the "wenzhou model" of development and china's modernization

The "Wenzhou Model" of Development and China's ModernizationAuthor(s): Alan P. L. LiuSource: Asian Survey, Vol. 32, No. 8 (Aug., 1992), pp. 696-711Published by: University of California PressStable URL: http://www.jstor.org/stable/2645363 .

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THE "WENZHOU MODEL" OF DEVELOPMENT AND CHINA'S MODERNIZATION

Alan P. L. Liu

One of the most significant aspects of the post-Mao economic and social development of China was the rise of many en- trepreneurial rural communities, especially those along the eastern coast. Some of these had been promoted by Chinese journalists and scholars as "models" (moshi) for emulation by other rural communities.1 The term "model" meant that a community's social and economic program best rep- resented the developmental strategy of the current national leadership. Accordingly, the post-1980 "models" had, in different ways, achieved the following: a rapid rise in personal income, use of the profit motive and the market mechanism, specialization, flexible patterns of ownership, and reliance on indigenous resources. This article deals with one of the most famous "models": Wenzhou municipality in Zhejiang Province.

One virtue of any detailed study of a subsociety such as the present one in Wenzhou lies in depicting the nature of the social and cultural context within which development inevitably has to take place. Another possible gain of a study like this is to see Wenzhou's development as a microcosm of Chinese modernization. Important aspects and dilemmas of China's political and economic development may be thrown into relief by an analysis of Wenzhou.

Wenzhou and Its People Located almost at the midpoint of China's eastern coast, Wenzhou con- sists of an urbanized area (488 square kilometers) and a large rural region (divided into eight counties) that was incorporated into the Wenzhou mu-

Alan P. L. Liu is Professor of Political Science, University of Cali- fornia, Santa Barbara.

? 1992 by The Regents of the University of California

1. Chen Jiyuan and Xia Defang, Xiangzheng Qiyemoshiyanjiu [A study of models of rural enterprises] (Beijing: Zhongguo Shejuikexue Chubanshe, 1988).

696



ALAN P. L. LIU 697 nicipality under the new "city administering county" (shi guan xian) policy in 1981. The urban area is a mere 4% of the municipality's 11,500 square kilometers, as well as one-fourth of the population that in 1989 stood at 6.4 million. The topography is rugged; 78% of the territory is mountainous with three ranges, all in northeast to southwest alignment, forming the northeastern, western, and southwestern borders and effec- tively isolating the municipality from the rest of the Chinese mainland. In traditional times, the main link between Wenzhou and the rest of China was by sea. The plains (17.5% of the area) are mostly along the coast and are criss-crossed with rivers and canals. Historically, Wenzhou served as the trading center of southeast Zhejiang and northern Fujian and as the main entrepot for trade with large northern ports such as Ningbo and Shanghai. The region is poor in mineral resources but rich in commercial crops, notably tea, fruit, sugar cane, lumber, and fishing.

Since the Song dynasty (960-1279), the people of Wenzhou have turned the area's natural endowments and geographic location into comparative advantage. They specialized their production in commercial crops and crafts-in other words, they produced for the market. Rural household industries thrived and an extensive infrastructure of local markets also developed. Above all, the people became highly mobile and skilled in long- distance trade, which enabled Wenzhou to sustain a larger population than its geography and natural endowments would have allowed. Out of this social and economic condition grew another of Wenzhou's traditions- outmigration. Emigration and long-distance trade, however, were also the people's reactions to political pressures. Successive dynasties from the Song to the Qing (1644-1912) closed the Wenzhou port from time to time in order to stop incursions by Japanese and Chinese pirates. Conse- quently, Wenzhouese became experienced smugglers. For the central government of China, then and now, control of Wenzhou has always been problematic.

Wenzhou was burdened with a deepening demographic crisis in the twentieth century, caused partly by a rise in manufacturing industries and partly by an influx of refugees escaping from civil wars and the Japanese invasion. From 1906 to 1921, the population in the urbanized area increased by 148%, and thus Wenzhou's emigration trend continued un- abated. In recent years, for example, the annual number of Wenzhouese migrants in other parts of China amounted to 270,000, and Wenzhouese constituted 83% of all Zhejiang immigrants in Europe.

Wenzhou, or for that matter, the entire province suffered from serious political discrimination under Mao, due partly to Zhejiang's being the home province of Chiang Kai-shek. Zhejiang had the highest number of emigrants to Taiwan in 1949, partly due to its proximity to Taiwan (mak-



698 ASIAN SURVEY, VOL. XXXII, NO. 8, AUGUST 1992

ing it vulnerable to invasion by the Nationalists) and partly due to its way of life that was antithetical to Mao's preference for collectivization and socialist enterprises. Mao's administration invested little in Zhejiang's or Wenzhou's economic development. Meanwhile, the Maoist collectivization program, which required Wenzhouese to stay put and farm, went against the grain of craftsmen and long-distance traders. Wenzhou was the first locality to resist the establishment of advanced agricultural producers' cooperatives in 1955-56,2 and the people never totally abandoned their way of specialized production and long-distance trade under Mao's rule.

The failure of Mao's rural policy to solve Wenzhou's Malthusian crisis contributed to the people's nostalgia for their old ways of trade and travel. From 1950 to 1982, Wenzhou led Zhejiang in annual rate of population increase: 2.4% in Wenzhou and 1.9% for the province, and in the early 1970s the demographic pressure was such that in some Wenzhou towns the sale of women, beggary, and smuggling occurred.3 By the end of Mao's era, rural Wenzhou had, by and large, gone back to precommunist practices. As one 1977 press account reported, in Wenzhou "collectivization had been turned into private farming, black market emerged, collective enterprises had collapsed and been replaced by 'underground factories' and 'underground labor markets.' "4 Against the background of Wen- zhou's distant and recent history its economic achievements after 1980 were more a renaissance and an evolutionary process than an economic "takeoff."

Formula for Success That Wenzhou was named as a national "model" was based on a number of impressive facts (see Table 1). The total product of society (the sum of the gross output value of industry, agriculture, building trades, communications, transport, post and telecommunications, and commerce) increased from 3 billion yuan in 1980 to 13 billion yuan in 1988 (current exchange rate $1 = 5.35 yuan). From 1978 to 1989, Wenzhou's industrial output rose from one to 8.9 billion yuan. The most dramatic change occurred in the rural area where the proportion of the value of nonagricultural produc-

2. Shang Jingcai, Dangdai Zhongguo di Zhejiang [Contemporary Zhejiang of China], vol. 1 (Beijing: Zhongguo Shehuikexue Chubanshe, 1989).

3. Wang Sijun and Wang Ruizi, Zhongguo Renkou: Zhejiang Fengce [Chinese population: Zhejiang volume] (Beijing: Zhongguo Caizheng Jingji Chubanshe, 1988), p. 170; and Lin Bai, Jin Guowen, Zhou Yilin, and Hu Fangsong, eds., Wenzhou Di Juqi [Rise of Wenzhou] (Nanning: Guangxi Renmin Chubanshe, 1987).

4. Xinhuashe Jizhe, "An Alarming Case of Counterrevolutionary Restoration in Wenzhou," Renmin Ribao (People's daily, hereafter RMRB), March 22, 1977, p. 2.



ALAN P. L. LIU 699

TABLE 1 Economic Growth of Wenzhou, 1978-1989

1978 1980 1986 1988 1989

Total product of society (100 million yuan) - 30.96 87.75 133.8

Gross output value of industry and agriculture (100 million yuan) 18.92 25.48 65.07 94.2 123.13

Gross output value of industry (100 million yuan) 10.01 14.12 48.21 73.95 89.89

Annual average income of peasant (yuan) 165 508 832 924

SOURCES: Zhang Renshou and Li Hong, Wenzhou Moshi Yanjiu [A study of the Wenzhou model] (Beijing: Zhongguo Shehuikexue Chubanshe, 1990); 1989 Zhongguo Jingji Nianjian [Almanac of China's economy] (Beijing: Jingji Guanli Chubanshe, 1989), and 1990 Zhongguo Jingii Nianjian.

tion in the total social product rose from 31.7% in 1980 to 67% in 1985. During the same period, the proportion of the labor force employed in nonfarm work in the rural area increased from 22% to 38%, and the average income of Wenzhou peasants, which before 1980 was among the lowest in the nation, was 50% above the national average in 1989 (924 yuan in Wenzhou as compared to 601 yuan for the nation).5 In 1990 Wenzhou established its own export processing zone, the Longwan Export Industry Zone, and opened its first international airport, both constructed mainly with local resources. For the airport, the central government contributed 20 million of the total 130 million yuan in construction costs and it contributed no funds for the establishment of the export processing zone.6

The key to Wenzhou's success may be summed up in one phrase: adapt- ing traditional institutions to modern conditions. Specifically, its formula may be described as a combination of "three Ms"-mass initiativeness,

5. Huang Jiajing, "Technical Conditions in a Society's Economy," in Lin Bai et al., eds., Wenzhou Moshi Di Lilun Tansuo [An exploration of the theoretical implications of the Wenzhou model] (Nanning: Guangxi Renmin Chubanshe, 1987), pp. 100-120; Dwight Per- kins and Shabid Yusuf, Rural Development in China (Baltimore: Johns Hopkins University Press, 1984), esp. p. 116; and 1990 Zhongguo Jingii Nianjian [Almanac of China's economy] (Beijing: Jingji Guanli Chubanshe, 1990), part iv, p. 75.

6. "Wenzhou Airport Gives Lift to Regional Economy," China Daily, July 22, 1991; "The Rise of Longwan," Wenzhou Tongxin [Wenzhou bulletin], no. 13/14 (1990), p. 26.




TABLE 2 Household Industries in Wenzhou, 1979-1988

Year Number

1979 1,844 1981 13,231 1982 20,363 1983 39,698 1984 100,286 1985 130,407 1988 150,000

SOURCES: He Rongfei, Zheng Dajiong, and Ma Jinlong, eds., Wenzhou Jingii Geju [Gen- eral pattern of Wenzhou economy] (Wenzhou: Zhejiang Renmin Chubanshe, 1987), pp. 133 -35; 1989 Zhongguo Jingji Nianjian, part iv, p. 105.

mobility, and markets-and "one I"-interstices. The "three Ms" corre- sponded to what one Chinese scholar had suggested as the three pillars of Wenzhou's post-Mao economy: household industries, sales agents (gong- xiao-yuan), and market towns,7 all three of which had thrived in traditional times. Their vigorous growth after 1980 may be due to a re- bounding effect after being long suppressed under Mao's rule.

The spirit of mass initiativeness was manifested, first and foremost, in the rapid growth of household industries, as shown in Table 2. These industries were, in turn, made possible by the Wenzhou migrants working elsewhere in China. A study found that initial investment in Wenzhou's household industries came from five sources: income earned by migrant laborers, earnings from exporting special local products, profits from work in "underground factories," allowances from overseas kin, and bank loans. Of these the most substantial source was the income from migrants,8 who also transmitted vital information back home concerning the national market and new production technology. The household industries relied heav- ily on the high mobility of a large number of Wenzhouese sales agents who performed the multiple functions of sales, disseminating information (especially about markets outside of Wenzhou), and contracting ("putting- out").

7. Wu Xiang, "On the Developing Rural Commodity Economy of Wenzhou," RMRB, August 4, 1986.

8. Zhang Renshou and Li Hong, Wenzhou Moshe Yanjiu [Study of the Wenzhou model] (Beijing: Zhongguo Shehuikexue Chubanshe, 1990).



ALAN P. L. LIU 701

TABLE 3 Designated Towns in Wenzhou, 1984-1990

County 1984 1985 1988 1990

Leqing 9 14 16 21 Yongjia 6 9 10 12 Ouhai 4 (10) 11 16 Ruian 7 14 16 20 Pingyang 12 12 13 14 Cangnan 13 14 16 18 Wencheng 1 4 4 4 Taishun 5 5 6 6 Dongtou 1 (1) 2 2

SOURCES: Ting Junqing, "Urbanization and Pattern of Cities and Towns in Wenzhou," in Zhejiangsheng Chenshi Guihua Xuesha Lunwenxuan (1985-1986) [Collection of selected works on urban planning in Zhejiang Province, 1985-1986] (Zhejiangsheng Chenshi Guihua Xueshu Weiyuanhui, 1986); Zhang Renshou and Li Hong, Wenzhou Moshi Yanjiu; Zhejiang- sheng Mingzhengting, ed., Zhejiangshengxingzhenquhua [Administrative divisions of Zhe- jiang Province] (Hangzhou: Zhejiangsheng Renmin Chubanshe, 1988); data on 1990 were supplied to me by a Chinese scholar and were part of "internal reference."

The activities of household industries and the sales agents were inte- grated in market towns that were, more often than not, built on the foun- dations of traditional market centers. Table 3 shows the rapid growth of towns in Wenzhou of which ten were the most famous, each specializing in a particular kind of manufacturing (see Map 1). The new towns were almost all situated on the coastal plain where there was an abundance of rivers and canals to ease communications, and they performed both up- ward and downward linkage functions. These towns were the meeting places for local, national, and even foreign businessmen, and at the same time were the base areas from which salesmen-turned-businessmen organ- ized household industries in surrounding villages to produce goods for sale in the national market or export overseas.

The vigorous revival after 1980 of Wenzhou's traditional institutions of household industries, long-distance trade (through sales agents), and market towns would not have been possible without skillful exploitation by the Wenzhouese of interstices in the Chinese economy, society, and politics. Economically, Wenzhouese household industries excelled in producing goods that belonged to the "excluded middle," that is, simple goods neglected by large-scale modern industry and especially, one might add,




MAP 1 The Ten Specialty Market Towns of Wenzhou

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9. Li Reshou and Huang Jiajin, "Peasants' Leaving Farming for Commerce," in Wenzhou Moshi Di Lilun Tansuo, pp. 171-82.



ALAN P. L. LIU 703

glass frames (2.2 %). Wenzhou's consumer industry grew truly "in the crevices of China's industrial structure."

Socially, Wenzhouese exploited the weakest link in a Soviet-type economic system: distribution and circulation. Wenzhou used its massive number of sales agents to take advantage of this interstice. Politically, Wenzhou was at an advantage as its private economy grew rapidly during a time of "control vacuum" when the national government had not yet made the necessary adjustments to a market economy. Without clear guidance from Beijing, local governments were at a loss on how to proceed in their relationships with private trade and enterprises. With their long trading tradition, Wenzhou people had a headstart over other localities in taking advantage of this political interstice.

The Political Context Wenzhou's development, however, needed much stronger political support than could be gained from a permissive factor such as a lag in governmental control, for the "Wenzhou model" was the furthest of all the models from socialism. As noted earlier, Wenzhou's renaissance after 1980 was mainly due to privately owned family businesses and self-employed sales agents. From 1980 to 1988 the proportion of industrial output by private firms in Wenzhou increased from 1 % to 41 %. 10 It was no wonder that criticisms of Wenzhou from the "left" have charged that "Wenzhou's way was the way of capitalism" and "the commodity economy of Wenzhou was the economic foundation of bourgeois liberalism." Wenzhou was able to have its way because of a combination of political factors.

First, it benefited from a consensus among national leaders in 1979-80 that impoverished areas such as Wenzhou be given a high degree of autonomy in deciding the pattern of farm or business ownership. Consequently, peasants in poor provinces such as Zhejiang, Anhui, or Henan quickly re- verted to household farming from which stemmed commercial crops and crafts industries.

Second, in the mid-1980s, just as its development gained national atten- tion, Wenzhou won active support from a group of influential national leaders, all known for their advocacy of bold economic reforms. The most important of these was Wan Li whose personal tie to Deng Xiaoping was of special significance to Wenzhou. Others included Zhao Ziyang, Tian

10. Zhongguo Minzhu Jianguohui Zhongyang Weiyuanhui Yanjiushe, "A Comprehensive Look at Wenzhou's Private Economy," in Guojia "Qiwu" Qijian Zhongdi Zhongguo Siying Jingji Yangjiu Ketizhu, ed., Zhongguo Di Siying Jingii: Xianzhuan, Wenti, Qianjing [China's private economy: Current situation, problems, and prospects] (Beijing: Zhonguo Shejui Kexue Chubanshe, 1989), pp. 135-49; Yao Liwen and Zhen Jian, "Wenzhouese Talk About Private Businesses," RMRB, June 19, 1988, p. 2.




Jiyun (Politburo member and vice premier), Du Runsheng (director of the Rural Policy Research Center under the Secretariat of the Central Com- mittee), and Wu Xiang (deputy director of the Rural Policy Research Center under State Council). With Deng Xiaoping's trust, Wan Li had successfully promoted household farming and free rural trade in Anhui, and he took a personal interest in seeing Wenzhou overcoming poverty in like manner. In 1985 Wan promised Wenzhou party leaders that he would take Deng Xiaoping a videotape describing Wenzhou's achievements and he personally toured the municipality in April 1986.11

Other national leaders such as Zhao Ziyang, Tian Jiyun, Du Runsheng, and Wu Xiang had also visited Wenzhou and apparently had formed an informal "lobby" for Wenzhou in Beijing. That in turn set the stage for a most significant visit in 1986 by Hu Qiaomu, one of the Communist Party's top ideologues and not a supporter of private ownership. After Hu's return to Beijing, the State Council announced that Wenzhou had been granted the formal status of an "experimental zone." Though an "experimental zone" was nowhere near a "special economic zone," the former bestowed on Wenzhou the right to "be free from the restrictions of traditional premises, current rules and regulations, and policies of the nation." Hu Qiaomu's visit to Wenzhou exposed the ambivalent attitude of the "left" among Beijing leaders. Although Hu agreed to the granting of "experimental zone" status to Wenzhou, he tried to limit its possible influence in China. He instructed the Wenzhou party establishment to emphasize education on the "two cultures" (socialism and science), cadre leadership in economic development, severe restrictions on visits to Wenzhou by outside cadres, and moderation in national propaganda for the municipality. Of course, the title "experimental zone" indicated Wenzhou's uncer- tain status in the eyes of Beijing's fractured leadership. Nevertheless, for the moment Wenzhou had obtained a degree of national endorsement, al- beit of an intangible type, and People's Daily carried special reports on the area's economic success.

Third, Wenzhou had also gained strong political support at the regional level. A patron-client relationship appeared to have developed between the Shanghai and Wenzhou party establishments, and Wenzhou owed its honorific "the Wenzhou model" to the Liberation Daily, the organ of the Shanghai Party Committee. The newspaper first referred to Wenzhou as a "model" in a front-page report on May 12, 1985, and subsequently, it and other Shanghai media collaborated with Wenzhou leaders in publishing books on Wenzhou's achievements, advertising its products, and defending

11. Lin Bai et al., eds., Wenzhou Di Ganbu [The cadres of Wenzhou], p. 87, and Wenzhou Duihualu [Dialogues in Wenzhou] (Nanning: Guangxi Renmin Chubanshe, 1987), pp. 100-101.



ALAN P. L. LIU 705

it in the face of attacks from the "left." 12 Meanwhile Wenzhou cadres, sales agents, and businessmen went to Shanghai in droves to buy second- hand machinery, get technical aid by hiring retired Shanghai engineers and skilled workers, and pick up the latest news on markets and production. In other words, as Shanghai's client, Wenzhouese obtained tangible bene- fits from the relationship, and Shanghai in turn, as Wenzhou's patron, used the "Wenzhou model" to reap-for the moment-an intangible bene- fit: advocacy of local autonomy and a fuller use of the market mechanism symbolized by Wenzhou. As was well known, Shanghai leaders blamed their city's lackadaisical performance in the era of reform on too much political control from the national government.

Last but not least, Wenzhou's rapid growth after 1980 was made possible by a fluid local party leadership and grassroots political support. As had earlier dynasties, both the Mao and Deng administrations had considerable problems in managing Wenzhou. From 1949 to 1984, the position of first secretary of the Wenzhou Party Committee changed hands 17 times, an average two-year tenure for each secretary. A major political shakeup occurred in 1981, removing 18 of the 27 leading municipal party leaders.13 These were among the political interstices that the Wenzhouese used to their advantage. Furthermore, village (cun) level cadres, being na- tives, vigorously participated in Wenzhou's private economy. For example, the book Wenzhou Di Ganbu, which recorded meritorious deeds of the cadres of Wenzhou in promoting industry and commerce, included 18 ex- amples, one of which was from the municipal party establishment, three from counties, six from towns or townships, seven from villages, and one unclassifiable. Although this was a very limited sample, its internal varia- tion was significant. The lower the administrative level, the more numer- ous were the instances of cadres' contributing to commerce and industry (note that designated towns and townships belonged to the same administrative level). Testimony from a former county party secretary supported the foregoing analysis when he said: "I discovered from my inspections that the prosperous localities almost always had higher proportions of cadres engaging in commerce or industry themselves."14

However, like the national elite, Wenzhou cadres were divided in their attitudes toward private business. There were many cases of cadres' ob-

12. References to these can be found in the series of books on Wenzhou edited by Lin Bai et al., especially: Wenzhou Di Juqi, p. 20; Wenzhou Di Ganbu, pp. 39 and 230; Wenzhou Xinfengqing [New social trends of Wenzhou] (Nanning: Guangxi Renmin Chubanshe, 1987), pp. 35, 118, and 178.

13. Zheng Wenyuan and Jiang Yaochun, "Stories from Wenzhou," Minzhu Yu Fashi [De- mocracy and rule of law], no. 8 (1986), pp. 4-17; also Wenzhou Di Ganbu.

14. Zhang Guisheng, "Seven Explanations on Villages," in Wenzhou Duihualu, p. 147.




structing private commerce and industry, mainly in their positions in party offices managing commerce and industry at county, town, and township levels. In almost every recorded case of controversy involving a local busi- nessman and a cadre, the latter was found to be from one of those offices. These cadres usually responded vigorously whenever Beijing launched one of its episodic ideological campaigns, such as the "rectification of compa- nies" in early 1985 or the "anti-bourgeois liberalism" campaign in 1986-87. However, they were weakened by the ambivalent attitude toward Wenzhou of leftist national leaders, as discussed earlier; their ob- structions were intermittent and failed to thwart the Wenzhouese will to develop.

Developmental Consequences Rapid economic development in Wenzhou inevitably produced a host of social and economic consequences, both positive and negative, with important local and national implications. Economically, the most tangible effect of Wenzhou's development was a reduction in the numbers of surplus laborers. Before 1980, only 570,000 of Wenzhou's 2.6 million-strong farm labor force were actually needed to cultivate the available land. By 1987 household industries and other private businesses had absorbed 75% of the surplus labor,15 and some formerly impoverished counties or towns now experienced shortages.

The attractions of nonfarm work, however, were not confined to surplus laborers. An overall decline in agriculture occurred in the 1980s, with a three-fourth decrease per mou (one sixth of an acre) in investment in farm land by Wenzhou peasants. In coastal areas, 30% to 40% of farm land was no longer being cultivated, and Wenzhou now relied substantially on grain imports to feed its population.16 In view of Wenzhou's history and Mao's policy, it was only to be expected that the peasants, given an oppor- tunity, would choose nonagricultural work. And as long as the Chinese government allowed regional specialization to proceed, then it was consis- tent with comparative advantage for Wenzhou to import grain. Among the chief beneficiaries of a rise in nonfarm work in Wenzhou were women. It was reported that 80% of the municipality's adult females were employed in either manufacturing or services. A major credit for increasing female employment must go to Wenzhou's ubiquitous household industries, and many new businesses employed young females from impover-

15. Wenzhou Di Juqi, pp. 9 and 72; and Zhongguo Shekeyuan Jingjisuo Wenzhou- nongcundiaochazu, "Pushing Forward Rural Economic Development," Jingji Yanjiu [Eco- nomic Research], no. 6 (1986), in Wenzhou Moshi Di Lilun Tansuo, p. 233.

16. Chen Jiyuan and Xia Defang, Xiangzheng Qiye Moshi Yangjiu, pp. 111-12.



ALAN P. L. LIU 707

ished mountainous areas, in some cases constituting 50% to 80% of the employees. 17

Some of the effects of the way in which Wenzhou developed were con- troversial, but the one that had aroused public and governmental concerns was income disparity-between regions, professions, status of employment, and types of employment. Regional differences occurred mainly between economically prosperous coastal areas and underdeveloped mountainous areas. In a survey of Leqing county in 1984, for example, the average annual income of residents of the manufacturing town of Liushi was 986 yuan, while in eight mountainous townships to the west the average income was 100 yuan.18 As to disparities between agricultural and nonagricultural work, the Leqing study found that among 1,599 households that had an average annual income of 10,000 yuan or more, 50% specialized in sales, 20% in manufacturing, 10% in labor contracting, 10% in services, and 5% in other nonagricultural work. In contrast, the average income of a farming household was 600 yuan in 1984. Income differential between employers and employees was reported in a study of 50 businessmen in 1986; it found that the average annual income of employers was between 30,000 to 50,000 yuan while that of employees was 1,500 yuan (the lowest being 600 yuan). 19 There had also been growing disparity between private and public sector employees. The average monthly income of a cadre was 100 yuan, the result of which was more and more public employees either leaving for the private sector or engaging in private business on the side.

Wenzhouese businesses were also criticized for employing child labor. No exact estimate of the number of child workers was available, but a rough count put the total at close to 10,000. In a 1985 study of Jinxiang, the cradle of the "Wenzhou model"-it was the center of production of aluminum badges and plastic film products-it was found that 483 of the workers were between the ages of ten and sixteen, 405 of them girls. Local opinion held that children in the countryside were either "child farmers" (tongnong) or "child workers" (tonggong). The so-called problem of child laborers in Wenzhou simply exposed the general conditions in the Chinese countryside, such as lack of educational opportunities for rural children, traditional discrimination against females, and the post-1980 rise in household industries. But there was an anomic aspect to Wenzhou's develop-

17. Meng Xiaoyun, "Notes on Wenzhou's Customs and Tradition: Women," RMRB, No- vember 6, 1986, p. 1; Lin Bai et. al., eds. Wenzhou Di Sichang [Markets of Wenzhou] (Nan- ning: Guangxi Renmin Chubanshe, 1987), p. 59; and Zhongguo Minzhu Jianguohui Zhongyang Weiyuanhui Yanjiushi, "A Comprehensive Look," p. 145.

18. Yuan Enzheng, ed., Wenzhou Moshi Yu Fuyu Zilu [Wenzhou model of economy and its road to affluence] (Shanghai Shehuikexue Chubanshe, 1987), pp. 256-65.

19. "A Comprehensive Look," p. 149.




ment. Since 1979, the national press of China had time and again exposed the fraudulent practices of some Wenzhou businessmen, such as false advertising, deceitful contracts, and substandard and counterfeit goods. Wenzhou also had its share of political graft, especially in illegal posses- sion or construction of private houses.

Wenzhou and Chinese Modernization In the final analysis, the significance of Wenzhou's way of development extended beyond its territory. A considerable number of Chinese scholars held the view that the "Wenzhou model" was more applicable to Chinese rural development than the alternate "southern Jiangsu model" (sunan), which consisted of government-owned local enterprises, use of more advanced technology, and reliance on subcontracting from state firms in urban areas. These scholars pointed out that Wenzhou shared with the vast majority of Chinese rural communities the following characteristics: long distance from major industrial cities, low level of savings, rudimentary skills in nonfarm production, and reliance on family-owned and managed crafts. Of these, the crucial role of the family was the most important common characteristic between Wenzhou and the rest of Chinese rural society. "Family," wrote two Chinese scholars, "was still the most basic, universal, and versatile institution that Chinese people had inherited from history; its survivability and cohesion were extremely strong."20

Those who held an affirmative view of Wenzhou as a model tended to gloss over the behavioral component of its formula for success-mass ini- tiative, mobility, skills in long-distance trade-which had evolved over centuries. How many Chinese rural communities were equipped with this component is a moot point. Even within Wenzhou these behavioral traits were not distributed evenly; the mountainous counties of Wencheng, Taishun, and parts of Yongjia were referred to as Wenzhou's "third world" and not part of the "Wenzhou model." Yet another possible con- straint on Wenzhou as a model concerns Beijing's treatment of it. The fractured leadership at the center has steered Wenzhou in self-contradictory directions. Hu Qiaomu's ambivalent attitude has already been noted; and after the Tiananmen crisis in June 1989, Beijing's inconsistent directions went even further. In the fall of 1990, Beijing suddenly forced a large number of private firms in the town of Liushi, famed for its appliances, to close on the grounds that they turned out substandard goods. This was followed by a campaign to expose Wenzhou, targeting false advertising, smuggling, and "yellow publications."

In early 1991, the government turned around, allowing Wenzhou to stage a special exhibit of its products in Beijing. At the same time, how-

20. Zhang Renshou and Li Hong, Wenzhou Moshi Yanjiu, p. 211.



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ever, Wenzhou party cadres were instructed to increase propaganda on the superiority of state-owned firms.21 After Deng Xiaoping toured the special economic zones in Guangdong in January 1992, during which he called on the whole nation to persist in bold economic reforms, Wenzhou's star rose again and Li Peng made a first visit to the municipality in May 1992. This contradictory treatment by Beijing could not have been too reassuring to any rural community that may have wished to emulate the "Wenzhou model." Moreover, Wenzhouese themselves reacted to their precarious status by refusing to reinvest, making do with obsolete machinery and dilapidated buildings, or leasing equipment instead of buying it.22 In other words, Beijing's inconsistent treatment of Wenzhou contributed more to anomic behavior than it did to the strengthening of collective enterprises.

Though Wenzhou's role as a model was problematic, its economic growth as an empirical fact had definitive implications for China's modernization, especially concerning the interrelationship of community, nation, and growth. First of all, Wenzhou's development showed that as modernization of a complex society proceeded, no community could re- main self-contained; instead, whole communities came to play specialized roles within the larger whole. Wenzhou now played two specialized roles in China's modernization. The first was as a national free market. It was no longer just a regional trading center, but was oriented toward the whole of China, and people from all over the country came to Wenzhou's famed ten market towns to trade. Wenzhou's second role was as a link between China's "first world" and "third world." Wenzhouese played the second role self-consciously as they targeted the "third world" of China for their goods: isolated mountainous regions, border lands, and impoverished communities. For example, a 1988 press report said that since 1979 some 40,000 Wenzhou merchants had arrived in the southwest border province of Yunnan to open up businesses.23

The history of Wenzhou's economic change since 1949 has demon- strated the relation of national power to surplus and community autonomy. In a complex nation such as China, the state must exercise power in order to transfer a part of the surpluses from producing communities to people other than the producers. By so doing, the state inevitably en-

21. Lang Lang, "Left-turn of the Wenchow Model, Li Jui-huan Being Hit Quietly," Chaoliu [Tide monthly], no. 56 (1991), pp. 12-14.

22. Bao Bingzhong and Xu Dongmin, "An Exploration of the Private Economy in Wenzhou and Its Prospects," Shanghai Shifandaxue Xuebao (Bulletin of Shanghai Normal University], no. 2 (1990), pp. 1-15.

23. "40,000 Wenzhou Craftsmen and Merchants Registered in Yunnan," RMRB, Febru- ary 27, 1988, p. 2.




croaches upon community autonomy. But community autonomy is based on a distinct culture that encompasses modes of production and exchange. The economic development of Wenzhou after 1980 showed that a community's ability to maintain a high degree of autonomy is critical to its capa- bility to produce surpluses. When autonomy is denied in an extreme way as Wenzhou was under Mao, then surplus production becomes problematic.

That Wenzhou produced much more surplus after 1980 than before was also due to a change in the type of authority that Beijing applied. After Mao's death, Beijing employed what one scholar called "venal control" over Wenzhou in which the state indulges a community in order to obtain part of its surplus. This form of control is most efficient in situations in which communications between national authority and community are very difficult.24 Though Wenzhou produced more surpluses, tax collection by the center (especially tax on profits) was difficult because of so many household firms.

The interrelation of power, surplus, and autonomy may be further eluci- dated by examining briefly the "southern Jiangsu model." Because these Jiangsu towns were situated in an area with modern transportation and communication, Beijing exercised "feedback control" over them. This form of control depends on excellent communications so that the state can readily monitor a community's activity and, if necessary, command it. The center's encroachment on the autonomy of southern Jiangsu towns was more extensive than on Wenzhou. As mentioned earlier, southern Ji- angsu rural enterprises were collectively owned-that is, owned by local governments. Beijing could count on regular tax revenues from these enterprises, but on the other hand, the latter were burdened with the same problems associated with state firms: declining efficiency and profit, a ris- ing number of firms operating at a deficit, and a focus on welfare instead of development.25 Shanghai's sponsorship of the "Wenzhou model" was yet another example of its leaders' reaction to Beijing's "feedback control," which undermined Shanghai's ability to produce surpluses efficiently.

It is also noteworthy that Wenzhou's autonomy was not parochial. Af- ter 1980, as a result of Beijing's recognition of a degree of local "sover- eignty," a parochial-type autonomy arose all over China in the form of local protectionism, such as setting up toll stations and collecting illegal transit taxes. Wenzhou did not resort to such practices since its economic

24. Frederick W. Frey, "Communication and Development" in Ithiel de Sola Pool and Wilbur Schramm, eds., Handbook of Communication (Chicago: Rand McNally, 1973), p. 385.

25. Guo Xiaomin, Zhou Ruchang, and Zhang Hongyu, "Another Look at the 'Southern Jiangsu Model,'" Jingji Tizhi Gaige [Reform of economic system], no 3. (1987), pp. 31-33.



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recovery was dependent on playing a special role in the national market. If Beijing truly wished to adapt the national economy gradually to market forces, then Wenzhou's "cosmopolitan autonomy" or "open autonomy" should have been a "model" for other rural communities.

Finally, one may see the rise of a new power base for Chinese nationalism that is different from the type to which the Communist Party is pas- sionately attached. I refer to the new market towns and the entrepreneurs of Wenzhou. Chinese scholars have noted that county capitals were eclipsed by the new market towns, both in economic activity and population size. In these towns were concentrated the new entrepreneurs of Wenzhou. It was estimated that among the 600,000 to 700,000 people employed in household industries or other businesses in the ten specialty market towns, one-fourth were experts in commerce and management.26 These new entrepreneurs, small firms, and small towns of Wenzhou may well contribute to economic and political pluralism, social mobility, and the emergence of a new middle class, giving rise to a nationalism attached to socioeconomic development rather than to political ideology. The new nationalism that Wenzhouese symbolize is similar to the nationalism of the "newly industrializing countries" of East Asia.

Though Wenzhou showed portents of a new nationhood, it also brought symptoms of disorganization in the anomic aspects of its development. But these should be understood in a proper perspective. First of all, social and economic deviances occurred all over China, almost always after a decline or collapse of a centralist and bureaucratic regime and partly due to the nature of that regime. Second, some of the deviances in Wenzhou were, as noted earlier, caused by Beijing's inconsistent treatment and legis- lation that was inadequate to protect the rights of private business. To this day, Beijing has not enacted such a law although there is regulation of private business. Third, some deviances were possibly caused by inadequate competition in the national market and severe demographic pressure inside Wenzhou. These would probably diminish as other communities began competing with Wenzhou in crafts and light manufacturing and outmigration reduced overpopulation.

But the most intractable problem was Beijing politics. In a larger sense, Wenzhou was a test of Beijing's ability to make a hard choice between a centrally planned and a market-based economy and between a political and a socioeconomic nationalism. Until Beijing decides, Wenzhou and much of rural China will persist in seeking a livelihood in the interstices, with all its merits and demerits.

26. Zhang Renshou and Li Hong, Wenzhou Moshi Yanjiu, p. 202.



the "wenzhou model" of development and china's modernization

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