China's shareholder peasants

The chief of a village hailed as a model of industrial growth says, "Whether it's a new kind of ism or an old kind of ism, our aim is to make everyone rich."

By Jonathan Watts

Published May 10, 2005 2:49PM (EDT)

China's road to riches could not be more boldly signposted than it is in Huaxi, officially the country's wealthiest village. Take the municipal government's stretch limousine across Textile Bridge, pass the smokestacks of the steelworks, speed alongside row after row of symmetrical pale-blue houses, skirt the 15-story pagoda hotel and then alight for a walk down the red-carpeted corridor of capital.

This concrete-covered passageway is a monument to the giddy material progress made by the commune since China's policymakers began mixing their ideological drinks 26 years ago. None went as far as Huaxi in combining the strict political control of the ruling Communist Party with the get-rich-quick economics of the market -- and the results are being hailed as a model for the nation to follow.

To demonstrate how good that cocktail is supposed to make the locals feel, "Huaxi Road" is decorated with smiling pictures of every family in the village. Each household's assets are listed in detail: size of the family, value of their property, average level of education, number of members of the Communist Party, as well as how many cars, mobile phones, televisions, washing machines, computers, air-conditioning units, motorbikes, cameras, fridges and stereo systems they own.

At first sight, the figures seem to justify Huaxi's boast about being the "No. 1 village in China." Since 1995, when Huaxi became the first commune in China to list shares on a stock exchange, local businesses, mostly in textiles and steel, have taken off. Their spectacular expansion has made even the national average growth rate of 9 percent a year seem laggardly. In 2003, the village reported the combined turnover of its companies at 10 billion renminbi (about 640 million pounds). Last year, it hit 26 billionn -- and by 2008 it is expected to double again.

This has turned residents -- all still officially registered as peasants -- into wealthy industrialists. Elsewhere in the country, the annual average disposable income of urban dwellers only recently passed $1,000. In the countryside, the figure is two-thirds lower. But Huaxi's residents get a yearly salary of $1,500, a bonus of $10,000 and dividends of $25,000. Twenty years ago, most were farmers living in small, one-story houses, who struggled to save the money to buy a bicycle. Now, they are shareholders with an average living space of more than 450 square meters and at least one family car.

Such impressive statistics mean Huaxi is now held up as a model in a nationwide reeducation campaign for Communist Party cadres. It is also attracting growing numbers of foreign visitors seeking clues about the direction of Chinese society.

That is a subject of increasing concern to the world. Earlier this year, Microsoft's Bill Gates praised China for developing a "new form of capitalism." Politicians in Beijing prefer to talk about "scientific socialism" or "socialism with Chinese characteristics." Huaxi's model is by no means the only option for villages, but if it becomes a template the future might just as easily be described as shareholder feudalism.

Located about 100 miles north of Shanghai in Jiangsu province, Huaxi has been described in the domestic media as both a "paradise" and a "dictatorship." While its residents are nominally richer than any other community, they have less time and freedom to spend their money. Bars and restaurants close before 10 p.m. so that workers do not oversleep. Holidays are scarce. And villagers get little cash from their paper assets. Eighty percent of their annual bonus and 95 percent of their dividend must be reinvested in the commune. If they leave the village, this paper wealth disappears.

"Our assets belong to the commune, not to the individual," said Sun Hai Yan, a member of the village government. "We have a local saying that your dividend lasts only as long as you stay in the village and the factories keep running."

But with living standards improving rapidly, few people seem to mind. Sun has done particularly well. As a child he remembers being able to eat meat only once a week. Now, he treats visitors to lavish meals of globe fish at the local restaurant and lives in a new villa -- decorated with Greek pillars and a marble staircase -- by the edge of an artificial lake.

Pragmatism rather than ideology is the guiding principle. "No matter whether it's a new kind of ism or an old kind of ism, our aim is to make everyone rich," said Wu Renbao, the former village chief who is credited with starting the Huaxi miracle.

During the cultural revolution, Wu was publicly humiliated in the village square as a "capitalist roader" because he wanted to establish a factory in the community. Five years later during the early reform period, he was criticized again for bucking the national trend to give peasants back their land. Instead, he kept property under collective ownership so that it was easier to expropriate for business.

Now, he is held up as a national hero. But he says the guiding principle is simple. "People here have five aims in life: money, a car, a house, a son and respect. We give them that. Every family here is rich. Our target now is to make all of China rich."

The Huaxi system appears to resemble the imperial dynasties of old more than communism. At the top is the ruling family: Wu has been replaced as village chief by his son, Xie'en, who was recently reelected with 100 percent of the votes in the commune. At least half of the village's main companies are run by other children and grandchildren.

At the bottom are the 30,000 migrant workers who do most of the work in the steel mills and textile factories for less than 80 pounds a month. "They get the same salaries as locals," said Wu. "The difference is that they don't own any capital."

Huaxi has to maintain rapid growth, however, to keep everyone happy. The original village of 1,500 households has swallowed 26 villages in a quest for more land. The population is now more than 60,000, including migrants.

Xie'en says political stability is the basis for rapid growth. "I think every era has a different formula for success. The most important thing is to be flexible and open to new ways to thinking. We must do whatever works," he says. "We are not Communist. We are 100 percent shareholder owned."

But at the local nursery school, the children -- 80 percent of whom are boys from migrant families -- are taught otherwise. "The sky of Huaxi is the sky of communism. The land of Huaxi is the land of socialism," goes the village song sung by the headmistress Wu Jie -- another granddaughter of the old general secretary. "We take the kids around our village and show them how wealthy we have become. We tell them that it is thanks to our hardworking village chief," said Wu Jie. "We want them to grow up to be good communists."

Jonathan Watts

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