Out of Mao's Shadow: The Struggle for the Soul of a New China (19 page)

Xiao and the others who gathered at Yao’s store suspected corruption was at the root of the factory’s struggles. Demand for the alloys it produced remained high, and the company was cutting costs every year by laying off workers, yet it was starved for funds. Where did the money go? Sitting on folding chairs under the shelves of soda and instant noodles in the convenience store, grumbling about the layoffs and their unpaid wages over beer or tea, the workers thought they knew the answer. They traded stories about how Fan and his managers were prospering, about who was seen driving a new car, or going overseas on a business junket, or sending his children to study abroad. But it was not until an accountant in the finance department joined them in the store that they understood the scale of the problem: through a variety of complex schemes, she said, Fan and other party officials were transferring millions of dollars in company assets to private companies they owned or controlled. When the accountant tried to report the crime, the police put her in jail for nineteen days. The money trail extended up the party hierarchy, and Fan was protected.

Word of the accountant’s disclosures spread quickly among the workers at Liaotie, and the conversations at Yao’s store took on a new edge. Xiao was furious. It wasn’t enough to just sit around and complain, he felt. They needed to take action. Yao agreed, as did another regular at the store, a truck dispatcher who worked with Xiao named Pang Qingxiang. The three men formed the nucleus of a group of Liaotie employees who set out to demand what was owed them. They drafted a letter outlining the workers’ grievances and organized delegations to visit a series of government offices looking for help. The official trade union controlled by the party—the only union allowed under the law—rebuffed them. The labor arbitration bureau refused to accept their case. The state media, the police, the courts, the prosecutors, the party’s discipline office—they all turned them away, too. The workers pooled their money and traveled to the provincial capital, Shenyang, and then to Beijing, to lodge complaints, but nothing came of those efforts, either. Some workers even confronted Fan directly, showing him documents outlining government policies prohibiting wage arrears. But the slick hack just brushed them off, saying the documents were worthless because the factory had no money.

In 1998, Yao explored the possibility of finding help for the workers elsewhere. During a brief political thaw before President Clinton’s visit to China that year, small groups of dissidents around the country tried to establish an opposition political party. They called it the China Democracy Party, and Xu Wenli, a former electrician and well-known democracy advocate from the late 1970s, was elected chairman of its Beijing branch. Less prominent figures were organizing branches in other cities. It was a bold, perhaps naive endeavor—the dissidents were operating in the open, trying to register the party with the government—but Yao was intrigued, and he traveled to a nearby city to attend a few of the party’s meetings. Before long, though, he concluded it could never survive a crackdown, and he declined an offer to join the party and serve as its representative in Liaoyang. His instincts were right. Shortly after Clinton’s visit, the security forces arrested Xu, sentenced him to thirteen years in prison, and dismantled the China Democracy Party. In December that year, police in Liaoyang detained Yao for questioning and warned him to stay away from the group. He agreed, signed a statement to that effect, and was released.

By the spring of 2000, the Liaotie workers were angry and desperate. The two thousand workers still on the job had not been paid for as long as two years, and the three to four thousand retirees and laid-off workers that the factory was responsible for had not received benefit payments in three to six months. “Our lives were pitiful,” Xiao said. “Workers were living from meal to meal, struggling to feed their children. Elderly workers died in their homes because they had no heat.” Meanwhile, disgruntled managers leaked more information about Fan’s corrupt dealings. By May the workers had heard enough, and hundreds of them took to the streets, blocking the main highway between Liaoyang and Shenyang and demanding their unpaid wages and pensions. After twelve hours, just past midnight, the authorities ordered antiriot and paramilitary police to break up the demonstration. Dozens of workers were injured in the clash, and Xiao and Pang were arrested. Hoping to prevent further protests, the government let them go the next day. But it was Xiao’s first brush with the police, and he would never forget it. “What I saw was the despotism of the Communist Party,” he said. “I saw workers begging for food, and the party respond with armed force, with antiriot troops and police. It was just like a fascist dictatorship. On the road that day, there were thousands of soldiers and officers, marching in step, trying to intimidate us.”

Workers from other factories were staging similar protests every day across the rust belt. Like the men and women from Liaotie, they had concluded that such acts of desperation and defiance, while risky, were the most effective way to draw attention to their problems in a political system in which the media, courts, and labor unions were controlled by the party. When they sought help through formal channels, the party ignored them. But when they took to the streets, the party snapped to attention. Party officials could be recklessly corrupt, but they were also a nervous and fearful bunch. They understood the depth of discontent with their rule, and they worried that any protest, if handled improperly, could gain momentum and spin out of control. The workers used this fear to their advantage. The bigger and more disruptive the protest, they realized, the quicker the party would respond and the more likely it would be to address their concerns. But if workers were able to win concessions by protesting, the party always gained more than it gave away. It defused demonstrations by dividing workers, paying some while holding out against others, and in doing so, it blunted demands for systemic change, too.

The workers at Liaotie staged more protests. Occasionally, the factory would pay some of what was owed them, but it would always fall behind again. The government promised to look into their allegations of corruption, and it once sent a team of officials to the factory to gather evidence, prompting workers to set off firecrackers in celebration. But nothing came of the investigation. One of the officials privately told the workers that the corruption was much worse than they knew, and suggested that too many senior party officials were involved for investigators to keep digging. Later, the official was transferred. The workers knew that Fan enjoyed good ties with Gong Shangwu, the former mayor and party chief who served as chairman of the local legislature and was said to take lavish trips abroad at the factory’s expense. Later, their suspicions also focused on the provincial governor, Zhang Guoguang. In 2001, before being assigned to govern another province, he visited their factory and announced that it was beginning bankruptcy proceedings, the workers said.

The announcement caused immediate alarm. Xiao and his colleagues had seen other state factories driven into bankruptcy, and they knew it would mean a raw deal for them. If Liaotie went bankrupt, they might never recover their unpaid wages. Instead the state would relinquish all welfare obligations, and their years of labor on behalf of socialism would end with a meager severance payment. Meanwhile, the corruption that had crippled their company might never be exposed. The workers believed they had as strong a claim of ownership on the factory as anyone. They were the ones who had built it and made it what it was, and China was supposed to be a workers’ state, wasn’t it? But if the factory were liquidated, its assets would just be sold behind closed doors at cut-rate prices to party officials and their relatives and friends. A few months after the announcement, a team of men showed up at Liaotie in the middle of the night and began hauling away thousands of tons of valuable iron ore and equipment in a fleet of trucks. Sympathetic security guards woke Xiao, and he rushed to the plant in his pajamas with several other workers. But they were outnumbered, and when they demanded answers, the men just ignored them. The workers staged a protest the next day, demanding an explanation from the government. The government ignored them, too.

Under Chinese law, worker representatives are supposed to vote and approve the bankruptcy of a state enterprise after reviewing a report on its accounts. Liaotie never distributed a report, but it scheduled the bankruptcy vote for a morning in October 2001. As the date approached, Xiao and the others stepped up their protests. “We knew it was a turning point,” he said. “It was our last chance to fight for our rights.” The day before the vote, more than a thousand workers from Liaotie blocked the highway to Shenyang again. Police detained Xiao and several other worker leaders. The next morning, they also nabbed Yao. Hundreds of riot police were deployed around the factory as a crowd of workers massed outside the front gate. Some worker representatives were blocked from entering, and management split up those it allowed in and forced them to meet in thirteen different locations. Two plainclothes police officers were stationed in each one to make sure the workers voted as they were told. Some of those who attempted to cast opposing votes had their ballots torn up in front of them.

The police released Xiao and the other labor leaders after the vote. A few weeks later, the government formally declared the company bankrupt. Despite the workers’ efforts, the Liaoyang Ferroalloy Factory was no more.

T
HE
S
PRING
F
ESTIVAL
is usually a joyous holiday in China, an occasion for families to come together and mark the start of the lunar year with fireworks, gifts, and homemade dumplings. But in the drab housing estates where the Liaotie workers lived, there was little to celebrate as the Year of the Horse began in February 2002. The only signs of revelry were the elderly workers who occasionally gathered and sang to the neighborhood in frustration. Theirs was a familiar tune, one the workers had all been taught as children, “The Internationale”:

The workers’ circumstances had deteriorated sharply after the bankruptcy. Some workers, including all the managers, were rehired by parts of the plant that resumed production after they were privatized. But most were left unemployed, with months of unpaid wages and benefit payments still owed them. The severance payments that were promised never materialized, and many families could no longer even afford cooking oil and heat. Because so many people had been laid off in the city, the competition for jobs was fierce. Some workers relied on their parents’ meager pension payments to support their families, while others tried to make do with monthly welfare subsidies equal to about twelve dollars. Xiao struggled to support his wife and three daughters by picking up odd jobs as a day laborer at construction sites.

But it was not destitution that angered Xiao most. It was the contrast between their lives and those of party officials. He could respect an entrepreneur who made a fortune by relying on hard work and talent, but as far as he could tell, the officials prospered because of the power that they held, not because of their abilities. They were no better than thieves and bandits, he thought, because they stole from factories that ordinary workers had built. Across the city, luxurious saunas, clubs, and karaoke halls opened to serve the new rich, and Xiao burned with frustration as he watched fancy sedans ferrying party officials and their mistresses from one pleasure palace to the next. During the Spring Festival, the Liaotie workers noticed the factory’s party officials coming and going from their apartments toting bags full of gifts from their shopping sprees. As far as Xiao was concerned, they weren’t just celebrating the holiday. They were celebrating the bankruptcy.

The depth of corruption in the party was evident to the workers as they followed news of a major purge unfolding in nearby Shenyang, the provincial capital and one of the nation’s largest cities. The mayor there and more than a hundred other city officials had been detained on corruption charges. While state media presented the case as an example of the party’s resolve to keep its cadres honest, the public marveled at the scale of malfeasance and wondered why it went unpunished for so long. At the center of the scandal was a mafia boss, Liu Yong, who sat on the city legislature and ran a crime organization responsible for thirty to forty murders, most of them of people who got in the way of his vast real estate, tobacco, and retail conglomerate. Among his allies was Mayor Mu Suixin, a flamboyant official who rode in a Mercedes and insisted on staying in the presidential suites of five-star hotels when traveling. Mu had once been held up by the party as a role model because of his efforts to “reform” state enterprises. Now it was revealed he had accepted “huge amounts of bribes.” When investigators searched his two country homes, they found one hundred and fifty Rolex watches as well as six million dollars in gold bars hidden in the walls. His first wife, second wife, sister, brother, daughter, and chauffeur were said to be on the take, too. Corruption infected almost every agency in Mu’s government, from the police to the banks to the construction bureau, and it took many forms: smuggling, extortion, the sale of official positions, the rigging of state contracts, embezzlement, as well as the use of public funds to maintain mistresses. The deputy mayor, Ma Xiangdong, blew nearly five million dollars in city money in gambling sprees in Macao and Las Vegas. Others arrested included the city’s chief judge, the chief prosecutor, the head of the tax bureau, and the manager of the state assets agency.