by Jung Chang
In 1943, a booklet was published in Yenan, entitled A Brief History of China’s Labour Movement, written by Deng Zhong-xia, a labor leader executed by the Nationalists. The original text had been published in 1930 in Russia, and contained no mention of Mao’s role. Now a passage was inserted: “In 1922, thanks to the leadership of comrade Mao Tse-tung, the workers’ movement in Hunan developed stormily …”
PART FOUR. TO CONQUER CHINA
26. “REVOLUTIONARY OPIUM WAR” (1937–45 AGE 43–51)
YENAN, MAO’S HQ during the Sino-Japanese War, was run somewhat differently from former Red bases like Ruijin. With the policy changes the CCP introduced for the “United Front,” the practice of designating “class enemies” for slave labor and dispossession was drastically scaled down. But the maximum extraction went on, through taxation.
This was despite the fact that Yenan enjoyed two enormous external subsidies: substantial funding from the Nationalists (for the first few years), and massive clandestine sponsorship from Moscow, which Stalin personally set at US$300,000 per month in February 1940 (worth perhaps some US$45–50 million a year today).
The chief domestic source of revenue was grain tax, which rose steeply during the years of Communist occupation. Official figures for grain tax for the first five years of Red rule, for which records are available, were (in shi, equivalent to roughly 150 kg at the time):
1937: 13,859 1938: 15,972 1939: 52,250 1940: 97,354 1941: 200,000
The sharp increases from 1939 on were to fund Mao’s aggressive expansion of both territory and army. Coercion and violence were clearly rife, as the region’s Communist chief secretary, Xie Jue-zai, noted in his diary for 21 June 1939 that peasants were being “driven to death” by tax collectors. (Xie was one of the few to keep a diary, thanks to his high position and his long relationship with Mao, which went back to Mao’s youth.) In 1940, grain tax doubled in spite of severe bad weather and famine. And it doubled again in 1941, even though the harvest was 20–30 percent down on the previous year.
Mao was disliked by the locals — a fact he knew, but had no impact on his policy. He later told senior cadres a story about a peasant complaining about heavy taxation. After a county chief was struck dead by lightning, the peasant said: “Heaven has no eyes! Why didn’t it strike Mao dead?” Mao told the story as a way of saying he was responsive to discontent, and claimed he had had grain tax reduced as a result. As a matter of fact, the lightning and the peasant’s curse occurred on 3 June 1941, well before that year’s unprecedentedly high tax was announced, on 15 October. Mao doubled the tax after he heard about the peasant’s anger. And that November he added a new tax, on horse feed.
On another occasion, Mao revealed that someone who, according to him, “was feigning madness” lunged at him and tried to assault him — because of the heavy taxes. Mao did not quote other stories that went the rounds, including one about a peasant who cut the eyes out of a portrait of Mao. When interrogated, he said: “Chairman Mao has no eyes,” meaning: “There is no justice under his rule.” Mao’s response was simply to cook the figures. In 1942 and 1943, government announcements understated taxes by at least 20 percent.
The Communists claimed that taxation in Yenan was much lower than in Nationalist-ruled areas. But Chief Secretary Xie himself noted in his diary that grain tax per capita in 1943 was “high by the standards of the Big Rear [Nationalist area].” Sometimes, he recorded, grain tax “almost equals the entire year’s harvest”; the state took the astronomical figure of 92 percent in the case of one family he cited. For many, “there was no food left after paying the tax.” Large numbers tried to flee. According to the Communists’ own records, in 1943 over 1,000 families fled from Yenan County alone, which was no small feat, as the whole place was guarded around the clock, and the county was not on the border of the Red area, which was roughly the size of France.
THE REDS FOSTERED the myth that Yenan was under tight economic blockade by Chiang Kai-shek. In fact, there was plenty of trade with Nationalist areas, and the person Chiang selected to place on Yenan’s northern frontier, General Teng Pao-shan, was a man who had longstanding ties with the Communists. His daughter was a Party member, and actually lived in Yenan, which he sometimes visited; he also had a Communist secretary. He let the Reds take over two crucial border crossing points on the Yellow River, which gave them uninterrupted communications with their other bases. In addition, his men bought arms and ammunition for the Reds. Chiang tolerated this state of affairs because he did not want an all-out civil war, which Mao promised to start if he did not get his way.
The Yenan region had considerable assets. The most important marketable one was salt. There were seven salt lakes, where all that had to be done, as one 1941 report noted, was “just to collect it.” In the first four years of their occupation, the Reds produced no new salt, and simply used up the reserve built up before they arrived. “The salt stock of decades has been sold out,” the 1941 report said, and the territory “is in a salt famine.” The regime was not only extremely slow to maximize this asset, it had no plan. This reflected the fact that Mao treated Yenan, like the other areas he occupied, as a stopover, inflicting an economic approach akin to slash and burn, with no attention to long-term output.
By mid-1941, the regime had belatedly come to recognize salt as “the second-biggest source of [domestic] revenue” after the grain tax, and a key money-spinner, which soon came to account for over 90 percent of export earnings. The salt was in the northeast of the region, but the export market was over the southern border. As there was no railway or navigable river, let alone motor vehicles, it had to be carried some 700 km on steep, twisting paths. “Transporting salt is the harshest form of taxation,” one Yenan governor wrote to the emperor under the Manchu Dynasty; “those who are poor and cannot afford animals have to carry it on their backs and shoulders, and their hardship is untold …” “Today,” Chief Secretary Xie noted, “it is not much different from the old days.”
The regime imposed corvée labor (unpaid porterage) on innumerable peasant families. Xie and other moderates wrote to Mao many times arguing against this harsh method, but Mao told them flatly that the policy “is not only nothing to criticise, but is also completely correct.” Peasants, he said, must be “forced” to do it, and, he specifically enjoined, “in the slack season.” The underline was Mao’s, to stress that they must not neglect farm work.
THE LOCAL PEASANTS were having to support an administration that was both huge and inefficient. A British radio expert who was in Yenan in 1944–45, Michael Lindsay, was so frustrated by the inefficiency that he produced a document called “What’s Wrong with Yenan.” The system stifled initiative, Lindsay wrote, and made people frightened of proposing improvements, as any suggestion could be twisted into a lethal political accusation. “Technical people all [sic] run away at the first opportune moment.” A copy was given to Chou En-lai. Lindsay heard nothing more.
Others had raised their voices against the bloated bureaucracy earlier. In November 1941 a non-CCP member of the region’s dummy parliament had proposed cutting down on the army and administration, quoting a traditional adage that a good government should have “fewer but better troops, smaller and simpler administration.” For propaganda purposes, Mao made a public show of adopting the adage. But he was not interested in reducing the number of cadres, or soldiers. He wanted more of them, not fewer, in order to conquer China.
It is part of the founding myth of Communist China that in Yenan both the army and the administration were reduced, and that this relieved the burden on the population. In fact, what the regime did was to weed out the politically unreliable (termed “backward”), and the old and the sick, and reassign them to manual labor. The rules for relocating them said they “must be placed round the centre of the region to avoid the Nationalists enticing them away.” In other words, to prevent them fleeing. But even with these reductions, as a secret document of March 1943 noted, there was actually “an overall increase�
�� in employees in the region’s administration, mainly at lower levels, in order to intensify control at the grassroots. Meanwhile, Mao used the drive to merge departments and carry out a reshuffle at the top to tighten his grip.
THE GERMAN INVASION of Russia in June 1941 made Mao look around for an alternative source of funding in case Moscow was unable to continue its subsidy. The answer was opium. Within a matter of weeks, Yenan brought in large quantities of opium seeds. In 1942, extensive opium-growing and trading began.
To a small circle, Mao dubbed his operation “the Revolutionary Opium War.” In Yenan, opium was known by the euphemism “te-huo,” “Special Product.” When we asked Mao’s old assistant, Shi Zhe, about growing opium, he answered: “It did happen,” and added: “If this thing gets known, it’s going to be very bad for us Communists.” He also told us that conventional crops, mainly sorghum, were planted around the opium to hide it. When a Russian liaison man asked Mao outright over a game of mah-jong in August 1942 how Communists could “openly engage in opium production,” Mao was silent. One of his hatchet men, Teng Fa, supplied the answer: opium, he said, “bring[s] back a caravan loaded with money … and with it we’ll whip the [Nationalists]!” That year a carefully researched study put the opium-growing area at 30,000 acres of the region’s best land.
The major opium-producing counties lay on the borders with the friendly Nationalist general to the north, Teng Pao-shan, who was actually known as “the Opium King.” Mao received invaluable collaboration from him, which he reciprocated by facilitating Teng’s own opium-trafficking. When Chiang Kai-shek was thinking of transferring Teng, Mao sprang into action to prevent this: “Ask Chiang to stop at once,” he told Chou in Chongqing, saying that he (Mao) was “determined to wipe out” the unit scheduled to replace Teng. Chiang canceled the transfer. Mao showed how much he appreciated Teng by mentioning him twice when he addressed the 7th Congress in 1945, once even in the same breath as Marx, leading the Russian liaison Vladimirov to ask: “What sort of man is this Teng Pao-shan whom Mao Tse-tung cited … alongside Marx?” Yet Mao never trusted his benefactor. After the Communist takeover in 1949, Teng remained on the Mainland and was rewarded with high nominal posts. But when he asked to travel abroad, the request was denied.
In one year, opium solved Mao’s problems. On 9 February 1943 he told Chou that Yenan had “overcome its financial difficulties, and had accumulated savings … worth 250 million fabi.” Fabi was the currency used in the Nationalist areas, which Mao had been stockpiling, along with gold and silver, “for when we enter Nationalist areas,” i.e., once all-out war began against Chiang. This sum was six times the official Yenan region budget for 1942, and it represented pure saving. In 1943 the Russians estimated Mao’s opium sales at 44,760 kg, worth an astronomical 2.4 billion fabi (roughly US$60 million at then current exchange rates, or some US$640 million today).
By early 1944 the Communists were “very rich,” according to Chief Secretary Xie. The huge fabi reserve “is without doubt thanks to the Special Product,” Xie wrote in his diary. The lives of Party members in Yenan improved dramatically too, especially for senior officials. Cadres arriving from other base areas marveled at how well they ate. One described a meal with “several dozen dishes,” and “every table left many dishes unfinished.”
Mao put on weight. When Opium King Teng met him in June 1943 after some time, his first words of greeting were: “Chairman Mao has grown fatter!” He meant it as a compliment.
FOR THE PEASANTS, the main benefit opium brought was that it lessened the impositions visited on them. Up till now, they had been liable to have their meager household possessions and vital farm tools commandeered. After he became opium-rich, Mao ordered steps to improve relations with the locals. The army began to return goods it had taken, and even to help peasants work the land. Mao himself later admitted that the locals’ attitude towards the Party until spring 1944 had been to “keep an awe-struck and fearful distance as if it were deity and devil,” i.e., to try to steer well clear of the Reds. And this was seven years after the Communists had occupied Yenan. Throughout, the Communists had little contact with the locals, except when their work required it, or on token New Year visits to villages to exchange ritual greetings. Intermarriage, and social relations, were rare.
Opium wealth, however, did not improve the locals’ standard of living, which remained far below that of the occupying Communists. The lowest-grade Communist’s annual meat ration was almost five times (12 kg) the average local’s (2.5 kg). While conserving its vast hoard of cash, the regime still lost no opportunity to milk the population. In June 1943, on the grounds that Chiang was about to attack Yenan (which he did not), civilians were made to “voluntarily donate” firewood, vegetables, pigs and sheep, and what little gold they had, which was often their life savings.
A mention of the CCP’s huge reserves in Xie’s diary on 12 October 1944 is sandwiched between dire descriptions of peasants’ lives: the mortality rate was not only rising, it was vastly outstripping the birth rate, in one district by nearly 5 to 1. The reasons, Xie noted, were “inadequate clothing, food and accommodation,” foul drinking water, and “no doctors.” The regime had introduced a major cause of mortality by banning firearms. Wolves sauntered into people’s front yards, and leopards roamed freely in the hills. So people had to bring their precious livestock into their dwellings, or risk losing them. The resulting abysmal hygiene led to many diseases. Access to game as food was also strangled by the firearms ban.
Mortality was highest among immigrants, who formed a sizable part of the population. They had been moving to the Yenan area because it had spare arable land. Mao encouraged them to keep coming, but then did little for them when they got there. Herded into mountain country and left to fend for themselves, they died like flies—31 percent within two years in one area. Mao knew that the mortality rate for children was 60 percent (and nearly all who survived grew up illiterate). And yet, as a top administrator recalled, “the massive death tolls in people and livestock were never given proper attention.” When pressed to do something, in April 1944, Mao said: Let’s discuss this in the winter. Public health did become the focus of discussion in November that year, for the first time since the Communists had arrived in the area nearly a decade before; but there was no mention of spending money on it.
FOR THE LOCALS, opium also brought astronomical inflation, much worse than in Nationalist areas. “We have caused great inflation,” Xie wrote in his diary on 6 March 1944, “not because we are poor, but because we are rich.”
Mao played a key role in this. In June 1941 he had personally ordered unrestrained printing of the local Communist currency, bianbi. The original plan had had a ceiling. After he saw the budget, Mao wrote: “don’t get fixated on the idea that bianbi should be kept within 10 million yuan … don’t tie our hands.” He urged spending “generously” on administration and the army, showing a total disregard for the local economy: “If in the future [the system] collapses, so be it.” In 1944 the price of salt was 2,131 times that in 1937, cooking oil 2,250 times, cotton 6,750 times, cloth 11,250 times, and matches 25,000 times, according to Chief Secretary Xie.
This hyper-inflation did not hurt those feeding at the state trough. Russian ambassador Panyushkin, who probably had a better picture than most, said it hurt the “toilers,” i.e., the peasants, who needed cash to buy basics like cloth, salt, matches, utensils and farm tools — and medical care, which was never free for non-state employees, if they could get it at all. A hospital official in one Red area revealed: “Only when we want wheat do we admit the lao-pai-shing [man-in-the-street].”
One practice where cash was needed, and the impact of inflation can be measured, was buying a bride. In 1939 a bride cost 64 yuan. By 1942 the prices were: seven-year-old girl: 700; adolescent: 1,300; widow: 3,000. By 1944 the price for a widow was 1.5 million.
Loan-sharking flourished, with average interest rates running at 30–50 percent monthly, according to Chief Secretary
Xie, who also recorded the astronomical rate of 15–20 percent from one market day to the next — which was five days. These rates were as bad as the worst before the Communists. To raise cash, many peasants presold crops, which sometimes meant accepting as little as 5 percent of the harvest-time price.
“Reducing loan interest” was one of the Communists’ two main economic pledges at the time; the other was to lower land rent. But, whilst there were specific regulations about the latter (which actually meant little, as the peasants just had to hand over their harvest to the state instead of to landlords), the regime set no ceiling on loan interest. All it said was: “it should be left to the people themselves to fix … and the government should not fix too low an interest rate, in case lending dries up.” As the regime advanced virtually no loans, it had to find some other way to get credit floated. Some Red areas enforced low ceilings on interest rates, but in the Yenan region the regime let loose the most rapacious forces of the private sector on the most helpless of its subjects.
In March 1944 the regime stopped the runaway printing of money and started to call in bianbi. This was partly prompted by the imminent arrival of the first non-Russian outsiders for five years — an American mission, and some journalists. Hyper-inflation did not look good. But deflation was no boon to those in debt either, as Xie noted on 22 April: “No matter whether the currency goes down or up, those who suffer are always the poor … the debt they owed when prices were high now has to be paid back by selling more of their possessions. I heard that many are selling their draft animals.”
Opium-growing stopped at this point. Apart from not wanting the Americans to see, there was overproduction. In fact, the surplus had become a headache. Some hard-liners advocated dumping it on the population within Yenan, which Mao vetoed. A drug-addicted peasantry was no use to him. But some peasants had inevitably become hooked by growing the stuff. The regime ordered locals to kick the habit, with tough deadlines, promising to “assist addicts with medicine” and saying that “the poor” did not have to pay for treatment, clearly showing that one had to pay if one could remotely afford it.