Abstract
This chapter selects an SOE (E Group Corporation) to show how communism was created artificially in a farming province, Sichuan. It first traces back the creation of a privileged SOE under Maoism in the beginning of China’s pursued for communism. Secondly, it reviews the failure of a system copied from the Soviet Union in terms of economic efficiency. Thirdly, such a problem became the prime reason for the post-Mao economic reforms. However, efficiency improvement led to unintended consequences including the decline of the social status for Mao’s workforce from an ex ante privileged position to a lower status.
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Notes
- 1.
The tensions can be divided as follows: tensions between the Soviet Union and China began in the late 1950s, and the Sino-Soviet border strategic confrontation; the U.S.-Vietnam war approached China’s southern gate in 1964; issues in the Taiwan Strait in the southeast coastal area and China-India issues; in the northeast, US troops stationed in South Korea and Japan pose a threat to China.
- 2.
Third line construction also allowed the completed construction factories to move to the interior areas.
- 3.
“Xiu” refers to “xiuzheng zhuyi” (the revisionism). It means distort, falsify and deny Marxism.
- 4.
Zhao Ziyang, Premier of State Council between 1980 and 1987; General Secretary of the Central Committee of the CCP between 1987 and 1989, quoted from China Labour Bulletin (2007), during the first stage of SOE reform (1978–1984, management reform), “in October 1978, the Sichuan provincial government, spearheaded by future Party Secretary Zhao Ziyang, launched a pilot project to expand enterprise autonomy in six selected enterprises. Instead of submitting all profits to Beijing, these enterprises were allowed to keep a proportion of their profits, and when they produced more than the state-set quota, they were free to use that profit to re-invest in production and technical innovation, provide workers and staff with individual bonuses and collective welfare, or to use the profit to maintain a reserve fund”.
- 5.
The chart does not show a historic and positive change in the structure of China’s three industries happened in 2013, when the share of the tertiary sector in GDP raised to 46.1%, surpassing the secondary industry for the first time for 2.2% (National Bureau of Statistics, 2016). This change marks that China’s economic development entered a new stage of transformation from an industrial-led economy to a service-oriented economy.
- 6.
The increase of the tertiary industry started from 1999. In 2018, it firstly reached over 50% in the provincial GDP (Sichuan Statistical Yearbook, 2018, 2019a and 2020).
Press conference on Sichuan's Economic and social Development achievements in 60 Years of P.R. China, Sep 30th, 2009. (“xin zhongguo 60nian Sichuan jingji shehui fazhan chengjiu” xinwen fabuhui). Available on 12th Sep, 2022, vide: http://www.scio.gov.cn/m/xwfbh/gssxwfbh/xwfbh/sichuan/Document/427606/427606.htm.
A Journey of Progress A Great Leap Forward—2nd in a series of reports on the achievements of Sichuan’s economic and social development in the 40 years of Reform and Opening up, August 31st, 2018. (fengjin de lichen weida de kuayue—gaige kaifang 40nian Sichuan jingji shehui fazhan chengjiu xilie baogao zhi er). Available on 12th Sep, 2022, vide: http://www.sc.gov.cn/10462/10464/10465/10574/2018/8/31/10458035.shtml.
- 7.
The 156 Key Projects (156 xiang zhongdian gongcheng) established with Soviet aid in 1950s. The 156 Key Projects were aimed to initially establish China’s industrial economic system during China’s first Five-Year Plan (1953–1957). The 156 projects cover the major fields: industrial, mining infrastructure, energy, pharmaceutical, chemical, national defense, etc., that were introduced from the Soviet Union and Eastern European countries.
- 8.
Experience a better life and witness the great changes in Tianfu—8th out of A series of Sichuan's economic and social development achievements in the 70th anniversary of the founding of P.R. China (ganshou meihao shenghuo jianzheng Tianfu jubian—xin zhongguo chengli 70 zhounian Sichuan jingji shehui fazhan chengjiu xilie zhi ba), August 22nd, 2019. Available on 12th Sep, 2022, vide: http://tjj.sc.gov.cn/scstjj/c105849/2019/8/22/4eab6dc77ecd4ee7b5bcd8d917c390f6.shtml.
- 9.
For the sake of anonymous, the fieldwork city will be referred to as D City.
- 10.
Data sources in this section are mainly obtained from the fieldwork research and will be quoted directly in this section. As EGC does not publish its annual report every year, there is no way to use the data from the research year 2018 when doing some data comparisons.
The completed list about the internal documents found in fieldwork research will be attached as Appendix B.
- 11.
In Chinese text: Zhongguo jixie gongye jituan youxian gongsi. SASAC is directly managed by the State Council. It represents the state to supervise and manage the central government controlled SOEs (exclude the financial institutes).
- 12.
1959–1961 was the “three years of hardship period (sannian kunnan shiqi)”. There were not enough resources for EGC’s construction.
- 13.
As suggested by the name, the primary school is for EGC employees’ children.
Hongwei means Chairman Mao’s Red Guards. It has a very typical political and historical characteristic. The central government-managed enterprise shows these political characteristics in many ways—in this case, showing in their education system.
- 14.
The period for completing this project was 10 years. Interviewee 015 who works at the aircraft industry said that this project was successfully completed on time in 2018.
- 15.
Source: Report from China Heavy Machinery Industry Association (CHMI) (zhongguo zhongxing jiexie xiehui). Available on 12th Sep, 2022, vide: http://navi.cnki.net/KNavi/YearbookDetail?pcode=CYFD&pykm=YZXJX&bh=N2010060053.
- 16.
Laid-off workers are still SOE workers nominally and they need to negotiate with the work unit on whether keeping their labour relations. They have no salary and are unemployment in a passive way.
- 17.
“The number of workers in D city in 1987” reflects workers in the industry while “the number of workers in D city in 2018” especially refers to the manufactory industry.
- 18.
“Other SOEs average” in Fig. 3.12 refers to the employees’ average income of SOE workers in other SOEs in D city.
- 19.
This document will be referred to as “Draft” in the following.
- 20.
These reports have 14 series, which were published along with the process of the strike movement on the Blog for the Workers’ Support Group. They will be listed in Appendix B, internal documents about EGC.
- 21.
The Labour Law and the Trade Union Law. According to the provisions of article 8 and article 33 of the Labour Law, workers have the right to elect workers’ representatives, convene workers’ group meetings, meetings for workers’ representatives and workers’ congresses, and they have the right to consult and negotiate on an equal footing with the management on the settlement plan. When conditions permit, the general congress of workers of the factory may be convened. The general congress of workers is the highest organ of power for protecting workers’ collective rights. When the general congress of workers is not in session, the meeting for workers’ representatives may exercise the functions and powers of the workers’ general congress. In accordance with the provisions of article 27 and article 53 (4) of the Trade Union Law, if the company refuses to negotiate with the workers on an equal footing, the workers shall have the right to prompt the management to negotiate through collective actions such as stopping work or slowing down work, and they shall have the right to send representatives to the people’s government above the county level to ask the government to order correction and deal with the matter according to the law. (genju laodongfa dibatiao, disanshisantiao zhi guiding, gongren youquan xuanju gongren daibiao, zhaokai gongren xiaozu huiyi, gongren daibiaohui he gongren dahui, youquan yu zifang jiu anzhi fangan pingdeng xieshang tanpan. You tiaojian shi, keyi zhaokai quanchang gongren dahui, gongren dahui shi gongren jiti weiquan de zuigao quanli jiguan, gongren dahui bihui qijian, gongren daibiao dahui keyi xingshi gongren dahui de zhiquan. Genju gonghuifa diershiqitiao, diwushishantiao disixiang zhi guiding, ruguo gongsi jujue yu gongren pingdeng xieshang tanpan, gongren youquan tongguo tinggong, daigong deng jiti xingdong cushi zifang tanpan, youquan xuanpai daibiao dao xian yishang renmin zhengfu, yaoqiu zhengfu zeling gaizheng, yifachuli.).
- 22.
Some interviewees mentioned that the subsidy is 10,000 RMB per year.
- 23.
Data Source China Labour Bulletin. Available on 12th Sep, 2022, vide: https://maps.clb.org.hk/?i18n_language=en_US&map=1&startDate=2008-01&endDate=2018-12&eventId=&keyword=&addressId=&parentAddressId=&address=&parentAddress=&industry=&parentIndustry=&industryName=
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Huang, S.S. (2023). The Case of E Group Corporation—an SOE in Sichuan, Post-1949. In: The Political Economy of Reforms and the Remaking of the Proletarian Class in China, 1980s–2010s. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-20455-5_3
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