu lake in Jiaxing city of Zhejiang province. At the meeting, the thirteen people declared the founding of the Chinese Communist Party (CCP). Today, Zhejiang must pride itself on being the cradle of the CCP. Ironically, however, during most of the pre-1949 period, the course of the Communist revolution in the province stood for a movement that was largely outside central control, and after 1949 the province became a lair of capitalism that was notorious as early as the Mao era. As we noted in Chapter 1, however counterintuitive, the historical origins of capitalism in Zhejiang province date back to the local Communist revolution during the pre-1949 period. In this chapter, we will first introduce the revolutionary history of Zhejiang province, describe its characteristics, and then reveal its structural effects on the power struggle after the victory of the revolution in the province, the great economic consequences of which will be discussed in the following three chapters. The Communist revolution in Zhejiang prior to 1949 was largely a movement initiated by outside revolutionaries and its evolution was the result of many accidental historical events. During this process, the increasingly strong local guerrilla forces became entrenched and had liberated many counties by 1949. In 1949 and subsequently, however, the southbound cadres, primarily from outside the province and largely drawn from the Third Field Army, took over Zhejiang and dominated the leadership positions in the party committees at various levels. The local guerrilla cadres were

44

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relegated to a secondary status in the new regime. Moreover, the southbound cadres gained the upper hand in the power struggle with the guerrilla cadres during the 1950–1966 period, leaving the latter in a no-win situation.

2.1 The Communist Revolution in Zhejiang Province (1922–1949) 2.1.1 The Party Center Falls, the Local Guerrilla War Begins (1922–1937) The Communist movement in Zhejiang province began as early as 1922, when the first party branch of the province was established in Hangzhou city. As a result of the first co-operation between the ruling Nationalist (Guomindang) (国民党) party and the CCP, the legitimacy of the CCP was acknowledged by the Guomindang and CCP activities soon thereafter spread throughout the province. As of early 1927, the CCP had established grassroots branches in Hangzhou, Wenzhou, Jinhua, Ningbo, Jiaxing, Shaoxing, and elsewhere. However, the honeymoon between the two parties did not last for long. On April 12, 1927, the Guomindang launched a coup against the CCP and many top Communist leaders were imprisoned or killed and party organizations in Zhejiang were almost completely destroyed. From April to September 1927, some 1,805 people were arrested, 932 of whom lost their lives, and the head count of CCP members in the province dropped from over 4,000 to 1,563 (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 205). The CCP had to hastily reorganize its forces to launch a counterattack against the Guomindang. In July 1927, the party decided to establish a provincial party committee in the province to lead and co-ordinate the province-wide armed rebellions. But the party was apparently too optimistic about its strength and it underestimated the severity of the situation. In fact, all military uprisings organized by the provincial party committee between 1927 and 1929 ended in failure. During the same period, the provincial party committee was a target of sabotage on many occasions. Of the ten provincial party committee secretaries who were top CCP leaders in Zhejiang, seven

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were killed between 1927 and 1929.1 In April 1929, the party was forced to dissolve its provincial party committee and instead it set up six county party committees, in Hangzhou, Ningbo, Wenzhou, Taizhou, Huzhou, and Lanxi, each of which was under the direct leadership of the party center (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 226). Thereafter, the CCP’s attempts to consolidate its leadership in Zhejiang met with serious setbacks, including the annihilation of the Thirteenth Red Army in 1932. The Thirteenth Red Army had been one of the regular red armies established in Zhe’nan (southern Zhejiang) in 1930 and the largest CCP military force in Zhejiang at the time. To keep this military force under its direct control, the party center sent down Hu Gongmin to serve as military commander and Jin Guanzhen to serve as political commissar. Initially, the Thirteenth Red Army grew rapidly. During its heyday, it boasted some 6,000 soldiers and it occupied several towns and county cities in the Wenzhou and Taizhou regions. Its activities soon attracted the attention of the Guomindang as a result of a military attack the Guomindang led against the CCP. After a series of military defeats, all senior cadres of the Thirteenth Red Army were arrested or killed by the Guomindang, and in 1932 the remnants of the Thirteenth Red Army were lured to surrender and immediately executed (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 239–252). This delivered a fatal blow to the ambitions of the party center to develop military strength in Zhejiang and it further exhausted direct CCP control over provincial activities. For the CCP as a whole, however, the true challenge did not come until 1934, when top Guomindang commander Chiang Kai-shek launched the Fifth Encirclement and Suppression Campaign to wipe out once and for all the CCP’s central base area in Jiangxi province. This time, the main body of the Central Red Army was unable to repel the enemy forces and the CCP was forced to abandon its central Soviet area in southern Jiangxi and embarked on the Long March. In the meantime, the party decided to leave behind a smaller army to harass the Guomindang army, defend its Soviet, and co-ordinate with the 1

See “Zhejiang sheng liren shengwei shuji” (Former Provincial Party Secretaries in Zhejiang, 浙江省历任省委书记), at http://zzgz.zjol.com.cn/zzgz/system/2013/03/ 12/019203485.shtml, accessed May 10, 2015.

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Central Red Army during its march west. Similar small armies were left scattered throughout southern and central China to wage guerrilla wars against the Guomindang army. This situation lasted for three years, and it later became known by party historians as the “ThreeYear Guerrilla War” that took place in eight southern provinces, including Zhejiang.2 The serious political consequences of this decision affected not only the subsequent evolution of provincial revolutionary history prior to 1949 but also the political structure after 1949 as well. Of the small armies left behind by the party center, the Seventh Red Army Corps (红七军团) was ordered in July 1934 by the central military leaders in Ruijin to reorganize as the Northern Expedition of the Anti-Japanese Vanguard (北上抗日先遣队) to wage a guerrilla war in Min-Zhe-Wan-Gang Soviet Area. The ostensible task of the Anti-Japanese Vanguard was to whip up an anti-Japanese movement in the Guomindang areas, but its true mission was to occupy the Guomindang army in order to provide cover for a strategic retreat by those on the Long March. Surely the Anti-Japanese Vanguard was overburdened with an impossible mission, which put it in a dangerous situation. In fact, after fighting over thirty successive battles, it suffered heavy losses and most of its leaders, including its best-known leader, Fang Zhimin, were captured in February 1935. But some units of the expedition, under Su Yu and Liu Ying, successfully broke through the encirclement of the Guomindang army in January 1935 and fought their way to Gandongbei (in northeastern Jiangxi), where they received a directive from the Central Committee sub-bureau in Gannan (southern Jiangxi). The directive ordered that they reorganize their remnant forces into an Advance Division (挺进师) of three detachments and go east into Zhejiang to fight the guerrilla war, tie down the Nationalist forces, protect the nearby red bases, create new soviets, and divide the land. For an army born of defeat, it certainly was a difficult assignment to send these demoralized soldiers into the main orbit of Guomindang power. But Su and Liu obeyed the order and in March 1935 moved quickly into Zhexi’nan (southwestern Zhejiang), where they opened up a new guerrilla base area—the Zhexi’nan Guerrilla Base Area (Party History Research Office under the Wenzhou City Party Committee 2004, 83–87). 2

For a detailed account of the Three-Year Guerrilla War, see Benton (1992).

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Su and Liu finally arrived in Zhe’nan (southern Zhejiang), where they found a greater chance of survival and more freedom of movement than in Zhexi’nan because they found there some remnant party activists who could be traced back to the Thirteenth Red Army and also because it was less heavily garrisoned by Guomindang troops. The Advance Division took full advantage of these conditions to establish the Zhe’nan Guerrilla Base Area and thus once again became active in about thirty counties, including Fuding, Jiangshan, Suichang, Taishun, Pingyang (平阳), Rui’an (瑞安), Yongjia, and so on (Party History Research Office under the Wenzhou City Party Committee 2004, 83–87). Unlike the Zhexi’nan Guerrilla Base Area, the Zhe’nan Guerrilla Base Area was not rapidly wiped out by the Guomindang. Though living in extremely harsh conditions, the Zhe’nan revolutionaries successfully managed to survive the Guomindang offensive and hold out until the CCP and the Guomindang agreed on a second round of co-operation in the wake of settlement of the Xi’an Incident (西安事 变) in 1937. In retrospect, the Zhe’nan Guerrilla Base Area established during the Three-Year Guerrilla War period should not be underestimated. It was the cradle of local guerrillas who would later ultimately control a large part of Zhejiang. More importantly, the way in which the Three-Year Guerrilla War was waged in Zhejiang portended the subsequent independence of the local guerrillas, unlike their counterparts elsewhere. Nevertheless, when the Advance Division first entered Zhejiang, it was not a local guerrilla unit but instead part of the regular Red Army. But that does not mean that its top leaders were blindly obedient to the center. Given the situation in 1934, sending a small and poorly armed army into the Guomindang stronghold was equivalent to making it walk the plank. As today’s party historians acknowledge, the true aim of the party center was to sacrifice these small armies to hold off the enemy as much as possible, gain time for the party center to transfer to a safer place, and reduce the military pressure on the main body of the Red Army. Few would have believed that these units could survive. The high-ranking cadres of the advance division, such as Su Yu and Liu Ying, clearly understood this. One lesson they learned from the heavy losses suffered from 1934 to 1935 was that in order to survive, they could only rely on themselves to find supplies, minimize the army’s losses, and win over the support of the local people. Like most local guerrillas fighting in other parts of southern China at the time, they

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fought their battles in a decentralized way, starting early to change from regular warfare to guerrilla warfare through a process of learning by fighting, and they trimmed the policy instructions from the party center to fit with various local conditions (Benton 1992, 209–232). In this process, the revolutionaries in Zhe’nan set up party committees on their own and gave themselves senior titles, all without the acknowledgment of the party center, which at the time was preoccupied with the Long March and had lost contact with the Advance Division since March 1935. All of these factors set the stage for the future birth of an independent, disciplined, and powerful local guerrilla force. The Communist movement in Zhejiang was bound to be a local affair during the Three-Year Guerrilla War period. For one thing, very few high-level figures in the CCP power hierarchy, especially those at the orthodox center in Yan’an led by Mao, were directly involved in the Three-Year Guerrilla War. In other words, Mao and his cronies played only a small role, if any, in Zhejiang’s local struggles, so the majority of the leaders of Zhejiang’s revolutionaries had few ties with the party center. Moreover, since the mid-1930s the heart of China’s Communist revolution had transferred from southern China to northern China, marked by the arrival of the Long March in Shaanbei (northern Shaanxi) in late 1935. This resulted in Zhejiang’s revolutionaries becoming independent yet marginalized in terms of their relationship with the party center as well as in terms of their diminished strategic importance on the national chessboard. This embarrassing status of the local guerrillas was consolidated in subsequent periods until 1949 and, in fact, it foretold the conflict between the local guerrillas and the southbound cadres entering Zhejiang from outside provinces in 1949. Although the long-term political meaning of the founding of the guerrilla areas in Zhejiang was significant, until 1937 Zhejiang’s revolutionaries were rather weak. As many scholars have noted, the Communists in Zhexi’nan and Zhe’nan during the Three-Year Guerrilla War period were not very strong. The guerrilla base areas in Zhexi’nan had collapsed, while those in Zhe’nan were often on the run due to military pressures from the Guomindang. Furthermore, the revolutionaries in Zhe’nan were often out of touch with one another for weeks, if not months, at a time. Their influence was restricted to a very limited mountainous area. Although they were genuine soldiers with nerves of steel and accustomed to harsh conditions, their future

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prospects were grim.3 However, their poor luck ended with the onslaught of the Anti-Japanese War, and thereafter they began to regain their strength.

2.1.2 Local Guerrillas Take Root during the Anti-Japanese War (1937–1945) In December 1936, the Xi’an Incident took place, during which Generalissimo Chiang Kai-shek was seized by Zhang Xueliang, a former warlord of Manchuria, as Chiang flew to Xi’an to urge Zhang and his allies to suppress the Communists who had recently arrived in Yan’an. After promising to sign a truce with the Communists and to point the gun at the Japanese invaders, Chiang was released. This incident ultimately led to peace between the Guomindang and the CCP so they could form the Second United Front against the increasing threat from Japan. According to the peace agreement, the guerrillas who were scattered across the eight provinces in southern China, including Zhejiang province, were reorganized into the New Fourth Army (NFA) (新四军) and in early 1938 were ordered to the battlefield. It was not until September 1936 that Su Yu and Liu Ying learned of the formation of the NFA and not until April 1937 that peace talks began between the Advance Division and representatives of the Guomindang. After several rounds of talks, a final deal was reached in August 1937, thus ending the Three-Year Guerrilla War in Zhe’nan. Thereafter, the Zhe’nan guerrillas made great efforts to recruit local people into their troops and they set up schools to train cadres. As a result, the strength of the Advance Division was quickly restored and its composition was radically changed. The backbone of the division was no longer composed of veterans of the former Advance Division but of local people from Zhe’nan and Zhexi’nan instead, including some students from Wenzhou and Shanghai (Party History Research Office under the Wenzhou City Party Committee 2004, 119). 3

As of July 1937, the head count of party members in the Zhe’nan Guerrilla Base Area declined from a peak of 4,000 to less than 400. The head count of the Advance Division declined from over 1,500 to over 300. The total area of the guerrilla base area decreased by 70–80 percent (Party History Research Office under the Wenzhou City Party Committee 2004, 119).

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After receiving instructions from the party center in the spring of 1938, Su Yu and Liu Ying decided to leave behind some of their troops under the command of Liu Ying; Su Yu was to take the rest to the NFA assembly point in Wannan (southern Anhui province), where they became a detachment of the NFA (Party History Research Office under the Wenzhou City Party Committee 2004, 119). In September 1938, the party center re-established the Zhejiang Provincial Party Committee and appointed Liu Ying as provincial party secretary to co-ordinate party activities in the province. This was the first time that the party center had attempted to assume direct control over local party affairs in Zhejiang since a decade earlier when the previous provincial party committee had been destroyed by the Guomindang. The wartime alliance between the CCP and the Guomindang existed largely in name only, and the peace between them was on shaky ground. Each side blamed the other for focusing on preserving its own forces and allowing the other to bear the brunt of military pressure from the Japanese. Small conflicts between them erupted here and there and finally they turned into major clashes, which culminated in the Wannan Incident (皖南事变) in early 1941, during which the 9,000 NFA troops were ambushed by a Guomindang force of 80,000 (Yang Kuisong 2008, Chapters 9–10). Political commissar of the NFA Xiang Ying was killed and army commander Ye Ting was detained. Less than 2,000 troops were able to escape the ambush. Thereafter, trust between the two parties declined dramatically and their co-operation was on the brink of failure. The situation for the Communists in Zhejiang began deteriorating in 1940. In February 1942, provincial party secretary Liu Ying was arrested by the Guomindang and in July he was executed, resulting in yet another abrupt collapse of the provincial party committee. Furthermore, many high-ranking cadres were either imprisoned or killed. The provincial party committee was not restored again until 1949 (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 400–401). This represented a fatal blow both to party efforts to centralize the party and to military affairs in Zhejiang, and as a result the revolutionaries in Zhejiang once again had to proceed in their struggle independently. Nevertheless, the local guerrillas in Zhejiang managed to grow throughout the Anti-Japanese War period and become much stronger

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Revolutionary History in Zhejiang Province

than they had been during the Three-Year Guerrilla War period. At first, they took full advantage of the temporary co-operation between the Guomindang and the CCP to secure supplies from the Guomindang and to expand their rank and file by recruiting local people, thus making them better prepared, both physically and culturally, for their future development (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 400–401; Party History Research Office under the Wenzhou City Party Committee 2004, Chapters 6–7). They also seized the opportunity created by the Japanese invasion to gain sympathy from the educated classes, to win over support from the middle classes whom they had previously attacked, and to boldly enter those areas where the Guomindang had become weak due to attack by the Japanese army.4 Overall, the strategy of the local guerrillas was very successful. In fact, when the Anti-Japanese War was nearing an end, Zhejiang’s local guerrillas not only succeeded in preserving their old base areas but also established some new base areas to spread party organizations in the province. The greatest achievements took place in Zhe’nan and Zhe’dong (eastern Zhejiang). In Zhe’nan, due to the influence of the Zhe’nan Guerrilla Base Area, by 1940 there were already 700–800 party branches (Party History Research Office under the Wenzhou City Party Committee 2004, 183); by May 1942, the number of party branches had increased to 800–900, and the head count of party members had reached over 10,000 (Party History Research Office under the Wenzhou City Party Committee 2004, 183). After Su Yu led the bulk of the guerrillas northward to Wannan, the guerrillas who stayed behind reorganized their military forces into many small groups of armed work teams (武工队) to protect party organizations, escort major party cadres and rank-and-file transfers, exploit new base areas, and suppress traitors and local people who had colluded with the Guomindang (Party History Research Office under the Wenzhou City 4

The Guomindang bore the brunt of the offensive by the Japanese. Its retreat created a power vacuum which was filled by the Communists. For example, the Japanese army occupied Wenzhou city on three occasions, in April 1941, July 1942, and April 1945, thus forcing the Guomindang army to retreat elsewhere. See Party History Research Office under the Zhejiang Provincial Party Committee (2002, Chapter 13); Party History Research Office under the Wenzhou City Party Committee (2004, Chapter 10).

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Party Committee 2004, 184). In March 1945, when the Anti-Japanese War was drawing to a close, the Zhe’nan Special Party Committee decided to combine all the armed work teams under its command into a new guerrilla force—the Yongyue Anti-Japanese Guerrilla Contingent (永乐抗日游击总队), consisting of 700 guerrilla soldiers. The area under its influence included today’s Wenzhou and some parts of Lishui and Taizhou, and was much larger than the base area when the Zhe’nan Guerrilla Base Area was first established seven years earlier (Party History Research Office under the Wenzhou City Party Committee 2004, 201–206). Another influential guerrilla force was active in Zhedong. In fact, the origin of Zhedong’s guerrillas can be traced back to the Three-Year Guerrilla War period. When the Zhexi’nan Guerrilla Base Area collapsed in 1935, the main body of the Advance Division under Su Yu and Liu Ying was transferred to Zhe’nan. Another small column of the advance division took another route into Zhedong, where they set up the Zhedong Special Party Committee (浙东特委) and opened up a new guerrilla base area—the Zhedong Guerrilla Base Area. Like all other guerrilla base areas in Zhejiang at the time, the extent of actions by the Zhedong guerrillas and their influence were rather limited. In fact, in 1936 organized resistance by the Zhedong guerrillas was crushed by the Guomindang, and the remnant guerrillas retreated to the Zhe’nan Guerrilla Base Area.5 After the Wannan Incident, the party decided to reorganize all military forces in Zhedong and put them under the unified leadership of the party organization in Shanghai. In May 1941, the party ordered a force of 400 in Shanghai’s Pudong district to set off to Zhedong to develop its military forces and to open up the Zhedong Anti-Japanese Base Area. In July 1942, the party appointed Tan Qilong as political commissar of the Zhedong District Committee, to be responsible for leading the armed forces in Zhedong. In December 1943, all armed forces in Zhedong were reorganized into the Zhedong Guerrilla Column of the New Fourth Army (新四军浙东游击纵队). In addition to the old Sanbei (三北) Base Area established in 1941–1942, after mid-1943 the guerrillas opened up some new base areas, including Siming, Kuaiji, and 5

See “The First Column of the Advance Division in Xianju County” (红军挺近师 第一纵队在仙居), at http://blog.163.com/gjq0904@126/blog/static/100454005 2010018913938, accessed June 10, 2018.

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Jinxiao (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 406–443). In 1944, Zhedong’s guerrillas suffered heavy losses due to attacks by the Guomindang, but they soon bounced back and became stronger. By the end of 1945, the Zhedong Guerrilla Base Area had become one of the eight largest strategic areas of the CCP in central China, with its sphere of influence including fourteen counties and about 15,000 soldiers (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 486).

2.1.3 The Heyday of the Local Guerrillas during the Civil War (1946–1949) After Japan surrendered in August 1945, the Guomindang and the CCP began peace negotiations in Chongqing, then the wartime capital of the Guomindang government. According to the agreement reached on October 10, 1945, the CCP was to give up all its base areas scattered across the eight southern provinces, including Zhejiang province, and to evacuate the New Fourth Army forces to northern China. As a result, only several hundred armed people stayed in Zhedong after the main body of the Zhedong guerrillas were evacuated northward. The guerrillas in Zhe’nan did not go north and instead remained in the base area. But the number of military staff declined from 700 to 200. Nevertheless, party organizations developed quickly, though in most cases this occurred secretly (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 493–502). Unfortunately, the truce between the two parties lasted no more than one year, and full-scale civil war broke out in June 1946. Thereafter, the revolutionaries in Zhejiang once again became active. Within a very short time, the guerrilla base areas were re-established and the armed forces regrouped. In Jinxiao, Siming, Taizhou, Zhe’nan, and Zhexi’nan the guerrillas readily beefed up their armed forces such that they could rally huge forces to harass their enemies in both rural and urban areas. In 1948, the guerrillas in Zhedong, Zhexi’nan, and Zhe’nan were reorganized into the Third Detachment of the Zhedong Guerrillas (浙 东游击第三支队), the Third Detachment of the Zhe’nan People’s Liberation Army (浙南人民解放军第三支队), and the Zhe’nan Guerrilla Column of the People’s Liberation Army (人民解放军浙南 游击纵队), respectively. Among them, the guerrillas in Zhedong and Zhe’nan were the most powerful. By the end of 1948 and into 1949,

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Zhedong’s guerrillas had grown into an army of 6,000 troops, whereas in Zhe’nan the guerrillas had an armed force of over 10,000 soldiers (Military Gazetteer of Zhejiang 1999, 194–195). Zhejiang’s guerrillas no longer were left to fight independently; instead, they began to weave together the various base areas and to co-ordinate their actions. In contrast, the activities of the Guomindang army were reduced to several county cities, separated by the guerrillas and exposed to further offensives from the Communists. Zhejiang’s guerrillas now enjoyed military supremacy. But even before this, many areas were already under their de facto control. In Zhedong, for example, as early as the Anti-Japanese War, the guerrillas had established some Anti-Japanese democratic governments in the base area. During the Civil War period, additional grassroots governments were established to exercise administrative functions, including the Sheng-Xin-Feng Government Office (嵊新奉办事处), the Jin(hua)-Yi(wu) County Government (金(华)–义(乌)县政府), the Eastern (Fuchun County) River County Government ([富春]江东县政 府), and so on (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 621). In Zhe’nan, the guerrillas took a very different strategy to penetrate into the Guomindang-occupied areas. This strategy, called “White Skin but Red Heart” (白皮红心), had been born during the Three-Year Guerrilla War period but did not play a significant role until the AntiJapanese War and the Civil War. The method was to subvert the existing Guomindang networks rather than to try to set up new networks. By a judicious mixture of terror, blackmail, and social manipulation, the Zhe’nan guerrillas developed a policy to win over those Guomindang officials who occupied “middle” political positions or to turn them into double-dealers (Benton 1992, 479–481; Party History Research Office under the Wenzhou City Party Committee 2004, 184–186). Ultimately, the guerrillas successfully sapped the Guomindang grassroots institutions that were originally established to suppress them and won over many leaders of the local societies, or at least fixed them on a neutral course. By the end of the late 1940s, local governments in many parts of Zhe’nan had “white skins,” whereby the senior officials as well as the local gentry and social celebrities ostensibly obeyed the orders of the Guomindang regime, but “red hearts,” because they were actually agents of the Communists

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Revolutionary History in Zhejiang Province

(Party History Research Office under the Wenzhou City Party Committee 2004, 270). All in all, by late 1948 the Guomindang regime in Zhejiang almost fell apart, awaiting the final fatal blow delivered by both the local guerrillas and the Central Field Armies, which would soon march into Zhejiang from northern China. At the time, the foreseeable debacle of the Guomindang and the coming victory of the CCP were welcomed. Nobody realised that in Zhejiang, in fact in all of China, another war was already brewing, not between the Guomindang and the CCP but among the Communists themselves. A new power struggle was about to unfold.

2.2 The Post-1949 Power Structure in Zhejiang Political power grows out of the barrel of a gun. Mao Zedong (1965b, vol. 2, 225) It was political and military elites who established the regime (and) the elites relied on the regime to control social wealth and state life across the board. In other words, it was the power derived from military force that dominated all aspects of the state and society. 夺取了政权的政治军事集团转化而来的军功受益阶层,利用政权全面地 支配社会总财富和国家生活的各个方面,意味着产生于武力的政治权力 支配着国家和社会的所有其他方面. Li Kaiyuan (1995, 24)

2.2.1 The Victory of the Communists The last straw that broke the back of the Guomindang in Zhejiang consisted of all-out military attacks launched in early 1949, coming from two fronts: one from the local guerrillas and the other from the Central Field Armies. In April 1949, after the People’s Liberation Army (PLA) crossed the Yangtze river, the party ordered the main force of the Third Field Army, which consisted of both the New Fourth Army and the Eighth Route Army in the liberated area of Eastern China (华东解放 区), to take over Zhejiang. The Seventh Corps, under Tan Zhenlin and Tan Qilong of the Third Field Army, first conquered a large part of Zhedong, including Changxing, Deqing, Anji, and

The Post-1949 Power Structure

57

Hangzhou, the provincial capital city, and so forth, and then they entered Zhe’nan and Zhedong. In the meantime, according to the changed situation, the Second Field Army, whose main forces were primarily composed of the Eighth Route Army, also entered Zhejiang from Jiangxi and Anhui provinces to provide support to the Third Field Army. In May, the Second Field Army took twentyfour counties in Zhexi’nan and central Zhejiang, including the Quzhou, Jinhua, and Lishui regions. Thereafter, the Second Field Army turned southwest in pursuit of the Guomindang army (Party History Research Office under the Zhejiang Provincial Party Committee 2002, Chapter 19). In addition to the field army, Zhejiang’s guerrillas also played an important role in 1949. When the Central Field Armies were advancing toward Zhejiang, the local guerrillas were sweeping over a large part of the province. In addition to their forces in Zhedong and Zhe’nan, the guerrillas also had several active armed forces at the intersection between Hangzhou, Jiaxing, and Huzhou, as well as in the border area between Zhejiang and Fujian provinces, including the Min-zhe-bian Independent Brigade of the People’s Liberation Army (闽浙边人民解放军独立 大队) and the Wu-jia-hu Independent Regiment of the People’s Liberation Army (人民解放军吴嘉湖独立团), among others (Military Gazetteer of Zhejiang 1999, 195). They either fought in co-ordination with field army operations or independently launched attacks against the enemy. In Zhe’nan, for example, before the Third Field Army moved into the region, the guerrillas negotiated with the Guomindang army that was garrisoned in Wenzhou city and successfully reached an agreement to peacefully take over Wenzhou. They then successively took fourteen counties in Zhe’nan and Zhexi’nan in the vicinity of Wenzhou city (Party History Research Office under the Wenzhou City Party Committee 2004, Chapter 15). The Zhedong guerrillas also occupied some places on their own. Among them, the Jinxiao Detachment (金萧支 队) seized several counties around Hangzhou, and the Second Detachment (二支队) captured Zhuji county and Shaoxing county. Ultimately, Zhejiang’s guerrillas had liberated twenty-four counties in the province (Committee of Party History Materials Collection and Research under Zhejiang Provincial Party Committee 1989, 8).

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Revolutionary History in Zhejiang Province

2.2.2 The Post-1949 Power Distribution: The Guerrillas versus the Southbound Cadres Having patrons at the higher levels is the prerequisite to an illustrious career in officialdom. 朝里有人好做官. Chinese proverb

By the end of 1949, the Communists’ military victory in Zhejiang, as well as in all of southern China, was over. The next step was to divide the fruits of the victory among the elites of the new ruling establishment. Based on the principle of “political power grows out of the barrel of a gun,” power in Zhejiang was to be shared between two major military groups, The first group consisted of military cadres drawn largely from the Third Field Army and those who had arrived in the wake of the field army.6 Cadres in this group were also referred to as southbound cadres because the vast majority were from northern China, such as Shandong province, Hebei province, Anhui province, and so forth. The second group, referred to as the guerrilla cadres, consisted of local guerrillas who had insisted on guerrilla warfare in Zhedong, Zhe’nan, Zhexi’nan, and elsewhere prior to 1949. The main issue was how to divide power between the two groups. The local guerrilla group was doomed to be the weak side in the new power structure. Such a distribution of power existed not only in Zhejiang but also in other southern provinces that had experienced the Three-Year Guerrilla War. This may be attributed to several reasons, all of which point to the factionalism rooted in pre-1949 revolutionary history. First and foremost, Zhejiang’s guerrilla warfare historically was a part of the Three-Year Guerrilla War that unfolded in southern China, which was remote from the orthodox party center under Mao’s leadership in Yan’an and which did little to boost the cult of Mao. As a result, the strategic significance of Zhejiang, and the other southern provinces as well, was necessarily downplayed after 1949. In fact, in the official language of the CCP, those who participated in the Long March, rather than the guerrillas fighting in the southern 6

The southbound civilian cadres were primarily drawn from the Shandong Military Command Area and the majority were natives of Shandong province. Strictly speaking, they belonged to the Eighth Route Army system.

The Post-1949 Power Structure

59

provinces, had been those who sought to save the party and the Chinese Revolution from an impasse in the 1930s, which eventually led to the 1949 victory. In contrast, the southern guerrillas, despite their fortitude demonstrated during the Three-Year Guerrilla War period, were initially highly praised by the party center, but were soon criticized for being poorly organized and acting too independently of central directives. As a result, even their political purity was open to question (Benton 1992, 466–467). It is not surprising that in the post-1949 distribution of power, the historical legacy of the guerrilla forces, which as a whole were largely outside central control, became a liability rather than an asset. Moreover, the southern guerrillas, which were reorganized into the New Fourth Army after the outbreak of the Anti-Japanese War in 1937, were associated with a leadership, including Xiang Ying and Chen Yi, who either committed grave political mistakes (Xiang Ying) or could not be counted on as loyal Maoists (Chen Yi). Xiang Ying had once maintained close ties with Wang Ming, the surrogate of Stalin in China and once a powerful challenger to Mao’s absolute authority in the party. Regardless of whether Xiang intended to form an alliance with Wang as an avenue to reach the top of the party, his aspirations to make the southern Three-Year Guerrilla War a parallel to the Long March and his attempts to put the New Fourth Army under his command without heeding Mao’s warnings, which had been criticized by the party center for being responsible for the Communists’ defeat in the 1940 Wannan Incident, inevitably created severe conflicts between Xiang and his followers on one hand and Mao on the other. In fact, from the Maoists’ perspective, Xiang ran the New Fourth Army like an independent kingdom and the New Fourth Army under his leadership was a hotbed of rightist deviations (Benton 1992, 510–512).7 These political mistakes committed by Xiang likely not only caused harm to those who had worked with or under him, such as Chen Yi, Su Yu, Zeng Jingbing, Fang Fang, and so forth, as indicated by their fates after 1949, especially during the Cultural Revolution. In addition, Xiang’s historical problems, as defined by the Maoists, reduced the cause of the southern guerrillas to a heresy that faced many problems, including a lack of discipline, 7

On the eve of the Wannan Incident, Mao lashed out at Xiang Ying, criticizing him for “always disobeying the center’s directives, catering to the Guomindang authority, and disrespecting the party center, which has become intolerable during the past three years.” See Wang Huashu and Wang Zuqi (2013).

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Revolutionary History in Zhejiang Province

insubordination, and adventurism, and this strengthened the unorthodox status of the southern guerrillas vis-à-vis the southbound cadres, who were from the orthodox party center of Yan’an. Finally, unlike the Eighth Route Army in northern China under the strict control and united leadership of Mao’s party center, the southern guerrillas had dispersed across a number of areas, splintered into unconnected fragments, and lacked cohesion. This situation underwent some changes when the New Fourth Army was established and the guerrillas united under Xiang Ying and Chen Yi. But the paramount leadership of Xiang and Chen was largely in name only and they could hardly project their influence into areas beyond their direct control. In a large part of southern China, such as Zhejiang, Fujian, and Guangdong, the local guerrillas still had to make independent judgments and act on their own. In the meantime, the leadership of the New Fourth Army was afflicted by the serious schism among Xiang Ying, Chen Yi, and Ye Ting, which further diluted the strength of the New Fourth Army in relation to that of the Maoists in Yan’an and it provided the Maoists with an opportunity to exploit its advantages. In fact, even before the Wannan incident, those in Yan’an had intervened in the leadership of the New Fourth Army, and Xiang’s status as the No. 1 leader in the New Fourth Army was substantially weakened, marked by Chen Yi’s crossing the Yangtze river based on an order from Yan’an without regard to Xiang’s opposition. After Xiang died and the New Fourth Army withdrew to north of the Yangtze river, the Maoists ultimately placed the two major military groups, the Eighth Route Army and the New Fourth Army, under its tight control, which finally determined the secondary status of the New Fourth Army in the CCP military hierarchy. To look closely at the inferior status of the southern guerrillas, the geographic distribution of the members sitting on the Seventh and Eighth Party Central Committees reveals the political pecking order of the different provinces. The rationale was that the members of the Party Central Committee represented a group of senior officials from all over the regime and the top party elites, and according to the party constitution, they should be elected by the Party Central Committee (Shirk 1993).8 In CCP history, members of the Seventh Party Central 8

The ranking of CCP elites in the Central Committee takes place roughly once every five years at the National Party Congress. At the congress, delegates elected by lower-level party congresses select and rank candidates and alternative candidates for the Central Committee (CC). The CC then elects the Politburo and

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61

Committee were elected in 1945, a crucial historical juncture when the CCP was preparing for the forthcoming Civil War with the Guomindang after the end of the Anti-Japanese War. In addition to those who had been working as central leaders, such as Mao Zedong, Zhu De, Liu Shaoqi, Zhou Enlai, and others, all the elected Party Central Committee members were drawn from delegates who had considerable political resources and influence within the party and who were from different localities with unmatched strategic importance to the CCP cause since the period of the Anti-Japanese War.9 Those elected party elites were therefore candidates as future rulers if the CCP were to take over China. In fact, after the Communists won the Civil War in 1949, those who were sent to take over the newly conquered provinces as the paramount provincial rulers were drawn from the members of the Seventh Central Committee. In other words, the political strength and influence of different CCP factions after 1937 were reflected in the geographic distribution of the members of the Seventh Central Committee. By the same token, the geographic distribution of the members of the Eighth Central Committee elected in 1956 depicted the political map that took into account the changed political landscape between 1949 and 1956. A comparison between the geographic composition of the members of the Seventh and of the Eighth Central Committees therefore reveals much about the political salience of different elite groups within the party. Finally, the members of the Central Committee whom we count in our calculations include those party elites who held both full and alternative membership. Table 2.1 shows the geographic distribution of the members of the Seventh Central Committee and the Eighth Central Committee across the provinces in 1945 and 1956 respectively. It is apparent that the majority of the Seventh Central Committee members came from the

9

the Politburo Standing Committee, as well as the party general secretary, the highest party official in China. At the end of a congress, high-ranking officials typically enjoy many more formal and informal powers during the subsequent five years, whereas those who are not selected even as alternative CC members remain removed from the center of power. Of course, there were some exceptions. Several Party Central Committee members were obviously Mao’s opponents, such as Wang Ming, but they lost everything in their power struggle with Mao. They were still granted Central Committee membership because Mao wanted to save face for Moscow (since Wang had been sent by Moscow to be its primary agent in China) and to show off party unity.

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Revolutionary History in Zhejiang Province

Table 2.1 The geographical distribution of members of the Seventh Central Committee (April 1945–September 1945) and the Eighth Central Committee (September 1956–April 1969)

Seventh Central Committee (67 members)

Eighth Central Committee (197 members)

Province

No. of delegates

Province

No. of delegates

Shaanxi Shanxi Hebei Jiangsu Shandong Inner Mongolia Henan Hebei Shanxi Shannxi Jiangsu Shandong Henan Inner Mongolia Gansu

10 9 9 8 6 5 5 36 34 27 18 18 15 10 10

Anhui Hubei Gansu Ningxia Fujian Guangdong Jiangxi Anhui Ningxia Hubei Jiangxi Guangdong Liaoning Zhejiang Hainan

4 3 3 2 1 1 1 9 7 6 2 2 1 1 1

Source: Dictionary of All Sessions of the CCP Central Committee, 1921–2003 (2004).

base areas in northern China and the Eighth Route Army, including Shandong (six), Hebei (nine), Shanxi (nine), Shaanxi (ten), and Inner Mongolia (five), and accounted for 58.2 percent of the total members (sixty-seven). The second tier consisted of those from the southern guerrilla provinces and the New Fourth Army, totaling twenty-three members and accounting for 34.3 percent of the total number of members. Of these twenty-three members, seventeen were from the three largest base areas of the New Fourth Army, including Jiangsu (eight), Henan (five), and Anhui (four). Of the remaining six delegates, three were from Hubei, one from Fujian, one from Jiangxi, and one from Guangdong. No members came from Zhejiang province. As compared with the power structure formed in 1945, the leading position of the northern base areas and the Eighth Route Army was more apparent in the Eighth Central Committee. Of the total 197 members, 125 (63.5 percent) came from the northern base areas and

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the Eighth Route Army. In contrast, fifty-four members were from the southern guerrilla provinces and the New Fourth Army. To be sure, the relative political importance of the southern Communists was declining, dropping from 34.3 percent in 1945 to 27.4 percent. Only one member was from Zhejiang. Even within southern China, the fate of the various provinces differed considerably, depending on their weight in the New Fourth Army. Table 2.1 shows that among the southern provinces, it was the New Fourth Army’s central base areas, namely Jiangsu province, Henan province, and Anhui province, that maintained an absolute majority on the Seventh Central Committee, relative to that of peripheral provinces such as Guangdong, Fujian, and Zhejiang. Jiangsu, Henan, and Anhui provinces contributed forty-two members, accounting for 77.8 percent of the total fifty-four southern members, compared with 74 percent in 1945. On the Eighth Central Committee, Tan Qilong was the only member with a Zhejiang background. Two members were from Guangdong and none were from Fujian. This should not be a surprise, however, because from the early 1950s until 1955, a nationwide political campaign, in the name of anti-localism, swept across large parts of the country, and these three provinces were most hard-hit. Dozens of senior cadres, including many top provincial leaders who had southern guerrilla backgrounds, were implicated, thus costing them their political careers. In Guangdong, Gu Dacun and Fang Fang were criticized in person in 1954 by Mao in Beijing for committing mistakes of localism during the Land Reform campaign, and their patron—Marshal Ye Jianying —was transferred from Guangdong (Yang Li 1998). In Fujian, Zeng Jingbing, the only alternative member from Fujian on the Seventh Central Committee in 1945 and the deputy provincial party secretary since 1949, was accused by the party center of being a “hidden traitor” (内奸) in 1955 and soon lost his positions. Even Su Yu did not escape political stigma. In 1958, Su was charged with making mistakes of dogmatism and thus was dismissed from his post as chief of the general staff (Yang Li 1998). Against the backdrop of the national political scene, the political situation for Zhejiang’s local guerrillas was rather embarrassing. For one thing, they could not find any powerful and reliable patrons at the party center who would provide them with a protective umbrella. Moreover, even within the New Fourth Army, Zhejiang was

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Revolutionary History in Zhejiang Province

a politically peripheral province as compared with other provinces, such as Jiangsu and Anhui. This meant that, as a whole, the local guerrillas were likely to be losers in the provincial distribution of power. They were wartime heroes when they were able to control their own fates, but now their fortunes were reversed and they were at the mercy of the new rulers from outside provinces sent by the party center. To bear this out, the new power structure was formed quickly. Without question, since 1949 the southbound cadres in Zhejiang had supremacy in the provincial power hierarchy and the local guerrillas were relegated to a secondary place in the new regime. Figure 2.1 illustrates the distribution of power on the party’s Provincial Standing Committee (PPSC), the paramount provincial power body from 1950 to 1990. In light of Figure 2.1, very few guerrilla elites were absorbed into the PPSC. Among the fourteen members of the first session (1949–1953) of the PPSC, Tan Qilong, Yang Siyi, and Gu Dehuan were the only three with local guerrilla backgrounds.10 Most of the other standing members were senior cadres from the Third Field Army, such as Tan Zhenlin and Jiang Hua,11 who had close factional ties with Mao.12 In 1954, Tan and Gu were transferred to Shandong province, and Yang was purged from the PPSC during the anti-rightist campaign of 1957 (Forster 1997, 191–232). Until 1963, none of the PPSC members were drawn from the Zhejiang guerrillas. Although the clout of the local guerrilla elites rebounded after the Lin Biao incident in 1971 (see 10

11

12

Strictly speaking, these three had only worked in the Eastern Zhejiang Guerrilla Area for a short period during the Anti-Japanese War. Among them, only Yang Siyi was a local. Another PPSC member, Sha Wenhan, was also a Zhejiang native. However, Sha Wenhan had left Zhejiang so early that he had very limited work experience in Zhejiang, and because he then was involved in underground work in Shanghai, we do not count him as a guerrilla cadre. In 1949, Tan was political commissar of the Seventh Corps of the Third Field Army, which was the main army in Zhejiang. Both Tan Zhenlin and Jiang Hua came from the Eighth Route Army system and had close personal relations with Mao dating back to the revolutionary base of Jinggangshan (井冈山) in the late 1920s. In fact, Jiang Hua became paramount leader in Zhejiang in 1954. From that time until 1967, one year after the outbreak of the Cultural Revolution, Jiang, holding the post of provincial party secretary, made the provincial leadership into a clique of southbound cadres who were loyal to Mao and showed no shame in paying him nauseating loyalty (see Chapter 3).

The Post-1949 Power Structure

65

1 Southbound cadres

Proportion of the PPSC

.8

.6

.4

.2

Guerrilla cadres

0 1950

1960

1970

1980

1990

Figure 2.1 The distribution of power on the Zhejiang Provincial Party Standing Committee (1950–1990) Note. The southbound cadres were those who entered Zhejiang in 1949, including the military cadres of the Third Field Army and the civilian cadres affiliated with the field army. The local guerrilla cadres were those who had been fighting guerrilla warfare prior to 1949. In this figure we do not consider those who were elevated to the PPSC after 1949 or those who were transferred to Zhejiang from other provinces. Source: data for 1950–1987 were collected by Dr. Dong Zhang from the Organizational History of the CCP in Zhejiang Province, April 1922– December 1987. Data after 1987 were collected by Mingxing Liu and Dong Zhang from various sources, including the website Baidupedia (http://baike .baidu.com), the website China Vitae (http://chinavitae.com), the Chinese Communist Party and state cadres’ database website (http://cpc.people.com.cn/ gbzl/), and the website of the Center for China Studies at Taiwan’s National Chengchi University (NCCU) in Taipei (http://cped.nccu.edu.tw).

Chapter 4) and gradually increased after the 1978 reforms, their membership on the PPSC never exceeded 20 percent. Obviously, during most periods the southbound cadres held an absolute majority on the PPSC. Not until 1984 did their share on the PPSC begin to fall below 50 percent.

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Revolutionary History in Zhejiang Province

20

Frequency

15

10

5

0 0

.1

.2

.3

Average proportion of local cadres holding party secretary and vice party positions on the county party committees

Figure 2.2 Local strength in the county party committees (1949–1966) Note. In this figure, local county cadres include (1) those who were natives of the county, (2) those who were not natives but had fought in the guerrilla war in the county prior to 1949, and (3) those who were born and fought in the guerrilla war in other counties of Zhejiang province but were transferred to the county after 1949. It is worth noting that all county-level local cadres in Figure 2.2 were local guerrilla cadres, whereas those non-local cadres were southbound cadres. Sources: various county gazetteers from Zhejiang counties, calculated by the authors. For a list of the counties, see Table A1.1 in Appendix 1.

To be sure, the dominance of the southbound cadres was not limited to the provincial level. Instead, it was overwhelming at other levels, from the provincial level down to the county level. In fact, due to the lack of powerful patrons at the provincial level, local guerrilla cadres down to the county level were reduced to minority and secondary status shortly after 1949, and their political fortunes fell further on the eve of the 1966–1976 Cultural Revolution (see Chapter 4). This is reflected in Figure 2.2, which illustrates the average proportion of local cadres between 1949 and 1966 who held positions of county party secretary and vice party secretary on the county party committees, the

.4

The Post-1949 Power Structure

67

top decision-making agency at the county level. On average, the proportion was merely 9.2 percent. In 86 percent of all fifty-seven counties for which data are available, the proportion was less than 20 percent, whereas in 61 percent of the counties the proportion was less than 10 percent. The highest figures were found in Yuhuan county (35 percent) and Cixi county (35 percent). In about 16 percent of all fifty-seven counties, all party secretary and vice party secretary positions were held by southbound cadres. Despite the marginalization of the guerrilla cadres in the party system, the new southbound leadership could not completely sideline the guerrillas because as a whole the latter were not political non-entities in Zhejiang. The local guerrillas had already entrenched themselves in local society before the arrival of the southbound cadres. Moreover, their local knowledge and experience were needed to help eradicate the remnant Guomindang influence and to implement state policies. As a result, among the counties influenced by the local guerrillas before 1949 (hereafter the “guerrilla counties”), after a reshuffling of power, a power balance was ultimately formed whereby the southbound cadres dominated the top positions on the county party committees and the guerrilla cadres held many leadership positions in county administration, responsible for executing party decisions and state policies. In contrast, in counties where local guerrillas were weak (hereafter “non-guerrilla counties”), even the key county administrative positions were primarily staffed by southbound cadres, leaving little place for the local political elites. As Figure 2.3 shows, during the 1949–1966 period, in the non-guerrilla counties (fifteen counties) only an average of 14 percent of all county and vice county heads were held by Zhejiang natives. In contrast, the average proportion of local cadres in the guerrilla counties was 32 percent, nearly 2.3 times that in the non-guerrilla counties. The difference between the two proportions is highly significant (the p value is 0.00). Of the forty-five guerrilla counties, the proportion of local cadres was greater than 20 percent in thirty-five counties. Furthermore, in seven counties the proportions of local cadres even exceeded 50 percent, suggesting that more than onehalf of the county and vice administrative heads were local people, namely local guerrilla cadres. Figures 2.1–2.3 help open the black box of the power structure in Zhejiang province from 1949 to 1966. Overall, the power structure bore out the Maoist principle that “political power grows out of the

68

Revolutionary History in Zhejiang Province 15

5 Non-guerrilla counties

Guerrilla counties

Frequency

Frequency

4 3 2

10

5

1 0

0 .05

.1

.15

.2

.25

.3

Average proportion of local cadres holding positions as heads or vice heads of county governments

0

.2

.4

.6

.8

Average proportion of local cadres holding positions as heads or vice heads of county governments

Figure 2.3 Contrast of local cadre strength in the administrative system of the county governments (1950–1966) Note. We introduce in Appendix 1 at the end of this book how we identify whether a county is a guerrilla county or a non-guerrilla county. Source: various county gazetteers from Zhejiang counties, calculated by the authors. For a list of the counties, see Table A1.1 in Appendix 1.

barrel of a gun” in that the southbound cadre group—backed by the Third Field Army—had a dominant status in terms of their positions on the party committees from the provincial level down to the county level, whereas the guerrilla cadre group was marginalized in the new regime, only wielding some influence in the local administrative system in the guerrilla counties. The power configurations revealed in Figures 2.1–2.3 not only reflect the distribution of power between the two groups in Zhejiang province. They also have far-reaching implications for the political and economic dynamics in the province. For one thing, aside from the southbound cadres and the guerrilla cadres, there were many ordinary native cadres in Zhejiang’s power hierarchy who had no pre-1949 guerrilla background and had joined the regime only after 1949. Due to their local identities, these cadres were naturally viewed as allies of the local guerrilla cadres, and therefore they were untrustworthy in the eyes of the southbound cadres. As a result, not only the guerrilla cadres but also local cadres faced discrimination by the dominant faction and their political upward mobility was disrupted, thus ultimately transforming the southbound–guerrilla conflict into a southbound–local conflict. This means that local cadres faced huge political uncertainties and risks during the political campaigns and purges throughout the Mao era, with little hope of receiving any protection from the regime.

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69

Ironically, however, this facilitated the formation of a united front between the local guerrilla cadres and other ordinary local cadres. Against the backdrop of the power structure in Zhejiang, local cadres in the various localities had different incentives to implement state policies. In the guerrilla counties where guerrilla cadres had considerable discretionary power to implement policies, they had no strong incentives to carry out radical policies that would hurt local interests. The reason is straightforward. Actively implementing policies would violate local interests but would not bring any immediate political benefits to the local guerrilla cadres, and this would only further alienate them from their potential grassroots supporters and undermine rather than consolidate their political foundation. In contrast, in the non-guerrilla counties there was no local cadre group with either the will or the capacity for collective action to defy the southbound leaders. Therefore, they were inclined to carry out policies in a manner to court their supervisors, i.e., they tended to participate in loyalty tournaments. To be sure, the political dynamics between 1949 and 1966 were much more complex than is depicted in Figures 2.1–2.3. In fact, the political structure from 1949 to 1966 was continually changing as a result of interactions between the southbound group and the local guerrilla group, which was a function of the national political atmosphere and of how each group read and responded to it. In any case, power sharing between the two groups was preordained to be a difficult task, and the political drama in Zhejiang throughout the Mao era depicted a seesaw battle, featuring intrigue, betrayals, and even blood, between the two groups.

2.3 Clashes of the Titans: The Guerrilla Cadres versus the Southbound Cadres in the 1950s 2.3.1 1949 as the Beginning The signs of tension between the local guerrillas and the southbound cadres began to loom large in 1949. As noted above, on their own Zhejiang’s guerrillas had liberated twenty-four counties before the arrival of the field army. Shortly after the local guerrillas took over the counties from the Guomindang, new governing agencies were rapidly established and staffed by the guerrilla cadres. In the meantime,

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Revolutionary History in Zhejiang Province

as the counties were now under their command, the guerrilla elites appointed themselves paramount county leaders (county party secretaries), without pre-authorization by the party center. At this point they were riding high with confidence about their strength and influence in local society, took for granted their authority in these areas, and believed that their assumption of power in these localities would be accepted by the southbound comrades as faits accomplis. In fact, even before the southbound cadres had rushed into Zhejiang to take over, the party center had realized the possibility of strife between the two groups and instructed the southbound cadres that they should realize the special characteristics of the southern provinces and treat the local guerrillas in an appropriate manner.13 In hindsight, however, peaceful power sharing between the two groups was merely wishful thinking. Due to the limited available resources and positions, conflicts between the southbound group and the guerrilla group were inevitable. In fact, instead of showing their respect to the local revolutionaries, when the southbound cadres met with their guerrilla counterparts they hastened to make a dent in their power base in order to establish their supremacy over the guerrilla cadres. For example, in May 1949 Xiaoshan county was liberated by the Jinxiao Detachment, an influential local guerrilla force under the Zhedong Guerrilla Column. Even earlier, local guerrillas had already established their own administrative system and had trained personnel in preparation for taking over the county. However, on the same day that the local guerrillas entered the county, they received an urgent telegram signed by Ji Pengfei, then the vice political commissar of the Seventh Corps of the Third Field Army, which ordered them to leave everything intact until the arrival of the southbound cadres to take over Xiaoshan.14 They had to obey the order and wait for nearly fifteen days before the southbound cadres rolled in. Although the local guerrillas were not as docile in all places as their counterparts were in Xiaoshan, eventually they realized they had no other choice but to obey the directives from above. In Wenzhou, for 13

14

See an indicative 1949 telegram by the Eastern China Bureau of the CCP (specific date and title are missing), found in the Yueqing City Archives by the authors. Yueqing has been a county-level city belonging to Wenzhou since 1993. Oral source, interview in Xiaoshan district, July 2008. Xiaoshan has been a district of Hangzhou city since 2001.

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example, as early as 1948 the guerrillas had taken steps to build their own ruling administrations (Party History Research Office under the Wenzhou City Party Committee 2004, 271). In April 1949, the guerrillas established the Zhe’nan People’s Provisional Administrative Committee to hold authority over the entire Zhe’nan area (Party History Research Office under the Wenzhou City Party Committee 2004, 271). In May, the Zhe’nan Guerrilla Column reached an agreement with the Guomindang garrison forces in Wenzhou city whereby the Guomindang forces agreed to surrender to the Zhe’nan Guerrilla Column in a peaceful manner. Within less than one month, the Zhe’nan guerrillas had liberated all eleven county cities in the Zhe’nan region as well as the neighboring regions (Party History Research Office under the Wenzhou City Party Committee 2004, 297–309). As the victor in the revolution, the local guerrillas rewarded themselves with allimportant posts in the new city and county leaderships. In addition, the Zhe’nan guerrillas were initially defiant when dealing with the southbound cadres. In fact, when the first batch of southbound cadres arrived in Wenzhou, the Zhe’nan guerrillas refused to welcome them because the guerrillas were unwilling to share the fruits of victory with these newcomers, and the guerrillas forced the southbound cadres to move to Lishui county.15 But soon the guerrillas had to cede to discipline and pressure from the party. In June, 500 southbound cadres under Li Tiefeng went to Wenzhou city. Some of them remained in Wenzhou city to insure that the power transition from the guerrilla cadres to the southbound cadres would be smooth, while others soon scattered to counties across the Zhe’nan region to take leadership positions on the county party committees, the decision-making bodies of the counties. In the subsequent three to five months, the guerrilla cadres in all Zhe’nan counties lost their leadership positions on the party committees and the southbound cadres then had the upper hand. Table 2.2 compares the distribution of power in some typical counties that were formed shortly before and after the arrival of the southbound cadres, as reflected in the distribution of the key leading posts on the county committees and in the county governments in 1949–1950. Due to space limitations, we do not include all counties in the table. Instead, we reveal the contrast between some representative counties. Among them, Yueqing county and Yongjia county were guerrilla 15

Oral source, interview in Lishui county, July 2009.

Table 2.2 County power structure after the military conquest (1949–1950/1951): the distribution of key posts on the county party committees and in the county administrative governments County Party Committee Yongjia county Party secretary

Tenure 04/1949–09/1949 09/1949–03/1952

Name Hu Guozhou Wei Junzhe

Vice party secretary

06/1950–01/1951 06/1950–10/1952

Liu Chaozhong Liao Yirong

05/1949–01/1951 01/1951–09/1952

Ye Lingyin Liao Yirong

09/1952–04/1954

Qiu Xueqing

05/1949–07/1951

Shen Yun

07/1949–10/1949 10/1949–12/1949 07/1951–10/1953

Lin Chen Liao Haoqun Dou Changfu

Native place Yongjia Pixian (Jiangsu province) Xihua (Henan province) Fuding (Fujian province)

County Administrative Government

County head

Vice county head

Tenure 05/1949–05/1950 05/1950–02/1951

Name Hu Guozhou Liu Chaozhong

Native place Yongjia Xihua (Henan province) Fuding (Fujian province) Zibo (Shandong province)

02/1951–10/1952

Liao Yirong

06/1951–01/1953

Qi Jingmin

05/1949–08/1949

Ye Lingyin

Yueqing

09/1949–04/1953

Qiu Xueqing

Yueqing

Yueqing county Party secretary Vice party secretary

Yueqing Fuding (Fujian province) Yueqing

County head

Cangshan (Shandong province) Shanghai Shanghai Linzi (Shandong province)

County head

Xiaoshan county Party secretary

Vice county head

N.A.

Vice party secretary Zhuji county

07/1951–09/1952

Zhang Yan

Xintai (Shandong province)

Party secretary

05/1949–06/1949 06/1949–07/1949

Shao Ming Wu Xiufeng

07/1949–02/1950 04/1950–07/1951

Shou Danting Wang Qiulin

06/1949–02/1950 02/1950–05/1951

Zhou Zhishan Wang Qiulin

02/1950–10/1950

Yuan Hansan

10/1950–09/1953

Zhang Yan

Xinchang Tai’an (Shandong province) Zhuji Feixian (Shandong province) Zhuji Feixian (Shandong province) Laiwu (Shandong province) Xintai (Shandong province)

05/1949–10/1949

Zhang Huachi

10/1949–6/1953

Cao Moting

06/1953–10/1954

Wang Zhenxing Cao Moting

Vice party secretary

County head

10/1949–02/1950

Zhou Zhishan

Zhuji

02/1950–05/1951

Wang Qiulin

Feixian (Shandong province)

Vice county head

05/1949–05/1949

Shou Naikang

Zhuji

12/1949–02/1955

He Wenlong

Zhuji

County head

06/1949–0/1952

Song Xiucun

12/1952–03/1953

Liu Yuzao

06/1949–08/1949

Wang Binru

10/1952–12/1952

Liu Yuzao

Jingyuan (Shandong province) Dongguang (Hebei province) Wuqiao (Hebei province) Dongguang (Hebei province)

Longyou county Party secretary

Vice party secretary

05/1949–10/1949

Wudi (Shandong province) Jingyuan (Shandong province) Laoling (Shandong province) Jingyuan (Shandong province)

Vice county head

Table 2.2 (cont.) County Party Committee 08/1952–02/1958

Liu

Liu Yuzao Dongguang (Hebei province)

05/1949–04/1951

Sheng Ping

05/1951–08/1952

Guo Jingbo

05/1950–12/1952

Dong Luzhan

Huguan (Shanxi province) Zibo (Shandong province) Changqing (Shandong province)

County Administrative Government

Deqing county Party secretary

Vice party secretary

Note. N.A. refers to missing values. Sources: County gazetteers from corresponding counties in the table.

County head

05/1949–05/1950

Lu Fengxiang

Vice county head

05/1950–12/1952

Qu Liting

N.A.

Ningjin (Shandong province) Zibo (Shandong province)

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counties in the Zhe’nan region during the revolutionary period, and Xiaoshan county and Zhuji county were under the influence of the Zhedong guerrillas prior to 1949. In contrast, Longyou county and Deqing county, located in the Quzhou region and the Huzhou region respectively, seldom saw any guerrilla activities before 1949. As shown in Table 2.2, at the very outset when the Guomindang regime had just been overthrown in 1949, in three guerrilla counties (Yongjia, Yueqing, and Zhuji) the key posts of both the secretary of the county party committee and the head of the county government were all held by local guerrilla elites. As far as the county party secretaries and vice party secretaries were concerned, Hu Guozhou and Ye Lingyin had served in the Zhe’nan guerrillas since the Anti-Japanese War period (Party History Research Office under the Wenzhou City Party Committee 2004, 333; Organizational Department under the Wenzhou City Party Committee et al. 2001, 93), whereas Shao Ming had been a senior guerrilla cadre serving in Zhedong (Zhuji County Gazetteer 1993, 523). In Xiaoshan county, also a guerrilla county, the county party secretary was not a guerrilla because, as noted, the guerrillas’ plan to take over had been stymied by an order from the field army. But even in the first three counties, after the entry of the southbound cadres, the guerrilla cadres were forced to take a back seat. In fact, in 1950 in all three counties the posts of county party secretary were monopolized by the southbound cadres, most of whom were natives of Shandong, Hebei, Shanxi, and so forth. In the meantime, the local guerrillas retained their political clout by occupying key posts in the county administrative system (government). In Yongjia, after losing the post of county party secretary to southbound cadres, Hu Guozhou (a local guerrilla cadre) still held the post of county administrative head. Although in 1950 Hu Guozhou was succeeded by Liu Chaozhong, a southbound cadre, in 1951 the post was returned to another elite local guerrilla, Liao Yirong (Yongjia County Gazetteer 2003, 875). It is also clear from Table 2.2 that in the county administrative bodies of Yueqing and Zhuji, distribution of the posts of county head and vice county head leaned toward the guerrilla cadres. Moreover, because the local guerrillas outnumbered the southbound cadres considerably, below the county level the local cadres remained in charge. In fact, in counties where the guerrilla forces had penetrated, the local guerrilla cadres basically monopolized most key posts at the district, township,

76

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and even village levels. This endowed the guerrilla cadres with undeniable political resources and influence at the grassroots levels. In contrast, in two non-guerrilla counties (Longyou and Deqing), the situation was very different. Due to the absence of a strong local guerrilla group, the southbound cadres in these two counties monopolized all key posts on both the party committees and the administrative bodies, leaving nothing for the local natives, as shown in Table 2.2. However dissatisfied with the distribution of power that apparently tilted toward the southbound cadres at the expense of the local guerrilla cadres, the local cadres had little room to maneuver and had no choice but to accept this political arrangement. Some of them may even have felt comfortable about the status quo. After all, the local guerrillas were not excluded from the regime and they held administrative powers, but it is likely that they felt that their inferiority in the face of the southbound cadres would be only temporary. At this point in time, few local guerrilla cadres linked the dominance of the southbound cadres in Zhejiang to a systematic anti-localism backed by higher-level authorities that would soon unfold through a wave of political campaigns, during which the dominant faction would show no hesitation in undermining the authority and power of their rivals.

2.3.2 Local Cadres in Retreat in the Early 1950s: From Land Reform to Agricultural Collectivization The first storm that came with the Land Reform campaign began shortly after Zhejiang was liberated by the Communists. The main battlefield in this campaign was the countryside, and its goal was to equalize the endowment of land by confiscating the land of the propertied classes, including the landlords, rich peasants, commercial and industrial capitalists, and so on, and redistributing it to the landless classes, composed of poor and lower-middle peasants. The Land Reform campaign was clearly a social-engineering project. But it was also a battle in which officials at various of levels of the power hierarchy competed to show their competency and loyalty to superiors, to demonstrate their authority over those whom they ruled, and to challenge their rivals and reduce their power. As the campaign unfolded in

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Zhejiang, it intensified the conflicts between the local southbound leaders and the local guerrillas.16 As early as February 1950, many counties had selected some experimental sites in the countryside and had sent work teams (工作组) into the villages to lead the campaign. Their typical methods included creating peasant associations (农民协会) in the experimental villages, determining the class status of individual households, and arranging public struggle meetings (批斗会) in the village to mobilize the poor peasants to complain about the wrongdoings of the landlords and to denounce them. But up to this point, none of the landlords had been killed.17 The situation began to change, however, after the Korean War broke out in October 1950, when Tan Zhenlin, the provincial party boss, in November called for “wiping out the landlord class completely” in order to deepen the Land Reform campaign,18 which in turn gave the southbound leaders more discretion in flexing their muscles to implement the campaign. At this time, the southbound group seldom went head-to-head with the guerrilla cadres. Instead, they were inclined to find fault with the work styles of the local cadres and to question their methods of implementing state policies. For example, local cadres were criticized for being too peaceful and too gentle toward class enemies, e.g., the landlords and other reactionary elements, thus they had committed mistakes of “peaceful land reform” (和平土改) during the first stage of the reform.19 Another method employed by the southbound group was to humiliate the local guerrillas by persecuting those who were close to them, especially the local gentry with whom they had social or kinship ties. Chen Daren, for example, was a renowned member of the local gentry class in Wenzhou city who prior to 1949 had pretended to be loyal to the Guomindang regime but in fact was a double-dealer working for the Communist guerrillas, a typical “white skin, red heart” figure. During the campaign to suppress counterrevolutionaries, 16

17 18 19

In fact, in all southern provinces where there were similar rival factions between southbound cadres and local guerrilla cadres, political campaigns such as the Land Reform campaign necessarily stoked the fires of intra-elite conflict. In Guangdong, for example, the Land Reform campaign led to serious confrontations between the two camps and Mao eventually was forced to intervene. For details on the Land Reform campaign in Guangdong, see Vogel (1980, 91–124); Yang Li (1998). Oral source, interview in Yueqing city, May 2009. Oral source, interview in Yueqing city, May 2009. Oral source, interview in Yueqing city, May 2009.

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another political campaign launched during land reform, Chen was characterized by the southbound cadres as a counterrevolutionary and he was sentenced to death, despite opposition by the guerrilla cadres.20 Another well-known case occurred in Yueqing county. During Land Reform, Li Tiefeng, a typical southbound cadre who was then party secretary of Wenzhou prefecture, visited Yueqing county to investigate progress in the Land Reform campaign. For unknown reasons, he vehemently reviled a local landlord. The landlord, however, responded without any sign of conceding. Secretary Li Tiefeng was irritated by this unyielding stance so he shot and killed the landlord on the spot. Ye Lingyin, who was a senior member of the guerrilla group and the uncle of the landlord who had been killed, had to pocket the insult without saying a word against his party boss.21 But Ye still failed to retain his post. Accused of making grave mistakes during the Land Reform campaign, Ye was transferred to another county. Some other local guerrilla cadres, including the president of Yueqing People’s Court, were also implicated and dismissed from their offices.22 All of these events reflected the ebb of the influence of the local guerrilla cadres and sent a clear signal revealing who were the true power holders. Disgruntled as they were, the local guerrillas could hardly voice their complaints, partly due to party discipline, partly because they had recently received a blow against their leadership, during which many senior leaders of the Zhe’nan guerrillas were purged. Long Yue, for example, had been a former top leader of the Zhe’nan Guerrilla Column, one of the most influential guerrilla forces in Zhejiang before 1949. After his troops controlled the entire Wenzhou region in 1949, he called himself “King of Southern China” (镇南王). Long Yue’s personal clout, along with an earlier incident during which some southbound cadres were not allowed by the guerrillas to enter Wenzhou, sounded the alarm to the higher authorities about the possibility that Long Yue might attempt to establish his own independent kingdom (独立王国) in Zhe’nan, thus making him a perfect target to teach the local guerrilla cadres a lesson.23 The party’s response was quick and decisive. In March 1950, at the First Session of the Wenzhou Party Congress, 20 21 22

23

Oral source, interview in Wenzhou city, August 2008. Oral source, interview in Yueqing city, April 2009. Oral source, interview in Yueqing city, May 2009. Also see Yueqing County Gazetteer 2000, 36. Oral source, interview in Yongjia city, July 2008.

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local guerrillas under Long Yue’s leadership were criticized for their mountain-stronghold mentalities, sectarian mistakes, and patriarchal work styles, thus sealing Long Yue’s political fate. As a result, Long Yue lost his post as party secretary of the Wenzhou Prefectural Party Committee. Soon thereafter, he was transferred to Shanghai, thus completely leaving Wenzhou’s political scene (Party History Research Office under the Wenzhou City Party Committee 1997, 10).24 The local guerrilla cadres had been keeping a low profile in the face of the southbound leaders. Nevertheless, this did not stop the new power holders from becoming more assertive to erode their already weak political status. As time passed and the authority of the southbound cadres became more entrenched, the local guerrilla cadres became the direct target of an assault staged by the southbound cadres. During the “ThreeAntis” movement (三反) (1951–1952), for example, dozens of leading guerrilla cadres in Xiaoshan county were persecuted. Jiang Changguo, a guerrilla leader who led a contingent of the Jinxiao Detachment (金萧支 队) to take over the county in 1949, was recalled from Hangzhou city by the Xiaoshan county authority. When he arrived, he was instantly imprisoned and detained for fifteen days. When he was released, no one ever explained to him the reason for his arrest.25 In addition to Jiang Changguo, other local cadres with guerrilla backgrounds were also subject to political persecution. Tang Ying, president of the Xiaoshan People’s Court, was dismissed from his post and sent down to engage in manual labor on charges of corruption. In extreme cases, some local cadres, such as the director of the Supplying and Marketing Co-operative, who were unable to withstand the pressures, ultimately committed suicide.26 24

25

26

The conflicts between the southbound cadres and the local cadres were exacerbated by differences in culture and lifestyles. In Xiaoshan county, the southbound cadres during Land Reform tended to categorize those who daily ate fish and shrimp as landlords, without taking into account the fact that Xiaoshan is situated on a river (Oral source, interview in Xiaoshan district, December 2008). In addition, compared with the local cadres, the southbound cadres, especially those from Shandong and Hebei, were generally less educated, which affected communications and co-operation between the two groups, at least during the first several years after liberation. For example, a local cadre aired a grievance that when he went to have a document signed by a Shandong cadre, the illiterate official held it upside town (Forster 1998, 203). To this day, no one knows who set the trap for him or for what reason, though it is widely believed that the southbound cadres were behind this plot. Oral source, interview in Xiaoshan district, December 2008. Oral source, interview in Xiaoshan district, December 2008.

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Revolutionary History in Zhejiang Province

In general, the situation for the guerrillas had deteriorated by the mid-1950s. Not only civilian cadres but also military officials with pre1949 guerrilla warfare backgrounds were investigated. In Wenzhou city, investigation teams were set up to examine whether a noted Zhe’nan guerrilla cadre, Zhou Pizheng, who was then a senior military officer in Zhejiang Provincial Military District, had once betrayed the CCP and had surrendered to the Guomindang before 1949. Many guerrilla cadres were aware of the political dangers behind this accusation and they understood that Zhou Pizheng was merely a victim, and probably not the last one, of a new round of political oppression waged by the southbound cadre group.27 The situation was indeed worrying. During the anti-rightist campaign (反右) and the Great Leap Forward (大跃进) (1958–1960), the southbound leadership in Wenzhou prefecture claimed that the guerrilla cadres had formed a clique for their own narrow interests, therefore committing the mistake of sectarianism. As was the rule in political struggles, typical notorious examples had to be revealed. For instance, Chen Shaodong, then the county head of Yueqing county, was dismissed because he allegedly committed a socalled right-deviationist error.28 Additionally, during the anti-rightist campaign, the guerrillas in Lishui county faced heavy pressure from the southbound county leaders, who not only viewed the guerrilla cadres as rightists but also accused them of engaging in localism, a fatal claim that amounted to political death for the local cadres.29 The aggression of the southbound cadres did not meet any organized resistance from the local guerrilla cadres. One reason is that relative to the guerrilla cadres, the southbound cadres, who were representatives of the orthodox party center, were always politically correct and their authority, as well as their decisions, was unquestioned and unchallenged at higher levels. In the meantime, Zhejiang’s guerrillas lacked a united cohesive leadership. Among the leading guerrilla figures, Long Yue had been transferred. Another well-known guerrilla hero, Yang Siyi, the only guerrilla representative sitting on the PPSC as the former 27

28 29

Zhou was a native of Yueqing county who had served in the New Fourth Army during the Wannan Incident and was then imprisoned by the Guomindang in Jiangxi province. He escaped from prison and returned to Wenzhou to join the guerrillas. His prison experience was the focus of the investigation. Oral source, interview in Yueqing city, May 2009. Oral source, interview in Yueqing city, April 2009. Oral source, interview in Lishui city, July 2009.

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leader of the Zhedong guerrillas, was alone and powerless and could not offer any meaningful support to the local guerrillas. In fact, Yang was even unable to protect himself from the political persecutions launched by the Maoists in the provincial leadership. In 1957, during the high tide of the anti-rightist campaign, Yang Siyi was purged and lost his position on the PPSC. It was not until the late 1970s that any Zhejiang PPSC members had local native backgrounds. This further weakened the guerrilla cadres’ resolution to counterattack. At the time, when a guerrilla cadre visited Qiu Qinghua, another well-regarded guerrilla leader, to inquire about his ideas regarding how to deal with the complicated situation, Qiu Qinghua simply told him to trust the party and suggested that the local guerrillas should not do anything to make trouble.30 Qiu was correct in this regard. Given the political atmosphere during the 1950s, any resistance on the part of the guerrillas would have been useless and could even possibly have backfired. In Lishui county, for example, there were cases in which some guerrilla cadres, who thought they had been poorly treated by the southbound county leadership, attempted to lodge collective complaints against the southbound county leaders by appealing to higher levels. But without exception, the guerrilla cadres ended up being denounced as counterrevolutionaries.31 In sum, during the factional strife between the southbound group and the local guerrilla group that unfolded from after 1949 until the early 1950s, the dominant faction made every effort to guarantee an absolute monopoly of power at the cost of the marginalized faction. Although the dominant faction was able to successfully infiltrate the deep localism and to project the authority of the ruling party into every corner of the province, such a winner-takes-all game made it clear that power sharing between the two factions was impossible, and many local elites, with the local guerrilla cadres as their backbone, became alienated. Because the local guerrilla cadres were unable to count on the regime to secure their political survival, they were forced to foster grassroots supporters from below, even from outside the regime. For the regime, a side effect was that when it needed the marginalized local guerrilla cadres to implement radical state policies that would harm local interests, the local guerrillas were very likely to remain passive in 30 31

Oral source, interview in Yueqing city, April 2009. Oral source, interview in Yueqing city, May 2009.

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Revolutionary History in Zhejiang Province

implementing these policies in exchange for local grassroots support, thereby allowing the non-orthodox economic activities to have some space to breath in spite of the seemingly impenetrable social control by the party-state. In the next chapter, we will recount in detail how local people in the guerrilla counties, due to connivance and tacit support from local cadres, were able to oppose the socialist agricultural collectivization in the 1950s by using different coping strategies based on the changing political atmosphere. In fact, whether private farming could survive under the agricultural collective and commune systems provided the first test of the tenacity of Zhejiang’s private economy.

3

The Dog That Did Not Bark Grassroots Resistance to Socialist Agricultural Collectivization

The purpose of our socialist transformation of agriculture is to cut off the source of capitalism in the vast countryside. . . . Agricultural cooperation will . . . isolate the bourgeoisie once and for all and facilitate the final elimination of capitalism . . . Our aim is to exterminate capitalism, obliterate it from the face of the earth, and make it a thing of the past . . . As a historical phenomenon, capitalism must also die out, and it has a very nice place to go to, that is, underground, there to “sleep.” Mao Zedong (1977, 212–214) inspector gregory: “Is there any other point to which you would wish to draw my attention?” holmes: “To the curious incident of the dog in the night-time.” gregory: “The dog did nothing in the night-time.” holmes: “That was the curious incident.” Arthur Conan Doyle, The Memoirs of Sherlock Holmes: The Adventure of Silver Blaze

3.1 A Transformative Change in the Early 1950s: From New Democracy to the General Line for the Transition Period Land reform was only the first move by the CCP to destroy the old structure based on private property. In the economic sphere, the top goal of the new regime was to build a socialist economic system featuring state ownership and heavy industrialization (Lin et al. 2003, 4). But initially, due to the legacy of the war-torn economy and advice received from Stalin, the party took pragmatic measures to restore the economy and the official policy under the banner of New Democracy (新民主主义) was rather moderate (Yang Jisheng 2006). As Chairman Mao Zedong and his colleagues had assured the non-CCP elites since the late 1940s, the task of building socialism would be a long process and should proceed in a gradual manner. It was wrong to think that capitalism could be eliminated in the foreseeable future

83

84

The Dog That Did Not Bark

(Mao 1977, 30). Furthermore, the transition to socialism should not begin until a mixed economy and private ownership had continued for a long time, probably twenty to thirty years (Hu Angang 2008, 113). However, once the new regime gained a firm foothold, the CCP swallowed its words and declared war against capitalism and began to speed up nationalization of the economy. In 1951 and 1952, as the Korean War (1950–1953) was still under way, the party launched the “Three-Antis” (November 1951–October 1952) and the “Five-Antis” (January 1952–October 1952) movements, respectively to purge the “corrupt” CCP officials who had collaborated with the infamous capitalists at the cost of state interests and to attack the national bourgeoisie for a variety of economic crimes.1 As a result, the capitalists, facing unprecedented pressures, had to declare bankruptcy or were forced to convert their private firms into joint state–private enterprises. In June 1953, Mao further urged making a clear-cut departure from the current New Democracy economic policy, by coming up with the idea of the General Line for the Transition Period in place of the economic policy of New Democracy, which had allowed the coexistence of socialism and capitalism. The transition from New Democracy to socialism was to begin immediately and to be completed within ten to fifteen years. According to Mao, The general line or the general task of the Party for the transition period is basically to accomplish the industrialization of the country and the socialist transformation of agriculture, handicrafts and capitalist industry and commerce in ten to fifteen years, or a little longer. This general line is a beacon illuminating our work in all fields. Do not depart from this general line, otherwise “Left” or “Right” mistakes will occur (Mao 1977, 93).2

1

2

In general, the capitalists were accused of evading taxes, stealing state property, luring state cadres into becoming corrupt by bribing them, cheating on government contracts, and stealing state economic secrets. The allegedly corrupt officials and sinister capitalists were sent to re-education camps, imprisoned, humiliated in public through mass struggle meetings, or even executed. For how the party decided to launch the Three-Antis and Five-Antis movements and how party leaders were involved in this process, see Kraus (1991, 54) and Li (2006, 15–19). For Chinese scholars on the Three-Antis and Five-Antis movements, see Xu Guang (1998). In fact, as Mao stated on June 6, 1952, “the contradiction between the working class and the national bourgeoisie has become the principal contradiction in China; therefore the national bourgeoisie should no longer be defined as an intermediate class” (Mao 1977, 77).

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Table 3.1 Share of gross industrial output value by ownership (%)

1949 1950 1951 1952 1953 1954 1955 1956 1957

State

Collective

Joint state–private

Private

Individual

26 33 35 42 43 47 51 55 54

1 1 1 3 4 5 8 17 19

2 2 3 4 5 10 13 27 26

49 38 38 31 29 10 13 – –

23 26 23 21 19 18 15 1 1

Note. The figures may not add up to 100 in some cases because of rounding off. Collective enterprises were originally handicraft industries that rarely made use of mechanical power and were absorbed into state ownership in the late 1950s. Individual (个体) refers to small-scale private enterprises. Joint state–private (公私合营) companies were actually “capitalist enterprises.” Their material inputs, marketing, and sales were under state control and their daily operations took orders and directives from the government. As Mao acknowledged, “this state-capitalist economy of a new type takes on a socialist character to a very great extent and benefits the workers and the state” (Mao 1977, 101). Source: China Statistical Yearbook (1984, 194), cited in Bramall (2009, 90).

Put another way, the most important task of the General Line was to transform private ownership into socialist ownership (Hu Angang 2008, 128–146). Mao’s General Line was publicly announced by the party center in September 1953 (Li 2006) and was approved by the party center in February 1954. The party’s plan to wipe out capitalism was rather successful in terms of nationalization of private industries and commerce in the urban areas. In fact, as Table 3.1 shows, the declining trend of capitalist industrial sectors, comprising private and individual industrial enterprises, was obvious, beginning in 1949. But until 1952, the capitalist industrial sector still accounted for 50 percent or more of total industrial output. It was only after 1952, when the Three-Antis and FiveAntis movements were completed and the General Line was publicized, that the capitalist industrial sector lost its dominant status. As of 1956– 1957, at the height of the high tide of socialism launched by Mao, the capitalist industrial sector almost ceased to exist (1 percent of industrial

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output). In fact, this rapid pace of wiping out capitalism was beyond even Mao’s original expectation that the target embodied in the General Line would take fifteen years or more to be achieved. But Mao met his Waterloo in the countryside, where he had to face strong peasant resistance against agricultural collectivization, which sought to take back the land that had been redistributed to the peasants during the Land Reform campaign and to further abolish private property rights and private farming. In particular, Mao felt disgraced by the recalcitrant private farming in Zhejiang. At the very outset of collectivization in the early 1950s, the party was astonished by the widespread unrest that was occurring in Zhejiang, which in turn deepened dissent among party leaders with regard to the proper pace of collectivization. After Mao declared the coming of the socialist high tide in rural China in 1955, Zhejiang peasants displayed their defiance by massively withdrawing from the collective co-operatives. But the more meaningful and influential collective resistance against Mao’s radical line came from peasants holding on to individual household farming (单干), which was illegal under the collective system and prohibited by the authorities. In the narrative of China’s economic reforms, the legendary story of Xiaogang village (小岗村) in Anhui province occurred in December 1978, when eighteen to twenty village households secretly met on their own to adopt household farming, a landmark event marking the beginning of reform. However, our field investigation and document search in Zhejiang revealed that after agricultural collectivization, the first experiment with private household farming was organized by a local county government in Yongjia county of Wenzhou prefecture as early as May 1956. This experiment lasted less than ten months and the local cadres and masses who were involved were eventually persecuted. Thereafter, spontaneous individual household farming went underground, spread to dozens of localities in the province, and was never completely stamped out during the entire Mao period. The key to understanding the above puzzle, i.e., the tenacious vitality of a private economy in a Communist country, is the role played by local cadres who were responsible for monitoring and implementing policies. Peasants were able to launch collective resistance against agricultural collectivization not only because collectivization harmed their interests, which as a result drove them to participate in the resistance, but also because, unlike the socialist transformation in the

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cities, there were divergent opinions and heated debates among the top leaders about how to carry out agricultural collectivization, thereby sending ambiguous policy signals to local officials. This could lead local cadres to be hesitant about using harsh means to suppress the peasants’ collective resistance, especially when they were unsure whether the center or their supervisors would back off from the current radical line and sacrifice them as scapegoats.3 By reviewing agricultural collectivization in Zhejiang between 1949 and 1957 and the subsequent political campaigns revolving around collectivization until the early 1960s, we find that from the beginning to the end, collectivization in Zhejiang was significantly affected by the ambiguous political signals emanating from the center. On one hand, for Zhejiang’s politicians, including the provincial leaders and the local political elites, the vague messages from above provided them with an opportunity to reveal their political positions and loyalty to their patrons, and gave them discretion and flexibility in terms of policy formulation and implementation; on the other hand, however, they were also exposed to huge political uncertainties and risks if they were to back the wrong line. To be sure, such risks were much greater for the marginalized elites who had no powerful patrons to protect them when the risks became a reality. Therefore, how the politicians interpreted and responded to these signals reflected their relative positions in the political structure. It also revealed how they maneuvered policy implementation to adapt to the changing political environment in order to enhance their own political security. However, once the disputes at the top were resolved and the radical line was irreversible, agricultural collectivization, followed by the commune system, had to be implemented to the letter throughout the country, leaving no room for maneuvering on the part of the local cadres. Nevertheless, resistance by the peasants did not subside; instead, it continued secretly, i.e., in the form of underground private 3

As shown in detail in this chapter, in order to promote socialist agricultural collectivization in the countryside after 1949, Mao spent most of his time and energy persuading his dubious colleagues in Beijing to entice the regional and provincial leaderships to follow his ever-changing plan and to launch a series of political campaigns to purge those recalcitrant party cadres and to force the peasants to join the collective farming units. Mao’s utopian scheme culminated in the socialist high tide of 1955–1957 and the subsequent Great Leap Forward of 1958–1960, but he was ultimately humiliated by the Great Famine of 1959– 1961.

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farming. In fact, after the failure of the Great Leap Forward, in many places private farming was revived on an even larger scale. Eventually, it was through this trial-and-error process that local guerrilla cadres began to realize where their political interests rested, thus shaping their attitudes toward the peasant responses to agricultural collectivization at different stages of the campaign and ultimately determining the fate of the collectives and the communes in the countryside.

3.2 High Politics and Policy Uncertainties during Agricultural Collectivization in the 1950s In February 1953, the party Central Committee approved the “Resolution of the Central Committee of the Communist Party of China on Mutual Aid and Co-operation in Agricultural Production (Draft),” thus marking the beginning of nationwide agricultural collectivization. In general, the collectivization campaign underwent three overlapping stages, in which three different levels of collective farming units prevailed in succession: mutual aid teams (MATs), low-stage cooperatives (LSCs), and high-stage co-operatives (or collectives) (HSCs). Among these, the MATs maintained private ownership of land and production materials. Compared with the MATs, the LSCs were more socialist in character. Although in the LSCs farmers still legally owned the land, they had to turn in their production tools to the co-operatives, and production decisions as well as the division of the harvest were no longer determined by individual households and instead by the cooperatives. Farmers would then receive remuneration in proportion to the share of land and other production materials they had contributed to the co-operatives. The HSCs were created through an amalgamation of the LSCs. Aside from their size, the biggest difference between the HSCs and the LSCs was ownership. In the HSCs, all production materials, including land, draught animals, production tools, and so forth, belonged to the collectives. Therefore, in the HSCs private ownership of land was completely abolished. At the outset of collectivization, there were divergent opinions among the party leaders regarding the pace of collectivization. Some top party leaders, including Liu Shaoqi, who was in charge of day-today operations of the party, believed that the party should abide by the policy outlined in “On New Democracy,” whereby peasant participation in the MATs should be voluntary, peasants should have the

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freedom to withdraw from the MATs and be allowed to engage in individual farming, and the nationwide transition from MATs to the more socialist-oriented co-operatives (LSCs) or collectives (HSCs) would not begin for fifteen or twenty years. In the meantime, many other senior party cadres were inclined to take a more radical route and to begin socialist agricultural collectivization as soon as possible. As a result, a major policy dispute took place in the spring of 1951 between the Shanxi provincial leadership and the senior party leaders, e.g., Liu Shaoqi and Bo Yibo.4 The Shanxi Provincial Party Committee submitted a report to the party center in which it complained that the MATs in Shanxi province tended to be dissolved because the farmers favored individual farming after they became rich, and therefore the Shanxi Provincial Party Committee had concluded that some measures should be taken to prevent farmers from withdrawing from the MATs, to weaken private ownership, to upgrade MATs to LSCs, and so forth. However, Liu Shaoqi and Bo Yibo disapproved of the “wrong, dangerous, and utopian socialist” viewpoints held by the Shanxi Provincial Party Committee. They stressed the necessity of adhering strictly to the principle of the New Democratic Economy (新民主主义经济) adopted by the party in 1949. Liu Shaoqi further pointed out that the issue of the transition to socialism could be set aside for a decade.5 Liu’s criticism of the Shanxi Provincial Party Committee was transmitted to the other provinces.6 It is worth pointing out that throughout this dispute Mao did not intervene until each side had revealed its respective stance. Although with the wisdom of hindsight Mao became determined to accelerate the pace of collectivization, he intentionally managed to neutralize his position in public. On one hand, Mao informed Liu and several other senior 4

5

6

In fact, as early as 1949, Liu Shaoqi had criticized the views of Gao Gang, then the leader of the Northeast China Bureau (东北局), who felt that party members in the countryside should not be allowed to engage in exploitation by hiring laborers for agricultural production and that the party should take action to mobilize the peasants to join the MATs in order to show its superiority over individual farming. Liu pointed out that at the current stage, the party should not prohibit party members from hiring laborers or from engaging in individual farming. Rather, farmers should have the full freedom to decide whether or not to hire laborers and whether or not to join the MATs (Liu Jianping 2003). For details about this debate, see Li (2006, 151–153); Du Runsheng (2005, 27–28). See Mao’s note on “Take Mutual Aid and Co-operation in Agriculture as a Major Task,” in Mao (1977, 71).

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party leaders that he sided with the Shanxi leaders. On the other hand, Mao also claimed that the two principles guiding the creation of the MATs and the LSCs, i.e., “voluntary” (自愿) and “being mutually beneficial” (互惠), should be obeyed. In fact, the draft resolution on mutual aid co-operation issued by the party Central Committee in February 1953 warned of both “leftist” and “rightist” inclinations in organizing the MATs and stressed that at the current stage, priority should be placed on avoiding the making of leftist mistakes.7 As a result, very few high-ranking party cadres—who were not involved in the disputes in 1951—were aware of Mao’s true policy intentions. An illustrative example is when Deng Zihui was appointed head of the Central Rural Work Department (中央农村工作部) (hereafter CRWD) in January 1953 to lead the national mutual aid and cooperative campaign. He failed to notice that there were fundamental differences between Mao and Liu Shaoqi (Du Runsheng 2005, 27), which subsequently placed him in a very difficult situation. As we will see below, the secrecy of high-level politics, which was often compounded by the murky messages emanating from the top, aggravated the information asymmetries between the central decision makers and the local policy implementers. Additionally, it led to serious misjudgments on the part of local officials about the political situation and its changing orientations. Not surprisingly, Deng Zihui, and the CRWD under his leadership, followed the draft resolution to the letter and placed an emphasis on avoiding making leftist mistakes, especially by putting a brake on rash development of the MATs and the co-operatives, which had led to tensions in the countryside between 1952 and 1953.8 Based on 7

8

See the “Resolution of the Central Committee of the Communist Party of China on Mutual Aid and Co-operation in Agricultural Production (Draft),” in Huang Daoxia et al. (1992, 52). Between the winter of 1952 and the spring of 1953, the CRWD headed by Deng Zihui noted that there was a wind of “rash advance” (冒进) at the grassroots level, whereby local officials used coercive measures to form MATs and LSCs and forced peasants to contribute their private property to the co-operatives in exchange for meager compensation. A well-known example took place in Daming county of Hebei province. The county village cadres assembled two desks on the street, one standing for socialism and the other for capitalism. The cadres then ordered the villagers to make a choice: those who wanted to take the socialist road were to sign their names at the socialist desk to join a co-operative, whereas those who wanted to take the capitalist road were to sign their names at the other desk if they did not want to join the co-operative. In another village, the cadres assembled all milling tools, vehicles, and draught animals under their

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Deng’s work, the party Central Committee issued a series of directives in March 1953 calling for checking on the misdeeds of local cadres and ending the “rash advance.” In April, the First National Conference on Mutual Aid and Co-operation in Agriculture was held in Beijing, at which Deng Zihui presented a speech emphasizing that at the current stage the main danger was impetuosity and rash advance. He again pointed out that party guidelines stated that agricultural co-operation should be promoted in a gradual and stable manner. He even told the audience that Chairman Mao had estimated that the party would require ten to fifteen years to implement the co-operatives (Du Runsheng 2005, 38). Obviously, from Mao’s perspective the ongoing official party line was completely off base and had to be addressed. In fact, before the April conference, Mao had a private conversation with Deng Zihui, in which he criticized Deng’s mistake of “sustaining private property” and “allowing the four big freedoms.”9 In October 1953, Mao instructed the CRWD to organize the Third National Conference on Mutual Aid and Co-operation in Agriculture, which was held between October 26 and November 5, 1953. During the conference, Mao had two private conversations with some senior CRWD leaders, revealing his stance on the agricultural co-operatives and his dissatisfaction with the work of the CRWD. Once again, he criticized Deng Zihui, blaming him for the fact that to date the main measures of the CRWD, such as building small dams, extending rural credit, distributing relief grain, and so forth, were not practicing socialism and instead were a kind of “small kindness.” Mao pointed out that the party should immediately develop agricultural production co-operatives (i.e., LSCs) on a large scale to prepare conditions for the final transition to collective farms (i. e., HSCs). Mao further declared that the party planned to develop over 32,000 co-operatives by the next autumn harvest, 700,000 co-operatives by 1957, and eventually a million or more (Du Runsheng 2005,

9

control and threatened villagers that they could not retrieve these items unless they participated in the co-operative. Fearing that their private property would be collectivized by the co-operatives, peasants killed their draught animals, cut down trees, sold off livestock, and let their farmland remain idle. See Huang Daoxia et al. (1992, 128). The four big freedoms refer to Deng’s policy that no restrictions were to be placed on hiring laborers, trading, moneylending, and renting land. Because this was a private conversation, Deng did not reveal to the audience his differences with Mao, so very few knew of Mao’s genuine plan (Du Runsheng 2005, 38).

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38; Mao 1977, 139). Mao’s scheme was accepted by the conference participants and was publicized in the December 1953 Resolution on Developing Agricultural Production Co-operatives, indicating that the party had formally abandoned its previous policy of “opposing the wind of rash advance.” Beginning in December 1953, the pace of agricultural co-operativization accelerated considerably. By the end of the year, there were only 15,000 LSCs and HSCs, but as of October 1954, the figure had risen more than fifteen times to 230,000 and in February and April of 1955 it had continued to rise to 580,000 and 650,000 respectively. On one hand, it is worth pointing out that Mao’s speeches at the Third National Conference on Mutual Aid and Co-operativization in Agriculture not only conflicted with the 1953 policy orientation when the party Central Committee had taken measures to slow down the pace of developing LSCs, but also conflicted with the strategy endorsed by the Central Committee in 1951 that scheduled the transition from MATs to co-operatives or collectives to take place within ten or fifteen years. Mao’s dominant role in the party enabled him to change the direction of policy formulation in a personal fashion, resulting in frequent fluctuations and abrupt changes in official policy. On the other hand, Mao’s political domination did not come with 100 percent obedience from many of his colleagues and other senior cadres. In fact, the differences of opinion regarding the development of agricultural collectivization, e.g., the differing opinions between Mao and Liu Shaoqi, between Mao and Deng Zihui, and so forth, still existed. Although Mao’s authority eventually steered official policy by eliminating a cacophony of voices that deviated from his own viewpoints, a new wave of policy disputes would erupt again when the practical situation exposed the inherent flaws of the radical policies, which would send mixed and even conflicting signals to officials at the lower levels and would then affect their political judgments and choices. This is exactly what occurred. The rapid increase in the number of LSCs and HSCs since December 1953 came at the price of unprecedented chaos in the countryside, thus causing errors of “commandism” and “bureaucratism” by local cadres as well as widespread deterioration in peasant welfare. In practice, to show their political zeal in taking the socialist road, local officials in many areas set high targets for the creation of co-operatives. When these targets were passed down to

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lower levels, the lower-level officials further increased the targets to demonstrate to the higher levels their political attitudes, regardless of local conditions and the willingness of the peasants. To fulfill the absurd targets, local officials usually resorted to coercive means and discriminatory policies to force peasants to join the LSCs and HSCs.10 Fearing that their private property would be confiscated with little compensation and that they would lose control over their property, in many places peasants either killed or undersold their draught and domestic animals, or they chopped down trees to realize their assets before the co-operatives were created. On many occasions, peasants temporarily enrolled in the co-operatives but soon withdrew from them, so many co-operatives were dismantled shortly after they were formed. Some peasants even resorted to protests or riots to demonstrate their opposition (Du Runsheng 2005, 46). The tense situation in the countryside attracted the attention of the party. As early as January 1955, Deng Zihui reported the worsening situation to Liu Shaoqi and Zhou Enlai, who were then in charge of the daily work of the party center, and suggested that national regulations on co-operatives should be formulated in order to restrict errors by local cadres in promoting the campaign and to allay peasant suspicions that their property would be expropriated by the co-operatives. Deng Zihui also urged the party center to take measures to bring the campaign under control and to consolidate the already existing co-operatives rather than developing new ones. Deng’s suggestions were accepted by the party center. Between January and March of 1955, the party issued a series of directives to address the problems in the 10

For instance, as early as April 1954 it was acknowledged in a policy report by the North China Bureau (华北局) that local officials were subject to leftist inclinations when carrying out the resolution on mutual aid and co-operation. For example, draught animals were requisitioned by the co-operatives with little or no compensation. In the Northeast region and in Hebei province, local officials arbitrarily apportioned the number of co-operatives to be created by the villagers and forced the peasants to press their thumbprints in lieu of their signatures to participate in the co-operatives. In Shanxi province, whether peasants were able to receive the necessary means of subsistence, such as cloth, distributed by the government was conditional on whether they were members of the co-operatives. When local cadres mobilized villagers to enroll in the cooperatives, they claimed that those who refused to join the co-operatives were unpatriotic and were loyal to the United States. See Huang Daoxia et al. (1992, 186–192, 198–201, 202).

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countryside,11 with the central aim of reining in the overheated growth of co-operatives, protecting the production incentives of the peasants, and consolidating the current achievements in the co-operative campaign. Deng’s initiatives were obviously backed by some top party leaders, among them Liu Shaoqi, who had remained silent on issues regarding agricultural collectivization since 1951 when Mao had interfered in the disputes with the Shanxi Provincial Committee. Liu not only endorsed some of the above directives but also took advantage of this opportunity to reassert his 1951 position on agricultural collectivization.12 Between April 6 and April 20, 1955, Liu convened several meetings with the responsible members from various provinces, during which he emphasized that the co-operative campaign should be gradual, and he urged Deng to take bold actions to limit the number of co-operatives. Meanwhile, as relations between the peasants and the state grew increasingly strained, Deng’s remedy measures even received approval from Mao, who agreed in an early March 1955 talk with Deng that the pace of collectivization should be slowed down. In a speech to provincial party leaders from all provinces in May 1955, Mao further pointed out that the collectivization drive should come to a temporary halt in North and Northeast China, to be contracted in Zhejiang and Hebei, and developed only in the newly liberated areas.13 On April 21, 1955, the Third National Rural Work Conference was held in Beijing, during which it was claimed that the conference resolution on the general 11

12

13

The directives include: Notice on the Rectification and Consolidation of Agricultural Producers’ Co-operatives (关于整顿和巩固农业生产合作社的通 知); the Emergency Directive Regarding the Vigorous Protection of Farm Animals (关于大力保护耕畜的紧急指示), issued by the Party Central Committee in January 1955; the Emergency Directive on Swiftly Making Arrangements for the Purchase and Marketing of Grain to Calm Peasants’ Feelings about Production (关于迅速布置粮食购销工作,安定农民生产情绪的 紧急指示), issued jointly by the CCP and the State Council in March 1955; and the Notice on the Consolidation of the Existing Agricultural Producers’ Cooperatives (关于巩固现有合作社的通知), issued by the CRWD in March 1955. Liu Shaoqi had a conversation with Deng Zihui on March 18, 1955, during which Liu told Deng that agricultural collectivization could be accomplished within three five-year-plan periods. During the first period, one-third of rural households would be absorbed into LSCs or HSCs, while the remaining twothirds would be enrolled in LSCs or HSCs during the following two periods. See A Biography of Deng Zihui (1996, 482). Mao’s instruction was then summarized in the slogan “pause” (停), “contract” (缩), and “develop” (发). See Huang Daoxia et al. (1992, 239).

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principles for the co-operative campaign during the next year should be to “pause the development of the co-operatives and to try one’s utmost to consolidate the existing co-operatives” (停止发展,全力巩固). Accordingly, the conference decided that the total number of co-operatives should be cut from the current 650,000 to less than 400,000 (Du Runsheng 2005, 51–52). The policy swings at the top had deep repercussions in rural areas throughout the country, especially in Zhejiang. In the spring of 1955, feedback from different information sources indicated that the problem of “rash advance” in Zhejiang province was rather worrying. The collectivization campaign in Zhejiang had begun in December 1953. By the spring of 1954, there were over 2,000 co-operatives. As of early April 1955, the number of co-operatives had reached 55,000, almost thirty times the number in 1954. Furthermore, the share of enrolled households among total rural households rose from 6 percent in December 1954 to 30 percent in April 1955 (Huang Daoxia et al. 1992, 239). No doubt these dizzying figures were achieved by coercive means under political pressure, thus violating the principle of “being voluntary” and “being mutually beneficial.” In Wuxing county, for example, county cadres called struggle meetings against the rich peasants and then threatened others: “If you want to take the socialist road, then you must join the co-operatives; otherwise, you will end up like them [the rich peasants].” In Jiashan county and Ningbo prefecture (宁波专区), production materials, such as land, draught animals, and so forth, were requisitioned by the co-operatives and the peasants received little compensation (Huang Daoxia et al. 1992, 242–243). What made things worse was that in many localities grain procurement became a powerful means by local officials to promote the co-operative campaign; they would impose higher procurement quotas on those peasants who did not enroll in the co-operatives (Du Runsheng 2005, 49). In addition, the absolute amount of procurement was exceptionally high. In the 1954 grain year, gross procurement of grain came to 2.55 million tons, accounting for 38 percent of total production (7.05 million tons) (Huang Daoxia et al. 1992, 244). To accomplish their procurement assignments, party cadres searched from house to house and ultimately they resorted to administrative means to pressure peasants to surrender their grain and prohibited them from growing non-grain crops and so forth, by labeling such activities part of a small-peasant economy

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(小农经济) or capitalist spontaneous forces (资本主义自发势力) (Du Runsheng 2005, 48–49). Similar to what happened in other provinces, Zhejiang’s peasants responded to the co-operative campaign by slaughtering their draught and domestic animals, cutting down trees, decreasing their land investments, selling their furniture, and so forth. As of the spring of 1954, the number of pigs and sheep in Zhejiang had been reduced by one-third and one-half respectively (Huang Daoxia et al. 1992, 242–243) and the number of farm cattle had decreased by 57,000 (Du Runsheng 2005, 49). Due to the high grain procurement quota, many peasants were compelled to eat grain that had originally been reserved for seed, to run away from their villages to avoid being subjected to high procurements, to sell or abandon their children for lack of food, and so forth. As an omen of the subsequent Great Famine which was to occur from 1959 to 1961, in some places high procurement caused widespread hunger and famine. In Longyou county, four people died of hunger. Several peasant households abandoned their children by leaving them in front of the county government building. In a village in Kaihua county, only three households out of a total of seventy-two had sufficient food to eat, and most other peasants had swollen faces due to a lack of food. In Jinhua prefecture, peasants in several counties, including Lanxi, Longyou, and Yiwu, abandoned their farmland and let it lie fallow. Seven mass riots occurred in the province and in each riot at least two or three villages were involved (Huang Daoxia et al. 1992, 242–245). After learning what had occurred in Zhejiang, in late March 1955 the party center summoned Jiang Hua, the provincial party leader, to Beijing to discuss with Deng Zihui and Tan Zhenlin how to deal with the situation. They finally decided to send a telegram to the Zhejiang Provincial Party Committee to suggest that the province should abandon the idea that bigger (HSCs) was better, to abandon efforts to maintain the co-operatives (LSCs), which did not function well, and to try to reduce the number of co-operatives in some areas (Du Runsheng 2005, 49). With the approval of Mao, the telegram was sent to Zhejiang in the name of the CRWD. After the provincial party committee agreed with the suggestions in the telegram, in early April 1955 Tan Zhenlin appointed Du Runsheng and Yuan Chenglong to go to Zhejiang to guide implementation of the center’s directive. Their efforts were effective. Within one month, 15,000 co-operatives were dismantled, and the

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number of enrolled households dropped from 28 percent to 18.6 percent (Huang Daoxia et al. 1992, 246). Nationally, 20,000 cooperatives had been dissolved by the end of July 1955. Apparently, the majority of them were in Zhejiang. But Mao soon changed his mind. On May 5, 1955, Mao had a private conversation with Deng Zihui and other senior party cadres, including Liu Shaoqi. In front of Liu Shaoqi, Mao warned Deng Zihui: “Don’t repeat the 1953 error of dissolving large numbers of cooperatives or [you will] again have to make a self-criticism” (Du Runsheng 2005, 53).14 On May 9, Mao called a meeting with Deng Zihui, Zhou Enlai, Li Xiannian, and others, in which he blamed peasants for desiring “freedom” and “resisting socialist transformation,” and claimed that those party cadres who only cared about peasant demands were not in favor of building socialism. Mao also asserted that the CRWD was “blowing a wind of rumor” (发谣风) for airing the pessimism. This was the first time that Mao mentioned to high-ranking comrades that the problem of the slow advance of agricultural collectivization was due to high-level resistance within the party (Du Runsheng 2005, 53–51). Without consulting with other central leaders, on May 17, 1955, Mao convened a meeting in Hangzhou city, the provincial capital of Zhejiang, with all regional and provincial party secretaries. At this meeting, Mao delivered a message that was the opposite of the spirit of the April–May 1955 conference, stressing the need to accelerate the development of the co-operatives. Mao again warned his audiences of two dangers: people would make mistakes if they did not acknowledge the superiority of the co-operatives; people would make huge mistakes if they continued to have passive attitudes about the co-operative movement (Huang Daoxia et al. 1992, 239). The conference finally 14

For unknown reasons, Deng did not relay Mao’s warning to the lower levels. Additionally, on May 6, only one day after Mao spoke with him, Deng Zihui delivered the concluding remarks at the Third National Rural Work Conference, in which he spoke at length about the negative aftermath of the “rash advance” and maintained the April 21 conclusion that the overheated cooperative campaign was the principal factor causing rural chaos. He reiterated that the general principles for the next year were to be “pause development, do one’s utmost to consolidate the existing co-operatives, make appropriate contractions, and re-endorse the MATs and take care of individual farming” (Huang Daoxia et al. 1992, 235–239). Obviously, Mao’s warning fell on deaf ears.

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proposed increasing the number of the co-operatives to 1 million from the current 650,000 by the 1956 autumn harvest (Du Runsheng 2005, 54). Mao’s speech at the May conference exposed his disputes with the CRWD about the co-operatives to the high-ranking party elite, thus placing the elites and their backers in an embarrassing position. Due to pressure from Mao, Liu Shaoqi began to change his tune about the cooperatives. At a meeting of the Politburo of the Central Committee, which was held on June 14,1955, for the first time Liu Shaoqi blamed the CRWD under Deng Zihui for being wrong in its evaluation of the situation and for committing many mistakes on matters of principle, including exaggerating the difficulties of promoting the co-operative movement and underestimating the peasants’ enthusiasm for the LSCs and HSCs. The meeting approved Mao’s proposal at the May 17 conference and decided that the new guideline for the co-operative movement was “consolidation and development” (Du Runsheng 2005, 54). The emphasis was placed on “development,” suggesting that the cautious approach previously adopted by the party center was to be abandoned. On July 31, 1955, Mao delivered a speech “On the Question of the Co-operatives” at a work conference of provincial and municipal party secretaries, which is widely believed to have constituted a decisive turning point in the history of agricultural collectivization. In his speech, Mao declared that the high tide of socialist co-operatives was approaching, called for the establishment of 1.3 million co-operatives by October 1956, set a target of 50 percent of rural households being absorbed into the co-operatives by the spring of 1958, and advocated completion of the co-operative movement by 1960 and then beginning the full transition from LSCs to HSCs. In addition, Mao poured bitter sarcasm on his opponents over the past debates, portraying them as “tottering along like women with bound feet,” “fearing dragons ahead and tigers behind,” and therefore “unable to keep pace with the mass movement.” According to Mao, “this state of affairs must be changed” (Mao 1977, 185). Mao’s offensive strategy definitely worked. For one thing, Mao successfully silenced colleagues who had views different from his. Facing the aggressive Mao, Deng Zihui lost his nerve to continue to debate with Mao and was compelled to admit that he had wrongly evaluated the situation in the past (Du Runsheng 2005). During the July conference, Deng went to Liu Shaoqi in hopes of winning his

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support. But Liu backed off from his original line. Rather than encouraging Deng to speak out, Liu exhorted Deng to treat Mao’s critique in a correct manner (A Biography of Deng Zihui 1996, 497–498). Deng Zihui had no choice but to give in to the pressure from Mao.15 Thus Mao sent a clear signal to the provincial leaders that the major policy change favored an accelerated co-operative movement. Among those provincial leaders who had attended the July conference, surely none wanted to be viewed by the chairman as a woman with bound feet. After returning to their provinces, they rushed to revise the previous schedule that, according to Mao, was too slow in implementing the co-operative movement and they competed with one another in issuing newly increased targets to lower-level governments. Between August and September, nineteen provinces publicized revised targets for 1957, eighteen of which aimed to increase the enrollment rate of households into co-operatives to 50 percent by 1957. Encouraged by the “enthusiasm from below,” Mao continued to set new targets at the 6th Plenum of the Seventh Central Committee, which was held on October 14, 1955. According to the resolution passed by the plenum, areas in which 30–40 percent of the rural households were in HSCs by the summer of 1955 were to achieve a 70–80 percent rate by the spring of 1957, and other areas were expected to complete enrollment in the co-operatives by the spring of 1958. Meanwhile, various provinces were to hold pilot programs upgrading the LSCs to HSCs if conditions allowed (Huang Daoxia et al. 1992, 261). As expected, Mao’s July–October speeches were followed by a socialist high tide at an unprecedented pace since the founding of the People’s Republic. What was unexpected was the size of the collectivization movement, even exceeding the most optimistic forecasts. In fact, to pass the litmus test set by Mao, various provinces competed with one another not only by creating new co-operatives but also by upgrading the LSCs to HSCs. By the end of 1955, 63.3 percent of rural households had joined at least 1.9 million co-operatives, whereas in the autumn of 1955 the percentage still remained at 14.2 percent. The figure soon rose to 80.3 percent in January 1956, suggesting basic completion of the 15

In August 1955, there were still some private conversations between Mao and Deng, in which Deng made a last but useless effort to persuade Mao to calm down. The outcome was that thereafter Mao decided to exclude Deng from decision making regarding the co-operative movement.

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co-operatives.16 Given such a great achievement, party attention turned to upgrading more LSCs to HSCs, and hence the high tide continued throughout all of 1956. Another miracle was created within a short period: by the summer of 1956, 91.7 percent of all peasant households were enrolled in co-operatives, with 62 percent in HSCs and 29 percent in LSCs. By the end of 1956, 96.3 percent of all rural households had joined co-operatives, with 87.8 percent in HSCs, declaring the accomplishment of agricultural collectivization. One thing that had not been anticipated by Mao, yet was more disturbing and depressing, was that in 1956–1957 peasants in a significant number of provinces had responded to the agricultural socialist transformation with strong resistance. Similar to the rectification and consolidation year of 1953, among the provinces that reported massive chaos and disturbances, Zhejiang exceeded all others in terms of the size and the duration of the peasant riots. In the remaining part of this chapter, we will review the occurrence and evolution of Zhejiang’s collective resistance during 1956–1957, which was associated with local officials’ attitudes toward mass resistance and the political reasons shaping their incentives during this period.

3.3 Collective Resistance in Rural Zhejiang: Leaving the Collectives After Mao delivered his speech on July 31, 1955, Zhejiang acted swiftly. In August 1955, the Zhejiang Provincial Party Committee, under the leadership of Mao’s loyal henchman Jiang Hua, submitted a report to Mao making a self-criticism about the April contraction, and he proposed completion of co-operativization by the autumn of 1960 (Huang Daoxia et al. 1992, 292–295). After the report was approved by the party center, an “anti-rightist opportunism” campaign was launched throughout Zhejiang to criticize the contraction since April and to ignite enthusiasm for a new wave of co-operativization. As a result, 80 percent of rural households had enrolled in LSCs by February 1956, achieving the target four years ahead of schedule (A Biography of Jiang Hua 2007, 175). However, Zhejiang did not stop at this. Given the new political 16

In his speech on October 11, 1955, Mao set the criterion for completion of the co-operative movement: 70 to 80 percent of the rural population will have joined the semi-socialist co-operatives (namely the LSCs). See Mao (1977, 220).

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context since July–October 1955, an upgrading of LSCs to HSCs began immediately. By the end of 1956, 96 percent of rural households had been organized into HSCs, fulfilling the task of collectivization in Zhejiang (A Biography of Jiang Hua 2007, 176). But quantity came at the cost of quality. As many researchers have pointed out, the HSCs faced a variety of problems, including poor management due to their large size, the crude work style of cadres stemming from their unchecked power, the mishandling of public accounts, and so forth.17 Not surprisingly, when Mao toured Hangzhou to edit his book Socialist Upsurge in China’s Countryside in December 1955, the flaws of the HSCs began to surface, i.e., they failed to deliver higher production yields, caused a decline in peasant income, and led to more corruption and commandism among cadres.18 According to an internal report, some non-CCP public figures summarized the 1956 situation as “Three Nineties” (三九), namely 90 percent of peasants were forced to join the HSCs due to political pressure, 90 percent of the HSCs had lower agricultural output and income than previously, and 90 percent of peasants had hard lives in the HSCs and barely sufficient necessities. The provincial committee of the political consultative conference, China’s rubber-stamp congress at the provincial level, sent an investigation team to the countryside to examine the agricultural production situation. After they returned to Hangzhou city, many of its members reported that they had heard loud moans and groans from the peasants who were complaining about the HSCs. In some counties, even the county party leaders doubted the superiority of the HSCs as well as the achievements of collectivization,19 and some felt guilty about boasting about the virtues of the HSCs.20

17 18

19

20

For a discussion of the problems with HSCs, see Thaxton (2008, 101–106). In all of our interviews conducted in Hangzhou, Wenzhou, and Quzhou with party historians and cadres who had knowledge about the situation at the time, the interviewees acknowledged that during the MAT phase, peasants were generally satisfied with their status, and life in the LSCs was not bad. A substantial deterioration in the situation occurred during the socialist high-tide period. See the report of the Zhejiang Provincial Party Committee at the Conference of Cadres above the County and Municipal Levels, in Selected Documents of the Zhejiang Provincial Party Committee, January 1957–December 1960 (n.d., 217–222). During the high-tide period, in order to entice peasants to join the HSCs, the government pledged that 90 percent of collectivized peasants would see an increase in their incomes every year. See Huang Daoxia et al. (1992, 391).

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Disappointed with the drawbacks of the HSCs, the disgruntled peasants turned to various forms of resistance to protect their self-interests. Among others, withdrawing from the HSCs, i.e., withdrawal from the collectives, was the most common practice pursued by peasants. According to a report by the CRWD, from autumn 1956 a nationwide wave of withdrawals from the collectives engulfed a number of provinces, such as Guangdong, Zhejiang, Sichuan, Henan, Anhui, Liaoning, Jiangxi, Shaanxi, and Hebei. On average, 1 percent of the enrolled households quit the collectives. In some places, the figure reached as high as 5 percent. In Guangdong province, for example, 70,000 households withdrew from the collectives, accounting for 1 percent of the total enrolled households (Huang Daoxia et al. 1992, 408). In Henan province, withdrawals from the collectives took place in twelve counties during the winter of 1956, as peasants took back their oxen and animals that had previously been collectivized, protested in front of government buildings, and even beat up those cadres who dared to attempt to stop them (Huang Daoxia et al. 1992, 424– 425). As in 1953, Zhejiang once again was a hotbed of rural disturbances. Between June 1956 and May 1957, a total of 1,100 riots, including petitioning the government, beating up officials, and so on, took place in the countryside. Most of such unrest was associated with the problems of the HSCs. Between 1956 and 1957, there were two waves of withdrawals from the collectives in Zhejiang, one in the autumn of 1956 and the other in spring–summer 1957. During the first wave, 230,000 households quit the HSCs, accounting for 5 percent of the total enrolled households (Huang Daoxia et al. 1992, 424–425). During the second wave, 200,000 households withdrew from the HSCs, accounting for 4.5 percent of the total. In Xiaoshan county, for example, between the autumn of 1956 and the summer of 1957, 5,000 peasants participated in seventy-nine riots, leading to the collapse of 114 of 1,326 HSCs (or 8.6 percent) (Ye Yangbing 2003). In the Ningbo region, by the end of 1956 about 5 percent of the total enrolled households had withdrawn from the HSCs, and an additional 20 percent intended to quit. In summer 1957, withdrawals from the collectives again erupted in the Ningbo region, when 11.81 percent of the enrolled households withdrew their membership in the HSCs, leading to the collapse of the HSCs (Ye Yangbing 2003).

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Among the numerous cases of withdrawal from the collectives, the most famous, in Xianju county, became known as the “Xianju Incident” (仙居事件). Xianju was a county located in a mountainous area of today’s Taizhou prefecture. By the end of 1955, 56 percent of rural households had enrolled in the LSCs and HSCs, but only 0.52 percent of the households were in HSCs. As of June 1956, however, 88.2 percent of households were organized in HSCs, and by the spring of 1957 the figure had reached 91 percent. As a by-product of the rapid collectivization, sporadic riots erupted in autumn 1956 but they did not attract the attention of the county leadership. Between the end of April and May of 1957 massive withdrawals from the collectives broke out in twenty-nine of the county’s thirtythree townships. Eventually, 116 out of the total of 302 collectives were completely dissolved, and an additional fifty-five collectives were on the brink of collapse. As a result, the proportion of households in the collectives dropped dramatically, from 91 percent to 16 percent (Huang Daoxia et al. 1992, 432–435).21 Moreover, the Xianju Incident was not confined only to Xianju county; it also extended to neighboring counties. In Linhai county, for example, during the first half of 1957, 74 percent of the 128,897 peasant households withdrew from the collectives and 44 percent of the 488 collectives were dismantled.22 In Tiantai county and Jinyun county, withdrawals from the collectives erupted in the spring and summer of 1957, resulting in the proportion of households remaining in collectives falling by 36 percent and 39.3 percent respectively.23 The withdrawals from the collectives definitely posed a serious threat to Zhejiang’s agricultural collectivization, and disgraced the provincial leadership under Mao’s loyal lieutenant Jiang Hua. To bring the situation under control, investigation and work teams dispatched by the Provincial Party Committee were sent to the counties, townships, and villages to pin down the causes of the riots, appease the discontent among the peasants, and, if necessary, quell the unrest by force. Jiang Hua, for example, personally went to Xianju county in August 1957 to 21

22 23

Also see the investigation report by Zhejiang party secretary Jiang Hua, in Selected Documents of the Zhejiang Provincial Party Committee, January 1957–December 1960 (n.d., 183–192). See Linhai County Gazetteer (1989, 271– 272). See Tiantai County Gazetteer (1995, 21); Jinyun County Gazetteer (1996, 144).

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take charge of investigating the causes of the withdrawals from the collectives and restoring the co-operatives.24 After several months of investigation, the factors believed to have provoked the rural disturbances were identified, including the crude work style of the cadres, the excessive grain procurements by the state, the falling incomes of the peasants in the co-operatives, poor leadership and management, and so on.25 In fact, even today most party historians and scholars accept these factors as contributing to the withdrawals from the collectives. But there is a deeper problem behind these explanatory factors. At best, these factors explain why the peasants were so angry about the collectives, but they do not touch on the core question: why was it possible for the withdrawals from the collectives to be launched in the first place and to persist for such a long time? In other words, the withdrawals from the collectives were not a simple aggregation of individual behavior by various peasants demonstrating their dissatisfaction with the agricultural co-operatives and with collectivization through individual actions, making individual decisions to petition the government. Instead, these were typical collective actions, in which hundreds or even thousands of peasants came together to confront the powerful party-state. It is easy to understand why the peasants were willing to engage in collective protests or petitioning rather than simply individually quitting the HSCs. Since the summer of 1955, it had become clear that for ordinary peasants whether or not they stayed in the HSCs was not a political issue of taking the socialist or the capitalist road, as claimed by Mao. For rural cadres, whether or not they were able to organize peasants into the co-operatives and sustain the collectives greatly affected their political careers. Consequently, it was politically risky for individual peasants to choose an exit strategy even if they were dissatisfied with the co-operatives. In fact, similar to the scenario during the “rash advance” of 1953, in 1956–1957 when the peasants threatened to quit the collectives, the typical first response of the rural cadres was to apply substantial pressure on the individual daring peasants or to resort to heavy-handed measures to punish them so

24 25

See A Biography of Jiang Hua (2007, 198–204). See the investigation report by Taizhou party secretary Yang Xinpei, in Huang Daoxia et al. (1992, 432–435).

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that the costs of withdrawal would be too high.26 Therefore, up to 1957, national policy stipulated that peasants had a right to exit; however, such a right was in large part a commitment on paper but was not taken seriously in practice.27 Things might have been different, however, if the peasants had exercised their exit rights collectively rather than individually. As Lin (1993) put it, “Under the political environment in 1956 and 1957, if a peasant individually decided to quit a co-operative, it was possible that he or she might be harassed by zealous cadres. However, the harassment would decrease or become impossible if the majority of co-operative members decided to quit.” When peasant resistance finally took the form of collective withdrawal from the collectives, the costs became lower by spreading the risk among an entire group of participants. Additionally, peasants opting to quit the collectives revealed that they were willing to work together and would co-ordinate their actions, which gave them a huge bargaining and moral edge over the government officials. As it turned out, the organized peasants had both the courage and the strength to confront the government, even if only temporarily. If the government demonstrated any signs of wavering over how to deal with the situation, more peasants would be mobilized into withdrawal from the collectivization movement and the 26

27

In Xiaoshan county, for example, before the massive riots due to withdrawals from the collectives broke out, state cadres beat those individual peasants who had tried to quit the collectives or forced them to kneel for hours as punishment. See the “Brief Report on the Situation of Rural Riots,” Archives of the Xiaoshan Party Committee, No. 320, June 19, 1957. In Xianju county, the county leadership prohibited members of the co-operatives from returning to individual farming. See the investigation report by Taizhou party secretary Yang Xinpei, in Huang Daoxia et al. (1992, 433). When four members of the Shiyingdu HighStage Co-operative (十英都高级社) wanted to quit the collectives, the township party secretary hunged one of them up by lifting his limbs and placing heavy stones on his back in hopes of deterring the other three from following suit. See “A Preliminary Investigation into the Withdrawals from the Collectives in Xianju County” (仙居县群众性闹退社事件初探), in Party History Research Office under the Taizhou City Party Committee (2005, 136). Ye Yangbing (2003) summarizes the methods that state cadres employed to prevent peasants from pulling out of the collectives. In addition to coercive administrative means, economic tools were also frequently employed. For example, if peasants withdrew from the collectives and requested to recover the land they had contributed to the collectives when they joined, the cadres would only return land of poor quality and low productivity. In many cases, peasants were not allowed to quit the collectives unless they were willing to abandon their property or animals.

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government would face even greater problems. This helps explain why peasant resistance in 1956–1957 ultimately took the form of withdrawals from the collectives; such collective resistance was the only strategy that was likely to have an effect. But there were still problems. As is well known, collective actions were difficult to organize, let alone continue for a long time. To initiate the withdrawals from the collectives, co-ordination problems had to be solved and qualified leaders were required. More importantly, given the formidable coercive forces that the party-state held under the Maoist system, collective resistance by peasants on its own was insufficient to bring about the desired effects, as evidenced by what occurred after popular protests in other parts of China. Therefore, the long duration of the withdrawals from the collectives in 1956–1957 suggests that from the outset collective actions on the part of peasants did not meet with heavy-handed means by local governments. This in turn contributed to the spread of withdrawals from the collectives. After all, only when potential participants in withdrawals from the collectives believed that massive protests and petitions would not be put down by the state were they willing to participate in such collective actions. Obviously, these conditions were hard to meet. The question is why local governments in Zhejiang province tended to be gentle toward restive peasants rather than immediately suppress them before withdrawals from the collectives had occurred. The geographic distribution of the withdrawals from collectives casts a light on why and under what circumstances the withdrawals from collectives were likely to take place. An intriguing finding is that in counties where revolutionary forces historically had been strong, popular resistance was more likely to take place and to succeed. As is shown in Table 3.2, among forty-seven “trouble-maker” counties out of a total sixty-one counties that experienced massive disturbances due to withdrawals from collectives in 1956–1957, 83 percent of them (thirty-nine counties) had once been the base areas of local guerrillas during the revolutionary era. By contrast, 64.3 percent of the total of fourteen counties that did not report massive withdrawals from collectives were those without strong local guerrilla forces during the revolutionary period. In addition, out of the seventeen counties where local revolutionary forces had been historically weak, only 47 percent had witnessed withdrawals from collectives. In comparison, in forty-four counties where local revolutionary forces had been historically strong,

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Table 3.2 Geographic distribution of withdrawals from collectives (1956–1957) Did withdrawals from collectives occur? (No)

Did withdrawals from collectives occur? (Yes)

In non-guerrilla counties

9 counties

8 counties

In guerrilla counties

5 counties

39 counties

Note. The definitions of guerrilla/non-guerrilla counties are provided in Appendix 1 of this book. Sources: calculated by the authors. For a list of the counties, see Table A1.1 in Appendix 1.

89 percent (thirty-nine counties) experienced withdrawals from the collectives. The relationship between the revolutionary forces and the incidence of withdrawals from the collectives as revealed by Table 3.2 should not be viewed as mere coincidence. In counties where local guerrillas had been active prior to 1949, the people had learned from past experience and training to take collective action to protect their interests. More importantly, in guerrilla counties local cadres tended to give tacit permission to, or even support, peasant action. According to official records, during the Xianju Incident, 50 percent of the township cadres refused to enroll in collectives or simply quit after joining.28 In addition, as noted by then Zhejiang party leader Jiang Hua, below the township level, more than 54 percent of local cadres in Xianju participated in withdrawals from the collectives or even took the lead in the disturbances. Those local cadres, as well as their families, who were involved in withdrawals from collectives included township party secretaries, township heads, deputy heads of the county courts, and so on. The deputy head of the county rural work department not only refused to join any collectives but also encouraged others to leave the collectives. Among the party members in the county, 50 percent were not firm in upholding the collectives, and they were either passive in dealing with withdrawals from the collectives or stood by and did 28

See Party History Research Office under the Taizhou City Party Committee (2005, 137).

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nothing during the riots. In addition, 5 percent of county party members were leaders or activists in the withdrawals from the collectives.29 In other counties affected by withdrawals from the collectives, it was not unusual that the rural disturbances were associated with recalcitrant local cadres. In Xiaoshan county, local cadres shared with the peasants considerable resentment toward the collectivization movement, which definitely facilitated the spread and duration of withdrawals from collectives. As early as late 1955, signs of withdrawal from collectives were emerging and the disruptions reached a climax in late 1956, but the aftermath continued to be felt until summer 1957. In fact, dozens of local cadres, such as the heads of some of the co-operatives, directly participated in or led the riots.30 In Yueqing county, peasant participation in withdrawals from collectives won the sympathy of local cadres, though the latter did not publicly voice their support.31 Apparently, it was the permissive attitude on the part of local cadres that helps explain why withdrawals from collectives could be sustained and survive in so many localities. It is worth pointing out that, given the political atmosphere during the 1956–1957 period, not all local cadres chose to be firm allies of the peasants. With the wisdom of hindsight, the greatest contribution that the majority of local cadres made to the movement to withdraw from the collective was probably not so much their direct participation in collective actions as their unresolved stance toward maintaining the collectives through coercive means. Most local cadres could hardly expect to reap any tangible political benefits by assuming a hard-line posture. Rather, if they attempted to suppress withdrawals from collectives, they had to confront angry peasants and bear the brunt of their wrath. In fact, on many occasions organized peasants besieged local cadres who were attempting to prevent them from leaving collectives. During the Xianju Incident, for example, a total of 107 cadres were beaten by peasants. In Nanfeng district of Xianju county, the district party secretary was severely beaten by peasants and would have lost his life had he not been immediately sent to a hospital after the beating. In another case, Zhou Chengzhu, the head of the Zhouzai Cooperative in Dongling township, convened a public meeting to struggle 29

30 31

See Selected Documents of the Zhejiang Provincial Party Committee, January 1957–December 1960 (n.d., 188–189). Interview in Xiaoshan district, December 2008. Interview in Yueqing city, December 2008.

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against those peasants who were predisposed to withdraw from collectives. Ironically, he became a sacrificial lamb at the meeting: the angry peasants beat him so severely that he fell unconscious.32 In Huairen township, because the head of a high-stage co-operative did not allow peasants to withdraw, the peasants threatened to beat him. The head of the co-operative then ran into the compound of the township government. The irate peasants surrounded the building and tried to charge into it in order to force the township government to surrender the head of the co-operative.33 In Xiaoshan county, peasants blockaded the main roads in case the cadres in the collectives attempted to move in and out freely.34 In Yongjia county, peasants chased after those cadres who tried to prevent them from withdrawing from the collectives.35 In many cases, the situation veered out of the control of the local governments so the PLA had to step in to restore order. The high cost of being a hard-liner also resulted from the ambiguous policy signals emanating from the central government between July 1955 and summer 1957. Based on past experience, local cadres knew that the policy lines of the party center were likely to swing back and forth between left and right at any moment, which would not only nullify their previous efforts but also leave them exposed to huge political uncertainties because their current seeming political correctness might prove to be wrong in hindsight, thus putting them in an embarrassing situation. On one hand, the party-state encouraged collectivization. On the other hand, based on his judgment about domestic and international environments since his July 31, 1956 speech, Mao emphasized that government officials should deal with the social and economic disturbances brought about by rash collectivization in an appropriate manner. In January and February of 1957, Mao delivered several keynote speeches in which he instructed his party comrades how to address the “contradictions among the people” (人民内部矛盾). Mao proclaimed that Communists “must use a democratic method of persuasion and education when working among the labouring people and must on 32

33

34 35

See the Party History Research Office under the Taizhou City Party Committee (2005, 141). See the Party History Research Office under the Taizhou City Party Committee (2005, 145). Oral source, interview in Xiaoshan district, April 2009. Oral source, interview in Wenzhou city, November 2008.

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no account resort to commandism and coercion.”36 In the spirit of Mao, the Zhejiang Provincial Party Committee issued several documents to classify most withdrawals from collectives as contradictions among the people and therefore made it clear that rural cadres should deal with these riots in a “unity–criticism–unity” manner rather than through confrontation. In particular, the directives of the provincial party committee stated that before the masses settled down, no troops would be allowed to crack down on the disturbances, much less fire upon people.37 As a result, local cadres contemplated how they should respond to the withdrawals from collectives. If they bet on the wrong horse, they were likely to become scapegoats sacrificed by their supervisors to placate the outrageous peasants, just like those local cadres who had been activists in promoting collectivization during the first wave of withdrawals from collectives and who were later scolded by their supervisors for having committed errors of commandism and bureaucratism. Thus, given the political context in 1956–1957, among the marginalized local cadres, the potential costs of being hard-liners when dealing with withdrawals from collectives were too high. Hence, their optimal strategy was to sit on the sidelines and try not to upset either side—remaining in line with official policy in public but in the meantime attempting to avoid direct confrontation with the peasants when dealing with withdrawals from collectives. This explains why many local cadres in 1956 and 1957 were so passive and slow to respond to withdrawals from collectives. In non-guerrilla counties, however, there was an entirely different situation. As we noted in the previous two chapters, in these localities, politics was dominated by the southbound cadre group and there was no strong local cadre group to check its power, let alone to challenge its authority. Therefore, in these localities the peasants were less likely to find a local cadre group that was patient and tolerant of their collective 36

37

See Mao, “On the Correct Handling of Contradictions among the People” (关于 正确处理人民内部矛盾的问题), in Mao (1977, 391). See “The Report of the Provincial Party Committee on the Discussions of the Plenum of the PPC and the Provincial and Municipal Party Secretaries on How to Address the Contradictions among the People, 13 May 1957,” and “The Directive of the Provincial Party Committee on the Correct Handling of the People’s Riots, 20 June 1957,” in Selected Documents of the Zhejiang Provincial Party Committee, January 1957–December 1960 (n.d., 87–97, 117– 125).

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resistance. Moreover, although officials in these counties also faced similar policy uncertainties, they had less to worry about, because even if they did something wrong to intensify the so-called contradictions among the people, e.g., assuming that the peasant riots were “antagonistic contradiction” (敌我矛盾) demonstrations, this would not cost them their political lives because they could count on protection from their high-level patrons. Therefore, the greatest concern for officials in these counties was to nip in the bud any sign of withdrawal from collectives so that collective action by the peasants would not develop into major chaos. The situations in Kaihua and Longyou counties provide an illuminating example. Both counties experienced serious unrest in the “rash advance” during the co-operative movement of 1953. In 1956 and 1957, agricultural production in the two counties dropped considerably. In Kaihua county, for example, per capita grain output dropped by 3.4 percent in 1957 compared with the output level in 1956. In Longyou county, per capita grain output decreased by 19 percent in 1956 compared with the output level in 1955. Grain output in 1957 appeared to recover, growing by 12 percent from 1956 in terms of per capita output, but it was still lower than the 1955 level.38 Despite the adverse conditions, the two counties did not report any massive peasant riots between 1956 and 1957. A reasonable explanation is that because of the lack of support and tolerance by the local elites, any sporadic protests or petitioning by the peasants, if there was any, would be instantly suppressed, leaving no room for further development. As a result, peasants in these two counties could seldom initiate any meaningful collective action against the state-sponsored collectivization.39 Despite the different fates of the withdrawals from collectives in the various localities from 1956 to 1957, the massive unrest ultimately sent a warning to Beijing and astonished party leaders. Beginning in summer 38

39

These figures are calculated by the authors based on the relevant information in the Longyou County Gazetteer (1991) and the Kaihua County Gazetteer (1988). In December 2008, the authors visited Quzhou city to meet with several party historians in the Office of Research on Quzhou Party History. We inquired about the withdrawals from collectives in the Quzhou region, including today’s Kaihua and Longyou counties, from 1956 to 1957. They confirmed that there had been no withdrawals from collectives at the time. Their reason was that both the cadres and the masses in the Quzhou region were so obedient that they were unlikely to become troublemakers.

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1957, Mao began to change his tune about the nature of withdrawals from collectives, and in fall 1957, he launched a Rural Socialist Education Movement to crush the withdrawals from collectives once and for all. By the end of 1957, the peasants’ exit option was reduced to an apparent rather than a real right. In 1958, when the People’s Commune Movement was launched to amalgamate the numerous HSCs into bigger communes, the exit option was officially abolished. Thereafter, peasants were required to retain their commune memberships until 1984, when the commune system finally collapsed after the economic reforms had been in place for some seven years.

3.4 Rural Resistance in Zhejiang: Individual Household Farming In addition to the withdrawals from collectives, another bold undertaking pursued by Zhejiang’s peasants to protect their self-interest during the high-tide period of collectivization was an insistence on individual farming, i.e., contracting output to individual households (baochan daohu), which later became known as the household responsibility system (HRS). On one hand, compared with withdrawals from collectives, the household responsibility system did not cause much confrontation because the peasants involved did not resort to breaking away from the collectives to demonstrate their dissatisfaction. Therefore, the household responsibility system did not directly challenge the political authority of the collectives. Rather, it sought to enhance the production incentives of members of the collectives by delegating production management to individual households rather than to collective farming units (such as production teams or production brigades under the HSCs and the communes). In all important aspects of the household responsibility system, the collective nature of the HSCs and the communes was largely maintained.40 In this sense, the household responsibility system was a revisionist method rather than a revolutionary transformation of the collective farming system. On the other hand, individual farming and household contracting did have a major influence. As feared by the Maoist ideologues, the 40

Under baochan daohu, all key production materials, including land, remained collectively owned. Production plans and remuneration were determined by the collectives or the communes.

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household responsibility system paved the way for the transition from collective farming to individual farming, and this development would eventually lead to the complete collapse of the collective agricultural system because everything, not merely production management, could be delegated to individual households, which definitely represented the embodiment of capitalism. Indeed, the first breakthroughs in China’s economic reforms in the late 1970s were achieved in the countryside in the form of the household responsibility system, which ultimately led to the breakdown of the collective system in rural China in the 1980s (see Chapter 5). Therefore, the household responsibility experiment in the 1950s is widely regarded as the predecessor of the rural economic reforms that commenced two decades later.41 Thus the nature of the household responsibility system inevitably provoked heated debates among the party leadership from 1956 and practice of the system was associated with great political risks.42 The household responsibility system was eventually viewed by Mao as a symbol of capitalism and came to be prohibited by the authorities. However, advocates of the household responsibility system, from leading figures in the party, such as Liu Shaoqi and Deng Zihui, down to low-ranking grassroots cadres, had to pay a heavy price during different historical periods for opinions that deviated from those of Mao. However, similar to his strategy adopted during the previous debates on the pace of the co-operative movement in the early 1950s, Mao did not reveal his cards at the outset and rather chose to watch from the sidelines to wait and see what transpired on the different sides of the debates. This allowed local officials to experiment with various local initiatives based on their own interpretations of state policies. Not surprisingly, local governments and officials in various localities treated the household responsibility system differently, reflecting its heterogeneous status in the power structure. It should be pointed out that in 1956 the household responsibility phenomenon was not confined to Zhejiang; it was found in a number of other provinces as well, including Sichuan, Guangdong, Henan, 41

42

See Party History Research Office under the Yongjia County Party Committee (2008, 137, 1–7); Party History Research Office under the Yongjia County Party Committee et al. (1994, 21–24). Yang (1996) documents the debates regarding baochan daohu among national and provincial leaders in the 1960s and the 1970s, as well as their political and economic consequences.

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Guangxi, Hubei, Jiangsu, Yunnan, and so forth (Du Runsheng 2005, 84–86). What set Zhejiang apart from the other provinces was the popularity of household responsibility and its long duration even after it was deemed ideologically illegal and officially prohibited. Again, household responsibility in Zhejiang was primarily a phenomenon in the guerrilla counties rather than in the non-guerrilla counties. In other words, the collective farming system was upheld in the nonguerrilla counties by obstinate local authorities. In addition, compared with withdrawal from collectives, which was a radical but short-lived social movement, household responsibility practices endured throughout the entire Maoist period, and this long duration was symptomatic of the de facto alliance between local cadres and peasants during the Maoist period. As far as household responsibility in Zhejiang is concerned, practices in Yongjia county of Wenzhou prefecture are well documented, and as a result it is the best-known case study today. Like many other counties in Zhejiang, before the party launched the socialist agricultural high tide in the summer of 1955, the pace of collectivization in Yongjia county was quite slow. The Mutual Aid and Co-operation Movement began in 1951, but the county’s first LSC was not established until August 1952 (Yongjia County Gazetteer 2003, 39). By the end of 1953, there were only 138 LSCs in the county and less than 10 percent of rural households were enrolled in co-operatives (Yongjia County Agricultural Gazetteer 1997, 16). Not until the high tide was introduced in September 1955 was the county’s first HSC established (Yongjia County Gazetteer 2003, 40). Thereafter, the collectivization movement was accelerated. By the end of 1956, 95 percent of peasant households had joined the HSCs, marking the completion of collectivization (Yongjia County Gazetteer 2003, 40). But the speedy advance of collectivization did not solve the problems inherent in the collective farming system. In retrospect, Dai Jietian, a local native cadre, seems to have been the first local official to want to reform farming management in order to address the inefficiency problems under the collective system. In the winter of 1955, Dai was sent by the county party committee to Panqiao High-Stage Co-operative (潘桥社) to oversee agricultural production in the co-operative. Dai found production incentives among members of the co-operative to be extremely low because it was difficult to supervise their work and their rewards were linked neither to output nor to the quality of their work

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(Dai Jietian 2002, 8–9). Dai’s observations were confirmed by Li Yunhe, then the deputy county party secretary, who attributed the problems of the HSCs to poor management, obscure responsibility, low efficiency, and fruitless efforts (Party History Research Office under the Yongjia County Party Committee 2008, 36–37). Based on his on-the-spot investigation, Dai came to believe that unless the evaluation of farmers’ work was linked to output and quality, there was no way to improve the efficiency of the co-operatives. He revealed his thoughts to Li Yunhe and suggested that the farmers be rewarded on the basis of their output by contracting output to individual households, and Li agreed (Dai Jietian 2002, 10). Their greatest concern, however, was whether contracting production tasks to individual households and then rewarding the households based on their actual production output was in line with socialist principles. Given the political atmosphere at the time, this was not a mere management issue; instead, it entailed huge political risks.43 At the same time, the National Conference of the Heads of the Rural Work Departments was being held on April 2, 1956, in Beijing. In his address to the meeting, Deng Zihui admitted the necessity of trying various methods to improve management of the co-operatives, including contracting production quotas to different accounting units (Huang Daoxia et al. 1992, 349). Echoing Deng’s speech, on April 29, 1956, People’s Daily, the mouthpiece of the party, published an article entitled “Work Groups and Co-operative Members Should Practice Contracting Labor and Production Quotas” (生产组和社员 都应该包工包产). The article emphasized there were no taboos when experimenting with contracting labor and production quotas to work groups (工作组) or to individual co-operative members (社员). No doubt Li Yunhe was heartened when he read the article in People’s Daily. With the article in his hand, Li Yunhe went to Zheng Jiashun, then the head of the rural work department in Wenzhou prefecture, to ask for permission to experiment with contracting production quotas to individual households in Yongjia county. After hesitating for a while, Zheng Jiashun gave the nod to Li Yunhe so that Li could proceed to experiment with his plan in Yongjia. 43

In fact, according to local policy in 1956, production quotas could not be contracted to individual households. See Party History Research Office under the Yongjia County Party Committee (2008, 169).

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However, Zheng Jiashun also warned that such experimentation could not be advocated on a large scale (Party History Research Office under the Yongjia County Party Committee 2008, 124). Apart from receiving a green light from Zheng Jiashun, Li Yunhe also received an endorsement from Yongjia county party secretary Li Guimao, who voted for Li Yunhe’s proposal at a meeting of the county party committee (Party History Research Office under the Yongjia County Party Committee 2008, 169–170).44 Ultimately, the county party committee decided to appoint Dai Jietian to chair a pilot project at Liaoyuan Co-operative (燎原社) to experiment with contracting production quotas to households and to link their monetary rewards to actual output,45 which was called “household responsibility” by Li Yunhe. This was the first time since the completion of collectivization that the term “household responsibility” appeared in an official Chinese document. Measured against economic criteria, the Liaoyuan experiment was successful. According to the official records, the farmers’ incentives were enhanced substantially and grain output increased by 40 percent in less than one year (Party History Research Office under the Yongjia County Party Committee 2008, 4). To promote the achievements of Yongjia’s household responsibility experiment, a meeting of 1,000 cadres was called by the county party committee in September 1956 to introduce the Liaoyuan experience to the heads of the county’s HSCs. As a result, the county leadership planned to approve more household responsibility pilot sites in the county. But before long, the political tides once again turned. On October 10, 1956, People’s Daily published an article entitled “Contracting Production Quotas to Production Teams Should Not Be Allowed” (包产不可到生产小组), denying the legality of the household responsibility system. Sensing this subtle change, the Wenzhou prefectural government stepped in. On November 19, 1956, the Southern Zhejiang People’s Daily, an official newspaper run by the prefectural party committee, published an editorial entitled “Opposing the Retrogression” (不能采取倒退做法), which directly denounced Yongjia’s household responsibility system as a demonstration of the “small-peasant economy” as well as “a fake advanced institution” 44

45

All the details about this meeting were confirmed by our interview in Yongjia county, August 2008. For details about the experiment in the Liaoyuan co-operative, see Dai Jietian (2002, 14–18).

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(Party History Research Office under the Yongjia County Party Committee 2008, 173). This threatening message, however, did not frighten the supporters of the household responsibility system. In fact, the advocates of household responsibility were fully confident about their political correctness, and their response was both quick and powerful. Backed by Li Guimao, Li Yunhe wrote a report that he personally signed, and on November 25, 1956, he submitted it to the Wenzhou Prefectural Party Committee, the Zhejiang Provincial Party Committee, the East China Bureau, and the CRWD, to summarize the economic merits of the household responsibility system and to emphasize its socialist nature. Li Guimao personally questioned the chief editor of the Southern Zhejiang People’s Daily asking why she had wantonly interfered in Yongjia’s household responsibility experiment. Dai Jietian, supervisor of the experiment at the Liaoyuan Co-operative, also wrote letters to the Zhejiang Daily, the official newspaper run by the Zhejiang government, to refute the unwarranted charges against them made by the Southern Zhejiang People’s Daily (Party History Research Office under the Yongjia County Party Committee 2008, 4–5). Up to this point in the debate, the balance seemed to tilt toward Yongjia’s reformers because they had support from the provincial government. Only one day after Li Yunhe submitted his report, Lin Hujia, who was then the deputy provincial party secretary in charge of provincial agricultural affairs, affirmed the value of the household responsibility system. On January 4, 1957, after Li Yunhe and Dai Jietian explained how and why they had carried out the household responsibility experiment in Yongjia at a meeting of the provincial party committee, Lin Hujia again officially endorsed Yongjia’s experiment. Following Lin Hujia’s instructions, the Zhejiang Daily published Li Yunhe’s report on January 27, along with an editorial comment, to publicize the attitude of the provincial authorities. Support from the provincial authorities obviously increased the popularity of the household responsibility system in Yongjia. As of February 1957, 255 HSCs in Yongjia, accounting for 39 percent of the total HSCs in the county, had adopted the household responsibility system. In fact, the system was not confined only to Yongjia county; instead, it also spread to Wenzhou prefecture. In Wenzhou prefecture there was a total of 1,000 HSCs that adopted the household responsibility system, involving 178,000 peasant households and accounting for 15 percent of the

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total peasant households (Party History Research Office under the Yongjia County Party Committee 2008, 4–5). However, the debates did not yet end. The chief editor of the Southern Zhejiang People’s Daily, after running into a wall in Zhejiang, chose to appeal directly to People’s Daily to arbitrate. Reportedly, it was Mao who personally made the final decision that the household responsibility system was opposed to socialism and should not be allowed (Party History Research Office under the Yongjia County Party Committee 2008, 43).46 After learning of the true attitude at the center, the Zhejiang Provincial Party Committee abruptly changed its tune. In early March 1957, the Zhejiang Provincial Party Committee and the Wenzhou Prefectural Party Committee ordered an end to the household responsibility experiment. Under unprecedented pressure from above, the Yongjia County Party Committee was forced to call a meeting on March 8, 1957, at which Li Guimao declared that all co-operatives in Yongjia, with the exception of the Liaoyuan co-operative, were to end the household responsibility experiment (Party History Research Office under the Yongjia County Party Committee 2008, 9). Pressure on the Yongjia County Party Committee continued to mount. Further, at an enlarged meeting convened by the Yongjia County Party Committee on April 2, 1957, the Wenzhou Prefectural Party Committee equated the household responsibility system with individual farming and capitalism. In June 1957, the provincial party committee sent an investigation team to Yongjia county to oversee changes to the system. In its report to the provincial authorities, the investigation team concluded that Yongjia’s household responsibility system was a plot orchestrated by capitalist forces to sabotage collectivization and the co-operatives. At the standing county party committee work conference on July 3, 1957, Li Guimao was forced to admit that the debate regarding the household responsibility system represented a struggle between socialism and capitalism, and the county committee resolved to correct its past mistakes (Party History Research Office under the Yongjia County Party Committee 2008, 43–45). 46

Although this was obviously Mao’s personal decision, in all openly published materials it was never revealed that the final judgment rested with Mao or who had sent the directive to the Zhejiang leadership. During our field surveys in Zhejiang, we never found any definite answer to this question.

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But Yongjia’s leadership did not immediately surrender. In fact, after the meeting on April 2, the experiment at the Liaoyuan co-operative remained alive. Until July 1957, Li Yunhe, together with many local cadres in the county rural work department, continued to promote the merits of the household responsibility system. At the work conference on July 3, for instance, Li Yunhe boldly refuted charges against the system. It should be pointed out that Li Yunhe and other advocates of the system resorted to Deng Zihui’s relevant speeches on the system to justify their position. For example, at the July 3 work conference, Li Yunhe quoted Deng Zihui’s speeches on the household responsibility system that affirmed that the system could be allowed in certain places that were not suitable for collective farming. It is evident that Li Yunhe equated the opinion of Deng Zihui with the position of the center (Party History Research Office under the Yongjia County Party Committee 2008, 44). As a result, Li Yunhe and others in his camp soon found they were on shaky ground because Deng Zihui was by no means the man who called the shots. On July 10, 1957, one day after Mao called for a counterattack against the offensive by bourgeois rightists in Shanghai, the Zhejiang Party Committee sent a work group to Wenzhou to call a meeting in Yongjia county. At the meeting, Wu Zhichuan, then head of the provincial rural work department as well as the head of the work team, declared that capitalism was spontaneously launching attacks against agricultural socialism, as embodied in two events: distributing farmland according to household labor and contracting output quotas to individual households (Party History Research Office under the Yongjia County Party Committee 2008, 21). Wu Zhichuan’s speech marked the death sentence for the official household responsibility experiment in Yongjia county. The Yongjia county party leadership had to pay a price for its poor political sense and its erroneous position on collectivization. The verdict was delivered in February 1958. Li Guimao lost his post as county party secretary and was demoted to the rank of an ordinary state cadre. Li Yunhe was stripped of his party membership, declared a rightist, and sent to engage in manual labor. Membership of the county rural work department was completely reshuffled. Han Hongchang, head of the county rural work department and a member of the county party standing committee, was expelled from the party standing committee,

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and other senior cadres serving on the county rural work department lost their positions.47 Yongjia’s official household responsibility experiment had rich and far-reaching implications, revealing much more than information about the experiment per se. For one thing, the entire experimentation process showed how local politicians, against the backdrop of the political atmosphere and the policy environment that prevailed in Zhejiang in the 1950s, read the political signals from above. It should be remembered that the experiment began shortly after the party launched the socialist agricultural high tide. No doubt Chairman Mao at the time was anxious for positive feedback from below to justify his decision to launch the high tide. According to socialist fundamentalists such as Mao, the superiority of collective farms, i.e., the HSCs, was due to their unmatched productivity as compared to that of individual farming, and evidence of this could be found in the substantial surge in output. In fact, in all of Mao’s speeches and all the directives issued by the center during collectivization, the only criterion for the success of the co-operatives, including both the LSCs and the HSCs, was an increase in grain output. The Yongjia county leadership obviously grounded the legality of their experiment on such a measurable criterion. However, according to Mao it was the ideology that had a final say as well as veto power, and Mao never revealed his true intentions in advance. In fact, he usually clouded his intentions with vague and even contradictory language. Hence, it was not unusual that Mao’s colleagues and subordinate officials had to make judgments based on their own political sense and experience, which ultimately could prove to be wrong and hence would entail huge political risks. Yongjia’s reformers in the 1950s were neither the first nor the last to lose their careers due to casting the wrong lot. To be fair, the Yongjia county leadership in fact realized the potential political risks associated with the household responsibility system. Their courage was based on two political perceptions: First, as Li Yunhe defended himself at the July 1957 conference, he used speeches by Deng Zihui and other relevant central documents as representative of the stand at the center. It should be remembered that when Li Yunhe persuaded the prefectural officials (e.g., Zheng Jiashun) to endorse his 47

Oral source, interview in Wenzhou city, November 2008. Also see Party History Research Office under the Yongjia County Party Committee (2008, 6).

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experiment in Yongjia, he used an article published in People’s Daily in favor of the household responsibility system to back his proposal. Although, with the wisdom of hindsight, Li Yunhe and his supporters had erroneous political judgment on the issue of household responsibility, even they did not make unsound decisions, given the fact that Deng Zihui was indeed in charge of national agriculture as the head of the CRWD and People’s Daily was the mouthpiece of the party. Once again, the political signals from above were mixed and even misleading for local officials, which was indicative of the secret nature of authoritarian politics as well as of the information asymmetries in the dictatorial system (Shih 2008). Second, this event also reveals that the officials involved in the household responsibility experiment faced different fates due to their different power statuses and political identities, i.e., southbound cadres versus marginalized local cadres. Both Li Yunhe and Li Guimao were southbound cadres with much political capital in Yongjia and Wenzhou, and this political identity gave them full confidence in their political security when advancing the household responsibility system. Among them, Li Yunhe enjoyed a successful career until he hit the wall in 1957. He had enlisted in the Third Field Army in 1945 and arrived in Zhejiang along with the field army in 1949 (Party History Research Office under the Yongjia County Party Committee et al. 1994, 124). He soon became part of a five-person team sent to Yongjia in August 1950 to lead land reform in the county (Yongjia County Agricultural Gazetteer 1997, 15). When he assumed the post of deputy county party secretary in Yongjia county in June 1956, he was only twentysix years old.48 His superior, Li Guimao, was a senior party cadre with long revolutionary experience that dated back to the Anti-Japanese War in Shandong province. Apart from being the top leader in Yongjia county, Li Guimao was also a member of the Wenzhou Prefectural Party Committee.49 Such political capital ultimately paid off. Although Li Guimao and Li Yunhe paid a high price for approving and leading the household responsibility experiment, they were not the ones who suffered the most. Li Guimao, for example, had initially been labeled a rightist who had committed serious mistakes. But due to his past revolutionary experience, Jiang Hua, then party secretary of 48 49

Oral source, interview in Yongjia county, November 2008. Oral source, interview in Wenzhou city, December 2008.

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Zhejiang province, intervened in Li Guimao’s case so that Li was merely labeled a “center-rightist” (中右), which allowed him to continue as a state cadre, but at a low rank. Although Li Yunhe lost his post on the county party committee and his family was also implicated,50 he could continue to live a normal life as an employee in a state-owned firm and receive a stable salary from the firm (Party History Research Office under the Yongjia County Party Committee 2008, 124, 176– 177). In fact, in September 1959, the Yongjia County Party Committee submitted a report to the Wenzhou Prefectural Committee, requesting that the charges as a rightist against Li Yunhe be revoked. By the end of September, this request had been approved by the prefectural party committee (Party History Research Office under the Yongjia County Party Committee 2008, 28). In contrast, the marginalized local cadres were most affected by household contracting. The misfortune that befell Dai Jietian is illustrative. Although the baochan daohu method was his brainchild, in the household responsibility event he was not a decision maker and his job was simply to carry out a blueprint proposed and approved by the county party committee, which consisted primarily of southbound cadres. But Dai Jietian received the most severe punishment. In addition to being labeled a rightist, he was declared to be a counterrevolutionary and sentenced to three years of compulsory labor. Dai was sent back to his birthplace in the countryside to work under supervision for about twenty hours per day. His family was also implicated; his wife lost her formal job in the county education bureau and his four children were deprived of urban household registration status and therefore were unable to receive any formal education (Dai Jietian 2002, 24–28). Even Li Guimao acknowledged that the county leaders, including himself and Li Yunhe, made the final decision whether to experiment with household responsibility in Yongjia, so they, rather than Dai Jietian, should have shouldered the principal responsibility and Dai’s punishment can be considered excessive (Party History Research Office under the Yongjia County Party Committee 2008, 177–178). In addition to Dai Jietian, all local cadres in the county rural work department, except for the southbound head Han Hongchang, were stripped of their party membership, labeled rightists, sent to labor 50

For example, Li Yunhe’s wife was deprived of probationary party membership.

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camps, or demoted, and the entire department was disbanded.51 Even ordinary local people were condemned. More than ten peasants were imprisoned for “instigating people to practice household responsibility.” Among them, two were sentenced to more than twenty years and one died during his time in prison. The persecution was extended further to the entire Wenzhou region and all grassroots-level cadres and peasants who had been involved in the household responsibility experiment were more or less implicated.52 The sharp contrast in the fates of the southbound cadres and the local cadres in the baochan daohu affair makes it clear that local political elites, though they all faced similar policy ambiguities and uncertainties, took different risks corresponding to their political status in the power structure. The marginalized local guerrilla cadres, no matter whether or not they had followed the official line, were bound to become the scapegoats for the policy-implementation mistakes and they could not count on protection from higher-level patrons. The baochan daohu affair no doubt represented the embodiment of the embarrassing status of the local guerrilla cadres in the regime. In contrast, despite the authorities’ prohibition of household responsibility, spontaneous practices of household responsibility by peasants nonetheless continued and survived party suppression. In fact, after the household responsibility system was declared illegal in 1958, it continued underground and was able to survive until its official authorization in the early 1980s. In Yongjia county, for example, the party-state had been attempting to eradicate the underground household responsibility system but it was never successful. In fact, echoing the call by the central government, since late 1957, the county authorities had been launching a Socialist Education Movement in the countryside to suppress any thoughts or activities that conflicted with socialism, and the household responsibility system was the main target of the movement. But by late 1959, the county authorities acknowledged in an official report that the household responsibility system had been revitalized in many areas of the county (Party History Research Office 51 52

Oral source, interview in Wenzhou, November 2008. See Party History Research Office under the Yongjia County Party Committee et al. (1994, 7); Party History Research Office under the Yongjia County Party Committee (2008, 6). In fact, by 2008, when the present authors were conducting interviews in Yongjia, the cases of some of these peasants had still not been redressed.

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under the Yongjia County Party Committee et al. 1994, 274–276). As of 1962, there were 176 production teams adopting the household responsibility system. This figure rose to 5,438 in 1968 and over 6,000 in 1976, involving 77.3 percent and 80 percent of total rural households respectively (Party History Research Office under the Yongjia County Party Committee et al. 1994, 456–466). Like the spread of withdrawals from the collectives during collectivization, the vitality of the household responsibility system in Zhejiang was not a fortuitous phenomenon. It basically reflected the passivity of local cadres in terms of implementing radical agrarian policies. For their part, expunging the household responsibility system from the countryside could not bring them any real political and economic benefits. Rather, because prohibiting the household responsibility system inevitably infringed upon peasant interests, it strained the relationship between peasants and local cadres, thus negatively affecting potential supporters of the local cadres and therefore putting local cadres in a precarious situation given the political context at the time. Even worse, unwise actions by some local cadres could provoke violent resistance from the peasants, aggravating their already embarrassing status in the local political arena. In extreme cases the peasants might humiliate local cadres in public, attack and beat them, or even threaten their lives. For example, after baochan daohu was prohibited in 1957, the Yongjia County Government sent several investigation teams down to the villages to prohibit farmers from adopting the system. But the cadres on the investigation teams found that they faced enraged farmers who welcomed them with violence. In Lixi township (里溪乡), the township party secretary led a work team to Shang Fan village (上泛村) to prevent the villagers from adopting the household responsibility system. The angry villagers proceeded to kill him with their hoes. The party secretary of Jinshantou (金山头) production brigade in Gu Shan township (孤山镇) was also killed by villagers. In Fuli village (福利村), angry villagers besieged the work team and successfully forced more than 100 militiamen, who had been sent by the township government to put down the riot, to withdraw from the village (Party History Research Office under the Yongjia County Party Committee et al. 1994, 437–438). To be sure, opposition by the peasants on their own could not force the party-state to back down, as had occurred during popular protests in other parts of China. The viability of the spontaneous practice of the

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household responsibility system by peasants was based on acquiescence and tacit support by local cadres. According to an official report in 1959, in Huangtian Commune (黄田公社),53 for example, the Red Flag Production Brigade (红旗生产队) reduced the size of the production teams substantially by increasing the number of production teams from twelve to thirty-six (consisting of an average of sixteen peasant households) and then contracted the output quota to these smaller production teams, even though the practice was illegal at the time. In Yantian Commune (岩田公社), a number of production brigades boldly adopted the household responsibility system. Several local cadres publicly declared that the only way to increase the farmers’ production incentives as well as the output level was to adopt the household responsibility system. In some places the local cadres even considered allocating farmland to peasant households (Party History Research Office under the Yongjia County Party Committee et al. 1994, 275–276). In another official report written in late 1961, county authorities criticized the propensity of many local cadres to adopt household responsibility (Party History Research Office under the Yongjia County Party Committee et al. 1994, 288–289). As a negative example cited by the county authority during the 1962 Rural Socialist Education Movement, Lingdong Brigade (岭东大队) was singled out for its adoption of the household responsibility system. Its party secretary even advertised the advantages of household responsibility to those who questioned its legality (Party History Research Office under the Yongjia County Party Committee et al. 1994, 290–291). In many cases, local cadres and peasants did not openly challenge the authorities. Instead, they contrived myriad methods to cover their true actions, which proved to be much more effective because of the difficulties of monitoring and supervising agricultural production. For example, the provincial government often sent work teams to places that engaged in household responsibility or called struggle meetings to criticize the “selfish” peasants and local cadres. In such cases, the local cadres typically promised the investigators that they would no longer engage in household responsibility. But after the work teams departed, 53

In 1958, Mao launched the People’s Commune Movement to consolidate the socialist nature of agriculture, during which many HSCs were amalgamated into larger communes. The commune system lasted for almost three decades and was not officially dismantled until 1984.

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the household responsibility system was resumed and continued to be practiced by the villagers. For example, in March 1960 a work team was garrisoned in Biaoshan village (表山村) to suppress any household responsibility activities in the village. To frighten those who sympathized with the household responsibility system, the work team dismissed the party secretary of the village party branch and appointed a replacement. Under pressure, all village production teams committed to resuming collective farming. The county authorities were satisfied with the success of the work team and concluded that its mission had been accomplished. However, after the work team departed, when the villagers asked the cadres what they should do, the cadres responded that they could do whatever they wanted, once again giving a green light for household responsibility (Party History Research Office under the Yongjia County Party Committee et al. 1994, 468). Another popular coping strategy used by local cadres was to disguise household responsibility as collective farming. A well-known example occurred in 1961 when a work team was garrisoned in Lingli village (岭里村). Zheng Yanliang, party secretary of the village party branch, pledged to the work team that as long as any village party members were alive, he would guarantee the dominance of collective farming in the village. When the work team members went to the fields to oversee the peasants’ work, they found that all commune members were carrying out their duties according to every collective directive, thus reinforcing the belief among the work team members that capitalism had indeed been eradicated and socialist agriculture had taken root. But the work team members had been deceived. In fact, all production materials, e.g., fertilizer and seeds, had already been distributed to different farmland plots which were contracted to individual households that were in charge of production on their own plots. Although the output was collected by the collective during the harvest period, this was merely a cover to mislead the investigators because once the investigators departed, the grain was distributed to the individual households according to their respective actual output. To be sure, there were a host of coping strategies used by the villagers to protect the household responsibility system from the inspection teams. For example, in the mountainous areas, some peasants remained on the lookout to tip off the villagers when the investigators were approaching. As soon as they found that the investigators were approaching, they shouted loudly, “the sweet potatoes were eaten by

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the cattle!” With this warning, the villagers who were working on their own plots of land would pool together to pretend they were participating in collective farming. In another case, to redress the household responsibility system in Wushang Brigade (五上大队) under Wuchi Commune, the investigators worked together with the villagers at harvest time to ensure that all grain output was collected by the collective. In fact, the peasants would pack the wheat from the different plots in packages with different symbols so that after the departure of the investigators each household was able to retrieve its own produce. In the meantime, all the production teams in Wushang Brigade had two account books: one was the true book for the production team members, whereas the other was cooked up to show the inspection team when the uninvited guests arrived at the brigade (Party History Research Office under the Yongjia County Party Committee et al. 1994, 440–441). The household responsibility system did not take root only in Yongjia. It survived as well in dozens of other regions in Zhejiang. In Yueqing county, for example, spontaneous household responsibility practices emerged even after the system was declared to be synonymous with capitalism.54 To provide cover for themselves, some local people went up into the mountains to transform wasteland into cultivated land or orchards. The experience of Chen Bihui, the brother of the head of the county as well as a delegate to the Provincial People’s Congress (PPC), provided such an example. His family turned a mountainous plot of wasteland into a fruit garden. Although some senior county leaders had intended to identify Chen’s behavior as one variant of the household responsibility system, he eventually weathered the storm because of strong opposition by local cadres. Due to his success, Chen was emboldened to advertise the advantages of the household responsibility system at a PPC congress.55 Chen was not alone in Yueqing. In order to feed themselves, many local people copied Chen’s actions, especially during the Great Famine in the wake of the Great Leap Forward in the late 1950s.56 54

55 56

Oral source, interview in Yueqing city, December 2008. According to two interviewees, who were both senior leaders in Yongjia county in the late 1950s, the baochan daohu experience began earlier in Yueqing than it did in Yongjia county. Oral source, interview in Yueqing city, December 2008. Oral source, interview in Yueqing city, May 2009.

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In Xiaoshan county, the household responsibility system experienced similar ebbs and flows. In fact, according to official statistics, until the spring of 1957 there were 417 small production teams that had adopted the household responsibility system. In Chengbei district (城北区), for example, 25 percent of the small production teams adopted the household responsibility method.57 After the provincial authorities declared the household responsibility system illegal, the county party committee followed suit to prohibit it. In an official August 1957 report by the county party committee, the household responsibility system was listed together with withdrawal from the collective as a main indicator of an attack by the forces of capitalism against the forces of socialism.58 But in the first half of 1959, the county authorities acknowledged that the household responsibility system had once again emerged in some areas of the county. As in Yueqing county, although the county authorities sent work teams down to the villages to correct this evil wind of capitalism, their efforts were unsuccessful. Although household responsibility activities subsided in the short term, they were soon resumed, and usually on a larger scale than before, revealing that few local cadres were serious about implementing county directives to suppress baochan daohu.59 In contrast to the situation in the guerrilla counties, in the nonguerrilla counties the fate of baochan daohu was very different. For example, in Quzhou prefecture, where southbound cadres dominated the political arena, throughout the 1950s and 1960s there were hardly any signs of household responsibility in the countryside. Of course, there were some sporadic occurrences, but these cases were principally due to passive responses by individual households under pressure of survival who turned to household responsibility as a way of feeding themselves. Such practices did not represent a collective alliance between hungry peasants and local cadres. The local cadres were zealous in carrying out the directives of the southbound leadership in 57

58

59

“Brief Report on the Situation in the Current Rural Socialist Education Movement” (中共萧山县委关于当前农村社会主义教育运动情况简报), in the archives of the Xiaoshan County Party Committee, September 10, 1957, archive serial no. (57) 127. “Report on the Rural Situation and the Principles and Missions of Rural Work in the Second Half of the Year” (关于农村形势和今年下半年农村工作方针、任 务的报告), in the archives of the Xiaoshan County Party Committee, August 10, 1957, archive serial no. (57) 61. Oral source, interview in Xiaoshan district, December 2008.

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order to maintain the purity of socialist agriculture. In Longyou county of Quzhou prefecture, for example, wherever the household responsibility system was found, those who had dared to practice it were bound to face prison terms. The repression in Quzhou was so effective that even at the height of the famine (1959–1960) very few peasants made efforts to engage in household responsibility to survive the dire times. Rather than resorting to the household responsibility system to produce more food, most local people in the famine-stricken counties of Quzhou chose to flee to neighboring prefectures or neighboring provinces to become beggars. In Longyou county alone, for example, before 1962 more than 50,000 people ran away from the county due to the famine and flooded into Jiangxi province in an attempt to earn a livelihood. But even under these circumstances the household responsibility system was still prohibited.60 The fate of spontaneous household responsibility practices in different localities in the 1950s and the 1960s reflected differences in the motivations and capabilities of local cadres to adopt local initiatives, which were a function of the power structures formed after 1949. The contrast between the guerrilla counties and the non-guerrilla counties would repeat itself again and again as long as the existing power structure remained basically intact. In Chapters 4 and 5, we will see that a similar sharp contrast continued to exist in Zhejiang counties in the 1970s and into the early 1980s.

60

Oral sources, interviews, Longyou county, Quzhou city, December 2008.

4

United in the Cultural Revolution The Return of Capitalism

To rebel is justified. 造反有理. Popular slogan during the Cultural Revolution

The high tide of socialist agriculture did not end with the collectivization of agriculture, which was successfully completed by 1956–1957. In fact, a bigger plan was brewing. At the Third Plenum of the Party Central Committee in September–October 1957, Chairman Mao repudiated the cautious attitude in developing the economy and urged more progress.1 On November 18, 1957, Mao, in Moscow, declared that China would overtake Britain, and later the United States, in the production of steel and other major industrial products within fifteen years. On December 2, Mao’s ambition was publicly announced by Liu Shaoqi at the Eighth National Delegates Convention of the All-China Federation of Trade Unions. Liu’s speech officially heralded the beginning of the Great Leap Forward. In addition to emphasizing the production of iron and steel, the Great Leap Forward movement also placed consolidation of the socialist nature of rural social and economic life on the top of the agenda. The key was to merge the existing HSCs into larger communes, which were designed to be both a basic agricultural production unit, to benefit from economies of scale, and a social unit to organize collective life in rural areas.2 Unfortunately, the Great Leap Forward ended with the unprecedented Great Famine that lasted from 1959 to 1961, which has been well documented by many researchers. Moreover, the failure of the 1

2

See Mao’s speech entitled “Be Activists in Promoting the Revolution” in Mao (1977, 483–497). In general, the commune was a three-tiered organization. Each commune was subdivided into production brigades (生产大队), which in turn were subdivided into production teams (生产队 or 生产小队).

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Great Leap Forward and the severity of the resultant famine triggered a series of subsequent political movements, including the Four Clean-Ups and the Cultural Revolution, during which politicians from different factions engaged in fierce political fighting to ensure their own political survival and to strike down their opponents. Like all previous political movements initiated by the party, the political struggles after the Great Leap Forward entailed mendacity, hypocrisy, and brutality, as all sides in the fighting justified their deeds by labeling others class enemies, such as revisionists, capitalist-roaders, bad elements, and so forth, and posing themselves as Mao’s vanguard and the genuine defenders of socialism. In Zhejiang, the Great Leap Forward and its aftermath resulted in significant political and economic consequences. On one hand, during the period of the Great Leap Forward the ruling southbound leadership took advantage of the opportunity to suppress local cadres. On the other hand, the radical policies of the southbound leadership during the Great Leap Forward, as well as its tragic outcomes, cost them both their reputations and their authority, deepened the division between the southbound group and the local guerrilla cadre group, and pushed the local guerrilla cadre group closer to its local constituency, including the peasants. Reciprocity between the local cadres and the local people was consolidated during the Four Clean-Ups period, and hit a peak during the Cultural Revolution when pressures on the marginalized faction were intensified. More importantly, the Cultural Revolution provided the marginalized local guerrilla cadres with an unprecedented window of opportunity to openly organize and recruit followers to compete for power. To win over grassroots support, the marginalized local cadres took the initiative to encourage and protect local people who pursued capitalist activities in order to enhance their economic welfare. As a result, contrary to Mao’s wishful thinking of wiping out capitalism through unending political movements, ironically it was during the high tide of the Cultural Revolution that capitalism finally took root in many guerrilla counties and set the stage for the takeoff of the private sector during the reform period.

4.1 From the Great Leap Forward to the Four Clean-Ups In the political history of the People’s Republic, 1958 was an unusual year. Unlike previous political campaigns during which the top leader

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never initially declared his policy position, during the Great Leap Forward, Chairman Mao showed no hesitation in demonstrating his true policy preferences to his party and in taking the helm of the campaign by frequently interfering with policymaking. During the entire year, Mao and his followers came up with radical targets for industrial and agricultural production, and escalated criticism against central bureaucrats who were cautious about these unrealistic targets and worried that the economy would become overheated. Among others, Zhou Enlai, Chen Yun, Li Fuchun, and Bo Yibo were forced to side with the chairman’s line, and they convened a series of conferences to call on the provincial leaders to immediately carry out the Great Leap Forward within their provincial jurisdictions (Xiao Donglian 2011, 92–104). Soon the entire country embarked on a spending spree. The share of investment in heavy industry rose from 43 percent of total investment in 1957 to 56 percent in 1958. Furthermore, the ratio of fixed investments to GDP surged from 17 percent to 26 percent during the same period. To accomplish the political task of overtaking Britain and the United States (赶英超美) in industrial production, swarms of “backyard furnaces” were established all through the countryside and millions of rural laborers were diverted from agricultural production to the production of iron and steel and work on large water conservancy projects. To show the superiority of socialism in the countryside, mess halls provided food free of charge so that members of the communes could eat their fill. On the face of it, these incredible achievements were indicative of Mao’s wise prediction about the enthusiasm of the masses. In reality, however, this also laid the foundation for future disasters. The Great Leap Forward was not only an economic scheme. It was a litmus test that all political elites at various levels were required to pass. In this regard, the provincial leadership of Zhejiang showed no hesitation in catering to Mao’s policy preferences. As early as December 9, 1957, Jiang Hua, the provincial party leader in Zhejiang, delivered a report to the Second Session of the Second Zhejiang Party Congress, echoing Mao’s claim made at the 3rd Plenum of the Eighth Central Committee in September–October 1957 that at the current stage, the main contradiction in Chinese society was that between the bourgeoisie and the proletariat. Jiang Hua was the first provincial leader to back Mao’s position, which in effect overthrew the conclusion of the majority opinion at the Eighth National Party Congress in September 1956 which maintained that the main contradiction was between the

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people’s demand for material well-being and the backward economy. In the same report, Jiang emphasized that conditions for leaping forward in Zhejiang were ripe. Whether by chance or not, Mao arrived in Hangzhou, the capital city of Zhejiang, on the same day (December 9) that Jiang Hua read his report to the Second Session of the Second Zhejiang People’s Congress. Mao would remain in the province for one month. Jiang’s report must have impressed Mao because Mao then asked his secretary, Ye Zilong, to inform Zhou Enlai and the provincial party secretaries from five provinces in East China and Shanghai who were present in Hangzhou that they should carefully read and discuss Jiang’s report. During Mao’s stay in Hangzhou, Zhejiang’s provincial leadership experienced its first open purge since 1949, when those who stood in the way of Jiang’s unchallenged authority in the province were labeled rightists and lost their positions. The cases of Yang Siyi and Sha Wenhan were typical. Both were local party leaders with long revolutionary experience and entrenched local fame. Yang Siyi had formerly been a senior leader serving in the Zhedong (East Zhejiang) guerrilla base area during the Anti-Japanese War; Sha Wenhan had led a peasant rebellion in the 1920s in Yin county of Zhejiang, and since the 1930s he had worked in the underground party organization in Shanghai. They sat on the standing committee of the Zhejiang Provincial Party Committee, the pinnacle of power in the province, and they held the important administrative posts of governor and deputy governor of the province respectively. However, at the Second Session of the Second Zhejiang Party Congress in December 1957, Sha Wenhan and Yang Siyi, along with two other senior provincial leaders who supported them, namely Peng Ruilin and Sun Zhanglu, were removed from their party posts and expelled from the party. Two weeks later, Sha Wenhan and Yang Siyi were also dismissed from their government administrative posts. In fact, even before the Second Session of the Second Zhejiang Party Congress, Sha’s wife, Chen Xiuliang, a vice director of the Propaganda Department of the provincial party committee, in November 1957 was accused of being a rightist and lost her position. In retrospect, the downfall of the local revolutionaries in the provincial leadership meant that from that time until the Cultural Revolution there would be no rival forces in the provincial leadership who could veto the southbound leaders, thereby paving the way for

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the subsequent radical policies.3 It also signified a decline in the political clout of the local cadres who were becoming politically marginalized in provincial politics. The political victory of the southbound leadership inevitably cleared the way for the Great Leap Forward fantasy. In February 1958, the provincial party committee at the Ninth Session of the Second Provincial Party Congress concluded that the high tide of industrial and agricultural production was approaching and concrete policy measures were to implement the Great Leap Forward. Thereafter, the provincial party committee constantly increased its production targets. Although Zhejiang had no comparative advantage in developing heavy industry due to its poor resource endowments, the provincial authorities put the development of heavy industry at the top of the development agenda and decided that gross industrial output and investment in basic infrastructure in 1958 should increase by 202 percent and 539 percent respectively, as compared with 1957. In the agricultural sector, grain output in 1958 was to rise by 1–5 percent compared to 1957 and per-acre output was to reach 600 jin (1 jin = 1.1 pounds or 0.5 kilogram). In March, the target for per-acre output was increased to 800 jin and it was expected to reach 1,000 jin in 1958. In June 1958, even though, until 1957, Zhejiang still could not produce steel and its pig iron production was only 4,700 tons, the provincial party committee stipulated that steel and pig iron production by the end of 1958 should reach 100,000 tons and 300,000 tons respectively.4 The situation, however, went from bad to worse. In August 1958, the party center held an enlarged Politburo meeting at Beidaihe (北戴河), which called for the establishment of communes. In addition, according to the false grain output figures reported to the center by the provincial authorities in the first half of 1958, after the Beidaihe conference, a resolution was announced that required all provinces to place 3

4

Forster (1997) provides a detailed account of the 1957 purge. Although he points out that Jiang was endorsed by Mao’s close colleagues, such as Tan Zhenlin and Ke Qingshi, he does not specify Mao’s role in the process. In April 2008, an informed party historian in Beijing informed us that in effect it was Mao who made the final decision to dismiss Sha Wenhan (he did not mention Yang Siyi) from the standing committee of the provincial party committee. Hence, Jiang Hua was merely implementing Mao’s directive. All figures are from the Party History Research Office under the Zhejiang Provincial Party Committee (2002, 1–44) and Zhejiang in Contemporary China, vol. 1 (1988, 67–78).

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industrial production, in particular iron and steel production, at the top of their agendas. Based on these inflated targets, Mao excitedly declared that the output of major industrial production was expected to exceed that of Britain in seven years and that of the United States within fifteen years. Once again, Zhejiang’s provincial leadership responded quickly to Mao’s call. In early October, less than two months after the Beidaihe meeting, Zhejiang established the commune system across the countryside. All existing 33,318 HSCs were amalgamated into 674 communes, involving 97.2 percent of total peasant households, with an average of over 8,500 households in each commune.5 According to the Beidaihe resolution, private property was completely abolished under the commune system. The private plots of peasant households were reclaimed by the communes and household sideline activities were prohibited. The physical property of households was appropriated by the state and laborers were utilized by the communes without compensation. Moreover, as noted at the beginning of this chapter, communal mess halls were established to provide free food. These characteristics of the people’s communes were referred to as “large and communal” (一大二公). In addition, in September 1958, the provincial party committee reaffirmed the priority of iron and steel production and increased the production targets to 120,000 tons and 400,000 tons respectively. Thereafter, it was required that the local authorities should move immediately to guarantee the fulfillment of production targets. To meet this political task, party secretaries at the prefectural and municipal levels were personally placed in charge of iron and steel production. In addition, 20,000 state and party cadres and over a million laborers were mobilized to engage in such production, and thousands of “backyard furnaces” were constructed in the countryside to speed up production. Twenty-five cities and counties, including Hangzhou city, Ningbo city, Wenzhou city, Xiaoshan county, and so forth, were designated as key production regions. To ensure that no resources would be diverted from the production of iron and steel, the provincial party committee decided that production of all industrial goods other than iron and steel would be delayed until the production targets for iron and steel were met (Zhejiang in Contemporary China 1988, vol. 1, 69–70).

5

By November 1958, the average size of a commune was 4,756 households.

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These policy initiatives inevitably transformed the Great Leap Forward into a grandiose mass movement, in which the entire society was mobilized and organized to work on political projects assigned from above. Soon, the negative consequences of this movement came to the surface. By the end of 1958, the costs of construction of the backyard furnaces and the subsidies for iron and steel production amounted to 200 million yuan, accounting for 25 percent of total fiscal expenditure for the year. What the party gained were only 210,000 tons of pig steel and 24,000 tons of iron, and a large portion was merely waste product.6 These results were both disappointing and embarrassing. But the biggest losses took place in the countryside. The expanding size of the communes, combined with their collective ownership, inflated the management and supervision costs of the commune system. Unpaid requisitions of peasant property by the communes doubtlessly wore down the peasants’ production incentives. In addition, because hundreds of thousands of rural laborers were diverted from agricultural work to iron and steel production, as well as to large collective projects, agricultural production, especially grain yields, were adversely affected. To make matters worse, the unlimited provision of free food by the mess halls led to overconsumption of food and placed strains on food supplies. Meanwhile, based on the bloated figures of grain production reported by local officials, and to meet the increasing demand for food by the huge army of the newly mobilized laborers who were working day and night in the backyard furnaces and the iron and steel factories, the state increased grain procurement quotas dramatically. These factors inevitably pushed the rural economy to the brink of collapse in subsequent years. The Great Famine was just around the corner. To be sure, the tensions caused by the Great Leap Forward between August and October of 1958 were not restricted to Zhejiang province. The top leaders received similar alarming messages from other provinces. From the end of 1958 to July of 1959, Mao and other party leaders began to take some remedial policy measures to alleviate the various problems and to attempt to improve the situation.7 6

7

See Party History Research Office under the Zhejiang Provincial Party Committee (2006, 15–16) and Zhejiang in Contemporary China, vol. 1 (1988, 70). The share of fiscal expenditures was calculated by the authors. Yang (1996, 43–54) provides a detailed account of the policy measures taken by the top leaders during this period.

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Following instructions from the center, Zhejiang began to take action to correct the mistakes committed during the previous several months. Between the end of 1958 and early 1959, the Zhejiang Provincial Party Committee held the Third Session of the Second Zhejiang Provincial Party Congress, at which Party Secretary Jiang Hua acknowledged that although great achievements had been made in the Great Leap Forward, some people had been carried away by success and become impractical in terms of policymaking and implementation. Thus, on one hand, the Great Leap Forward movement was to be continued and deepened; on the other hand, Jiang Hua also made it clear that “the air should be compressed and the temperature should be cooled down.” After the conference, the Zhejiang provincial leadership suggested a number of policy measures to cut the unrealistic production targets. For example, in 1958, the number of iron and steel production firms was scaled back from 900 to 12. The planned output of pig steel and iron production was lowered from 400,000 tons to 310,000 tons and from 100,000 tons to 30,000 tons respectively. To boost the peasants’ production incentives, the production brigade, rather than the commune, once again became the basic accounting unit and therefore the number of peasants pooled together in a single work unit was reduced. The property requisitioned by the communes with little or no compensation, totaling 280 billion yuan, was returned to production brigades and teams and to peasant households. Private plots and household sidelines were once again permitted and rural fairs were resumed, though still under strict regulation and limitation (Zhejiang in Contemporary China 1988, vol. 1, 69–70). Had these remedial efforts been continued, the disaster could have been avoided. But the political storm in August 1959 changed everything. At the time, an enlarged Politburo conference, known as the Lushan Conference (庐山会议), was held at Lushan in Jiangxi province. In addition to reaffirming the achievements of the Great Leap Forward, the conference also discussed the problems that had emerged during the Great Leap Forward. However, criticism of the Great Leap Forward at the conference by Marshal Peng Dehuai and his supporters, including the Vice Minister of the Ministry of Foreign Affairs Zhang Wentian, Chief of the General Staff Huang Kecheng, and Hunan provincial party secretary Zhou Xiaozhou, provoked Mao’s retaliation. As it turned out, Mao branded Peng and his supporters “right opportunists,” and they were lumped together as an alleged “anti-party clique headed by

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Peng Dehuai.” Moreover, after the conference, Mao decided to launch a nationwide witch hunt for the “anti-right deviation” movement (反右倾) in which anyone who was skeptical about the achievements of the Great Leap Forward could become a target. As a result, beginning in late 1959, “petty-bourgeois fanaticism,” a notion used by Peng Dehuai to locate the root cause of the policy mistakes of the leap, once again prevailed. Without question, having learned of what occurred at the Lushan Conference, the Zhejiang provincial leadership under Jiang Hua moved quickly to show its allegiance to Beijing’s top leaders. From August to September, the Zhejiang Provincial Party Committee held a month-long conference to prepare for the launch of a new round of the leap forward. In February 1960, the Second Session of the Second Zhejiang Party Congress proposed the realization of a big leap on all fronts in 1960. The session called for strengthening and increasing Communist elements in the commune system and upgrading brigade ownership to communal ownership. The mess halls that had closed during the retrenchment period of the first half of 1959 were reopened and unrealistically high agricultural and industrial production targets were reinstated. In comparison to 1959, gross agricultural and industrial output in 1960 was scheduled to increase by 140 percent and iron production was to increase by 366.9 percent. The party urged the building of more factories and furnaces as well as increased investment in industry, especially heavy industry. The mass movement aimed to mobilize a vast number of laborers for production. Grain procurement was further increased to meet the surging demand for food due to the increased size of state employment. As a result, from the end of 1959 the devastating symptoms that had occurred during the first half of 1959 returned with a vengeance. Although industrial output in 1959 and 1960 grew by 30 percent and 13 percent respectively, it was driven primarily by hefty state investment, even though Zhejiang was inherently short of a comparative advantage due to its poor resource endowments. This was achieved at the cost of production of consumption goods. In fact, output in light industry in 1960 dropped by 0.3 percent, and in 1961 gross industrial output fell by 36.1 percent. The agricultural sector was affected even more seriously. Relative to previous years, gross agricultural output plunged successively from 1959 to 1961, by 3.7 percent, 12.7 percent, and 11.4 percent respectively. The slump in grain output was even

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more worrying. From 1959 to 1961, compared with previous years, grain output dropped by 1.3 percent, 14.6 percent, and 1.7 percent respectively (Zhejiang in Contemporary China 1988, vol. 1, 76). Beginning in 1959, the threat of a famine began to loom large in Zhejiang’s rural areas, and it struck in 1960 when thousands of rural residents fled from their hometowns to beg for food, suffered edema due to severe malnutrition, and even died of hunger. The situation continued to deteriorate until, in the late 1960s, the party center finally realized the severity of the problems and took action to redress the policy mistakes. The Great Leap Forward no doubt delivered a heavy blow to Zhejiang’s political and economic life. Like all previous political campaigns, the Great Leap Forward provided an opportunity for the dominant faction to consolidate its power and to threaten rival factions. In Zhejiang, the dominant southbound leadership could easily demonize its local subordinates as either rightists or right deviationists, much as the provincial leadership had done to Yang Siyi, Sha Wenhan, and so forth in 1957. A similar strategy was adopted by cronies among the southbound cadres at various local levels. For example, during the August 1958 Beidaihe Conference the party center called on its local agents to “Pull Down White Flags and Raise Red Flags” (拔白旗, 插红 旗), thus local power holders in various localities were able to test the loyalty of all their lower-level officials and justify persecution of their opponents and potential challengers in the name of implementing central directives. In the political atmosphere of the Great Leap Forward, a popular strategy of the local southbound authorities was to ratchet up the production targets assigned to lower-level governments and officials and then to watch whether and how they could reach their assigned targets. Local cadres at various levels were forced to pass a political litmus test. Anyone with a different opinion or who was skeptical about the excessive production quotas was to be pulled out as a “White Flag” so that the “Red Flags” could be raised. A typical example took place in Yueqing county. In 1957, Chen Shaodong, a former local guerrilla cadre and then vice county party secretary and head of the county government, and Wang Zhenyuan, another vice county party secretary with a southbound background, attended a provincial conference to discuss the grain procurement quotas to be assigned by the provincial government to Yueqing county. They were required to report the actual grain yield figures in 1957 in

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order to establish the procurement targets for the following year. Although the actual grain yield in the county in 1957 was 330 kilograms per mu (1 mu = 0.0667 hectares) (Grain Gazetteer of Yueqing County 1991, 48), the figure that Chen reported was 400 kilograms per mu, while the figure that Wang reported was 700 kilograms per mu. Without any questions, Wang’s figure was accepted by the provincial authorities as the reference grain output to determine procurement quotas for 1958. As a result, in 1958 during the “Pulling Down the White Flags and Raising the Red Flags” campaign, Chen lost his post on the county party committee and was dismissed from his post in the government administrative body as well. Several months later, he was sent down to the Wenzhou Chemical Plant to serve as a deputy director in a workshop. In comparison, Wang was regarded as a “Red Flag” model and was promoted to the post of county party secretary.8 In Xiaoshan county, fearing likely opposition by local cadres due to the excessive production quotas, the county leadership organized a series of movements from March to May of 1958 to pull down White Flags in order to purge the so-called bad elements in the agricultural cooperatives and to criticize those with capitalist thinking. In August, the county party committee further criticized those on the party committee who took a wait-and-see attitude (观潮派), i.e., those who were cautious about reporting unrealistically high grain-yield targets. During the anti-right deviation movement, the local cadres again became the targets.9 Lishui county provides an example. As noted in Chapter 2, the county’s first wave of purges against local cadres occurred in the early 1950s, shortly after the county was liberated by local guerrillas and taken over by southbound cadres. The second round of purges engulfed the county during the anti-rightist campaign in 1957 and during the anti-right-deviation movement in 1958, when the remaining senior local cadres who had survived the first wave of purges were dismissed from the center of county power.10 To be sure, not all the victims of these political purges were local cadres. Some southbound cadres also fell into the trap of the power struggle, mainly in places where local (guerrilla) cadres had already been purged during the previous campaigns, e.g., the county party 8 9 10

Oral source, interview in Yueqing city, December 2008. Oral source, interview in Yueqing city, December 2008. Oral source, interview by the authors, Lishui county, July 2009.

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secretary in Yueqing county was deposed.11 In non-guerrilla counties where there was no local guerrilla cadre group to challenge the authority of the southbound leadership, southbound county cadres became the victims. Liu Yuzao and Qi Jieyuan, for example, were both southbound cadres and had served on county party committees until 1959. During the anti-right-deviation movement in 1959, they were deprived of their membership of the county party committee and labeled rightists because they refused to set the excessive quotas for grain production.12 In retrospect, however, only a small number of southbound cadres were implicated by the post-1957 purge, and they were soon replaced by those who had the same southbound background, thus allowing little room for local guerrilla cadres to take up the slack. In sum, the local cadres as a whole were most severely affected during the political movements after 1957. Both the senior local cadres with guerrilla backgrounds and a large number of grassroots local-level cadres were likely to fall prey to their dictatorial southbound superiors. The case of Xiaoshan county provides an illuminating example. Table 4.1 summarizes the number of party cadres who were subject to various disciplinary punishments in Xiaoshan county during the Rectification Movement (整风运动) between June 1957 and October 1958. During this period, 225 party members, accounting for 3.5 percent of the total of 6,382 party members in the county, were disciplined in various ways. Among them, only four (1.7 percent) were from the county party committee, the top echelon of the party hierarchy composed primarily of southbound cadres, while sixty-nine (30.6 percent) were middle-level cadres and 152 (67.6 percent) were grassroots party members comprising mainly guerrilla cadres. Moreover, eighty-three (36.9 percent) of these 225 party members received disciplinary punishments merely due to their incorrect political stance or unorthodox background (Panel A). Another forty (17.8 percent) were eliminated simply because they were blamed for not adhering to the socialist economic policy (Panel B). 11

12

Oral source, interview by the authors, Yueqing city, December 2008. According to the interviewee, the county party secretary was initially labeled “a rightist,” but this was rejected by the East China Bureau (华东局) of the Central Committee because the party had decided that his pre-1949 revolutionary experiences were sufficient to prove that he was a loyal Communist, even though he had committed serious mistakes during the Great Leap Forward. Oral source, interview in Longyou county, December 2008.

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Table 4.1 The numbers of party cadres subject to various disciplinary punishments in Xiaoshan county (June 1957–October 1958) County party committee members or those holding comparable positions

Lowerlevel party cadres

Rank-andfile party members

Panel A Political charges rightists

2

10

11

Bad elements

6

4

Individualist thinking

4

3

Rightdeviationists

4

13

Taking a wrong class stance

5

14

Destroying unity Subtotal

83

2

2

5

31

50

Panel B Economic charges Business profiteering

3

Underreporting actual grain output

21

Withdrawal from the collective

13

Individual farming Subtotal

1

2

40

0

1

39

Other charges

102

2

37

63

Total

225

4

69

152

Panel C

Sources: calculated by the authors based on files in the Xiaoshan County Archive.

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Table 4.2 presents the pattern of political persecutions in the countryside during the second phase of the Great Leap Forward in early 1960. Between October 1958 and February 1960, 471 party members, accounting for 6 percent of the total 7,803 party members in the county, were charged with committing various errors. Among them, thirty-two (6.8 percent) were commune-level cadres and sixty-seven (14.2 percent) were production brigade-level cadres. The remaining 372 (79 percent) were production team and lower-level cadres. In addition, compared with Table 4.1, the proportion of political charges rose substantially. In Table 4.2, 59.4 percent of the total 471 party members were accused of committing political errors (Panel A), and 24.2 percent of those committed errors relevant to antisocialist economic behavior (Panel B). These two categories accounted for 83.6 percent of total errors. The political implications of the results in both Table 4.1 and Table 4.2 are straightforward. As political campaigns such as the Great Leap Forward proceeded, all political elite faced increasing political uncertainties and risks. However, the risks were unevenly distributed among officials of different factions. Those officials from the dominant southbound camp who monopolized the county leadership positions were well informed about the high political situation, had agenda-setting power in local policymaking, and could easily take advantage of the existing system to impose pressures on local cadres and eliminate them as scapegoats if any policies went wrong. In contrast, when the political storms arrived, those marginalized elite who did not have powerful patrons at higher levels to protect them were more likely to be devoured by the storms because they could face political charges at any time. This explains why, as seen in Tables 4.1 and 4.2, the local cadres who were far from the county power center were affected most severely during the Great Leap Forward. In general, top-down political campaigns in Zhejiang that were initiated by Beijing and implemented by local agents delivered a heavy blow to the de facto power of local cadres, and therefore forcibly affected the victims even in places that traditionally had belonged to the sphere of influence of the local guerrilla group. In Xiaoshan and Lishui, for example, beginning with the anti-rightist movement in 1957, the local guerrilla cadres were hit so severely that their influence began to wane relative to that of the southbound camp.13 In Yueqing county, a 13

Oral source, interview in Xiaoshan district, December 2008; interview in Lishui county, July 2009.

Table 4.2 The numbers of rural party cadres subject to various charges in Xiaoshan county (October 1958–February 1960)

Commune level

Brigade level

Team level

Other rankand-file party members

Panel A Political charges Bad elementsa

8

1

3

2

5

2

Individualism and poor discipline

10

22

59

33

Rightdeviationist

12

22

55

14

Anti-three red flagsb

1

3

10

6

Destroying unity

3

3

6

29

52

143

56

Business profiteering

6

24

10

Underreporting actual grain output

1

41

26

Resisting state requisitions

1

1

Individual farming

1

3

7

67

40

Anti-party and opposing the party leadership

Subtotal

280

Panel B Economic charges

Subtotal

114

Panel C Other charges Total

77

3

8

34

32

471

32

67

244

128

Notes. a b

Includes alien class elements, bad elements, and degenerate elements. The three red flags refer to the general line, the people’s communes, and the Great Leap Forward.

Sources: calculated by the authors based on files in the Xiaoshan County Archive.

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large number of local guerrilla cadres ceded to the southbound group, and some even became henchmen of the southbound cadres, rushing to act on behalf of the preferences of their new patrons in order to demonstrate their loyalty.14 As the absolute superiority of the southbound cadres over the local guerrilla cadres was established, conditions leading to the later calamity also ripened. Indeed, when more and more local cadres were compelled to participate in a tournament to show their loyalty to the southbound leadership, the “Five Winds” were both inevitable and pervasive as local cadres had to curry favor with the higher-ups by implementing radical policies assigned by their superiors, regardless of their adverse effects on the local economy.15 In a production team of Xuxian Commune (许贤公社) in Xiaoshan county, for example, in order to accelerate agricultural production, the cadres did not allow a widow to take leave to see a doctor for her sick baby, resulting in a failure to receive medical treatment and leading to the death of the baby.16 In one village in Hongqiao township (虹桥镇) of Yueqing county, the village cadres reported unrealistically high grain output figures to the county government because they wanted to serve as models to the county leadership, which ultimately led to excessive procurement quotas in the village. To achieve the procurement targets, even the peasants’ food rations were requisitioned, resulting in the spread of famine. At its peak, there were four or five people dying of hunger every day.17 In Lishui county, the peasants’ food rations were also appropriated to fill the gap between actual grain output and the assigned procurement quota due to the exaggerated figures reported by county party secretary Zhang Jieqing, a typical southbound cadre. Zhang even prohibited the hungry peasants from planting sweet potatoes or pumpkins to survive the famine because he believed that such personal activities would tarnish the socialist cause in the county by their capitalist nature. Unfortunately, his order was strictly implemented by many local cadres.18 14 15

16 17 18

Oral source, interview in Yueqing city, October 2009. The “Five Winds” refer to the five bad work styles among state cadres at the time, namely the Communist wind (共产风), commandism (命令主义), boastfulness (浮夸风), arbitrary leadership in production (瞎指挥), and cadres being privileged (干部特殊化). Oral source, interview in Xiaoshan district, December 2008. Oral source, interview in Yueqing city, December 2008. Oral source, interview in Lishui county, July 2009.

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In hindsight, however, campaigns like the Great Leap Forward provided the southbound cadres with a double-edged sword. On one hand, the dominant faction fully exploited the campaign to encroach upon the power of the rival faction to consolidate their influence. On the other hand, the southbound leaders had to follow the radical policies that sooner or later would precipitate great economic losses and would result in terrible human tragedies. Indeed, the disgraceful failure of the Great Leap Forward and its terrible aftermath substantially discredited the southbound leadership, tainted its capacity to control local society, and alienated the masses to the extent that they tended to support the opposition. Because of the Great Leap Forward, the local guerrilla cadres faced a difficult test in which they could not placate both sides. Any confrontations with the southbound leadership, e.g., not complying with the political mandates assigned from above, were sure to be severely punished. However, it was also very risky for local cadres to adhere to every detail of the radical policies, which meant betraying both their local cadre counterparts and their grassroots constituency by harming their interests, while at the same time indicating their loyalty to the southbound leadership. It was unclear what they would gain from taking such a stance. This is not only because at the time almost all resources went to the southbound cadres so there were few resources left available to the marginalized local cadres. Furthermore, if the political tides were to turn, the local cadres rather than their southbound superiors would likely be jettisoned as scapegoats, similar to what occurred to their predecessors in Yongjia county due to the household responsibility system (see Chapter 3). In such a case, those who previously took pains to show loyalty to the southbound group could not count on local people, who should have been their natural constituency, to protect them. Indeed, during the subsequent Four Clean-Ups campaign after the failure of the Great Leap Forward, those local cadres who had been activists in implementing the radical policies of the Great Leap Forward paid a high price. They found they were in a no-win situation, as they were struggled against by the disaffected local people who were mobilized in the Four Clean-Ups campaign and they received little in return from the southbound cadres. As a result, even during the Great Leap Forward, most local cadres tended to strike a balance between accomplishing the policies assigned from above and looking out for local interests. To the extent they

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fulfilled their duties as state cadres, they also used their discretionary powers to help local people survive the hard times. In Liushi township (柳市镇) of Yueqing county, for example, had the local cadres made efforts to meet the procurement quotas assigned by the southbound county leadership, the peasants would have had their food rations confiscated. But the local cadres did not squeeze the peasants to turn in more grain. Instead, they left the peasants with sufficient grain rations to survive. In the same township, when the party center announced it would return the former communalized private plots to individual households in late 1960, the local cadres moved swiftly to distribute the private plots among the peasants.19 Another common strategy pursued by the county local cadres was to allow the peasants to go to the mountains to reclaim the wasteland. The peasants could retain whatever they were able to grow in these reclaimed lands and the collective brigades or teams did not intervene. In fact, as a substitute for the illegal household responsibility system, the practice of reclaiming mountain wasteland was also adopted in many other localities in Zhejiang province.20 In Changtan Production Brigade (长潭大队) of Daicun village (戴村) in Xiaoshan county, the local cadres allowed the peasants to trade agricultural products on the black market so they could sell them at prices higher than the procurement prices set by the state. Many local cadres were even directly involved in black-market activities.21 In addition, the local cadres intentionally purchased fewer agricultural products from the peasants than the quotas set by the state to reduce the peasants’ economic losses.22 In Jinxi Production Brigade (金西生产队) of Chengnan Commune (城南公社), even though the grain output had increased somewhat in 1960 compared to the previous year, its party secretary, Peng Shougen, underreported the true 19

20 21

22

Oral source, interview in Yueqing city, May 2009. It should be pointed out that the Wenzhou prefectural authority did not authorize the return of the private plots until August 1961. Oral source, interview in Yueqing city, May 2009. “On the Preliminary Experience Arrived at by the Three-Tier Cadre Conference Held by the Xiaoshan County Party Committee” (萧山县委关于召开三级干部 会议的初步经验), Xiaoshan County Archives, October 18–27, 1959. According to the reports, 6 percent of production brigade cadres were participating in black-market activities. For example, in late 1959 production brigade cadres purchased forty live pigs and 1,030 chickens, completing only 16 percent and 49.5 percent of the annual state procurement mandates respectively.

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yields for fear that reporting the genuine output figures would result in increased state procurement quotas in the future. The first figure for yield per mu he reported to the higher-ups was 410 jin; thereafter, on the second and third occasions, he decreased the figures to 390 and 360 jin per mu respectively. His concern and his coping strategy were shared by many other leading brigade cadres in the commune.23 The kindness of local cadres to take care of the economic interests of local peasants paid off politically during the subsequent Four CleanUps campaign. By late 1962, as the disaster caused by the Great Leap Forward subsided, the party-state was eager to set in motion a new political campaign in the countryside to relieve the top leaders of any responsibility for the Great Leap Forward and to arrest the peasants’ already shaky faith in the superiority of Maoist socialism. In February 1963, the party center decided to launch a Socialist Education Movement in the countryside, which was dubbed the “Four CleanUps” (siqing 四清) campaign. Like previous political campaigns, siqing considered any deviant economic practices to be threats to Maoist socialism. Furthermore, another key feature of the campaign was its deep skepticism about grassroots party cadres. By condemning bad work styles and shoddy economic management of local party cadres as a manifestation of sabotage by “class enemies,” the campaign was designed to expose the wrongdoings of grassroots cadres since the Great Leap Forward, including their wasteful spending of public funds, their inhumane commandism, their appropriation of private property without compensation, and so forth. This was accomplished by organizing mass meetings in which the villagers were encouraged to openly expose and criticize bad and illegal practices carried out by the commune and production brigade/team cadres. Unlike the subsequent Cultural Revolution, the Four Clean-Ups was a mass movement launched and organized by the party-state to purify the grassroots rank-and-file bureaucrats, and therefore it did not pose any real threat to the existing political order and authority. In the meantime, the campaign allowed the masses to target those grassroots cadres who were far away from the center of power and not embedded in the network of protection woven by the power holders. Thus, once 23

“Briefing on the Four-Tier Cadre Conference in Xiaoshan County, No. 9” (萧山 县四级干部会议情况简报,第9期), Xiaoshan County Archives, December 6, 1960.

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again, the cadres at the periphery of the power structure were considered responsible for the failure of the Great Leap Forward, which in fact should have been shouldered by the regime, and they were struggled against by the masses who had suffered terribly during the Great Leap. In Zhuji county, for example, an 11,000-member work team was garrisoned in the county in October 1964 to bring shame on all rural grassroots cadres (Zhuji County Gazetteer 1993, 89–90; Wang Fang 2006, 181). In addition, an 800-member work team was sent by the provincial authority to Xiaoshan county to lead the campaign.24 By late 1965, more than 33 percent of the commune party secretaries were regarded as “problematic” or even “seriously problematic.”25 Because the Four Clean-Ups campaign provided (limited) leverage to the once-ignored masses over the fate of the grassroots cadres, whether the grassroots cadres could avoid misfortune in the campaign was in some ways dependent on the response of the masses. As expected, the peasants sided with those cadres who had not been enthusiastic about implementing the radical policies of the Great Leap Forward and who had helped them survive the famine. In return, they chose to co-operate with the local cadres to secure their political careers. In Zeji village (泽基村) of Lingdi township (岭底乡) in Yongjia county, a three-member work team headed by a southbound cadre was garrisoned in the village to “cleanse the [village] accounts.” The work team called several mass meetings in hopes of mobilizing the villagers to expose corruption among village cadres, much in the same way they had done during the Land Reform campaign. But contrary to expectations, the villagers remained silent during the meetings so the efforts of the work team were in vain and it finally left the village. The villagers had good reason to protect the village cadres. In fact, the villagers were beholden to the village cadres because during the Great Leap Forward the township and village cadres, most of whom had guerrilla backgrounds, refused to report unrealistically high grain-yield targets to the higher-ups. After Liu Shaoqi declared his 1962 liberal-oriented 24 25

Oral source, interview in Xiaoshan district, December 2008. “Summary on the Rectification of the Rural Production Brigade Party Branches in Xiaoshan County during the Socialist Education Movement (Draft)” (萧山县 社教运动中整顿农村大队党支部总结 草稿), Xiaoshan County Archives, January 16, 1966.

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policy package of sanzi yibao (三自一包) to accelerate recovery of the economy,26 the village cadres moved quickly to return to the villagers their livestock and no less than 50 percent of the collectivized land. Though the higher-level officials soon criticized these bold actions, even though they only lasted one year because they were too rightist, they strengthened the reciprocal relationship between local cadres and the masses whereby the previous beneficiaries (i.e., the villagers) were now helping their previous benefactors (i.e., the local cadres) to avoid repercussions from the siqing.27 Similar scenarios unfolded in other areas as well, where the local cadres either underreported the grain output far below the figures expected by the higher-ups during the Great Leap Forward, or perfunctorily implemented radical state policies to help the local people survive the famine. In a village in Liushi township (柳市镇) of Yueqing county, for example, a work team was garrisoned in the village for three months but did not discover any negative evidence about the village cadres. The reason was that the villagers refused to co-operate with the work team because they were beholden to the village cadres who had returned their private plots to them during the famine so that no one had died of hunger.28 Hence, the ever-changing political environment, embodied in the Great Leap Forward and the subsequent Four Clean-Ups campaign, reminded the marginalized local elites in the guerrilla counties of their status in the power structure and awakened them to the importance of winning over grassroots support rather than relying on the existing system. Given that they had very few material resources at their disposal, however, the local cadres had to fully utilize their discretionary policy-implementation powers to take care of the economic interests of their grassroots supporters in return for political support, e.g., sheltering them from harassment by the radical policies from above, allowing them to pursue activities prohibited by the party-state to improve their welfare, and so forth. In the end, the political strategies of the local cadres consolidated the symbiotic relationship between the local cadres 26

27 28

This policy package can be summarized by the slogan “Three Freedoms and One Contract,” which literally can be conceived of as “more private plots for farming, more free markets, more enterprises with full responsibility for their profits and losses, and fixing output quotas on a household basis.” Oral source, interview in Yueqing city, May 2009. Oral source, interview in Yueqing city, May 2009.

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and the grassroots. The umbrella of protection offered by the local cadres inevitably helped preserve and boost rural entrepreneurship amid official hostility toward any unorthodox nonsocialist activities. One compelling piece of evidence is the rural black markets that suddenly sprang up in various localities across Zhejiang province in the early 1960s. After completion of agricultural collectivization, market fairs in the countryside were regarded as a manifestation of capitalism and therefore were either eliminated or placed under strict restrictions so that both the volume and the variety of goods that could be legally traded were strictly limited. Since the early 1960s, especially during the period of the siqing, however, rural black markets had emerged spontaneously, expanded quickly, and revealed their strong viability in scores of localities, whereby individual peasants gathered together at fixed sites to trade materials and commodities that were prohibited by the authorities but had relatively high economic value. For example, a cotton free market was established in Dongyang county (东阳县) by the end of 1964. It was so active that the daily trading volume reached 14,000 jin. At the same time, a large cotton free market was located in Yiwu county (义乌县). In two townships of Yiwu county, the daily trading volume came to 3,000 jin. In a district of Huangyan county (黄岩县), there were 6,000 households, accounting for more than 30 percent of all village households, engaged in spinning and weaving in household workshops. According to the official records, the annual output of handwoven yarn and cloth could have been as high as 560,000 jin and 7.32 million chi (1 chi = ⅓ meter) respectively. During the first eight months of 1964, the peasants produced 62,000 jin of yarn and 0.96 million chi of clothes for sale in the local Luqiao marketplace (路桥 市场). Many peasant households even abandoned collective farming and made a living by exclusively specializing in producing yarn and cloth for the black market.29 The goods traded in the black markets were not confined to yarn, cloth, cotton, and so forth. Rather, they included a wide variety of commodities for which there was market demand. In all three townships of Xiaoshan county, coupon exchanges (票证交易) in the black 29

“Circular of the Central Committee and the State Council on Strengthening the Management of Markets and Eliminating Speculation and Profiteering” (中共中 央、国务院关于加强市场管理, 严厉打击投机倒把活动的通知), Zhongfa 64, No. 717, November 12, 1964.

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market had been popular since 1963.30 In Yongjia and Yueqing counties, as early as late 1961, peasants had met regularly at several sites to barter various products, including agricultural products, housewares, and so forth. Ultimately some specialized markets were established in which peasants from the neighboring counties pooled together to buy and sell lumber, grain, coupons of various kinds, and so on. For example, in Hongqiao township of Yueqing county, there were several black markets, including a coupon market in Xinjie (新街) district, a lumber market in Xiaoshunqiao (孝顺桥) district, a grain market in Daqiaotou (大桥头) district, yarn and cloth stalls beside street hotels, and so on.31 For many, it was puzzling that these black markets were able to survive and thrive in the hostile political environment. To be sure, even after the failure of the Great Leap Forward, market-oriented activities were still very restricted or even prohibited, and the authorities did indeed make ruthless efforts to eliminate them. During the period of siqing, work teams were frequently sent to the countryside by the authorities to cut off the tails of capitalism, which included closing down the black markets. Despite these efforts, sparks of capitalist activity remained alive and suppression proved to be futile. As stated in one official Yueqing county report, as soon as the movement against capitalism subsided, capitalism would make another comeback. The report pointed out that even though in Hongqiao township the local black markets had basically been eliminated in the winter of 1964, they became active again in the summer of 1965. Among the seventy-seven households that worked in the Hongqiao Handicraft Industry Service Association (虹桥手工业服务社), for example, 62 percent (forty-eight households) were engaged in private wood processing. All their input materials were purchased in the local black markets. Some peasants made huge profits by selling gunnysacks. Their business networks spread not only to many counties in the province, such as Lishui county, Jingning county, Wenzhou prefecture, and so forth, but also to other provinces, including Shandong, Hubei, and Inner Mongolia, among others. 30 31

Oral source, interview in Xiaoshan district, December 2008. “Report of the Work Team of the County Committee on Anti-speculation and Profiteering in Hongqiao Township” (县委虹桥工作组关于虹桥镇反对投机倒 把运动开展情况的报告), July 23, 1965, Yueqing Archives Office.

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The backing of local cadres, which took many forms, enabled the spontaneous entrepreneurship of local people to weather the storms. As earlier, the local cadres often turned a blind eye to the peasants’ wayward activities. If pressures from above were so great that the local cadres felt they had to do something to show they were not shirking, they would pretend to get down to work but they would do so in a rather detached and perfunctory manner. In Xiaoshan county, for example, efforts by the county authorities to close down the coupon black market eventually failed because very few local cadres had any enthusiasm to closely oversee the situation or to chase down the illegal traders and peddlers. As a result, participants in the black market were rarely caught by investigators. Even if they were unfortunate enough to be caught, the most common punishment was to receive a scolding, to be fined, or to be slapped in the face in order to humiliate them in public. Very few were imprisoned or had their products confiscated. So even when the authorities launched a movement to crack down on black-market activities, they would merely remain dormant for a time, but again and again they would return.32 On many occasions, the local cadres also helped the peasants by leaking useful information, e.g., providing tips about nearby work teams or newly installed inspection stations, so any peasants engaging in unauthorized businesses could avoid being detected. Lingdi township (岭底乡) of Yueqing county, for example, was known for a lumber black market. Initially, whenever the county authorities attempted to close down the market, the peddlers would move to another location and reopen. In order to end this cat-and-mouse game once and for all, the county authorities set up several temporary inspection stations on the main public roads where the peddlers would likely pass when participating in their market transactions. However, this seemingly sensible strategy failed because the local cadres told the peasants the location of these stations and this news would quickly spread to all potential traders. After learning of the location of these inspection stations, as well as when they operated, the peasants could easily bypass such routes and avoid being stopped by the inspectors.33 Moreover, many local cadres also directly participated in the illegal businesses. In Yueqing county, some party cadres either engaged in 32 33

Oral source, interview in Xiaoshan district, December 2008. Oral source, interview in Yueqing city, May 2009.

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black-market transactions in person or encouraged the collectives to engage in business activities. For example, among the six members of the party committee of Danxi Commune (淡溪公社), three members took part in selling saplings. Among the ten members of the party committee of Sidu Commune (四都公社), five members were also selling saplings. All three leading cadres of the production brigades, namely the party secretary, the production brigade chief, and the accountant, also participated in selling saplings. To protect these illegal businesses, some local cadres even sent in the militia to provide protection. For example, when the production brigade cadres of Danxi Commune sold saplings, they ordered the militia to keep watch on the commune cadres in case they were to launch a sudden inspection. In some extreme cases, local cadres even used force against such unexpected harassment. In Danxi township (淡溪乡), for example, an investigation team in 1965 abruptly appeared in the market and confiscated all the lumber. When the lumber was shipped through Lingdi township, the brigade chief of the Shang’ao Brigade (上岙大队) amassed dozens of local residents to board the ship, intercept the lumber, and throw the team leader into the river. Two months later, in Xilian Commune, local cadres led hundreds of local people to recapture the confiscated lumber from the investigation team and beat its leader unconscious.34 To sum up, consolidation of the symbiotic relationship between local cadres and grassroots people during the siqing had two political implications. First and foremost, the local cadres realized that in order to survive the harsh environment, they had to have co-operation from the masses and to win over their support rather than placing their hopes on support from the regime. In other words, their interests were aligned with those of the powerless people outside the regime. Second, the mutual benefits of the local cadres and the local people inevitably obstructed the party’s ambitions to eradicate capitalism in rural Zhejiang and helped to preserve the seeds of capitalism in the countryside. Regardless of all the unexpected outcomes of the siqing, the base upon which it was generated was shaky. Both the Great Leap Forward and the subsequent siqing did not alter any feature of the post-1949 34

“Investigation Report of the Hongqiao Work Team of the County Committee on Speculation and Profiteering in Hongqiao Market” (县委虹桥工作组关于虹 桥市场投机倒把活动的情况报告), November 15, 1965, Yueqing Archives Office.

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power structure and the weaknesses of the local guerrilla cadres remained intact. Despite the degree to which the local cadres portrayed themselves as allies of local grassroots constituencies, they seldom took the initiative to publicly organize their grassroots supporters in defiance of the authority of the southbound leadership, and the southbound leadership was able to strike them down at opportune times. Thus the coping strategy of the local cadres to take care of the economic interests of the local people can best be viewed as a buffer against persecution by the southbound leadership. This suggests that the protection they offered their grassroots constituents was small in scale and limited in scope. Once political controls were reasserted, such as during agricultural collectivization and communalization in the late 1950s, the local cadres had less discretionary power and less space to maneuver. This situation would change dramatically with the beginning of the Cultural Revolution, which delivered an unexpected shock to the existing order in Zhejiang and allowed formerly marginalized political players to fully mobilize their supporters to engage in competition for power. As we shall see in the remainder of this chapter, it was during the Cultural Revolution that the protection that the local cadres offered and the resultant growing entrepreneurship established a solid foundation for the takeoff of the economy in the post-Mao era.

4.2 The Cultural Revolution in Zhejiang: Fighting for Survival Our objective is to struggle against and crush those persons in authority who are taking the capitalist road, to criticize and repudiate the reactionary bourgeois academic “authorities” and the ideology of the bourgeoisie and all other exploiting classes and to transform education, literature, and art, and all other parts of the superstructure that do not correspond to the socialist economic base, in order to facilitate the consolidation and development of the socialist system. Decision Concerning the Great Proletarian Cultural Revolution, August 8, 1966

On May 16, 1966, an official notification, titled “Notification from the Central Committee of the Communist Party of China” (also known as the “May 16 Circular”) (五·一六通知), was issued at an enlarged meeting of the Politburo, marking the beginning of the Cultural Revolution.

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On August 8, the Eleventh Plenum of the Central Committee passed its “Decision Concerning the Great Proletarian Cultural Revolution” (also known as the “16 Points”) (中国共产党中央委员会关于无产阶 级文化大革命的决定), which officially called for the all-out development of the Cultural Revolution. Until then, Mao’s purpose in launching the Cultural Revolution remained hidden and no one knew when he/she might be hit by the movement. But now it became obvious that the Cultural Revolution would unfold in an untraditional manner with unpredictable results. As quoted at the beginning of this section, the Cultural Revolution was about to overthrow those “capitalist roaders” who were powerful within the party. In fact, at the August 8 plenum, Lin Biao (林彪) rather than Liu Shaoqi was elected the No. 2 leader on the Politburo Standing Committee, the paramount body of power in the country. The plenum also ratified the decision made at the May 16 enlarged meeting of the Politburo to disband the “Group of Five in Charge of the Cultural Revolution” (文化革命五人小组), consisting of Beijing mayor Peng Zhen, Propaganda Department director Lu Dingyi, and so forth, and to dismiss them from their posts. A new “Cultural Revolution Group” (文革小组) was formed to lead the Cultural Revolution movement. Moreover, Liu Shaoqi and Deng Xiaoping, the two party leaders in charge of daily affairs before the plenum, were criticized for major mistakes presiding over the Four Clean-Ups campaign and sending work teams to college campuses to monitor the rebellious students. These events revealed to politicians at various levels as well as the populace at large how to vent their grievances. Encouraged by the spirit of the 1966 11th Plenum, various Red Guard groups and other mass rebel organizations spread throughout the country.35 Initially, especially prior to the 11th Plenum, the youthful Red Guards engaged in red terror to target the powerless, including academics in middle schools and colleges and those classified as the five lowest groups, who were also known as the “five black categories” (黑五类).36 After the 11th Plenum, however, the rebels began to focus on the powerful incumbent party cadres, as a result of which the rebels 35

36

The first Red Guard organization was established in May 1966 at Tsinghua University in Beijing. The five black categories refer to landlords, rich peasants, counterrevolutionaries, bad elements, and right-wingers (地、富、反、坏、右). Later, capitalists and the offspring of black gangsters were added to the list.

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divided into different groups depending on which leaders they attacked as capitalist roaders. These long-lasting conflicts between the rebel organizations and their relations with powerful leaders pointed to the complex and changing political circumstances during the last twenty years of the Maoist era and to a large extent revealed the factionalism in Chinese politics (MacFarquhar and Schoenhals 2006). The power struggles between incumbent power holders and rebel organizations, and among competing rebel organizations, caught the party and governments off guard, unleashed unprecedented chaos, encouraged political forces in opposing camps to mobilize political and social resources to secure their survival, and ultimately had an undeniable impact on subsequent political and economic developments. When the Cultural Revolution broke out in Zhejiang, the incumbent power holders at various levels tried to manipulate the movement to their advantage, in much the same way as they had attempted during previous political campaigns. They sent in work teams or set up liaison stations (联络站) in schools, colleges, and enterprises to direct the movement. Between May and August 1966, Jiang Hua, then the first provincial party secretary of Zhejiang, responded to the directives issued by the party center under the leadership of Liu Shaoqi and Deng Xiaoping in order to keep the Cultural Revolution under control. To do this, Jiang rejected the demands by some rebel students at Zhejiang University to withdraw the work teams from the colleges; at the same time, he ordered that the work teams should be directed by the party committees, big-character posters were not encouraged, and some sensitive entities, such as the public security organs and large state-owned enterprises and utilities, were to be sheltered from the influence of the Cultural Revolution. Local governments followed suit. In Xiaoshan county, for example, in early 1966 the county party committee decided that any public rally denouncing bourgeois agents within the party could not be held without the approval of the county party committee (Party History Research Office under the Xiaoshan City Party Committee 1994, 191). In July 1966, the prefectural party committee of Wenzhou held a meeting to discuss how the Cultural Revolution was to unfold in Wenzhou. The meeting finally decided that places such as hospitals, urban residential units, public security departments, and so forth should be kept insulated from the Cultural Revolution. Any mass movement was to remain under the leadership of the county party

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committee and any disturbance of public order was forbidden (Party History Research Office under the Wenzhou City Party Committee 1997, 110). But the situation was changing too rapidly to remain under the control of the provincial and local authorities. After the 11th Plenum in August 1966, the mass rebel organizations became increasingly assertive and aggressive. Finally, two provincial mass organizations were formed, each of which was composed of several relatively small Red Guard groups. One was called the Zhejiang Provincial Revolutionary Rebel United Headquarters (浙江省革命造反联合总 指挥部) or the Provincial United Headquarters (省联总), and the rival organization was called the Zhejiang Provincial Red Storm Provisional Headquarters (浙江省红色暴动派临时指挥部) (hereafter Provincial Red Storm) (省红暴). Both the Provincial United Headquarters and the Provincial Red Storm, like their counterparts in other parts of the country, claimed that they were loyal followers of Chairman Mao and were guided by Mao Zedong Thought. Although it is difficult to make a neat distinction between the two mass organizations based merely on their membership and economic and social circumstances, it is clear that they differed in terms of their attitudes toward the Zhejiang provincial authority, including Jiang Hua and his followers.37 The Provincial Red Storm alleged that the leaders of the Zhejiang Provincial Party Committee were responsible for its establishment, whereas the Provincial United Headquarters aimed its fire on the provincial power holders, such as Jiang Hua and other senior provincial party cadres. Probably for this reason, although both these rebel organizations went to extreme lengths to obtain official recognition from the Central Cultural Revolution Group in Beijing, the Provincial United Headquarters finally received the backing of the Central Cultural Revolution Group and became well known as the provincial “rebel group” (造反派), whereas the Provincial Red Storm was given by the 37

The Provincial Red Storm comprised members of “high political quality,” whereas the Provincial United Headquarters appeared to attract members of “low political quality.” For a detailed account of the formation, evolution, confrontation, and impact on Zhejiang politics of these two mass organizations during the Cultural Revolution, see Forster (1990, Chapter 1). Our descriptions of provincial politics during the Cultural Revolution rely primarily on Forster’s seminal work.

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Central Cultural Revolution Group the opprobrious epithet of “conservative faction” (保守派) (Forster 1990, 8–9, 22–25). Because the Provincial United Headquarters was officially recognized by the Central Cultural Revolution Group, its influence was boosted, as well as its strength relative to that of its rival organization. Efforts by the Provincial United Headquarters to unseat the provincial leadership culminated in Jiang Hua’s downfall in February 1967. Prior to his downfall, he had disappeared from public view for months in order to avoid being criticized at the struggle meetings held by the rebels. Additionally, many other provincial committee elites—such as Chen Bing, who was appointed head of the Zhejiang Cultural Revolution Group (浙江省文 革小组) by Jiang Hua; Wu Xian, who was a member of the standing committee of the provincial party committee; Wang Zida, who was the vice governor of Zhejiang, and others—were criticized at struggle rallies and were paraded and denounced for their close relations with Jiang or with “royalist” organizations. The turbulence increased in January 1967, when the “January Storm” broke out in Shanghai, during which the party and government leadership of Shanghai were overthrown by rebels. The results of the January Storm soon spread to Zhejiang, which is situated in close geographic proximity to Shanghai. Encouraged by the achievements of their counterparts in Shanghai, beginning in mid-January 1967, the Provincial United Headquarters, along with other small rebel groups, sent delegates to take over the various provincial governing bodies. By the end of January 1967, the rebels had basically seized power from the incumbent power holders (Party History Research Office under the Zhejiang Provincial Party Committee 2002, 65). Ultimately, Jiang Hua was sacrificed on the altar. On February 12, 1967, the Provincial United Headquarters convened a mass rally at the provincial sports stadium to announce Jiang’s dismissal. Although the previous evening Jiang Hua had departed Hangzhou and flown to Beijing in a special aircraft dispatched by Zhou Enlai, his personal authority and network in Zhejiang had been destroyed. In fact, Jiang Hua could not even save the life of his wife.38 What made things even 38

Jiang’s wife, Wu Zhonglian, then head of the Political and Legal Group of the Zhejiang Provincial Party Committee and president of the provincial supreme court, had been detained by Red Guards since early January 1967. On January 19, shortly after she received approval to temporarily return home to retrieve some clothes, she was found dead in her home. The official conclusion at the

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worse was that Tan Zhenlin, Jiang’s central patron who was then a member of the Politburo and vice premier of the State Council, and other high-ranking central leaders became victims in clashes with the supporters of the Cultural Revolution in February 1967 and as a result they were denounced as February Countercurrent Forces (二月逆流). The development of high politics in Beijing aggravated Jiang Hua’s misfortune, formally ending his political career until the 1971 Lin Biao incident, and delivered a heavy blow to the provincial southbound leadership in Zhejiang. At the local level, the situation was in complete disarray. After the 11th Plenum in August 1966, a vast number of mass rebel organizations sprang up overnight and directed their fire at the local authorities. In early September 1966 in Wenzhou prefecture, some Wenzhou native students arrived from Beijing to establish ties with the local Red Guards and called on the local rebels to uncover the capitalist roaders hiding in the “old prefectural and city party committee” (旧地市委走资派) (Wang Fang 2006, 189). In the evening of September 8, thousands of people assembled in front of the prefectural committee compound and attempted to charge in to post big-character posters. Although their efforts were unsuccessful, their action produced huge reverberations throughout the entire Wenzhou region (Party History Research Office under the Wenzhou City Party Committee 1997, 113–114). On a number of occasions since November 1966, the rebels had launched a series of charges into party and government buildings and began to criticize and denounce major party cadres at struggle rallies. On November 18, the rebels occupied the Wenzhou Public Security Department and detained Wang Fang, the prefectural party secretary, there for several days. Only after Chairman Mao personally issued a directive to order the rebels to withdraw was Wang Fang released (Wang Fang 2006, 191–192). Similar events occurred in many other places in Zhejiang province. In Yongjia county alone, by September 1966 the rebels had established more than 100 mass organizations. Furthermore, five days after the September 8 event in Wenzhou, Yongjia rebels had pasted up a poster on the door of the county committee building that read “the county time was that she had committed suicide. However, in a recently published biography of Jiang Hua, the author implies that she was murdered. Jiang Hua was informed of her death only when he boarded the plane to Beijing. See A Biography of Jiang Hua (2007, 323–325).

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committee remains immobilized. There must be some demons hiding inside” (按兵不动, 必定有鬼) (Yongjia County Gazetteer 2003, 45). In November, the rebels in Zhuji county claimed that it was time to expose and denounce the crimes committed by the capitalist roaders within the county party committee. One month later, the top local leaders, including the county party secretary, Zhou Shilin, and Shaoxing prefectural party secretary, Wang Xing, were publicly criticized at struggle meetings (Party History Research Office under the Zhuji City Party Committee 1997, 100–101). The same situation occurred in Xiaoshan county, where the county party secretary, Jin Mingzhu, was criticized by the rebels in December 1966 and forced to make a public self-criticism (Party History Research Office under the Xiaoshan City Party Committee 1994, 199–200). By the end of 1966, in Longyou and Kaihua counties of Quzhou prefecture, the county leaders were criticized and struggled at public meetings (Party History Research Office under the Longyou County Party Committee 1998, 70–71; Kaihua County Gazetteer 1988, 23). After the January Storm in 1967, local rebels moved swiftly to seize power from the local party committees. In Wenzhou city, various rebel factions on January 6, 1967, coalesced to form a new rebel organization, the Wenzhou Revolutionary Rebel United General Headquarters (温州革命造反派联合总司令部), or the Wenzhou United Headquarters (温联总). Then, on January 16, the Wenzhou United Headquarters held a mass meeting of tens of thousands of people calling to take back power from the capitalist roaders and thereafter occupied the prefectural and city committee compounds (Party History Research Office under the Wenzhou City Party Committee 1997, 119). In Xiaoshan and Longyou counties, between January and March 1967, the rebels rounded up the county leaders, criticized them at public mass meetings, and then paraded them through the streets with black placards hanging round their necks. The rebels also closed off the county public security office and arrested some policemen (Party History Research Office under the Xiaoshan City Party Committee 1994, 199–201; Party History Research Office under the Longyou County Party Committee 1998, 71). After seizing power in Lanxi county, the rebels established their own provisional executive committee to substitute for the official county party committee (Lanxi County Gazetteer 1988, 19). To make things worse, in all localities throughout the province, local rebel

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organizations split into two big opposing camps, aligned with either the Provincial United Headquarters or the Provincial Red Storm, and engaged in a power struggle that produced a state of anarchism. To stabilize the chaotic situation, the party Central Committee, the State Council, and the Central Military Affairs Commission issued a joint decision on March 15, 1967, to set up the Zhejiang Provincial Military Control Commission (浙江省军事管制委员会) (hereafter the Provincial Military Control Commission) to place the province under military control.39 Subsequently, the Twentieth Army (Unit 6409) stationed in Jiangsu province was ordered to move to Zhejiang to take military control of the province together with the Zhejiang Provincial Military District (浙江省军区) (hereafter the Provincial Military District). Long Qian, political commissar of the Provincial Military District, assumed the post of head of the Provincial Military Control Commission. Nan Ping and Chen Liyun, political commissars of the Twentieth Army and the Fifth Air Force (Unit 7350) respectively, became deputy heads of the Provincial Military Control Commission (Zhejiang Communist Party Gazetteer 2007, 14, 66). This arrangement, including the appointment of Nan Ping and Chen Liyun, who had both risen in the ranks of the Fourth Field Army during the Civil War, obviously mirrored the rising influence of the Lin Biao group both in high politics and in Zhejiang political affairs. The arrival and intervention of outside military forces, however, did not ease the situation. In fact, leadership of the Provincial Military Control Commission was in no way united and its core members competed with one another for paramount power in the province. Additionally, there was no agreement regarding their attitudes to rebels belonging to different organizations. Previously, the Provincial Military District had good relations with Zhejiang’s former provincial civilian leadership, such as Jiang Hua and his surrogates in the military, including Political Commissar Long Qian and Chief Commander Zhang Xiulong (Forster 1990, 25). Hence the Provincial Military District was reluctant to offer any support to the Provincial United Headquarters and instead chose to stand behind the Provincial Red Storm. In contrast, Nan Ping and Chen Liyun were active in supporting the Provincial United Headquarters to display fealty to Lin Biao, their central patron in Beijing and at the time a rising political star to replace 39

Zhejiang Communist Party Gazetteer 2007, 14, 66.

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Liu Shaoqi. As Keith Forster observes, the arrival of the outside military forces “also exacerbated tensions between the two mass organizations, ensnared both local military forces and outside troops in the dispute, and thereby brought about tense relations between local and outside PLA units” (Forster 1990, 35–36). As a result, conflicts between the Provincial United Headquarters and the Provincial Red Storm escalated after the establishment of the Provincial Military Control Commission. In various localities, rival local mass organizations sought assistance from either the Provincial United Headquarters or the Provincial Red Storm, depending on their affiliation, and they competed fiercely with one another for power and influence. Ultimately, after the spring of 1967 the antagonism among the rebel organizations erupted into a series of armed clashes (武斗), during which mass organizations throughout the province resorted to force to attack their rivals. According to an official source, between March and August 1967 large-scale armed struggles occurred in twenty-eight counties (Zhejiang Communist Party Gazetteer 2007, 14), as well as in major urban centers such as Wenzhou, Xiaoshan, Jinhua, and so forth. In Wenzhou city, for example, in May 1967, an armed struggle broke out between the Wenzhou United Headquarters and the Wenzhou Workers’ General Headquarters (温州市工人革命造反总司令部) (hereafter the Wenzhou Workers’ Headquarters) (工总司), a new rebel organization established in early May 1967. Thereafter, small skirmishes between the Wenzhou United Headquarters and the Wenzhou Workers’ Headquarters frequently broke out. Finally, in July and August 1967, a major conflict erupted. On July 10, the two rival organizations used cannons, mortars, and other heavy weapons to attack each other. The fighting lasted until mid-August. Official figures reveal that a total of 1,018 people died in the fighting (Wang Fang 2006, 193–194). Although the Wenzhou United Headquarters was subdued due to intervention by the military forces sent by Nan Ping, then the newly installed head of the Provincial Military Control Commission, conflict between the two mass organizations did not cease and armed clashes resumed in the early 1970s. Similar scenes occurred in Xiaoshan county, in the vicinity of Hangzhou. Beginning in April 1967, the two opposing mass organizations, i.e., the Xiaoshan Revolutionary United Headquarters (萧山县革 命造反联合总部, hereafter Xiao United (萧联总)) and the Xiaoshan Revolutionary General Headquarters (萧山县革命造反联合总指挥部,

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hereafter Xiao General Command (萧总指)), accused one another of being conservatives, which led to the outbreak of armed struggle. The clashes culminated in a bloody conflict in August 1967. On August 26, to realize the dominance of the Xiaoshan Revolutionary General Headquarters in Xiaoshan county, the Provincial United Headquarters stepped in and mobilized 3,000–4,000 troops in Hangzhou to launch an attack on Chengguan township (城关镇). They used bombs, flamethrowers, light and heavy machine guns, and cannons to occupy first the township and then the entire county. Sixtyfour people died, many more were injured, and thousands of people belonging to the Xiaoshan Revolutionary United Headquarters were expelled from the county (Party History Research Office under the Xiaoshan City Party Committee 1994, 202–203; Forster 1990, 45–47). The disorder and violence throughout Zhejiang obviously hastened a reshuffling of power. In August 1967, the party center reshuffled the leadership of both the Provincial Military Control Commission and the Provincial Military District. As a result, at a “handover-of-power meeting” (交权大会), Long Qian was expelled from the Provincial Military Control Commission, and Nan Ping and Chen Liyun respectively became its head and deputy head. In the meantime, Xiong Yingtang, commander of the Twentieth Army, replaced Zhang Xiulong as commander of the Provincial Military District and Nan Ping became political commissar of the Provincial Military District. In other words, leadership of the military in Zhejiang came under the influence of the Twentieth Army and the Fifth Air Force, both of which had loose ties with the southbound civilian cadres, as opposed to the ground forces of the Zhejiang Provincial Military District (Forster 1990, 44). On March 18, 1968, the party center ratified formation of the Zhejiang Provincial Revolutionary Committee, the paramount power body in the province. Its membership consisted of military, civilian, and mass organization representatives, thereby embodying Mao’s so-called three-in-one unity (三联合). Predictably, Nan Ping was elected chairman of the Zhejiang Provincial Revolutionary Committee, and Chen Liyun became first vice chairman. Subsequently, on March 24 the party core group (党的核心小组) of the Zhejiang Provincial Revolutionary Committee was installed, corresponding to the standing committee of the provincial party committee prior to the Cultural Revolution, with the majority of its leading members from the Twentieth Army and the Fifth Air Force (see Table 4.3).

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Table 4.3 Composition of the leadership of the Zhejiang Provincial Revolutionary Committee (March 1968–January 1971) Head:

Nan Ping (Twentieth Army)

First deputy head:

Chen Liyun (Fifth Air Force)

Deputy heads:

Lai Keke (southbound cadre) Xiong Yingtang (Twentieth Army) Shen Ce Wang Zida Zhu Quanlin Meng Zhaoyu Dai Kelin

Other members:

Xie Zhenghao

Source: Zhejiang Communist Party Gazetteer 2007, 99.

Formation of the Zhejiang Provincial Revolutionary Committee and the composition of its leadership marked the full establishment of military rule in Zhejiang and it was a reflection of the ascendancy of Lin Biao, who was made Mao’s “comrade-in-arms” after the October 1968 12th Plenum of the Eighth Party Congress. At the same time, Liu Shaoqi was expelled from the party. Lin Biao’s prominent status in the top echelon of power represented strong support for the Zhejiang military leaders who were loyal to Lin Biao. In fact, the provincial power structure that was established in March 1968 continued to the 1970s and did not end until late 1971, after the Lin Biao incident. It also reveals the extent to which high politics in Beijing had an impact on the fate of the two provincial mass organizations in Zhejiang. Although they were called mass organizations, their political survival and influence were conditional on the support they received from Beijing. Both mass organizations were eager to win the support of the Cultural Revolution Group in Beijing, which in effect determined which mass organization would prevail. It was the Provincial United Headquarters that was finally endorsed by the Cultural Revolution Group, thus enabling it to successfully seize power from the provincial southbound leadership and to expel Jiang Hua from Zhejiang in February 1967. Subsequently, after Nan Ping stepped in to establish

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his authority in Zhejiang, the Provincial United Headquarters quickly followed the new leader, who apparently had the backing of Beijing, whereas the Provincial Red Storm continued to be backed by the Zhejiang Provincial Military District, which had close ties with the provincial southbound leadership. In March 1968, as Nan Ping and his colleagues finally consolidated their control over the province, as reflected in the formation of the Zhejiang Provincial Revolutionary Committee, the Provincial United Headquarters allegedly emerged as a winner. In fact, in the newly established Zhejiang Provincial Revolutionary Committee, all representatives of the mass organization were from the Provincial United Headquarters and none were from the Provincial Red Storm (Forster 1990, 56–71). Simply put, the struggle between the two provincial mass organizations was generally affected by political developments in Beijing. At the local level, especially in the non-guerrilla localities that had no strong independent social forces to fight on their own, politics at higher levels easily penetrated local society, thereby shaping the development trajectory of the Cultural Revolution locally. As a result, the rise of the rebels, as well as the armed clashes and their outcomes, was affected by the distribution of power in the local three-in-one revolutionary committees, which were almost a replication of the distribution of power at the provincial level. For example, in the typical non-guerrilla county of Quxian (衢县), despite the local rebel groups’ call for a power seizure and the fact that the local leaders were publicly denounced in early 1967, rebels met with strong resistance from rival organizations propped up by the incumbent southbound county leadership and the local PLA forces garrisoned in the county. In May 1967, two opposing mass organizations were established, the Quzhou Revolutionary United Headquarters (衢州革命造反派联合总指挥部, hereafter Qu United (衢联总)) and the Quxian Revolutionary Liaison Station (衢县 革命造反派联络站, hereafter Revolutionary Liaison Station (革联站)), and armed struggles between them ensued (Party History Research Office under the Qu County Party Committee 1994, 76–77).40 Because the Quzhou Revolutionary United Headquarters had the support of Nan [Ping]–Chen [Liyun]–Xiong [Yingtang], between July and October 1967 it dominated the Quxian Revolutionary Liaison Station. By October 1967, the Quzhou Revolutionary United Headquarters 40

Confirmed by a field interview carried out by the authors, October 2009.

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was able to send armed troops to reinforce its allies in other counties (Party History Research Office under the Qu County Party Committee 1994, 77–78).41 As a result of the victory of the Quzhou Revolutionary United Headquarters, the Quxian Revolutionary Liaison Station was disbanded in late August and a local revolutionary committee was established by the end of November, in much the same way as the Zhejiang Provincial Revolutionary Committee had been established. In localities where local guerrilla cadres were able to mobilize and organize resources on their own, the situation developed quite differently. In these localities, the rebels were initially so powerful and united that they were quickly able to seize power from the local southbound leadership, usually in January or February 1967. This temporary victory by the local rebels, however, soon faced intervention by the new provincial military authority. To be sure, the new provincial military authority had no intention of sharing power with the local rebels. Instead, the new provincial military authority sought to handpick those mass organizations that had demonstrated absolute loyalty in order to establish an absolute monopoly over local politics. As a result, in spite of the downfall of the southbound leadership, the local guerrilla camp and their affiliated mass organizations had to compete with rival organizations backed by the provincial military. Whether the local rebels could deal with this new threat depended on how many resources they could mobilize, as well as how much support they could recruit from local society to overpower the rival mass organizations backed by the military and even to deal with direct intervention by the provincial military. In Wenzhou city, for example, the largest rebel organization, the Wenzhou United Headquarters, was successful in seizing power in January 1967. The former ruling system, which included institutions such as the city party committee, the city government, and the city public security bureau, were all occupied by the rebels. Although the southbound leadership was placed under the protection of the local Wenzhou Military District, there were no other mass organizations to challenge the authority of the Wenzhou United Headquarters. However, after the establishment of the Zhejiang Provincial Military 41

Also see “Quzhou’s Mass Movement of Disclosing, Criticizing, and Examining the Crimes of the Gang of Four” (衢州揭、批、查“四人帮”群众运动), unpublished manuscript by the Research Office for Party History of Quzhou Prefecture, No. 13920, 2008.

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Control Commission in March 1967, the rebels split into two opposing camps, the Wenzhou United Headquarters and the Wenzhou Workers’ Headquarters, which was established in May 1967, was loyal to provincial military leader Nan Ping, and was affiliated with the Provincial United Headquarters. Ironically, the Wenzhou United Headquarters turned to the patronage of the Wenzhou Military District, an ally of the Wenzhou southbound leadership, to consolidate its strength (Forster 1990, 480; Party History Research Office under the Wenzhou City Party Committee 1997, 121; Wang Fang 2006, 193). Armed clashes between the two organizations began in the summer of 1967. At first, the Wenzhou United Headquarters gained the upper hand due to the backing of the Wenzhou Military District. Ultimately, however, the political connections of the Wenzhou Workers’ Headquarters with its patron in the Zhejiang Provincial Military Control Commission paid off political connections. In early August, two units commanded by the Twentieth Army, Unit 6517 and Unit 6299, entered Wenzhou to “support the left,” according to a directive from the Central Military Committee (Wang Fang 2006, 193). After it moved in, the field army declared that it supported the Wenzhou Workers’ Headquarters. Subsequently, the Provincial United Headquarters and Nan Ping, the newly installed head of the Zhejiang Provincial Military Control Commission, also offered support to the Wenzhou Workers’ Headquarters on August 14 and 17 respectively (Forster 1990, 48–49). As a result, by the end of August the armed clashes had been subdued, and the defeat of the Wenzhou United Headquarters also meant a setback for the Wenzhou Military District in its competition for power with the Twentieth Army and the Fifth Air Force under the command of Nan– Chen–Xiong. In fact, after the Wenzhou United Headquarters was suppressed, the Zhejiang Provincial Military Control Commission issued a circular on August 15 calling for exposing a handful of evildoers hiding in Wenzhou’s local military authority, thus, in effect, directing the fire at the military patron behind the Wenzhou United Headquarters. In late August 1967, Wang Futang, commander of the Wenzhou Military District, was denounced at mass rallies organized by the Wenzhou Workers’ Headquarters. In addition to Wang Futang, Wang Fang, the prefectural party secretary who had been party leader of the local southbound leadership, was accused by the rebels of manipulating the Wenzhou United Headquarters behind the scenes and instigating a counterrevolutionary military revolt (Wang Fang 2006, 194; Forster

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1990, 49). At the end of 1967, the Zhejiang Provincial Military Control Commission decided to reorganize the Wenzhou Military Control Commission and to replace the leadership with commanders of units that supported the left (Party History Research Office under the Wenzhou City Party Committee 1997, 125), suggesting that the power of Wenzhou’s Nan–Chen–Xiong regime had reached an unprecedented level. Although the Wenzhou Workers’ Headquarters was seemingly the winner of the armed struggle, the Wenzhou United Headquarters did not disappear. Conflicts between the two mass organizations continued and resistance by the Wenzhou United Headquarters was quite strong. Even though the Wenzhou United Headquarters suffered huge losses in the downtown city area of Wenzhou, it was able to retain its strength to shift the main battleground from the urban center to the countryside. In fact, in September 1967 the Wenzhou United Headquarters was even able to install cannons to fire at the city area from nearby Niushan mountain (牛山) (Party History Research Office under the Wenzhou City Party Committee 1997, 124). In neighboring counties, such as Rui’an county, Yueqing county, Yongjia county, and others, the Wenzhou United Headquarters resorted to guerrilla warfare against the Wenzhou Workers’ Headquarters. According to official sources, outbreaks of armed struggle between the two mass organizations occurred frequently in the wake of the large-scale conflict in July– August 1967. The fighting lasted for nearly two years and did not subside until the end of 1969 (Wenzhou City Gazetteer 1998, 62). Altogether, more than 1,000 people were killed in the armed violence. By the same token, a power balance in Wenzhou was not achieved until November 1968, when the Wenzhou Prefectural Revolutionary Committee and the Wenzhou City Revolutionary Committee were established. The core party group of the Wenzhou Prefectural Revolutionary Committee, the paramount organ of power in the prefecture, was not established until July 1969. In short, the situation in Wenzhou contrasted sharply with the situation in Quzhou, where the beginning and the end of armed clashes between local mass organizations were practically in sync with the power dynamics at the provincial level and the outcome simply reflected the replacement of the old provincial leadership by a new military ruler. What made Wenzhou distinct from Quzhou was that Wenzhou’s local guerrilla group played a significant role and neither the

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southbound leadership nor the subsequent military authority could easily suppress it. Although far too many materials relevant to the Cultural Revolution are still confidential,42 we can still postulate that from the very beginning of the Cultural Revolution, all the rebels in Wenzhou were united under the banner of the Wenzhou United Headquarters, with the local guerrillas as its backbone, to unseat the southbound civilian leadership. In fact, these diehard southbound cadres in the local leadership who had once bullied the local guerrilla cadres, such as the head of the Wenzhou Public Security Bureau, Yang Shaogeng, and member of the Wenzhou Prefectural Standing Party Committee Li Tiefeng, were the first victims of the rage of the rebels, whereas those soft-liners in the southbound leadership were treated better (Wang Fang 2006, 190–192; Party History Research Office under the Wenzhou City Party Committee 1997, 122).43 The heyday of the Wenzhou United Headquarters, however, lasted for only a short time and it faced a real challenge after the seizure of power in early 1967. As noted, the provincial military authority endorsed the Wenzhou Workers’ Headquarters in the hope of taking advantage of its forces to crush the Wenzhou United Headquarters. To the surprise of the military, a vast number of local guerrilla cadres, knowing that they could not count on the support of the provincial military authority and would have to fight for themselves, chose to align with the Wenzhou United Headquarters. In fact, without the full support of the local guerrilla group, it would have been impossible for the remaining forces of the Wenzhou United Headquarters to stand firm in Wenzhou’s rural areas after its 1967 July–August defeat, let alone thereafter to organize several counterattacks against the Wenzhou Workers’ Headquarters. Further evidence confirming this judgment is the response by its opponents. In July 1968, the Provincial United Headquarters, by printing an editorial in its mouthpiece, the Red Storm, on June 17, called for uncovering a well-hidden 42

43

Like other sensitive political issues that may undermine the CCP’s legitimacy, until the present any open discussion or academic research on the Cultural Revolution is still largely considered taboo in China. In every case, whether or not we had some personal connections, when we visited the official archives in different localities, our requests for official documents or the minutes of party committee meetings were all declined. Wang Fang, who was transferred to Wenzhou in 1965 as prefectural party secretary, acknowledged that although he was also criticized at the mass rallies, the prefectural southbound leadership bore the brunt of the rage of the rebels.

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clique of traitors in Zhe’nan (southern Zhejiang), thereby declaring war against the local guerrilla group (Party History Research Office under the Wenzhou City Party Committee 1997, 125–126). This request by the Provincial United Headquarters was soon echoed in a speech by Nan Ping at the second enlarged conference of the Zhejiang Provincial Revolutionary Committee, when he stated that prior to 1949 many local revolutionaries in Zhe’nan, Zhedong (eastern Zhejiang), and Zhexi (western Zhejiang) had betrayed the Communist cause and had formed a clique of traitors that persisted to that very day (Party History Research Office under the Zhejiang Provincial Party Committee 2003, 115–121). After Nan Ping’s speech, a massive campaign against the Zhe’nan Traitor Clique (浙南叛徒集团) was launched in the Wenzhou region in July 1968 (Party History Research Office under the Wenzhou City Party Committee 1997, 126–127). By January 1969, a total of 35,000 people were alleged Zhe’nan Traitor Clique suspects, and later more than 3,000 people were identified by the Zhejiang Provincial Revolutionary Committee as traitors. The entire pre-1949 leadership of Zhe’nan local guerrillas, including its top leader, Long Yue, and other senior leaders, such as Zheng Danfu, Zheng Haixiao (both of whom were ex-members of the standing committee of the Special Zhe’nan Party Committee (浙南特委)), Qiu Qinghua (ex-party secretary of the Kuocang Central Party Committee (括苍中心县委)), Zeng Shaowen (ex-party secretary of Yongjia County Party Committee), and Zeng Jiashun (ex-party secretary of Rui’an County Party Committee), among others, were charged with being leading traitors or bandit chieftains. Some, such as the deputy head of the Yongjia County Government, were even persecuted to death (Party History Research Office under the Zhejiang Provincial Party Committee 2003, 116–118). Despite the offensive by the Provincial United Headquarters and its backstage boss, i.e., the provincial military authority, the local guerrilla cadres did not directly confront their formidable rivals, since all rebel forces, including the mass organizations, required an official endorsement from the provincial authority in order to have legal status. However, the local guerrilla cadres did not simply cede to their rivals or surrender. In fact, regardless of whether or not they were loyal to the military, the military never allowed them to grow so strong that they could not be controlled, so their fate depended on peaceful power-

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sharing with the incumbent power holders, whether the southbound leadership or the new military authority. The concerns of the local guerrilla cadres were by no means ungrounded; they were justified by the case of the Provincial United Headquarters during the Cultural Revolution, which reveals the logic of power under dictatorship. The Provincial United Headquarters was able to prevail in the armed clashes with the Provincial Red Storm due to support from the military under Nan Ping and his colleagues in the Zhejiang Provincial Military Control Commission. Ultimately, however, in the “three-in-one” Zhejiang Provincial Revolutionary Committee the military cadres were in the majority and the representatives from the Provincial United Headquarters were in the minority. None of the leaders of the Provincial United Headquarters, such as Zhang Yongsheng and He Xianchun, were able to be part of the party core group of the Zhejiang Provincial Revolutionary Committee. Compared with the Zhejiang Provincial United Headquarters, its affiliated organization in Wenzhou, the Wenzhou Workers’ Headquarters, fared somewhat better. In December 1968, mass organization representatives accounted for 60 percent (thirty-four out of fifty-seven members) and 57 percent (twenty-seven out of forty-seven members) of the total members respectively in the newly formed Wenzhou Prefectural Revolutionary Committee and the Wenzhou City Revolutionary Committee (Party History Research Office under the Wenzhou City Party Committee 1997, 129). However, this was only because their rival mass organizations were still active, so its forces were still needed. In effect, even the two committees were under the leadership of two military commanders, Qi Qinglian and Bi Shupu respectively, and the de facto power of the Wenzhou Workers’ Headquarters was highly centralized in their hands. Moreover, with the passage of time, more bad news was awaiting these mass organizations. After the 12th Plenum of the Eighth Party Congress in October 1968, the party launched a new “Go up to the Mountains and Down to the Countryside” (上山下乡) movement during which millions of young students and adults, who represented the main force in the mass organizations, were required to leave the urban centers to settle in the remote countryside. Furthermore, when the new national power center was formed at the CCP’s Ninth National

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Congress in April 1969,44 the party ordered that all rebel organizations be disbanded. In Zhejiang, central directives were relentlessly implemented. As expected, a vast number of mass organization leaders who had risen in the ranks during the Cultural Revolution via rebellion were soon deprived of their organizational base and inevitably became puppets of the military. Ultimately, the local guerrilla cadres chose to maintain their de facto autonomy within their sphere of influence in an indirect manner—by allying with those mass organizations that acknowledged, at least nominally, the superiority of the Wenzhou Workers’ Headquarters. However, in effect, they acted as the backstage wire-pullers of these mass organizations to organize and mobilize resistance against intervention by the Wenzhou Workers’ Headquarters and the military, thereby avoiding a challenge from the incumbent power holders. The mass organizations were willing to form an alliance with the local guerrilla cadre group not only because the two faced the same survival problems but also because they craved autonomy and hoped to increase their negotiating power vis-à-vis the mighty military. Therefore they had no other recourse but to co-operate with the guerrilla cadres whose entrenched social networks and rich political resources were ideal assets during the chaos of the Cultural Revolution. In sum, according to the divisions and realignments of the mass organizations, in the guerrilla counties there were two phases to the political game between early 1967 and early 1971. During the first phase, the rebel mass organizations were basically divided into two groups based on their attitudes toward the incumbent southbound leaders. These mass organizations were ultimately supported by the Nan– Chen–Xiong regime, which had seized power from the southbound leadership. During the second phase, a new power game erupted between the mass organizations and the new provincial military authority, during which the ambitious mass organizations fought a war for survival in order not to succumb to the military. This usually unfolded between the restive mass organizations and their rival counterparts as local agents of the military. In order to withstand the military offensive, they required full support from the local guerrilla group. 44

A major achievement of the Ninth Party Congress was the election of a new Politburo, with Mao Zedong, Lin Biao, Chen Boda, Zhou Enlai, and Kang Sheng as the five members of the Politburo Standing Committee.

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The political struggle in Yueqing county of Wenzhou region between 1967 and 1969 is indicative of how the games played out. Like the development of the Cultural Revolution in Wenzhou City, the local rebels successfully seized power in January 1967. After mid-February 1967, serious confrontations took place between two opposing organizations, the Yueqing Revolutionary United Headquarters (乐清县革 命造反联合司令部-县联司) and the Yueqing Proletarian Revolutionary General Headquarters (乐清县无产阶级革命造反总司令部县总司) (hereafter Yueqing General Headquarters) (Yueqing County Gazetteer 2000, 47–48). Initially, on February 25, the local Militia Department (人武部) declared support for the Yueqing General Headquarters, forcing the Yueqing Revolutionary United Headquarters to disband the following day. But the Yueqing Revolutionary United Headquarters soon rebounded by aligning with the new provincial military authority and thereby re-emerging with the name Yueqing Revolutionary Rebel United General Headquarters (乐清县革命造反联合总指挥部) (hereafter Yueqing United Headquarters). In August, Unit 6516 of the Twentieth Army was garrisoned in the county to support the left (Yueqing County Gazetteer 2000, 47–48). Receiving reinforcements from the military, the Yueqing United Headquarters, after launching a series of battles against the Yueqing General Headquarters between October 1967 and March 1968, finally gained the upper hand (Yueqing County Gazetteer 2000, 47–48). After victory in the armed clashes, the Yueqing County Revolutionary Committee was established in July 1968. Among all the members on the committee, mass organization representatives accounted for 44 percent, military representatives accounted for 33 percent, and civilian cadre representatives accounted for 23 percent (Table 4.4). The joy of victory did not last long, however. Soon thereafter, armed struggles once again erupted, not between the Yueqing United Headquarters and the Yueqing General Headquarters but among different factions within the Yueqing United Headquarters. In late November 1968, the Yueqing United Headquarters split into two opposing groups, the Yueqing Group (乐清派) and the Hongqiao Group (虹桥派), which began to attack each other. The Yueqing Group was commanded by Tu Qingxia, the de facto No. 1 leader of the old Yueqing United Headquarters, whereas leadership of the Hongqiao Group consisted of a group of Tu’s opponents within the Yueqing United Headquarters.

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Table 4.4 Yueqing County Revolutionary Standing Committee (August 1968) Head

Li Qingtang (李清堂)

CCR

Aug. 1968–Oct. 1970

Deputy heads

Xie Baomin (谢保民)

MR

Aug. 1968–Jan. 1969

Liu Heting (刘鹤亭)

MR

Aug. 1968–June 1975

Tu Qingxia (屠庆夏)

MOR

Aug. 1968–Oct. 1976

Zheng Shaohua (郑少华)

MOR

Aug. 1968–Oct. 1976

Li Jianli (李建立)

MR

Aug. 1968–April 1970

Gao Fenggui (高凤桂)

CCR

Aug. 1968–April 1970

Lin Jinbang (林金榜)

MOR

Aug. 1968–April 1970

Lin Caifeng (林彩凤)

MOR

Aug. 1968–April 1970

Standing committee members

Notes. CCR = civilian cadre representative, MR = military representative, MOR = mass organization representative. Source: Organization Department under the Yueqing County Party Committee et al. (1993, 551–552).

This time, however, the military, including the military representative Xie Baomin, opposed Tu Qingxia and supported the Hongqiao Group.45 To everyone’s surprise, Tu successfully prevailed over his opponents throughout the Cultural Revolution, expelled Xie Baomin from the Yueqing County Revolutionary Committee, and forced the military to accept his authority (Yueqing County Gazetteer 2000, 49),46 and therefore he defended his position as the true boss of the Yueqing United Headquarters. Tu Qingxia remained in power until the end of the Cultural Revolution in 1976. 45 46

Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009.

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It is clear that the clashes between the Yueqing Group and the Hongqiao Group in effect reflected the competition for power between Tu Qingxia and the military. As always, the military hoped that Tu Qingxia would become its puppet. When Tu refused, the military then attempted to unseat him by supporting the Hongqiao Group. In general, it was unusual for mass organization leaders to dare to defy the strength of the military. But Tu’s assertiveness in Yueqing was by no means fortuitous; rather, it stemmed from his adept leadership skills and his masterful capacity to mobilize local political support from all potential allies, including local guerrilla cadres. As the secretary of Wang Zhenyuan, the ex-county party secretary between 1958 and 1966,47 Tu Qingxia was embedded in local officialdom and maintained close ties with the county southbound leadership. Due to this connection, it was relatively easy for Tu Qingxia to unite with the southbound civilian cadres. The nominal head of the Yueqing County Revolutionary Committee, Li Qingtang (see Table 4.4), for example, was actually a loyal follower of Tu Qingxia and therefore he firmly supported the Yueqing Group.48 Li Qingtang’s attitude in effect represented the general position of the southbound civilian cadres, revealing the endorsement of the southbound cadres. Li Qingtang’s successor, Song Jianci, another southbound cadre who had been transferred from Yongjia County, also supported Tu Qingxia throughout the Cultural Revolution.49 Tu’s most powerful and influential allies, however, were the local guerrilla cadres. At the outset of the Cultural Revolution, Tu Qingxia had swiftly realized that this political movement would deliver a fatal blow to the existing order and the local guerrilla cadres as a whole would be powerful players. To demonstrate his resolution, Tu encouraged the rebels to criticize and denounce the county southbound leaders at mass rallies. He also instigated the rebels to seize the ex-party secretary, Wang Zhenyuan, who at the time was transferred to Daxing county of Beijing as county party secretary, and to return him to Yueqing county for public struggle sessions. In the meantime, Tu Qingxia was keen on striking a balance between winning the support of the local guerrilla group and consolidating the 47 48 49

Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009.

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unity of the southbound group. To do so, he focused on the diehard southbound cadres who had taken a hard-line approach toward the local guerrilla group prior to the Cultural Revolution. One such hardliner was Lei Mingyuan, who was then head of the Organization Department under the county party committee. He was subject to ruthless struggles and denouncements at mass meetings due to his notorious hostility toward the local guerrilla cadres.50 In contrast, moderates such as Wang Zhenyuan, who had not been so brutal in his treatment of the local guerrilla cadres before the Cultural Revolution, did not suffer as much as his hard-line counterparts. In fact, Wang Zhenyuan was actually treated quite well after being returned to Yueqing. Even though he appeared at struggle meetings, few people rushed to the stage to beat him. This was also the case for Wang Hongli, then the county party secretary and a good man in the eyes of local people. Wang Hongli had once been criticized and denounced by some rebels from a minor mass organization. When they learnt of this, the Yueqing United Headquarters sent its forces to release Wang and they placed him under their protection.51 At such a delicate moment, Tu’s maneuvering to sacrifice the extremists and to secure the moderates proved effective in appeasing both the southbound leaders and the local groups. Tu Qingxia’s strategy of wooing the local guerrilla cadres was not confined to those in Yueqing county. Rather, it also applied to the entire local guerrilla group in the Zhe’nan region. As noted, the provincial and Wenzhou prefectural authorities launched a witch hunt in 1968–1969 against the local guerrilla cadres by grouping many of them into the so-called “Zhe’nan Traitor Clique.” Although the county revolutionary committee in Yueqing followed suit to set up an ad hoc group in October 1968 to uncover the traitor network in the county (Yueqing County Gazetteer 2000, 48–49), it seems that Tu Qingxia did not seriously carry out the higher-level directive because none of the local guerrilla cadres in the county was ever charged with being a traitor. It should be pointed out that only one month later, they split into two rival groups, the local guerrilla cadres and the southbound cadres. Thus it is plausible that Tu Qingxia was playing up to the local guerrilla group before he faced a showdown with his enemies. The 50 51

Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009.

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advantages of Tu Qingxia’s strategy are obvious from the development of subsequent events in which he successfully won support from the majority of the local guerrilla cadres in battles with the Hongqiao Group. It is obvious that Tu Qingxia had won the confidence of the local guerrilla cadres and the latter finally accepted the fact that Tu Qingxia would serve their interests better than his rivals in the Hongqiao Group. In the meantime, for all of Tu Qingxia’s hawkish actions against the Hongqiao Group backed by the military, he did not make a clean break with the military and he knew his limits. All he did was flex his muscles in order to augment his negotiating powers vis-à-vis the military, but in the meantime avoided any confrontation with the military representatives in Yueqing, let alone challenging the provincial military authority. In fact, throughout the period between the late 1960s and the outbreak of the Lin Biao incident, to reveal his political position Tu Qingxia’s organization remained affiliated with the Provincial United Headquarters. As evidence, although Tu Qingxia did not follow the directive of the provincial military authority to pursue the “Zhe’nan Traitors” in the county, he also strictly opposed the local guerrilla cadres providing any substantial support to the Wenzhou United Headquarters,52 thus not ruffling the feathers of the military and showing that he was no threat to the newly established order. Tu Qingxia’s strategy finally paid off in the sense that Liu Heting, successor to the former military representative Xie Baomin, compromised to endorse Tu Qingxia’s de facto leading political position in the county. In sum, it was the combination of Tu’s adept political sense, inclusive approach to the local political forces and the local guerrilla cadres, and outward low profile in the face of the military that worked together to earn his rebel organization the independence and autonomy that otherwise would not have been expected.

52

Oral source, interview in Yueqing city, October 2009. This is also reflected in the spatial distribution of casualties throughout the Wenzhou region during the armed struggles between the Wenzhou United Headquarters and the Wenzhou General Headquarters. In this regard, most victims during the period of armed struggle were found in counties such as Wencheng, Rui’an, Taishun, and Yongjia, thus suggesting that Yueqing county was not extensively involved in the armed struggles. See Wencheng County Gazetteer (1996, 1042); Party History Research Office under the Zhejiang Provincial Party Committee (2003, 115–121).

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In reality, the kinds of strategy that the local guerrilla cadres employed to secure their political survival differed greatly among the localities and were conditional on a wide variety of factors,53 which is difficult to explain due to a lack of systematic data and materials. However, by the logic of this book, as well as the above recounting of the history of the Cultural Revolution in Zhejiang, it is plausible that relative to the non-guerrilla counties, the power struggle in the guerrilla counties among various factions would have been more difficult to subdue, thus prolonging the clashes. The reason is simple. In the nonguerrilla counties, there were no political forces that were sufficiently strong to challenge the authority of the incumbent power holders—that is, the southbound leadership or the military—and the survival of the mass organizations was primarily dependent on the resources and support provided by their higher-up patrons. As a result, politics in the various localities replicated the dynamics of higher-level politics. Once the situation at the higher levels was settled, jostling for power in the localities ended. In contrast, the strength of the different factions in the guerrilla counties was relatively well balanced; they all faced various constraints and each party was more or less checked by forces beyond their control. The southbound civilian cadres had to face disgruntled rebels from below and heavy pressure from Beijing. The new 53

For example, in contrast to the Yueqing experience, the local guerrillas in Yuyao county took a much more confrontational approach to protect their political interests. In Yuyao, two mass organizations, the Yuyao Rebel United General Headquarters (余姚县造反联合指挥部) (hereafter Yuyao General Headquarters) (县联指) and the Yuyao Proletarian United Headquarters (余姚 县无产阶级联合总指挥部) (hereafter Yuyao United Headquarters), were established in January and March of 1967 respectively. In May, the Yuyao General Headquarters was reorganized into the Yuyao Rebel United Committee (余姚革命造反联合委员会) (hereafter Yuyao United Committee) (县联委) and in June 1967 it became affiliated with the Provincial United Headquarters. Soon thereafter, in May–June 1967, armed clashes between the Yuyao United Committee and the Yuyao United Headquarters erupted. Initially, the development of armed clashes in Yuyao was very similar to that in Wenzhou city in that the Yuyao United Committee retreated as it was under attack by the Yuyao United Headquarters. Thereafter, the provincial military authority stepped in to support the Yuyao United Committee; thus, to everyone’s surprise, the Yuyao United Committee had an edge over the Yuyao United Headquarters. Resistance by the Yuyao United Headquarters was so strong that the fighting ended in a standoff. In the face of this stalemate, Nan Ping summoned delegates from the two organizations to a meeting in Hangzhou to discuss a possible solution, but to no avail. The armed violence did not end until April 1969. See Yuyao County Gazetteer (1993, 43–45).

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provincial military authority, despite its seemingly unchallenged status, not only was alert to the possibility that the southbound cadre group might be rehabilitated,54 but also was checked and balanced by the Nanjing Military Region, the de facto patron of the old Zhejiang Provincial Military District under the command of Xu Shiyou, who had been entrusted by Mao and was garrisoned in Jiangsu province to keep an eye on the Nan–Chen–Xiong regime (Forster 1990, 36).55 The local guerrilla cadres and their allied mass organizations had to fight the formidable power holders; that is, the southbound leadership or the successor provincial military authority that backed the rival mass organizations. Obviously, in such a situation, it was impossible to easily take down one’s rivals, and the dust did not settle until a new balance of power emerged after a long and daunting Machiavellianstyle power struggle. In the new power-balance equilibrium, either one faction gained the upper hand over the other factions, or they had to maintain a delicate power-sharing situation since neither one could eliminate its rivals in the foreseeable future.56

54

55

56

For example, although Jiang Hua, the former provincial party leader, was forced to leave Zhejiang in February 1967, it was not until October 1968 that Chairman Mao revealed his attitude regarding how Jiang Hua should be treated. During this period, the signals from Beijing were ambiguous and contradictory. Given the political environment at the time, no one could predict with certainty, as long as Mao did not personally indicate his fate, whether or not Jiang would be able to return to the provincial political arena. For Jiang Hua during this period, see Forster (2003, 133–144). In fact, after the Lin Biao incident, it was Xu Shiyou who was in charge of purging members of Lin’s clan, including, among others, Nan Ping and Chen Liyun. In the latter case, i.e., when the strength of the various factions was relatively the same, even if one faction believed it had won the game and announced the establishment of a revolutionary committee, the revolutionary committee would not last for long. In Cixi county, for example, the county revolutionary committee was announced by a local mass organization in May 1967. However, because of opposition by many other mass organizations, the revolutionary committee was abolished within three months. It took another eleven months of armed fighting before another county revolutionary committee was established (see Cixi County Gazetteer 1992, 32). Another example can be found in Wenling county, where a county revolutionary committee was established in May 1967. However, it collapsed within three months due to the withdrawal of the military representative. Thereafter, armed clashes continued for almost a year. It was not until May 1968 and September 1969 respectively that a county revolutionary committee and a party core group were established (see Wenling County Gazetteer 1992, 34–35; and Party History Research Office under the Wenling City Party Committee 1997, 84).

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8

8 Non-guerrilla counties

Guerrilla counties 6 Frequency

Frequency

6

4

2

4

2

0

0

10

15

20

25

5

10

15

20

25

30

Figure 4.1 The distribution of the time interval (in months) between January 1967 and the official establishment of the local revolutionary committee (xaxis) Sources: Various county gazetteers from Zhejiang’s counties. For a list of the counties, see Table A1.1 in Appendix 1.

As introduced above, it was the establishment of a county revolutionary committee that began a new equilibrium in the balance of power. Hence we can compare the time interval (the number of months) between January 1967, when Beijing called on the rebels to seize power from the incumbent power holders, and when a local revolutionary committee was officially established to infer the intensity of the local armed struggle in the county. Figure 4.1 reveals the results.57 According to Figure 4.1, on average the length of the time interval in the non-guerrilla counties was 14.2 months, whereas in the guerrilla counties it was 18.4 months. The gap is 4.1 months and is statistically significant (p-value is 0.007). With the wisdom of hindsight, once a Pandora’s box like the Cultural Revolution was opened, even the initiator could not control where and how it would proceed. In Zhejiang, the Cultural Revolution produced unexpected outcomes for all political players. First, the southbound civilian group as a whole was substantially undermined. Although the successor military authority attempted to establish absolute authority in Zhejiang, its efforts met with strong resistance from the local guerrilla group as well as from their local allies. 57

In Appendix 3, we empirically investigate the impact of the local guerrilla forces on the intensity of armed clashes within a county in Zhejiang by looking at how long it took a county to establish a new balance of power, starting from January 1967 to when the power seizure was basically completed and a new power balance, embodied by the formation of a local revolutionary committee or its core leading group, was achieved.

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More importantly, shortly after the outbreak of the Lin Biao incident in 1971, the provincial military authority, represented by the Nan–Chen– Xiong regime, quickly collapsed, providing even greater room for the local guerrilla cadres to consolidate their local power bases. The turbulence and factional antagonism after the collapse of the Nan–Chen– Xiong regime continued to distract the provincial southbound leaders who had returned to Zhejiang but were considerably weakened by the Cultural Revolution (Forster 1990). When the Cultural Revolution came to an end, even though the guerrilla faction still lacked strong and reliable patrons at the provincial level, the systematic political persecution of its members ended for good. Thereafter, the political elites in the two camps continued to jostle for power, but in a more gentle fashion, to which we will return in the following chapter.

4.3 The Economic Consequences of the Cultural Revolution: Capitalism Redux For many, the Cultural Revolution, especially from 1966 to 1970, left an impression of incredible frenzy, massive violence, ubiquitous lies and betrayal, disgusting blandishment, and unprecedented disturbances. This stereotype, to a large extent, is not wrong. Figure 4.2 illustrates the poor economic performance of Zhejiang province by comparing its provincial per capita GDP with the national average. In every year from 1952 to 1976, Zhejiang’s provincial per capita GDP was far below the national average, and the gap between Zhejiang and the other provinces was increasing with the passage of time, with a nation-to-province ratio of 1.2 in 1966, 1.39 in 1970, and 1.42 in 1976. Table 4.5 compares the growth record of Zhejiang during different periods. During the Cultural Revolution period, the average annualized GDP growth rate in Zhejiang was 5.2 percent, which was higher than that during the famine of the Great Leap Forward period (–6.2 percent) but far below that during the First Five-Year Plan period (7.2 percent) and the Four Clean-Ups campaign (11 percent). Similarly, the annual growth rate of per capita GDP during the Cultural Revolution was 3.2 percent, much lower than that during the Four Clean-Ups campaign (8.2 percent) and during the First Five-Year Plan period (4.7 percent). In fact, the average annualized provincial per capita GDP growth rate dropped from 1.9 percent in 1966–1970 to 0.8 percent in 1971–1976, suggesting

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183

300

250

200

150

Zhejiang

National

100 1950

1955

1960

1965

1970

1975

Figure 4.2 Comparison of per capita GDP (yuan) between Zhejiang and the national average (1952–1976) Note. All figures are in 1952 prices. Source: 50 Years of Statistics for New Zhejiang (1949–1998), available at China Data Online.

that Zhejiang’s economy continued to deteriorate throughout the entire Cultural Revolution period. Many factors contributed to Zhejiang’s poor economic performance during the Cultural Revolution. Apart from the constant political turbulence and violence, the inappropriate development strategy and economic policies pursued by the state and the provincial authority also played a major role. At first glance, during the Cultural Revolution, especially during its early years (i.e., 1966–1970), the party-state reshaped center–province fiscal relations and replaced central administration by provincial administration in order to provide incentives to local governments to promote growth by granting them more discretion regarding investments.58 However, despite the decentralization, there were no appropriate policy initiatives for local conditions. Instead, local authorities at various levels were motivated to promote policies that were in tune with their political interests, by signaling their 58

For a detailed account of the economic policy orientation during the Cultural Revolution, see Prime (1991, 197–215), Naughton (1991, 153–181), and Wong (1991, 183–196).

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Table 4.5 Zhejiang’s economic growth (1953–1976)

Period

GDP growth Per capita GDP rate (%) growth rate (%)

Average level of per capita GDP (yuan)

First Five-Year Plan period, 1953–1957

7.2

4.7

129.6

Great Leap Forward/ Famine period, 1958–1961

0.2

–7.5

159.6

11.0

8.2

148.3

Cultural Revolution, 1966–1976

5.2

3.2

183.1

1966–1970

4.2

1.9

162.2

1971–1976

2.4

0.8

200.7

Four Clean-Ups campaign, 1962– 1965

Note. All per capita GDP figures are in 1952 prices. Source: 50 Years of Statistics for New Zhejiang (1949–1998), available at China Data Online.

loyalty and pandering to higher levels, as manifested by the nationwide application of radical agrarian policies, such as the “Dazhai Campaign in Agriculture” (农业学大寨) and “Taking Grain as the Key Link” (以粮为纲), without regard to local conditions (Zweig 1989; 1991, 63–82; Chung 2000, 34–35). Zhejiang was no exception to the national tide. Echoing the center’s call to build up “independent and complete” local industrial systems, Zhejiang’s provincial military authority carried out a development strategy that emphasized capital- and resource-intensive industries,59 dictated primarily by defense considerations but deviating from provincial conditions and comparative advantages. As a result, the bulk of investment funds were directed to coal mining and iron and steel production,60 at the 59

60

These included the so-called “five small industries” (五小工业)—coal, iron and steel, cement, agricultural machinery, and hydro-power stations. At the end of 1969, the provincial authority decided to launch a mass movement to boost coal production to 2 million tons in 1970, even though at the beginning of the 1960s Zhejiang only produced 10 percent of the total coal used in industrial production, with 90 percent imported from other provinces. In 1970,

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expense of agriculture, light industry, and infrastructure.61 Not surprisingly, these economic policies that ignored comparative advantages can be regarded as a mini version of the Great Leap Forward strategy, and they were bound to be inefficient and costly, as witnessed by the widening gap in per capita GDP between Zhejiang and the national average during the entire Cultural Revolution period. However, Zhejiang’s official economic figures during the Cultural Revolution masked huge variations in the development of capitalism within the province. In fact, it was during the Cultural Revolution that developmental patterns in the various localities throughout the province began to diverge. Despite the overall lag in economic development in Zhejiang during the Cultural Revolution, many guerrilla counties, such as those in Wenzhou but not confined only to Wenzhou, went their own way to follow the “capitalist road.”62 Not only were nonorthodox businesses, such as black markets and underground household factories, growing rapidly, but also some new and creative businesses and organizational forms, e.g., shareholding firms and joint-stock co-operative firms that later became popular during the post-reform era, were widely practiced in many localities. These structural changes resulted primarily from the shocks of the Cultural Revolution as well as from coping strategies on the part of local elites to guarantee their political survival in the face of the unprecedented tragedy. First of all, even initially, the Cultural Revolution delivered a heavy blow to the ruling machinery. From the provincial level down to the county levels, the incumbent southbound leaders were struggled and denounced, party and government compounds were occupied, the reputation and authority of the entire southbound

61

62

the province planned to increase the output of iron and steel several-fold. See Zhejiang in Contemporary China (1988, 102–104). For a detailed introduction to this Great Leap Forward style of economic planning during this period, see Forster (2003, 148–151). As of 1970, 50 percent of total investment in capital construction was concentrated in defense-related industries that were located in the mountainous areas, especially western Zhejiang. At the same time, investment in agriculture decreased by 20 million yuan compared with that in 1969, and local fiscal funds to support agriculture also dropped by 46 percent. See Zhejiang in Contemporary China (1988, 104). Some researchers, e.g., Yia-Ling Liu (1992), also note that capitalism had been very active in Wenzhou during the Cultural Revolution. But they only briefly refer to Wenzhou’s economic history during this period.

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leadership were decimated, and the patron–client networks that had formed in local societies since 1949 under the aegis of the southbound leadership were destroyed. There is no doubt that this undermined control of the party-state over local society and helped local guerrilla groups to fill the vacuum left by the southbound leadership.63 In addition, in some ways the Cultural Revolution blurred the distinctions and alleviated the confrontation between the southbound cadre group and the local cadre group. Due to the destruction of the old southbound leadership, the southbound cadres who survived the first phase of the Cultural Revolution had to face a powerful but hostile military authority and were forced to seek aid from other sources. No doubt one choice was the local guerrilla cadre group. When the two formerly opposing factions were forced to become closer, the strength of the local guerrilla cadre group inevitably increased, which in turn enhanced the group’s discretionary power and capacity to adopt strategies in line with their political interests.64 More importantly, it was during the Cultural Revolution that for the first time since 1949 the local guerrilla cadres had an opportunity to mobilize their supporters to defend themselves. Given this new window of opportunity, along with their marginalized status in the power hierarchy and poor relations with the higher-ups, the local guerrilla cadres had no other option but to win over and mobilize the lower-level cadres and the ordinary masses outside the regime to protect themselves from various political threats and uncertainties. Therefore,

63

64

This was most obvious below the county level. In Yueqing county, for example, in the late 1960s the local guerrilla cadres returned to the newly formed county government on a massive scale. In the Hongqiao township of Yueqing county, the guerrilla cadres constituted approximately 80 percent of the core-group members of the township revolutionary committee that had been formed in 1970, whereas the remaining 20 percent of the core-group members were also local natives. The leadership of Hongqiao township even after the Cultural Revolution was composed of local guerrilla cadres and their followers. Oral source, interview in Yueqing city, November 2009. In fact, after the downfall of the Nan–Chen–Xiong regime in 1972, it was unlikely that the returned southbound cadres, who had been weakened considerably during the first phase of the Cultural Revolution, would assume their former dominance over the local guerrilla cadres established during the pre-1966 period due to the ongoing political turbulence as well as the renewed factional fighting at the provincial level. For a description of the political situation between 1972 and 1976, see Forster (1990).

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whether the local guerrilla cadres were able to rally grassroots support was essentially an issue related to their political survival. Indeed, since the beginning of the Cultural Revolution, the experienced guerrilla cadres had quickly realized the importance of winning grassroots support. “The mass line (群众路线) saved me,” Chen Bibo, a guerrilla cadre told the authors during an interview. When the Cultural Revolution erupted, Chen Bibo was the party secretary of Yanhu Commune in Yueqing county, and thus he was targeted by some rebels who wanted to struggle him as a capitalist-roader in power. But such attempts failed because the commune members refused to hold a struggle session to denounce him as he had been so kind to the peasants between the Great Leap Forward and the Four Clean-Ups campaign. Later, when the head of another rebel organization arrived to take over the township leadership, he was driven out of the township government compound by local people commanded by Chen Bibo.65 Like Chen Bibo, Chen Shaodong, another senior guerrilla cadre and the ex-head of Yueqing county, was caught by some rebels to be struggled and denounced at a public meeting at the outset of the Cultural Revolution. After learning of the news, some local cadres amassed dozens of local people to rush to the stage to release Chen Shaodong and place him under their protection.66 After armed clashes between rebel organizations erupted in 1967, it was imperative to mobilize the masses on a large scale. As noted above, after losing the battle in the Wenzhou downtown area, the Wenzhou United Headquarters (温联总) retreated to the countryside and insisted on fighting with a rival organization, the Wenzhou General Headquarters (温总司), which was affiliated with the Provincial United Headquarters and therefore had the backing of the provincial military authority. Without the support of the local people, the Wenzhou United Headquarters could not have sustained activities in rural areas for nearly two years. In Yueqing county, the two opposing groups within the Yueqing United Headquarters (乐清县联总), the Yueqing Group and the Hongqiao Group, took pains to mobilize local people to participate in their respective organizations to gain the upper hand. In some counties, local rebels in one county would even 65 66

Oral source, interview in Yueqing city, April 2009. Oral source, interview in Yueqing city, December 2008.

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United in the Cultural Revolution

cross the county border into neighboring counties to recruit followers.67 Competition for popular support led local cadres in many counties to adopt similar strategies: in return for grassroots support, they were more willing to take care of the economic interests of local people. It is worth noting that during the Cultural Revolution, it was natural for political elites to resort to economic means, including wage increases and the transfer of material benefits to the masses, as a mobilization strategy. However, such a strategy, and even more so allowing nonorthodox economic activities such as private business, was called “economism” (经济主义) and was prohibited by the authorities.68 For the political elite of the dominant factions whose political survival was more dependent on the fortunes of the regime’s patron–client networks, their fortunes ebbed and flowed primarily with the evolution of the power struggle and the bargaining with the party center. As a result, they did not have to pursue grassroots support and mobilization as a political survival strategy. Even amidst the fierce factional infighting at the provincial level, the provincial leaders as well as their local followers, were they incumbent officials or challengers, still had to resolutely implement Beijing’s radical economic policies. As Keith Forster notes, neither the Provincial United Headquarters nor the Provincial Red Storm placed the workers’ economic grievances high on their list of priorities, even though they might have supported such demands when it suited them. Nevertheless, the provincial military authority ruthlessly suppressed any interest-group demands (Forster 1990, 27–28). In other words, the selection of a strategy was characteristic of the political calculations of the local elites. Only the marginalized elite who could not depend on the regime for survival had a real motivation to pursue the mass line in exchange for grassroots support. Therefore, in the guerrilla counties local cadres were more attentive to their public image and tended to be more selfdisciplined. In Yueqing county, for example, rebels in different factions 67

68

Oral source, interviews in Yongjia county and Yueqing city, October– November 2008. In urban centers, this included workers’ demands for pay increases, improved working conditions (including the accompanying benefits, security, and rights), and so on. In rural areas, peasants sought fewer state requisition policies and quotas and the redistribution of collective funds in their favor (see Forster 1990, 27–28).

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adopted slogans such as “do not take a single needle or piece of thread from the masses” (不拿群众一针一线) to portray themselves as the protective umbrella of the masses. In comparison, when the Cultural Revolution erupted, some rebels burdened the local people by requiring that they provide free food and tributes, which aroused great hostility. Mindful of their relationship with the masses, both the Yueqing United Headquarters and the Yueqing General Headquarters ended any misdemeanors by their members, and they rarely committed similar mistakes by restraining their members from becoming grabbing hands.69 Additionally, local cadres took the initiative to offer protection to increase the economic benefits of the local people. Now not only did local cadres support the peasants’ deviant activities, but they also encouraged local people to engage in a much wider range of nonorthodox businesses that were prohibited ideologically. As a result, capitalism quickly sprouted and took root, and then spread to dozens of localities throughout the province.

4.3.1 Agrarian Extremism: Apparent or Real? According to David Zweig, agrarian extremism refers to the Maoist rural development strategy pursued by the party-state from the late 1960s to 1978. This development strategy was embodied in a set of radical agricultural policies, e.g., “The Dazhai Campaign in Agriculture” (hereafter the Dazhai Campaign) and “Taking Grain as the Key Link,” and so forth, which sought to transform peasant ideology, eradicate all vestiges of the private sector, and build comprehensive collective ownership (Zweig 1989; 1991, 63–82). Zhejiang’s provincial military authority showed no hesitation in carrying out agrarian radicalism in the province. Beginning in 1967, the Zhejiang provincial leadership intensified its efforts to emulate the Dazhai model and called for “denouncing capitalism relentlessly and working energetically for socialism” (大批资本主义,大干社会主义). Emphasis was placed on instituting a work-point system based on the Dazhai model, namely awarding peasants with work points based on their output in the fields and arbitrary self-assessments of their labor contributions. According to official estimates, as of 1968, 90 percent of 69

Oral source, interview in Yueqing city, April, October, November 2009.

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all brigades in the communes practiced such a work-point system (Zhejiang in Contemporary China 1988, 98–99). Beginning in early 1968, a Great Leap Forward-style policy package began to reassert itself in the province. The Zhejiang provincial leadership launched a campaign to “Make Three Contributions and Implement One Amalgamation and One Upgrading” (三献一并一升), which meant turning three types of land (private plots, orchards, and land next to residences) into collectives, amalgamating the smaller production teams into larger brigades, and accordingly raising the accounting level from the production team to the brigade. By the summer of 1968, 25 percent of the brigades in the province had centralized accounting to the brigade level. Due to this amalgamation, the number of production teams was reduced from 3,315,000 to 2,103,000. In addition, private plots were recollectivized in 30 percent of the counties in the province, though the degree of ownership readjustment differed from county to county (Zhejiang in Contemporary China 1988, 98–99). Additionally, beginning in late 1969 the provincial authority implemented a policy of “Three Passes” (把三关). The aim of this policy was to further block the road to capitalism, including taking grain as the key link at the expense of cash crops,70 practicing egalitarianism in distribution and increasing accumulation funds in the commune by reducing the benefits distributed to peasants, forbidding collective and commune members from selling agricultural and sideline products in markets, and prohibiting peasants from breeding fowl. In fact, even as late as 1976, the last year of the Cultural Revolution, a fourth pass was added by establishing strict regulations on personal consumption decisions by commune members (Zhejiang in Contemporary China 1988, 100). For all the agrarian extremism at the time, archival research reveals that implementation of the radical agricultural policies was uneven and differed substantially in various Zhejiang localities. Indeed, it was the non-guerrilla counties that were most affected by agrarian radicalism. For example, ardent advocates of agrarian radicalism lived in the Huzhou region. The so-called “Three Passes” model, for example, had first been instituted in Deqing county of the Huzhou region. As 70

At the time, growing grain was regarded as pursuing socialism, whereas growing cash crops was considered to be capitalism. See Zhejiang in Contemporary China (1988, 100).

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of 1967, the amount of land in private plots in the entire region was reduced from 1,630,000 mu to 1,390,000 mu. By 1968, 80 percent of production brigades in Huzhou had adopted the work-point system in the arbitrary Dazhai fashion to assess labor contributions. The public accumulation rate increased from 1.85 percent in 1956 to 11.73 percent in 1970. These radical policy measures, which continued throughout the entire Cultural Revolution period, did not end until 1976 (Huzhou City Gazetteer 1999, 529). In the Quzhou region, the Dazhai-style work-point system was adopted in the summer of 1967. In 1968, the authorities began a campaign of “Making Three Contributions and Implementing One Amalgamation” (三献一并) to show off its revolutionary spirit. Among others, Changshan county (常山县) stood out due to its radical approach of carrying out “Making Three Contributions and Implementing One Amalgamation”: the county authority amalgamated its initial 2,025 production teams into 1,001 larger teams, raised the accounting level from the production team to the brigade in all of its 333 brigades, and collectivized the peasants’ private plots (Quzhou City Gazetteer 1994, 455). Although most counties in Quzhou began to redress such radical measures in the early 1970s (Jiangshan City Gazetteer 1990, 26, 163), the process was slow and thus was not completed until the late 1970s (Quzhou City Gazetteer 1994, 455). In fact, in Changshan county, the county authority again ushered in a new wave of the “Learn from Dazhai” campaign in 1975 in order to upgrade the current collective ownership to ownership by the whole people (Changshan County Gazetteer 1997, 143). In Yuhang county of the Hangzhou region, the county followed the line of “Taking Grain as the Key Link” throughout the 1970s, maintained the work-point system with Dazhai-like characteristics, and maintained a high level of public accumulation (Yuhang County Gazetteer 1990, 128). In the guerrilla counties, however, agrarian extremism soon became a formality. In the Wenzhou region, agrarian radicalism met strong grassroots resistance and could not be implemented in an all-out way. In Yongjia county, for example, the county authority viewed individual household farming, or household responsibility, as a form of capitalism and therefore targeted it for eradication during the “Learn from Dazhai” campaign. Although local cadres publicly complied with directives from above, they ignored the directives in practice, in much the same way as they had prior to the Cultural

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Revolution in the late 1950s (see Chapter 3). In 1968, there were 5,432 production teams, accounting for 77.3 percent of Yongjia’s 7,025 production teams that had privately adopted household responsibility (Yongjia County Gazetteer 2003, 463–465). In 1973 and 1975, the county authority placed anti-household-responsibility at the top of its agenda. Ironically, the campaign ended with an increase in the number of production teams adopting household responsibility, and with the proportion adopting household responsibility among all total production teams reaching 80 percent in 1976 (Yongjia County Agricultural Gazetteer 1997, 124; Yongjia County Gazetteer 2003, 465–466). In Yueqing county and Rui’an county, household responsibility was officially prohibited, private plots and household sidelines were to be eradicated as tails of capitalism, and production teams were to be amalgamated into the larger brigades (Yueqing County Gazetteer 2000; Rui’an City Gazetteer 2003, 302). But the official prohibitions were largely foiled due to opposition by the peasants (Yueqing County Gazetteer 2000, 398; Rui’an City Gazetteer 2003, 302), which was definitely supported by the local grassroots cadres. In both counties, the accounting level under the commune system was maintained at the level of the production team rather than the brigade (Yueqing County Gazetteer 2000, 398; Rui’an City Gazetteer 2003, 302). In fact, throughout the 1970s, there was a decollectivization trend in the Wenzhou region whereby the size of the production teams tended to become smaller and land was basically cultivated by individual households (Wenzhou City Gazetteer 1998, 1419). Resistance against agrarian extremism was also strong in other regions that had powerful guerrilla cadres. In Jinhua region, for example, the “Learn from Dazhai” campaign reached a climax in 1968, when the production teams were required by the county authority to be amalgamated into brigades, private plots were to be reclaimed by the collective, and household sidelines were forbidden. However, ultimately the success of the campaign was limited. In fact, in the entire region the size of the production teams basically remained intact and the accounting level remained at the level of the production team throughout the Cultural Revolution. Some private plots that had been collectivized at the height of the campaign were soon redistributed back to the peasants, and the Dazhai workpoint system was canceled after only a short period (Jinhua City

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Gazetteer 1992, 20, 347).71 In Yinxian county in the Ningbo region, radical agrarian policies were pursued at the height of the “Learn from Dazhai” campaign in 1968, but by the early 1970s they had already been abandoned (Yinxian County Gazetteer 1996, 856–857). To be sure, there were indeed some guerrilla counties that were seriously affected by agrarian radicalism. But even in these cases, the agrarian radicalism did not last for long and it seldom had an enduring effect after the political fanaticism had subdued. Between 1968 and 1970 in Zhuji county in the Shaoxing region, 1,319 brigades, accounting for 76 percent of all brigades in the county, adopted brigade-level accounting rather than accounting at the level of the production team. However, in 1971 the number of brigades using brigade-level accounting dropped dramatically to only eighty-nine, and all of these brigades were relatively small. At the same time, work points were no longer assessed based on the peasants’ political attitudes (Zhuji County Gazetteer 1993, 170). Cixi county and Xinchang county underwent similar experiences during this period (Cixi County Gazetteer 1992, 219; Xinchang County Gazetteer 1994, 156). In many counties of the Jinhua region, such as Wuyi county and Pan’an county, among others, agrarian radicalism basically ended shortly after it began (Wuyi County Gazetteer 1990, 179; Pan’an County Gazetteer 1993, 179).

4.3.2 Black Markets and Underground Businesses During the Cultural Revolution, fairs and marketplaces were subject to strict regulations and market transactions were referred to as tails of capitalism that were to be cut off. In the Three Passes campaign in Deqing county, individual peasants were prohibited from engaging in nonagricultural businesses, the communes and production brigades were not allowed to start their own enterprises, individual peasants’ agricultural and sideline products were not permitted to be sold in markets, and handicraftsmen were forbidden to sell their goods on the streets (Zhejiang in Contemporary China 1988, 100–101). In effect, any potential profit-making activities were regarded as symbols of capitalism and were to be suppressed. 71

In Pujiang county, for example, except for several brigades that raised the accounting level from the production team to the brigade, most production teams remained the basic accounting unit. Only several production teams were amalgamated into brigades (see Pujiang County Gazetteer 1990, 124).

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As expected, these radical measures lost momentum in the guerrilla counties. In the Wenzhou region, for example, private market stalls (小商摊) during the Cultural Revolution were basically closed by the authorities. However, the number of private small peddlers without official licenses surged. Although the local authorities sought to clamp down on such activities, their efforts never bore fruit. By 1976, the number of private peddlers without licenses had reached more than 11,000 (Wenzhou City Gazetteer 1998, 2014–2015). In Pingyang and Rui’an counties, black markets continued to operate throughout the Cultural Revolution. Some of these markets would be temporarily closed when political pressures mounted, but they would soon reopen when the situation eased (Zhejiang Market Gazetteer 2000, 558, 603). Moreover, the repression of formal markets led to the prosperity of black markets. In Yongjia county, for example, all agricultural-product markets were closed during the Cultural Revolution and rural fairs were tightly controlled. However, local people spontaneously engaged in trading on the black markets. In fact, during the Cultural Revolution, especially after the armed clashes, black markets were pervasive throughout Yongjia county. The Lingku market (岭窟市场) was the largest and most famous black market in Yongjia, where peasants and private peddlers from Yongjia and neighboring counties, including Yueqing, Dongtou, Xianju, Jinyun, Wenling, Yuhuan, and so forth, would meet on specific dates each month to trade lumber, fish, silk, meat, and other agricultural products. Lingku market even attracted peddlers from neighboring provinces, such as Jiangsu and Fujian. It is estimated that the number of participants might have been as high as 10,000. The county authorities on several occasions attempted to close the market, but their efforts proved fruitless. In fact, during the Cultural Revolution, Lingku market was the largest black market in all of southern Zhejiang (the Zhe’nan region) (Yongjia County Gazetteer 2003, 656). Similarly, when formal marketplaces and fairs were blocked in Yueqing and Rui’an counties, black markets thrived in defiance of the official prohibition (Zhejiang Market Gazetteer 2000, 558, 603). To be sure, black markets were not confined to Zhe’nan; they were found in other guerrilla counties as well. In Lanxi and Shaoxing counties, markets and fairs were never completely eliminated during the Cultural Revolution. Even when they were officially banned, they continued operating in private (Lanxi County Gazetteer 1988, 400; Shaoxing County Gazetteer 1999, 890). In

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Yiwu county, agricultural-product markets and rural market fairs continued to operate up to the mid-point in the Cultural Revolution (Yiwu Industry and Commerce Gazetteer 2003, 670.) In Shaoxing county, the suppression of rural market fairs gave birth to a number of black markets. The growing popularity of black markets indicated that local cadres in these localities were willing to protect their local economic interests. In Xinjie Commune (新街公社) of Xiaoshan county, for example, a large number of households began growing seedlings in the early 1970s. This became a thriving profitable business due to its high market price and short growth cycle. Peasants sold seedlings to private peddlers, who then sold them to other counties and even to other provinces, such as Jiangsu and Shanghai. As of 1972, more than 980 households were involved in such businesses, accounting for more than 50 percent of the total households in the commune.72 On many occasions, business-savvy peasants would purchase seedlings in other localities and sell them to local private peddlers at higher prices, thus bringing in considerable profits. Local cadres in particular were involved in this business. According to an official investigation of five production brigades, among all fifty-eight brigade-level cadres, fortyseven were engaged in the business of selling seedlings.73 The Xiaoshan Agricultural Bureau (萧山农业局) wrote letters of introduction so that commune members could purchase seedlings in other localities.74 In Shengdong Brigade (盛东大队), some cadres led some commune members to purchase saplings from Fuyang county (富阳县), sold the saplings in Jinshan county (金山县), and sent the sales revenue to Cixi county (慈溪县) in order to avoid official inspections.75 In Xinsheng 72

73

74

75

“Report on Stopping the Evil Capitalist Wind by the Xinjie Commune Party Committee” (中共新街公社委员会关于刹住资本主义歪风邪气的报告), archival material in the Xiaoshan County Archive, March, 16, 1973. “Report on the Five Brigades Selling Seedlings” (关于五个大队苗木自由贩卖情 况的调查), by the Agricultural Bureau of the Xiaoshan County Revolutionary Committee, archival material in the Xiaoshan County Archive, July 6, 1973. “Report on Stopping the Evil Capitalist Wind by the Xinjie Commune Party Committee” (中共新街公社委员会关于刹住资本主义歪风邪气的报告), archival material in the Xiaoshan County Archive, March 16, 1973. “The Situation in the Struggle between the Two Roads Regarding Seedlings” (关于在苗木问题上两条道路斗争情况). See the supplemental material on the “Report on Stopping the Evil Capitalist Wind by the Xinjie Commune Party Committee” (中共新街公社委员会关于刹住资本主义歪风邪气的报告), archival material in the Xiaoshan County Archive, March 16, 1973.

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Brigade (新盛大队), many of the leading cadres, including the brigade party secretary and the deputy party secretary, as well as others, not only purchased and sold seedlings on their own but even acted as salesmen to introduce their business experience to counterparts in neighboring counties.76 In Pingyang county, peasants sold handwoven clothes to eight provinces, including Jiangsu, Liaoning, and Fujian, and twenty-four counties. Local cadres in communes, banks, fiscal departments, communications departments, and others provided facilities for the business.77 In Lanxigang (楠溪港) in Yongjia county, between 2,500 and 3,000 persons would daily load and unload ships for the local lumber market.78 Moreover, in the entire Wenzhou region, local people established private business networks involving underground construction teams (地下包工队), underground long-distance transport (地下运输队), underground stores, and so forth. Many local entrepreneurs even privately hired laborers, which was completely illegal and prohibited ideologically at the time.79 Perhaps it was the development of the commune and brigade firms (CBFs) and the household enterprises that was more meaningful for long-term development in Zhejiang province, because these were the predecessors of the later TVEs and private enterprises that would become the powerhouse behind the economic growth after the mid1980s. During the Cultural Revolution, Zhejiang’s CBFs experienced remarkable growth. Between 1968 and 1971, the number of collective 76

77

78

79

Also see the “Report on the Five Brigades Selling Seedlings” (关于五个大队苗木 自由贩卖情况的调查), by the Agricultural Bureau of the Xiaoshan County Revolutionary Committee, archival material in the Xiaoshan County Archive, July 6, 1973. “Report on Strengthening the Struggle against Embezzlement, Theft, and Profiteering” (关于进一步加强同贪污盗窃、投机倒把活动作斗争的报告), Wenzhou Prefectural Party Committee (file no. WPPC (73)-103), archival material in Yueqing County Archive, May 19, 1973. “Report on Cracking Down on the Forces of Capitalism” (关于打击资本主义势 力的情况汇报), by the party core group of the Yongjia County Revolutionary Committee, archival material in the Yueqing County Archive, December 2, 1973. “Report on Opposing Embezzlement, Theft, and Profiteering, and Smashing the Capitalist Offensives” (关于反对贪污盗窃、投机倒把,粉碎资本主义势力猖 狂进攻的报告), by the Wenzhou Prefectural Party Committee, archival material in the Yueqing County Archive, December 28, 1973.

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firms and CBFs in Zhejiang increased by 33 percent and Zhejiang’s industrial output increased by 89.7 percent, which far surpassed that of the SOEs (Zhejiang in Contemporary China 1988, 105–106). Total industrial output of the collective firms and the CBFs grew at an average annual rate of 15.8 percent during the entire Cultural Revolution period (Zhejiang Communist Party Gazetteer 2007, 16). The traditional view attributes the growth of the CBFs during the Cultural Revolution to the central government’s economic policies at the time, including the Maoist rural industrial policies that required the provinces, rather than the center, to assume responsibility for planning and co-ordinating development of local industry, and that emphasized the principle of self-reliance at the grassroots level. This economic strategy was best embodied in the development of the rural “five small industries” noted at the beginning of this section, most of which were the CBFs established by local collectives. During the entire Cultural Revolution period, state support for these five small industries included massive amounts of financial and material resources that were pumped into the countryside to create an extensive CBF sector (Wong 1991, 183–196; 2003, 203–217).80 We believe that the role of central policy, though undeniable, should not be overplayed. Like other state policies at the time, the rural industrial strategy during the Cultural Revolution was directed by the center without regard to local conditions and it was flawed due to its dictatorial regulations requiring that the CBFs be confined to agriculture-related activities to meet only local demand. Such a parochial development strategy, if it was implemented strictly by local cadres, would have rendered the CBFs the same as the short-lived firms established during the Great Leap Forward. In fact, as has been noted by researchers, a majority of the CBFs were not profitable or were lossmaking enterprises and therefore they required massive state subsidies to survive (Wong 1991, 183–196; 2003, 203–217). Many of the CBFs could not count on easy money from the state and instead had to break through the constraints of narrow local markets, create new market demand, and develop the necessary capacities, including human capital, business networks, and investments, to meet demand. However, 80

For example, state grants for the farm machinery industry provided some 8–9 billion yuan between 1966 and 1978, accounting for more than half of the total investment in this industry.

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such initiatives, regarded by the party as taking the capitalist road, were basically prohibited. To solve this quandary, acquiescence, support, and protection by local cadres were indispensable. Therefore, the attitudes of local cadres toward the CBFs determined the fate of the CBFs during the Cultural Revolution. Again, it was in the guerrilla counties of Zhejiang province that the CBFs enjoyed a permissive environment. In these places, local cadres displayed great enthusiasm to develop collective local industries. In Yuyao county of the Ningbo region, for example, as early as 1963– 1964, local CBFs broke through the agricultural sector and extended their businesses to urban areas. As a result, local CBFs were criticized by the higher authorities for pursuing capitalism. But ideological discrimination against local CBFs did not inhibit their development. In fact, local CBFs continued to grow throughout the Cultural Revolution period, with the number of CBFs increasing from forty-eight in 1965 to 260 in 1975, their employment increasing from 2,357 to 36,541, and their output value increasing from 2.76 million yuan to 81.56 million yuan during the same period (Yuyao City Gazetteer 1993, 306–307). In Yinxian, the CBFs were permitted to receive orders from large urban SOEs, thus substantially boosting their production and profits. By the end of 1975, the number of CBFs had reached 767, employing 20.6 percent of the total rural labor force. As of 1976, the total output value of the CBFs reached 162.88 million yuan, accounting for 58.93 percent of the total industrial and agricultural output in the county (Yinxian County Gazetteer 1996, 620–621). Similar scenarios unfolded in the Wenzhou region. During the Cultural Revolution, CBFs in Wenzhou were regarded as “underground factories” as well as “refuges of capitalism.” Investigation teams were frequently sent down to the countryside to close down those CBFs involved in illegal activities, such as long-distance transport, nonagricultural business, and so forth (Wenzhou City Gazetteer 1998, 1090–1091; History and Learning Committee of the National People’s Political Consultative Conference et al. 2007, 126–127). But throughout the Cultural Revolution, the CBFs’ operations had the backing of local cadres. For example, local cadres allowed SOE engineers and technicians in the city center to provide technical support to the CBFs under their purview and permitted the CBFs in Yueqing, Yongjia, Rui’an (瑞安), and Pingyang (平阳), to produce for both local and remote markets (History and Learning Committee of the

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National People’s Political Consultative Conference et al. 2007, 125– 126; Wenzhou City Gazetteer 1998, 1091). Another innovation was that local cadres granted the CBFs legal status by allowing them to affiliate with SOEs and branches of local government, such as the County Materials Bureau (县物资局).81 As a result, the CBFs in Wenzhou continued to grow during the Cultural Revolution. As of 1976, the number of CBFs in the Wenzhou region totaled 5,009. In the same year, the output value of the CBFs totaled 172 million yuan, of which 159 million yuan was produced by industrial firms—4.9 times that produced in 1965. Some CBF industrial products even dominated the national market. For example, according to an investigation by the State First Mechanical Engineering Ministry (国家第一机械工业部), the number of valves produced by the CBFs in Rui’an and Yongjia from 1975 to 1977 was nearly equal to the number produced by the Shanghai municipality and almost 1.5 times that produced by the five provinces in northern China (Wenzhou City Gazetteer 1998, 1090– 1091). Table 4.6 contrasts the output of the CBFs and the SOEs in some guerrilla counties and in some non-guerrilla counties between 1966 and 1978. In both the Ningbo and Wenzhou regions, the SOE share of total industrial output was less than 50 percent in 1978, whereas most counties in the two regions still had a dominant SOE sector in 1966. On average, this ratio was less than 40 percent (in Cixi) or even 30 percent (in Yuyao, Yongjia, Yueqing, and Rui’an). In addition, in all counties of the two regions, as of 1978 the output of the CBFs already exceeded that of the SOEs, foreshadowing the advent of a new age. In Yongjia county, for example, the CBF–SOE ratio was as high as 2.5, which was followed by that in Yuyao county, with a ratio of 1.6. The thriving CBFs in the guerrilla counties eclipsed their counterparts in the non-guerrilla counties. As of 1978, SOEs in Jiashan and Haining counties in the Jiaxing region still accounted for more than half of the total industrial output. Furthermore, in all three counties of the Jiaxing region, as of 1978, the share of the CBFs in the total industrial output was less than 30 percent. In Anji county in the Huzhou region, the share of SOEs increased from 70.34 percent in 81

In return, the CBFs handed over 1 percent or more of their income to their affiliated institutions as a service fee (see Wu Fengxu and Chen Wenbao 2008, 2–3).

Table 4.6 Changes in the output shares of different ownerships in various counties (1966–1978)

Guerrilla counties

Region

County

Share of SOEs in total Share of SOEs in total industrial output, 1966 (%) industrial output, 1978 (%)

Share of CBFs in total industrial output, 1978 (%)

Ningbo

Yinxian



60.00

Cixi

80.28

43.96

51.98

Yuyao

68.76

29.50

46.96

Ninghai

81.58

39.04

43.15

Yueqing

40.21

28.87

42.00

Pingyang



Yongjia

56.52

16.78

42.54

Rui’an

39.52

20.95

30.61

Jiashan

77.42

55.10

16.71

Haining

84.94

53.41

26.31

Pinghu





19.29

Deqing

78.62

< 50

23.94

Anji

70.34

75.24

13.64

Quxian

75.65

66.62

12.26

Changshan

73.00

72.80



Longyou

83.61

72.36

13.87

Kaihua

84.95

79.31

7.63

Wenzhou

Nonguerrilla counties

Jiaxing

Huzhou Quzhou

< 40

< 50

41.07

Sources: the figures, from county gazetteers of the corresponding counties in this table, were calculated by Dong Zhang. The authors thank him for sharing his results.

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1966 to 75.24 percent in 1978, and in the entire Huzhou region the share of the CBFs in the total industrial output was still less than 14.7 percent (Huzhou City Gazetteer 1999, 576). In the Quzhou region, the share of SOEs dropped by various degrees in the different counties but still was higher than 50 percent in all counties, and the share of the CBFs in all counties was less than 15 percent. In fact, in all counties in the non-guerrilla areas in Table 4.6, the ratio of the CBF–SOE industrial output in 1978 was far below that in the guerrilla counties. In the guerrilla regions, this ratio was greater than 1 in all counties except Pingyang county (at 0.8).82 In the non-guerrilla counties, however, and even in Deqing and Haining, with the highest ratio of 0.5, the ratio was still lower than that in Pingyang in the guerrilla region. In addition to establishing a solid foundation for the reform-era TVEs, the rise of the CBFs during the Cultural Revolution also contributed to the emergence of private household factories. Both archival research and our field study reveal that during the Cultural Revolution, a vast number of individual household firms formed symbiotic relations with CBFs. Many of the CBFs commonly contracted out production to individual households or to individuals who held shares in the CBFs.83 Peasants were allowed to start up their own household factories as long as they were affiliated with the CBFs and they handed in management fees for the affiliation with the CBFs, and the latter did not intervene in their daily operations and management.84 To be sure, these coping strategies provided considerable political convenience to the private firms against the backdrop of a hostile or discriminatory political environment such that they were able to continue to be widely used by many private entrepreneurs even during the reform era (until the 1990s) in order to circumvent the political and ideological constraints at the time (see Chapter 5). Apart from the disguised capitalists, many daring peasants also managed to start up their own genuinely private firms. Wang Jindong, the first registered private entrepreneur after 1978 in Ouhai county, is an example. Soon after the Cultural Revolution began, Wang 82 83 84

The value of Pingyang’s SOEs’ share accounted for 50 percent. Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009. Also see Wu Jinhan (2008, 3–5). In Yueqing city, before 1979, the management fees levied by the CBFs accounted for 2–4 percent of the revenue income of the private firms affiliated with them.

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acquired initial capital by purchasing lumber in Yongjia and Qingtian and selling it in Wenzhou city. He then established an underground factory at the home of one of his relatives to produce electrical meters and springs for the market (Wu Fengxu and Chen Wenbao 2008, 135–136). In Yueqing county, Yao Rufa and his friend Zhao Jiashu began an underground factory in Yao’s home. They received orders from the CBFs and village enterprises to produce various molds (Zhao Shunpeng and Zhu Zhixi 2000, 120–121). In Rui’an county, peasants built underground factories to produce machine tools and other small commodities for distant markets.85 In Liushi township of Yueqing county, many skilled craftsmen set up their own household factories specializing in hardware fittings or low-voltage accessories for electrical products. By the end of 1976, it is estimated that the industrial output produced by household factories in Liushi township was at least twice that produced by local SOEs (Zhao Shunpeng and Zhu Zhixi 2000, 48–50). It should be noted that the local cadres not only supported and encouraged local entrepreneurship; they also engaged in business themselves. In Danxi township (淡溪乡) and Lingdi township of Yueqing county, under the protection of Peng Shangwang, who led the Hongqiao Group during the armed clashes in Yueqing county, peasants sold shrimp and lumber. In Maoyang village (茅垟村) of Danxi township, all peasant households were engaged in the shrimp business. Peng Shangwang himself, according to an interviewee who, toward the end of the Cultural Revolution, was a member of a work team investigating capitalist elements in the village, was also a capitalist because he owned a factory.86 Nevertheless, the work team could not proceed without the co-operation of Peng Shangwang. To elicit Peng’s cooperation, the head of the work team made a deal with Peng whereby Peng would persuade the villagers to spend more time engaged in agricultural production and in return the work team managed to receive bank credits for Peng to invest in his factory.87 During the same period, in Donglian township (东联乡), the majority of township cadres were involved in capitalist activities.88 On some occasions, the local cadres did not directly engage in business, but they chose to hold 85

86 87 88

Lin Bai et al., Wenzhou de jue qi (The Rise of Wenzhou, 温州的崛起), quoted in Yia-Ling Liu (1992, 32–33). Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009. Oral source, interview in Yueqing city, October 2009.

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shares in enterprises, including the CBFs and individual household factories, based on their capital contributions or the protection that they would provide for the enterprises.89 In sum, in the guerrilla regions, local cadres took the opportunity of the Cultural Revolution to cement mutually beneficial relations with the masses in order to mobilize and consolidate their grassroots support, which ultimately enabled capitalism to gain momentum and to expand during this chaotic period. After surviving the Cultural Revolution, the budding private sector set the stage for the takeoff of the private economy after the introduction of the reforms in 1978, which is the focus of Chapter 5.

89

Oral source, interview in Yueqing city, November 2009.

5

Capitalism with Zhejiang Characteristics Crossing the River by Feeling for the Stones during the Reform Era

We must legitimize what is by far illegal . . . It doesn’t matter whether the cat is yellow or black, as long as it catches the mice. 不合法的使它合法起来 . . . 黄猫、黑猫,只要捉住老鼠就是好猫. Deng Xiaoping, [1962] 1994, 323 It was the best of times, it was the worst of times . . . it was the season of Light, it was the season of Darkness, it was the spring of Hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way. Charles Dickens, A Tale of Two Cities (1859)

Chairman Mao died on September 9, 1976. In less than one month, his loyal disciples on the Central Politburo, known as the Gang of Four, including Mao’s wife Jiang Qing, were arrested in a coup orchestrated by Hua Guofeng as Mao’s appointed heir; Ye Jianying, who as minister of defense and vice head of the Central Military Commission of the CCP Central Committee was the representative of the military; and Wang Dongxing, at that time head of the Guard Regiment of the CCP Central Committee. The purge of the radical Maoists from the party and government, however, did not automatically bring economic radicalism to an end. Huge policy discrepancies and debates revolving around the economic-strategy direction, embodied first and foremost by debates on agricultural policy, continued to exist among the different political factions. The policy differences between the reformists and the conservatives began unfolding in the late 1970s, continued throughout the 1980s, and lasted into the early 1990s, which resulted in the ebbs and flows of the market-oriented economic reforms throughout the 1980s. They did not end until Deng’s famous Southern Tour in 1992.1 1

For a detailed account of the political struggles among the top politicians after Mao’s death, see Yang Jisheng (2006).

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In other words, when the market-oriented economic reforms began in the late 1970s, there was no consensus among the top leaders and the different political factions about the future direction of the reforms. In fact, due to strong resistance and opposition from diehard ideologues and vested interests, before the early 1990s the reforms had to proceed in a piecemeal or incremental fashion. For the same reason, there were many setbacks during the reform process. Ideological antagonism against capitalism was still pervasive throughout the country, and the private sector and private entrepreneurs were de facto second-class citizens and subject to political and policy discrimination. Conservative leaders in Beijing frequently intervened to put pressure on provincial leaders to stamp out unorthodox local initiatives by sending work teams to the localities to eradicate any economic activities that deviated from the official line. Even the reforms themselves were subject to attack due to pressures from the conservatives, as witnessed by the fate of many senior reform-minded party elite at both the central and provincial levels who lost their positions amidst the political struggles. This included Xiang Nan and Lei Yu, the provincial party secretaries of Fujian and Hainan respectively, in 1985; Hu Yaobang, party general secretary in 1987; and Zhao Ziyang, party general secretary in 1989. In all cases, after the reformist leaders were deposed, a momentous political campaign aimed at suppressing capitalism ensued. In other words, although in retrospect China’s economic reforms continued to move forward on a liberal course, in practice the reforms, at least up until the early 1990s, were filled with political uncertainty and were by no means irreversible. Those who engaged in private business and officials who were supportive of the development of the private sector faced real and substantial political risks that had the potential to deprive them of their wealth and even their personal freedom, or could cost them their political lives. In short, although directional liberalism, a term coined by Huang Yasheng to describe the dynamic process in which political strongmen such as Deng Xiaoping made a credible commitment to the security of property rights in the early 1980s, and thereby resulted in the spread of private entrepreneurship,2 may indeed have played a significant role in eliciting 2

For a detailed discussion of the content of directional liberalism and how it operated in the early 1980s to assure would-be private entrepreneurs of the security of their property rights, see Huang (2008, 30–41).

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investments from would-be private entrepreneurs at the outset of the reforms, its actual effect is likely exaggerated. This brings us back to the question we faced in Chapter 1 of this volume; that is, given the arbitrary institutional environment and the highly uncertain political atmosphere during the early stages of the reforms, why did local policy innovations and the resultant private entrepreneurship remain alive? The answer to this question is related to the two observations that we have been emphasizing. First, similar to what occurred during agricultural collectivization in the 1950s (see Chapter 3), when uneven high politics sent mixed signals to lower-level local officials, the latter interpreted these signals in a way suited to their own political needs and to maximizing their own political interests, therefore leading to tremendous regional variations in policy choice and implementation. Second, despite the different responses on the part of local politicians, it was only in places where local officials had both the motivation and the capacity to protect the private sector, depending on their status in the power hierarchy, that a permissive environment emerged to support local initiatives and encourage private entrepreneurship. As a result, development of the private sector during the reform era was first and foremost a local phenomenon, during which the fate of local capitalism was largely a function of both central politics and the local power structure. In this chapter, we first review the political situation from the end of the Cultural Revolution until the late 1990s to show how the mechanism that helped preserve the private economy during the Maoist era continued to work in the reform era to lead to the takeoff of the private sector. Specifically, we compare the differences between the guerrilla and non-guerrilla counties from two perspectives: (1) the decollectivization of agriculture between the late 1970s and the early 1980s, and (2) the thriving of local private entrepreneurship across the board after the end of the Cultural Revolution. This comparison reveals that the deep-rooted vigor of capitalism was primarily found in the guerrilla counties rather than in the nonguerrilla counties. In other words, the vitality of local capitalism in Zhejiang was not so much the result of top-down policy implementation as a product of the political game involving interactions between national politicians on the one hand and local elites and would-be private entrepreneurs on the other.

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5.1 The Political Situation after the Cultural Revolution Although the Cultural Revolution in Zhejiang province shifted the balance of power in favor of the local cadre group vis-à-vis the southbound cadre group, this does not mean that the southbound cadres were swept off the political stage or that their political positions were inferior to those of the local cadres in the province. Quite the opposite; the dominance of the southbound cadres on the provincial party standing committee (PPSC)—the top echelon of provincial politics—was not effectively challenged in any sense both during and after the Cultural Revolution. As shown in Figure 2.1, the absolute majority of southbound cadres on the PPSC did not change during the Cultural Revolution. In fact, after the outbreak of the Cultural Revolution in 1966, the number of southbound cadres among the total members on the PPSC rose from 64 percent in 1966 to 100 percent in 1968, and southbound cadres continued to retain their monopoly of the PPSC until 1970. Although the dominance of the southbound cadres plummeted in 1971 after the Lin Biao incident, they soon resumed their dominance over the local cadres as their share of seats on the PPSC increased to 77 percent in 1976, and then reached 81 percent in 1981. In contrast, the share of local cadres on the PPSC during the same period was always less than 20 percent. The absolute majority of the southbound leadership on the PPSC began to diminish in the mid-1980s. As of 1984, their share of seats on the PPSC for the first time declined to 50 percent, and it continued dropping until it reached 10 percent in 1989. Correspondingly, the share of seats of local guerrilla cadres rose from 6 percent in 1978 to 22 percent in 1988. Thereafter, the shares of seats of both groups on the PPSC continually decreased. The number of local guerrilla cadres fell to zero in 1992, and that of the southbound cadres reached zero in 1994. Hence the first generation of both groups in the provincial leadership had completely left the political stage by the early 1990s. Regardless, even as the first generation of southbound leaders had withdrawn from the core provincial power in the early 1990s, this does not mean that their de facto political influence disappeared because the PPSC was still staffed with members who had been promoted by the first generation. In fact, provincial officials during the reform era still mainly came from Hangzhou, Jiaxing, and Huzhou, which

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traditionally had been dominated by southbound cadres.3 In other words, the factions and networks of southbound cadres that were established between 1949 and 1978 were preserved at the provincial level in the 1990s. Therefore, the marginalized status of the guerrilla cadres in the provincial power structure remained basically unchanged even after the Cultural Revolution, and they had reason to worry that the Maoiststyle political campaigns would continue to prevail in the post-Mao era. This is especially true just as the Cultural Revolution was coming to an end and few people could foresee the future direction of national politics. In Beijing, for example, Hua Guofeng, Mao’s anointed heir, portrayed himself as a genuine follower of Mao, as demonstrated by the epigraph in Section 5.2 on the Two Whatevers. For Zhejiang’s local guerrilla cadres, this implied that the political repression during the Maoist period was likely to return under Hua Guofeng’s rule. In Zhejiang, as noted above, provincial politics dominated by the southbound cadres remained basically unchanged. From 1976 to 1988, all five successive provincial party secretaries were from the southbound cadre group and had served in Zhejiang during the preCultural Revolution period. Four of them, including Tan Qilong (October 1976–February 1977), Wang Fang (March 1983–March 1987), and Xu Ju (March 1983–December 1988), had formerly had a close working relationship with Jiang Hua, Zhejiang’s paramount leader between 1954 and 1966, either as his superior or as his subordinate. Tie Ying, who served as provincial party secretary shortly after the Cultural Revolution (February 1977–March 1983), had a military background and had joined Zhejiang’s administration, together with Tan Qilong, as early as 1972, when the former provincial military leadership under Nan Ping was purged due to the Lin Biao incident. Given the political atmosphere, as well as the history of the pre-Cultural Revolution provincial leadership, the guerrilla cadres were still motivated to protect their local constituencies from any political repression or discrimination that might occur after the end of the Cultural Revolution. In addition, the symbiotic relationship between the local cadres and their grassroots constituencies took on some new characteristics. As the private economy grew during the reform era, the economic benefits 3

Oral source, interview in Hangzhou, April 2009.

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accruing to local officials also grew, thus further joining the local cadres and the private sector. For example, development of the private economy not only enriched local people but also provided greater personal income for local officials,4 and generated a higher employment rate, more fiscal revenue, and so forth, which carried increasing weight in evaluating the performance of local grassroots cadres by the higher-ups during the reform period, especially during the 1990s, and therefore helped to burnish the administrative performance (政绩) of local governments as national policy emphasized economic growth over ideology. More importantly, after the Cultural Revolution the opportunity costs of protecting local economic interests declined. In fact, regardless of how the local cadres perceived their political circumstances after the Cultural Revolution, it was impossible to persecute or disgrace the local guerrilla cadres in the way the southbound cadre leadership had during the Mao period. In hindsight, no national political campaigns, such as the anti-localism movement, were launched to target the local guerrilla cadres after the Cultural Revolution. Furthermore, many victims of past witch hunts, including both southbound cadres and local guerrilla cadres, were rehabilitated after 1978 as the party center called for “setting wrong things right” (拨乱反正) throughout the country. For example, in 1979–1983, Yang Siyi, Sha Wenhan, and other rightists who had been purged from the PPSC in 1957 by the southbound leadership under Jiang Hua (see Chapters 2 and 3) were rehabilitated (Party History Research Office under the Zhejiang Provincial Party Committee 2003, 36–37; Forster 1997). The alleged members of the so-called Zhe’nan Traitor Clique charged by the provincial military authority during the Cultural Revolution (see Chapter 4) were also rehabilitated in December 1978 (Party History Research Office under the Zhejiang Provincial Party Committee 2003, 118–119). All of this sent clear signals to local cadres that although they were still politically marginalized, power struggles between the two groups would no longer be as fierce and the personal security of local cadres would be largely guaranteed. To be sure, local cadres in the guerrilla cadre group sooner or later would realize that they were then 4

As observed by Liu Yia-Ling (1992), through voluntary donations by private entrepreneurs, receiving supplementary salaries by assuming moonlighting positions in the private sector, taking free shares in private enterprises, and so on, the local cadres benefited greatly from the growth of the private sector.

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more able to protect the local private sector because they no longer faced the danger of being purged or imprisoned for providing such protection. The incentive effect of the personal security of local cadres to protect and support local economic interests should not be underestimated. The impact of this new development was clearly illustrated by the Eight Big Kings affair (八大王事件), which took place in Yueqing county in the early 1980s. In 1982, the central government launched a campaign to crack down on economic crimes and it urged local governments to do whatever was necessary to protect the socialist economic order from being disrupted by illegal economic activities, such as smuggling or underground factories. Having long been dissatisfied with the rampant capitalism in Wenzhou, the provincial authority primarily targeted Yueqing’s private entrepreneurs and sent an investigation team to garrison in Liushi township in the county. As a result, eight wealthy local private entrepreneurs were identified as bad elements. Six were instantly arrested, whereas two, Zheng Yuanzhong and Hu Jinlin, fled and were not arrested until 1983 and 1984 respectively.5 During the Eight Big Kings affair, Yueqing’s local cadres were on the side of the capitalists. Zheng Yuanzhong and Hu Jinlin were able to evade arrest because some local cadres had tipped them off.6 Moreover, the provincial investigation team met with strong opposition from local officials, even from the county leadership. There were considerable differences of opinion about the nature of the local private economy between the two sides, and eventually a heated debate ensued. Whereas the provincial investigation team saw the county leadership as “pursuing capitalism,” the county leadership responded by regarding the provincial investigation team as “committing the mistake of 5

6

Oral source, interview in the Wenzhou city government, May 2009. For a detailed report on the Eight Big Kings affair, see “Gaige xuyao yongqi he zhihui” (Reform Requires Courage and Wisdom, 改革需要勇气和智慧), Wenzhou government website, November 19, 2008, at www.wenzhou.gov.cn/ art/2008/11/19/art_1231104_2347381.html, and “Zheng Yuanzhong: Cong laiyu li chongchu de Wenzhou moshi” (Zheng Yuanzhong: A Wenzhou Symbol Who Cast Off the Fetters of Prison, 郑元忠:从牢狱里冲出的温州模式), Nanfang Metropolis Daily, November 1, 2008, at http://wznews.66wz.com/sys tem/2008/07/25/100608887.shtml, accessed June 22, 2018. Confirmed by the authors’ interview with an insider involved in the affair, in Yueqing city, May 2009.

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doctrinairism.”7 This was an unusual challenge by subordinates against their superiors. To be sure, local cadres paid a high price because of sympathy for the private entrepreneurs as well as because of their attitude toward the provincial investigation team. The entire county leadership was purged. Among the six party secretaries and vice party secretaries on the county party committee, except for the young vice county party secretary Lian Zhengde, five lost their positions and were transferred to other counties. In less than one year during 1983, more than a hundred local cadres were dismissed. These results constitute prima facie evidence that Lian Zhengde had betrayed the local cadre group.8 As a result, after Lian Zhengde was sent by the PPSC to study in the provincial party school for two years, he found that he was unable to return to Wenzhou after completion of his studies due to strong hostility on the part of the local cadres in Wenzhou, who made it clear that they did not welcome Lian’s return. In the end, Lian Zhengde was transferred to the Taizhou region and did not assume any government position in Wenzhou until the late 1990s when the rumors about his betrayal of local interests were finally clarified.9 The Eight Big Kings affair revealed the growing strength and the confidence of local cadres after the Cultural Revolution. Although local cadres in Yueqing could not alter the final decision made by the provincial investigation team, their de facto influence was undeniable as they united together and boldly articulated opinions that differed from those of the provincial authority, and the provincial authority could not persecute them in the same manner as they had during the Maoist era. Apparently the power of the local cadre group, combined with their strong incentive to protect and promote the local private sector, formed a solid political foundation for the takeoff of the private economy during the reform period and constituted a driving force behind

7

8

9

Confirmed by the authors’ interview with an insider involved in the affair, in Yueqing city, May 2009. Oral source, interview at the Wenzhou city government, May 2009. According to the interview, however, the truth is that Lian Zhengde opposed the hard-line measures against the restive local cadres. However, for reasons unknown to us, it was officially declared that the new county leadership, including Lian Zhengde, had reached a consensus to take a hard-line approach with respect to the local cadres. Oral source, interview at the Wenzhou city government, May 2009.

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differences with respect to private economic development between the guerrilla counties and the non-guerrilla counties.

5.2 Agricultural Decollectivization amidst Political Uncertainty: The Spread and Legitimization of Individual Household Farming (1977–1982) Resolutely uphold whatever policy decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave. 凡是毛主席的决策,我们都坚决维护;凡是毛主席的指示,我们都终始 不渝地遵循. The ‘Two Whatevers,’ 两个凡是, People’s Daily editorial, February 7, 1977 Practice Is the Sole Criterion of Truth 实践是检验真理的唯一标准. Guangming Daily editorial, May 11, 1978

5.2.1 Elite Cleavages and Spontaneous Local Initiatives By all accounts, agricultural decollectivization was one of the fundamental and most important institutional changes in the post-Mao period. Officially, the People’s Commune Movement, one of the most important Maoist legacies, was disbanded in 1984. The process of decollectivization, however, had begun without official permission as early as the late 1970s under the name of contracting output to individual households, a form of individual farming that was later called the household responsibility system (家庭联产承包责任制) (hereafter HRS). Hence, decollectivization was not so much a well-devised reform blueprint of the central government as a spontaneous practice by peasants in many parts of the country. For many, the peasants’ voluntary selection of household responsibility is best embodied by the story of what happened in Xiaogang village of Fengyang county in Anhui province in December 1978. At the time, farmers from eighteen village households secretly held a meeting and decided on their own to adopt household responsibility. Aware of the potential political risks associated with this decision, they pledged

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to raise until the age of eighteen the children of the ringleaders who risked being persecuted (Ling Zhijun 2008, 1–11).10 The timing of the Xiaogang farmers’ experiment with household responsibility was of great significance. As Huang Yasheng notes, it occurred during the historic 3rd Plenum of the Eleventh Central Committee, which was widely believed to mark the official beginning of the economic reforms (Huang 2008, 88). Indeed, the political events preceding the 3rd Plenum had already released a message that tilted the balance of power toward those who would later be known as reformist leaders, including, among others, Deng Xiaoping. The well-known debate on “practice as the sole criterion of truth,” beginning in May 1978, as quoted at the beginning of this section, began to chip away at the power of the Two Whatevers group under the flag of Hua Guofeng. Hua’s supporters at the center, such as Wu De and Wang Dongxing, were either dismissed or forced to make self-criticisms for following the Two Whatevers. In fact, under great pressure from senior party cadres, including Ye Jianying, Chen Yun, and Deng Xiaoping, among others, even Hua Guofeng had to make a self-criticism at the Central Work Conference held from November 10 to December 15, 1978. For savvy politicians, surely such unusual developments suggested that the radicals rallying around Hua Guofeng were losing power at the center and the development strategy they had espoused was likely to be rejected. As evidence, the resolution passed by the 3rd Plenum revealed a major policy change away from the orthodox socialist line by declaring that the party center had decided that economic construction rather than class struggle would be the focus of future work. With regard to agriculture, the resolution did not mention the Dazhai model (“in agriculture, learn from Dazhai”),11 the showpiece of agricultural 10

11

Nearly all the literature on baochan daohu and the agricultural reforms refers to this episode. The Dazhai model was one of the major legacies that Hua inherited from Mao. Between the end of 1976 and 1978, Hua and his supporters called for building more Dazhai-type counties throughout the country, upgrading the basic accounting unit under the People’s Commune Movement from the production team to the brigade, and suppressing capitalist tendencies in the countryside, such as private plots, rural trade fairs, household sidelines, and so forth. For a detailed introduction to agricultural radicalism during this period, see Zweig (1989); Yang (1996, 124–126).

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production and organization favored by Hua Guofeng and other champions of agrarian radicalism, including Vice Premier Chen Yonggui and Ji Dengkui. All three were forced to make selfcriticisms at the 3rd Plenum.12 However, although economic policymaking in Beijing was moving away from agrarian radicalism, it is difficult to attribute the grassroots experiment with the household responsibility taking place in Xiaogang village to any mechanism stemming from new developments in central policies emanating from Beijing.13 To be sure, any information about central-level politics was strictly controlled by the party-state. Only a select few senior party officials knew what was occurring in Beijing, to say nothing of those peasants who had no knowledge of politics. The actions by the Xiaogang farmers in effect were primarily driven more by their strong motivation to survive the economic difficulties in Fengyang due to a severe drought than by any calculation of political benefits and costs.14 Moreover, the differences among the top leaders about the direction of agricultural radicalism did not mean there was a lifting of the ban on individual household farming, which was still officially illegal. In fact, the 3rd Plenum explicitly rejected the legitimacy of household responsibility. In the two official documents approved by the 3rd Plenum regarding agricultural policy—the “Decision of the Central Committee of the CCP on Some Questions Concerning the Acceleration of Agricultural Development (Draft)” (中共中央关于加快 农业发展若干问题的决定[草案]) and the “Regulations on Work in the Rural People’s Communes (Draft)” (农村人民公社工作条例 [试行草 案]), which is also called the New Sixty Articles, household responsibility was strictly prohibited.15 In retrospect, although the reformists at the center of power opposed agrarian radicalism, such as the Dazhai model, 12

13

14

15

For descriptions of the events during this period, see Meisner (1999) and Ma Licheng and Ling Zhijun (2008). Huang (2008, 88), for example, suggests that the Xiaogang farmers engaged in the brave experiments with baochan daohu because they had reason to believe that their probability of success would be non-trivial in late 1978. For a detailed introduction to the Xiaogang event, see The History of Rural Reform in Anhui Province (2006). Also see Ma Licheng and Ling Zhijun (2008) and Ling Zhijun (2008). See Du Runsheng (2005, 100) and Huang Daoxia et al. (1992, 906). For example, the New Sixty Articles categorically stated that “contracting output to the household must not be permitted; dividing the land to the household must not be permitted” (不许包产到户,不许分田单干).

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until late 1978 they did not challenge the existing agricultural collective system, much less allow any form of individual household farming, which was still regarded as being antisocialist. Against the backdrop of the second half of 1978, as far as the Xiaogang event is concerned, the more meaningful question is why the farmers’ actions were able to survive and later spread to other places, involving more and more people, even though such actions were obviously illegal. It is worth noting that in 1978 the Xiaogang farmers were not alone in adopting household responsibility. In fact, as Chung (2000, 88) notes, local policy innovations resembling household responsibility were simultaneously taking place in nine counties in Anhui province. In most cases, these grassroots innovations were tacitly permitted by the local cadres who tended to limit household responsibility to within the boundaries of their respective jurisdictions for fear of causing political troubles if they were to spread to other areas. Although many factors may be cited to explain why local cadres were tolerant of household responsibility, conventional wisdom asserts that the attitude of the top provincial leaders played a key role. In other words, “capitalism” could survive because the provincial leaders were basically reformists who tolerated grassroots innovations. In the Xiaogang case in Anhui province, for example, Wan Li, who assumed the position of provincial party secretary in 1977, was well known for his reformist stance regarding politically sensitive issues. One must remember that the 3rd Plenum was held in late 1978. But in effect many rural agricultural policies of the 3rd Plenum type, such as allowing more private plots, encouraging household sidelines, and so forth, had already been implemented in Anhui by late 1977, when Wan Li had not even spent his first year in office. After an inspection tour of Anhui between late 1977 and early 1978, Wan Li declared at an enlarged work conference of the provincial party committee that “as long as you [i.e., the party secretaries from the poor areas of the province] can increase grain output, you can have whatever policies you want” (只要能把生产搞上去,你们要求什么样的政策条件都可 以) (Zhang Guangyou and Ding Longjia 2006, 163–167). Without question, Wan’s commitment to the policy discretion of local cadres set off a chain reaction of experimenting with household responsibility when conditions—e.g., the unprecedented drought in late 1978—were ripe.

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In addition to Anhui, similar grassroots experiments took place in Sichuan province. Provincial party secretary Zhao Ziyang did not go as far as Wan Li did in Anhui to directly support household responsibility. But Zhao Ziyang still encouraged local experimentation with contracting output quotas to groups under the production teams (包产到组) (hereafter baochan daozu) and sought to prop up the peasants’ enthusiasm for production by increasing their private plots (Du Runsheng 2005, 108). Because of Zhao’s endorsement, baochan daozu quickly spread to the entire province. By September 1979, it had been adopted by half of all production teams in Sichuan.16 It was not accidental that both Wan Li and Zhao Ziyang insisted on grassroots innovations in defiance of ongoing official lines. They both had close relations with reform-minded leaders, such as Deng Xiaoping and Hu Yaobang, who early on had masterminded the “criterion-oftruth” debate to facilitate a power shift from the Two Whatevers group to the reformist group. Before beginning his career in Anhui, during the Cultural Revolution Wan Li had been sent by Deng Xiaoping to take charge of the Ministry of Railways, where he successfully eliminated factionalism (派性) and was praised for his achievements (Zhang Guangyou and Ding Longjia 2006). It was Deng Xiaoping and Hu Yaobang who made the final decision to send Wan Li to Anhui to solve the complex intra-provincial factional bickering (Chung 2000, 93–98). Throughout the controversy over the household responsibility experiments in Anhui, Deng Xiaoping and Hu Yaobang gave tacit but firm support to Wan Li. In February 1978, when Deng Xiaoping met with Zhao Ziyang in Sichuan, he expressed his approval of Wan Li’s policy measures in Anhui, which in turn likely encouraged Zhao Ziyang to later take the bold baochan daozu actions (Ma Licheng and Ling Zhijun 2008, 93). In the autumn of 1978, Wan Li went to a Beijing meeting to report on his work in Anhui to the top leaders, including Hua Guofeng, Deng Xiaoping, and others, in order to justify what he had been doing. At the meeting, Wan Li argued that in order to help the peasants escape the poverty trap, it was necessary to divide up the land for the peasants and to establish various production responsibility systems so that individual households could be in charge of agricultural 16

With the support of Zhao Ziyang, who declared “there is no problem with the amount [of baochan daozu] in terms of [political] direction and line,” Guanghan county experimented with baochan daozu as early as 1978. See Yang Jisheng (1996, 157).

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production. Although Hua Guofeng disagreed with Wan Li, Deng Xiaoping offered his support by repeating, in front of Hua, his famous “Black Cat, White Cat” view.17 Marshal Ye Jianying, who also was present at the meeting, chimed in agreement with Deng (Ma Licheng and Ling Zhijun 2008, 94). There is no doubt that support from the top party leaders was crucial to continuing household-responsibility practices in Anhui. However, the Xiaogang experience in Anhui and the baochan daozu experience in Sichuan could not be emulated elsewhere in the nation; they had to remain local phenomena. This reflected an emerging but deep division among the top decision makers regarding the orientation of future agricultural policy. As indicated by the official declaration at the 3rd Plenum, central opposition to grassroots reforms was deeprooted and any deviation from the status quo was still considered taboo. In the meantime, although the reformists differed from the staunch Maoists, such as Hua Guofeng and his allies, they believed they had to find a way out of the outdated collective system; at the outset of the reforms they actually did not have a clear idea about what would be the best alternative. As a consequence, even the reformists in Beijing were unable to turn their personal support for Wan Li into a general policy applicable to the rest of the country. To compromise, they attempted to keep the People’s Commune system intact but to experiment with local initiatives by trial and error, as embodied in the 3rd Plenum’s call for “respecting the interests of peasants” and demanding that “those erroneous policies that are not conducive to eliciting peasant enthusiasm and development of the productive forces must be revised and corrected . . . Whether our policies contribute to the development of productive forces should be judged by whether they can enhance the peasants’ enthusiasm.”18 Obviously these statements were consistent with Deng Xiaoping’s “Black Cat, White Cat” views.

17

18

Deng’s “Black Cat, White Cat” view refers to Deng’s view on agricultural policy in the 1960s. The original quote, actually stated by Liu Bocheng, features a black cat and yellow cat. Deng Xiaoping used this quote to support a capitalist market economy. In essence, he was saying that whichever gets the job done, a planned economy or a market economy, will be adopted. The quote also appears at the introduction to this chapter. Quote from the “Decision of the Central Committee of the CCP on Some Questions Concerning the Acceleration of Agricultural Development (Draft).” See Huang Daoxia et al. (1992, 910–911).

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The mixed political signals emanating from the 3rd Plenum provided local politicians with an opportunity to reveal their political positions by their choice of agricultural policies and with discretionary room to implement these policies in their respective jurisdictions. Their final decisions were largely based on their policy preferences and judgments about the political situation, which in turn were a function of their career paths and work experience, as well as on the balance of power at higher levels. It is not surprising that some well-informed local politicians, such as Wan Li and Zhao Ziyang, who had close work and personal ties with the top reformist leaders in Beijing, had both the motivation and the capacity to experiment with household responsibility in Anhui and with baochan daozu in Sichuan. Other leaders were very likely to opt for blocking any reform measures regardless of their contribution to efficiency. As the CCP elite began to look to the future, the debates within the party about household responsibility intensified, involving both central and provincial officials. In March 1979, the newly established State Agricultural Commission (国家农委) summoned provincial leaders from seven provinces (Guangdong, Hunan, Sichuan, Jiangsu, Anhui, Hebei, and Jilin), as well as agricultural officials from three counties (Quanjiao county in Anhui, Boluo county in Guangdong, and Guanghan county in Sichuan) to meet in Beijing to discuss the production-responsibility system. Although the majority of speakers at the meeting, including the delegates from Anhui, Jilin, and Guangdong, urged that more freedom be given to the peasants to experiment with appropriate responsibility methods based on local conditions, Vice Premier Wan Renzhong, who was head of the State Agricultural Commission, addressed the meeting to re-emphasize the superiority of the collective system over individual household farming, and several provincial delegates followed suit. Although Hua Guofeng also emphasized the superiority of the collective system, he intentionally avoided specifying exactly which policies should be implemented under the current situation, by pointing out that there was no one-size-fits-all agricultural policy in a country as big as China. Deng Xiaoping, too, did not show his hand, but he simply pointed out that in poor areas policy measures should be more flexible. Since no consensus was reached, the minutes of the meeting, which were approved by the party Central Committee in April, again conveyed ambiguous information regarding household responsibility. It repeated

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the “Two Prohibits,” i.e., both household responsibility and dividing land among households were prohibited. Meanwhile, the minutes also left a crack in the regulations by permitting two exceptions: household responsibility could exist if it was approved by the county authority under special circumstances and it could also be permitted in distant and mountainous areas (Huang Daoxia et al. 1992, 917–920). This was the first time since the Cultural Revolution that a central document stated that household responsibility might be allowed, albeit contingent on special conditions (Du Runsheng 2005, 104–107). Obviously, the minutes represent the result of a compromise.19 With the passage of time, the debates on household responsibility escalated. At first, the ongoing situation appeared to be encouraging for the supporters of household responsibility. In early 1980, Zhao Ziyang and Wan Li were appointed vice premiers, to take overall charge of the economy and agriculture respectively. In February 1980, Wan Li also assumed the position of head of the State Agricultural Commission, in place of Wan Renzhong. Moreover, Deng Xiaoping was in favor of local innovations. He delivered two speeches, in April and May of 1980, in which he agreed to experiment with household responsibility in backward and impoverished provinces, such as Guizhou and Yunnan (in his April speech) and extolled Feixi county’s household responsibility and Fengyang’s da baogan (大包干, contracting everything to individual households). Deng’s speech sent a clear signal that household responsibility and even da baogan might be legalized. In June 1980, based on his investigation in Mizhi county of Shaanxi province, Zhao Ziyang wrote a letter to the center, in which he strongly supported household responsibility. He further pointed out that even if 19

After the meeting in March, before the Central Party Committee approved the Decision of the Central Committee of the CCP on Some Questions Concerning the Acceleration of Agricultural Development (Draft) in September 1979, Wan Li proposed amending the relevant articles to relax the restrictions on household responsibility. With the assistance of Hu Yaobang and Zhao Ziyang, who had become a member of the Politburo in September, Wan’s opinion was reflected in the final version of the document. In the original draft, dividing land to the households and household responsibility were categorically prohibited, whereas in the official document endorsed by the Central Committee it reads, “dividing land to the households must not be allowed. With the exception of those who have special needs for sideline production (副业生产的特殊需要) or who live in border, distant, or inaccessible mountainous areas, household responsibility should also not be adopted.” See Zhang Guangyou and Ding Longjia (2006, 79–80); Huang Daoxia et al. (1992, 912).

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the peasants were to adopt household responsibility without official endorsement, there was no need to nullify their voluntary choice. Zhao’s letter was soon relayed to the entire party, suggesting a reorientation of central policy in favor of household responsibility (Du Runsheng 2005, 114–116). But opposition to household responsibility was entrenched within the party, and resistance to the policy shift came from the center as well as from many provinces. In January 1980, the State Agricultural Commission convened a meeting to discuss how to improve management under the People’s Commune Movement. At the meeting, the divisions among the leaders of the State Agricultural Commission became apparent. Whereas Wang Renzhong, at that time still head of the State Agricultural Commission, repeated his opinion that a collective system was superior to household responsibility, his subordinate, Du Runsheng,20 then a vice head of the State Agricultural Commission, expressed an opposite position on the issue, and he arranged for Zhou Yueli, then the agricultural leader in Anhui, to introduce Anhui’s experience with household responsibility at the meeting. But the majority of participants at the meeting sided with Wang Renzhong. Based on Du Runsheng’s recollections, after his speech Zhou Yueli was almost besieged by delegates from other provinces. Wang Renzhong’s views were well received by the top central leaders, including Hua Guofeng and Li Xiannian, who was a standing member of the Politburo and a vice premier at the time. Li Xiannian argued that in the future any local experiments or innovations in violation of the principle of collective farming should be prohibited once and for all. Fortunately, Du Runsheng and Zhou Yueli had the support of Zhao Ziyang, then a vice premier of the State Council. Zhao reiterated that local experiments and innovations should be allowed (Du Runsheng 2005, 107–108).

20

Du Runsheng was well known for his liberal views in rural and agricultural affairs as early as the 1950s, when he and Deng Zihui were criticized by Mao for their conservative position regarding agricultural collectivization (see Chapter 3). Due to his experience and knowledge of agriculture, Du Runsheng has been dubbed the “Chief of Staff of the Peasants” (农民的总参谋长). Throughout the 1980s, he was one of the main agricultural advisers for the top leadership.

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Opposition to household responsibility culminated at a meeting of first provincial secretaries, held from September 14 to September 22, 1980. The purpose of the meeting was to review a document drafted by Du Runsheng. The draft pointed out that in the entire countryside a responsibility system should be permitted to fit local conditions throughout the county, that the choices made by the peasants should be respected, and that household responsibility and da baogan should not be prohibited. To the reformists’ surprise, among the first provincial secretaries, only Zhou Hui (from Inner Mongolia), Chi Biqing (from Guizhou), and Ren Zhongyi (from Liaoning) made speeches in support of household responsibility, whereas the others either remained silent or adamantly opposed it. In fact, most participants at the meeting suggested that household responsibility should be confined to economically backward regions so that it would not spread to wealthy regions. (Du Runsheng 2005, 116–117). The meeting thus reached a deadlock. As a result, the final version of the draft, issued as Document No. 75 (75号文件), took into account the opinions of both sides and therefore was filled with seemingly contradictory statements. It affirmed that a collective economy was superior to an individual economy, and socialist commerce and collective agriculture should remain dominant in the economy. At the same time, it also acknowledged that the existing system should be reformed. With regard to household responsibility, the document stipulated that in remote and mountainous areas, as well as in poor and backward areas and in those places where the people’s livelihood depended primarily on state support or where the peasants had already lost faith in the collectives, household responsibility and even da baogan (or baogan daohu 包干到户) could be allowed. To be sure, the document belittled the Two Whatevers in agriculture (Du Runsheng 2005, 116–117). After the September meeting, Hu Yaobang and Wan Li took trips to northwest and northeast China respectively to press the wavering provincial leaders to change their attitudes toward household responsibility (Yang Jisheng 2006, 202). In November 1980, the central government distributed to the entire party the Report on the Lessons from the Dazhai Campaign submitted by the Shanxi Provincial Party Committee, formally declaring the demise of the Dazhai campaign.21 21

Shortly beforehand, in March 1980, Chen Yonggui, an advocate of the Dazhai model and icon of the Maoist agricultural development strategy, was forced to resign from his position as a vice premier of the State Council.

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To apply more pressure on the conservatives, Wan Li delivered an address at a meeting held by the Ministry of Agriculture in March 1981, in which he excoriated the leadership of the Ministry of Agriculture for its suspicion and passivity with respect to household responsibility. He warned his audience that they could lose their positions if they did not align themselves with the new policy orientation of the center (Zhang Guangyou and Ding Longjia 2006, 215–218). Zhao Ziyang, who had succeeded Hua Guofeng as premier in September 1980, instructed local leaders not to intervene in the peasants’ voluntary choices regarding household responsibility. This meant that even peasants in wealthy regions should be allowed to adopt household responsibility and da baogan (Xiao Donglian 2008, 659–660). Against this backdrop, the party center held a National Rural Work Conference in October 1981 to settle the debate on the nature of household responsibility and da baogan once and for all, namely whether household responsibility and da baogan were socialist or capitalist in nature (姓社姓资). The greatest achievement of the conference was that it formally legitimized household responsibility. In the summary of the conference approved by the Politburo in November 1981, all forms of responsibility system, ranging from baochan daozu (contracting output to groups) to household responsibility and baogan daohu, became part of the production responsibility system of the socialist collective economy. On January 1, 1982, the summary of the conference was issued to the entire country as Document No. 1. To be sure, Document No. 1 of 1982 granted full legal status to both household responsibility and baogan daohu, which together are known as the HRS. Thereafter, the HRS spread throughout the entire country at an astounding rate. By the end of 1983, about 99 percent of all production teams in the country had adopted individual household farming (Chung 2000, 64). Based on this development, the center announced the abolition of the People’s Commune system in 1984.

5.2.2 Agricultural Decollectivization in Zhejiang As documented in Section 5.2.1, with respect to the rural reforms, between December 1978 (the 3rd Plenum) and September 1980 (issuance of Document No. 75), local governments and peasants faced a very delicate situation. Central policy categorically prohibited

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household responsibility. Meanwhile, central policy also signaled that it aimed to reform the shortcomings of the existing institutions. This complex political atmosphere tested provincial as well as lower-level officials on the issue of household responsibility. Whether or not they tolerated the peasants’ spontaneous adoption of household responsibility was based on their judgment whether their policy choice was in line with their political interests, which in turn was contingent on their political background and work experience. Indeed, in practice the policymakers differed substantially in terms of their policy choices. In many provinces, such as Anhui, Guizhou, Sichuan, Gansu, Inner Mongolia, Hebei, Henan, and Guangdong, household responsibility had become very popular around the time of the 3rd Plenum. In Guangdong province, for example, a production team in Tan’ge Brigade of Beihe Commune in Kanghai county (康海县北和公社谭葛 大队) in 1978 adopted household responsibility, which spread to the entire commune by 1979. In Fengdu county of Sichuan province, about 10 percent of the production teams had adopted household responsibility by March 1979, but in some communes this figure could have been as high as 20–30 percent. Similar phenomena occurred in Gansu and Inner Mongolia during the first half of 1979 (Xiao Donglian 2008, 659–660). In such cases, local officials obviously understood what was occurring within their jurisdictions but they did not take a hard-line approach to the local innovations. Instead, they gave implicit or explicit support to the risk-taking peasants. For example, when the controversy on household responsibility escalated in March 1979, Wang Renzhong instructed People’s Daily to publish a letter by a reader named Zhang Hao criticizing household responsibility,22 in order to make a dent in local enthusiasm for experimenting with it. When this news hit Anhui province, however, several county party secretaries in Yuxian prefecture, e.g., Wan Yemei in Lai’an county (来安县), Chen Tingyuan in Fengyang county (凤阳县), and Jia Chengzhi in Jiashan county (嘉山县), made it clear that if the peasants had chosen household responsibility on their own, then there was no need to revert to the old system (Zhang Guangyou and Ding Longjia 2006, 195–198; Ma Licheng and Ling Zhijun 2008, 97–98; Ling Zhijun 2008, 81). 22

In the letter, Zhang Hao claimed that, based on his observations and personal experiences in the countryside, baochan daohu did not have any grassroots support and was opposed by ordinary peasants.

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Again, in many of the above cases the county authorities were able to remain committed to household responsibility because they had firm backing from higher levels, including, first and foremost, from the provincial leadership. The case of Anhui recounted above is a telling example. Behind the three brave county party secretaries in Yuxian prefecture there was the prefectural party secretary Wang Yuzhao. Behind Wang Yuzhao there was the provincial party leader Wan Li. In fact, Wan Li was on an inspection trip to Tuxian prefecture when Wang Yuzhao and his subordinate county party secretaries faced huge pressures after People’s Daily published Zhang Hao’s letter. Wan Li assured Wang Yuzhao that there was no problem with the household responsibility experiment that was taking place under their purview and he re-emphasized that practice is the sole criterion for testing truth (实践是检验真理的唯一标准). Wan Li even promised that if the experiment caused any political trouble, he would assume responsibility (The History of Rural Reform in Anhui Province 2006, 112–114). Although local demands for rural reform in Guizhou had been running high since early 1978, the provincial party secretary, Ma Li, was very concerned about the political correctness of baochan daozu due to the Two Prohibits laid down by the 3rd Plenum. Ma Li finally decided to take measures to impose strict restrictions on the spread of household responsibility in the province. Fortunately, Ma’s successor, Chi Biqing, who assumed power in late 1979, took a different approach to local initiatives. He first supported baochan daozu, followed by household responsibility as well. Under Chi’s leadership, in July 1980, two months before Document No. 75 was issued by the center, the provincial party committee formally accepted baogan daohu in poor and distant areas. Due to Chi Biqing’s tolerance and support, baogan daohu quickly spread to the entire province. By the end of 1980, about 80 percent of all production teams in Guizhou had adopted baogan daohu (Xiao Donglian 2008, 673–675). In contrast, in provinces where there were no reform-minded provincial leaders, local cadres paid a high price for their tolerance of local innovations. In Wenxi county (闻喜县) of Shanxi province, party secretary Zhang Shixian planned to experiment with household responsibility in 1979. However, he ran up against a conservative provincial party leader, Wang Qian, who blamed Zhang Shixian in front of several hundred local officials at a meeting for mistakes regarding the issue of household responsibility. As a result, Zhang Shixian

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soon stepped down from his position and his experimental project was terminated. In Shandong province, the provincial authority dismissed those local officials who supported dividing production teams into smaller groups and contracting output quotas to groups (baochan daozu). Work teams were sent down to correct the unaccepted activities, after which the percentage of production teams experimenting with baochan daozu dropped from 60 percent to 15 percent within two months (Ling Zhijun 2008, 181–182). The provincial party secretary of Jiangsu province, which borders Anhui on the east and Zhejiang on the south, Xu Jiatun (许家屯), was determined to redress the phenomenon of household responsibility in his province. In early 1980, the provincial leadership called for immediately stamping out household responsibility, with the inflammatory slogan of “Resolutely Close Up the West Gate [to Anhui]” (坚决堵住西大门) (Ji Yin 2008). Along the common border between Jiangsu and Anhui, loudspeakers were installed by Jiangsu local officials to broadcast the resolution to “Firmly Oppose the Wind of Individual Household Farming Originating in Anhui” (坚决顶住安徽的分田单干风) (Ling Zhijun 2008, 181–182). The importance of the provincial leaders during this period is best exemplified by contrasting the fate of rural reform before and after top provincial leaders changed their mindsets or top provincial leaders changed. In Anhui, Wan Li was elevated to the central government and left the province in March 1980. His successor, Zhang Jinfu, rushed to change the course set by Wan Li. He argued that the ongoing HRS experiment in the province should end immediately and he took administrative measures to deal with the recalcitrant local cadres. From March to August 1980, the provincial party committee convened four meetings to criticize the HRS. Many county party secretaries who had been activists regarding the HRS were criticized, transferred, dismissed, or even detained. Due to Zhang’s heavy-handed approach, the rural reforms in the province stalled abruptly until Document No. 75 was issued (Xiao Donglian 2008, 674; The History of Rural Reform in Anhui Province 2006, 124–133). Similarly, even though the first provincial party secretary in Guangdong province at the time, Xi Zhongxun (the father of current President Xi Jinping), was well known as an open-minded reformist, he firmly opposed the HRS. At the provincial rural work conference held on May 27, 1980, Xi Zhongxun delivered a speech to emphasize his

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opposition to household responsibility. He warned local party cadres that he would take measures to reorganize the local party branches in areas where the HRS had been established. After the conference, the provincial party committee sent 230 cadres to sixteen counties to press local cadres to redress the household responsibility phenomenon. After learning of Deng Xiaoping’s speech on household responsibility in May 1980, Xi Zhongxun began to adjust his stance on the issue by permitting experimental plots in certain poor regions of the province. It was only after Ren Zhongyi took over as provincial party secretary in November 1980, two months after Document No. 75 was issued, that the new provincial leadership fully granted peasants the right to freely choose production responsibility (Xiao Donglian 2008, 676–678, 698–699; The Years When Xi Zhongxun Was Steering Guangdong 2007, 134–143). For all the importance of the provincial leaders, what is more meaningful is the intraprovincial variations in terms of the adoption of household responsibility or baogan daohu, even within those provinces with the same conservative provincial leaders. In Guangdong province under Xi Zhongxun, for example, despite strong opposition by the provincial and local authorities, household responsibility quickly developed in many counties. Between March 1979 and February 1980 the county authority in Zijin county sent three work teams to investigate household responsibility in the countryside. Ironically, the result was that the number of the production teams adopting household responsibility increased from 1,000 to 3,000, accounting for 62 percent of all production teams in the county. In Dianbai county, work teams were garrisoned on six occasions. But each time, after the work teams departed, household responsibility soon resumed. In Zhangxi Commune (漳溪公社) of Heyuan county, the commune leaders imposed formidable restrictions on individual farming. Nevertheless, as of early 1980, 82 percent of its production teams had turned to individual household farming (Xiao Donglian 2008, 677–678). In Shandong province, more than 1,000 production teams had adopted household responsibility by the end of 1979. As of 1980, about 5 percent of all production teams in the province had changed to household responsibility, mainly concentrated in the northeast area of the province, including Heze county, Liaocheng county, Dezhou county, and Huimin county (Du Runsheng 2005, 129). Similar occurrences took place in a number of counties of Jiangsu province, whose

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provincial authority completely opposed the HRS. Although in the spring the prefectural leadership of Huaiyin prefecture sent three successive work teams to Sihong county to suppress household responsibility, such efforts bore no fruit because local grassroots cadres did not seriously carry out the suppression and household responsibility actually spread to the entire county. During the same period, 183 production teams in Wujiang county adopted household responsibility (Ji Yin 2008). When the collision among the central elite gave provincial policymakers discretion over policy choices, the attitudes of the provincial policymakers played an influential role in some provinces (e.g., Anhui and Shanxi) but not in others (e.g., Guangdong and Jiangsu). As we stress in this volume, such differences in the fate of local innovations were largely a reflection of the different motivations of local cadres below the provincial level. Once again, Zhejiang province stood out among the provinces where household responsibility demonstrated considerable heterogeneity within the province, even though the provincial leadership was hostile toward local innovations. Zhejiang’s party boss, Tie Ying, for example, served as provincial first party secretary from 1977 to 1983. Throughout most of his administration, he staunchly adhered to socialist collective agriculture and repudiated household responsibility, including baogan daohu.23 In fact, among all the provincial leaders at the time of the 3rd Plenum, Tie Ying was one of the most diehard opponents of household responsibility.24 After Document No. 75 was issued by the center, the Zhejiang authority insisted that most parts of Zhejiang did not belong to border or poor localities which, according to Document No. 75, were allowed to adopt household responsibility. In January 1981, the provincial party committee called a meeting to discuss rural work. A (draft) notice was circulated at the meeting, demonstrating the attitude of the provincial party committee toward household responsibility. According to the (draft) notice, household 23

24

A local party historian in Wenzhou reported that after Tie Ying retired, he assumed the position of chairman of the Mao Zedong Thought Research Council, reflecting his consistent political attitude as a loyal Maoist. Oral source, interview in Yongjia county, August 2008. According to Zhang Guangyou and Ding Longjia (2006, 209), from 1978 to 1979 opposition to baochan daohu by provincial leaders was strongest in Jiangsu, Zhejiang, Hubei, Jiangxi, and Fujian.

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responsibility was merely a makeshift measure for poor regions to rapidly enhance agricultural production and it could not be relied upon to solve long-term agricultural problems. Although the (draft) notice was not officially relayed to the grassroots levels, it placed huge pressures on local governments. But in late April 1981, the provincial party committee issued a self-criticism by acknowledging its errors in clamping down on household responsibility in “non-three” areas (非三靠地区).25 At the same time, however, the provincial authority insisted that wealthy regions should be set apart from other regions and could not practice household responsibility. In fact, it was not until August 1982, seven months after the center’s Document No. 1 was issued, that the provincial authority formally endorsed household responsibility and lifted the ban on it in wealthy regions (Zhejiang in Contemporary China 1988, 131–132). The provincial leaders’ obstinacy on the issue of household responsibility, however, did not scare peasants away from adopting household responsibility on their own in scores of localities. Recall that before Document No. 75 was issued in September 1980, household responsibility, including baochan daohu, was prohibited. But the spontaneous practice of household responsibility had already become popular in many counties. In Yongjia county in the Wenzhou region, for example, the county authority held more than 1,500 meetings in December 1977 alone to criticize the wind of household responsibility. In March 1978, the county authority sent propaganda teams consisting of more than 4,000 members to oversee grassroots adoption of household responsibility. In spite of strict pressures from above, household responsibility demonstrated its great viability. By the end of 1978, official records reveal that there were still 1,731 production teams adopting household responsibility (Yongjia County Agricultural Gazetteer 1997, 123–124), and even more production teams continued to practice household responsibility secretly.26 In 1979, the political atmosphere was much more favorable to local innovations. In Beijing, Du Runsheng proposed that Deng Zihui, as well as other local cadres who had been persecuted during the Maoist 25

26

“Non-three areas” refers to places where peasants lived on procured grain sold by the state, daily consumption was dependent on government relief, and production relied on banking loans (吃粮靠返销,花钱靠救济,生产靠贷款). Oral source, interview in Yongjia county, November 2008.

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era due to their support for household responsibility, be rehabilitated. From February to July, the three heroes (Li Guimao, Li Yunhe, and Dai Jietian) who were wrongly convicted as rightists and counterrevolutionaries in Yongjia’s household responsibility event of 1956–1957 (see Chapter 3) were rehabilitated, sending a strong signal that household responsibility was gaining legal status (Party History Research Office under the Yongjia County Party Committee 2008, 7–40, 133). In fact, after Central Document No. 75 was issued in September 1980, the county authority instantly declared that household responsibility had a socialist, rather than a capitalist, nature, thereby endorsing it in the county (Yongjia County Agricultural Gazetteer 1997, 124). Yongjia county was not alone in the Wenzhou region in spearheading the household responsibility system. In Wenzhou, prefectural officials endorsed the household responsibility experiment in December 1980. According to official records, as of September 1981 70.1 percent of all production teams in Wenzhou had adopted household responsibility and baogan daohu (Wenzhou City Gazetteer 1998, 66, 1423–1424). But even earlier, many production teams in the county had spontaneously adopted household responsibility. In Rui’an and Wencheng counties, for example, the peasants’ spontaneous adoption of household responsibility took place as early as spring 1980, even preceding official approval (Wencheng County Gazetteer 1996, 444; Rui’an City Gazetteer 2003, 47). In Yueqing county, the county authority legitimized household responsibility in March 1981, even though the grassroots experiment had started much earlier.27 No doubt the continuing existence of household responsibility and baochan daohu was largely due to the tolerance and acquiescence of local cadres. In all of the above cases, before the county authorities had formally endorsed household responsibility, work teams were unsuccessful in their attempts to redress the situation. Surely this did not take place only in Wenzhou. Similar phenomena existed in many other guerrilla counties. In Xiaoshan, the county authority did not approve of household responsibility until September 1982 (Agricultural Gazetteer of Hangzhou 2003, 217). Nevertheless, as early as 1978 27

The official record shows the spontaneous adoption of baochan daohu began in 1979 (see Yueqing County Gazetteer 2000, 398). According to an on-site interview with local cadres in Yueqing, it might have begun as early as shortly after the Cultural Revolution in 1976. Oral source, interview at Yueqing city, April 2009.

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many brigades in Louta Commune (楼塔公社) had reduced the size of the production teams by dividing current production teams into smaller teams. After learning of this, the county authority sent work teams to eradicate this wind of capitalism. The achievements of the work teams, however, were frustrated because among the total of thirty brigades in the commune, twenty-nine had adopted household responsibility, including baochan daohu (Past Stories Recounted by 100 Xiaoshan People 2007, 573–577). As acknowledged by one local cadre participating in a work team, he had full knowledge of how the peasants were concealing their illegal activities, but he did nothing to expose them, and he continued to write inaccurate reports to fool the higher-ups. Even the county authority was not strict when dealing with unauthorized household farming. Although household responsibility had been spreading in the commune, beginning in late 1980, the county authority stopped sending down work teams to return the illegal activities to the collective orbit.28 Similar occurrences took place in other guerrilla areas. In Huangtan Commune (黄坦公社) of Linhai county in the Taizhou region, some villagers took the lead in adopting household responsibility in 1977, and by the late 1980s it had spread to the entire commune. Under the protective umbrella provided by the local grassroots cadres, peasants publicly pretended to work collectively but in fact they were only responsible for production on their own land that had been assigned by the production teams. The commune cadres knew that their subordinates were colluding with the peasants to take the capitalist road but they turned a blind eye. When the county officials inquired about agricultural production in the commune, the commune cadres told them there was no individual household farming whatsoever.29 In Xiaochun Commune (肖村公社) of Wenling county, the official records show that household responsibility was discovered as early as 1973 and had spread to the entire 28

29

Oral source, interview in Yueqing city, April 2009. An interview with several retired senior local cadres confirmed that by the end of 1980, the county authority no longer conspired against baochan daohu. Oral source, interview in Xiaoshan county, August 2008. See the news report “1977: Women toutou ba tian fele” (1977: We Secretly Divided the Peasants’ Fields, 1977 我们偷偷把田分了), posted on TaizhouNet, at www.taizhou.com.cn/a/20080513/content_63674.html, accessed May 13, 2008.

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commune by 1975. In addition, lucrative household sidelines and land rentals among households, which were strictly prohibited at the time, had emerged by 1974. Fearing the situation would spin out of control, the commune party secretary filed a report with the higher-ups requesting intervention. But his call for help did not produce any concrete results.30 As expected, spontaneous adoption of household responsibility was on average more likely to take place in guerrilla counties than in nonguerrilla counties. In non-guerrilla counties, local cadres had close network connections with higher-level officials, and their political careers usually depended on their patrons at the provincial level. Therefore, compared with their counterparts in the guerrilla areas, they more closely followed the instructions from above to block household responsibility within their jurisdictions. As a result, local spontaneous experiments with household responsibility seldom occurred in these areas, and if they did, they did not endure for long or spill over to other localities. In Quzhou region, for example, some peasants in Kaihua county spontaneously adopted household responsibility in late 1979. Due to opposition by Quzhou leaders, however, Kaihua’s experience was criticized and such activities in the entire region were held at bay. Even after Document No. 75 was issued, the Quzhou authority continued to insist that Quzhou should support collective farming (Quzhou City Gazetteer 1994, 455). Although some production teams in Changxing county of Huzhou region had adopted household responsibility in 1979 (Huzhou City Gazetteer 1999, 531), it appears that few other production teams emulated these pioneers and the collective system was too entrenched to be shaken. Of the three accounting levels in the commune system (from high to low, commune–brigade–team), the income share claimed by the communes and brigades increased from 14.1 percent (at the commune level) and 5 percent (at the brigade level) in 1976 to 29.4 percent (at the commune level) and 14.5 percent (at the brigade level) in 1982, whereas the income share of the production teams during the same period decreased from 81 percent to 56 percent (Huzhou City Gazetteer 1999, 531). 30

See the report “1973 nian Wenling xiaocun ‘fentian daohu’ kaoshu” (An Examination of “Dividing Lands to Individual Households” in Xiaocun Commune of Wenling County in 1973, 1973年温岭肖村‘分田到户’考述), Wenling News Net, at http://wlnews.zjol.com.cn/wlrb/system/2007/09/04/010 048053.shtml, accessed September 4, 2007.

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Table 5.1 Spontaneous adoption of household responsibility: guerrilla counties versus non-guerrilla counties (December 1978–September 1980)

Non-guerrilla counties Guerrilla counties

No spontaneous adoption of household responsibility

Spontaneous adoption of household responsibility

16 19

2 28

Note. For the definitions of guerrilla and non-guerrilla counties, see Appendix 1. Whether or not baochan daohu was spontaneously adopted between December 1978 and September 1980 can be found in relevant official publications, including county gazetteers, chronicles of events in county party history (党史大事记), and county agricultural gazetteers. In the Yongjia County Gazetteer (2003, 466), for example, it states, “At the end of 1978, there were still 1,731 production brigades that had adopted baochan daohu. As of the December 1978 3rd Plenum, peasants in the entire county were making spontaneous efforts to engage in baochan daohu” (1978年底仍有1731个生产队暗中实行包产到户。1978年12月, 中共十一届三中全会后,全县 . . . 农民又在自发地试行包产到户、包干 到户的“双包责任制). If no records were found about the spontaneous adoption of baochan daohu during this period, then, we believe, peasants in the county had not adopted baochan daohu. Sources: from various county gazetteers and chronologies of major events in county history.

Table 5.1 contrasts the guerrilla counties with the non-guerrilla counties in terms of spontaneous adoption of household responsibility during the December 1978–September 1980 period (when Central Document No. 75 was issued). The contrast between the two types of county is revealing. Among the eighteen non-guerrilla counties, only two (11 percent) reported any incidence of spontaneous adoption of household responsibility. In comparison, among the forty-seven guerrilla counties, twenty-eight (60 percent) experienced spontaneous adoption of household responsibility.31 These results are consistent with our theoretical expectations. 31

The t test for the equality of the mean percentage of the spontaneous adoption of baochan daohu between the two types of county yields a p-value of 0.00, suggesting that the difference is highly significant.

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By the same token, it should come as no surprise that after Central Document No. 75 was issued in September 1980, on average official endorsement of household responsibility came earlier to the guerrilla counties than to the non-guerrilla counties. As noted, Document No. 75 acknowledged for the first time that peasants could adopt baochan daohu in distant mountainous and poor regions and gave local governments discretion with respect to local conditions. As Wan Li recalled, peasants in Anhui stated with perfect assurance that they did not violate central policy after Document No. 75 was issued. The reason is that there was no sole criterion about which areas could be regarded as poor, thus it depended on the interpretation of local officials. Without exception, those who wanted to adopt baochan daohu claimed they belonged to poor areas (The History of Rural Reform in Anhui Province 2006, 83). Hence, both the opponents and the supporters of baochan daohu could justify their positions by referring to Document No. 75. It can be predicted that the county leaderships in the non-guerrilla counties likely interpreted Document No. 75 in a way that was consistent with the views of their conservative provincial patrons, whereas in the guerrilla counties the county authorities tended to adapt quickly to the peasants’ wishes by emphasizing the particularity of local conditions and thus favoring adoption of household responsibility. As a result, on average baochan daohu was endorsed earlier in the guerrilla counties than it was in the non-guerrilla counties. Figure 5.1 shows the distribution of the time interval between September 1980 and when a county authority officially endorsed baochan daohu. In the non-guerrilla counties, the mean time interval was nineteen months, compared to a mean time interval of only fifteen months in the guerrilla counties.32 Among the ten counties with the smallest time interval, only Chun’an county belongs to the non-guerrilla group. Among the five counties with the longest time interval, there are three non-guerrilla counties. Apparently, local authorities in the guerrilla counties were ahead of their counterparts in the non-guerrilla counties in terms of keeping up with local initiatives.

32

The t test for the equality of the means of the time interval between the two types of county yields a p-value of 0.03, suggesting that the difference is highly significant.

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4

5 Non-guerrilla counties

Guerrilla counties

4 Frequency

Frequency

3 2 1

3 2 1 0

0 10

15

20

25

30

0

10

20

30

Figure 5.1 Distribution of the time interval between September 1980 and when the county authority endorsed baochan daohu Note. The time interval (x-axis) is the number of months between September 1980 (when Document No. 75 was issued) and the time when the county authority formally endorsed the practice of baochan daohu. The date when the county authority endorsed the practice of baochan daohu is recorded in relevant official publications, including county gazetteers, chronicles of events in county party history, and county agricultural gazetteers. In Yongjia County Gazetteer (2003, 466), for example, it states, “On July 6, 1980, the Yongjia County Party Committee issued Document No. 85 (1980), entitled ‘Viewpoints Regarding Conscientiously Implementing Party Policy, Establishing the Responsibility System in Agricultural Productions, and Promoting Economic Development in Mountainous areas’,” which formally endorsed both baochan daohu and baogan daohu and began to promote the responsibility system across the board and improve it step by step (1980年7月6日,中共永嘉县委制定《关于 认真落实党的政策,建立各业生产责任制,加快山区经济发展的意见》(永 嘉县委[1980]85号文件), 把“双包”责任制列入“正册”,使之全面推广并逐步 完善). In cases when baochan daohu was adopted prior to September 1980 when Document No. 75 was issued, the time interval is assigned a value of 0. Sources: various county gazetteers and county agricultural gazetteers, collected by the authors.

5.3 Entrepreneurial Capitalism in Zhejiang after 1976 I heard that in Guangdong, raising three ducks is of a socialist nature, whereas raising five ducks is regarded as pursuing capitalism. That is ridiculous. Our rural policy must be changed, must be reformed. 我在广东听说,养三只鸭子就是社会主义,养五只鸭子就是资本主义, 我看荒唐得很!可见我们的农村政策要变,要改革. Deng Xiaoping, 1977

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In retrospect, the rural reforms from the late 1970s to the early 1980s, which were embodied by the spread of the household responsibility system and the collapse of the commune system, should be viewed as one of the most successful reforms in the post-Mao era. Despite their far-reaching political and economic implications after 1978, their direct impact was largely confined to agriculture, especially grain production. When we investigate beyond agriculture, the situation becomes more complicated. In this regard, the above quote by Deng Xiaoping is a reflection of how difficult it was to do business in both rural and urban areas,33 given the arbitrary and restrictive policies on the private sector at the time. Surely Deng’s comment did not apply only to the late 1970s when he made it. Indeed, since then, considerable numbers of ameliorative reform measures have been implemented to improve the business environment for the private sector. However, throughout the 1980s, ideological discrimination against the private economy was real and policy constraints affecting the private sector were substantial. Moreover, political struggles in the 1980s among the elite at the top echelons of the power hierarchy resulted in frequent policy setbacks, which had an impact on the credibility of the center’s commitment to liberal-oriented reforms and inevitably affected the private-business environment. Similar to what occurred during agricultural decollectivization when faced with mixed political signals emanating from the center, the attitudes of provincial and local elites toward the private businesses under their purview played a key role in interpreting the ambiguous policy signals and in implementing central policies. The Chen Zhixiong affair that took place in Guangdong province in 1981 is illustrative. Chen Zhixiong, an ordinary villager in one of the six production teams in Shayi Brigade of Shapu Commune (沙浦公社) in Gaoyao county, was a capable fish farmer (养鱼能手). Beginning in 1979, with the support of the brigade party secretary, Liang Xin, Chen Zhixiong contracted eight mu of fish ponds from the production team to raise fish for the market. Chen’s venture was a huge success. In the first several years, he earned net revenue of 6,000 yuan, an amazing amount of money at the time, equivalent to the total annual income of fourteen 33

See “Weiren zuji: Deng Xiaoping zai Guangdong de yishi” (A Great Man’s Footprint: Anecdotes of Deng Xiaoping in Guangdong, 伟人足迹:邓小平在广 东的逸事), at www.gzzxws.gov.cn/gzws/gzws/ml/69_1/200911/t20091130_16 104.htm, accessed November 30, 2011.

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male laborers. During the subsequent two years, Chen’s business continued to grow so big that he was unable to run it on his own, so he hired workers to help him. Receiving agreement from Liang Xin, Chen Zhixiong hired five to seven regular workers per year and dozens of casual workers, paying them an annual salary of 1,200 yuan per capita. Because Chen Zhixiong offered such a decent salary (recall that at the time the annual income of an ordinary commune member was only 800 yuan), even villagers outside the province visited Chen Zhixiong in the hopes that he would hire them. At the height of his fame, within one year Chen Zhixiong had hired a cumulative total of 2,300 casual workers from twelve provinces.34 There is no doubt that Chen was running his business at odds with official policy, which explicitly stipulated in Central Document No. 75 issued in 1980 that “hiring employees is not allowed.”35 What was occurring in Shapu Commune inevitably attracted the attention of the party-state. In late 1981, People’s Daily published a series of articles debating the nature of Chen’s business. Thereafter, the top leaders began to voice their opinions about the nature of Chen’s business. Hu Yaobang asked Du Runsheng to keep an eye on the situation and in turn Du Runsheng requested that the Guangdong Provincial Party Committee keep watch. Neither of them wanted to come to a hasty conclusion. In the meanwhile, Zhao Ziyang regarded the event as a pure economic issue and gave his oral support to Chen Zhixiong, saying that Chen was doing a good job by generating more tax revenue. However, a directive from Hu Qiaomu, who was a former secretary to Mao Zedong and from 1980 a member of the Secretariat of the Central Committee in charge of ideology-related issues, made a harsh comment in a letter to Ren Zhongyi, first party secretary of 34

35

See “Xingshi jianyu dangshi, shifei gong you houshi” (Act According to Convictions and Leave Evaluation to Posterity, 行事见于当时,是非公于后世), Nanfang Net, at www.nfyk.com/nflt/ShowArticle.asp?ArticleID=2494, accessed April 20, 2010. See also Ji Yin (2008). The prohibition was loosened somewhat in 1981. In “Guanyu chenzhen feinongye geti jingji ruogan zhengce xing guiding” (Policies and Regulations on the Urban Non-agricultural Individual Economy, 关于城镇非农业个体经 济若干政策性规定) and the “Guanyu guangkai menlu, gaohuo jingji, jiejue chengzhen jiuye wenti de ruogan jueding” (Decisions on Opening all Avenues and Reinvigorating the Economy to Solve the Urban Employment Problem, 关于广开门路,搞活经济,解决城镇就业问题的若干决定), issued by the State Council in 1981, it is stipulated that “the hiring of more than seven employees is not allowed.” This ban was not officially lifted until 1987.

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the Guangdong Provincial Party Committee. In the letter, Hu Qiaomu, in an unquestionable tone, pointed out that Chen Zhixiong’s behavior was definitely straying away from socialism and therefore should be prohibited and redressed immediately. He warned Ren Zhongyi that how the Guangdong provincial authority handled the event was of overriding importance in terms of its implication for the socialist cause in China (Ji Yin 2008). After receiving Hu Qiaomu’s letter, Ren Zhongyi and his colleagues began to feel nervous. Fortunately, Ren Zhongyi withstood the pressure from Hu Qiaomu and protected the local innovations. After sending many investigation teams to Shapu Commune to obtain firsthand information, the provincial party committee finally concluded that although Chen’s business depended on hired laborers, it could not be equated with capitalism. Moreover, its management and performance were much superior to that under the collective system. In a report submitted to the center, the Guangdong Provincial Party Committee suggested that it was inadvisable to criticize Chen’s behavior at the current stage; instead, such practices should be allowed to continue to exist (Ji Yin 2008). Due to protection from the top provincial leader, Chen Zhixong survived the crisis. Chen Zhixiong was not alone. Nian Guangjiu, a private entrepreneur in Wuhu city of Anhui province, faced a similar situation. Nian Guangjiu became a millionaire by selling sunflower seeds that he cooked in his own factory, which had hired more than 100 workers as of 1981. Nian’s business led to a heated debate on socialism versus capitalism both in the province and at the center. An investigation into Nian’s business by the provincial authority continued for more than a year. During the entire event Nian Guangjiu was supported by the leaders of Wuhu city. Additionally, this time Deng Xiaoping also personally voiced his opinion in support of Nian Guangjiu, thus Nian Guangjiu was able to continue to expand his business throughout the 1980s.36 In Zhejiang province, however, private entrepreneurs were generally not as lucky as Chen Zhixiong and Nian Guangjiu had been in the early 1980s. The aforementioned Eight Big Kings affair in 1982 is indicative of the political environment in the province. At that time, smuggling 36

For a news article on Nian Guangjiu, see http://news.xinhuanet.com/fortune/ 2008~03/24/content_7849415.htm, accessed March 24, 2010.

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was becoming rampant in both Guangdong and Fujian, which were at the front line of the opening-up policy experiment that had been selected by Deng Xiaoping but had enraged the top leaders in Beijing. In February 1982, provincial leaders in the two provinces were summoned to Beijing to make self-criticisms in front of national leaders who held nearly all the key positions in the central Secretariat, the State Council, the Central Military Commission, and so forth. The conservatives seized this opportunity to attack the emerging private sector. At a meeting held to review the self-criticisms made by the leaders of the two provinces, Hu Qiaomu forcibly intervened by delivering a speech that stated that the rampant smuggling was a demonstration of the confrontation between socialism and capitalism in the political, economic, and ideological spheres.37 Shortly after the meeting, the central government launched a nationwide anti-economic-crime campaign aimed at cracking down on smuggling and also suppressing various private economic activities that put competitive pressures on the huge state-owned enterprises. In Zhejiang, the provincial authority had long been uneasy about the rampant capitalism in Wenzhou and decided to draw on the campaign to cleanse the local economy and put it back on a socialist track. An investigation team headed by a standing member of the provincial party committee was sent to Wenzhou to oversee the campaign. After consulting with the leadership of Wenzhou, the team finally chose Liushi township of Yueqing county as its primary target due to its allegedly rampant speculative activities. Ultimately, dozens of private entrepreneurs were arrested and publicly paraded through the streets, and some were even executed. The eight richest private entrepreneurs were dubbed the “Eight Big Kings” because of the fame and wealth they had amassed from their private businesses. Therefore, the event came to be known as the Eight Big Kings affair.38

37

38

A Guangdong participant at this meeting recalled that Hu’s speech sent a shiver down his spine. See Yang Jisheng (2006, 209–211). See “Gaige xuyao yongchi he zhihui” (Reform Asks for Courage and Wisdom, 改革需要勇气和智慧), Wenzhou Daily, November 19, 2008, at www.wenzhou .gov.cn/art/2008/11/19/art_1231104_2347381.html. See also History and Learning Committee of the National People’s Political Consultative Conference et al. (2007, 111–120). To date, there are different versions of the name list of the Eight Big Kings. Whoever they actually were, they included the following eleven businessmen: Chen Yinsong (陈银松), Cheng Buqing (程步青), Hu Jinlin (胡金林), Li Fangping (李方平), Liu Dayuan (刘大元), Ruan Ziyue (阮子岳),

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For private businessmen in Yueqing as well as in all of Wenzhou, the impact of the Eight Big Kings affair was considerable. First, the incident sent a signal to local private entrepreneurs that the party-state would not permit the private sector to continue to grow. In fact, private entrepreneurs were actually regarded as second-class citizens whose personal safety, as well as their property, could not be guaranteed. To bear testimony to this pervasive pessimism among private local entrepreneurs, fixed-asset investments in the Wenzhou region plummeted substantially and the private economy nearly crashed. As shown in Table 5.2, total fixed-asset investments in the entire Wenzhou region decreased from 408 million yuan in 1981 to 319 million yuan in 1982, a fall of 22 percent. The suffering fell mostly on the private sector, which is reflected in the ownership composition of industrial output. For example, private industrial output fell by 75 percent, from 6.4 million yuan in 1981 to 1.6 million yuan in 1982. Among the three counties in Wenzhou largest in economic scale, Yueqing county was certainly a major victim of the Eight Big Kings affair, with its total industrial output and fixed-asset investments decreasing by 2.6 percent and 49.7 percent respectively. An interesting and meaningful finding from Table 5.2 shows that there is a negative relationship between the private economy and the collective economy between 1981 and 1983. Industrial output produced by the collective sector increased by a negligible 0.6 percentage point, from 937 million yuan in 1981 to 944 million yuan in 1982. In addition, although private fixed-asset investments bounced back in 1983, collective fixed-asset investments dropped from 50.6 million yuan to 42.8 million yuan. After 1983, when there was a turnaround in the political atmosphere in favor of private businesses, both the private and collective sectors continued to grow. This likely reflects the fact that the collective sector consisted mainly of private enterprises with fake collective registrations, resulting from the strategy used by private entrepreneurs to avoid the political risks associated with private ownership by registering as fake collectives. In the post-1949 history of Wenzhou, the Eight Big Kings affair was neither the first nor the last event reminding private businessmen of the political risks they faced. Alert to such risks, private entrepreneurs Wang Maiqian (王迈迁), Wu Shilian (吴师廉), Ye Jianhua (叶建华), Zheng Xiangqing (郑祥青), and Zheng Yuanzhong (郑元忠).

Table 5.2 Wenzhou’s economic growth during the Eight Big Kings affair (1980–1986) (10 million yuan) 1980

1981

1982

1983

1984

1985

1986

Total industrial output Collective Private Other Fixed-asset investments Collective Private Fiscal revenue

165.09 88.90 0.67 21.58 35.05 4.56 21.13 17.09

172.90 93.77 0.64 22.95 40.84 3.62 28.02 18.08

175.29 94.41 0.16 22.18 31.92 5.06 15.50 19.10

213.05 115.26 0.97 33.64 39.19 4.28 20.11 23.07

290.70 160.79 2.47 56.27 51.17 7.40 29.33 27.33

421.07 233.11 25.99 80.25 76.77 12.45 41.74 40.58

489.87 272.17 31.82 95.78 105.93 15.20 67.79 50.33

Total industrial output Fixed-asset investments Fiscal revenue

18.73 5.35 1.99

17.86 7.54 2.58

17.39 3.79 2.90

26.73 5.63 3.65

40.62 6.81 4.57

62.09 7.90 6.62

69.49 14.57 7.48

Total industrial output Fixed-asset investments Fiscal revenue

25.72 5.51 2.30

27.10 7.34 2.47

26.26 5.03 2.41

30.98 5.50 2.87

40.64 8.47 3.44

55.31 13.68 5.67

67.51 15.69 6.83

Total industrial output Fixed-asset investments Fiscal revenue

7.74 4.55 0.67

8.54 3.45 0.81

8.51 2.20 0.85

9.92 2.97 1.13

18.03 3.40 1.51

27.20 4.96 2.14

31.85 5.91 2.86

Wenzhou region

Yueqing county

Rui’an county

Yongjia county

Sources: fixed-asset investment data are from Comprehensive Statistical Data and Materials on 50 Years of New Zhejiang (2000). The other information is cited from Qian Tao (2008).

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developed a set of coping strategies to protect themselves and exploit the cracks in state policies. The two most widely used coping strategies of private entrepreneurs in Wenzhou were “wearing red hats,” whereby private enterprises registered as collective enterprises, and “hanging on to the collective operations” (挂户经营) or “borrowing red hats” (借红帽子), whereby private enterprises used the name of a collective enterprise to run their business and in return paid a certain fee to the host collective enterprise for the use of its name (Cao Zhenghan 2006, 81–140; Qian Tao 2008). As noted in Chapter 4, both practices of “wearing red hats” and “borrowing red hats” emerged in the 1970s. Because “borrowing red hats” was relatively better than “wearing red hats” in terms of defining property rights, “borrowing red hats” became increasingly popular in Wenzhou in the early 1980s. For example, all the Big Kings referred to above engaged in “borrowing red hats” (Cao Zhenghan 2006, 81–140; Qian Tao 2008). The 1982 attack on Wenzhou’s private undertakings primarily targeted such enterprises. Without any concrete evidence, it is plausible that many private investors did not simply withdraw from their businesses when they faced political dangers but instead became more cautious by disguising their enterprises. In other words, instead of “borrowing red hats,” they instead turned to “wearing red hats.” When the political atmosphere relaxed in 1983 (as described in the following), “borrowing red hats” once again gained momentum. It is worth noting that throughout the 1980s neither “borrowing red hats” nor “wearing red hats” was officially acknowledged as legal. Nevertheless, in practice the “red-hat” phenomena were widely adopted by risk-averse private entrepreneurs. As early as April–June 1977, fifty fake collective enterprises, i.e., those wearing red hats, at Sanshan Commune (三山公社) in Yueqing county gave up their collective registrations and borrowed red hats by becoming affiliated with some collective enterprises in the commune. This practice was soon emulated by other communes in the county. By the end of 1977, more than 600 private-household enterprises had become “hang-on” enterprises (Zhao Shunpeng and Zhu Zhixi 2000, 272–273). Another way of borrowing red hats was to reduce the size of the collective enterprise and lower the accounting units and management to the household level, in much the same way peasants had turned collective farming into baochan daohu. For example, a collective firm would be divided into seven or eight, or even more, workshops, and each workshop

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would be an independent accounting unit. Because of the small size of each workshop, it did not make economic sense that it produce all the goods by itself. Instead, a workshop would receive contracts from outside and then outsource production to individual household factories. The workshop levied a small management fee for this process (Zhao Shunpeng and Zhu Zhixi 2000, 272–273). In this way, collective enterprises became shadow workshops of private household factories. Apart from the collective enterprises, local governments and officials also took part in providing benefits for “hang-on” enterprises. In Cangnan county, for example, a host of public agencies was established after 1980 at county, district, and commune levels to provide “hang-on” services for private sale agents (供销员) and individual household factories, including providing bank accounts, issuing business cards and official letters of introduction, and so forth. In other words, private enterprises were able to acquire all the necessary services to pursue their businesses regardless of state policies and regulations that prohibited private enterprises from tapping into these services. In Yueqing county, nearly all county administrative departments under the county government on their own had established corresponding subdivisions to provide “hang-on” services for private enterprises. In fact, the provision of “hang-on” services created new businesses, with different host agencies competing with one another to attract customers. As a natural outcome of the fierce market competition, the management fees levied by the host agencies remained very low, equal to approximately 0.3 percent of the total sales of the “hangon” private enterprises. The services were also extremely flexible in terms of form and content. Individual sale agents, whether they were natives or not, were able to select a local collective enterprise or a public agency to serve as their host entity. Private enterprises could “hang on” to one collective enterprise or one public department, or to several collective enterprises and several public departments simultaneously. The connection between the “hang-on” private enterprises and the host agencies was rather loose so that a private firm could easily transfer from one host entity to another as it wished (Cao Zhenghan 2006, 98–107). The collusion between private businessmen and local officials not only contributed to the extraordinary prosperity of the local private sectors in the guerrilla counties. It also sent a strong signal to the higher levels that existing policies had encroached on the interests of the local cadre group

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and they could hardly count on co-operation from the local cadres. Moreover, it shed light on how local conditions, when combined with changing national politics, could affect the decision making of the dominant southbound faction at the higher levels. As has been pointed out, in a highly centralized system leading local officials, though differing in terms of their power status in the structure, not only followed directives from the provincial authority but also paid attention to the ongoing national political atmosphere and policy trends, from which they could make sense of Beijing’s policy priorities to determine their own optimal political decisions and policy choices. Thus it is possible that the policy preferences of some individual politicians in the dominant faction might have differed from their preferences when the central policy line was changing in favor of private-sector development in order to align with the new political opportunities. In other words, when there was a favorable turnaround in the national political tide, the guerrilla counties were likely to witness the southbound leaders changing from conservative leaders opposing capitalism into reformist leaders espousing private-sector development.39 In this regard, the political careers of Yuan Fanglie and Dong Chaocai in Wenzhou provide two concrete examples in which two high-ranking southbound politicians, who had been orthodox Communist cadres, changed their policy orientations to align with changing political and economic situations. As an alternate member of the party’s Central Committee and a standing member of the Zhejiang Provincial Party Committee, Yuan Fanglie was appointed party secretary of Wenzhou prefecture in August 1981. His primary mission, as assigned by the provincial authority, was to centralize power and to prepare to resolve the deep-rooted problems in Wenzhou.40 Given Yuan’s southbound background and his long work experience in the two non-guerrilla counties of Changshan and Quxian from 1949 until the Cultural Revolution, he was shocked, after arriving in Wenzhou city, to see the thriving private 39

40

In Chapter 3, we showed that under similar circumstances the southbound county leaders tended to act as reformists in support of the household responsibility experiment at the initial stage of agricultural collectivization in the late 1950s. Oral source, interview in Wenzhou, October 2007. Also see History and Learning Committee of the National People’s Political Consultative Conference et al. (2007, 11–13).

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economy, and he felt as if he was in enemy-occupied territory dominated by capitalism (Huang Xiaoyang 2007, 10). It is not surprising that the Eight Big Kings affair occurred in Wenzhou under Yuan Fanglie’s watch. In fact, when we interviewed a local official with close personal relations with Yuan Fanglie, the interviewee told us that had Yuan not co-operated, the Eight Big Kings affair would not have occurred.41 Yuan Fanglie soon realized that the situation in Wenzhou was far more complex than he had originally thought. Due to the Eight Big Kings affair, the private sector had been hard-hit, but the state sector had not yet been reinvigorated. Yuan Fanglie was reputedly struck by the dismal statistical figures, including the industrial output and fixed-asset investment figures revealed in Table 5.2, when he received the 1982 fiscal summary (Huang Xiaoyang 2007, 24–25). Moreover, Yuan Fanglie must have sensed the strong dissatisfaction among local cadres. Not only had Wenzhou’s local cadres stood up to the provincial investigation teams (and in fact challenged their authority) in the Eight Big Kings affair, but also, in the subsequent anti-economic-crime campaign, they once gain protected local interests. For example, even though the campaign targeted private enterprises using hired laborers, local officials tipped off the peasants that an investigation team was nearby so that when the team arrived, they saw no more than seven people working in a workshop.42 Yuan Fanglie understood the tricks played by local officials but he had no idea how to address them. In addition, many local officials and relatives of the Eight Big Kings wrote letters of appeal to higher-level authorities requesting rehabilitation. For example, one local grassroots cadre wrote hundreds of letters of appeal, amounting to 1.3 million words, to higher-level officials, calling attention to the unnecessary suffering of private entrepreneurs. In 1984, these letters finally attracted the attention of Hu Yaobang, who requested the Zhejiang authority to re-examine the case of the Eight Big Kings.43

41 42

43

Oral source, interview in Wenzhou, May 2009. Oral source, interview in Wenzhou, November 2008. Firms hiring more than eight workers before 1987 were referred to as private firms, whereas those hiring less than eight workers were referred to as individual firms. Oral source, interview in Wenzhou, November 2008.

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In addition to the disaffection and objections from below, political trends at the top further prompted Yuan Fanglie to reconsider how to govern Wenzhou. In September 1982, Yuan participated in the Twelfth Party Congress held in Beijing. In his opening address to the congress, Deng Xiaoping declared that the party’s principal task for the remainder of the decade was “to intensify socialist modernization . . . economic development is at the core of these tasks” (Deng 1993, 1–4). At this congress, Hu Yaobang was elected the general secretary of the party, marking the formation of a reform-oriented triumvirate leadership, i.e., the Deng [Xiaoping]–Hu [Yaobang]–Zhao [Ziyang] axis. To be fair, the conservative wing of the party was still strong and powerful, as many senior conservatives, such as Chen Yun and Li Xiannian, retained their seats on the Politburo Standing Committee. To placate the conservatives, in the comprehensive report that Hu Yaobang presented to the congress, Chen Yun’s idea that in the economic domain central planning should take precedence over market forces was adopted. However, the report also stated that in practice central planning should take a more flexible form. Those industries without strategic importance, such as handicrafts and services, local building, transport and commercial activities, and so forth, should fall under the jurisdiction of the local levels.44 All in all, the Twelfth Party Congress should be viewed as the outcome of a delicate political balance between the reformists and the conservatives, with a nuanced tilt toward the reformists. While the congress was still under way, Yuan Fanglie made a call from Beijing to his subordinates in Wenzhou, telling them that Wenzhou must make great strides in developing the economy. Apparently Yuan’s mindset had undergone a fundamental change. In December 1982, Yuan Fanglie invited many rural private entrepreneurs to a meeting to publicize their business successes. After receiving the invitations, however, many of the private entrepreneurs were afraid that this might be a government trap to arrest all of them in one fell swoop. After receiving the invitations, some entrepreneurs immediately fled to other places. Among those who showed up at the meeting, quite a few brought their quilts and toothbrushes, anticipating that they were 44

For a detailed account of the Twelfth Party Congress, see Dittmer (1995). For the political debates and conflicts before and after the Twelfth Party Congress between the two camps, see Yang (1996, 161–172).

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about to be imprisoned. To dispel their fears, Yuan Fanglie told the local governments that the entrepreneurs should receive assurances about their personal safety. Ultimately, a total of 1,200 private entrepreneurs attended the meeting, at which Yuan spoke highly of them, extolling their business achievements and encouraging them to expand their businesses.45 In spring 1983, Yuan Fanglie took another step to rehabilitate four of the imprisoned Eight Big Kings. In 1984, Hu Yaobang made a remark on the Eight Big Kings affair and sent a letter of instruction to Zhejiang. In the meantime, the central government enacted Document No. 1 and Document No. 4 in early 1984, in which local governments were urged to develop the economy. Motivated by the new situation, Yuan Fanglie made the decision in 1984 to rehabilitate all of the Eight Big Kings and to return their assets.46 Yuan Fanglie’s positive gesture toward the private entrepreneurs was not mere lip service. On many occasions when local innovations had crossed the line to break taboos, Yuan Fanglie intervened to create precedents for the future. Due to Yuan’s intervention and support, many local innovations were introduced and legitimized. In 1983, even though the interest rate remained under strict state regulation, Jinxiang Credit Co-operative (金乡信用社) of Cangnan county began to allow local financial intermediaries to provide private enterprises with loans with floating interest rates. Without question, this move encountered strong opposition from the People’s Bank of China, the highest administrative institution in charge of banking operations, but Yuan Fanglie supported it. This was the first time since 1949 that the state-stipulated interest rate was allowed to fluctuate within a certain range.47 In 1984, Yuan Fanglie also tacitly allowed private banking businesses (私人钱庄), which was a truly bold initiative given the political context. Another major breakthrough was the brainchild of 45

46

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History and Learning Committee of the National People’s Political Consultative Conference et al. (2007, 17–18). See also a news report on Yuan Fanglie entitled “An Interview with Yuan Fanglie,” June 5, 2008, at http://wznews.66wz.com/ system/2008/06/05/100560816.shtml, accessed June 22, 2018. History and Learning Committee of the National People’s Political Consultative Conference et al. (2007, 17–18). See also a news report on Yuan Fanglie entitled “An Interview with Yuan Fanglie,” June 5, 2008, at http://wznews.66wz.com/ system/2008/06/05/100560816.shtml, accessed June 22, 2018. In the 1985 Document No. 1, the central government allowed rural credit cooperatives to float the interest rate within a certain band.

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a local cadre named Chen Dingmo, who planned to accelerate urbanization by offering peasants an option to buy urban residence registrations in order to attract a huge amount of peasants’ savings to build a new township, Long Gang township in Cangnan county. Chen’s idea produced a significant outcome. When he began planning construction of the township at the beginning of 1984, he did not have any funds. By the end of 1984, however, he had deep pockets with a township fiscal revenue of 90 million yuan, via selling township residence registrations to the peasants (Huang Xiaoyang 2007, 40–69; Wu Fengxu and Chen Wenbao 2008, 56–59). As Yuan Fanglie’s successor, Dong Chaocai, who assumed office at the end of 1985, experienced a change in his policy position similar to that of his predecessor. Unlike Yuan, who had a southbound background, Dong was a Zhejiang native. But, like Yuan, Dong had spent most of his early career in the Quzhou region, which made him an orthodox Communist and even more hostile to capitalism than Yuan Fanglie had been when he was transferred to Wenzhou. In fact, this was precisely the reason why Dong Chaocai was sent to Wenzhou by the provincial authority to replace Yuan Fanglie. When Dong Chaocai was appointed party leader of Wenzhou, the directive from the provincial leadership stated that his top priority was to reassert the dominance of the state sector over the private sector.48 However, Dong Chaocai disappointed the provincial leadership. Shortly after arriving in Wenzhou, he took a several-month investigative tour of the basic situation of the local economy throughout the Wenzhou region. During the tour, he was deeply impressed by the vibrant private sector. Whether coincidental or not, Dong Chaocai adopted the same strategy as Yuan Fanglie by intervening in a juridical trial of an economic case to show his cards. In the particular case, two private investors had jointly established a partnership and “hung their business on” as a collective enterprise. But they were thereafter arrested because they had divided the after-tax profits between themselves, instead of leaving the profits at the disposal of the host collective unit. After examining the case, Dong Chaocai realized that what the two businessmen had done was common practice among firms “wearing red hats” and that the court’s verdict had nullified the implicit contract between the private investors and the host collective firm. Dong Chaocai believed that the 48

Oral source, interview in Wenzhou, August 2007.

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two private entrepreneurs were innocent and he urged the court to reverse its decision and release the two businessmen. Dong explicitly declared that from then on, the regulations on collective enterprises should be more flexible and take into consideration the actual operations of the “hang-on” enterprises, including the new partnership enterprises (Huang Xiaoyang 2007, 31–32). Thereafter, in an August 1986 report to the central government, the Wenzhou authority proposed granting all “hang-on” enterprises formal legal status (Cao Zhenghan 2006, 106–107). In 1987, the State Council approved twelve cities, including Wenzhou, to become pilot areas for the rural reforms (农村改革试验区). In October 1987, the Wenzhou authority made use of this opportunity to enact provisional regulations on the operations of “hang-on” enterprises, thus legalizing their business. Another bold, and probably more meaningful, measure by Dong Chaocai was to authorize shareholding co-operatives (股份合作企业), corporate entities in which an enterprise was owned by two or more private investors according to the shares they contributed to the capital of the enterprise. Compared with “hang-on” enterprises, shareholding co-operatives can better solve the problem of moral hazards, e.g., emphasizing output at the expense of product quality, and so forth, which was a common problem among “hang-on” enterprises because many of them were free-riding on the brand of a collective enterprise. In addition, shareholding co-operative practices allowed private investors to raise capital beyond the limits for household businesses. Given these exclusive advantages for shareholding co-operatives, beginning in the mid-1980s, when market competition escalated and private enterprises had to pay more attention to the marketing and reputations of their products, an increasing number of private enterprises began to take the form of shareholding co-operatives rather than hanging their enterprises on to collective enterprises.49 As of 1986, there was a total of 104,000 private enterprises taking this corporate form, claiming 22 percent of total industrial output in Wenzhou.50 With the rapid 49

50

It should be noted that some shareholding co-operatives emerged sporadically during the Cultural Revolution, as noted in Chapter 4. Some took the form of fake collectives, i.e., wearing red hats, whereas others were similar to the “hangon” enterprises of the early 1980s (Cao Zhenghan 2006, 107–116). Song Wenguang (1998, 68). By 1993, the number of shareholding co-operatives in Wenzhou reached 369,000, accounting for 56.9 percent of total industrial output.

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growth of shareholding co-operatives, the Wenzhou leadership under Dong Chaocai issued two official documents to classify them as cooperative enterprises,51 which were shortly thereafter acknowledged by the central government. It should be noted that after the 1989 Tiananmen crackdown, the Wenzhou authority withstood the political pressures and insisted on classifying the shareholding co-operatives as a form of collective enterprise, in order to minimize the political risks facing the private enterprises (Cao Zhenghan 2006, 113–114). In addition to granting quasi-legal economic activities legal status, Dong Chaocai also did not hesitate to support local entrepreneurship. For instance, he published an article in People’s Daily on November 23, 1986, to promote a venture by Ye Wengui, a private entrepreneur who, as early as 1985, was worth some 10 million yuan. In his article, entitled “Women xuyao geng duo de Ye Wengui” (We Need More People Like Ye Wengui, 我们需要更多的叶文贵), Dong Chaocai extolled Ye Wengui as a vanguard of the rural economic reforms and he called for changes in the formal institutional arrangements in order to adapt to the new circumstances since the reforms (History and Learning Committee of the National People’s Political Consultative Conference et al. 2007, 29–30). In addition, Dong Chaocai elevated Ye Wengui to the position of deputy head of Jinxiang district (金乡区), thereby creating the first case, since the elimination of capitalism in the mid-1950s, in which a private entrepreneur was appointed a government official. Furthermore, Dong Chaocai offered support to those private entrepreneurs who wanted to engage in finance. In 1986, a private entrepreneur named Yang Jiaxing planned to establish a private financial institution specializing in providing exclusive banking services for small and medium local enterprises. Together with several other private investors, they were able to raise sufficient capital to announce the opening of a private bank in October 1986. But the local regulatory agency, the Wenzhou Branch Office of the People’s Bank of China (WBOPBC), blocked the idea by declaring that under no circumstances was private banking permitted. Learning of this episode, Dong Chaocai asked the head of the WBOPBC to consider the possibility of giving 51

The two documents are “Provisional Regulations on Some Issues Related to the Rural Shareholding Co-operatives,” and “Some Issues on the Standardization of the Shareholding Co-operatives,” enacted in November 1987 and November 1989, respectively.

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a green light to Yang’s plan. When the head of the WBOPBC, who was also the secretary of the party group of the WBOPBC, hinted to Dong Chaocai that he was in charge of Wenzhou’s banking sector rather than Dong, Dong replied that as secretary of the party group of the WBOPBC, he should accept a decision made by the party leader of Wenzhou. Ultimately, the head of the WBOPBC had no choice but to yield. As a result, Yang Jiaxing opened the Wenzhou Lucheng City Credit Bank (温州鹿城城市信用社) on November 1, 1986, the first city credit co-operative in China. In addition to their personal temerity, two other factors were indispensable for both Yuan Fanglie and Dong Chaocai to be assertive reformists regardless of their southbound backgrounds. One was support and encouragement from the top reformist leaders in Beijing. For example, a major event in Wenzhou history occurred in 1987 when the State Council listed Wenzhou as one of the twelve experimental regions for the rural reforms. This idea came from Premier Zhao Ziyang, who had visited Wenzhou in 1985 and had informed Yuan Fanglie that Wenzhou could experiment with any measures that relied on spontaneous forces by the peasants rather than on resources distributed by the state to develop the economy.52 In 1986, Hu Yaobang also made it clear that Wenzhou could be a pilot experimental region to develop the individual and private economy. Among the central leaders, Wan Li was probably the most ardent advocate on behalf of Wenzhou. In fact, Dong Chaocai’s policy had firm support from Wan Li. Each time Dong Chaocai and other local officials were summoned to Beijing to brief the central leaders on local economic development, Wan Li would single out Dong Chaocai among the local officials to describe Wenzhou’s reform experience. Even Hu Qiaomu, a diehard conservative at that time, agreed that since the center had handpicked Wenzhou as a pilot region, then Wenzhou should try something new and unorthodox, as long as it could keep negative influences under control.53 Support from the top leaders alone was insufficient to convince Dong Chaocai and Yuan Fanglie to promote their reform agendas in Wenzhou. The deep-rooted grassroots entrepreneurial spirit and the co-operation of local cadres constituted another necessary condition 52 53

Oral source, interview in Wenzhou, August 2007. See also Zhu Kangdui (2008). Oral source, interview in Wenzhou, August 2007. See also Zhu Kangdui (2008) and Song Wenguang (1998, 8–10).

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for the leading Wenzhou officials to accept the reformist strategy, which they had earlier believed would be detrimental to their careers, because it signaled to policymakers what the local people really wanted and, more importantly, it rendered the leading policymakers the necessary human capital, ranging from local entrepreneurs to rank-and-file bureaucrats, to implement a policy blueprint in line with their interests. Without suitable local conditions, local leaders would have found it too risky and therefore they would have lacked any resolution to build up their political capital by pursuing market-oriented reforms that ran counter to the official ideology. The implications are straightforward. Given the same national political atmosphere, in the guerrilla regions with local conditions similar to those in Wenzhou, we are more likely to witness a political leadership that supported reform, whereas in the non-guerrilla regions without similar local conditions we would not expect to find a pro-reform leadership. In Wenling county, a typical guerrilla county in the Taizou region, shareholding co-operatives appeared in the early 1980s. In June 1982, the county Industrial and Commercial Bureau (县工商局) granted licenses to four shareholding co-operatives and registered them as “joint-household enterprises,” the first officially authorized jointhousehold enterprises in China since the 1950s. In 1984, the county’s Industrial and Commercial Bureau confirmed that the joint-household enterprises were of a collective co-operative nature. This was one year prior to Central Document No. 1, which did the same by acknowledging the legal status of the shareholding co-operatives. In Huangyan county, another guerrilla county in the same region, shareholding cooperatives had also experienced remarkable development before having a legal identity. But initially, the county’s Industrial and Commercial Bureau differed from its counterpart in Wenling county by denying the socialist nature of shareholding co-operatives and insisting on limiting their size. Wang Dehu, the county party secretary, overturned the decision by the county’s Industrial and Commercial Bureau. Under the watch of Wang Dehu, the county party committee enacted the document on “Some Opinions on Shareholding Cooperatives,” Document No. 69 of October 1986, officially granting legal status to local shareholding co-operatives. Among all local governments throughout China, Huangyan county was the first to establish an official policy specifically for local shareholding co-operatives (Party History Research Office under the Wenling City Party

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Committee 1997, 48, 67–68; Party History Research Office under the Taizhou City Party Committee 1997, 71). In Xiaoshan county, another guerrilla county, the county leadership introduced the slogan “getting rich is glorious” (致富光荣) in the late 1970s, relying on commune and brigade enterprises as the mainstay of the local economy. As noted, commune and brigade enterprises were officially classified as collectives. But in reality, many of them were created and managed by private investors, e.g., individual households, which divided their shares according to how much they contributed to the capital of the enterprise. Despite all the ambiguity in the ownership of commune and brigade enterprises, the Xiaoshan county authority allowed these local enterprises to operate by wearing red hats.54 During the economic crunch of 1984–1986, the central government’s policy position was to ensure supplies and inputs for the large SOEs at the cost of the non-SOEs. The center’s policy priorities were implemented to the letter in Yuhang county, a non-guerrilla county neighboring Xiaoshan, which sacrificed development of its non-SOE sector, including local TVEs, to give priority to local SOEs.55 In Xiaoshan, however, the county leadership emphasized considering specific local conditions, i.e., assuring the local people that no policy changes would threaten the status quo— that is, among other things, land supplies and banking credits for the local TVEs. Due to the support of the county authority, total industrial output of local TVEs in Xiaoshan in 1987 reached 3 billion yuan, more than thirty times that in 1978.56 In contrast to the above successful cases in the guerrilla counties, in the non-guerrilla counties the situation could be completely different, even if the two areas faced the same national political environment and 54

55

56

See “Having a Good Sense of the New Trends in Agriculture to Build a Prosperous New Countryside: Speech by Jin Minzhu on Getting Rich in the Xiaoshan Countryside” (认清农业发展的新趋势,建设繁荣复苏的新农村—金 鸣珠同志在全县促富会议上的讲话), in the Xiaoshan County Archive, December 27, 1979. All local commune and brigade enterprises in Xiaoshan county were transformed into TVEs in the 1980s. Oral source, interview in Xiaoshan county, July 2008. According to the interviewee, who was one of the county leaders who made the decision at the time, had the county authority followed the central policy directives during 1984–1986, Xiaoshan’s economic development would have been totally different to what it is today.

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similar endowment conditions, e.g., capable entrepreneurs, close business–government relations, and so forth. In these localities, local officials lacked the motivation to pursue market-oriented strategies, which first and foremost would benefit ordinary people but entailed political risks and thus would have little political value for local officials. Or they tended to implement reform strategies, if at all, in a topdown manner in which the dominant faction had no intention of ceding their control over the local economy, and their intervention, however economically inadvisable, rarely met with meaningful resistance from strong rival groups in the local society. In fact, the story of a legendary entrepreneur, Bu Xinsheng (步鑫生), in pioneering the SOE reforms in the early 1980s in Haiyan county, a non-guerrilla county sixty-nine miles from Shanghai, is illustrative of this point. In 1980, Bu Xinsheng took over the Haiyan Shirt Factory (HSF), a 300-employee SOE that was close to bankruptcy, and began to reform it in his own fashion. His reform measures were original and innovative at that time, including advertising its products on the market, introducing strict rules to discipline workers, composing company songs to inspire workers’ morale, rewarding and punishing employees according to their work performance, and so forth. Like his counterparts in Wenzhou, Xiaoshan, Jinhua, and elsewhere, Bu Xinsheng was a creative entrepreneur who knew how to run a business in a businesslike manner. Initially, Bu Xinsheng’s reform efforts were successful. As of 1983, he had transformed the firm into a flourishing business, with 630 employees and total assets worth US$817,000. Profits in 1983 alone exceeded US$242,000. Bu Xinsheng’s business achievements made him a household name, a star reformer and the focus of media attention. In March 1983, Xinhua News Agency, China’s national media, ran twenty-seven reports on Bu Xinsheng within one month, making him an unquestionable model from whom the entire country should learn. The HSF became an obligatory stop for government officials and journalists from all over the country. Bu Xinsheng was invited by government agencies, research institutes, and numerous enterprises to give lectures on how to manage enterprises. However rapid Bu Xinsheng’s success was, his Waterloo also came quickly. Witnessing Bu Xinsheng’s capacity to restore the weakened SOEs, the local government in Haiyan county urged him to move forward to expand the business, in the hope of building up a stunning SOE

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business model within the local jurisdiction and polishing the political achievements of local leaders. Under pressure from the local government, Bu Xinsheng was forced to increase investment by accepting cheap credit from banks to extend the production capacity of HSF. Within a short time, HSF’s liabilities were piling up at a staggering rate, burdening the firm with mounting interest on its debts and soon pushing it to the verge of insolvency. In January 1988, the provincial party committee dismissed Bu Xinsheng as director of HSF, charging him with incompetence. Tong Baogen, a Xinhua News Agency journalist who had written the first news article about Bu Xinsheng, concluded his series of reports with an article entitled “Tough and Domineering Bu Xinsheng Was Dismissed, the Indebted Haiyan Shirt Factory Is Hiring a New Director” (粗暴专横讳疾忌医步鑫生被免职,债台高筑的海盐衬衫总 厂正招聘经营者). In the article, Tong Baogen moralized, “Bu Xinsheng concealed himself from criticism. So far he still does not realize his mistakes. He let down both the party and the people” (步鑫生讳疾忌 医,至今仍不觉悟,辜负了党和人民的期望).57 Bu Xinsheng’s business failure was by no means fortuitous. It symbolized the fragile business environment in the non-guerrilla regions of Zhejiang due to heavy political interference that suffocated true entrepreneurship. In fact, from the very beginning Bu Xinsheng’s reform measures, as well as his initial business success, were not his personal cause; sooner or later, they would invite the involvement of political forces beyond his control. As recalled by Tong Baogen, Bu Xinsheng’s story came to the attention of Hu Yaobang, general secretary of the party Central Committee, who was looking for a model to be emulated by managers of the poorly run SOEs, and Hu believed that Bu Xinsheng was a perfect candidate. Hu Yaobang then instructed People’s Daily to publish Tong Baogen’s report on November 16, 1983, with the tendentious headline “A Creative Director: Bu Xinsheng” (一个具有独创精神的厂长—记步鑫生). Beginning in early 1984 a national campaign was launched to publicize Bu’s experiences, which not only placed Bu Xinsheng in the limelight but also turned his personal business into a political game that the central and local governments both hoped to use to implement their political agendas. 57

See “Bu Xinsheng: Fuchen zhong zouchu shenhua” (The Myth of the Rise and Fall of Bu Xinsheng, 歩鑫生:浮沉中走出神话), Hexun Net, at http://news .hexun.com/2008-07-23/107623406.html, accessed July 23, 2008.

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A landmark event occurred in 1984, when a senior county official in charge of local light industry instructed Bu to build a new suit production line with an annual production capacity of 60,000 suits, which was far greater than market demand at the time. Bu Xinsheng had earlier rejected similar requests from above on three occasions. This time he was not able to withstand the pressure and he had no choice but to accept the task, but he continued to insist that the production target should never be 60,000 suits. However, when the original proposal was submitted to the provincial government for approval, a provincial official who was responsible for light industry was dissatisfied with the plan and came up with an alternative and more ambitious proposal to expand production capacity fivefold to 300,000 suits. Accordingly, the budget rose from US$180,000 to US$800,000. The government promised Bu Xinsheng that bank loans with lower-than-market rates would be offered to cover the costs of the investment. Despite the official support, in 1984 Bu Xinsheng encountered a glut market and found that most of his products were not selling. What made things worse was that since 1984, the state had implemented contractionary policy measures, which considerably undermined banking credit capacity. As a result, HSF’s financial conditions deteriorated rapidly and by 1985 it could not maintain its daily operations. The national and local media were once again filled with news stories about Bu Xinsheng, but this time the tone was completely negative. As of 1988, Bu’s fate was sealed and he was dismissed from his position. Hence, in non-guerrilla counties without a rival local cadre group to provide a cushion against the leadership of the dominant faction, even gifted entrepreneurs such as Bu Xinsheng could not maintain their independence and autonomy from strong state intervention. For all the systematic differences between the local guerrilla counties and the non-guerrilla counties in terms of the attitudes of the local leadership toward the local private sector and entrepreneurs, central politics throughout the 1980s continued to put local leaders to a hard test regarding their policy choices. As a result, local leaders had to make trade-offs between taking care of local economic interests and courting the higher-ups at the cost of local demands. Unlike the grassroots-level cadres, the political fates of local leaders such as Yuan Fanglie and Dong Chaocai were basically conditional on the development of central politics and they had to understand the changing balance of power at the top to discern the direction of policy trends. If their policy choices

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were in line with the preferences of the dominant faction at the top, they would likely climb up the power hierarchy. But if they cast their lot with the wrong side, they would pay a high price for policy choices that were incompatible with the political momentum. In this regard, at a very early stage, even Yuan Fanglie realized the potential risks associated with his experiments with unorthodox policies in Wenzhou. As Yuan Fanglie recalled, he knew that the provincial authority was dissatisfied with his policy experiments in Wenzhou, and behind his back many provincial leaders even accused him of taking the capitalist road. As time passed, Yuan Fanglie lost his former optimism at the Twelfth Party Congress about economic reforms. Instead, he was conscious of the potential political trap into which he could fall and he worried about his political career. When Huang Huang, then provincial party secretary of Anhui province, visited Wenzhou in November 1985, Yuan Fanglie told his visitor that his undertakings in Wenzhou were causing him trouble (History and Learning Committee of the National People’s Political Consultative Conference et al. 2007, 25–26). Aware of his complicated situation, Yuan Fanglie had already decided to leave Wenzhou when Zhao Ziyang arrived on an inspection tour of Wenzhou in 1985.58 When Dong Chaocai left for Wenzhou to succeed Yuan Fanglie, a provincial-level leader told him that clearly the provincial party committee had differing opinions about Yuan Fanglie’s administration in Wenzhou.59 Unlike Yuan Fanglie, who prior to taking office in Wenzhou had a strong political background and maintained close relations with many senior southbound cadres, including the ex-provincial party secretary Jiang Hua and the incumbent provincial party secretary Wang Fang,60 Dong Chaocai had very weak connections to the provincial leadership and he had to rely on reformist leaders at the center, such as Wan Li, as noted above. But both Yuan Fanglie and Dong Chaocai, as well as other local reform-minded leaders, overestimated support from the center. In fact, even the reformist leaders in Beijing were at times under attack from conservatives on the ideological front. In early 1983, with backstage support from Chen Yun, some leading conservatives, including Hu 58 59 60

Oral source, interview in Wenzhou city, July 2007. Oral source, interview in Wenzhou city, July 2007. Oral source, interview in Wenzhou city, July 2007.

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Qiaomu, Yao Yilin, and Deng Liqun, plotted to criticize General Secretary Hu Yaobang and even to unseat him. Although their attempt failed due to intervention from Deng Xiaoping, this created a huge shock among the top elite (Yang Jisheng 2006, 264–266). Ultimately, the conservatives took advantage of the Anti-bourgeois Liberalization Movement in 1987 and they successfully persuaded Deng Xiaoping to dismiss Hu Yaobang, who was forced to step down from his position as general secretary in January 1987. The Anti-bourgeois Liberalization Movement began on the political and ideological front, but it soon expanded into the economic sphere. Even though Wenzhou had been designated a pilot region for rural economic reforms in 1984, the city was viewed as a typical embodiment of bourgeois liberalization. Many blamed Wenzhou for its rampant capitalism and economic crimes, and the erroneous direction of the policy experiments adopted by Wenzhou’s leaders. Some ranted and raved about Wenzhou’s reforms, suggesting that sooner or later it would slide into a Taiwan-style capitalism.61 Fortunately, fearing the campaign might halt the reforms, Deng Xiaoping and Zhao Ziyang, who had succeeded Hu Yaobang as general secretary, decisively put an end to the campaign. In Central Documents No. 4 and No. 5 issued in 1987, it was explicitly stated that the struggle against bourgeois liberalization should not turn into an across-the-board movement and that economic affairs, including rural policies, should not be implicated. There is no doubt the two central documents helped Wenzhou brave the storm (Wu Wei 2015). The toughest time came in the spring of 1989. The tragedy of the Tiananmen Square crackdown on June 4, 1989, brought deadly political and economic consequences. Shortly after the suppression of the student movement, the composition of the top leadership was reshuffled to purge Zhao Ziyang and his followers at the center. The reformists were kept at bay and the economic reforms were almost reversed. From the end of 1989 through to the end of 1991, the focus of the center was no longer economic development, as had been declared by Deng Xiaoping a decade earlier, but instead opposing peaceful evolution (反和平演变) from socialism to capitalism. Market-oriented policies became suspect 61

See History and Learning Committee of the National People’s Political Consultative Conference et al. (2007, 33–34). See also the record of the interview with Dong Chaocai, unpublished materials, April 2004.

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and the private sector was a primary target, as embodied in an article entitled as “Put Reform and Opening Up under the Guidance and Regulation of the Four Cardinal Principles” (用四项基本原则指导和 规范改革开放), published in the official media in January 1990. The article explicitly showered hostility on the private economy as it stated that “the private economy and the individual economy . . . if we let them continue without checks . . . will shake the socialist economy” (Ma Licheng and Ling Zhijun 2008, 119–121). The most alarming message was delivered by Jiang Zemin, the newly installed party general secretary who had replaced Zhao Ziyang. In a speech on the illicit behavior of some private entrepreneurs, Jiang Zemin proposed bankrupting private businesspeople (把他们搞得倾家荡产) (Yang Jisheng 2006, 466). At the height of this movement, some critiques from the conservative camp even implied that Deng Xiaoping should be held accountable for the spread of bourgeois liberalization (Ma Licheng and Ling Zhijun 2008, 119–121; Yang Jisheng 2006, 453–462). Against this national political backdrop, Wenzhou faced its greatest challenge since 1978.62 It was alleged that Li Zemin, provincial party secretary of Zhejiang, delivered a lecture at the Central Party School in 1991 to lash out at Wenzhou’s capitalism. Li Zemin claimed that Wenzhou’s capitalism was a typical example of peaceful evolution, a threat to China’s socialism, and that it should be eradicated once and for all.63 In fact, after the Tiananmen crackdown, Zhejiang’s provincial authority under Li Zemin on several occasions criticized Wenzhou in front of Dong Chaocai and implied that Wenzhou’s status as a pilot area for rural economic reforms would be revoked (History and Learning Committee of the National People’s Political Consultative Conference et al. 2007, 33–34). The entire leadership of Wenzhou, including Dong Chaocai, Zhang Youyu (deputy city party secretary), Liu Xirong (city head) and so forth, was blamed for indulging in capitalism.64 As a result, Dong Chaocai was forced to resign in early 1990. 62

63 64

The story of one of our interviewees illustrates Wenzhou’s precarious situation at that time. In 1989, a Wenzhou entrepreneur named Nan Shimu attended a national conference of model workers from across China. When the other delegates heard that Nan Shimu was from Wenzhou, the notorious lair of capitalism, they refused to sit with him. Oral source, interview in Yueqing city, May 2009. Oral source, interview in Wenzhou city, July 2007. Oral source, interview in Wenzhou city, July 2007.

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The most daunting blow came from the center. In August 1989, October 1989, and July 1991 the State Council sent three investigation teams to Wenzhou to collect materials with the aim of setting the tone for a debate about the nature of the experience of Wenzhou. During the first two investigations, the central teams concluded in favor of Wenzhou. In their summary reports to the center, it was stated explicitly that Wenzhou’s economy was still of a socialist nature. However, the third investigation team was much less friendly. After a ten-day tour of Wenzhou, the team concluded that the problems inherent in Wenzhou’s economy were serious, including illegal tax evasion, poor working conditions, encroachment by private enterprises on SOEs and collective enterprises, and so on. Obviously, this report worried the Zhejiang provincial authority, which in August 1991 called for a provincial party committee executive meeting, whose participants included the leaders of Wenzhou, to discuss how to respond to the report. At the meeting, many participants voiced different opinions about the report’s conclusion and suggested that the center should pay more attention to some of the positive aspects of Wenzhou’s private economy. After the meeting, Li Zemin sent summary notes to the center that were believed to alleviate the negative influence of the central report (History and Learning Committee of the National People’s Political Consultative Conference et al. 2007, 184–186). In hindsight, however terrifying the shocks were to the private sector in the aftermath of the Tiananmen crackdown, Wenzhou’s private entrepreneurs were actually more frightened than hurt. As far as we know, no one suffered the same misfortune as their predecessors in the Eight Big Kings affair, i.e., political persecution or confiscation of assets by the state. Once again, this was basically due to the resistance and lack of co-operation of local officials. One widely circulated story among Wenzhou officialdom is that Dong Chaocai contradicted Li Zemin at a meeting convened by the provincial committee. When Li Zemin said that there were serious problems in Wenzhou, Dong Chaocai instantly rebuked him by asking him to explicitly point out the problems so that Wenzhou could correct its faults, causing the provincial party secretary to choke on the spot.65 In October 1989, Li 65

Oral source, interview in Wenzhou city, July 2007. Dong Chaocai also mentioned this meeting but he provided few details. See History and Learning Committee of the National People’s Political Consultative Conference et al. (2007, 34).

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Zemin visited Wenzhou to personally chair a meeting, whose participants included all the senior cadres in the Wenzhou region. Without notifying Dong Chaocai in advance, Li abruptly proposed at the meeting to revoke Wenzhou’s honorific status as a pilot region for rural economic reforms. Li’s motion shocked Dong Chaocai, who without hesitation demonstrated his objection on the spot. Dong Chaocai told Li Zemin that Wenzhou’s status as a pilot region had been granted by the center and that Li had no right to strip Wenzhou of this status. Dong Chaocai also told Li Zemin that Wenzhou had not made any big mistakes, either political or economic, and that Wenzhou people would not accept Li Zemin’s charges.66 The confrontation between Li Zemin and Dong Chaocai was very similar to the quarrel between the provincial investigation team and the Yueqing county leaders in the Eight Big Kings affair. Moreover, to dispel worries among local officials, Dong Chaocai convened a Second Session of the Sixth Wenzhou Municipal Party Committee, during which he assured all the delegates that Wenzhou would stick to the course of reform.67 Even after Dong Chaocai resigned in early 1990, Liu Xirong, son of Liu Ying (see Chapter 2), who succeeded him as party secretary of Wenzhou, followed the basic line of his predecessors from Yuan Fanglie to Dong Chaocai. To be sure, Wenzhou’s reformists deserve credit for their determined stance in defending its privileged status. More importantly, its backing by the top central leaders was indispensable as it sent a clear message to local reform-minded leaders that they were not alone in carrying forward the economic reforms. Li Ruihuan, then a Standing Committee member of the Politburo, visited Wenzhou in May 1991 and encouraged the city to implement bold experiments regardless of the debate on “socialism or capitalism” (Wenzhou City Gazetteer 1998, 74). Li’s visit and speech reflected the change in the political climate. Although Deng Xiaoping had taken a hard-line approach toward the student movement in 1989, he had no intention of putting an end to the economic reforms that had become a symbol of his career. As the antipeaceful-evolution campaign in the 1989–1991 period was inevitably leveling a political assault on the reforms, Deng Xiaoping decided to turn the tide. In January 1991, Deng began to criticize the conservatives 66 67

Oral source, interview in Wenzhou city, July 2007. Oral source, interview in Wenzhou city, July 2007.

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for exaggerating the role of state planning in the economic sphere and for overlooking and underestimating the positive aspects of market forces. To force the newly installed top leaders to demonstrate their stance on the issue of reform, Deng embarked on his famous Southern Tour in January 1992, during which he warned that those who were not determined to carry out the reforms would be unseated. This also included the incumbent general secretary, Jiang Zemin. As Deng expected, his speech tilted the political balance in favor of the reformist camp. After receiving Deng’s warning, Jiang Zemin made a quick and decisive choice between the two camps. At the Fourteenth Party Congress held in October 1992, Jiang declared that the ultimate aim of the reforms was to build a socialist market economy with Chinese characteristics (有中国特色的社会主义市场经济), therefore putting a legal stamp on the private economy.68 In retrospect, 1992 was indeed a milestone year for Chinese capitalism. For those with political savvy, the political implications of Deng’s Southern Tour were straightforward. In fact, when Wenzhou people got wind of Deng’s Southern Tour and the content of his speech was disclosed, many people took to the streets, setting off firecrackers to celebrate this historic moment.69 They had good reason to be awash in joy, aware that from then on the political risks of private ownership were about to dissipate. Because they could openly pursue private businesses without fear of suppression, there was no longer any need to conceal the nature of their businesses, i.e., “wear red hats.” In fact, after 1992 China underwent a huge surge of growth in the private economy as well as a massive ownership transformation. Not only did those private enterprises that had previously worn red hats rush to take them off but also many genuine collective TVEs undertook an ownership transformation to become private enterprises. As expected, it was the guerrilla counties in Zhejiang that led the ownership transformation movement. As noted by many scholars (Huang 2008; Kellee Tsai 2007), many collective TVEs were actually shareholding co-operatives or even private firms disguised in a collective identity. The ownership transformation enabled these firms to formally become shareholding co-operatives run by capable entrepreneurs (who 68

69

For a detailed account of the evolution of the political situation between the Tiananmen Square crackdown in 1989 and Deng Xiaoping’s Southern Tour in 1992, see Yang Jisheng (2006, 452–479). Oral source, interview in Wenzhou city, August 2008.

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usually were the biggest shareholders). As time passed, these shareholding co-operatives turned into joint-stock ventures or purely privately owned limited-liability companies. Xiaoshan county, for example, began ownership transformation as early as 1992 with a slogan to establish a modern corporate system. As of 1996, 97.3 percent of collective TVEs in Xiaoshan had successfully completed ownership transformation to become private enterprises.70 In Ningbo region, ownership transformation began in 1992. Many red-hat enterprises, including today’s well-known apparel manufacturer Youngor (雅戈尔), registered as joint-stock limited-liability companies or private limited-liability companies. In Yinxian county, TVEs claimed more than half of total industrial output during the Cultural Revolution period (see Chapter 4). By the end of 1994, 95 percent of Yinxian’s TVEs had completed ownership transformation.71 The tide of ownership transformation swept across the entire province. In the late 1990s, even SOEs and collective enterprises in the non-guerrilla counties also implemented property rights reform to transform their ownership. In the Quzhou region, a bastion of SOEs in Zhejiang, ownership transformation officially began in 1998 to convert many SOEs and collective enterprises into private enterprises. The transformation was basically completed by 2002.72 Once again, ownership transformation even at local levels was not immune to the impact of central politics. Although after Deng’s Southern Tour there was no public opposition to the market-oriented reforms, hostility toward the private sector continued to exist. It was waiting for an opportune time to flex its muscles, which occurred when three ten-thousand-character memorials (万言书) circulated in Beijing political circles between 1994 and 1996. The memorials revived the socialism-or-capitalism issue, asserting that individual businessmen and private entrepreneurs had developed into a bourgeois class that 70

71

72

See “1996: Xiangzhen qiye lu quanguo zhixian, jiben wancheng zhuanzhi” (1996: Xiaoshan’s TVEs Basically Completed the Ownership Transformation, 1996 乡镇企业率全国之先 基本完成转制), Xiaoshan Daily, December 23, 2008. See “Xiangzhen qiye chanquan zhidu gaige de Ningbo jingyan” (Ningbo’s Experience in Reforming the Property Rights of TVEs, 乡镇企业产权制度改革 的宁波经验), Zhejiang Business Net (浙商网), at http://biz.zjol.com.cn/05biz/ system/2009/09/27/015866541.shtml, accessed September 27, 2008. This figure was provided by the head of the Bureau of Medium and Small Enterprises in Quzhou. Oral source, interview in Quzhou city, December 2008.

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inevitably would become the backbone of peaceful evolution toward capitalism and thereby threatened the regime. To turn things around, the memorials concluded that resolute and forceful measures had to be taken to put a premium on the development of the state sector and to place a cap on the further development of the private sector, and that the private economy was to be subject to the state sector (Ma Licheng and Ling Zhijun 2008, 242–251, 276–280, 312–316). Although, with the wisdom of hindsight, this conservative offensive did not bring any real political or policy changes, it still sent mixed signals to low-level governments and caused confusion and even temporary setbacks in local policy choices, including in ownership transformation in Zhejiang. In this regard, the Lantian Hotel event (蓝天宾馆事件) in Xiaoshan city is a prime example. At the end of 1993, all of Xiaoshan’s city and township senior cadres met at the Lantian Hotel to sum up the experience of local TVE ownership transformation. While one township cadre at the meeting was introducing how the township had turned collective TVEs into private enterprises, the city party secretary entered the conference room to interrupt the meeting. He had just returned from Hangzhou after attending a study group sponsored by the provincial party committee. Based on what he had learned from the study group, he declared that the transformation of the TVEs was not socialism. To show his resolve to attack the ownership transformation, he made an instant decision to dismiss the township cadre who was just introducing the local experience in his jurisdiction. As a result, the official ownership transformation in Xiaoshan was silenced and ownership transformation was not reactivated until its political correctness was no longer a problem.73 As far as we know, the Lantian Hotel incident was the most influential and probably the last political event related to the ownership debate in Zhejiang province after 1992. For all the repercussions it caused, its effects were local and transitory. In effect, the legality issue that had been harassing Zhejiang’s private entrepreneurs and their businesses since 1978 no longer existed. As witnessed by developments over the last three decades, once the greatest obstacle was finally removed, entrepreneurship immediately sprang up on an unprecedented scale, rendering Zhejiang the province with the most active private sector in 73

Oral source, interview in Xiaoshan district, August 2008.

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the country and a bastion of home-grown capitalism (Huang 2008, 262–265). In the meantime, entrepreneurs in Zhejiang, like their counterparts in other provinces throughout China, continue to face endless and challenging problems inherent in the political system, which have far-reaching implications for the Chinese political economy. We will explore this issue in the concluding chapter.

6

Beyond Zhejiang The Zhejiang Model versus Jiangsu Province

Political phenomena are the outcome of all kinds of political forces. A wise political leader should understand the dominant political forces in each era. 政治现象实为各种政治势力所造成. 故善为政者,应该洞明每一时代支配政治之主要社会势力. Zhou Gucheng 1982, Preface to Chinese Political History

Previous chapters have revealed how historical and political shocks impacted the development of the private economy in Zhejiang province. The pre-1949 revolutionary history led to the power structure formed in 1949, which in turn shaped the motivations of the local political elite either to nurture the private economy or to clamp down on it. In this analytical framework, whether or not local cadres remain close to the local people is determined by their political status in the power structure. When the historical shocks leave local officials in an embarrassingly marginalized position in the power structure, they are likely to seek political support from below, as a rational response to guarantee their political life by generating informal or growthenhancing institutions and delivering visible economic benefits to their constituents. In contrast, when local officials are deeply embedded in the political networks close to the core of power, they are more likely to court the affection and protection of powerful patrons by implementing the latter’s favored policies, regardless of the economic interests of local people. However, can this causal explanation go beyond Zhejiang province to explain the fate of the private sector elsewhere? Our answer is yes. In effect, a counterfactual inference from our analysis is that if local revolutionaries prior to 1949 had become a significant part of the provincial ruling group after 1949, we would expect that townshipand county-level cadres in this group would have relied on patron– 265

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client networks with their provincial patrons to guarantee their political careers. Thus these cadres, similar to the southbound cadres in Zhejiang, could be expected to be loyal executors of policies from above, even though doing so would harm local economic interests. In this regard, Jiangsu province provides a prime example for examining the external validity of the theory advanced in this book. Zhejiang and Jiangsu are neighboring coastal provinces adjacent to Shanghai. Both were taken over by the Communists in 1949 and had similar levels of non-state-sector activities immediately after 1949. Both provinces also had similar income levels and similar levels of private-sector economic activity in the early 1950s, thus making them comparable in terms of their initial economic conditions.1 Moreover, like Zhejiang province, the trajectory of the Communist revolution in Jiangsu province prior to 1949 also led to a power configuration whereby the local elite were divided into two main groups: one group with extensive ties to the power holders at the provincial and even the national level and one group that was marginalized and relegated to lower-level positions. Unlike Zhejiang, however, until the late 1980s, the highest echelons of the provincial authority in Jiangsu were primarily dominated by local revolutionaries who had insisted on military struggle against the Guomindang in the central Jiangsu area (Suzhong) prior to 1949, whereas the southbound cadres from Shandong province and other local (non-Suzhong) political elites played second fiddle in the provincial leadership. In other words, the marginalized group in one province (i.e., Zhejiang) happened to be the dominant group in the other province (i.e., Jiangsu), thus providing an ideal natural experiment to test our theory. In the ensuing strife between the two groups, the marginalized southbound cadres as well as the non-Suzhong local cadres in Jiangsu had greater incentives to take care of local economic interests in the areas under their influence, leading to de facto protection of capitalist economic activities and eventually creating the famous Su’nan model in today’s Su’nan area. In contrast, in areas controlled by the Suzhong cadres, local officials managed the economy in a manner that courted the higher-ups to signify the socialist nature of the local economy. Not 1

According to Huang (2008, 263), private firms in 1952 accounted for 57 percent of the sales value of the retail sector in Jiangsu and 60 percent in Zhejiang. Based on CEIC data, per capita GDP in Zhejiang and Jiangsu in 1952 were 131 yuan and 112 yuan respectively.

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surprisingly, the intraprovincial differences in local economic development between the two localities echo those in Zhejiang province, in a very opposite way.

6.1 Revolutionary History and the Power Structure in Jiangsu Like Zhejiang, Jiangsu was an active base province established by the nascent CCP to expand its influence as early as the 1920s, but it met a major setback in the violent purge launched by the ruling Guomindang in the spring of 1927 (see Chapter 2). With the escalation of suppression by the Guomindang, the CCP was forced to move its provisional party center from Shanghai to the Jiangxi Soviet Base Area in March 1931. In January 1935, the Jiangsu Provincial Party Committee was paralyzed and lost contact with the party center. This misfortune did not see a turnaround until 1938, when the CCP determined its strategy of “seize hold of Huabei [northern China], and explore Huazhong [central China]” and it thereby ordered the New Fourth Army (NFA) to march toward Huazhong, including Jiangsu. In 1938, some units of the NFA entered the Su’nan area (southern Jiangsu) to establish the Su’nan Anti-Japanese Base Area. In July 1940, Chen Yi and Su Yu led the NFA headquarters across the Yangtze river and marched into Suzhong to establish the Suzhong Anti-Japanese Base Area. From May to October 1940, Huang Kecheng led the second column of the Eighth Route Army, together with some units of the NFA, to move into Subei (northern Jiangsu) and established the Subei Anti-Japanese Base Area (Organization Department of the Jiangsu Provincial Party Committee 2001, 168, 202, 225). In the later period of the SinoJapanese War, the Su’nan Anti-Japanese Base Area and the Subei Anti-Japanese Base Area, along with some base areas in neighboring Anhui province, were merged into one bigger area, i.e., the Central China Revolutionary Base Area (CCRBA), with its constituent base areas connected with one another. In fact, the CCP made the CCRBA the most important base area in southern China. In those areas where the CCP had taken root, the party even set up anti-Japanese democratic governments to perform regular governance functions. After the Sino-Japanese War suddenly ended in 1945, the CCP moved swiftly to expand its sphere of influence in Jiangsu by establishing new base areas and Communist governments. The CCP and the Guomindang then began truce negotiations and finally reached a peace

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agreement in October 1945. According to the agreement, the NFA was to withdraw all of its forces in Su’nan to the north side of the Yangtze river. As a result, the Su’nan counties were reoccupied by Guomindang forces and the local Communists who had remained in Su’nan were successfully held at bay until 1949. In the meantime, the CCP refused to cede Subei and Suzhong to the Guomindang. Although during the Civil War (1946–1949) the Guomindang had temporarily occupied a large part of the two areas, CCP forces were not destroyed; rather, they continued fighting until they took control. In fact, beginning in 1947, the party launched an investigation campaign to distribute land to peasants in order to mobilize and recruit local people into the PLA. In March 1948, the Guomindang responded to the growing CCP military threat in Subei and Suzhong by orchestrating a “total war” aimed at eliminating the CCP in Subei. Ironically, the “total war” ended in failure and the CCP regained its dominance in Subei. In addition, according to the peace agreement, in 1945 the main force of the NFA was to move northward into Shandong province, where the Shandong Field Army (山东野战军) was reorganized, along with some units of the Eighth Route Army. Those who remained in central China, including Subei and Suzhong, were reorganized as the Central Field Army (华中野战军). The Shandong Field Army and the Central Field Army were combined to become the Eastern Field Army (华东野战军) in 1947, which was once again reorganized in 1949 as the Third Field Army (第三野战军). During the Civil War period, the Third Field Army, in co-operation with the Second and Fourth Field Armies, waged several campaigns in Jiangsu before finally taking over the entire province.2 As a result, in the post-1949 Communist regime, the Jiangsu Provincial Party Standing Committee (PPSC)—the top provincial power—was dominated by a native Jiangsu military elite who originally had served in the CCRBA. In contrast, those non-CCRBA cadres (or Shandong southbound cadres), who were mainly from the Shandong Base Area, constituted a minority in the PPSC throughout most of the Mao era. Figure 6.1 illustrates those with pre-1949 revolutionary experience in the composition of the PPSC from 1949 to 1989. As shown, from the very beginning, the PPSC was dominated by the military elite who had originally served in the CCRBA. 2

The Second Field Army and the Fourth Field Army were soon transferred to other provinces.

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1

.8 CCRBA

.6

.4

.2 Non−CCRBA 0 1950

1960

1970

1980

1990

Figure 6.1 Composition of Jiangsu’s Provincial Party Standing Committee (1949–1989) Sources: Organization Department of the Jiangsu Provincial Party Committee (2001) and various biographies of provincial leaders. The authors thank Dr. Zhang Dong for collecting and sorting the data.

In contrast, the non-CCRBA cadres constituted the minority on the PPSC throughout most of the Mao era (Organization Department of the Jiangsu Provincial Party Committee 2001). In fact, the proportion of CCRBA cadres on the Jiangsu PPSC remained steady at more than 70 percent during most of the years between 1950 and 1965, whereas the proportion of non-CCRBA cadres stood at only about 20 percent during this period. For example, Jiang Weiqing, an NFA cadre, served as party secretary of Jiangsu province from 1954 to 1967. In the meantime, another NFA cadre, Hui Yuyu, held the post of governor of Jiangsu province from 1955 to 1967. Similarly, Chen Pixian and Xiao Wangdong, two NFA cadres, held the positions of party secretary of the Southern Jiangsu District Committee and the Northern Jiangsu District Committee respectively in the early 1950s. The proportion of members from the CCRBA experienced an abrupt and large drop when the Cultural Revolution broke out, but they soon

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resumed their absolute majority on the PPSC,3 whereas the position of the non-CCRBA cadres continued to be weak, as their presence on the PPSC was kept at bay even after the Cultural Revolution had come to an end. Thus, unlike Zhejiang, in which local revolutionaries were marginalized in the power structure, the opposite was the case in Jiangsu, where the local revolutionaries (or the CCRBA cadres) dominated the power structure.4 At the local levels, CCRBA cadres and their loyalists dominated counties that had been heavily involved in the Communist revolution and whose military forces had belonged to the CCRBA during the SinoJapanese War. Non-CCRBA cadres, consisting of the Shandong southbound cadres and some local cadres without a Suzhong revolutionary background, tended to exert a large influence in those counties where the CCRBA cadres were not dominant, i.e., in the Su’nan area and Suzhou, Wuxi, and Changzhou, among others. As a result, at the grassroots, such as at the township and village levels, local cadres in Su’nan basically had been cultivated by the southbound cadres during the Land Reform period and they then became senior backbone officials in Su’nan during the Cultural Revolution and post-Cultural Revolution periods.

6.2 The Cultural Revolution in Jiangsu and Its Economic Consequences Although Jiangsu’s provincial leadership was deeply affected by the Cultural Revolution, in hindsight, as in Zhejiang, the weight of the dominant CCRBA faction on the provincial standing committee did not diminish substantially. From 1970 to 1976, the proportion of the CCRBA group on the PPSC remained at about 41 percent (Organization Department of the Jiangsu Provincial Party Committee 2001). Moreover, the fact that the dominant faction temporarily lost 3

4

After the Lin Biao incident in 1971, the CCRBA cadres with NFA backgrounds were rehabilitated and once gain played a dominant role on the PPSC. Among others, Peng Chong, Xu Jiatun, and Han Peixin served as successive party secretaries of Jiangsu province from 1974 to 1989. Until the early 1980s, the majority of members of the PPSC had pre-1949 revolutionary experience. Beginning in the mid-1980s, many members of the pre1949 generation retired. Despite this trend, the new generations who succeeded them were generally recruited from CCRBA localities or from the inner circle of the provincial party committee.

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did not necessarily accrue to the marginalized faction. The proportion of the non-CCRBA faction on the PPSC remained at about 30 percent from 1971 to 1976 (Organization Department of the Jiangsu Provincial Party Committee 2001).5 In addition, the seats of the dominant CCRBA faction on the PPSC remained stable or continued to increase shortly after Mao’s death in 1976. From 1976 to 1979, the proportion of CCRBA seats on the PPSC reached 62 percent (see Figure 6.1). In other words, the chaos of the Cultural Revolution did not lead to a fundamental change in the provincial power structure. Nonetheless, the CCRBA faction had been preoccupied with attacks from the radicals in Beijing and in provincial capitals that had heeded Mao’s call to overthrow the provincial power structure. Many provincial-level CCRBA leaders, including Jiang Weiqing, Chen Guang, Xu Jiatun, and others, lost power shortly after the Cultural Revolution began in 1966, whereas some veterans without CCRBA backgrounds, such as Xu Shiyou, Du Ping, and Yang Guangli, were appointed to key provincial positions.6 As a result, the proportion of CCRBA members on the PPSC dropped from 64 percent in 1966 to 38 percent in 1974. It was only toward the end of the Mao era that CCRBA veterans regained their majority status on the PPSC.7 For local cadres of different camps, the impact of the Cultural Revolution could vary substantially. The political fortunes of those belonging to the CCRBA faction ebbed and flowed primarily with the evolution of the provincial power struggle and through bargaining with the party center. As a result, they did not need to pursue grassroots support as a political survival strategy. Even amidst the fierce factional infighting at the provincial level, provincial leaders still had to resolutely implement the radical economic policies emanating from Beijing. Their local followers, be they incumbent officials or challengers, had to follow the radical line set forth by the provincial authorities to court their provincial patrons. 5

6

7

During this period, most of the remaining seats were allocated to the military or to civilian elites transferred from other provinces. A few seats were left for native rebel representatives who did not have solid local political connections but had the support of Beijing. For an introduction to the Cultural Revolution in Jiangsu province, especially how central politics and interventions from the center affected the direction of the Cultural Revolution in the province, see Dong and Walder (2010). The proportion of CCRBA members on the PPSC was 38 percent in 1973, rising to 50 percent in 1975 and 60 percent in 1976.

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The Cultural Revolution did not allow non-CCRBA cadres any relief; instead, it intensified their survival crisis because they then had to face challengers from all corners who aimed to oust them. Given their marginalized status in the provincial power structure, the nonCCRBA cadres, similar to the guerrilla cadres in Zhejiang, had no incentive to carry out the radical Maoist policies in order to play up to their provincial supervisors. Instead, they showed no hesitation in building up their own grassroots political networks. The concrete strategy that the non-CCRBA cadres adopted was to take care of the economic interests of their supporters by developing collective commune and brigade enterprises (CBEs). First, the nonCCRBA cadres had an ideological justification for developing CBEs because they were endorsed by both the central government and the provincial government. In the early 1970s, the central government convened the Conference on Agriculture in Northern China (北方地 区农业会议), which called for across-the-board promotion of rural development. After the conference, the collective CBEs, which had lost their momentum due to the failure of the Great Leap Forward, began to flourish again. In October 1975, Red Flag, the mouthpiece journal of the party, published an article entitled “A Promising New Thing: An Investigation Report on How Wuxi County in Jiangsu Province Developed its CBEs” (大有希望的新生事物:江苏无锡县发 展社队工业的调查报告), which spoke highly of the county’s experience in developing local CBEs. Receiving this message, the provincial authority quickly followed suit to indicate its official support for the CBEs (Jiangsu Provincial Gazette: Township and Village Industrial Gazette 2000, 541). During the period from 1968 to 1976, the annualized growth rate of CBEs in Jiangsu province reached 35.62 percent, far exceeding the growth of other economic sectors (Jiangsu Provincial Gazette: Township and Village Industrial Gazette 2000, 6). Second, and more importantly, by developing a non-state collective economy, the non-CCRBA cadres were able to keep economic resources in their own hands, rather than submitting them to the higher-ups, and then to distribute the resources in a paternalistic manner to establish local patron–client networks to consolidate their political power in local society. This is because, unlike the SOEs, the collective ownership of CBEs gave the local cadres who were in charge of the enterprises full discretionary power over the enterprises, including the power to distribute the revenues and profits. In addition, the

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CBEs sponsored by the non-CCRBA cadres could not rely on receiving financial support, such as subsidies, from the higher-ups; therefore, they were basically labor-intensive rather than capital-intensive, in line with their local factor endowments and with local demand, thus providing considerable non-agricultural job opportunities to local people. In other words, the CBEs were an ideal economic tool for the nonCCRBA cadres to woo local grassroots cadres and the masses. It is worth noting that, despite the official positive attitude toward CBEs, in reality the provincial authority in Jiangsu did not place a high priority on the development of CBEs, and in fact it was especially passive about the development of CBEs in the Su’nan region where the non-CCRBA cadres were concentrated. Our field interviews in Su’nan, including in Suzhou city and Wuxi city, reveal that until the end of the 1970s, both the provincial authority and the regional leadership were alert to any development strategy that diverged from the provincial strategy. For example, with instructions from the provincial authority, the leaders who transferred from the Suzhong region (the CCRBA base) to Su’nan insisted that grain production should be the basic priority in the local development strategy in lieu of the industrial development embodied by the CBEs. To implement this policy, these leaders, backed by the provincial authority, put up big-character posters in the compound of the county party committees to convene mass meetings in the counties and townships to criticize and struggle county cadres who supported the development of CBEs. As expected, these attempts ended in failure because, as our interviewees told us, very few people attended the struggle meetings or paid attention to the dictates of these politicians.8 The alliance-building strategy of the non-CCRBA cadres was both successful and fruitful. Ultimately, compared with Subei and Suzhong, where CCRBA cadres dominated, it was the Su’nan region, which was under the influence of non-CCRBA cadres, that enjoyed the rapid development of CBEs throughout the Cultural Revolution period. Table 6.1 shows the contrast in development between the two regions. In the Subei area, the local economy was dominated by SOEs. In fact, until the mid-1960s, growth in the Subei area was faster than that in the Su’nan area due to Subei’s privileged status in courting investment 8

Oral sources, interviews in Suzhou and Wuxi, September–October 2008 and May 2010.

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Table 6.1 Share of total industrial output of different ownership types (%)

Region

County

By SOEs in 1966

By SOEs in 1978

By CBEs in 1978

Xuzhou

Pixian Suining Fengxian Da’eng Sheyang Binhai Sihong Siyang Tai’ang Zhangjiagang Wuxian Wuxi Jiangyin Yixing

84.68 83.40 NA 87.80 93.52 74.93 NA 90.99 81.97 82.72 83.87 66.80 52.24 68.23

63.03 67.00 >50 60.50 62.41 50.49 78.31 66.60 46.37 24.18 32.25 20.94 30.57 37.87

20.44 25.66 16.99 29.00 27.95 28.23 21.49 16.91 40.39 63.29 50.85 64.85 55.34 44.80

Yancheng

Suqian Suzhou

Wuxi

Sources: county gazetteers from counties cited in this table

distributed by the provincial authority.9 When the collective sector began to take off in the Su’nan area during the Cultural Revolution, the Subei counties lagged behind. In the Xuzhou region, for example, as of 1978, the state sector contributed 63 percent of industrial output in Pixian county and 67 percent in Juning county, whereas CBEs produced only 20 percent of industrial output in Pixian county and 25.6 percent in Juning county. In Siyang county of the Suqian region, as of 1978, 66.6 percent of industrial output was produced by SOEs and only 16 percent by CBEs. In contrast, in the Su’nan area, the local economy took a different path in favor of the development of CBEs. The state sector in Su’nan had been contracting since the late 1960s due to the expansion of the collective sector. Among others, the Suzhou and Wuxi regions stood out for the outperformance of CBEs over SOEs during the Cultural Revolution. In Wuxi county, SOEs claimed 67 percent of total 9

The industrial output of Subei grew at an annual rate of 12 percent between 1952 and 1965, whereas the industrial output of Su’nan during the same period increased at an annual rate of 7.5 percent (50 Years of Jiangsu Statistics 1999).

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275

industrial output in 1965. By 1978, the figure had dropped to 21 percent. In contrast, by the end of 1978 the industrial output of CBEs was 65 percent. Similarly, in Zhangjiagang city of the Suzhou region, in 1978 CBEs accounted for 63 percent of total industrial output, whereas in 1976 the share of industrial output of SOEs had decreased to 26 percent. In short, the Su’nan region began to experience an ownership transformation prior to the economic reforms in the late 1970s. These CBEs later became the TVEs in the 1980s that would lead the takeoff of the local economy after the Cultural Revolution.

6.3 Historical Legacy, Power Structure, and Economic Development: Hypothesis, Variables, and Estimation Specifications The experiences of Zhejiang and Jiangsu offer two insights into the motivations of the political elite that were the basis for their policy choices. First, even in an institutionalized single-party regime like China, the heterogeneity of power status among the ruling elite can drive the marginalized elite to seek lower-level political support as a survival strategy, which endogenizes the economic policy packages offered to their constituents in exchange for their constituents’ loyalty and support. In Jiangsu, the CCRBA cadres and their loyalists dominated those counties that had been heavily involved in the Communist revolution and whose military forces had belonged to the CCRBA during the Sino-Japanese War. In contrast, the marginalized nonCCRBA cadres tended to exert a large influence in counties where the CCRBA faction was not dominant. In Zhejiang, the dominant southbound cadres were able to exert firm control over counties that had been less penetrated by local guerrillas before 1949, whereas the marginalized guerrilla cadres maintained their influence over those counties where they had engaged in guerrilla warfare as early as during the SinoJapanese War. In any case, the counties in both provinces can be classified as dominant-faction counties (DFCs) and marginal-faction counties (MFCs). It is clear that in Jiangsu the DFCs were governed by CCRBA cadres and in Zhejiang they were dominated by southbound cadres. Conversely, the MFCs were governed by non-CCRBA cadres in Jiangsu and by guerrilla cadres in Zhejiang. From the above discussion, we believe that local officials in the MFCs had greater incentives than their counterparts in the DFCs to protect the economic interests of

276

Beyond Zhejiang

grassroots elites and to shield business activities from the predatory policies mandated by higher-level authorities. Second, the Cultural Revolution gave the marginalized elite an unprecedented opportunity to build up a symbiotic relationship with their grassroots constituents and motivated them to protect the economic interests of their grassroots constituents, thus becoming the “helping hands” of the local nonstate economy. Figure 6.2 illustrates the causal link between the historical legacy, the power structure, and the resultant political and economic outcomes. We thus have the following testable hypothesis: Hypothesis: In both provinces, during the Cultural Revolution the development of the non-state-sector—the hallmark of capitalism— took off and flourished in the MFCs but was highly restricted in the DFCs. To test the hypothesis, we first present evidence suggesting that the ownership composition of industrial firms in the MFCs experienced a fundamental transformation during the Cultural Revolution, whereas firms in the DFCs did not. We construct a novel data set consisting of the share of non-state industry in 1965, 1978, and 1998 from the available county gazetteers for Zhejiang and Jiangsu provinces. We use the non-state share of total industrial output and the level of nonstate industrial output per capita (logged) as dependent variables to proxy for non-socialist capitalist economic activities. Non-state firms include both TVEs and private enterprises. As Huang (2008) convincingly argues, although conventional wisdom treats TVEs as collectively owned firms, from the very beginning the vast majority of TVEs were in fact private rather than public. In the absence of a legal framework to register private businesses, most private entrepreneurs registered their businesses as collective TVEs. We then show that the different power structures shaped jointly by revolutionary history and by the Cultural Revolution persisted and had a long-lasting impact on intraprovincial economic variations in the post-Cultural Revolution period, which is measured by the growth rate in average annual GDP per capita from 1978 to 1998. Our analysis also includes a set of economic control variables, such as total industrial output, per capita GDP, total population, and so forth. The county-level data for Zhejiang and Jiangsu are derived from the Comprehensive Statistical Data and Materials on Fifty Years of

Zhejiang Province Counties with strong local guerrilla forces

SinoJapanese War

Controlled by local guerrilla cadres

Southbound cadres dominated provincial leadership

Chinese Civil War

Counties with weak local guerrilla forces

Marginalized factions

Less predatory & more capitalist activities

Cultural Revolution

Controlled by southbound guerrilla cadres

Dominant factions

More predatory & less capitalist activities

Controlled by CCRBA cadres

Dominant factions

More predatory & less capitalist activities

Jiangsu Province Counties with CCP-led government

SinoJapanese War

Counties without CCP-Ied government

Chinese Civil War

CCRBA cadres dominated provincial leadership Controlled by non-CCRBA cadres

Figure 6.2 Power configuration in Zhejiang and Jiangsu provinces

Marginalized factions

Cultural Revolution

Less predatory & more capitalist activities

278

Beyond Zhejiang

New Zhejiang: 1949–1999 (2000) and Fifty Years of Jiangsu Statistics: 1949–1999 (1999) respectively. All variables are deflated to constant 1998 prices. We also control for a number of geographical variables, including the length of the coastline along a county’s border, altitude, and the proportion of flat ground in the total county area. Summary statistics of the key variables are reported in Table 6.2. The strength of the revolutionary forces prior to 1949 is the key to identifying the political status—the distinction between the MFCs and the DFCs—of a county, which constitutes a key explanatory variable. Based on a historical analysis of Zhejiang and Jiangsu, we show that in Zhejiang province, counties with strong guerrilla forces prior to 1949 were influenced by marginalized elites during the post-1949 era, whereas in Jiangsu province, counties with strong military forces under the CCRBA prior to 1949 were governed by powerful dominant elites after 1949. This difference was due to the fact that cadres with southbound backgrounds in Zhejiang and cadres with CCRBA backgrounds in Jiangsu were dominant at the provincial level, while their counterparts with guerrilla backgrounds in Zhejiang and with nonCCRBA backgrounds in Jiangsu were marginalized by the provinciallevel authority. Thus counties with stronger guerrilla forces prior to 1949 in Zhejiang and counties with non-CCRBA experiences in Jiangsu can be identified as MFCs. Given this definition, we expect that in both provinces, after the shock of the Cultural Revolution, the MFCs would have higher levels of non-state industrial development and more rapid economic growth than the DFCs. For Zhejiang province, we use a dummy variable to code the MFCs. As discussed in previous chapters, we coded a dummy variable that takes the value of 1 if a county maintained its own independent guerrilla forces from 1945 to 1948, and 0 otherwise (see Appendix 1). In Jiangsu, counties with a CCP-led government were more likely to have a strong military force belonging to the CCRBA prior to 1949. Therefore, if a county established a CCP-led government in a CCRBA area between 1945 and 1947, we consider this county to be a DFC, in the sense that local cadres in such a county had close connections with the provincial power holders after 1949, which is coded as 0. Meanwhile, counties without a CCP-led government in a nonCCRBA area from 1945 to 1947 are considered to be MFCs, which are coded as 1. The relevant information can be found in Organization Department of the Jiangsu Provincial Party Committee (2001).

Table 6.2 Descriptive statistics Variables

OBS

Mean

Std dev.

MFCs

DFCs

Zhejiang province Share of non-state industrial output, 1965 Share of non-state industrial output, 1978 Share of non-state industrial output, 1998 Non-state industrial output per capita, 1965 Non-state industrial output per capita, 1978 Non-state industrial output per capita, 1998 Annual GDP per capita growth rate, 1978–1998 (%) GDP per capita, 1978 Population size, 1965 Length of coastline Altitude

52 53 61 51 52 58 58 58 60 61 61

0.319 0.495 0.946 58.383 299.382 19668.340 12.130 281.138 38.296 41.643 280.328

0.173 0.173 0.054 44.746 208.081 13926.640 2.285 84.592 21.610 88.453 206.949

0.341 0.549 0.950 58.842 312.280 21465.990 12.685 263.053 41.782 42.328 294.146

0.280 0.390 0.936 57.610 275.020 16252.800 11.076 315.500 31.323 40.239 252.000

Proportion of flat ground in total county area (%)

61

21.738

18.759

17.221

30.998

0.238 0.507 0.913

0.130 0.183 0.064

0.240 0.592 0.942

0.237 0.467 0.898

Jiangsu province Share of non-state industrial output, 1965 Share of non-state industrial output, 1978 Share of non-state industrial output, 1998

48 50 58

Table 6.2 (cont.) Variables

OBS

Mean

Std dev.

MFCs

DFCs

Jiangsu province Non-state industrial output per capita, 1965 Non-state industrial output per capita, 1978 Non-state industrial output per capita, 1998 Annual GDP per capita growth rate, 1978–1998 (%) GDP per capita, 1978 Population size, 1965 Length of coastline Altitude Proportion of flat ground in total county area (%)

47 50 58 58 58 57 58 58 58

27.802 295.578 22804.810 11.574 314.810 61.965 14.839 14.224 79.434

25.660 47.294 238.380 505.139 21941.030 46543.020 2.623314 14.391 91.903 379.421 23.251 56.518 35.066 2.526 13.310 18.105 16.134 69.855

18.665 196.961 11240.050 10.201 283.333 64.689 20.837 12.333 84.101

Sources: Comprehensive Statistical Data and Materials on 50 Years of New Zhejiang (2000), Comprehensive Statistical Data and Materials on Fifty Years of New Zhejiang: 1949–1999, Fifty Years of Jiangsu Statistics: 1949–1999 (1999). We thank Dr. Dong Zhang (Lingnan University) for his research assistance in data collection and analyses for this chapter.

Historical Legacy, Power Structure, and Development

281

It is worth noting that counties were unlikely to self-select into the treatment status—the MFCs in our study. The formation of MFCs/ DFCs in both provinces and the provincial power configurations were outcomes shaped by the Sino-Japanese War and the Chinese Civil War, which involved strategic interactions between the Guomindang (then the ruling party), the CCP, and Japan during different periods. For instance, the decision by the party center to send troops to certain regions was primarily based on military and strategic needs that had little to do with the local economy. Similarly, the Cultural Revolution was an exogenous political shock that was related to Mao’s distrust of his anointed successor, Liu Shaoqi. Therefore, historical shocks and contingencies alleviate concerns of selection bias in our research design. Finally, we employ a generalized difference-in-difference (DID) approach to compare the effects of the Cultural Revolution on nonstate economic development between the MFCs and the non-MFCs. The model specification is as follows: X yit ¼ α þ βt  MFCi  It t¼1978;1998

þ

X

λt  controli  It þ ηi þ θt þ εit

t¼1978;1998

where i indexes county and t indexes year, ηi is the county fixed effect, θt is the year fixed-effect parameter, and εit is the error term. By controlling the county fixed effects, we can eliminate the effects of time-invariant or slow-changing factors on the outcome variable. Given the plausibility of a geographical thesis and a cultural thesis in understanding economic development (Diamond 1997; Gallup, Sachs, and Mellinger 1999; Landes 1998; Weber 1992), the fixed-effects model allows us to take into account these alternative hypotheses. Our dependent variable is yit, i.e., the non-state share of total industrial output and the level of non-state industrial output per capita (logged); MFCit denotes a dummy for an MFC county, which is defined by its revolutionary experience prior to 1949; It is an indicator variable that is equal to 1 in the years 1978 or 1998, leaving the year 1965 (one year before the start of the Cultural Revolution) as the omitted category. The coefficient βt of the interaction term between MFCit and It is our primary concern, which captures the effect of a revolutionary legacy on the outcome variables in the year t (1978 and 1998), relative to the year 1965.

282

Beyond Zhejiang

Additionally, Controli includes a set of time-invariant control variables, such as the length of the coastline, altitude, and the proportion of flat ground in the total county area. Whereas the fixed effects capture the constant effects of the time-invariant characteristics, the interaction terms between the time-invariant variables Control and year dummies It in the model take into account the time-variant effects that these variables may exert on the outcome variables. The coefficient λt captures the effect of a set of time-invariant features on the outcome variables in the year t (1978), relative to the year 1965.

6.4 Estimation Results 6.4.1 The Rise of Non-state Industry during the Cultural Revolution Table 6.3 reports the effect of MFC status on the non-state share of total industrial output after the Cultural Revolution. Columns 1–2 present the regression results for Zhejiang province. In column 1, we see that the estimated coefficient of the interaction term between MFCs and the year 1978 dummy is 0.11 and it is significant at the 10% level (p-value = 0.077). The results suggest that the difference in the share of non-state industrial output between MFCs and non-MFCs is 11 percent in 1978, relative to the difference in the year 1965. Put differently, counties governed by political elites from the marginalized faction in Zhejiang province developed a more vibrant non-state industry than non-MFCs governed by political elites from the dominant faction during the Cultural Revolution. In addition, the estimated coefficient of the interaction term between MFCs and the year 1998 dummy is –0.038 and insignificant, indicating that the share of non-state industry in the MFCs and the DFCs converged to a similar level during the post-1978 era, relative to their difference in the year 1965. In column 2, we control for the length of the coastline (logged), altitude (logged), and the proportion of flat ground in the total county area interacted with the year dummies to account for the effect of these three geographical factors on the share of non-state industrial output over time. The estimated results in column 2 remain fairly robust. Notably, the magnitude of the treatment effect becomes larger. Turning to the results for Jiangsu province, column 3 suggests that the non-state share of industrial output in the MFCs is 13.4 percent

Estimation Results

283

Table 6.3 Effects on the non-state share of industrial output Dependent variable: share of non-state industrial output

MFC × 1978 MFC × 1998

Zhejiang province

Jiangsu province

1

2

3

4

0.110* (0.061) −0.038 (0.049)

0.171** (0.075) −0.000 (0.062) 0.003 (0.018) −0.010 (0.016) 0.028 (0.038) 0.007 (0.051) 0.006** (0.002) 0.003 (0.003)

0.134*** (0.040) 0.049 (0.040)

0.144*** (0.045) 0.084* (0.046) −0.017* (0.010) 0.018 (0.012) −0.081** (0.038) 0.042 (0.040) −0.000 (0.003) 0.004 (0.002)

166 0.887 YES YES

166 0.896 YES YES

156 0.908 YES YES

156 0.921 YES YES

Coastline × 1978 Coastline × 1998 Altitude × 1978 Altitude × 1998 Flat ground × 1978 Flat ground × 1998

Observations Adjusted R-squared County FE Year FE

Note. Robust standard errors clustered at the county level shown in parentheses. *** significance at 1%, ** significance at 5%, * significance at 10%.

higher than that in the DFCs in 1978, taking into account their difference in the year 1965. This result is again consistent with our theoretical prediction: counties governed by marginalized elites in Jiangsu were more likely to develop a vibrant non-state industrial sector during the Cultural Revolution. Similar to the case in Zhejiang, the difference in the share of non-state industry between MFCs and non-MFCs became minuscule and insignificant by 1998. In column 4, we control for a set of geographical factors and find the results to be quantitatively similar and to remain robust. One key assumption of a DID framework

284

Beyond Zhejiang

is “parallel change,” which implies that in the absence of a shock, the outcome in the treatment group moves in tandem with the outcome in the control group. We cannot conduct additional tests to directly verify this assumption largely because non-state-industry data at the county level are not available. However, it is worth noting that the difference between MFCs and DFCs in our key dependent variable—i.e., the nonstate share of total industrial output—is small and insignificant in 1965, as illustrated in Table 6.3. Thus we have more confidence in the validity of the parallel-change assumption. One concern about the above analysis is that the increase in the share of non-state industry during the Cultural Revolution may simply be driven by the decline of state industry, as opposed to the development of non-state industry. To address this concern, we use the level of nonstate industrial output per capita (logged) as the dependent variable and similar DID model specifications to estimate the effect of the Cultural Revolution on non-state economic activities. The results are reported in Table 6.4. In column 1, the estimated coefficient of the interaction term between the MFC dummy and the year 1978 dummy is approximately 0.33, suggesting that the level of non-state industrial output per capita of the MFCs is 33 percent higher than that of the DFCs in 1978, relative to the difference in non-state industrial output per capita (logged) in the year 1965. Moreover, the estimated coefficient of the interaction term between the MFCs dummy and the year 1998 dummy is approximately 0.45. This result indicates that the level of non-state industrial output per capita of MFCs is 45 percent higher than that of non-MFCs in 1998, relative to the difference in non-state industrial output per capita (logged) in the year 1965. Taken together, the results show that the level of non-state industrial output per capita between MFCs and DFCs in Zhejiang diverged during the Cultural Revolution and continued to widen during the post-1978 era, although the share of non-state industry tended to converge at a high steady state in 1998 (over 90 percent in this case; see Table 6.1) as privatization swept through Zhejiang province in the 1990s. In column 2, we control for a set of geographical variables interacted with year dummies, as we used in the previous analysis. Furthermore, we also control for the level of non-state industrial output per capita in 1965 interacted with the year dummies to account for the changing effects of the initial non-state industrial output. Arguably, this strategy can mitigate concerns of a “parallel-trend” assumption in

Table 6.4 Effects on non-state industrial output Dependent variable: Ln (non-state industrial output per capita) Zhejiang province

Jiangsu province

1

2

3

4

5

6

MFC × 1978

0.327* (0.183)

0.528** (0.198)

0.489** (0.186)

0.285* (0.163)

0.636*** (0.216)

0.639*** (0.177)

MFC × 1998

0.450** (0.219)

0.733*** (0.196)

0.821*** (0.194)

0.691*** (0.177)

1.036*** (0.208)

1.063*** (0.194)

YES YES YES YES

YES YES YES YES YES

YES YES YES YES

YES YES YES YES YES

161 0.98 YES YES

161 0.98 YES YES

154 0.98 YES YES

152 0.99 YES YES

Controls coastline Controls altitude Controls flat ground Controls output 1965 Weighted by pop. 1965 Observations Adjusted R-squared County FE Year FE

161 0.97 YES YES

154 0.98 YES YES

Note. Robust standard errors clustered at the county level shown in parentheses. The regressions in columns 3 and 6 are weighted by the counties’ total population in 1965 *** significance at 1%, ** significance at 5%, * significance at 10%.

286

Beyond Zhejiang

the DID model. In column 3, we use weighted regressions to give greater weight to changes in densely populated counties. The regressions are weighted by the counties’ total population in 1965. This strategy can avoid the problem that changes in a few small counties may affect the overall results. Reassuringly, after controlling for the potential confounding variables and taking into account the size of the counties, the results remain fairly robust. With respect to Jiangsu province, the results in columns 4–6 display striking patterns. In column 4, we see that in MFCs the estimated effects of the shock of the Cultural Revolution on non-state industrial output per capita in 1978 and in 1998 are 0.29 and 0.69 respectively. The results suggest that non-state industrial output per capita of MFCs was 29 percent higher than that of non-MFCs in 1978, relative to their difference in 1965. Not surprisingly, the difference in the level of nonstate industry between MFCs and DFCs grew larger after 1978. In 1998, non-state industrial output per capita in the MFCs was 69 percent greater than that in the DFCs. Again, the results are consistent with our hypothesis. In columns 5–6, we take into account the effects of geographical features and population size; the results show that the magnitude of the estimated effects becomes even larger. To summarize, the above empirical results document the sizable effects of the shock of the Cultural Revolution on the development of non-state industry during the Cultural Revolution and during the post1978 era in Zhejiang and Jiangsu provinces, and thus lend support to our hypothesis. Non-state industry tended to prosper in MFCs in both Zhejiang and Jiangsu, confirming the hypothesis that counties governed by marginalized elites performed better in fostering non-state businesses. The estimated effects are meaningful and robust across various model specifications. To further alleviate concerns regarding the “parallel-trend” assumption, we conduct a “placebo” test. As mentioned previously, data on non-state industrial output prior to 1965 are unavailable. We thus investigate the trend in total industrial output per capita between MFCs and DFCs to provide some suggestive evidence (for details, see Table A4.1 in Appendix 4). In addition, we conduct another “placebo” test to lend credence to the identified mechanism. We use state-owned industrial output per capita as the dependent variable to estimate the effects of the Cultural Revolution on the state-owned economy. If both state and non-state sectors developed in MFCs after the Cultural

Estimation Results

287

Revolution, the growth of non-state industry in MFCs could be attributed to other structural factors rather than to local officials’ incentives to refrain from predation and to foster a non-state economy. We find that state-owned industry did decline more in the MFCs than it did in the DFCs, so we have more confidence in our theory (see Table A4.2 in Appendix 4).

6.4.2 The Non-state Sector during the Cultural Revolution and Long-Term Economic Growth Given the findings that the MFCs developed a sizable non-state sector and grew faster than the DFCs during the Cultural Revolution, we expect that the ownership change in the MFCs might have had a longlasting effect on non-state economic development if the provincial power configuration and the incentive structure of local officials had continued. In other words, even though the Cultural Revolution ended in 1976, the logic we have uncovered predicts that after the economic reforms began in 1978, the entrepreneurship unleashed during the Cultural Revolution continued to impact the non-state economy and overall economic performance. Another advantage of comparing MFCs and DFCs during the reform era is that due to the pervasive political ambiguities until the early 1990s (see Chapter 5), development of the non-state sector better reflected the local elites’ motivations for their policy choices than did merely state mandates. In other words, the divergent incentives of the marginalized groups and the dominant factions remained the same in the 1980s—the former remained motivated to be concerned about local interests, while the latter were concerned about implementing policies to please the higherups. Given the socialist nature of the party-state and the second-class status of the non-state sector relative to the state sector at the time (Huang 2008; Xu 2011), MFCs, where the local elite still had incentives to protect the non-state sector, should have experienced faster economic growth during the reform era. To test this, we use the average annual GDP per capita growth rate during 1978–1998 as the dependent variable and regress it on the dummy variable indicating MFCs. We control for the initial level of economic development measured as GDP per capita in 1978 (logged). We also control for the set of geographical variables that we used in the previous analysis. Table 6.5 reports the estimation results. Column 1

Table 6.5 Effects on long-run economic development GDP per capita growth

Ln (GDP per capita)

Ln (Ind per capita)

Ln (luminosity)

GDP per capita growth

Ln (GDP per capita)

Zhejiang province

MFC Ln (GDP per capita 1978) Ln (land per capita 1978) Ln (pop. 1978) Ln (altitude) Ln (coastline) Flat ground

Observations Adjusted R-squared

Ln (Ind per capita)

Ln (luminosity)

Jiangsu province

1

2

3

4

5

6

7

8

1.749*** (0.486) –0.619 (0.794)

0.313*** (0.087) 0.890*** (0.142)

0.393** (0.175)

0.456*** (0.160) 0.438** (0.194)

4.278*** (0.675) 0.574 (0.839)

0.767*** (0.121) 1.091*** (0.151)

0.748*** (0.179)

0.375** (0.172) 0.541** (0.230)

1.683*** (0.437) –0.987* (0.533) 0.019 (0.135) –0.013 (0.032)

0.299*** (0.078) –0.175* (0.095) 0.004 (0.024) –0.002 (0.006)

0.593*** (0.163) 0.571*** (0.136) –0.107 (0.173) –0.006 (0.045) 0.008 (0.011)

58 0.476

58 0.683

58 0.601

0.830*** (0.140) –0.504*** (0.127) 0.065** (0.029) 0.004 (0.008)

0.065 (0.770) –0.957** (0.404) 0.088 (0.137) –0.023 (0.024)

57 0.823

58 0.644

0.008 (0.138) –0.172** (0.072) 0.017 (0.024) –0.004 (0.004)

0.978*** (0.123) –0.153 (0.144) 0.030 (0.107) 0.045 (0.039) –0.002 (0.008)

0.173 (0.165) 0.141 (0.100) 0.061* (0.031) –0.002 (0.007)

58 0.823

58 0.780

58 0.388

Notes. Robust standard errors are shown in parentheses. The average annual GDP per capita growth rate is measured for 1978 to 1998. The levels of GDP per capita, industrial output per capita, and luminosity are measured for 1998. *** significance at 1%, ** significance at 5%, * significance at 10%.

Estimation Results

289

suggests that during the reform era, MFCs grew faster than DFCs in Zhejiang province by an average of 1.78 percent per year. Column 5 indicates that DFCs grew slower than MFCs in Jiangsu province by an average of 4.28 percent per year. None of the geographical variables in the regressions for Zhejiang are significant, indicating that geographyrelated factors were not important driving forces behind the long-term growth in Zhejiang. Similarly, among the control variables in the regressions for Jiangsu province, only distance to Shanghai is statistically significant, indicating that being close to Shanghai is associated with more economic benefits for the local economy.10 We also examine the effects on the levels of economic development in 1998 measured by GDP per capita, total industrial output per capita, and satellite luminosity (Henderson et al. 2012). The results in Table 6.4 suggest that MFCs in both Zhejiang and Jiangsu had higher levels of economic development than did DFCs, controlling for the level of economic development in 1978 and a set of geographical variables. We also use matching methods to estimate the effects on economic growth and levels of economic development and find similar results (see Table A4.3 in Appendix 4). Another implication of our theory is that MFCs are likely to have more spending on public goods than are DFCs because local officials in MFCs are more concerned about local economic interests. We use public-goods spending per capita (including spending on science, education, culture, and health) and productive expenditure per capita (including fixed investments in public goods and related projects) in 1998 as dependent variables in the OLS regression. We control for population size in 1998, levels of economic development in 1978 (to mitigate any post-treatment bias), and a set of geographical variables. Table 6.6 reveals that government expenditures on public goods measured by two variables in MFCs are significantly higher than in DFCs. 10

We also control for the amount of arable land in 1952 to account for the initial agricultural endowments. In addition, we consider the effects of human capital on long-run economic growth. We collected the number of “presented scholars” (jinshi) (the highest degree in the civil service examinations) during the Ming and Qing dynasties in each province. We cannot match these data to each county in Jiangsu province. We add this variable in the regression and find that the key results remain unchanged for Zhejiang province. These results are available from the authors upon request.

Table 6.6 Effects on public spending (1998) Panel A: Zhejiang province Ln (public-goods spending)

Ln (productive expenditure)

1

3

2

MFC

4

0.193** 0.280*** (0.091) (0.102) Ln (GDP per capita 1978) 0.451*** (0.144) Ln (pop. 1998) –0.358** (0.135) Ln (altitude) 0.214* (0.114) Ln (coastline) 0.074*** (0.021) Flat ground 0.010 (0.007)

0.364** 0.218 (0.175) (0.142) –0.128 (0.270) –0.376** (0.173) 0.245 (0.198) 0.190*** (0.048) 0.007 (0.012)

Observations

58

58

58

58

Adjusted R-squared

0.046

0.339

0.059

0.353

Panel B: Jiangsu province Ln (public-goods spending)

Ln (productive expenditure)

5

7

6

MFC

8

0.391*** 0.342*** (0.053) (0.076) Ln (GDP per capita 1978) 0.178* (0.104) Ln (pop. 1998) −0.070 (0.064) Ln (altitude) −0.089* (0.046) Ln (coastline) −0.009 (0.015) Flat ground −0.001 (0.003)

1.171*** 0.737*** (0.190) (0.238) 0.721** (0.337) −0.261 (0.235) 0.092 (0.098) −0.035 (0.041) −0.005 (0.007)

Observations Adjusted R-squared

58 0.422

58 0.458

58 0.559

58 0.481

Note. Robust standard errors shown in parentheses. *** significance at 1%, ** significance at 5%, * significance at 10%.

How Zhejiang Differs from Jiangsu

291

6.5 How Zhejiang Differs from Jiangsu Although the political logic underlying the contrast between MFCs and DFCs is the same in Zhejiang as it is in Jiangsu, the Zhejiang model still differs from the Jiangsu model in that, even initially, the non-state economy in MFCs in the two provinces followed different routes. As noted, the private sector in the Zhejiang model (also known as the Wenzhou model during the reform period) became the mainstay of the economy, whereas the collective sector in the Jiangsu model (also known as the Su’nan model during the reform period) was the primary engine of growth. Not surprisingly, when the collective TVEs were transformed into private firms via the ownership transformation in the late 1990s, most were sold to insiders, i.e., nengren (能人, literally “capable people”) who maintained close relations with local governments or who themselves had once been government officials. Behind this nuanced difference between Zhejiang and Jiangsu is the divergent government–business relationship in the two provinces. As noted by a number of observers, as compared with Zhejiang, Jiangsu (including Su’nan) is known to have had much stronger local governments as opposed to businessmen, in that businessmen were always subservient to government officials and local governments steered the way for resource allocation and the direction of development. Indeed, the Jiangsu model is much more emblematic of China’s state capitalism today due to the role of a strong government in the local economy. As a result, although both provinces have been enjoying rapid economic growth since the economic reforms, private firms in Zhejiang have taken root, innovative entrepreneurship has blossomed, and a vibrant civic society is burgeoning, whereas in Jiangsu the provincial economy has been under the shadow of a strong government whereby private firms are second-status citizens and truly innovative capitalism has given way to crony capitalism (Xin Wang 2005; Huang 2008). The nuanced difference between the two provinces again results primarily from differences in the status of the local elite in the power structure. Although Jiangsu’s non-CCRBA cadres and Zhejiang’s guerrilla cadres were both marginalized in the provincial party committees, Jiangsu’s non-CCRBA cadres had many more political resources to count on and thus their de facto power should not be underestimated. For example, the southbound cadres in Jiangsu, who constituted the backbone of the non-CCRBA cadres, belonged to the same military

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system as the southbound cadres in Zhejiang; thus they had a powerful protective umbrella at higher levels and as a result their political status was much superior to that of the guerrilla cadres in Zhejiang. The contrast between the fates of the two groups during the anti-rightist campaign in the 1950s offers a glimpse into their respective political status. Even though Mao personally resided in Jiangsu province to urge the provincial leadership to expose alleged rightists, the Jiangsu leadership, remaining humble before the chairman, insisted there were no rightists among senior provincial cadres. In the end, none of the senior cadres at the county level or above were identified as rightists during the ensuing witch hunt. In comparison, the southbound leadership in Zhejiang, from the provincial level down to the county level, was not hesitant to label the non-southbound cadres rightists, including the provincial governor, Sha Wenhan, and his wife, Chen Xiuliang, who was the head of the provincial department of propaganda of the party (see Chapter 2).11 In other words, unlike their guerrilla counterparts in Zhejiang, whose support came primarily from outside the regime, Jiangsu’s non-CCRBA cadres were embedded in the regime and backed by the patron–client networks of the Third Field Army, and thus had relatively little need for support from the local people. As a result, Zhejiang’s guerrilla cadres permitted the development of the private sector to look out for the economic interests of the local people in exchange for their support, whereas Jiangsu’s non-CCRBA cadres had less motivation to share the economic fruits with the local people and in the meantime they also lacked enthusiasm to turn over resources to those provincial authorities who were not their patrons. Thus, in their equilibrium strategy, the non-CCRBA group chose to develop the collective sector in order to keep the economic benefits for themselves, i.e., in the hands of the local bureaucracy under non-CCRBA leadership. Not surprisingly, even after the ownership transformation, when collective firms became private firms or joint-stock companies, the biggest beneficiaries were those nengren who remained in charge of the firms and their local political patrons who continued to steer the local economy (Xin Wang 2005). In short, local development strategies and the resultant economic outcomes—e.g., the composition and growth of ownership—resulted 11

For a brief comparison of the development of the anti-rightist campaign in Jiangsu and Zhejiang, see Gao Hua (2006).

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from the coalition-building strategies of the local political elite to appease their core constituents, i.e., either local grassroots people or low-level bureaucrats. Therefore, the different economic strategies and policy vehicles corresponded to different distributional outcomes that resulted in some groups becoming privileged and others becoming marginalized or even weeded out, according to their importance in the coalition (Pepinsky 2009; Rock 2017). As we have emphasized throughout this book, the incentive for provincial local elites to provide a benevolent institutional environment for the private sector was rooted in the provincial power structure, which was the result of the province’s pre-1949 revolutionary experience. Moreover, we believe that protection of business by local elites is a common phenomenon in contexts where historical shocks have produced elite cleavages similar to those identified in Zhejiang, e.g., non-CCRBA cadres versus CCRBA cadres in Jiangsu province, local guerrilla cadres versus southbound cadres in Guangdong province, TFA cadres versus non-TFA cadres in Fujian province, and so forth, and even local natives versus the newly arrived Guomindang in Taiwan and northerners versus southerners in Vietnam after the Communist victory. In fact, in the broader developing world where protection of property rights is weak and the sunk costs of starting new businesses are relatively low, this form of localized protection can provide assurance to entrepreneurs and hence produce sufficient conditions for the proliferation of some types of business activity. This brings us to the following intriguing question: if such a coalition-building strategy was in place in Zhejiang up to the 1990s, then was it still working to bond the local elite with local society? We leave this discussion to the concluding chapter.

7

Discussion and Conclusions Rethinking the Power Structure, the Government–Business Relationship, and the Future of the Private Economy

In China the bourgeoisie could not have the monarchy as their ally . . . Businessmen were never strong enough to affect politics. 中国的资产阶级,没有王权可以成为他的同盟者 . . . 中国的商业从来没有 达到影响政治的地步. Gu Zhun 顾准 (2013), 205, 237

On December 31, 2017, a prominent entrepreneur named Mao Zhenhua, the boss of the Yabuli Ski Mountain Village Resort in Heilongjiang province, posted a three-minute video on social media in which he accused the administrative committee of occupying his land and trying to edge his company out of the local market. In the video, Mao Zhenhua complains vehemently, They are both government and enterprise. Using their government authority, they illegally took away [land] from our private firm . . . Law enforcement agencies frequently came to us to make trouble, claiming they were checking the food quality or the boiler safety . . . They have never done one [good] thing for us.

After Mr. Mao’s impassioned video went public on the Internet, an executive at his Yabuli Ski Mountain Village Resort told the Financial Times in an interview that local officials had seized more than 200,000 square meters that Mr. Mao had bought for future development. The executive added, “They are using their political power to steal from a private company and protect their own business. The police also keep summoning our executives so we cannot operate normally.”1 Mao Zhenhua was not alone among China’s elite businessmen and entrepreneurs in facing a strong party-state, be it the sovereign state or the local government, which threatened their property and even their 1

See “Chinese Entrepreneur Accuses Officials of Land Grab,” Financial Times, at www.ft.com/content/0a9125fe-f061-11e7-b220-857e26d1aca4, accessed January 3, 2018.

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personal safety. In 2017 alone, many tycoons in business and financial circles either abruptly disappeared from public after being taken away by the secret police or were on tenterhooks due to being under investigation for unknown reasons. To name but a few, the list includes Xiao Jianhua of the Tomorrow Group, Wu Xiaohui of the Anbang Insurance Group, Wang Jianlin of the Wanda Group, Guo Guangchang of the Fosun Group, among others. In comparison, Mr. Mao Zhenhua actually should have felt lucky because, for all his alleged mistreatment by local officials, at least the provincial government promised to investigate his case a few days after his video went public. What happened to Mao Zhenhua and others like him is consistent with the scenarios introduced in the first chapter of this book that suggest that the security of property rights is by far the most worrying concern among Chinese entrepreneurs. The lack of property-rights security requires private entrepreneurs and businessmen to continue to form alliances with political elites for protection from harassment by the predatory state and by predatory officials (Haber 2002). In light of the theory advanced in this book, for the marginalized elites, as long as the uncertainty inherent in Chinese authoritarian politics remains such that peaceful power sharing with the dominant faction is impossible and intra-elite jostling for power is basically a zero-sum game, forming an alliance with their grassroots constituents becomes a desirable option. As always, when elite cleavages put marginalized elites on the grill, the marginalized elites typically rely on a massive mobilization of their grassroots supporters for collective action in order to flex their muscles and withstand encroachment by the dominant faction.2 In other words, the alliance between marginalized elites and their grassroots constituents is still in place today on a quid pro quo basis, resulting in localized property-rights protection in which creative entrepreneurship germinates and bursts forth in the shadow of a predatory regime. With the passage of time, however, some contemporary developments have given the alliance new characteristics and economic growth has inevitably brought about changes in the composition of the 2

In this vein, Li Lianjiang and Liu Mingxing (2016) provide a detailed account of collective action that features massive collective contention orchestrated by lower-level officials against their supervisors since the 1990s.

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alliance, the resources at the disposal of the players, and the coping strategies they use to defend their interests. The Huangyan affair, which took place in Zhejiang’s Huangyan county in the Taizhou region in 1998, provides a typical example. Without consulting with Huangyan’s officials, the Taizhou city government decided to absorb Huangyan county into an urban district of Taizhou city. Realizing that this decision by their superiors would deprive Huangyan county officials of their administrative and fiscal power and would harm local interests, the affected officials mobilized grassroots cadres and entrepreneurs, most of whom were delegates to the local people’s congress or the local people’s political consultative conference, to voice their opposition and to attempt to have the people’s congress block the decision, by submitting to the party center and the State Council a written statement signed by 160 delegates to the congress (i.e., 70 percent of the total delegates), seeking a repeal of the resolution by the city authority. At the height of the standoff, the delegates to the local people’s congress successfully dismissed the secretary of the congress, who was the appointed agent of the city authority. This deadlock lasted for seven years until a compromise was reached in 2005 when Huangyan agreed to become a district unit of Taizhou city but would retain its fiscal independence. Although local officials in the Huangyan affair stayed behind the scenes to instigate collective resistance against the higher-ups, the local social network of elites, the grassroots cadres and entrepreneurs who were delegates to the local people’s congress and the local people’s political consultative conference took the offensive against the Taizhou city authority and its backstage boss, the Zhejiang provincial authority. These local political and social forces relied on their own networks and resources to create a huge social movement during which the local elites revealed daunting strength that ultimately forced a deal that favored local interests.3 Local private entrepreneurs definitely played a major role, if not the most important role, in this event. First and foremost, as the biggest 3

Interview with local government officials by the authors, September 2012. Also see “Zhejiang Huangyan Ceshi Shequ Zhizheng: yige difangrenda de shinian zhiyang” (The Administrative Status of Huangyan Changed: The Struggle by a Local People’s Congress during the Past Ten Years, 浙江黄岩撤市设区之争: 一个地方人大的十年之痒), at www.people.com.cn/GB/14576/14528/2437363 .html, accessed April 8, 2004.

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beneficiaries of economic growth and prosperity, private entrepreneurs had many resources at their disposal that were prerequisites for social mobilization. In addition, the mechanisms that provided protection of local property rights created conditions that were favorable to the private sector and also strengthened the local society in which the private entrepreneurs were embedded. In other words, the alliance between the marginalized elites and local society not only put development of the private sector on the fast track but also fostered social capital that bound various social forces even beyond private entrepreneurs and businesspeople. For example, private enterprises formed business associations or entrepreneurs’ clubs whose members included both renowned businesspeople and small and medium-sized privatefirm owners who regularly met to discuss matters related to their businesses and to government–business relations, including articulating their opinions to government agencies, making suggestions to relevant policymakers, and so forth. Such interpersonal relations and association memberships clearly are a reflection of the rising strength of the private sector and its increasing capacity to take collective action. Moreover, the private sector does not work on its own; rather, it has become a part of wide social networks in which various sources of power co-operate with one another and make concerted efforts to achieve desirable outcomes. As we found in our field investigations, when private entrepreneurs and businesspeople became rich, they were the first to take on responsibility to invest in the provision of public goods, such as temples (as early as the late 1970s), churches (since the 1980s), and so forth.4 In addition, with aid from private entrepreneurs, a myriad of civic organizations emerged, such as elderly citizens’ associations, folk culture societies, local dancing groups, and so forth.5 These civic organizations and religious groups, through their daily operations and engagement with one another, help integrate divergent interests and co-ordinate different social groups in the direction of common values. Apart from promoting social solidarity, these social organizations and groups also serve the function of linking social forces to local government when it includes incumbent or retired cadres, thus making these embedded local cadres into brokers between local 4

5

Oral sources, interview with villagers in Taizhou and Wenzhou, October–December 2010. Oral sources, interview with villagers in Taizhou and Wenzhou, October–December 2010.

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officialdom and local society.6 This, in turn, consolidates the united front between the marginalized elites and their grassroots constituents, and enables both sides to better understand each other’s priorities and to act on behalf of their mutual benefit. In short, with a prosperous private sector and a diversified local society, the alliance that underpinned the Zhejiang model in the past continues to exude vibrant vitality, as it has become more entrenched in local society and stronger in terms of mobilizing social forces. The alliance’s impact on the protection of local property rights is crystal clear. In this regard, the Qian Yunhui affair in Zhaiqiao village of Hongqiao township in Yueqing city provides an illustrative example. In 2004, under pressure from the provincial government, the city government approved construction of a power plant in Zhaiqiao village. Thereafter, the company building the power plant, a high-profile SOE with formidable power (the Zhejiang Energy Group Company, Ltd.), had all the arable land appropriated by the government and provided only negligible compensation to some 4,000 villagers and the township government, thus provoking villager protests against abuse by the local government in appropriating their land. Qian Yunhui, former village head of Zhaiqiao village, led the protest—including traveling to Beijing to file a petition with the central authority. Although Qian Yunhui died during a suspicious traffic accident in which he was run over by a truck, our field interview found that he and his followers in the village were backed by local private entrepreneurs and local cadres, including township officials who wished to voice their aversion to the project and to benefit from boosting the price of the land appropriations. In fact, it was support from these political and business elites that rendered the protest so viable that it lasted for some six years, despite the forcible intervention of the SOE and the provincial government. For example, before Qian Yunhui died in the automobile accident, he and some villagers were arrested and imprisoned. However, the head of the Wenzhou Municipal People’s Congress personally intervened to have the villagers released. Although these efforts ultimately failed to end the building of the power plant, for a long time they were able to successfully stall the progress of the project and they forced the government and the SOE to raise the 6

Tao (2015) calls this type of social capital “linked social capital.”

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price of the land appropriations to make it acceptable to the villagers.7 Unlike their counterparts in the guerrilla localities, due to the absence of protection of local property rights, the non-guerrilla localities lack an active private sector. By virtue of the same reason, there is a lack of a cohesive and autonomous group of private entrepreneurs, let alone any other social or religious groups whose existence can serve as a check on local governments and officials. Although this allows the local government and officials to dominate local society, they lack the social capital to embed local officialdom in local society and therefore local governments and officials are deprived of the capacity to reach deep into society to tap its potential, thereby nullifying efforts by local officials to effectively mobilize social forces to their own advantage in a power struggle. For example, Changxing county in Huzhou region, a typical nonguerrilla region, experienced a shock in 2013 that was similar to that in Huangyan county in 1998. At the time, Huzhou city was planning to merge Changxing county into the city and to reduce the county to one of its districts. When, in May 2014, this news began to spread, acrossthe-board opposition by the county began to grow. As in Huangyan county, almost all social strata, including ordinary citizens and business groups such as the county business association, participated in collective action to voice their discontent. But unlike in Huangyan county, the unrest in Changxing unfolded so rapidly that it soon exposed the elite cleavages to the public and squarely escalated a confrontation among the political elites. In fact, it was the Changxing local government and officials who took to the streets to publicly demonstrate their opposition to this decision, fearing that the decision by the city authority would critically hurt the county’s fiscal status and the welfare of the county bureaucrats. Initially, all the administrative agencies under the county government signed petitions opposing any possible decisions by Huzhou city that would harm county interests. Furthermore, the leaders of all township governments in the county threatened to resign to signal their opposition. It is apparent that throughout the event, county officials were the backbone of the collective action, while private entrepreneurs and other social forces served as tools, rather than as allies, of the local government. 7

Oral sources, interview in Yueqing city, September–October 2012.

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As a result, they failed to act as a cushion in the conflict among the political elite.8 These new developments and the contrast among them in different localities allow us to reflect upon the nature of the symbiotic relationship between local political elites and their potential grassroots supporters and its impact on the protection of local property rights in a rapidly changing society under a Leninist regime with a mask of capitalism. In essence, such an alliance is an implicit pact guaranteed not by an independent third party, e.g., the courts, but instead by the mutual benefits between the local political elites and their grassroots constituents. The viability of this mechanism, i.e., the motivation and capacity of each party to sustain the pact, is contingent on the degree of power and the distribution of resources within and between local political elites and social forces. For the local political elites, the alliance is doubtlessly based on their need for support from their grassroots constituents. On the supply side, however, to win over grassroots support, the political elites have two ways of delivering benefits that are to some extent substitutes for each other. One is to buy support by providing private goods and resources —e.g., cash, government contracts, public positions, and so forth— that go exclusively to particular persons or specific population groups, whereas the other way is to provide quasi-public goods—e.g., rulebased services, property-rights protection, and so forth—that benefit much larger population groups. Obviously, the former is a shortcut to 8

See “Remove the County District? Changxing Is Not Happy” (撤县设区?长兴 不高兴), Southern Weekend (南方周末), May 16, 2013. Our interview in Changxing county confirmed the main observations in this report. Oral source, interview by the authors in Changxing county, September–December 2012. Another similar but more violent event was the Jinning affair (晋宁事件) in Jinning county of Yunnan province. Beginning in 2001, a conflict between Bai Enpei, the incumbent provincial party secretary, and some senior provincial officials intensified. Those who opposed Bai Enpei formed a clique called “the Committee of Down-with-Bai” (倒白委员会), through which they instigated villagers in Jinning county to protest against land appropriations by the local government, because the official in charge of the land appropriations was a follower of Bai Enpei. During this process, the opposing clique had no intention of working for the villagers’ interests; it simply stoked the collective contention to attack Bai’s camp. As a result, the collective action gradually spiraled out of control and ultimately led to bloody conflicts during which some villagers died in October 2014. For an account of the Jinning affair, see Li Lianjiang and Liu Mingxing (2016).

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nepotism and cronyism, whereas the latter in all likelihood can lead to robust and broad-based economic growth. In Chapter 1, we point out that resource abundance plays a decisive role in swaying the choice of the political elite. When only limited resources are available for distribution, political elites are unable to dispense private goods for their clients but instead should opt for a more cost-efficient distributive strategy, i.e., providing public goods to their supporters. Apart from resource abundance, another important factor impacting distributive-strategy options for the political elite is power or resource distribution among the elites. If power or resources are disproportionately concentrated among a few political elites, they tend to provide their clients with private goods such as political protection, privileges, and so forth, because in this way these political elites can require their clients to reciprocate by offering them exclusive support and therefore preventing other elites from free-riding by implementing clientelism. In contrast, if power or resources are not at the disposal of a few political elites but are more evenly distributed, then the few political elites are unable to monopolize the resources for patronage and must co-operate and co-ordinate to win over grassroots support. As a result, they must share this support with each other. In this context, providing public goods to maximize output (support) and to share it among themselves appears to be a dominant strategy. Apart from the power and resource concentration within the political-elite group, the distribution of resources among grassroots supporters and their capacity to co-ordinate collective action are two other crucial factors determining the nature of their relationship with political elites. Ceteris paribus, if local people are divided and atomized, they are too weak to co-ordinate collective action on their own. This leads to two consequences: first, their value as an independent ally for the elites is downplayed and they have to rely on the elites to organize them; and second, they play a subservient role in the alliance. Either way, local people have insufficient negotiating power relative to that of the political elites, who in turn lack incentives to make large concessions to their demands.9 Otherwise, the political elites would have 9

One such example that occurred in Hongqiao township of Yueqing city illustrates how sufficiently strong social forces were able to punish political elites who reneged on an implicit deal. In the late 1980s, the township government intended to appropriate land, but with little compensation to local peasants. The peasants, in turn, sought aid from entrepreneurs in the village as well as some

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a greater incentive to care about the interests of local people. In the meantime, if authority and resources are disproportionately concentrated in a small number of social groups rather than evenly distributed within the entire society, then it makes no sense for the elites to provide public goods for the benefit of all members of society. Rather, they tend to pour resources into specific groups in exchange for their support, and accordingly they will choose to dispense such benefits as private goods to target these groups. The above analysis suggests that good governance and inclusive economic growth likely go hand in hand in areas where there is a diversified but well-organized civil society that is governed by an elite group marginalized in the power structure. In this case, the marginalized political elites must count on a wide range of social forces to amass sufficient support to secure their survival. Thus they have an incentive to respond to and meet broad social demands by providing public goods, such as property-rights security, social welfare, health care, infrastructure, and so forth, which surely will both boost economic growth and enhance income distribution. This helps explain why the 1980s–1990s prosperity continues to boom today in Zhejiang’s guerrilla counties and other regions with similar political and social conditions. Otherwise, we are likely to witness a scenario in which the powerful political elites are less responsive to a weak and anemic society which they do not expect to become an important political ally. In such a case, policymaking on the part of political elites aims at enriching themselves or cultivating their own patronage networks, resulting in nepotism and cronyism. In contrast, with long-term economic growth, endogenous processes can result in local political economies embarking on divergent tracks, even if they began with similar original conditions. For instance, at an early stage of economic development firms do not significantly differ in terms of their size and other metrics. As the economy grows and market competition intensifies, however, the gaps among firms will become larger, usually due to variations among entrepreneurial intelligence, visions, and abilities. When the gap is large enough that at a certain from county officials to oppose the township government. Furthermore, some local businessmen petitioned the relevant departments of the National People’s Congress to make an on-site investigation of Zhaiqiao village. In the process, the villagers even imprisoned the village party secretary, who sided with the township government. Oral source, interview in Yueqing city, October 2008.

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point several large firms hold sway over the market, and when there is a centralized elite leadership, conditions are ripe for a fundamental change in the government–business relationship because, as we have analyzed, political elites will then have an incentive to build coalitions with large firms by providing them private goods, i.e., tilting resource allocations toward them. Therefore, heterogeneity in entrepreneurship can endogenously lead to a changing relationship between the elites and their business supporters in a way that leads to cronyism and political favoritism. In another potential but relatively rare scenario, several powerful firms and large companies meet a weak political elite group in which the former will no longer submit to the latter. Instead, the business barons tend to wield their economic clout as backstage bosses to transform officials into their political agents, who advocate on behalf of their interests. Again, if a few large firms acquire a monopolistic status in the local economy, then the game will very likely result in the formation of collusion among businessmen and officials, or even a mafia-like group in which broad social interests are sacrificed for those of a few narrow circles. In addition to power and resource distribution, the nature of factor inputs and technology that firms use in their production and their effects on the alliance are also noteworthy. The coalition between the marginalized elites and their grassroots supporters remains alive because of mutual demands for each other’s resources. Both parties hold a belief that the mutual demands are credible and will remain stable in the long run. If such a belief becomes increasingly shaky, it will soon activate a chain of reactions in which there is a successive resort to opportunistic behavior in the pursuit of self-interest without regard to the other, thus resulting in the collapse of the coalition. Given the importance of belief in maintaining the coalition, it is natural that the introduction of new factor inputs as well as new technology, often by firms, will lead to suspicions that it will augment the firms’ advantages and negotiating power relative to local political elites, thus altering their mutual demands and eroding the foundation of their mutual beliefs. If a firm’s production relies on traditional factors—e.g., land, labor, and natural resources such as coal, petroleum, diamonds, and so forth—as inputs rather than human capital or new and state-of-theart technologies, then the implicit pact between local political elites and

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the firm, once formed, is stable and more favorable to the political elites because, in the foreseeable future, the firm will not find any alternative sources of factor inputs and will have to continuously rely on the political elites to guarantee the factor inputs. By the same token, the profits as well as the rents generated by using traditional inputs and technology are relatively easier to predict and to share. In such cases, the political elites have no reason to worry that the firm may betray the alliance due to the emergence of alternative opportunities associated with a change in inputs or the introduction of new technologies. In contrast, if a firm intensively utilizes intelligent capital, such as human capital, as inputs and adopts new technologies that are highly innovative, political elites will be subject to a huge information disadvantage regarding judging and mastering the development of the market and technology, and will have few means to sway and interfere in the firm’s business activities, let alone control its decision making. As a result, the political elites will be uncertain whether the firm will still need their backing in the future and will fear that sooner or later it will substitute them with other political elites who will provide better resources and terms. Because of this concern, political elites will anticipate the occurrence of such a scenario by excluding the firm from the coalition, or will move swiftly and decisively to block the development of new technologies within their jurisdictions. Given the incentive structure of local political elites, the way they provide benefits to their grassroots supporters also matters for the development of technology. As noted, if the political elites choose to provide public goods—e.g., property-rights protection—then the adoption of new technology and innovative business formulas will be facilitated because the public goods, such as governance and infrastructure conditions provided by government and technology and innovative methods and ideas, are often complements rather than substitutes. The more public goods are provided by political elites, the greater the productivity of technology and the firms’ investments will be, and the less likely it is that human-capital-intensive or technology-intensive firms will find comparable alternatives elsewhere since good governance and better public services are generally scarce goods in developing counties. Hence, political elites who tend to provide public goods to their supporters will also be willing to welcome the introduction and spread of new technology.

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However, if political elites instead use private goods to distribute benefits to firms, they are inclined to resist the development of any new technology because ushering in new technology will reduce the reliance of firms on the resources they provide, thus shifting the balance of power away from the political elites and toward the firms. The above analysis suggests that political elites may have an inherent incentive to discourage technological progress, especially in an age featuring rapid technological changes that usually bring about fundamental changes in the redistribution of resources as well as in the balance of power. However, even if political elites choose to oppose new technology, whether they are able to block it is contingent on another factor, i.e., the distribution of power. If power and resources are disproportionately concentrated in one or a few elites, the elites can easily move to stifle the development of new technology. If power and resources are dispersed evenly among a large number of elites, the elites will be challenged to act independently to rein in the development of new technology due to their limited resources, unless they can coordinate concerted action. In other words, all else being equal, innovative technologies are more likely to be adopted in places where the political elites’ distribution of benefits via the provision of public goods and power is less concentrated.10 This reasoning helps explain why today it is all the rage for so many high-tech start-ups, e.g., Alibaba, Tencent, Huawei, and so forth, to be only too willing to focus on some dynamic counties and townships in provinces such as Zhejiang, Jiangsu, Guangdong, and so forth. As we have seen in previous chapters, it is only in these places that conditions are ripe for cultivating a strong base for disruptive innovation: the local governing elite are far from the power core in the existing power structure and have fewer resources at their disposal, thus compelling 10

The mechanism at work in our analysis differs from that advanced by Acemoglu and Robinson (2006). In their framework, political elites block the development of new technologies because of the political-replacement effect associated with new technologies, i.e., they shift the power balance away from the incumbent political elites toward those who have mastered the new technology. In our analysis, new inputs and technologies do not directly threaten the power of the incumbent political elites. Rather, they play a role by changing the mutual demands of both the incumbent political elites and their potential supporters, such as firms and other social forces, and therefore influence the expectations of the incumbent political elites regarding the likelihood and viability of forming an alliance relationship with their potential supporters.

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them to endure an active civil society, provide a wide range of public goods, and welcome free entrepreneurship, ultimately giving birth to the innovation centers that we are witnessing today. Last but not least, the localized property protection advanced in our theory, however clear its benefits in promoting local private entrepreneurship and social capital, is not a substitute for nationwide de jure property-rights protection. At best, it can be viewed as a spatially limited solution to the problem of insecure property rights. As a mechanism for mutual benefits between marginalized local elites and their grassroots constituents, its effects are largely spatially bounded and basically local. In fact, under current political conditions, marginalized elites can by no means expand their sphere of influence beyond the local society into other localities via open and competitive mobilization, e.g., canvassing votes by promising the constituency better governance. Nor can they form cross-border alliances with political and social forces in other localities. Thus when local businesses grow and look for investment opportunities in other counties or even in other provinces, they encounter very different political environments, which in turn will affect their businesses in new and unexpected ways, and they can hardly count on patrons in their hometowns to protect them.11 In addition, as factor endowments—e.g., capital and labor forces—move to those places with greater freedom and flow into and concentrate in places with better governance and more propertyrights security, the prices of assets, such as real-estate prices, are driven up and job competition among the local labor force and migrants is intensified. 11

One example is the nationalization of coal mines in Shanxi province. In 2009, the Shanxi provincial government mandated that medium-sized and small coal mines, most of which were owned by private investors from Zhejiang province, had to be nationalized based on the goal of enhancing coal-mining safety standards and production. Such nationalization led to astronomical losses for the Zhejiang investors, who had been attracted to invest in Shanxi’s coal industry due to the promised preferential investment policies. As a result, they had to seek help from the Zhejiang government. Zhejiang officials tried to bargain with Shanxi province on behalf of the Zhejiang investors and even appealed to the central government to pay attention to local protectionism in Shanxi in the course of the nationalization of the coal mines. Ultimately, however, their efforts were ineffective. See “Shanxi’s Nationalizing of Coal Mines Riles Zhejiang Investors, Government,” at www.chinastakes.com/2009/ 9/shanxis-nationalizing-of-coal-mines-riles-zhejiang-investors-government .html, accessed September 28, 2009.

Discussion and Conclusions

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But the key challenge to localized property-rights protection comes from its inherent weakness under a regime whose survival is based on dominance over any potential challenge from outside the regime and therefore the regime’s top policymaking priority is to maintain at all costs its superiority over other social interests. As we have emphasized throughout this book, the effect of localized protection largely fluctuates with the ebbs and flows of national politics. On the one hand, throughout the history of the People’s Republic, every political campaign that aimed at cracking down on nonorthodox economic activities provided leverage to the dominant factions to pressure marginalized groups, keeping them in line with state mandates to alienate their local grassroots constituents and leaving them more vulnerable in the power struggle. On the other hand, as shown by the development of baochan daohu during the agricultural collectivization of the 1950s (see Chapter 3) and during the economic reforms in the 1980s (see Chapter 5), the ambiguous signals emanating from central politics also bestowed on local cadres discretionary power to act based on their own political knowledge and political judgment. However, once the party center made it clear that baochan daohu was prohibited, it deprived local cadres of any flexibility to interpret the orientation of state policies, and, as a result, baochan daohu completely lost its legitimacy. Unfettered by the Cultural Revolution, local cadres in guerrilla counties were able to mobilize their grassroots followers on an unprecedented scale that would have been impossible before and after the Cultural Revolution. Simply put, in a single-party regime armed with Leninist organizational principles, the local political economy, embodied by acts by local political elites and their interactions with local society, was always swayed by high politics, which determined how much discretion was available for the marginalized local elites to maneuver on behalf of their own interests, including forging alliances with their constituents and opting for specific coping strategies to implement state policies. The Zhejiang experiences are definitely not mere history. As long as China remains a Leninist single-party system, the state’s policy orientation in practice will still primarily determine how far the mechanism of localized property protection can go. As the Jiangsu Tieben Iron Co. incident shows in the introductory chapter, whenever the state tightened its grip on policy implementation, the implicit alliance between

308

Discussion and Conclusions

local elites and private entrepreneurs was put to a hard test, and it likely resulted in leaving the private entrepreneurs helpless. The private-finance situation in Zhejiang during the reform era provides an example illustrating the limit of localized property protection and the shaky status of private capital. Even today, China’s financial system, with its state-owned banking system as a backbone, is still under the control of the party-state and favors the state sector in allocating resources. As a result, private businesses are often left to fend for themselves in an informal moneylending market, typically by offering investors a rate higher than that set by the state. But relying on private financing, especially for those who raise funding by promising jaw-dropping high returns to investors, may be dangerous because it is illegal, and they may be charged with “illegal fund-raising” when the government tightens controls over informal financing. For example, in recent crackdowns on illegal fund-raising in Zhejiang, Wu Ying, who raised 770 million yuan from investors in 2005–2007, received the death penalty.12 Her story epitomizes how weak today’s capitalists are when facing the party-state, no matter how wealthy they are and whether or not their businesses are legal or in a gray area. Even in Zhejiang where it has been working well, the local property-rights protection mechanism still may fail to protect businesses when the state is determined to destroy them.13 Given the political trends beginning in the 1990s, especially in the new era as the top leadership has become increasingly determined to centralize power, private entrepreneurs indeed have plenty to worry about. For example, even in Zhejiang province where economic prosperity has been built on the growth of the private sector, the provincial 12

13

The Chinese Supreme Court overturned Ms. Wu’s death sentence following an outcry on the Internet over the severity of the penalty. She was then sentenced to death with a two-year reprieve, which is usually commuted to a long prison term. See “Underground Lender Gets Death Sentence in China,” May 20, 2013, at www.nytimes.com/2013/05/21/business/global/underground-lender-getsdeath-sentence-in-china.html, accessed June 8, 2018. In addition to Wu Ying, Lin Haiyan, another female businesswoman who collected 640 million yuan (c. US$100 million) received the death penalty in 2013. She had promised high returns with low risks, which turned her venture into a pyramid scheme. In fact, in the Wenzhou region alone, there were several businesswomen in the 1980s who were sentenced to death based on charges of illegal fund-raising. This is particularly worrying because many senior provincial officials with Zhejiang backgrounds have become closer to the center core since Xi Jinping’s rise to power at the end of 2012.

Discussion and Conclusions

309

authority has recently shown strong interest in courting central SOE investment in the province.14 In the meantime, awash with cash and valuable resources, such as cheap land and low-cost banking loans, the central SOEs have become increasingly aggressive in spreading to businesses that have traditionally been believed to be highly competitive, such as food processing, high-profile services, real estate, and so forth, thus paving the way for potential collusion between flagship state companies and local governments. Although it is too early to conclude that these developments will jeopardize the symbiotic relationship embodied by the localized property-rights protection, it is safe to predict that private companies and investors that used to be the beneficiaries of local property-rights protection will sooner or later face head-to-head competition with national champions, a battle that the private companies have little chance of winning. Finally, given the limits of local property-rights protection and the applicable conditions as outlined above, we have attempted to examine a deeper question about the political impact of local property-rights protection: will the robust local economic growth driven by the mechanism of local property-rights protection eventually facilitate national institutional changes toward full protection of private property rights, rule of law, and even democracy? In fact, one possibility underlying the answer of optimists to this question is presented by the endogenous democratization theory, i.e., democracy, and good governance in a more general sense, will emerge as a country develops economically (Lipset 1959; Przeworski and Limongi 1997). In addition, many scholars also argue that in order to guarantee regime survival and maintain regime stability, an authoritarian regime will adjust its existing institutions and policies to adapt to new economic and social changes—e.g., via privatization and accommodation of new forces in the regime and so forth—thus depicting a bright future for private

14

In a May 2016 speech at the signing ceremony for strategic co-operation with some central SOEs, Xia Baolong, then provincial party secretary of Zhejiang, stated that full-scale co-operation with some central SOEs should be the top priority of the provincial economic strategy. See “Zhejiang sheng yu qijia yangqi qianding sanshi ge hezuo xiangmu, tongtouzi yuewei 2000 yi” (Zhejiang Province Signs 30 Co-operation Projects with Seven Central Enterprises, 浙江省 与7家央企签订30个合作项目 总投资约2000亿), Zheshang wang, March 4, 2016, http://biz.zjol.com.cn/system/2016/03/04/021048892.shtml, accessed June 8, 2018.

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Discussion and Conclusions

entrepreneurs and investors (Dickson 2003; Gandhi 2008; Kellee Tsai 2007). Our analysis suggests we should be cautious about optimistic predictions. For one thing, as we have pointed out throughout this book, the existence of local property-rights protection and its outcomes, embodied by the alliances and interactions between marginalized elites and their grassroots constituency, are basically a result of the coping strategies of the local marginalized elite in response to the changing national political situation, such as the Cultural Revolution and the policies adopted by Beijing since the 1980s, rather than the other way around. Hence, if Beijing is poised to centralize more of its authority and resources to the center rather than to leave sufficient space to local discretion, the role of local property-rights protection can be expected to be severely limited. More importantly, localized property protection is an alliance among the weak. This implies that marginalized elites can hardly expect to harvest any real political capital to elevate their clout within the regime by providing localized property protection, and therefore they can exert little influence at national-level policymaking and are unlikely to compel national leaders to institutionalize propertyrights protection. But it also suggests that the coalition is susceptible to major elite political shocks, national policy uncertainties, and revolutionary technological changes. In other words, the virtues of local property-rights protections also expose their limitations and vulnerability. In sum, although historical contingency may propel a handful of lucky regions to become affluent, that window of serendipity may be closed at any time by major national political and technological shocks beyond the control of the coalition among marginalized political elites and their grassroots constituencies.

Appendices

Appendix 1 Measuring Local Guerrilla Strength in Zhejiang

Based on the detailed historical account in Chapter 2, pre-1949 revolutionary experiences provide a natural experiment to divide Zhejiang counties into two categories: the guerrilla counties (GCs) and the non-guerrilla counties (NGCs). Counties with strong guerrilla forces prior to 1949 (GCs) were governed by marginalized local guerrilla cadres during the post-1949 era, whereas counties without active guerrilla activity prior to 1949 (NGCs) were governed by powerful dominant southbound cadres after 1949. Based on the information collected by the authors in the Organizational History of the CCP in Zhejiang Province, April 1922– December 1987 (1994) as well as various county gazetteers, we coded a dummy variable (GC) that takes the value 1 if a county maintained its own independent guerrilla force from 1945 to 1948, otherwise a 0 is assigned. To be more specific, a county’s local guerrilla force before 1949 is defined as strong (Guerrilla County = 1) as long as any one of the following criteria was met: (1) there were military forces established during the Sino-Japanese War or during the War of Liberation, or (2) the county city was liberated by local guerrillas rather than by the field army. In addition, even among the guerrilla counties, some had more powerful guerrilla forces than others. To take this into account, we created two new dummy variables: a Strong Guerrilla County dummy, which takes the value of 1 if active guerrillas were not only found in the county (i.e., Guerrilla County = 1) but also the county was where the main guerrilla force was garrisoned and the guerrilla headquarters were located, otherwise a 0 is assigned; a Normal Guerrilla County dummy takes the value of 1 if in a county there were active guerrilla forces, but they were not the main force and no guerrilla headquarters were established in that county, otherwise a 0 is assigned.

312

Appendix 1

313

Table A1.1 provides a full list of guerrilla and non-guerrilla counties. It is noteworthy that Table A1.1 does not include some island counties, e.g., Xiangshan county, Daishan county, and so forth. In addition, due to changes in the administrative units after 1950, some counties in the table are dropped from the empirical analyses in Chapters 3–6 of this book. In addition, we also constructed a variable for Local Cadre Strength (LCS) to measure the local cadre’s de facto strength after 1949. As already noted, for historical reasons local cadres in GCs held leading positions in the county administration rather than on the county party committee, reflecting their true political influence in the county. Therefore, we measure the Local Cadre Strength by taking the average proportion of local people holding positions as heads or vice heads of a county government between 1949 and 1966 (one year before the outbreak of the Cultural Revolution). Table A1.2 presents the descriptive statistics for GC and LCS.

Table A1.1 List of counties: guerrilla and non-guerrilla counties

County

Guerrilla Guerrilla county_strong/ county normala County

Guerrilla Guerrilla county_strong/ county normala

Anji Changshan Changxing Chun’an Deqing Haining Haiyan Jiangshan Jiashan Kaihua Longquan Longyou Pinghu Qingyuan Quxian

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Ninghai Pan’an Pingyang Pujiang Qingtian Rui’an Sanmen Shangyu Shaoxing Shengxian Songyang Suichang Taishun Tiantai Tonglu

1 1 1 2 1 1 1 2 1 1 1 1 1 1 2

314

Appendices

Table A1.1 (cont.)

County

Guerrilla Guerrilla county_strong/ county normala County

Guerrilla Guerrilla county_strong/ county normala

Tongxiang Yuhang Cangnan Cixi Dongyang Fenghua Fuyang Huangyan Jiande Jiaojiang Jinhua Jinyun Lanxi Lin’an Linhai Lishui

0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

0 0 1 2 1 1 2 1 1 1 1 1 1 1 1 1

Wencheng Wenling Wuyi Xianju Xiaoshan Xinchang Yinxian Yiwu Yongjia Yongkang Yueqing Yuhuan Yunhe Yuyao Zhuji

1 2 2 2 2 1 2 1 2 2 2 1 1 2 2

Note. In the columns, 0, 1, and 2 respectively stand for an NGC, a county with normal guerrilla forces, and a county with strong guerrilla forces. Sources: data were collected by the authors from various county gazetteers from counties in this table.

Table A1.2 Summary statistics for GC and LCS Variable

No. of obs.

Mean

Std. err. Min.

Max.

Guerrilla County (GC) Local Cadre Strength (LCS)

66 60

0.72 0.28

0.45 0.16

1.00 0.7

0 0.04

Source: various county gazetteers. For a list of the counties, see Table A1.1 in Appendix 1.

Appendix 2 Test of the Spatial Distribution of Withdrawals from Collectives

As pointed out earlier in Chapter 3, collective resistance against agricultural collectivization in Zhejiang during the 1955–1957 period was more likely to be found in guerrilla counties than in non-guerrilla counties. The following equations (A2.1) and (A2.2) are the specifications we have used to formally test this argument. nao tuishe ¼ C0 þ α1  GCi þ β  X þ δi

ðA2:1Þ

0

nao tuishe ¼ C0 þ α2  GC  Strong=Normali þ γ  X þ i

ðA2:2Þ

0

where subscript i stands for ith county, C0 and C0 are constant terms and δ and ϕ are error terms. The dependent variable withdrawal from a collective (nao tuishe) is a binary variable, taking the value of 1 if withdrawal from a collective took place during the summers of 1955 and 1957, otherwise it takes the value of 0. In official publications, including county gazetteers, county chronicles on party history, and so on, whether a county experienced the likes of withdrawals from collectives during the period is documented in detail. This enables us to collect the necessary information from the publications to code withdrawals from collectives for most counties in Zhejiang province. GC, GC_Strong, and GC_Normal are three binary variables for whether a county is a guerrilla county, whether a county is a GC with local guerrilla headquarters, and whether a county is a GC with normal guerrilla strength (see Appendix 1). Because the dependent variables are binary variables taking the values of 1 or 0, we estimate Equations (A2.1) and (A2.2) using a probit method.

315

316

Appendices

Table A2.1 The test results of withdrawals from collectives (summer 1955–1957)

Variables GC

1 Probit

2 Probit

3 Probit

4 IV Probit

5 IV Probit

5.13*** (2.16) −0.52 (0.45) −0.01 (1.13) 0.62** (0.28) −1.83*** (0.69)

4.91** (2.29) −0.52 (0.46) −0.09 (1.16) 0.61** (0.28) −1.81*** (0.71)

0.42 51

0.55 51

1.12** (0.56)

GC_Strong

1.06** (0.58) 1.16** (0.66)

GC_Normal LCS

Log (distance to Shanghai)

−0.65** (0.39) 0.33 (1.18) 0.25 (0.31) −0.85 (0.87)

−0.65** (0.39) 0.33 (1.18) 0.26 (0.30) −0.87 (0.80)

3.55** (1.86) −0.53 (0.46) –0.55 (0.99) 0.54** (0.29) –1.64** (0.74)

P-value of Wald test No. of observations

54

54

51

Log (industrial output 1952) Log (land 1952) Log (altitude)

Note. *** significance at 1%, ** significance at 5%, * significance at 10%. Sources: collected by the authors.

X is the control set, including log (output 1952), measuring the per capita industrial output (in yuan) in 1952, and log (land 1952), measuring the per capita arable land area (per mu) in 1952. These variables control for the initial conditions in a county. In addition, three geographical variables are controlled for in the estimation. One is the altitude of the county seat (log (altitude)). The second variable, log (distance), is the geographical distance from the county seat to Shanghai. In Table A2.1, columns 1 and 2 present the estimation results by using GC and GC_Strong/GC_Normal as explanatory variables respectively. In both columns, the estimated coefficients of GC and GC_Strong/GC_Normal are positive and statistically significant.

Appendix 2

317

According to the estimated coefficients, we can calculate that on average, the probability of withdrawal from a collective is 33 percentage points higher (in column 1) and 35 percentage points lower (in column 2) in guerrilla counties than in non-guerrilla counties. In addition to the reduced form of Equations (A2.1) and (A2.2), we also use the probit method to estimate the following equation to take into account the mechanism by which local revolutionary experiences played a role in withdrawals from collectives, nao tuishe ¼ C0 þ α1  LCSi þ β  X þ δi

ðA2:3Þ

where LCS is the local cadre’s de facto strength after 1949, which is defined in Appendix 1 as the average proportion of local people among all heads and deputy heads of a county government between 1949 and 1965. Equation (A2.3) captures the idea that the role of revolutionary experiences was mediated by their impact on the power balance between the two camps. In Zhejiang counties after 1949, this was largely reflected by the force of local cadres in county administration rather than in the county party committee, which is an indicator of their true political influence in a county. Thus we expect withdrawals from collectives to be more likely to occur in counties where local cadres had greater leverage on local policymaking, which in turn resulted from their pre-1949 local revolutionary experiences. In other words, in Equation (A2.3) LCS is an endogenous variable and GC is the exclusive instruments for LCS. Column 3 gives the results when LCS is treated as an exogenous variable. In columns 4 and 5, LCS is endogenous and we use GC and GC_Strong/Normal as instruments for LCS. The Wald test results at the bottom of columns 4 and 5 show that in both columns we cannot reject the null hypothesis that LCS is exogenous. Regardless, the estimations based on an instrumental-variable (IV) method still generate consistent results. In fact, in all three columns (columns 3–5), LCS has a positive coefficient and is statistically significant. According to the IV results, if LCS increases from half of its standard error below its median value (0.15) to half of its standard error above its median value (0.32), the probability that withdrawals from collectives will occur increases by 0.83 points.

Appendix 3 The Intensity of Local Armed Struggles in Zhejiang: A Test

As introduced in Chapter 4, at the local level armed struggles during the Cultural Revolution were aimed primarily at ensuring the political survival of the various groups and at gaining the upper hand over their rivals in the new balance of power as the dust settled. Ultimately, how the battles unfolded and which group emerged victorious were reflected in the establishment and composition of the revolutionary committees in the different localities as well as in the new power structures that replaced those who had been in power prior to the Cultural Revolution We can understand the intensity of a local armed struggle in a county by examining the time interval (the number of months) between January 1967, when Beijing called on rebels to seize power from the incumbent power holders, and the time when the local revolutionary committees (RCs) were officially established. The rationale underlying this measurement is that when the armed struggles were fierce because no one faction could easily overwhelm its rivals, the struggle would go on for a long period and it would take a longer time from the collapse of the old power balance to the formation of a new one. Our analysis in Chapter 4 suggests that the armed struggles were fiercer in the guerrilla counties than in the non-guerrilla counties. The reason is that in the NGCs, there were fewer groups from outside the regime to challenge the incumbent southbound leaders who basically monopolized the various political resources. Hence, in these localities, either the southbound camp could easily crush any opponents from outside the regime who attempted to challenge it, or the southbound camp was further divided into several groups who competed with each other. Either way, the political situation basically changed with changes in the political atmosphere, depending on the

318

Appendix 3

319

political atmosphere in the provinces and ultimately in Beijing. Once patrons at higher levels made a final decision, the dust would settle and a new balance of power would come into being. In contrast, the existence of the local guerrilla cadre group in the guerrilla counties and their coalition-building strategy to mobilize grassroots support presented a real challenge to the power holders and further complicated the situation. Due to the participation of new players and their success in rallying local social forces around them, the outcome of the armed struggle was beyond the control of the incumbent southbound leadership and their patrons at higher levels. Because each party had its own power base and constituency that its rivals could not easily destroy, the battles would last until they reached a new equilibrium in the power balance. We thus have the following testable hypothesis: Hypothesis: After January 1967, it took a longer time in the guerrilla counties than in the non-guerrilla counties to form local revolutionary committees. We test the hypothesis with the following specifications: RC  time ¼ C0 þ α1  GC=GC  Strong=Normali þ β  X þ δi

ðA3:1Þ

where subscript i stands for the ith county. C0 is a constant term. δ is the error term. RC_time is the number of months between January 1967 and the month when a RC was formed in the county. GC, GC_Strong, and GC_Normal are three binary variables for whether a county was a guerrilla county, whether a county was a guerrilla county with a local guerrilla headquarters, and whether a county was a guerrilla county with typical guerrilla strength respectively (see Appendix 1). X is the control set, including log (industrial output 1952), measuring the per capita industrial output (in yuan) in 1952, and to control for the income level of a county, and log (population 1952), to measure the size of the population in a county in 1952. The size of a county’s population can influence the intensity of the local armed struggle via two channels: (1) with a larger population, the composition of social forces is more complex and there are more potential manpower resources for the factions to mobilize, resulting in fiercer fighting, or

320

Appendices

(2) with a larger population, the political status of a county is more important, thus higher-level authorities are more likely to interfere in the local armed struggle in order to end the conflict as soon as possible. The effects of these two channels cancel each other out. As a result, the overall impact of the size of a county population is ambiguous and we can infer that it is only based on the final estimation results. In addition, X controls for the endowment conditions in a county, including log (Land 1952), measuring the per capita arable land area (mu) in 1952. We use this to control for the comparative advantage of an agricultural or crop-farming county. A county with more arable land tends to be based on an agricultural economy. Given that armed struggles basically occurred in urban areas, an agricultural county should be less involved in the conflict. The variable log (altitude) is the altitude of the county seat, and log (flat land ratio to total area) is the area of flat land as a proportion of the total county area. The two variables measure whether a county provides favorable geographical conditions for an armed struggle. For example, the plain topography had a great impact on the command, organization, and performance of armed conflict. A county with a greater altitude value and a smaller proportion of flat land indicates that the geographic conditions are not conducive for small skirmishes to develop into massive armed combat. However, a county with greater altitude and less flat land may become a hotbed for guerrilla-style conflict. Hence it is difficult to make ex ante judgments about the overall effects of the two variables. Finally, we controlled for log (distance), the geographical distance from the county seat to Shanghai, the political hub of all of eastern China. We use the variable to control for the extent to which a county is geographically susceptible to the development of high politics emanating from Shanghai. Columns 1 and 2 of Table A3.1 report the estimation results for equation (A3.1). In column 1, the coefficient of GC is positive and statistically significant. In column 2, although GC_Normal is not significant, GC_Strong is positive and significant. These results are consistent with our hypothesis that, compared with the NGCs, armed struggles in the GCs were fiercer and lasted longer before an RC was established.

Appendix 3

321

In addition to the reduced form of Equation (A3.1), we also estimate the following equation to take into account the mechanism by which local revolutionary experiences had an impact on armed struggle: RC  time ¼ C0 þ α1  LCSi þ β  X þ δi

ðA3:2Þ

where LCS is a local cadre’s de facto strength after 1949, as defined in Appendix 1, as the average proportion of local people in positions as heads and deputy heads of a county government between 1949 and 1965. Equation (A3.2) captures the idea that the role of revolutionary experiences was mediated by their impact on the power balance between the two camps. In Zhejiang’s counties after 1949, this was largely reflected by the force of local cadres in the county administration rather than on the county party committee, which reflected their true political influence in a county. Thus we expect armed struggle should be fiercer and an RC should take a longer time to form in counties where local (guerrilla) cadres had a greater presence in the county administration. In other words, in Equation (A3.2), LCS is an endogenous variable and GC is the exclusive instrument for LCS. Column 3 of Table A3.1 reports the results when LCS is viewed as exogenous. Columns 4 and 5 present the results when LCS is viewed as endogenous and GC (column 4) and GC_Strong/Normal (column 5) are the exclusive instruments for LCS. In all the columns, the coefficient of LCS is positive and statistically significant. It is noteworthy that in column 5, the F value in the first stage of IV estimation is 6.6, indicating that there is a weak instrument problem in the estimation. Therefore, we use a limited-information maximum-likelihood method to estimate Equation (A3.2), still using GC_Strong/Normal as the exclusive instruments for LCS. The results are presented in column 5. In Equations (A3.1) and (A3.2), the dependent variable is the RC_time, the time interval (number of months) between January 1967 and the month when an RC was formed in a county. Another dependent variable is LGRC_Time, the time interval (number of months) between January 1967 and the month when the leading group of a revolutionary committee was formed. LGRC_Time measures how long it would take for the new top leadership of a county to be established after the rebels were allowed to seize power. Using specifications similar to those in Table A3.1, the estimation results when

322

Appendices

using LGRC_Time as a dependent variable are reported in Table A3.2. In columns 1 and 2, we use GC and GC_Strong/Normal as explanatory variables respectively. In column 3, we use LCS as an explanatory variable and treat it as an exogenous variable. In columns 4 and 5, LCS is viewed as endogenous and we use GC (column 4) and GC_Strong/Normal (column 5) as the exclusive instruments for LCS. As the results show, in all columns the coefficients of GC, GC_Strong/Normal, and LCS are positive and statistically significant, which is consistent with the hypothesis. In addition, in Table A3.1 the coefficient log (industrial output 1952) is positive and significant, whereas in Table A3.2 the significance disappears and even becomes negative in the IV estimation. The result suggests that the formation of an RC indeed took longer in counties with a higher industrial output, whereas once an RC was formed, the establishment of leading groups was insensitive to the industrial structure. In most columns in both Tables A3.1 and A3.2, log (population 1952) has a negative coefficient and is statistically significant. This suggests that counties with a larger population received more attention and more interference from higher levels in order to keep the situation under control, resulting in a shorter period of fighting in these counties. In all columns in both tables, log (arable land 1952) has a negative coefficient and is statistically significant. This is highly consistent with the expectation that counties with favorable conditions for crop farming tended to have armed struggles of a shorter duration. Again, this may indicate that politicians at higher levels attempted to confine the effect of an armed struggle to urban centers to avoid influencing agricultural output in the countryside. The variable log (altitude) also has a negative and significant coefficient in columns 1 and 2 in both Tables A3.1 and A3.2, but it loses its significance in columns 3–5 in both tables. Again, this shows that in counties with unfavorable terrain conditions (i.e., counties with higher altitudes), the duration of armed struggle tended to be shorter. But this effect seems to be absorbed by the strength of the local cadres (columns 3 to 5), showing that compared with the political-incentive mechanism, the role of geographical conditions as embodied by altitude was secondary. Similarly, log (distance to Shanghai) is positive and significant in columns 1 and 2 of Table A3.1, but it loses significance in columns 3 to 5 in the same table. Also, the variable is insignificant in all columns in Table A3.2.

Appendix 3

323

Table A3.1 Test results: dependent variable is RC_time (the time interval, i.e., the number of months, between January 1967 and the month when a revolutionary committee was formed in a county) Variable GC

1 OLS

log (flat land ratio to total area) log (distance)

P-value of Wald test F-value of the first-stage results No. of observations

4 IV

5 IV

14.57* (9.99) 2.92*** (0.99) −2.50** (1.36) −7.72*** (2.76) −1.57 (3.26) −0.03

13.9** (8.41) 2.91*** (0.98) −2.46** (1.34) −7.79*** (2.63) −1.67 (2.99) −0.03

(0.17) 2.04 (2.59)

(0.15) 2.14 (2.46)

0.82 14.37

0.83 6.69

3.22* (2.10) 3.11 (2.40)

GC_Normal

log (industrial output 1952) log (population 1952) log (arable land 1952) log (altitude)

3 OLS

3.16* (2.17)

GC_Strong

LCS

2 OLS

12.30** (6.41) 2.30*** 2.30*** 2.90** (0.71) (0.73) (1.08) −1.67 −1.69 −2.34* (1.61) (1.63) (1.42) −5.44* −5.47* −7.99*** (3.35) (3.43) (2.74) −3.55* −3.57* −1.97 (2.54) (2.54) (2.49) −0.11 −0.11 −0.05 (0.16) (0.16) 5.02** 5.04** (2.61) (2.59)

55

55

(0.13) 2.43 (2.28)

52

52

52

Note. *** significance at 1%, ** significance at 5%, * significance at 10%. Sources: various county gazetteers from Zhejiang’s counties. For a list of the counties, see Table A1.1 in Appendix 1.

324

Appendices

Table A3.2 Test results: dependent variable is LGRC_Time (the time interval, i.e., the number of months, between January 1967 and the month when the leading group of a revolutionary committee was formed) Variable GC

1 OLS

2 OLS

3 OLS

4 IV

5 IV

5.13** (2.18)

GC_Strong GC_Normal

4.16** (2.10) 6.18*** (2.14)

LCS

17.06*** (4.58) log (industrial 0.52 0.49 −0.25 output 1952) (0.89) (0.94) (1.12) log (population −5.89** −5.42** −6.57** 1952) (2.76) (2.82) (2.65) log (arable −10.69** −9.81* −12.53*** land 1952) (5.48) (5.93) (3.62) log (altitude) −4.16** −3.92** −0.19 (2.09) (2.08) (1.74) −0.03 −0.02 0.11 log (ratio of flat land to total area) (0.14) (0.15) (0.09) Log (distance) 3.32 3.06 −1.52 (3.38) (3.16) (2.44) P-value of Wald test F-value of first-stage results No. of observations 53

53

50

25.15** 23.69** (12.14) (14.18) −0.21 −0.22 (1.17) (1.14) −7.22*** −7.11*** (2.20) (2.37) −11.46*** −11.65*** (3.89) (3.92) 1.26 0.99 (2.61) (2.89) 0.18* 0.17 (0.13) −2.94* (2.28)

(0.14) −2.68 (2.41)

0.44 12.24

0.62 5.92

50

50

Note. *** significance at 1%, ** significance at 5%, * significance at 10%. Sources: various county gazetteers from Zhejiang’s counties. For a list of the counties, see Table A1.1 in Appendix 1.

Appendix 4 Placebo Tests and Matching Estimations on the Effects of Power Structure

Placebo Test I Table A4.1 Effects on total industrial output (1952–1965) Dependent variable: Ln (total industrial output per capita) Zhejiang province 1

Jiangsu province

2

3

4

5

MFC × 1957 0.023 (0.122) MFC × 1965 0.010 (0.170)

−0.124 (0.123) −0.082 (0.181)

−0.180 (0.120) −0.229 (0.182)

−0.093 (0.162) −0.483** (0.220)

−0.254 −0.285 (0.179) (0.171) −0.753*** 0.818*** (0.231) (0.240)

Controls coastline Controls altitude Controls flat ground Weighted by pop. 1957 Observations Adjusted R-squared County FE Year FE

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

6

YES

174 0.56

174 0.60

174 0.58

169 0.66

169 0.76

168 0.76

YES YES

YES YES

YES YES

YES YES

YES YES

YES YES

Notes. Robust standard errors clustered at the county level are shown in parentheses. The regressions in columns 3 and 6 are weighted by the counties’ total population in 1957. *** significance at 1%, ** significance at 5%, * significance at 10%.

325

326

Appendices

Placebo Test II Table A4.2 Effects on state-owned industrial output (1965–1998) Dependent variable: Ln (state-owned industrial output per capita) Zhejiang province 1

Jiangsu province

2

3

4

5

MFC × 1978 −0.072 (0.167) MFC × 1998 0.162 (0.278)

−0.175 (0.192) 0.148 (0.316)

−0.204 (0.183) 0.103 (0.348)

−0.316** (0.130) 0.194 (0.198)

−0.520*** −0.466*** (0.121) (0.139) −0.104 0.130 (0.227) (0.236)

Controls coastline Controls altitude Controls flat ground Weighted by pop. 1965 Observations Adjusted R-squared County FE Year FE

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

6

YES

161 0.65

161 0.65

161 0.65

155 0.90

155 0.91

153 0.92

YES YES

YES YES

YES YES

YES YES

YES YES

YES YES

Notes. Robust standard errors clustered at the county level are shown in parentheses. The regressions in columns 3 and 6 are weighted by the counties’ total population in 1965. *** significance at 1%, ** significance at 5%, * significance at 10%.

Appendix 4

327

Table A4.3 Matching estimation: effects on economic performance (1978–1998) Panel A: Zhejiang province

MFC Observations

GDP Growth

Ln (GDP per capita)

Ln (industrial output per Ln capita) (luminosity)

1

2

3

4

2.064*** (0.448) 58

0.282*** (0.100) 58

0.434** (0.180) 58

0.360*** (0.133) 57

Panel B: Jiangsu province

MFC Observations

Ln (GDP per GDP Growth capita)

Ln (industrial output per capita)

Ln (luminosity)

5

6

7

8

4.744*** (0.577) 58

0.945*** (0.111) 58

1.073*** (0.279) 58

0.375** (0.150) 58

Notes. Robust standard errors are shown in parentheses. Due to the small sample size, we used the nearest-neighbor matching method and selected the three nearest neighbors for a treated unit. *** significance at 1%, ** significance at 5%, * significance at 10%.

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Index

action, collective, 28, 29, 69, 104, 106–107, 108, 111, 295, 297, 299–300, 301 Advance Division (挺进师), 47–49, 50, 53 agricultural radicalism, 214 anti-localism, 63, 76, 209 armed work teams (武工队), 52, 53 authoritarianism institutionalized, 40 regionally decentralized, 21, 23 baochan daohu, 26, 112, 122–124, 128, 228–230, 232–233, 241, 307, see also contracting output to (individual) households black market, 10, 147, 151–153, 185, 194–195 Bo Xilai, 3, 4, 9 Bu Xinsheng, 253–255 business, underground illegal economic activities, 210 underground construction teams, 196 underground factories, 198, 202, 210 underground long-distance transport, 196 Central China Revolutionary Base Area (CCRBA), 267, 268–271, 273, 275, 278 Central Committee, 47, 60–63, 88, 90–92, 162 Central Field Army, 268 Chen Bibo, 187 Chen Liyun, 162, 164 Chen Shaodong, 80, 139, 187 Chen Yi, 59–60 Chen Zhixiong, 235–237 Chongqing model, 4 clientelism, 40–41, 301

collectivization, 10, 82, 86–89, 92, 94–95, 97–98, 99, 100–101, 103–104, 105, 108, 109–112, 114–115, 116, 119–120, 124, 130, 151, 155, 206, 307, see also decollectivization commune and brigade firms (CBFs), 10, 196–203 contracting output to individual households, 24, 26, 112, 115, 212 co-operativization, 92, 100 crime anti-economic-crime campaign, 238, 244 economic, 84, 210, 257 Cultural Revolution, 10, 27, 31–35, 40, 59, 66, 131, 133, 148, 155–157, 160, 164–166, 170, 172–174, 175–177, 179, 181–189, 190–195, 196–199, 201–203, 206–209, 211, 216, 219, 243, 262, 269–272, 273–275, 276–278, 281, 282–284, 307, 310 Dai Guofang, 2–3 Dai Jietian, 114–117, 122, 229 Dazhai campaign, 184, 189, 191–193, 221 model, 189–190, 213–214 work-point system, 191, 192 decentralization and recentralization, fiscal, 14 decentralization, economic, 13, see also decentralization and recentralization, fiscal decollectivization, 192, 206, 212, 235 Deng Xiaoping, 10, 16, 25–27, 156–157, 205, 213, 216–219, 226, 235, 237–238, 245, 257–258, 260–262

345

346 Deng Zihui, 90–94, 96–99, 113, 115, 119, 120–121, 228 dictator, benevolent, 36 Dong Chaocai, 243, 247–250, 255–256, 258–260 Du Runsheng, 96, 220–221, 228, 236 Eastern Field Army, 268 economism (经济主义), 188 Eight Big Kings affair, 210–211, 237–239, 244, 246, 259–260 Eighth Route Army, 56–57, 60, 62–63 elite dominant, 30, 278 marginalized, 7, 28–31, 33–35, 38–39, 42, 43, 87, 143, 188, 283, 286, 295, 297–298, 303, 306, 310 faction dominant, 7, 22, 28–29, 30–31, 32, 38–39, 68, 76, 81, 139, 146, 188, 243, 253, 255–256, 270, 282, 287, 295, 307 marginalized, 81, 131, 271, 282 five small industries (五小工业), 197 Four Clean-Ups (siqing), 131, 146, 148–149, 150, 156, 182, 187 Go Up to the Mountains and Down to the Countryside (上山下乡), 172 government-business relationships, 43, 291, 303 grassroots supporter, 28, 30–31, 38–39, 69, 81, 150, 155, 295, 300, 301, 303–304 Great Leap Forward (GLP), 80, 88, 127, 130–132, 134, 136–139, 143, 146, 148–152, 154, 182, 185, 187, 190, 197, 272 guerrilla cadre, 31–33, 44, 45, 58, 66–71, 75–81, 123, 131, 140–145, 146, 155, 167, 170–173, 176–179, 180, 182, 186, 187, 192, 207–209, 272, 275, 291–293 guerrilla county (GC), 32, 33–35, 67–69, 75, 82, 107, 114, 128–129, 131, 150, 173, 179, 181, 185, 188, 191, 193–194, 198–201, 251–253 guojin mintui (国进民退), 2

Index Haiyan Shirt Factory (HSF), 253–254 hand, grabbing, 5, 39, 189 hang-on enterprises, 241–242, 248 high-stage collectives (HSCs), 88, 92–93, 96, 98–103, 104, 111, 114–117, 120, 130, 135 Hongqiao Group (虹桥派), 174–176, 178, 187, 202 household responsibility system (HRS), 17, 22, 26, 112–113, 116–119, 120–121, 123–129, 146–147, 212, 225–227, 229, 235 Hu Jinlin, 210 Hu Qiaomu, 236–238, 250, 257 Hu Yaobang, 26, 205, 216, 221, 236, 244–246, 250, 254, 257 Hua Guofeng, 204, 208, 213–214, 216–217, 218, 220, 222 Huangyan affair, 296 institution, informal, 40–41 Jiang Hua, 64, 96, 100, 103, 107, 121, 132–133, 137–138, 157–160, 162, 165, 208, 209, 256 Jiangsu model, 291, see also Su’nan Model Jinxiao Detachment (金萧支队), 57, 70, 79 Lan Shili, 3 land reform, 63, 76–78, 83, 86, 149, 270 Lantian Hotel event (蓝天宾馆事件), 263 Li Guimao, 116–117, 118–119, 121–122, 229 Li Tiefeng, 71, 78, 170 Li Yunhe, 115–117, 119–122, 229 Liaoyuan Co-operative (燎原社), 116–117, 118–119, see also Liaoyuan experiment Liaoyuan experience, 116 Liaoyuan experiment, 116 Lin Biao, 156, 160, 162, 165, 178, 182, 207, 208 Lingku market (岭窟市场), 194 Liu Shaoqi, 61, 88–90, 92–94, 97–99, 113, 130, 149, 156–157, 163, 165

Index Liu Ying, 47–48, 50–51, 53, 260 Liushi township (柳市镇), 147, 150, 202, 210, 238 localized property-rights protection (LPRP), 7–8, 29, 31, 35, 43, 295, 307, 309 mutual protection, 32 quasi-public goods, 29, 43 Long Yue, 78–79, 80 loyalty tournament, 37, 69 Making Three Contributions and Implementing One Amalgamation (三献一并), 191 Mao Zedong, 22, 44, 61, 63–64, 83–86, 89–92, 94, 96–101, 104, 109–110, 112, 113, 118–120, 130–133, 135, 136–138, 156, 158, 160, 180, 204, 208, 236, 292 Mao Zhenhua, 294–295 mass line (群众路线), 187, 188 Nan Ping, 162–166, 168, 171–172, 208 Nan–Chen–Xiong, 166, 168–169, 173, 180, 182 nao tuishe (闹退社), 10 nengren (能人), 291, 292 New Fourth Army (NFA), 50–51, 54, 56, 59–60, 62–64, 267–268 Zhedong Guerrilla Column of (新四 军浙东游击纵队), 53, 70 Nian Guangjiu, 237 non-three areas (非三靠地区), 228 Northern Expedition of the AntiJapanese Vanguard (北上抗日先遣 队), 47 party core group (党的核心小组), 164, 172 Peng Shangwang, 202 people’s commune, 112, 135, 212, 217, 220, 222 power distribution, 58–59, 63–64, 68, 71, 76, 166, 305 power structure, 31, 34–35, 38, 42, 58, 62, 64, 67, 69, 113, 123, 129, 149, 150, 155, 165, 206, 208, 265, 270–272, 276, 291, 293, 302, 305 private property rights credible commitment to, 32

347 protection and weak protection of, 15, 27, 309 security of, 4, 6 promotion tournament, 21, 23 provincial Red Storm (省红暴), 158, 162–163, 166, 172, 188 provincial United Headquarters (省联 总), 158, 162–163, 165–166, 168, 171–172, 178, 187–188 Qian Yunhui, 298 Qiu Qinghua, 81, 171 Ren Zhongyi, 221, 226, 236, 237 resource abundance, 301 revolutionary committee, 164–167, 169, 171–172, 174–176, 177, 181 Second Field Army, 57 Shandong Field Army, 268 shareholding co-operatives, 248–249, 251, 261, 262 signal, 206, 209, 218, 219, 229, 235, 239, 242, 263, 299 signaling, 31, 38, 183, see also signal Smash the Black, 3–4 southbound cadre, 31, 32, 44, 45, 49, 58, 60, 64–68, 69–71, 75–76, 78–80, 110, 121, 122–123, 128, 139, 141, 145–146, 170, 176–177, 186, 207–209, 256, 266, 270, 275, 291–293 Southern Tour (南巡), 10, 16, 204, 261–262 stationary bandit, 36 struggle, armed, 163–164, 166, 169, 174 Su Yu, 47–48, 50, 51, 52, 53, 59, 63 Su’nan model, 266, 291, see also Jiangsu model survival, political, 7, 23, 30, 31, 32, 37, 43, 165, 179, 185, 187, 188, 271 Third Field Army, 44, 56–58, 121, 268, 292 Thirteenth Red Army, 46, 48, 68 three-in-one unity (三联合), 164, 172 Three Pass (把三关), 190, 193 Three-Year Guerrilla War, 47, 48–50, 52–53, 55, 58–59

348 Tie Ying, 11, 227 Tieben Iron Co., 2, 307 township and village enterprises (TVEs), 10, 14, 17, 196, 252, 261–263, 275, 276, 291, see also commune and brigade firms (CBFs) Tu Qingxia, 174–178 Wan Li, 24, 215–219, 221–222, 224, 225, 233, 250, 256 Wang Renzhong, 220, 223 Wannan incident (皖南事变), 51, 53, 59–60 wearing red hats (戴红帽子), 6, 15, 241, 247, 252, 261 Wenzhou, 9–11, 18–19, 45–46, 50, 53, 57, 70–71, 78–79, 80, 86, 119, 121, 123, 135, 152, 157, 160–161, 163, 167–172, 173, 177, 185, 187, 191–192, 194, 196, 198–199, 202, 210, 211, 228–229, 238–241, 243–245, 247–251, 253, 256–261 Wenzhou model, 291 Wenzhou United Headquarters (温联 总), 161, 163, 167–170, 178, 187 White Skin but Red Heart (白皮红心), 55, 77 withdrawal from collectives, 10, 102–108, 110–112, 114, 124, 128, see also nao tuishe (闹退社) collectivization movement, 105, 108 Wu Ying, 308 Xi Zhongxun, 225–226 Xiang Ying, 51, 59–60 Xianju, 103, 107–108, 194 Xiaoshan, 70, 75, 79, 102, 108, 109, 128, 135, 140, 143, 145, 147, 149, 151, 153, 157, 161, 163–164, 195, 229, 252–253, 262, 263

Index Xie Baomin, 175, 178 Xiong Yingtang, 164, 166 Xu Jiatun, 225, 271 Xu Shiyou, 180, 271 Yan’an, 49–50, 58, 60 Yang Siyi, 64, 80, 81, 133, 139, 209 Ye Wengui, 249 Yongyue Anti-Japanese Guerrilla Contingent (永乐抗日游击总队), 53 Yuan Fanglie, 243–247, 250, 255–256, 260 Yueqing Group (乐清派), 174–176, 187 Yueqing Proletarian Revolutionary General Headquarters (乐清县总 司), 174, 189 Yueqing Revolutionary United Headquarters (乐清县联司), 174 Yueqing United Headquarters (乐清县 联总), 174–175, 177, 187, 189 Zhao Ziyang, 26, 205, 216, 218, 219–220, 222, 236, 250, 256, 257–258 Zhedong Anti-Japanese Base Area, 53 Zhedong Guerrilla, 53–54, 57, 75, 81 Base Area, 53, 54, 133 Column, 53, 70 Third Detachment of, 54 Zhejiang model, 9, 25, 291, 298, see also Wenzhou Model Zhe’nan Traitor Clique (浙南叛徒集 团), 171, 177, 209 Zheng Yuanzhong, 210 Zhexi’nan Guerrilla Base Area, 47, 48, 53 Zhou Pizheng, 80