ANXIOUS WEALTH

MONEY AND MORALITY AMONG CHINA'S NEW RICH

Stanford University Press

Contents

Excerpt

CHAPTER 1

INTRODUCTION

In 1997, I arrived in Guangzhou, the booming capital city of Guangdong province,to begin teaching English at a provincial education college. Like many casualobservers of China, I was captivated by the irony of a wealthy, entrepreneurialclass in an ostensibly socialist country and the social tensions andcontradictions brought by China's market reforms. My students were primarilyhigh school English teachers in their twenties from small towns in ruralGuangdong. They were attending two years of professional training in Guangzhoubefore being sent back to their schools. Over late-night snacks andbeers in outdoor sidewalk restaurants, they talked about their hopes for thefuture and anxieties about the present. I quickly learned that the broadersocial and economic transformations of the previous two decades, while improvingtheir standard of living, had overturned many of their certainties about Chinesesociety and their place within it. They felt both threatened by and drawn to theexpanding world of business, angry about its injustices but seduced by itspromises of excitement, status, and riches.

While the new rich were a common topic of discussion, many of the conversationswe had about this group quickly evolved into discussions of marriage, romance,and sexual morality. In many ways, among my students it seemed that anxietyabout growing social inequality in China manifested in moraldiscussions about men and women.

My male students frequently complained that in their hometowns uneducatedentrepreneurs and nouveau-riche peasants were taking "their women."They claimed that just a few years earlier the level of education and thelifestyle afforded by their occupations had given them moderate status in theirrural home communities, enough status at least to attract another hometownteacher as a wife. Now they felt that the relatively paltry material benefits oftheir jobs—low incomes and dependence on their schools for cramped, dilapidatedhousing—ranked them lower in the marriage market than uneducated but wealthyentrepreneurs who often had private cars and personal residences bought in thecommercial housing market. Their female classmates, they complained, had iteasy. Because they were educated (but not overeducated), poorly paid (relativeto a potential husband), and employed in jobs considered morally appropriate fortheir gender, these women had no trouble finding a suitable (and wealthy)spouse.

For these male students, an increasingly normative masculinity based on takingentrepreneurial risks and achieving success in the market economy had very realconsequences for their life decisions. As a result of their difficulty gettingmarried, many were looking for ways to leave their schools. However,because their work units (danwei) had funded their two-year stints at theeducation college, the only way out of their teaching commitments back home wasfor them to reimburse their schools for all the money spent on their behalf.Ironically, this led quite a few of them to skip classes in search of businessand money-making opportunities in Guangzhou. In fact, some had viewed attendingthe college in Guangzhou from the start as little more than a means of gettingto the city to find better employment, a better quality oflife, and, they hoped, a wife along the way.

They experienced their dependence on the state sector as a form of emasculation.Their outdated sense of entitlement, derived from their status as nonlaboring"intellectuals" (zhishifenzi), informed their indignation over "theirwomen" marrying nouveau-riche fish farmers and auto parts dealers who wouldhave been both morally and politically suspect just a decade earlier. Thisexample points to the gendered logic and consequences of stratification incontemporary China. The emergence of a new, class-inflected masculinity,revealed in this case in the domain of marriage, reoriented the ambitions ofthese teachers and altered their sense of themselves as producers, consumers,and men. And for the female teachers it helped reinforce a reemerging"traditional" femininity—that women should cultivate their feminine virtues andphysical attractiveness along with the goal of marrying well. As many popularallegories now proclaim, overachievement in education and business would onlymake finding a husband more difficult.

There was a saying often repeated to me in these conversations: "As soon as aman gets rich, he goes bad; as soon as a woman goes bad, she becomes rich"(nanren yi youqian jiu huaile; nüren yihuaile jiu youqian). Thisstatement suggests that to many of my students both the lure of wealth and theexperience of prosperity affect men and women differently. They understoodwealth not only to reveal basic differences between men and women, but to have atransformative effect on their motives, characters, and relationshipsas well. In short, the social stratification brought by China's economic reformshas produced new ideologies and relations of gender, and these are in turnaffecting the course of social and economic change in China (Gal and Kligman2000).

This book examines the rise of elite networks composed of nouveau-richeentrepreneurs, state enterprise managers, and government officials. Thesepowerful new groups have exerted increasing dominance overmany aspects of Chinese commerce and politics during the reform era, which beganin the late 1970s. The book considers these networks, which are composed mostlyof men, as gendered social formations governed by an ethics of brotherhood,loyalty, and patronage. Using ethnographic data gathered frominterviews, experiences as the host of a Chinese television show, and countlessevenings accompanying businessmen entertaining their clients, partners, andstate officials, I analyze the ways in which relationships are formed betweenelite men through shared experiences of leisure—banqueting, drinking,gambling, and cavorting with female hostesses—and the importance of theserelationships in organizing business ventures, orienting personal morality, andperforming social status.

This "masculinization" of the sphere of private business and deal-making inChina has generated challenges for women entrepreneurs, who are often accused ofusing their sexuality to get ahead, and has given rise to a new class of youngwomen who live off the patronage of China's new-rich businessmen andcorrupt state officials. These young women are central to mediatingrelationships and mirroring status among elite men and are integral to theemergence of a growing, semi-legitimate "beauty economy" (meinü jingji)in urban China, which seeks to exploit the youth and attractiveness of youngwomen for commercial gain.

I also examine the rise of new forms of leisure and consumption, new patterns ofmarriage and sexuality, and the proliferation of official corruption in China,all as aspects of shifting templates of interpersonal morality. I contend thatthese phenomena are key to understanding new forms of economic inequality andgender discrimination in contemporary China, as well as many aspects of China'scurrent political configuration.

China's Market Reformsand the Rise of Entrepreneurs

After the death of Mao in 1976 and after a brief Maoist interim period led byHua Guofeng, the Communist Party, under the leadership of Deng Xiaoping, beganto reassess many of the tenets of Maoist economics such as collectivization andthe centralized allocation of resources. In the domain of ideology, Dengproclaimed that the fundamental contradiction in Chinese society was no longerbetween classes, but between "the backward and the advanced forces ofproduction," and therefore called for the unleashing of the latter, even if itmeant the appearance of "transitional" forms of social inequality. Deng groundedhis new theory of "socialism with Chinese characteristics" in a selectivereading of Maoist thought that stressed pragmatism over theoretical dogmatism,an approach summarized by Mao's oft-quoted phrase, "seek truth from facts." Dengand the Party legitimated their reform program largely as a reorganization ofthe economy in accordance with certain "natural laws" of the market. Marketreforms, were, and continue to be, legitimated as scientific and rational meansof achieving the socialist ends of national economic prosperity, socialstability, and prestige in the international political arena.

In 1978, the Third Plenum of the Eleventh Party Congress introduced the firstreforms that marked the beginning of the Reform and Opening Policy (gaigekaifang) and what has become known as the reform era. This period has beenmarked by a decline in central economic planning and an increasing reliance onmarket mechanisms for the distribution of capital, resources, and goods. The"opening" component of the Reform and Opening Policy also signaled an opening tocultural and economic exchanges with the capitalist world—the United States,Japan, Hong Kong, and Taiwan in particular. It also signaled a turningaway from the "nonaligned" countries of the third world (Rofel 2007: 11).

Reforms began in rural areas in 1980 with the introduction of the householdresponsibility system. However, following a general theme of the reform era,practices on the ground tended to precede their official sanction in statepolicy. Under this system, individual households contracted for a portion ofcollectively owned land and farm equipment, which they "paid" for in taxes andgrain quota obligations to the state. Households were allowed to organizeproduction in any way they saw fit and to sell their surplus for profit.Although the household responsibility system improved agricultural output andraised the standard of living throughout rural China, reforms in rural industrybenefited a smaller portion of the country and produced a class of ruralindustrialists which included many cadres and their kin.

Post-Mao reforms also included a reorganization of state power. The CommunistParty apparatus was formally dislodged from the government bureaucracy (thoughnot disconnected in practice), and the daily operation of the government becameless subject to the intense politicization that characterized the CulturalRevolution years (1966–1976). The Party's role was envisioned as formulatinggoals, agendas, and priorities, while the government's role would be to developand implement policies that realized these goals (Fairbank and Goldman 1998:420). Deng called for the rationalization of bureaucratic rule, emphasizingprofessional qualifications over ideological purity among the official ranks(Meisner 1999). Both economic and political decision-making were partiallydecentralized, granting greater autonomy to local-level governments and cadres.While this change helped facilitate rapid economic growth in many areas, it alsogave local officials the power and administrative space to personally profitfrom economic reforms. They were able to do so largely because many of the newmarket-oriented businesses were built on the bureaucratic architecture of theprevious collective, state-run economy.

"Township-village enterprises" (TVEs) were one such example. They evolved fromcollective and brigade-run industries started during the Great Leap Forward(1958–1960). The dramatic success of TVEs in the mid-1980s spawned the firstclass of "new rich"; and "rural entrepreneurs" (nongcun qiyejia) andnouveau-riche "upstarts" (baofahu) emerged as social categories around thistime. Though officially classified as part of the collective sector of theeconomy, TVEs were run independently of planned economic decisions by the state,a common theme of much market-oriented business during the first decade ofreforms. They were officially registered as collectives (known as "wearing a redhat" [dai hongmaozi]), but most were run like profit-oriented privatebusinesses. In fact, many "privately run" businesses to this day are stillstarted with state-controlled capital, affiliate themselves with a state-ownedenterprise or ministry, or invite one or more government officials to serve ontheir governing board, practices that allow them to reap the tax benefits,regulatory flexibility, and political protection afforded by close ties to thestate (Wank 1999; Tsai 2007; Huang 2008).

Small-time entrepreneurs first appeared in urban areas in the early 1980s as"independent households" (getihu). For the most part, this term referredto a petty capitalist class of shop owners, peddlers, taxi drivers, andrestaurateurs who were independent of the state-controlled work-unit (danwei)structure, made their own production decisions, and received few or nostate-sponsored benefits such as medical care and housing. Businessesclassified as getihu were envisioned by policymakers as units of householdproduction and were legally limited to eight employees. Up until the early1990s, most urban Chinese viewed this class with suspicionand disdain. Many early getihu who prospered in the nascent market economy werein fact men and women with low political status and sometimes criminalbackgrounds on the margins of the state-run economy who had little to lose byengaging in semi-legal business. They included unemployed youth andintellectuals who had recently returned to urban areas after being sent down tothe countryside during the Cultural Revolution, as well as former politicalprisoners.

Reflecting on this era, many of my informants described the first group to getrich from market-oriented small businesses as "daring" (danzi da)because of the semi-legal nature and uncertain political status ofmany of their activities. According to narratives of the time, because theyalready lived a marginal, insecure existence, successful getihu were not afraidto suffer or "eat bitterness" (chiku). In the 1980s, many parentswould have been reluctant to allow their daughters to marry an entrepreneur,which at the time was still perceived as a politically insecure status (Yang1994: 160).

The power and scope of the market economy in urban areas increased significantlyin 1984 when the Communist Party leadership called for the increased efficiencyand autonomy of state enterprises. Cut off from public funds and facingbankruptcy if unable to show a profit, most urban enterprises began to be runlike profit-minded businesses, and some aspects of production (as well as entireenterprises) were contracted out (chengbao) to entrepreneurs, many ofwhom were the current managers of the businesses being privatized. Until themid-1990s, however, the majority of these enterprises used their increasedrevenues to provide for employees by constructing housing and creating jobs fortheir employees' children, thereby continuing to fulfill their socialist-erawelfare obligations (Andreas 2008: 127). While many managers themselves becameshareholders in or proprietors of formerly state-owned enterprises throughmanagerial buyouts and "insider privatization", others profited both directlyand indirectly from their sale. According to several of my interviewees, asfailing and unprofitable state enterprises started to be dismantled, countlessnumbers of them were sold at well below market prices to relatives andassociates of the cadres overseeing their sale who manipulated the value of thecompany's assets.

In 1988, private firms (siying qiye) received official legal sanction,and private businesses were allowed to legally hire more than eight employees.In practice, it was still difficult for them to obtain bank loans, they weresubject to higher rates of taxation than their "red hat"-wearing or state-runcounterparts, and they were (and still are) barred from certain sectors of theeconomy. As Kellee Tsai (2007: 54) puts it, it wasn't until after DengXiaoping's 1992 Southern Tour (nanxun) that "the red hats started tocome off" and the number of legally registered private enterprises began tomushroom. Many state-run and collective enterprises were dismantled orprivatized, resulting in over 50 million public sector workers losing theirjobs. Those state enterprises that remained were increasingly run likeprofit-oriented businesses, shedding many of the welfare obligations to theiremployees (Andreas 2008: 131). Around this time the flow of ruralmigrants to cities and prosperous rural regions such as the Pearl River Delta,which had started in the early 1980s, became a flood. These migrants filled theservice and manufacturing jobs created by the newly legitimated private sector.

After 1992, foreign investment, the bulk of which initially came from Taiwan andHong Kong, also took off, creating more opportunities for entrepreneurs asfactory managers and export merchants. China's Special Economic Zones, as wellas other coastal cities open to foreign capital, attracted much of thisinvestment, which was primarily used to support export-oriented manufacturing.During the 1990s and 2000s, foreign investment continued to grow exponentiallyas other cities and provinces were opened up to international capital. Most ofthe early foreign corporate ventures in China came in the form of joint ventures,which paired foreign companies with Chinese state-owned and privately ownedenterprises. But since China's entry into the World Trade Organization (WTO) in2001, foreign investment has increasingly taken the form of wholly foreign-ownedenterprises (WFOEs). By 2008, 80 percent of foreign investment assumed a"wholly-owned" structure (Walter and Howie 2010: 7).

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(Continues...)Excerpted from ANXIOUS WEALTH by JOHN OSBURG. Copyright © 2013 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of STANFORD UNIVERSITY PRESS.
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