[Marxism] China's public sector

Michael Karadjis mkaradjis at hn.vnn.vn
Sat Oct 15 00:27:30 MDT 2005

Louis Godena wrote:

>According to Forbes 
>State-Owned Enterprises employed about half of China's 750 million >workers in 2004. The figure is probably higher due to the opaque nature of >China's business laws.   

Pity a body as "reputable", if that's the appropriate word, as Forbes, could get it so wrong. Louis Godena and others hopeful re the direcftion of the CCP must think all their christmases have come at once, with 375 million state sector workers, as massive force for socialism!

More like one tenth of the workforce.

For a start, the figure of 750 million  is for the entire "workforce", including agricultural, ie, mostly atomised small farmers. Urban employment stands at 231 million, of which 71 million are in the state sector in 2002, down from 112 million in 1995, as 40 million state enterprise workers - over one third - were thrown on to the scrapheap, not due to crisis, but on the cointrary, following 20 continuous years of the world's highest growth rate. State sector employment in rural areas is zero. The following paragraph from an International Finance Corporation publication 

sums up the employment situation well:

"China is now undertaking a dramatic transformation from a traditionally planned

economy to a market-based economy. Although China's economic growth has gained

great success by first restructuring agriculture and then moving people out of agriculture

and into industry, the traditional industrial enterprises such as state-owned enterprises

(SOEs), township and village enterprises (TVEs) are losing steam. The number of

workers in state-owned units plunged from 112 million in 1995 to 71.6 million in

2002, and those in collective urban units from 32 million to 11.2 million, a decline of

32% and 65%, respectively. Most of the losses are from the SOEs or collective-owned enterprises, though the exact figures are hard to obtain. Meanwhile, the number of employees in the private enterprises (including enterprises fully registered as private plus some sort of shareholding and joint ownership companies-rose from 13 million to 42 million (more than tripled), and the those in foreign plus Hong Kong, Macao & Taiwan enterprises increased from 5.1 million to 6.7 million, or 31%. The employment elasticity of the self-employed and private enterprises in general is considerably higher that that of enterprises of other ownerships." 

The industrial "collective" enterprises referred to are considered by all experts on China to be purely private shareholding companies, though they may once have been something different which had the potential to go either way. The decimation of their workforce from 32 to 11 million in 1995-2002 represented precisely their transition to "joint-stock" (capitalist shareholding) firms. As for the private and foreign sectors only having 50 million workers, this obviously leaves even the urban workforce of 321 milllion shortchanged, let alone the rural workfoce of 489 million (figures for urabn and rural workforce in a table in the same report). That is a simple matter of the bulk of the private workforce being in the informal sector.

In addition, the state sector figures include all utilities, which are often state owned even in capitallist countries (and never mind that China has made a great many even of these "joint-stock" with state majority, so they are still called 'state'). 

According to a Businessweek article "China Is a Private Sector Economy"

"There are 200 large state companies -- basically, they are in utilities, some in heavy industries, some in resource industries. Traditionally, this is where governments have invested. China Mobil and China Telecom are huge, but these are natural monopolies. Even France and Britain had those large state companies for a long time. If you take these away, China is a private-sector economy."

Other useful articles include:

 Development of the Non state Owned Sector 


Market Oriented Reforms of Chinas Enterprises in Retrospect 


(which notes that "In 2001, the output of the non-state owned industrial enterprises reached 78.3 percent of the total industrial output, or, 32.5 percentage points higher than the 45.8 percent in 1991", ie state sector industrial output was only 21.7 percent of the total in 2001)


another International Finance Corporation publication, 'China's Emerging Private Enterprises'


Note that the last, and the first article I quoted from, still put the "state sector" share of the GDP at 37 percent, but if you look at their figures, you see they are quoting from 1998, ie, just at the onset of the massive wave of privatisation at the end of the 1990s and till 2002 that destroyed the jobs of 40 million in the state sector and 20 million in the former "collectives". This is why the current estimates, of around 25 percent of GDP in the state sector, as in some articles Louis Godena himself has posted, are more on the mark now, or even the 18 percent of GDP that Forbes claims in the last article he posted.

Of course all this does not necessarily mean the Chinese working class has been "smashed", as Fred Feldman often points out, in fact the collective power of the worker and peasant uprisings of the last few years in China are surely the biggest class struggle in the world. So, no, the stats don't tell you everything. But it's worthwhile  having the stats, and other facts, correct, to understand why the Chinese workers and peasants have been launching such a furious struggle.

Michael Karadjis 

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