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Published online by Cambridge University Press: 07 May 2025
Revolutionaries in the 1950s offered this prospect to the Chinese people: a highly egalitarian society, the product of land reform, collectivization and nationalization, with low but gradually rising income and welfare provisions for all, would chart a course toward mutual prosperity on foundations of socialist development. The key lay in restriction of markets and transfer of the surplus to the state for investment centered in heavy industry in the cities and collective agriculture in the countryside, eventually enabling China to overcome poverty and underdevelopment. This paper assesses the nature and impact of that low consumption socialist regime then and the subsequent strategies that have sustained low consumption for labor in city and countryside in the subsequent market and capitalist transition. We locate the discussion in relation to theories of original accumulation, proletarianization, wage stagnation, and low consumption in the emerging capitalist world economy of which China has been a part since the 1970s. We hope to add to that discussion by exploring a range of structures that have produced incomplete proletarianization and inequality during two periods of socialist transition (1950s to 1970) and capitalist transition (1970s to present).
1 We are grateful to Jenny Chan, Pun Ngai and participants in the City University of Hong Kong conference on Chinese authoritarianism for critical comments and suggestions on earlier drafts of this paper. The authors thank Liao Ching-Hua and Huang Pei-Chun for their excellent research assistance.
2 Robert Brenner, The Boom and the Bubble: The US in the World Economy, London: Verso, 2006; R. Taggart Murphy, “In the Eye of the Storm: Updating the Economics of Global Turbulence, an Introduction to Robert Brenner's Update,” The Asia-Pacific Journal; Robert Brenner, “What is Good for Goldman Sachs is Good for America: The Origins of the Current Crisis.”
3 The Forbes 2010 China Rich List notes that China added 49 new billionaires in 2010 for a total of 128: link.
4 See the contributions in Martin King Whyte, ed., One Country, Two Societies. Rural-Urban Inequality in Contemporary China, Cambridge; Harvard University Press, 2010, particularly Wu Jieh-min, “Rural Migrant Workers and China's Differential Citizenship: A Comparative Institutional Analysis,” pp. 55-84; Wang Feng, “Boundaries of Inequality: Perceptions of Distributive Justice among Urbanites, Migrants, and Peasant,” pp. 219-40; and Fei-ling Wang, “Renovating the Great Floodgate: The Reform of China's Hukou System,” pp. 335-64.
5 Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, Boston: Beacon Press, 1975, pp. 77-78; 86-88. See also Wu Jieh-min's “Rural Migrant Workers and China's Differential Citizenship: A Comparative Institutional Analysis.”
6 See Dorothy Solinger, Contesting Citizenship in Urban China: Peasant Migrants, the State, and the Logic of the Market, Berkeley: University of California Press, 1999.
7 Mark Selden with Ka Chih-ming, “Original Accumulation, Equality and Late Industrialization: The Cases of Socialist China and Capitalist Taiwan,” in Mark Selden, ed., The Political Economy of Chinese Development, Armonk, M.E. Sharpe, 1993, 109-36.
8 The economist Hama Noriko offers a critical perspective on this question in an interview. “China is said to be the world's factory, but it is not an accurate depiction of what is happening. Rather, the world is making China its factory. An overwhelming majority of factories in China are not Chinese; they are coming from all over the world. This is unprecedented. When Great Britain used to be called “the factory of the world, “the factory had British technologies and they were capitalized by the British. In the postwar period, America was the world's factory, and Ford was the most symbolic company icon of American technology as the production-line manufacturing invented by Ford increased production volumes dramatically. Then Japan became the world's factory, with its major players being Toyota, Nissan, Honda, Sony and Panasonic — and they are all Japanese. But China today is different — because the manufacturers there are the likes of General Motors, Ford, Toyota and Volkswagen.” Tomoko Otake, “Scholar Brings Economics to Life,” The Japan Times, November 7, 2010. Hama makes an important distinction between China as workshop and the US and Japan as workshop in an earlier era. But she also misses important dimensions of the Chinese phenomenon. The overwhelming majority of factories in China, including many large and advanced factories, are of course Chinese owned and operated. Yet it is true that many cutting edge factories producing for export are foreign enterprises whose names read like a Who's Who of the world's advanced technology industries. And that it is the multinational enterprises that capture the lion's share of profits. Missing from discussion, however, is the recognition of the steady advance both of China's technological prowess and its own enterprises. China then both is, and shows every sign of becoming, the workshop of the world. For an interesting, if mistitled, take on contemporary underconsumption see Nouriel Roubini, “The Confucian Consumer: Seven reasons why the Chinese save, when they really should be spending,” Newsweek January 24, 2011, p. 31.
9 “Inequality and Its Enemies in Revolutionary and Reform China,” Ching Kwan Lee and Mark Selden, Economic and Political Weekly, XLIII No 52, December 27, 2008. Reprinted in China After 1978. Craters on the Moon, Bombay: Orient Blackswan Books, 2010.
10 Wu Jieh-min, 1997, “Strange Bedfellows: Dynamics of Government-Business Relations between Chinese Local Authorities and Taiwanese Investors,” Journal of Contemporary China 6 (15): 319-346.
11 Wu Jieh-min, 2010, “Three Worlds of Migrant Workers: Comparing Local Citizenship Regimes in Globalized China,” unpublished paper presented on the international conference “Breaking Down Chinese Walls: The Changing Faces of Labor and Employment in China,” Cornell University, Ithaca, New York, September 26-28, 2008.
12 For Marx, Bukharin, Preobrazhensky and Gerschenkron's approaches to original accumulation see Selden with Ka, “Original Accumulation, Equality, and Late Industrialization: The Cases of Socialist China and Capitalist Taiwan,” pp. 109-14.
13 Pun Ngai, Chris King Chi Chan and Jenny Chan, “The Role of the State, Labour Policy and Migrant Workers' Struggles in Globalized China,” The Global Labour Journal, I, 1, January, 2010, pp. 132-51. The authors explore what they describe as the “unfinished proletarianization” of migrant workers, “turning rural bodies into industrial waged labour,” p. 136 ff. The Global Labour Journal is accessible online. See also Tiejun Cheng and Mark Selden The origin and social consequences of China's hukou system. The China Quarterly (1994) 139, pp.644–68. Kam Wing-chan, “The Global Financial Crisis and Migrant Workers in China: ‘There is No Future as a Labourer; Returning to the Village has No Meaning,‘” International Journal of Urban and Regional Research (2010), pp. 1-23.
14 Pun Ngai and Lu Huilin, “Unfinished Proletarianization: Self, Anger, and Class Action among the Second Generation of Peasant-Workers in Present-Day China,” Modern China 36(5), 2010, pp. 493-519. The authors see the second generation as far more prone to collective action than their predecessors.
15 Victor Lippit, Land Reform and Economic Development in China, White Plains: International Arts and Sciences Press, 1974), p. 123.
16 Zhonghua renmin gongheguo fagui huibian (Collection of Laws of the People's Republic of China) 12 Vols., Beijing: Guowuyuan, 1955. I, 579; Vivienne Shue, Peasant China in Transition. The Dynamics of Development Toward Socialism, 1949-1956, Berkeley: University of California Press, 1980, pp. 235-45; Jean Oi, State and Peasant in Contemporary China: The Political Economy of Village Government, Berkeley: University of California Press, 1989, pp. 13-65.Oi provides detailed data on rural grain procurement from 1952-86 in relationship to the total harvest and subsistence consumption, espec. Tables 6, 11 and 18.
17 Peter Schran, The Development of Chinese Agriculture, 1950-1959, Urbana: University of Illinois Press, 1969, pp. 142-45; John Wong, Land Reform in the People's Republic of China, New York: Praeger, 1973, p. 246
18 Yang Jianbai and Li Xuezeng, “China's Historical Experience in Handling the Relations Between Agriculture, Light Industry and Heavy Industry,” Social Sciences in China 1, 3, pp. 31-62; Nicholas Lardy, “Regional Growth and Income Distribution in China,” in Robert Dernberger, ed., China's Developmental Experience in Historical Perspective, Cambridge: Harvard University Press, 1980, p. 130. Carl Riskin, China's Political Economy. The Quest for Development Since 1949, Oxford: Oxford University Press, 1987, pp. 55-60.
19 Pun, Chan and Chan, “The Role of the State, Labour Policy and Migrant Workers' Struggles in Globalized China,” pp. 137, 143-44. Presumably the State Council's survey did not include the tens of millions of unregistered migrant workers, so that the actual percentage of workers working without a legal contract is much higher. The Labour Contract Law of 2008 stipulated mandatory labor contracts for all new employees. It remains to be seen whether the law is being widely implemented and with what consequences.
20 Add World Bank source.
21 Link.
22 Robert Frank, “Income Inequality. Too Big to Ignore,” The New York Times, October 16, 2010. The direction of change has, if anything, accelerated since 2007.
23 T. Sicular, Ximing Yue, Björn Gustafson and Li Shi, “The Urban-Rural Gap and Income Inequality,” in Guanghwa Wan, ed., Understanding Inequality and Poverty in China: Methods and Applications, Basingstoke: Palgrave Macmillan, 2008; Carl Riskin, “Inequality: Overcoming the Great Divide,” in Joseph Fewsmith, ed., China Today, China Tomorrow. Domestic Politics, Economy and Society, Lanham: Rowman and Littlefield, 2010, pp. 93-97. See also Jenny Chan and Ngai Pun, “Suicide as Protest for the New Generation of Chinese Migrant Workers: Foxconn, Global Capital and the State,” Asia-Pacific Journal 37-2-10, September 13, 2010.
24 Ho-fung Hong, “Rise of China and the global overaccumulation crisis,” Review of International Political Economy 15:2, May 2008, 149-79, especially pp. 162-63.
25 The above country figures were taken from a Goldman Sachs Report, except those of China. “The Saving Rates in China and Its Long-term Trends,” (Chinese) Quanqiu Jingji Yanjiu Baogao (Global Economic Research Report), No. 191, 2009.
26 Global Wage Report 2008/09: Minimum wages and collective bargaining: Towards policy coherence, Statistical appendix Table A1, p. 80, ILO.
27 Wang Canli, “Dissecting the ‘Ratio of Labor Remuneration to GDP’ Interpreted by the Ministry of Finance,” Fenghuang Wang (Phoenix Net), May 21, 2010.
28 “Numbers show that the ratio of labor remuneration to GDP had dropped for consecutive 22 years (1983-2005),” Zhongguo Jingji Wang (Chinese Economic Net), May 12, 2010, link.
29 “Ministry of Finance Official Says the Ratio of Labor Remuneration to GDP Is Underestimated,” Zhongguo Pinglun Xinwenwang (China Review News), May 18, 2010, link.
30 The bottom seems to have fallen out after 2003. Further investigation is required to determine why.
31 Liu Zhirong, “Is the Chinese Labor Remuneration Underestimated?” Da Jiang Wang (Big River Net), May 19, 2010; cf. Liu Zhirong “Statistics in Wages Should not Dispose of the 85%,” Zhongguo Gaige Bao (China Reform News), Jan. 07, 2010.
32 Global Wage Report Update 2009, ILO, Geneva. p.10.
33 Wu Jieh-min, “Rural Migrant Workers and China's Differential Citizenship: A Comparative Institutional Analysis.”
34 “PRC Statistical Bulletin on National Economic and Social Development, 2006” (Zhonghua Renmin Gongheguo 2006 Nian Guomin Jingji he Shehui Fazhan Tongji Gongbao), released by the National Bureau of Statistics, Feb. 28, 2007.
35 Wang Dewen, director of Research Center for Social Security, Chinese Academy of Social Sciences. Quoted in a report by First Financial Daily (Diyi Caijing Ribao), August 22, 2007.
36 Rural Division, National Bureau of Statistics, Monitoring and Investigation Report on the Migrant Workers, (2009 Nongmingong diancha jiance baogao) March 19, 2009, link.
37 “Average monthly wage” is calculated and published by the local government according to an officially-announced formula. To put it simple, it is the number of the aggregate urban wages over the total urban employees.
38 Of course, from another angle, this means that workers with urban hukou who have been laid off or are seeking jobs for the first time face difficulties due to the fact that employers will be required to pay higher wages and to provide more costly benefits when hiring them. An important future research theme is the competition for jobs between laid-off workers with urban hukou and nongmingong.
39 “The Provision for the Transfer and Continuation of Old-Age Pension for City and Township Enterprise Employees,” link, China Labor News Translation, 24 March 2010. We thank Jenny Chan for drawing this to our attention.
40 Service Sector Investigation Center of the National Bureau of Statistics (hereafter, SSIC), “Survey on migrant workers' quality of life,” 2006, link.
41 “Opinion regarding further improvement of peasant workers' children compulsory education,” State Council, October 1, 2003.
42 SSIC, “Survey on migrant workers' quality of life.”
43 SSIC, “Survey on migrant workers' quality of life.”
44 Jamil Anderlini, “Call to end China citizen registration system,” The Financial Times, March 1, 2010.
45 John Knight, Deng Quheng and Li Shi, “The Puzzle of Migrant Labour Shortage and rural Labour Surplus in China,” Department of Economics Discussion Paper Series, University of Oxford Number 494, July 2010, esp. pp. 5-6, 23-27. The authors draw on National Bureau of Statistics household surveys for 2002 and 2007 supplemented with later surveys to 2010. They project 292 million migrant workers in cities by 2020, comprising 60 percent of the urban labor force in that year, together with a continued fall in rural employment by 2.5 percent a year.
46 Jenny Chan and Ngai Pun, “Suicide as Protest for the New Generation of Chinese Migrant Workers: Foxconn, Global Capital, and the State,” The Asia-Pacific Journal, Vol 8 Issue 37 No. 2, September 13, 2010.
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