The Tragedy of Liberation: A History of the Chinese Revolution 1945-1957 (28 page)

Whatever the long-term strategy of the party, private business was soon in dire straits. In the first year after liberation many enterprises were compelled to accept wage increases that vastly inflated the costs of production. Punitive taxes followed, some of them applied retroactively, bearing little relationship to the actual income of private enterprises. Their remaining assets were further drained through the enforced purchase of Victory Bonds. The cadres appointed to supervise commerce and industry compounded the problem. Many lacked basic knowledge of the world of trade and business and were reticent and suspicious, checking and rechecking every transaction. The trade embargo imposed by the nationalists also crippled international commerce, while the communists began redirecting all foreign trade towards the Soviet Union after Mao returned from Moscow in early 1950. Once bustling commercial districts had slipped into decay by the summer of 1950, as described in Chapter 3.

Aware that taxation was killing the proverbial goose that lays the golden eggs, finance minister Bo Yibo reformed the tax system in June 1950. Labour activism was curbed, while the state started ordering products in massive quantities from some of the larger industrial concerns, saving them from bankruptcy. The People’s Bank of China selectively used ‘encouragement loans’ to rescue other private concerns, increasing their dependence on government credit.

Tariff and exchange controls brought the business community closer to its knees. Gradually everything standing between the entrepreneur and the state was eliminated. The rule of law was suspended. People’s tribunals replaced independent courts. In June 1950, branches of the party-controlled All-China Federation of Trade Unions were substituted for independent trade unions. From 1951 onwards, local branches of the party-controlled All-China Federation of Industry and Commerce likewise took over from independent chambers of commerce. To maintain the appearance of the New Democracy, industrial leaders like Rong Yiren were invited to join their boards. The party also set up compulsory Management Committees to negotiate conflicts between workers and their bosses, in effect controlling both labour and capital.
26

The Korean War brought a further clampdown on the private sector. A Donations Drive replaced the Victory Bonds Campaign, as massive contributions in gold, jewellery, dollars or other foreign currencies were extracted from manufacturers, entrepreneurs and traders to finance the war. But, most of all, the campaign of terror that unfolded after October 1950 silenced all opposition to the regime. As hundreds of thousands of real or imagined enemies were executed before large crowds, entrepreneurs feared being dragged away to the police station to face accusations of being ‘a person of the compradore class who built up his fortune by means of depriving the legal livelihood of the working class’ or ‘an agent working for the nationalist government’. As most foreigners were hounded out of the country, they left behind a vulnerable, fearful and isolated bourgeoisie cut off from all their contacts with the rest of the world.

The campaign against the bourgeoisie unleashed by Mao in January 1952 followed well-established techniques which had been fine-tuned during land reform. At denunciation meetings the workers were encouraged to turn against their managers. The trade unions established work brigades, each member taking an oath of loyalty and promising to ‘stand firm’ and prosecute the campaign thoroughly. Traditional links with employers were severed as employees ‘spoke bitterness’, urged by local cadres to dig out every past slight they could think of. The workers were now the masters. Party activists took the lead, searching for evidence of criminal activity. ‘Clerks and workers, on instructions from their labour unions, pried into account books, opened safes, and eavesdropped on telephone calls in a feverish search for something incriminating.’ Entire cities were placed on a war footing, as lorries trundled through business districts, stopping before shops with their loudspeakers blaring: ‘Hey, proprietor! Evidence of all your misdeeds is now in our hands. Confess!’ The windows of suspected businesses were plastered with bills and placards, while gangs of demonstrators blocked their entrances. Denunciation boxes, bright red with a small slit at the top, were provided to make it more convenient for people to denounce others. Big banners fluttered over busy streets: ‘Sternly Punish Corruption Culprits’.
27

Terrified merchants, traders and bankers crowded into confession meetings to confront their accusers. Before he was locked up in his office to write a confession on his work in the cotton mills operated by Rong Yiren, employee Robert Loh found that posters had been put up on the wall in front of his desk. They contained slogans such as ‘Crush the Vicious Attack of the Capitalist Class’, ‘Surrender, You Vile Capitalist’, ‘A Complete Confession is the Road to Survival, Anything Less Will Lead to Death’. A loudspeaker was installed in one of the office windows. It sputtered briefly and then burst into an ear-splitting racket, broadcasting the mass meeting under way in the main dining hall. Most of it was an harangue against capitalism, as party activists worked the crowd into a frenzy. Then cadres took over the microphone to address Loh directly. They shouted abuse, insults and threats, admonishing him to make a full confession. This went on for a full afternoon. In the evening a cook dropped a blanket on the floor and reluctantly placed a bowl of noodles on the edge of his desk. Guards made sure he could not leave, even accompanying him to the toilet. Later, when he tried to sleep on the floor of his office, they sat grimly in front of him, refusing to turn off the lights at night.

This went on for two days. On the morning of the third day, as he was escorted to the party secretary’s office, the employees jeered and called him a ‘capitalist swine’ and ‘unscrupulous dog’. Some spat at him, a few tried to hit him. The most vehement were those with whom Loh had been most friendly. ‘At first, this cut me deeply, but then I realized that precisely because they had been friendly to me, they would be the ones threatened the most and for their own safety they would strain to show that they no longer had anything but hatred and contempt for a capitalist criminal like me. Oddly enough, this thought made me feel better.’

After more admonitions from the leading cadre, Loh spent another two days of torment under the constant scrutiny of his guards, listening to the accusations broadcast over the loudspeaker and trying to come up with a plausible crime for which he could atone. He submitted one confession after another. His seventh attempt was accepted. Then came the day of reckoning, as he had to ‘face the masses’.

My entrance was the signal for a tremendous uproar. The screams of rage, the shouted slogans and insults, were deafening. I was made to stand with humbly bowed head before the small stage on which the communist officials sat at tables. I had lost 13 pounds. I was filthy, unshaven and exhausted. My knees trembled with both weakness and fear. The shouting behind me was turned off suddenly. The party secretary rose and read off the list of the people’s charges against me.

When he had finished, Loh had to bow to the crowd. One by one, representatives from every group of employees came to the stage to denounce him.
28

Robert Loh escaped relatively lightly. Many others did not. Some were terrorised with threats of the death penalty, and then told that their fate depended on their own contributions to the campaign. In order to save themselves, they turned on others. Terror sometimes drove them to become even more ferocious than the cadres. Since they had exclusive knowledge of their own particular branch of business, they were also in the best position to pinpoint crimes to which others were pressed to confess. Even wives and children were used in the denunciations. In Changsha an accountant named Li Shengzhen provided information on dozens of cases, denouncing his own father. ‘Relatives are not as close as the state and members of the same class,’ he proclaimed, according to security boss Luo Ruiqing, who proudly reported the case to the Chairman. The communist press reported that children were instructed to expose the crimes of their parents. One told his father, ‘If you don’t confess your own corruption, other people will expose you just the same; if you remain obstinate, I won’t recognize you as my father.’
29

Denunciations took place under intense pressure in closed meetings. But sometimes they were made in public, as victims turned up in their warmest clothes, expecting to be sent to a labour camp in Manchuria. Some captains of industry – Rong Yiren, Liu Hongsheng, Hu Juewu – shook with fear as they stood on the stage, desperately hurling accusations at each other, Bo Yibo explained with satisfaction when writing to Mao Zedong. Breaking down in tears, Rong Yiren openly proclaimed his shame when confronted with his family’s exploitative past, confessing to 20 million yuan in ill-gotten gains, an amount he had arrived at by spending weeks going through mountains of ledgers.
30

Techniques acquired during land reform were widely used to inflict pain and humiliation. In the cities some victims were tied up, ordered to kneel on a small bench or bend down for hours on end. Sleep deprivation was common. Tactics became rougher in the countryside. Throughout Sichuan people accused of being ‘capitalists’ were cursed, stripped, beaten, hanged and flogged. Work teams often served as judge, jury and executioner, deciding, for example, to double a fine when a payment was made immediately and to shoot those who failed to pay up on more than four occasions. In some cities in Guangdong, tax inspectors took factory owners to witness public executions, pointing out that they would meet the same fate if they failed to comply. Some workers in Jiangmen, on the other hand, presented a ‘bill for exploitation’ to the factory owners, who were beaten, forced to kneel in accusation meetings and locked up in the toilets. Other forms of physical torture were ‘very common’. In Shenyang merchants were stripped by the workers and forced to stand in the cold for hours on end.
31

Few victims died, but many committed suicide. ‘The sight of people jumping out of windows became commonplace,’ reported Robert Loh, who saw it happen twice, even though he seldom left his house during this period. ‘The coffin makers were sold out weeks ahead. The funeral homes doubled up so that several funerals were held simultaneously in one room. The parks were patrolled to prevent people from hanging themselves from the trees.’ In Beijing, when the frozen West Lake began to melt in spring, more than ten bodies were found in one corner alone.
32

Suicide was not easily accomplished, as suspects were under constant supervision. But nothing bred ingenuity quite like despair. Some entrepreneurs who had links to the pharmaceutical industry managed to obtain cyanide pills and swallowed them when dragged away to attend struggle meetings. Others would hide a piece of rope and hang themselves in a closet. A few slashed their wrists with a watch crystal while wrapped in a blanket, pretending to sleep on the office floor. The majority jumped from windows. Accurate statistics are impossible to come by, but in Shanghai, the city that bore the brunt of the attack, 644 people killed themselves in two months, or more than ten daily – if one can trust the statistics the party compiled.
33

In an orgy of false accusations and arbitrary denunciations, few escaped with their reputations intact. By February no more than 10,000 of a total 50,000 ‘capitalists’ in Beijing were considered honest. Similar figures came from other parts of the country. To punish all would wreck the economy. Mao had a solution to this conundrum. He came up with a quota, ordering that a few should be killed to set the tone, while exemplary punishment should focus on 5 per cent of the most ‘reactionary’ suspects. Across most cities, by a rough rule of thumb, about 1 per cent of the accused were shot, a further 1 per cent sent to labour camps for life, and 2 to 3 per cent imprisoned for terms of ten years or more.
34

The vast majority – classified as ‘basically law-abiding’ and ‘semi law-abiding’ – were given fines, as the campaign was used to finance the Korean War. Outside the People’s Bank in Shanghai, a queue 1.5 kilometres long could be seen, as small shopkeepers eagerly sought to sell their few gold possessions to pay the heavy fines imposed on them. The queue was restive, as some had to wait their turn for several days. Eventually the government agreed to accept their gold as a deposit against their debts. The payment was registered on the day of the deposit and no return was allowed. Before long, all the savings of the business and merchant community were appropriated, reducing many to poverty and further undermining the financial structures of the country.
35

In the spring of 1952 the government quietly attempted to bring the campaign against the bourgeoisie to a close. After May Day, tax burdens were gradually eased, property evaluations reconsidered, fines imposed during the campaign reduced and crippled firms offered low-interest loans. Help was neither unconditional nor universal, as the state could now pick and choose which firms to keep afloat, strengthening its grip on the private sector. The loans came with new conditions, including a 75 per cent share of the profits for the state, while dividends, bonuses and managerial salaries had to come out of the remaining 25 per cent.
36

It was too little, too late. By March 1952 the entire state system was at a standstill, reeling from months of self-purification. Few cadres were willing to take any decisions – when they were not busy pursuing ideological backsliders and corrupt elements. Everything was referred to the next level up the chain of command in the party hierarchy. Delays became common, apathy was widespread.