The Death of Deng: Worrying legacy of social and economic ills

After the years of despotism, China marches on into the great unknown

Daunting economic and social problems face China's leaders in the post-Deng era, threatening to undermine the authority of the Communist Party, writes Teresa Poole.

After nearly 17 years of rapid reform and breakneck economic growth, most people enjoy a much higher standard of living. But there is also widespread resentment about social ills, ranging from unemployment and endemic corruption, to the collapsing social welfare system. The Chinese needed no encouragement to follow Mr Deng's maxim that "to get rich is glorious", but the country is now experiencing the tensions that emerge when some people get much richer, much quicker than others.

On the economic front, China is suffering all the problems associated with rapid transition from a centrally planned system to one where market forces prevail. As one Western diplomat said: "There are a huge variety of scenarios available to choose from. There are plenty who take all the negative things, put them all together, and produce a catastrophe scenario, one in which China is going to break up, break down, central government will lose its authority, anarchy will ensue, and so on and so forth. Equally you can ... construct scenarios which show an unimpeded advance towards some status as an economic superpower, sooner rather than later in the next century."

At the moment, more than a third of the country's state enterprises are losing money and millions of workers have been sent home from moribund factories with partial pay or none. It is estimated 40 million of the 147 million urban workers are surplus to requirements; even projections from the Ministry of Labour speak of 268 million jobless by the end of the decade. The central government cannot allow large-scale bankruptcies because such a radical move would prompt serious labour unrest; already there are regular reports of disgruntled factory workers going on strike over deteriorating conditions, something unheard of in Mao's day.

Almost everyone lives much more comfortably than in 1978, but 70 million people, mostly in rural areas, remain below the official poverty level of pounds 20 a year. In cities, too, the contrast between wealth and poverty is striking. At the bottom of the heap are the new urban poor, whose livelihoods are tied to loss-making state enterprises.

The dislocation of Chinese society has raised alarm about a breakdown in public order. An urban crime wave, ranging from petty theft to gang violence, has swept the country, and China's streets are far less safe than 10 years ago. In response, the central government in April 1995 launched the biggest anti-crime crackdown for more than a decade, and tens of thousands were arrested in its wake.

Chinese complain even more vociferously about corruption. Despite repeated campaigns by the government and the party, economic crimes, embezzlement and bribe-taking are increasing at alarming rates. Few business transactions are carried out without something to oil the wheels of the bureaucracy.

A Communist Party document outlined some of the abuses that should be avoided: "Officials are not allowed to build private houses with public funds ... or attend banquets which could influence their decision-making process."