Regime faces its own ‘Hurricane Katrina’

In the run up to the Lunar New Year on 7 February, which occasions the biggest human migration in the world, China experienced almost four weeks of extreme winter weather. In many parts of eastern and southern China this was the coldest winter since 1951.

By Vincent Kolo, CWI

Snowstorms killed more than 80 people, destroyed or damaged 800,000 houses and caused economic and agricultural damage valued at 80 billion yuan (about $11 billion), according to the Red Cross in China. Transportation by air, road and rail seized up. Collapsing power lines and disruption of coal deliveries created the country’s worst ever power failures, with some areas without electricity for nearly two weeks, as in the case of Chenzhou, a city of 4.5 million people in Hunan province.

Some 8,000 freight trains were delayed as snow blocked tracks and brought down overhead power lines. Shanghai saw its worst snowfalls in 135 years, and its gigantic port at the mouth of the Yangtze River was forced to close on Saturday 2 February, stranding more than 1,000 ships. The crippling of rail services aggravated the crisis in the electrical power sector, although serious shortages existed before the storms, and became acute as power plant bosses deliberately ran down coal stocks in protest over government price controls. Insufficient capacity in the national power grid means supply is tight at the best of times. The storms also played havoc with passenger transport, with ten airports closed altogether and tens of thousands of motorists stranded for days on blocked roads. China’s main north-south trunk road, the Beijing-Zhuhai expressway, was closed for 17 days.

“It’s like something from the film, ‘The Day After Tomorrow,” commented Chen Lizhi, a socialist from Jiangsu province. “We have never seen so much snow in the Yangtze Delta, it is not normal for temperatures to drop below freezing in this region,” he told chinaworker.info.

The extreme weather will intensify popular concerns over climate change in a country where 47 percent of those questioned in a survey by HSBC last year consider this to be one of the biggest issues facing humankind, one of the highest ratios in the world. Scientists are divided over whether there is a link between China’s big freeze and global warming. But something clearly has gone awry – Hunan and Guizhou, two of the worst-hit provinces, have a sub-tropical climate. The snowstorms are linked to La Niña, the recurring cold weather phenomenon that has also caused disastrous flooding in Australia, Indonesia and southern Africa in recent weeks. The increased intensity and frequency of La Niña and its warm weather counterpart El Niño in recent decades strongly suggests a link to warmer ocean temperatures as a result of global warming.

The worst hit parts of China – the provinces of Anhui, Jiangxi, Hubei, Hunan and Guizhou – include important farming regions where winter crops are now destroyed. ”The impact on fresh vegetables and on fruit in some places has been catastrophic,” warned Chen Xiwen, Beijing’s top expert on the agricultural economy. The Ministry of Agriculture reported the loss of 14.4 million poultry, 870,000 pigs, 450,000 sheep and 85,000 cattle, that either froze to death or died from lack of food and water due to transportation hold-ups. The disaster has smashed a hole in government price controls imposed just weeks ago. According to he National Reform and Development Commission the price of vegetables in 36 cities rose by 30 percent between 25-30 January.

”Somewhere between 80 to 120 million people have suffered serious effects as a result of the breakdown of transportation and communication, with even phone systems out of action,” Chen Lizhi reported. ”People have to burn wood and buy candles for light. The cost of candles as well as fuel and food has shot up – one block candle sells for 5-8 yuan (between 70 cents and $1.10).”

Parallels with Bush’s Katrina fiasco

As the snowstorms recede and China begins to recover, a political storm is brewing. For the ruling ’communist’ party, just six months before it hosts the Olympic Games, the terrible winter of 2008 raises uncomfortable comparisons with the botched response of the Bush Administration to Hurricane Katrina in 2005. That event marked a political turning point in the United States and, alongside the fiasco of Iraq, doomed Bush as a ’lame duck’ president. There are many parallels in the events of recent weeks, which, no matter how much Beijing’s propaganda machine tries to hide the facts, have exposed systemic failings of state agencies such as railway and power authorities, local governments, news media and emergency services.

Why was so much of China’s transport and energy infrastructure immobilised by the freezing weather, and why was the government response so slow and chaotic? China has experienced the mother of all investment booms in recent years, with fixed asset investment accounting for a colossal 50 percent of GDP last year, yet the expansion of the national power grid has consistently lagged behind the growth of the economy as a whole leading to ever tighter supply problems. Total demand for electricity increased 20.2 percent annually between 2001 and 2007, but installed generating capacity only grew by 18.5 percent a year over the same period. [Wall Street Journal, 6 February 2008]

According to fresh analysis by investment banks Goldman Sachs and Merrill Lynch, ”the storms may be evidence that China is not spending enough on infrastructure”. The figures in these reports show that, ”China’s estimated spending on utilities and transportation last year was far lower than in 2005 and 2006”. Whereas capital expenditure in the utilities sector grew by more than 30% in 2005, this fell to 11% last year.

During the storms, over 2,000 transmission towers [pylons] and a staggering 39,000 kilometers of power lines collapsed under the weight of ice and snow. China’s use of a high-tension power grid as opposed to more expensive underground cables, and its crushing dependence on coal – for 80 percent of its electrical power – left it especially vulnerable to the storms.

In many areas where transmission towers collapsed this was because they were spread too far apart, causing them to buckle under the additional weight. This is again a result of cost-cutting that is endemic to many construction projects in China. The heavy reliance on coal, apart from its dire environmental effects, also poses huge logistical problems: coal takes up 40 percent of total railway capacity.

The government’s handling of the crisis has won praise from some quarters. A spokesman for the UN’s International Strategy for Disaster Reduction (ISDR), Salvano Briceño, claimed ”governments across the world can learn from the Chinese government’s commitment”. Some commentators went so far as the extol the virtues of authoritarian government, as in the case of one report in the International Herald Tribune (7 February). This spoke of a ”uniquely Chinese display of communist mass mobilisation, propaganda and state control,” adding that this, ”illustrated the strengths of an authoritarian one-party communist government.”

But rather than a ’strength’, the dictatorial and bureaucratic nature of Chinese governments at all levels enormously hampered relief work. As in the case of the ’SARS’ outbreak of 2003, strict media censorship aimed at preventing ’instability’ impeded the vital flow of information about the disaster and reduced the limited scope that has existed for the official media to exert some pressure on government agencies by exposing malpractice and incompetence. This also reinforced the government’s rigid, top-down approach to crisis management. As one blogger commented, ”Numerous friends want to join me as volunteers, but there is no formal channel that will accept them.”

”Government almost disappeared…”

It often happens that external observers are taken in by regime propaganda. A more astute observer is Howard W. French, the veteran Shanghai-based correspondent of the New York Times. He reported, ”The real scandal of China’s weather emergency is that it had been going on for weeks, largely uncovered and not treated as an emergency for most of that time.” [New York Times, 1 February]

In another report, French explains that, ”Although large, in most places the snowfall – described as having been the worst in 50 years – has been nothing like the deep cover that other parts of the world often experience in winter… But in many badly affected areas, the government appears to have almost disappeared, so overwhelmed has it been by the demand for emergency services.” [New York Times, 3 February]

Even state-controlled Xinhua News quoted Jiang Liqun, senior manager of central China region of Walmart, saying the severity of the disaster has been largely underestimated despite the early warnings issued by the Hunan meteorological authority. Rivalry and competition between provinces, a crucial factor in Chinese economic and political affairs, undoubtedly complicated efforts to organise a unified national response to the crisis. Some provinces with coal surpluses, for example, were reluctant to release them to provinces in need.

The central government has been busy issuing exhortations and reprimands to its local satraps. A statement from the central committee of the ruling Communist Party warned ”officials’ performances during the crisis could either mean promotion or punishment”. Many would agree with the view of Gao Fang, a professor with People’s University in Beijing, who told the Los Angeles Times (4 February), ”The crisis has revealed that many of our local officials are not qualified. Most are appointed, not elected. Or if they are elected, the voters are often told whom to select”.

But bungling and inaction by provincial and local bureaucrats does not let Beijing off the hook. The first snowstorms struck on 10 January, yet it took almost three weeks – until 29 January – for the State Council, China’s cabinet, to set up a national command centre to coordinate relief work and direct operations in the coal, oil and power sectors.

Official propaganda portrays a government taking a ’hands on’ approach to the crisis. Top government figures, especially Prime Minister Wen Jiabao, have been flying to trouble spots such as railway stations to address crowds and tell local administrations ”not to be slack and weary”, as Vice Premier Wu Yi put it [Xinhua, 3 February]. The state-run media has received orders not to report complaints, only positive news, bearing in mind the threat to ’social stability’. Repeated references in speeches and articles to ’all-out war’ are designed to unite the population behind the government and suppress criticism. ”No disaster could vanquish the great Chinese people” declared President Hu Jintao. When a ruling group uses propaganda like this, workers and ordinary citizens have every reason to be suspicious.

The crisis has laid bare the class divisions in Chinese society. While tens of millions of migrant workers have been forced to abandon their one and only chance to escape to their families from the unspeakable drudgery and hard toil of their factories, and millions still face food and power shortages, the share prices of coal and rail companies have surged on the stock market in recent days on the prospect of higher profits stemming from the crisis.

There was huge media coverage of Hu Jintao’s visit down a mineshaft to tell miners in Shanxi province to keep working through the New Year holiday in order to relieve coal shortages: ”As you all will not be able to have any days off, I wish you early New Year’s wishes for good health, smooth work and prosperous families,” he told them. How willingly these workers responded to this idea is unclear – they were not given a choice – but the week-long holiday is normally used to carry out equipment repairs and maintenance. Now, most of China’s state-run mines will continue working through the holiday, and the scheduled maintenance work will be postponed. It should be remembered that China’s coal industry has the worst safety record in the world with an average of 13 miners killed every day.

Power companies stage ’rebellion’

Despite the regime’s awesome propaganda machine a ’post-Katrina’ political reaction is inevitable. This process will take longer than was the case in the United States given the heavy boot of dictatorship, but the questions and objections are too many to simply disappear. Many are already asking how China can put astronauts into space but can’t keep its trains running through a cold winter. Likewise, many question the merits of spending $35 billion on the Beijing Olympics, which as The Economist (1 March 2007) pointed out, is more than 43 percent of the total cost for the last nine Olympic Games put together.

Another valid question is why it took so long to mobilise 251,000 PLA troops and 772,000 militia and army reservists for road clearance and other relief work. ”In Hunan, it started snowing on the 13 January,” wrote one blogger, ”Why is it that this was left to traffic policeman and ordinary street cleaners until yesterday, when the army was mobilized?” [International Herald Tribune, 30 January 2008]

Once the soldiers were called in, their tools were often inadequate. There are reports of work teams clearing the main Beijing-Zhuhai expressway on foot, using shovels. Tanks were used for snow clearance work in some areas, but snowploughs would have been more effective. Xinhua News reported soldiers firing sub-machine guns to shatter the ice on overhead cables, and television news showed maintenance workers dangling from high voltage lines like human spiders, hacking away the ice with hammers. The tragic news that eleven electrical maintenance workers have been killed is therefore no surprise. While these deaths have been exploited by the regime’s media machine as part of its drive to spur the population to greater sacrifices, the fact remains that with mechanisation, a sound investment policy as a result of democratic planning, and trade union rights, these deaths could probably have been avoided. Evidently China’s power companies have a shortage of mobile cranes and bucket-trucks, making repair work an extremely dangerous and labour intensive task. These and other problems have not been helped by the ongoing privatisation and deregulation of the industry.

Many power companies deliberately ran down their coal stocks in the first weeks of 2008, even as the severe winter weather was approaching. This was a ”rebellion by power plant managers”, to quote The Standard (24 January), aimed at pressuring the government to lift price controls and increase profits. From December to January, the price of premium coal which is not controlled by the state rose by 13 percent, from 575 yuan a tonne to 650 yuan, while electricity prices are still subject to price fixing.

Power company bosses were copying the tactics of the state-owned oil refiners, led by Sinopec, who in October forced the government into an embarrassing u-turn when it sanctioned a 10 percent rise in petrol and diesel prices. Power plants that normally stock 18-20 days’ worth of coal had in some cases run their reserves down to as little as three days’ worth, according to Fang Xiu’an, of the China Coal Transport and Distribution Association. Some power station managers have reportedly been selling their coal stocks, rather than burning them, in order to profit from higher coal prices. If the disaster of recent weeks really was ’all-out war’ as the government says, then many power company bosses should now be facing the firing squad.

This crisis raises fundamental questions about the viability of China’s economic model. As The Wall Street Journal (6 February) points out, ”the scale of the problems showed how close the country’s racing economy is to hitting its physical limits”. But it would be false to see such problems as an inevitable result of rapid industrialisation. The crux of the problem in China is that the investment boom is largely unplanned and anarchic. As the government regularly points out, much investment is ploughed into ’wasteful and duplicative’ projects such as monster shopping malls or five-star hotels. What is the point of these without electricity, and without consumers who can afford to shop or stay in them?

World’s biggest migration

The chronic overloading of transport systems as around 200 million migrants make the annual trek home for the Lunar New Year, also shows the inhuman social cost of China’s booming economy. The bumper profits made by Chinese and overseas capitalists are based upon uprooting this massive ’sub-proletariat’ from China’s poor inland and billeting it for eleven months of the year in crowded dormitories or other makeshift accommodation in the coastal manufacturing centres. The ’motivation’ for these workers to leave their loved ones, travel thousands of kilometres and then slave under some of the worst industrial conditions in the history of capitalism, is that staying in their home village is simply not an option. There are no jobs, and most farms are too small and unproductive to support a whole family.

With devilish timing, the snowstorms struck just as the world’s largest annual pilgrimage was beginning. One week before the start of the New Year, an estimated six million migrant workers were stranded at railway and bus stations. ”Due to the snow, thousands of migrant workers arrived at major transport hubs in Hunan, Guizhou or Sichuan province, to find there was no more public transportation to finish their journey home,” Chen Lizhi told chinaworker.info. ”Most can’t afford even a cheap bed in a local hostel, at 10-20 yuan ($1.40-2.80) per night. So they are stranded, forced to sleep wherever they can. For some this lasted for over a week. Others chose to continue their journeys on foot, walking for 7-10 hours a day, and covering 50-100km through the snow.”

At its worst, a staggering 800,000 travellers were stranded at the main railway station in Guangzhou, the capital of Guangdong province, which has more migrants than any other province – roughly 30 million. The government’s solution, spelt out on massive banners draped around railway stations, was for migrants to return to their factories and spend the holiday there. But for many this was not an option. As Zhou Wei, one of Guangdong’s migrant workers, explained, ”My factory dormitory is closed. There’s nowhere for me to go.” Another migrant who had slept rough for several nights outside a shopping mall said, ”I feel like a refugee”. [The Standard, Hong Kong, 31 January]

Around 15 million of Guangdong’s migrant workers were forced to spend the Lunar New Year in the province. Local governments and the official [puppet] trade unions dealt out sweeteners – tickets to film-shows, karaoke, and free phone cards to call home. But for a workforce that lacks written job contracts, medical insurance and social security cover, the loss of their home leave is a heavy blow. As Chen Lizhi explains, ”Once they are paid, many migrants will go back home for a month or longer, then they will probably go to a new area to find work.”

These events have again brought home the suffering of China’s migrant population. ”What caused 600,000 people to be stranded at the train station?” asked one online critic. ”It is not because of heavy snow for days, nor is it the delayed or cancelled bus service. The problem is our old, two-track urban-rural divide.” [The New York Times, 3 February]

Railway stations were ringed by huge paramilitary forces for fear of unrest. Still, one woman migrant worker was trampled to death and 500 people were injured in a stampede for tickets at Guangzhou station. When Wen Jiabao arrived in Guangzhou as part of his lightning tour of the worst traffic bottlenecks, this was partly for propaganda purposes, but partly also to upbraid local officials for their slow and ineffective response to the crisis.

The incredible social contradictions in China today were highlighted by Wen’s much-reported appearance, megaphone in hand, before the crowd at Guangzhou. Many of the migrant workers huddled in the station forecourt did not know who the speaker was, a situation unthinkable in the era of Mao Zedong or Deng Xiaoping – a time when most Chinese did not have access to television let alone the internet.

As Howard W. French reports: ”It was a quiet but powerful recognition of the fact that the millions of migrant workers who keep the country’s economy churning are too busy, or too poor, too tired or too alienated, to have followed the news on television closely enough to recognize their country’s second-highest official simply by seeing him before a crowd with a megaphone.” [The New York Times, 1 February]

’World-class’ infrastructure?

Even in normal times China has the most congested railway network in the world, carrying 24 percent of the world’s rail traffic on just 6 percent of the world’s tracks. The total length of China’s railway system is 76,600 km, making it the third longest in the world. But this is a vastly undersized system compared to China’s population and the explosive growth of industry in the last 20 years. By comparison, Germany boasts 45,000 km of railways, or 58 percent of China’s total, despite the fact its territory is 28 times smaller than China’s.

According to an industry magazine, Chinese Railways, on a daily basis passenger trains provide only 2.41 million seats, but issue 3.05 million tickets (4.2 million tickets on peak days), forcing many passengers to stand. This is no joke on 12 hour journey, which is not an especially long trip by Chinese standards.

Freight transport is even more overstretched. While total available capacity on any day is 110,000 freight cars, average daily demand is for 280,000 freight cars. Like most state-owned industries, the railways are separate provincial entities rather than forming a fully integrated national system. The author, on a trip from Shanghai to the inland province of Hebei, found it was impossible in advance to buy a ticket to take me from Beijing to my final destination. It was only possible to buy such a ticket from the railway station in Beijing itself – a different province and therefore a different company!

Official statistics show that 6,500 km of new railways were built in the last five years. But this compares to 4,400 km of new expressways built in 2006 alone, and a further 8,300 km of expressways last year. The reason for this lopsided emphasis on road-building is that almost all China’s expressways are toll roads, largely financed by private companies under contract from provincial governments. The railways too are being opened to private and foreign capital, but this development has come much later and is, so far, on a much smaller scale.

In September last year, the Quchang railway in Zhejiang province opened to traffic, China’s first railway financed in part by private capital. The Deputy Director of Shanghai Railway Bureau hailed this as ”a turning point in the opening of railway investment and the financing market, which has long been monopolized by the state, to private capital for the first time”. [Beijing Review, 20 December 2007]

Government and media ’experts’ are using the winter transport crisis to urge even faster privatisation and adoption of ’market solutions’. With the listing of China Railway Group Ltd., the biggest rail company, on the Shanghai and Hong Kong bourses in December, China now has four stock market-listed railway companies. Last year, based on statistics from the Ministry of Railways (MOR), fixed investments in the rail network fell far short of the target, by almost one-third. ”With a severe shortage of funds for railway construction, the MOR will have to make use of the capital market, financing present listed companies and establishing new joint stock companies for listing,” declared the government-run Beijing Review.

One such government ’expert’ is Yu Hui, from the Institute of Industrial Economics of the Chinese Academy of Social Sciences, who argues, ”The [MOR] administrative monopoly must be eliminated in order to set up a reasonable mechanism for competition and impel enterprises to improve efficiency.”

Yet wherever these methods – deregulation and faster privatisation – have been carried out as in many European countries, the results have been higher ticket prices, worsening conditions for employees and passengers, and falling safety standards. Rather than more neo-liberal experiments and profiteering, China’s traffic chaos is a powerful argument for democratic socialist planning, to pool national resources, harness the skills and initiative of workers and passengers, and root out bureaucracy by placing all decision-making in the hands of elected committees, subject to immediate recall, and receiving no more than a skilled workers’ wage.

Year of the Rat

China’s rulers must be viewing the new Year of the Rat with trepidation. ”We fear that 2008 will be a most difficult year for the economy,” Wen told his cabinet last week. On one hand there’s the rapidly cooling global economy and deepening worldwide banking crisis. On the other there’s the Summer Olympics running parallel with the risk for escalating inflation-driven protests and strikes. The winter chaos has underlined fundamental weaknesses in China’s economic growth model. What are the prospects for Beijing’s dictators in their struggle to hold down inflation, minimise speculative sabotage as in the energy sector, and at the same time prevent the economy following the United States into a hard landing?

The Christian Science Monitor (1 February) underlined the problems for the regime: ”Administrative price controls, however, are hard to implement now that almost all food production, distribution, and sales are in private hands… If farmers or shopkeepers are not allowed to raise their prices in line with their costs, they will be tempted to hold supplies back.”

This of course, is what we have seen, in a very sharp form, over the last 2-3 weeks. The central government has stressed its price control policy is only ’temporary’ and this will probably be lifted, at least partially, after the New Year festivities. As the same journal points out: ”Officials insist that the new food price controls are simply an effort to overcome malfunctions in the market, not a retreat to socialist economic planning diktats. Nor is China the only Asian country taking action in the face of rising food prices: Malaysia rationed cooking oil last month, while Indonesia is subsidizing edible oil refineries to keep retail prices down. Beijing’s moves include curbing exports of wheat, corn, and rice powder in an effort to boost domestic supply and dampen price increases.” [The Christian Science Monitor, 1 February]

But the massive crop failures suffered this winter will increase the pressures on Wen’s government, insuring that food price inflation, which ran at a monthly rate of 18.2 percent in November, continues to top the list of public concerns. And no amount of media ’spin’ and propaganda will stop a groundswell of criticism in coming months over the government’s handling of this crisis and the real causes of a spectacular infrastructural breakdown.

As socialist Chen Lizhi explains, ”The lessons from the winter crisis are clear. What’s needed is massive new investment in public services and particularly in rural areas focusing on agricultural development, but using this as a spur to industrial development in the inland provinces. There must be a shift away from today’s one-sided dependence on exports. This would allow tens of millions who are now ’industrial nomads’ to live at home, and work nearby home, enjoying a better standard of living. But this is only possible on the basis of workers and farmers democratically planning production and putting an end to privatisation and profiteering.”

Despite the ominous start to the Year of the Rat, chinaworker.info wishes its readers and all socialists and labour activists a happy holiday. These events can only convince more and more people to join the struggle for an end to capitalist chaos and for a democratic socialist future.

This entry was posted on Saturday, February 9th, 2008 at 10:49 am and is filed under Regional news and analysis, World news and analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.