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China in the Red

Written, Produced and Directed by Sue Williams
Co-Produced by Kathryn Dietz
Edited by Howard Sharp

ANNOUNCER:  In China, 1998 was a year of enormous change and uncertainty.  The most drastic economic reforms in nearly half a century were upending the lives of millions.  That year, FRONTLINE began filming families across the country.

    FENG HUI-XIU:  Everyone's worried.  I haven't been this worried in years.

ANNOUNCER:  For four years we followed their lives, their fears and their dreams.  For some, it was a time of opportunity.

    ZHANG WU:   I have big ambitions.  I want to do everything.

    TIAN XIAO-WEI:   Now you can do anything, as long as you make money.

ANNOUNCER:  For many, it was a time of desperation.

    ZHANG SHU-YAN:   With so little money, it's hopeless.  I can't talk about this.

    TAXI DRIVER:   My brother's laid off.  My sister-in-law is also laid off.  My sister and her husband are laid off.

ANNOUNCER:  No one we filmed-in the government or on the street-knew how things would turn out.

WU JING-LIAN:   The chances of success are 50-50.  If the reforms don't succeed, China's social stability will not be maintained.

ANNOUNCER:  This is the story of the human cost of China's reforms.  It is the story of a China rarely seen in the West: of a nation trying to redefine itself and of ordinary people living in extraordinary times.

NARRATOR:  At the center of the reforms that swept China at the end of the 20th century were thousands of state-owned companies, like the Beijing Machine Tool Plant.  Controlled by the government, factories like this formed the heart of both the communist economy and millions of workers' lives.  Feng Hui-xiu has worked here all her life.

FENG HUI-XIU:  I am a real Beijinger.  I started at the plant almost 28 years ago.  I went from primary school to high school, and with my book bag I went straight into Number One Machine Tool Plant.  Back then, the plant was famous.  When people heard I was assigned here, they said, "You're so lucky."

NARRATOR:  In the factory's heyday, 9,000 people worked here.  They earned minimum wages, but the plant took care of all their needs and they were guaranteed a job for life.

FENG HUI-XIU:  It was the Iron Rice Bowl, everyone working together.  A bowl for you, a bowl for me.  A dollar for you, a dollar for me.  There was nothing to worry about.  You just had to do your job.

NARRATOR:  But by 1998, this plant and thousands more across the country had fallen deeply into debt.  There was no demand for their products, and the workers had little to do.

WU JING-LIAN, Government Economist:  Because state companies had such large debts, they started to rely on government money.  From the mid-1980s to the early '90s, they depended on the banks.  By the early '90s, the banks had so many bad debts, they themselves didn't have any money.

NARRATOR:  By 1998, the crisis in the state sector threatened the entire economy and forced the government to act.  In March, Premier Zhu Rong-ji addressed the nation.

    Premier ZHU RONG-JI:  [subtitles]  We have decided that in three years, most large and medium state-owned companies must get out of their current financial difficulties and establish modern corporate systems.  This must be accomplished in three years.

NARRATOR:  All state companies, the premier insisted, had to become modern, profitable corporations in just three years.

    ZHU RONG-JI:  [subtitles]  There is no more money.


NARRATOR:  Around the country, more than 110 million workers know their jobs and their benefits are on the line.  At the Beijing Machine Tool Plant, feelings are running high.

FENG HUI-XIU:  People are mad.  It feels like someone will murder the manager.

NARRATOR:  As the manager's assistant, Feng Hui-xiu often bears the brunt of workers' rage.

FENG HUI-XIU:  Say some worker wants to complain.  Of course, he's all fired up, and who does he ask for first?  He comes to the manager's office.  When the manager is nowhere to be found, he vents his anger on us.  There have been so many cases like this-people sprawled all over the office, pouring their hearts out, threatening us with cleavers.  And in the end, we tell them it's because they don't have the skills.  So no matter how hard they cry, it's useless.

NARRATOR:  When workers are laid off, they lose more than their jobs.  Their health care and pensions disappear, too.  The government knows it has to help them.  City officials visit the plant to explain how a social security system will eventually work.  But for now, outside the factory there is no social safety net.

At 44, Feng is scared.

FENG HUI-XIU:  I know my limitations.  No matter what others might say, in the job market I'm already considered too old to be the manager's assistant.

NARRATOR:  In the coming months, Feng will worry every day about losing her job.

At the western edge of the city, behind a traditional Chinese gate, lies Capital Iron and Steel.  Once a centerpiece of the communist economy, it still employs more than 100,000 people.  It is also plagued with debt and production setbacks.  As a production manager, Wang Hao-ren is under enormous pressure.

WANG HAO-REN:  The company has ordered our plant to lay off workers.  To lay guys off for no reason-that's hard.

NARRATOR:  Wang knows his performance is being evaluated, too.

WANG HAO-REN:  I have been feeling pressure at work.  But I've only had fleeting thoughts about doing other things because I have to be realistic.  At 19, I got a certificate in steel-making.  I've been working in this field for 15 years.  It is my specialty.  What could I do if I left Capital Steel?  It really gives me a headache.

NARRATOR:  For better or worse, almost every aspect of Wang's life is bound to Capital Steel.  He is married with a small daughter, but the family can't live together because his factory-assigned apartment is too small.

WANG HAO-REN:  Everyday after work, I come by.

TRANSLATOR:  Every day, he comes for dinner and helps her wash up.

WANG HAO-REN:  Give the child a bath and wait till they go to bed.  Then at 9:00, I take the subway home.  It's very close by.

NARRATOR:  More than anything, Wang wants to live with his family.  And that, he believes, will only happen if he stays at Capital Steel.  The plant has promised to sell him a larger apartment at a low insider price.  He just hopes he won't lose his job before he gets the chance.

But if Wang Hao-ren is laid off, he at least has a chance of finding another job.  Here in the capital, there is a flourishing private sector.  Small shops and businesses are springing up all over town.  Foreign companies are hiring.

Outside of Beijing the situation is much tougher.  In northern industrial cities like Shenyang, 85 percent of the economy is state-run.  There is nowhere to look for work.  Here workers, once the proud elite of the communist state, scramble to survive.  Local authorities forbid filming the unemployed who cluster on street corners, and accurate assessments of their numbers are hard to come by.  Some experts, however, estimate that this city of 8 million has 1.3 million people out of work.

The mayor of Shenyang is Mu Sui-xin.  The Communist Party appointed him just one year ago.  Now, in the fall of 1998, he has one of the toughest jobs in the country.

MU SUI-XIN, Mayor, Shenyang:  We have to change the way people think.  Under the planned economy, workers' and officials' lives were managed from cradle to grave by the government.  In the market economy, you're responsible for yourself.  This is a historic change.

NARRATOR:  The Shenyang Machine Tool Corporation is one of the city's largest employers.  As with all state companies, it is run by party members like Yao Jun-xi.

YAO JUN-XI:  Under the planned economy, we were assigned workers whether we needed them or not.  Our numbers rose from 4,000, 5,000, all the way to 10,000.  If we don't get rid of our surplus employees, we won't be able to move forward with the reforms.

NARRATOR:  Zhang Shu-yan tracks supplies in the stockroom.

ZHANG SHU-YAN:  Before reform and opening, the main jobs were workers, peasants, soldiers.  I've never been to the countryside, so I couldn't be a peasant.  All I could be is a worker.  My father used to work here.  So after graduating, I was assigned to be work in the greenhouse.  Twenty women worked there, and I was in charge.  But because of the reforms, they closed the greenhouse.  Then I was transferred to this warehouse job.

Before the reforms, it was different.  I could do the work or not do the work.  If I wanted to do it, I did it.  If I didn't want to do, I didn't.

NARRATOR:  Now Zhang Shu-yan finds herself in a completely new work environment.

ZHANG SHU-YAN:  Every year, things keep changing.  If you don't adjust, you get left behind.  You have to think positively.  You could lose your job altogether.

NARRATOR:  At the plant, party officials meet with workers to try to persuade them to leave voluntarily.  Zhang Shu-yan is terrified to find herself here and doesn't dare speak.  Everyone is uncomfortable.

    1st WOMAN:  I've been working here for over 21 years.  I think I've made a real contribution.  I've had a hard time understanding being laid off.  I've worked here for so many years, and I feel I've done a really good job.

    1st PARTY OFFICIAL:  I know that it would be difficult for your personal lives, for your families.  We are worried whether you have the strength to bear it.

    2nd PARTY OFFICIAL:  When you're laid off, we would see if we could find another job that suits you.

    FU XUE-REN:  I have been at the factory for over 30 years.  I don't understand about being laid off.  I feel like I haven't made mistakes in my work.  I have to have a job so I can contribute to the company.  I have to have a job.

    2nd PARTY OFFICIAL:  Some people are waiting to find a new job.  But even though they haven't found work, they say, "What's good for the factory is good for everyone."  They say, "If the factory is doing well, then I'm happy, even if it means I'm sacrificed."  Everyone has their own problems, right?  Tell us your difficulties.  Tell us your situation.

    ZHANG SHU-YAN:  I think I'm a special case here because my husband is sick.  I had a really hard time dealing with my transfer.  I am very grateful that the factory kept me.  Every day, I'm really doing my best at work.  I'm grateful to the factory for its trust in me.  I'll do my best, so the factory can do better and we can all benefit.

    2nd PARTY OFFICIAL:  It's really not easy.  If you have any difficulties, you can come talk to us.

ZHANG SHU-YAN:  Originally, my husband worked at an engine factory.  Then he was laid off.  He didn't work for a number of years.  He stayed at home because he had high blood pressure.  Then all of sudden, last March, he had a stroke.  I was so shocked.  I couldn't understand how this could happen when he was still so young.  And his factory doesn't give us a cent.

As a wife, do I abandon him?  I can't.  Every month, I earn so little money and I have to pay for my daughter's schooling.  With so little money, it's hopeless.  I can't talk about this.  It's too painful.  As for my daughter, with a dad not functioning anymore, if she didn't have a mother, it would be even harder for her.  I must be strong for the whole family.

NARRATOR:  Until recently, Fu Xue-ren was an office worker who wrote posters and notices for the plant.

    WIFE:  You haven't been laid off yet, right?

FU XUE-REN:  I'm waiting for a new position.

NARRATOR:  Now his pay has been cut, and he has been given three months notice.

FU XUE-REN:  After three months, if you still haven't found a job at the plant, then your work unit is no longer responsible for you.

WIFE:  It's no longer responsible for you.

FU XUE-REN:  And you go to a re-employment center.  They assign you two job opportunities.  If you're not willing to take either job, then forget about it.  You won't get another chance.

WIFE:  The whole time he was at the plant, he only did office work.  He doesn't know anything about business.  He's not physically strong, and he doesn't have many skills.  He's bringing home less than $37.  It's very stressful.

NARRATOR:  What Fu Xue-ren fears most is ending up adrift and penniless in one of Shenyang's vast labor markets.

Mayor MU SUI-XIN:  Of course, all those workers don't like being laid off.  With so many laid off from the state companies, there are no jobs for them.  We estimate that 450,000 people will be laid off this year.  Where are they going to find work?

NARRATOR:  The communist government started on its road to a market economy not in the cities but in China's vast countryside.  More than half of the nation's 1.3 billion people still live in rural areas.  Here, nearly 20 years ago, communes were abandoned, and peasants were encouraged to raise and sell their own crops.

In Chestnut Flower Village, the policies transformed Tian Xiao-wei's life.

TIAN XIAO-WEI:  My whole life, I've been a good-for-nothing woman, good for nothing.  My father had a bad class background.  My family was poor.  My mother died when I was 2.  Many people in the village looked down on us.  Since the reforms and opening, there have been many changes.  Now you can do anything and no one will be against you, as long as you make money, and the government loves it.

I started the noodle shop to pay for my children to go to school.  I can't read a word, so I supported my children to go.  It'll help them get ahead.  It's the '90s now.  I really don't want my kids to do heavy, dirty work, the kind of work that makes you sweat all over.  So I do it myself.

NARRATOR:  Tian Xiao-wei also grows vegetables and raises pigs.  She earns about 10,000 yuan, or $1,200 a year, making her one of the richest people in the village.  She has put her daughters through school and helped them move to the city.  She has built a large house.  And she has done it alone.

TIAN XIAO-WEI:  My husband is a lazy man.  He's the village chief and works for the villagers.  I let him do his work.  But even after he finishes, he doesn't help me unless I ask him.  Maybe the way I'm talking about him is not very respectful, but what can I say?  That's the way he is.

NARRATOR:  Just a few doors away, Hong Huan-zhen and her family are slipping into poverty.

INTERVIEWER: How much do you make a year?

HONG HUAN-ZHEN:  We earn about $500 a year.  It's really hard work, also, because I'm ill.

NARRATOR:  Hong has a thyroid condition that is easy to control, but paying for treatment is not.  The socialist health system, which provided peasants with basic medical care, vanished with the reforms.  Hong pays about $250 a year, half their annual income, for medical care.

HONG HUAN-ZHEN:  We have to gradually save up, selling vegetables, to pay for this.

NARRATOR:  Hong's husband works outside the village, picking up construction jobs whenever he can.

HONG HUAN-ZHEN:  He eats breakfast and goes out early in the morning and won't get home until dark.  I stay in the house, preparing meals and feeding the pigs.

NARRATOR:  They have a young son who is mentally retarded and also needs expensive medical care.  Hong's hopes rest on her 14-year-old daughter, who is in junior high school.

HONG HUAN-ZHEN:  I hope she'll go out into the world and learn something and learn what is going on in the world.  If she stays in the village, she won't learn anything and she'll never get ahead.  It's mainly because of my illness that our life's not good.  Many people are better off.  We want to catch up with the others and live a better life, too.  I am unhappy.  I feel sick and unhappy.

[www.pbs.org: Chronology of China's market economy]

NARRATOR:  In villages across the country, the economic changes mean peasants are in business for themselves.  At dawn in Guo Village, farmers are leaving for market.  Guo Xin-min and his wife, Xiu Yun, sell their produce in town three times a week.

INTERVIEWER: Did you sell everything?

XIU YUN:  Sold out.  Sold out.

INTERVIEWER:  What were your total sales today?

XIU YUN:  I haven't counted yet.

GUO XIN-MIN:  How can you not know?

XIU YUN:  Over $6.00.  We sold over $6.00.

INTERVIEWER:  Who comes more often?

XIU YUN:  I do.

GUO XIN-MIN:  She sells more than I do.

INTERVIEWER:  How much did you earn last year?

GUO XIN-MIN:  Last year?

XIU YUN:  Better not to ask.

GUO XIN-MIN:  It's hard to say.

XIU YUN:  It's hard to calculate income.  It's not high, it's not low.  It's in between.  This year, vegetable prices aren't good.  Even though we're growing the same vegetables, we're making less money.  At night, when we're picking vegetables, we think we can sell them for 10 cents a pound.  But then we always worry that when we get to the market, we won't be able to sell them at that price.

NARRATOR:  The Guo family has lived in this village for so many generations, it bears their name.  But the couple is determined that their son will not lead the same hard life on the land.

XIU YUN:  Everyone wants their children to leave.  No one wants to stay home and work.

NARRATOR:  But 15-year old Xiao-lei is an unenthusiastic student.

XIU YUN:  He wants to get a job in a bank.  So I say, "But how can you make it if you don't do well at school?"  We often tease him.  He has very high expectations.  If you aren't well educated, no matter where you go, it won't work out.

KANG XIAO-GUANG, Professor of Public Policy, Qinghua Univ.:  Peasants can now clearly feel the huge gap between countryside and city.  Of course, they don't have the language to express it.  They don't have access to the media.  They don't write books.  So they use their legs to express themselves.  Every year, 80 million or 50 million-it's hard to say, but at the very least, tens of millions float to the cities.

NARRATOR:  For peasants, surviving in the city is tough.  Fortunate ones work 80 hours a week in foreign-owned sweatshops.  They earn subsistence wages making goods for the booming export market.  Others live precariously, competing against laid-off workers for whatever jobs they can find.

Creating jobs is key to the success of the reforms.  The government is plowing money into huge construction projects.  In big cities like Beijing, Shanghai, Guangzhou, a building boom is throwing up office blocks, apartments and highways.  A new middle class is emerging.  Some are making more money than they ever dreamed.

[www.pbs.org: More about the music in this film]

Businessmen like Zhang Wu in Beijing are role models for the reforms.  He, his wife and son still share a small apartment with his in-laws, but he has ambitious plans.  A few years ago, Zhang Wu quit his job at a state packaging company and set up his own design firm.

ZHANG WU:  With the economic reforms, every company wants ways to survive, to grow, to change their image.  That's where we come in, as their corporate image consultants, producing an overall package, from small details such as business cards to a comprehensive advertising campaign.  Recently, our main client has been China's largest bank.

NARRATOR:  Beijing Armstrong employs nearly one hundred people.  Zhang Wu is teaching his young team new standards: to meet deadlines and use their initiative.

ZHANG WU:  Our company doesn't work like other companies.  A lot of people see that I am always with my employees, working till 1:00 or 2:00 or 3:00 or 4:00 in the morning.  I have to contribute more, to do more than the others.  That way, I can set a good example for the rest.  And with time, it becomes an ethic, a company work ethic that people are used to.  So things like overtime are pretty normal in our company.

I have big ambitions.  I want to do everything.  I have no time to rest.

NARRATOR:  Zhang Wu routinely works 14-hour days, but this afternoon he is taking time off to visit his mother.

ZHANG WU:  Recently, my mother got cancer.  I'm worried that she is dying.  My mother knows that she can't recover.

INTERVIEWER:  Will this be the last time you see her?

ZHANG WU:  Yes, it might be the last time.  It might be.

    Don't move.  Don't move.  How did you sleep?

    MOTHER:  So-so.

    ZHANG WU:  Do you still have any of those pills I bought you?

    MOTHER:  There are four left.

    ZHANG WU:  Take them when you're in pain.  One a day, OK?

NARRATOR:  Zhang Wu is paying for his mother's medical care because her work unit is not.  He can easily afford it, but the situation leaves her feeling betrayed.

MOTHER:  In the early days, I believed in the Communist Party, but now I'm confused.  I'm very sad because I worked all my life.  Then I got this disease.  My work unit is no good and won't reimburse my medical costs.

ZHANG WU:  She worked in the Medical Administration Bureau.

MOTHER:  Now they don't give me a penny for medical care.

ZHANG WU:  The bureau was a government work unit, but they didn't know how to do business.  They used to be a good unit and had a lot of money, but then they went into real estate and lost it all.

    MOTHER:  Will you come back tomorrow?

    ZHANG WU:  I'll come back tomorrow.  I'll try.  You need to rest.  Your hand is so cold.

NARRATOR:  At the end of the first year of the reforms in the state sector, most Chinese are not doing as well as Zhang Wu.  The steady disintegration of the Iron Rice Bowl has left millions living on the edge.

Inside the government, some fear the harsh costs of the reforms will threaten Party rule.  Reformers are fighting to stay the course.

WU JING-LIAN, Government Economist:  Some leaders think reform and opening should be slowed down a bit, that the slower you go, the fewer the shocks from outside.  But you can't escape globalization.  China can't isolate itself.  If it isolates itself, it will be the same as before the reforms-very backward.  Neither the Chinese leaders nor the Chinese people are willing to return to the era when our country was cut off from the world.


NARRATOR:  This year, the Chinese Communist Party will celebrate its 50th year in power.  Beijing is being spruced up.  Workers are cleaning Tiananmen Square for the festivities.

Behind the makeover, the government is struggling to contain the crisis in the state sector.  Twenty five million workers have already been laid off.  But factories are still hemorrhaging so much money that some say it would be cheaper to close them all down and keep paying the workers.

KANG XIAO-GUANG, Professor of Public Policy, Qinghua University:  The state companies affect the economic well-being of the whole country.  To use a Chinese metaphor, let's suppose you have a large, poor family.  The eldest son is a drug addict.  The parents love him and want to indulge him.  They will take his siblings' money and give it to him to support his habit.  The end result?  The whole family suffers.

Since the beginning, the state has been lending money to try to save a dying man without truly addressing his problems.

WU JING-LIAN:  The very foundation of the state owned system is sick, and it won't be resolved by giving them more loans or more guidance.  Both the Chinese government and economists know the problem has to be resolved this year.

NARRATOR:  For Feng Hui-Xiu, work at the Beijing Machine Tool Plant is even more tense.

FENG HUI-XIU:  In the past eight months, the management has changed twice.  I haven't been this worried in years.

NARRATOR:  She's worried about her family, as well.  Her husband seems likely to lose his job at a failing chemical company.  Relations with their 16-year old son, Gu Feng, are strained.

FENG HUI-XIU:  A generation ago, before the reform movement, there was a 5,000-year-old cultural belief that a son must respect his parents.  But things are so different with my son.

GU FENG:  I saw a television program once about their generation.  In their time, people just got up early to go to work and came home after to eat and sleep.  Their lives were very dull and boring.  Now, at school, through the newspapers and radio, we have access to new things and information.

NARRATOR:  Like most of his friends, Gu Feng watches NBA games on satellite TV.  He listens to Western rock music.  Feng is dismayed at her son's lack of discipline and his eager materialism.

FENG HUI-XIU:  The worst fight we had was during school break.  School was about to start, and he hadn't done his homework yet.  I found out and got really angry.  He still wanted me to buy him a new pair of designer jeans.  And he tore up his assignment notes.  I was so angry, I hit him.  We had a huge fight.  It made him so upset, and it really taught me a lot.  I wouldn't buy him the jeans, and in the end, he saved up and spent I don't know how much on them.

GU FENG:  Their generation lived through the Cultural Revolution.  They "ate bitterness."  They went through a lot, while we've been spoiled growing up.

FENG HUI-XIU:  My son often says I'm foolish.  I never left Number One Machine Tool Plant.  Why don't I want to leave the plant?  Realistically, I need the money because my son is still a student.  If I left and worked for a private employer, I wouldn't have a steady income.

NARRATOR:  In a desperate effort to keep her job, Feng is trying to upgrade her skills.

FENG HUI-XIU:  I am studying accounting.  But I'm not young anymore, and it's so hard to study at my age.


NARRATOR:  In Shenyang, nearly half a million people have been laid off.  Local officials work hard to prevent us from interviewing anyone without a job.  But people are eager to talk, as long as we hide their identities.

1st MAN:  My brother is laid off.  My sister-in-law's also laid off.  My sister, my youngest sister, and her husband are laid off.  My middle brother-in-law is laid off, and my middle sister is laid off.  My oldest sister is laid off, while her husband is not.  My parents are retired.  You tell me how much money my family makes now.

2nd MAN:  People in the northeast don't get a penny when they're laid off.  Nothing.  They're told they will, but they don't.

NARRATOR:  The unemployed are fending for themselves as best they can.  Some become street vendors or shine shoes.  They compete for odd jobs.  They take to the streets.  Demonstrations by laid-off workers and pensioners, which the media are not allowed to film, are an almost daily event in Shenyang.  And they are breaking out in cities around the country.

Mayor Mu is trying to keep the lid on an explosive situation.

Mayor MU SUI-XIN:  For now, in Shenyang we try to reason with protesters.  They just want the government to solve their problems because their factories haven't been paying their pensions on time.

NARRATOR:  The mayor is gaining a reputation as one of the party's most active and aggressive leaders, and he performs well for the media.  With no precedents to follow, he improvises as best he can.  He's set up a hotline where people can find help.  It is overwhelmed with calls.

    Mayor MU SUI-XIN:  [to hotline staff]  I propose that within a week, you do whatever is necessary to let more than 80 percent of the calls come through.  Can you do it?

    HOTLINE STAFFER:  We need the help of the Telecom Bureau.

    Mayor MU SUI-XIN:  If you need to add people, add people.  If you need to add equipment, add equipment.  It has to be done quickly.  You guys are slow.  There is no problem we can't solve.  Within a week.  Today is Wednesday.  I want it to be done before next Wednesday.  I'm going to come back and see how hard you've worked.  The quicker, the better.

NARRATOR:  Mayor Mu dashes from one meeting to another, trying to solve problems, encouraging people to take responsibility, seeming to will the city out of its crisis.

[at meeting]

    Mayor MU SUI-XIN:  The Forging Plant owes you around $60,000.  You are all so narrow-minded.  For a mere 60,000, you let the issue go on for 10 years, right?  It's still not solved, and neither side wants to settle.

    How about this?  It looks like this factory definitely can't pay you back, right?  And I'm afraid you can't expect the district to take care of it, either.  By taking on this factory, the city has already inherited a burden, and now you're asking them to take over your debt.  Of course, they won't agree.  [nervous laughter]

    What should we do?  Well, let the two parties take care of it together.  The city can chip in a little bit, and you can chip in a little bit.  And then you can negotiate with the bank.  We'll see if it's possible.  It'll be good enough to pay back the principal.  The situation is already so messy, right?

NARRATOR:  Later, the mayor meets with private businessmen to see how the city can help them.  His position gives him extraordinary power, and he doesn't hesitate to use it.

    DONGYU MANAGER:  Many of our divisions are growing very fast these days.  For example, Dongyu Electric plans to earn more than $20 million this year.  We don't have enough operating capital to support all the divisions.  So we want to ask the city government if we can be supported with a short-term $5 million bond.  A short-term bond.

    Mayor MU SUI-XIN:  Why don't you get a loan?

    DONGYU MANAGER:  A loan is fine, as well.  We're talking with the bank right now.  However, it takes a long time these days to secure a bank loan.

    Mayor MU SUI-XIN:  A bank loan takes longer than issuing a bond?

    DONGYU MANAGER:  A bond is faster.  It only takes a couple of days to issue a bond.

    Mayor MU SUI-XIN:  In cases when security can be guaranteed, we can issue a bond.  Think about this carefully.  If you can guarantee that within the short term-is it a year?

    DONGYU MANAGER:  Nine months.

    Mayor MU SUI-XIN:  Within a year, can you pay it back?

    DONGYU MANAGER:  We're very confident about it.

    Mayor MU SUI-XIN:  Then that's fine.

NARRATOR:  Wherever he goes, people seem genuinely pleased to see Mayor Mu.  At the end of a long day, he returns to city hall for yet another meeting.  His day will not end until nearly midnight.

At the Shenyang Machine Tool Corporation, managing director Yao Jun-xi has new hopes for the company.  The World Bank has given them a major loan.

YAO JUN-XI:  With the World Bank loan, we will buy the sophisticated equipment from abroad that we need to set up a new machine tool production line.  Next time you visit the plant, you will see people using a lot of new equipment.  I am very grateful to the World Bank.  They have also given us $10 million to relocate workers.  We will use it to make job opportunities for them.

NARRATOR:  Tonight is Moon Festival.  People want to forget the grim reality surrounding them.  To boost morale, the government is pouring money into making Shenyang more attractive.  Mayor Mu seems convinced the city is going to make it.

Mayor MU SUI-XIN:  There is an expression, "It doesn't matter how thin a camel is, it is still a camel."  This is still an industrial city, with decades of economic strength behind it.  It has enormous industrial capital.  This city is going to solve these problems.  We're going to be the best!


    [rap song on the radio] [subtitles]  No more Iron Rice Bowl like my father's.  I don't want to be fussed over like the kids today.  We haven't had it bad.  We haven't had it good.  So they call us a generation of slackers.

NARRATOR:  As the reforms continue to reshape Chinese society, some young people are choosing to opt out.  They scoff at the old Communist system and the money-driven world replacing it.  Nie Zheng is a 32- year old photographer, immersed in Beijing's music scene.

NIE ZHENG:  Rock-and-roll is very revolutionary.  Even in the West, Bruce Springsteen is also very revolutionary.  Sting and U2 are revolutionary.  Rock-and-roll, it's about what you want to say, what you want to do and what you want to admit to.  It liberates you.  It opens up your pores.

NARRATOR:  Nie's passion is work that doesn't pay, making portraits of ordinary people.

NIE ZHENG:  Many of my friends are making money.  They are buying houses, cars.  But I think life is simpler because there is no end to making money, but there is an end to living and life.

NARRATOR:  He still lives with his parents, who are senior party officials.  They see his love of photography as self-indulgent, and they disapprove of his laid-back lifestyle on the fringes of Beijing society.

NIE ZHENG:  There's a lot of fighting at home, but I'm always trying to defuse this anger.  I don't want it to be this way because home should be a place where people can be themselves.  My parents are always telling me, "You're not stable."  And I wonder, what does stable mean?  Getting a monthly salary-that's one kind of stability, isn't it?  But are your heart and mind stable?  All I can say is that I just want take my time doing the things I want to do-take good photographs, one frame at a time.

[www.pbs.org: See more of Nie Zheng's photography]


    [song]  [subtitles]  These are such good times.  Downtown, people rush to the future.  They're drunk, laughing, singing, and still complaining.  They've been dreaming of the good life for many years now.  So I put out my hand and make you look at my poverty.

NARRATOR:  By the summer of 2000 the gap between rich and poor is growing fast.  On the edges of big cities, some are living in poverty that was unimaginable just a few years ago.  Across the country, five million more people have lost their jobs.


NARRATOR:  In Beijing, life is changing dramatically for Feng Hui-xiu.  Last year, she was still trying to hang onto her job at the Number 1 Machine Tool Plant.  Then her husband left his job and put all their savings into starting a private garage.  Then Gu Feng failed the college entrance exams.

FENG HUI-XIU:  Things between the three of us were very tense.  My husband was angry.  Based on our son's I.Q. and good background, he should not have failed.

NARRATOR:  Soon after, the government offered retirement packages to older workers in heavy industry.  Feng was eligible for a pension of almost $100 a month, 80 percent of her regular salary.

FENG HUI-XIU:  I felt very conflicted.  If I stayed at work, it would get even busier.  I wouldn't even be around to make my son dinner.  But if I retired, he might be a little better off.  I could bear some of his burden.  Once I decided that, I went to the plant director for an application.  It was very quick.  And in October, I stopped going to work.

NARRATOR:  Feng immediately borrowed $800 to pay for Gu Feng to repeat his courses.  Since then, she has stayed home to help him study.

GU FENG:  I don't feel anything about the college entrance exam.  When I'm in the exam hall, I just feel kind of numb.  I don't feel anything else.  All I do is study.  I don't think of anything else.

FENG HUI-XIU:  I told him it's up to him to seize the opportunity.  It really shook him that I gave up such a good job for his sake.  All of a sudden, he pulled himself together.

NARRATOR:  The college entrance exams are a major event in China.  In today's economy, people see a degree as essential.  Waiting to take the exam, some are so tense they need oxygen.

After the exams, time hangs heavily for Feng Hui-xiu.  Family finances are tight, and she needs to get a job.  But she feels she can't until she knows if Gu Feng has passed.  The family will spend the rest of the summer anxiously awaiting the results.

At the western end of Beijing, there hasn't been much improvement at Capital Iron and Steel.  Two years into the reforms, it is still mired in debt and riddled with corruption.

KANG XIAO-GUANG, School of Public Policy, Qinghua University:  We give more than $12 billion every year to dying companies to help them recover a little.  But it's a bottomless pit.  The money can't save them.  It just gets squandered by government officials, banks and factory managers.  Workers don't get paid, and the company goes bankrupt.

WU JING-LIAN, Government Economist:  Managers of some state-owned companies have done terrible things to ordinary workers.  For instance, in some places, they sold the company to the friends and relatives of officials.  In other places, they were even greedier and made the workers pay to keep their jobs.

KANG XIAO-GUANG:  There are almost no restrictions on them.  Even worse, in some places, the government is their partner.  They all share in the spoils.  Workers can't stop them.  The media can't report it.  The law is null and void.  There is no auditing.  The banks are also in collusion with the management.  Basically, they can do whatever they want with government money.

NARRATOR:  Many say that official corruption is the worst in China's modern history.  Some people are angry.  Some are resigned.  For Wang Hao-ren at Capital Steel, corruption is a fact of life.

WANG HAO-REN:  To get anything done, you have to spend money.  For example, our workshop decides whether or not to renew a worker's contract.  We take into account factors like their age, abilities, performance to decide.  But some workers think, "If I give the boss some gifts, then maybe he will keep me on."  Many workers think this.  But I think that if you take bribes, it's hard to say no.  If you want to be fair, you can't do it.

NARRATOR:  Wang is disillusioned, but he is pleased he is still at Capital Steel.  The biggest benefit of his job, a new apartment, has finally come through.  He has happily spent his life's savings on it.

WANG HAO-REN:  I bought this apartment from Capital Steel at a preferential price.  In all, we spent nearly $5,500.  They assign the apartment according to your contribution, position and length of service.  The apartment is 600 square feet.  That's not bad.  We spent $3,500 to get a decorating company to design the interior because since we got married, we'd never lived together.  So this time, I put a little money into decorating, so my wife and child could live in a more beautiful, comfortable place.

My daughter is growing.  She's learning.  And I think she's very cute.  When I see her smile, I forget my work and the stress of life.  She brings me a lot of joy.

NARRATOR:  Businessman Zhang Wu seems to thrive on stress, and he maneuvers skillfully through the tangles of corruption at work.

ZHANG WU:  Of course, my company has met with corruption.  It is impossible to avoid in normal daily business dealings, where people help each other and favors are exchanged.  Our company does this quite a bit-treating clients to meals, giving little gifts, et cetera.  But we haven't gone to the point of giving money.  That hasn't happened because our business is in the service sector.  We don't have production lines or build tall buildings.  We're not in that kind of business.

NARRATOR:  In the last year, Zhang Wu moved his firm into a prestigious Beijing address, and he has moved his family into a penthouse in a luxury compound.

ZHANG WU:  In the past, people never imagined such a high standard of living.  My father and mother had different values.  They had never seen good housing.  If they had a bed and place to eat, that was enough.  This is pretty comfortable, but my next apartment will be even more comfortable.  When it comes to housing, my ambitions are boundless.  As long as you have money, you can do anything.

NARRATOR:  After his mother died, Zhang and his wife decided to have a second child in her memory.

ZHANG WU:  The Chinese national policy is a one-child policy.  The fewer children, the better.  China has too many people.  But when you step back and look at the big picture, because the Chinese population is so large, most of it is of low quality.  I estimate that those of superior quality make up only 15, maybe 20 percent of the population.  Given our family's culture and values, I think that, despite that national policy, having one more child shouldn't be a problem.  It can only benefit, not harm China.  And it can only benefit, not harm me personally.

Until a few years ago, births were controlled very strictly.  Since last year, it's easier to get a birth certificate when you have a child.  You need some good connections, some money, to make some donations.  You can give to hospitals, different social institutions.  All that makes getting the registration easier.  If you give money, the state becomes more amenable.


NARRATOR:  In Shenyang, a huge corruption scandal is rocking the city.  It began when police arrested a local official, who was also head of the city's most notorious criminal gang.  Now rumors are swirling around city hall and Mayor Mu.

MAN:  People on the street say Mu is like the boss of the underworld.  He's rough.  He doesn't pay attention to details.  And he does whatever comes into his head and does it with great determination.  But realistically, in a place like Shenyang, you can't get much done without that sort of resolve and determination.

NARRATOR:  This time, we are not able to see Mayor Mu.  We are told he is out of town-in Beijing for party training or in the hospital for tests.

Corruption is rampant not only in the cities but in the countryside, too.  Here in Guo Village, local officials make life a misery for the peasants.  Guo Xin-min pays about 25 percent of his income in regular taxes, but on top of that, he has to pay a multitude of tolls and levies.

GUO XIN-MIN:  Unofficial taxes are tiliu.  For instance, in the spring, they collected a motor vehicle use tax.  They went to every village.  Town officials came with land tax officials.  They organized checkpoints on the road.  And they stopped you and didn't let you pass if you didn't pay.  They would even take your vehicle.  Sometimes, after tiliu, they ask you for more, which they call something else, so the amount of tiliu doesn't look too big.  After tiliu, they wait for a while, then they ask you to pay an irrigation project labor fee.  We don't know what they actually use it for.  You just have to pay.  You can't refuse.  If you don't pay, the township official will come here to collect it, and there's no way to refuse.

NARRATOR:  Tax-gouging, falling prices and a severe drought are making this a tough year for Guo Xin-min.  The one bright spot is that his son, Xiao-lei, has managed to leave the village.  Guo hopes his son will now have a future, learning to repair refrigerators in Beijing.

GUO XIN-MIN:  In the village, I wanted him to learn some skills, like driving or repairing cars.  He didn't want to learn.  Then he suddenly got this opportunity in Beijing.  I'm really happy he got this chance.

NARRATOR:  In Chestnut Flower Village, almost all the young men have gone to look for work.  Hong Huan-zhen's life is unraveling.

HONG HUAN-ZHEN:  Last time you were here, it was big here and here.  [pointing to neck and eyes]  Last March, my whole body swelled up.  I stayed in the hospital for three weeks.  After I came back, my neck got smaller and smaller.  Now my main problem is diabetes.

The injections they used in the hospital were imported.  Each shot cost about $2.50.  Back home, I didn't have any medicine or injections.  We were harvesting the wheat when I fainted.  I lay in the house for a day before going to the hospital.  My husband was so good that I really couldn't have asked for more.  When I was sick, he lost weight and his hair turned gray.  He ran around to buy medicine for me and to borrow money.

NARRATOR:  The couple is now $1,200 in debt, more than twice what they earn in a year.  Hong's illness has ruined her daughter's future.  Although Yu Yen loved studying, she has stopped going to school.

HONG HUAN-ZHEN:  She cried and cried.  She said, "I want to go out and earn money.  There isn't even room for me at home."  There is no separate room for my daughter in the house.  All our money went into my medicine.

YU YEN:  I hope in my heart that my mother will get better soon, so the whole family can be happy.  When she's sick, we're all unhappy, every day.  I cook and do housework and I work in the fields, but my dad won't let me do the heavy work.

INTERVIEWER:  Do you still want to continue your studies?

YU YEN:  I'd like to go to school.  I'm sad that I've missed the chance.

HONG HUAN-ZHEN:  I don't care anymore whether I live or die.  I can't do anything about this illness.  If I was meant to die, I should just die.

NARRATOR:  Our last trip seems to have changed Tian Xiao-wei's life.  The fact that we interviewed her finally won her the esteem of the villagers.

TIAN XIAO-WEI:  Every time I look at the pictures, I miss you.  I have all this bitterness in my heart and no one to talk to.  I'm happy that foreigners came to hear about my bitter life.

NARRATOR:  She is proud that although she herself is illiterate, her daughter has graduated college.

TIAN XIAO-WEI:  Last year, after graduating, she became a teacher.  Teachers, leaders, local officials all think highly of her, and that makes me happy.  I feel she's given me face.

NARRATOR:  She continues to work long hours and to reap the benefits.

TIAN XIAO-WEI:  Our life has reached the level of upstairs and downstairs, electric lights and telephones.  I have a telephone, and there is an extension in every room.  It is very easy for me to contact my daughters and son-in-law.  My daughters want me to go and live with them, but I don't want to live in a city.  I feel this is my home, with green hills and clear waters.  This place, I've paid for everything here.


NARRATOR:  This year, China will enter the World Trade Organization.  Beijing has been awarded the 2008 Olympic Games.

For Zhang Wu, these are the best of times.  Yet while he still relishes all the opportunities of the reforms, some of his priorities are changing.

ZHANG WU:  Pretty soon I will be 40, "the year when you are no longer bewildered."  Your feelings, your heart, are all suddenly different.  I'm no longer a single person, like in the past, when every day I focused entirely on my work.  Back then, you probably would have seen me working all day long, without any time for the kids, letting the grandparents look after them.  Now we basically raise the kids ourselves.  We hired two nannies.  One cleans the house, the other takes care of the kids.  But the nannies don't know how to educate them, so when we have a little time, we usually devote it to educating the kids

NARRATOR:  Personally and professionally, Zhang Wu is riding high.

ZHANG WU:  In the last four years, we have focused on establishing the company as a brand name and building a reputation as one of the best.  And it seems that in the last few years, the company did become the best in its field in China.

NARRATOR:  Recently, he won the biggest contract of his life.

ZHANG WU:  I've been commissioned to head the Chinese Design Committee, which will create the look for the 2008 Olympic Games.  I think that this is the big thing for the next 20 years.  It is also a big undertaking for our company.  And for me personally, it's a very big job.

NARRATOR:  2001 is the government's target date for the state companies to become profitable.  Some plants, having shed their surplus workers, are doing better.  Thousands have closed.  Others are still limping inefficiently along.

KANG XIAO-GUANG, Professor of public Policy, Qinghua University:  The state still keeps companies under the state-owned mentality.  To put it bluntly, maintaining the state-owned system systematically guarantees that party officials can continue to profit personally.  According to surveys we've done, officials and managers all know that this kind of system will result in the death of the companies, but it is in their interest to keep running them.

NARRATOR:  Directly or indirectly, the government is still pumping money into the state sector.

WU JING-LIAN, Government Economist:  There are very, very, very intense debates on this.  Most of us believe that this cannot coexist with the modern corporate system.  I estimate that this year, when there is not as much infusion of government money, some companies will go back to showing a loss.

NARRATOR:  But there are even greater difficulties.  The Communist Party is unwilling to tackle the underlying problems of its own rule: corrupt officials, a banking system that has no autonomy, and a legal system that is often just a rubber stamp for the party.

WU JING-LIAN:  It will be very hard to move forward with economic reform without social, political and legal reform.  Legal reform will probably be more difficult than economic reform because it has more political and ideological implications.

NARRATOR:  In Shenyang, the absence of legal and political reform has been costly.  The corruption scandal around Mayor Mu has paralyzed city hall and derailed the reforms.  Mayor Mu went on trial in September, 2001.  At his home, police found jewelry, gold bars and cash, evidence, prosecutors charged, that he had accepted bribes and kickbacks.

In a written statement, Mu admitted the charges.

    Mayor MU SUI-XIN:  My heart has always been with the Communist Party.  When I was young, I was a very good person.  Now I am very bad.  This is my tragedy.

NARRATOR:  Mu Sui-xin was sentenced to death.  The execution was suspended for two years, and he was sent to jail.

We requested interviews with the prosecutors and Mayor Mu.  No official would talk.  But people on the street had plenty to say.

OFFICE WORKER:  There's a saying among ordinary people: As far as division heads and above are concerned, take any one of them you can and execute him before investigating, and he will not have been wronged.

NARRATOR:  Dozens more officials have been arrested, and investigations are ongoing.  The new mayor has complained that no one in city hall will work without a bribe.

MAN IN CAR:  Let me tell you, if China doesn't tackle corruption, the country is done for.  I don't care what you think.  When I speak, I speak the truth.  If corruption was eliminated, the party would be wiped out.  The fall of the Tang, Song, Yuan, Ming and Qing dynasties all started with corruption.

NARRATOR:  In Shenyang, the number of unemployed continues to grow.  Locals now call the factory district the area of "broken-hearted streets."

The Shenyang Machine Tool Company appears to be an exception.  It seems to have a future.

YAO JUN-XI, Managing Director, Shenyang Machine Tool Company:  This year, we supplied equipment for the Shanghai Airport Express Rail Link.  Our equipment is the only domestic product that won the bid.  The reason our products and equipment have achieved their new standard is because of the World Bank loan.

NARRATOR:  Mr. Yao assured us that the company was now paying salaries and pensions in full, on time.

YAO JUN-XI:  No Problem.  One hundred per cent.

NARRATOR:  But the company still has a long way to go.  According to sources at the World Bank, it does not seem to want to repay the millions it has borrowed.

WU JING-LIAN, Government Economist:  This problem occurs for two reasons.  One is that they are in very bad shape financially.  The other reason is that the last time the state companies failed to repay almost $17 billion, the government waived the loans.  Well, $17 billion has been waived in the past, so they expect that the government will waive them again.

NARRATOR:  The company is still laying off workers.  After we filmed him, Fu Xue-ren was let go.  We are not allowed to see him again.

The public relations department does not want us to film Zhang Shu-yan again, either.  After a two-day standoff, we finally manage to meet with her.  She still has her job in the stockroom but, like many workers, her pay has been cut.

[www.pbs.org: More about the making of this film]

ZHANG SHU-YAN:  My financial situation used to be better.  I was making more than $48 a month.  Now my salary is only $36 a month.  Expenses?  My daughter's tuition costs me something, but other things, like food-we eat very simply.  Anyway, my daily spending limit is $1.20.  I can't spend more than that.  Water and electricity cost more than $12 a month, even if I use as little as possible.

My daughter likes to look at how nicely other people eat and dress.  I want her to eat and dress well, but I can't afford it.  I just keep telling her, "You must study hard.  Studying hard is your only way out."  My life doesn't matter.  My only hope is that my daughter can go to college and live a good life.  Then I'll have finished my mission.

NARRATOR: On the outskirts of Beijing, we tracked down Guo Xiao-lei, the son of farmer Guo Xin-min.  It's been almost two years since he left his home in Guo village.  Now 17, he is supposed to be learning to repair refrigerators and air-conditioners.  Instead, he and the other apprentices have been told to tear down these walls and salvage the bricks.

GUO XIAO-LEI:  We came here to learn skills.  Every month, I get $12 pocket money.  We also help-help with the work-I mean, all kinds of odd things when the other work is done.  In the evenings, we get together and study, study for a few hours.  For the last few days, we haven't been able to study because the work is quite exhausting.  So we don't study anymore.

NARRATOR:  For Xiao-lei and tens of millions like him, the search for a better life often ends in bleak exploitation.  He shares this tiny one-room shack with three other boys.  They've insulated the walls with cardboard against the cold.  All Xiao-lei's belongings are stored in one small bag.

Xiao-lei gets only a few days off every year.  He spends them visiting his parents.

GUO XIN-MIN:  Since Xiao-lei left, we have much more work to do.  When he was home, he would cut the chives and dry them, and we had an easier time.

GUO XIAO-LEI:  Since I left, I miss them very much.  After all, because I am away from home, my mom and dad have a harder time.  And I'm not there to help them.

GUO XIN-MIN:  We certainly hope he will have a better future, but we mustn't expect too much.  If you do, it may not happen.

GUO XIAO-LEI:  I'll just do my best, and there'll be a day when I can lift my head and make my mark.

NARRATOR:  We want to go back to Chestnut Flower Village for a final visit with Tian Xiao-wei and Hong Huan-zhen, but local authorities refuse us permission.  All they will tell us is that Hong Huan-zhen's situation is even worse, and they feel her story reflects badly on the area.

Back in Beijing, it is photographer Nie Zheng's 34th birthday.  His mother died just over a year ago, and he is going to visit her ashes.  In his mother's last months, he tried hard to reconcile their differences.

NIE ZHENG:  There is one thing in which I didn't satisfy her.  I haven't married.  She asked me every day for a week.  So I think, in her heart, she would have liked to see me married.  She really regretted that I didn't.  In this I didn't satisfy her dreams.  What is unacceptable is that, since her death, I think of her constantly.  It's really troubling and extremely upsetting.

NARRATOR:  In his grief, he has decided to change his priorities.  Now Nie Zheng only does commercial work, photographing album covers, magazine spreads and elaborate video shoots.

NIE ZHENG:  I have to make some money-for my father and then for myself.  I feel that if I have some savings, I will be more stable.  I think growing old and getting sick is pretty brutal.

NARRATOR:  For the moment, his artistic dreams are on hold.

Feng Hui-xiu now works at her husband's garage.  Slowly, they are starting to make a profit, and the pension she negotiated two years ago gives them an additional financial cushion.

FENG HUI-XIU:  People ask why I'm so lucky.  I have security, and they don't.  Actually, I shouldn't have quit my job.  It was all because my son failed the exams the first time.

NARRATOR:  Feng's sacrifice paid off.

GU FENG:  When I learned that I did all right, I was really excited.  To be honest, it was as if everything I saw was beautiful.

FENG HUI-XIU:  My son was jumping on my bed.  "I got accepted!"  He almost broke my bed.  We were overjoyed.

NARRATOR:  Gu Feng is studying for a degree in sports management.  He wants to be a personal trainer, a concept that did not even exist in China until recently.

GU FENG:  There has been a lot of change in China, and people like my parents' generation, they definitely find it difficult to adapt to society today, while kids are quick to accept new things.  So there are definitely conflicts about this.  Sometimes I still ask my mother's opinions on certain things.  I asked her if I could have my ears pierced.  The way my mother answered, there was no room for negotiation.  It was a definite no.

NARRATOR:  Working at the family business has changed the emotional fabric of Feng's life.

FENG HUI-XIU:  People who work in state companies and people who work outside are two different kinds of people with two different world views.  In a state company, there's selfless contribution.  People talk about spiritual growth.  When I am with my friends at the plant, having a meal or a good time, I'm usually very happy.  When I am here, my words are short and to the point.  People work for me, and I pay them.  They can quit, and I can fire them.  Relationships are based more on money.

I don't like business.  I don't like cars.  But what can I do?  Because of my family's situation, I have no choice.  I have to compromise.

NARRATOR:  At Capital Steel, Wang Hao-ren also misses the sense of community that is disappearing from his life.

WANG HAO-REN:  Since I was a child, I've had a very deep emotional attachment to Chairman Mao because that's how I was taught.  So as time goes by, I feel that the relationship between people is getting more and more superficial, not as deep as in the past.  I really miss that era.

NARRATOR:  The future of Capital Steel is uncertain.  It is a major polluter in Beijing and is under huge pressure to reduce its emissions.

WANG HAO-REN:  We are really worried that Capital Steel will have to move before the 2008 Olympic Games.  Since the Games will be hosted in Beijing, it will have to meet lots of environmental requirements if it stays.  If the company spends its earnings on pollution controls, it won't be profitable and it'll have a hard time surviving.

NARRATOR:  After four years of the reforms, Wang Hao-ren still feels unable to survive outside the factory.

WANG HAO-REN:  So what I'm thinking is, wherever Capital Steel moves, I'll follow, because then I'll be able to continue making steel, which I love.  Also, talking about studying something new, looking for new jobs-deep down, I just don't have enough confidence.

NARRATOR:  Today, China's economic growth continues to be impressive, but the government's plan to make the state companies profitable remains messily unresolved.  And as the country enters the World Trade Organization, many fear that tough foreign competition will only make the situation worse.

The impact of the reforms has been huge.  While there are clear winners, many have lost out.  Since 1998, 35 million people have been laid off.

WU JING-LIAN, Government Economist:  Looking back, we realize we've made many mistakes.  Things that should have been done from the beginning weren't done.

[protest sign: "Workers from Dalian want to eat"]

NARRATOR:  In desperation, more and more are taking to the streets.  They are protesting lay-offs, unpaid severance and pensions that never materialize.

WU JING-LIAN:  There are two things that need to be understood by Chinese people and foreigners who are concerned about China.  The first is what serious difficulties China is facing.  The other is that we already have accomplished far more than many generations of the past.

FENG HUI-XIU:  People grow over time.  I believe my growth, and how I came to be who I am now, were shaped by my work at the plant.  The best days of my life were there.  At first I really missed it, but leaving early forced me into the real world.

WU JING-LIAN:  If we can continue in this way, there is hope that my generation, or the next, will see China become a democratic, civil, and prosperous society.


    Feng Hui-xiu decided to go back to the state sector.  She now works for the Number One Machine Tool Ministry.

    To avoid losing her job, Zhang Shu-yan took a demotion.  She now cleans toilets at the Shenyang Machine Tool Company.

    Hong Huan-zhen's current health condition is unknown.

    Mayor Mu died in prison, of cancer, in January, 2002.

    China's economic reforms continue.


Sue Williams

Kathryn Dietz

Judith Vecchione

Howard Sharp

Bestor Cram

Shenyu Belsky
Larry Guo

Will Lyman

William Turnley

Melissa Carlson
Valerie Evering
Kyle Freeman
Samantha Head
Emily Jansen
Charlotte Mangin

Michael H. Amundson

Neil Cedar

Grant Maxwell

Jason Kao Hwang

Robert DeBellis 
Brad C. Jones
Adam Rogers
Satoshi Takeishi
Wang Guowei

Cui Jian
Wang Faye
Tian Zhen
Happy Avenue
Wild Child

Jan C. Berris
Deborah S. Davis 
Nicholas R. Lardy
Andrew J. Nathan
Edward S. Steinfeld
Anne F. Thurston
Martin K. Whyte

Gaye Korbet 
Matt Harter
Bruce Walker

Shuping Lu
Ching Ip

ABC News Videosource
Agence France Press
AP Wide World
China Central Television Corporation
Sinopix Photo Agency

Mathew Clark
Filmmakers Collaborative
Katurah Hutcheson
Peter S. McGhee
Jane Olson
Marcia Storkerson
Fay Sutherland
Tang Dynasty
Dan Wright
Shirley Anderson


Tim Mangini

M.R. Frederick

Steve Audette

Michael H. Amundson
John MacGibbon
Julie Kahn

Chris Fournelle

Chetin Chabuk

Mason Daring
Martin Brody

Erin Martin Kane

Christopher Kelly

Jessica Smith

Jennifer McCauley

Dennis O'Reilly

Jenna Lowe

Jessica Cashdan

Mary Sullivan

Danielle Gillis

Lisa Palone-Clarke

Eric Brass
Jay Fialkov

Adrienne Armor

Alex Fitzsimmons

Tobee Phipps

Sarah Moughty
Kimberly Tabor

Stephanie Ault

Sam Bailey

Wen Stephenson

Catherine Wright

Robin Parmelee

Ken Dornstein

Karen O'Connor

Sharon Tiller

Michael Sullivan

Marrie Campbell

Jim Bracciale

Louis Wiley Jr.

David Fanning

An Ambrica Productions film for WGBH/'FRONTLINE 

All Rights Reserved.

ANNOUNCER:  There's more of this report on FRONTLINE's Web site, including a roundtable with prominent China experts on the prospects for Western-style democracy there, a two-decade chronology of China's tumultuous economic reforms, a talk with the producers about their experience making this film, and the opportunity to watch the full program on line, and more.  Then join the discussion at PBS on line, pbs.org, or write an email to frontline@pbs.org, or write to this address [Dear FRONTLINE, 125 Western Ave., Boston, MA 02134].

Next time on FRONTLINE:

    Pres. GEORGE W. BUSH:  The course of this nation does not depend on the decisions of others.

    ANALYST:  The president's speeches since 9/11 have been all about worldwide use of American power.

    Pres. GEORGE W. BUSH:  We will fight, and we will prevail.

    ANALYST:  We have to go change the old order, and the place to start is Iraq.

    ANALYST:  In their minds, terrorism has become the new communism.

    Pres. GEORGE W. BUSH:  Free people will set the course of history.

    ANALYST:  They're making decisions that are going to have reverberations for many, many years.

The War Behind Closed Doors

ANNOUNCER:  To obtain a VHS of China in the Red, call PBS Home Video at 1-800-PLAY-PBS.  [$29.95 plus s&h]

Major funding for this program is provided by the John D. and Catherine T. MacArthur Foundation, Joseph E. Seagrams & Sons, Inc., and Fiona and Stan Druckenmiller, with additional funding from the W.L.S. Spencer Foundation, the Coulter-Weeks Charitable Foundation and Vinton Rollins, and by the following: [The Byrne Foundation, Patrick M. Byrne, Albert Kunstadter Family Foundation]  A complete list is available from PBS.

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