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Ration cards – China’s second currency

Ein Bild von Johnny Erling
By Johnny Erling

Exactly 30 years have passed since Deng Xiaoping’s legendary inspection tour of China’s south (南巡). In Wuhan, Shanghai, Canton, and Shenzhen, he once again took up the cudgel for an opening-up policy, which was threatened by a relapse into a planned economy. Deng’s trip spark the introduction of stock exchanges and special economic zones, encouraged private initiative, and ended the ideological debate over whether the country was “capitalist or socialist” (姓资姓社). In January 1992, three years after the Tiananmen massacre, which happened on the orders of Deng, the party was on the threshold of its return to old-style dogmatic socialism.

Deng’s plea for market reforms broke up the old structures, but at the same time led to extreme social injustices. They served today’s leader Xi Jinping as an excuse to change course. He did not acknowledge Deng’s trip to the south with a single word in his New Year’s speech. Instead, high-tech and artificial intelligence are to lead his preferred command economy to success. Yet he knows better. He personally suffered under China’s systemic shortage economy and chronic rationing. But control takes priority for him.

Our daughter Anita was born in Beijing at the end of 1981. Her mother was a Chinese citizen at that time. Despite having a German father, Anita was documented as an only child in my wife’s passport according to her mother’s nationality. We received a special pass for one-child families with an accompanying bonus of five yuan (five euros at the time), a bath towel, and soap. Also included were some postage stamp-sized ration cards for buying rationed grain, cooking oil, and cotton.

The most important consumer goods were rationed for 40 years, from 1953 to 1993. Each household received ration stamps, which looked different in each city and province. Various cards: The first two of the five stamps in the picture allowed you to buy gasoline (1975), beans (1968, Fujian Province), grain (1971 Tibet), or wedding supplies (1984 Liaoning).

When I recently came across this collection again, I was reminded of what China owes to the now controversial free-market reforms of the Deng Xiaoping era, which brought an end to shortages that had lasted for more than four decades.

The rationing enforced from 1953 onward became the symbol of China’s planned economy. Just how much, I realized only when I stumbled across a bulky set of documents from the Beijing Grain Bureau, issued at the end of 1991, at Beijing’s Panjiayuan flea market.

This hardcover tome with over 1,600 pages is a treasure trove for economists and historians. The book was publicly peddled when Beijing officially stopped issuing the last Liangpiao grain stamps after 40 years on October 16, 1993.

Planned economy bible: The grain bureau of the city of Beijing published internal documentation of all regulations on rationing of basic needs from 1953 onwards at the end of 1991. The volume contains more than 1600 pages. It was not until 1993 that Beijing ended the distribution of ration cards for grain and other scarce goods.

China’s planned economy was guarded by hundreds of thousands of bureaucrats with increasingly sophisticated rationing decrees. It all began on October 16, 1953, with the Central Committee’s decision to place the buying and selling of grain under a unified state monopoly. Then, on August 25, 1955, the State Council issued detailed regulations for all cities and towns on how much grain (rice, wheat, millet, corn) a city resident was entitled to according to the type of work, gender, and age. For adults, the rations ranged from 12.5 to 17.5 kilos, and for children, from 1.5 to 10 kilos, who received liangpiao. Soon, other foods, meat and vegetables, wool or cloth, and finally commodities and industrial goods of all kinds were also rationed. China’s researchers found, according to the legal newspaper “Fazhi Zhoumo” on December 26, 2013, that there were at least 14,000 different ration stamps. Only officials, official travelers, and soldiers could receive cards valid nationwide. Otherwise, each city and province distributed only regionally valid ration cards.

Travel was impossible without ration cards, especially for China’s peasants. “The Party and the government gained complete control over the daily lives of the urban population,” wrote the 2012 monograph, “Change in China’s Social Life” (中国社会生活变迁高智勇). “Ration cards became symbols of personal identity.” Among the populace, they became known as “second currency.”

In later investigative books, he accused Mao of being responsible for the country’s severe economic and supply crisis and more than 36 million starving Chinese as a result of his disastrous Great Leap Forward and People’s Communes policies from 1959 to 1961. Ration stamps reflected the crisis. The number of rationed products rose to 156 different goods in 1961. Even the capital, which rationed only eight foodstuffs, cotton and cooking oil at the beginning of 1962, had to do the same for 102 goods from mid-June.

Hungarian economist János Kornai (1928-2021) was the first to demonstrate how chronic shortages were systemic consequences of the socialist economy in his 1980 study on the “Economics of Shortage.” The CCP’s planned and special command economy, whose alleged benefits Xi Jinping is again promoting today, was the actual culprit, wrote Kornai, whose thinking influenced China’s reforms in their early stages. His book sold millions of copies, shaped Beijing’s leadership and the first generation of economic reformers, who lose more and more influence today.

The reforms brought an end to shortages and rationing stamps in 1993. Ten years later, the population began to collect them like stamps. Hundreds of catalogs came to the market. Particularly rare ration cards are worth hundreds of euros today.

The end of shortages thanks to Deng’s reforms in the 1990s suddenly transformed these once loathed colorful ration stamps into collector’s items. Swap meets, special auctions, and price catalogs made them as valuable as stamps. Private collectors opened museums. Li Santai gathered more than 50,000 coupons in his exhibition in southwest China’s Liuzhou until 2014. Even the propaganda paper China Daily smugly remarked after a visit: “Everything was rationed, only the little red book with Mao’s quotes was available without a ration card.” The hype has since died down. The party, which is rewriting China’s history under Xi, doesn’t want to be reminded of how it once ruined the country.

China’s bureaucracy was able to use ration cards to control all transactions in individual households in a system without free movement. But since then, hundreds of millions of peasants have flocked to the cities in search of work, and more than 500 million Chinese were living outside their registered households by the end of 2021. With cash, credit cards and smartphones, everything is readily available for purchase. Beijing needs to change. That’s probably one of the reasons why the People’s Republic is at the forefront of the world’s most advanced surveillance technologies and artificial intelligence.

Grotesque nostalgia: In particularly high demand among collectors are ration cards from the time of the Cultural Revolution with Mao’s revolutionary slogans. A page from a special book just for such cards, a sign of extreme scarcity.

Although China now has record harvests of more than 650 million tons of grain annually thanks to its farming economy, which has been privately organized again since Deng Xiaoping, and is the world’s largest producer of cotton, vegetables, fruit, or nuts, its leadership constantly fears an agricultural crisis.

Most recently, at the end of December, Party leader Xi warned to not underestimate this risk: “The Chinese people’s rice bowl must be firmly held in their own hands at all times, and the rice bowl must mainly contain Chinese grain” (中国人的饭碗任何时候都要牢牢端在自己手中,饭碗主要装中国粮。). This would also apply to meat and vegetables.

Xi has been driven by this idea since taking office. As early as December 23, 2013, he said at an agricultural conference (在中央农村工作会议上的讲话), “When it comes to the issue of grain security, I immediately remember the grain coupons. They were abolished 20 years ago today. (…) That was a milestone in the reform development of our country. (…) A small, thin piece of paper directly decided people’s right to eat.” Xi wrote that he “still belongs to a generation for whom hearing the word ‘ration cards’ feels like yesterday.” He then warned that China’s long-term agricultural problems should not be ignored “just because we have had good harvests for several years in a row. We must not be naive.” No more than 300 million tons of commercial grain would be offered on the entire global market, he said. “Even if we bought up all of it in the event of a crisis, it would not be enough for even half of China’s annual grain needs. Moreover, we would plunge the global supply and world prices into chaos.”

Satirical montage of the magazine “National Humanity History” March 2014. The masses hold ration cards for meat instead of Mao’s Red Book. Grain. Cooking oil and salt in their fists. Illustration for a critical cover story about China’s former shortage economy.

But eight years later, Xi is returning to socialist models for agricultural planning. He seems to have repressed his earlier insights.

Hungary’s shortage economist Kornai, once an adviser to Chinese reformers, died in Budapest in October 2021 at the age of 94. He had recently criticized the increasingly autocratic regime under Xi. Three months before his death, Korsai settled accounts with Beijing in an essay for the Financial Times. He said he regretted helping to create an anti-reform “Frankenstein’s monster system” in his role as an adviser to China. He also felt responsible. Beijing has so far remained silent about Korsai’s bitter judgment.

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