Flourishing Collectives

At first glance, Fenghuang is still a backward village. Peasants pull two- wheeled harnessed carts along the roads, and sewage remains the primary fertilizer. Beneath that superficial impression, however, the lives of the 865 people of Fenghuang and of their neighbors in Sichuan province have been revolutionized. Where just six years ago most of the villagers were rice growers, today nearly 80% of Fenghuang's work force is no longer engaged in farming. Some peasants mix fodder, some produce soft drinks, some refine edible oil. Many of them work in a small distillery, brewing a potent rice liquor called feifeng daqu (flying phoenix wine). Whatever their trade, most of Fenghuang's inhabitants are pursuing their ventures jointly in group-owned enterprises known as collectives.

These small, low-risk economic bodies, which have sprouted throughout China, are an important component of Deng Xiaoping's second revolution. They serve as manageable guinea pigs, where the authorities can tinker with flexible production lines or even try out such foreign devices as stockholding and mergers. "We have a saying," explains Shen Yuanlong, director of the Peking- based State Administration for Industry and Commerce, " 'A small boat can turn back more easily.' "

The collectives, which range in size from a few people to several thousand, have gone in for all manner of enterprise. Visitors to the Yuying (Civilized Heroes) market in Peking, for instance, will find tape decks and stationery for sale. Small group-owned businesses this year plan to build 59 hotels in Peking alone. The most daring of these experiments has seen a few collectives sell "internal shares" to employees, on which they stand to gain "bonuses" (the capitalist-sounding term dividends is still avoided). When a photoprinting service in Shanghai offered stock for sale earlier this year, thousands of people lined up to pay $17.50 each per share, equivalent to about half a month's wages for an average worker.

In Peking, the Tian Qiao Merchandise Co., which produces cosmetics and clothes, went so far as to issue what appeared to be real stock, complete with voting rights and variable dividends. So great was the demand for a piece of the action that the firm had to turn away thousands of individuals who responded to an advertisement posted at the store's entrance. The stock offering had official approval: it was orchestrated by the State Commission for Restructuring the Economic System, which is headed by Premier Zhao Ziyang.

Collective ownership has altered the way many people live. Fenghuang village's gross sales figures have soared over the past six years, even though the agricultural share of its production has dropped sharply. In 1977 the village earned about $50,000. Last year the figure was up to $1.5 million, and this year's goal is $2.5 million. Not only have the peasants been able to give up the backbreaking labor of tilling rice paddies, but they are now taking in vastly more money than in 1977. "People's lives are changing," says Han Bingqing, manager of the collectively owned Fenghuang Industrial Combine, an agglomeration of ten small factories and assembly plants. "In the past, the big items for us were bicycles, sewing machines and watches. Now those are just middle goods. Our big goods are washing machines, motorcycles, refrigerators and tape recorders." As peasants come to expect more creature comforts, and as the livelihood of villages increasingly depends on their manufacture, Dengist reforms could prove harder and harder to uproot.