the wanfeng model and its demise

Today, episode 10 from The Transformation of Shenzhen Villages (沧海桑田深圳村庄三十年): “Lonely Wanfeng”.

In 1957 at the height of collectivization, Wanjialang (万家郎) was changed to Wanfeng Village. Located on the eastern banks of the Pearl River, Wanjialang had been settled for over 600 years, and was part of the larger Shajing xiang or village federation. As narrated in the documentary, the rise of Wanfeng Village was inseparable from Village Secretary, Pan Qiang’en (潘强恩), who in 1981 made a pre-emptive decision to raze village agricultural land and build factories despite the fact that Wanfeng was located in New Bao’an District and thus, technically, still a commune.

Pan Qiang’en based the design of Wanfeng’s industrial zone on the Shekou Industrial Zone, which had been designated only three years previously. Also, like Yuan Geng at China Merchants, Pan Qiang’en mobilized Hong Kong capital for initial investments. Also, like Yuan Geng, who deployed official networks to raise investment capital, Pan Qiang’en took advantage of opportunities created through his position as a local cadre. Indeed, it was in his role as a Wanfeng cadre that he would have had opportunities to visit Shekou and meet with Yuan Geng.

The critical difference between Wanfeng and Shekou, of course, was and remains, status within the state apparatus. China Merchants developed Shekou as a Ministry work unit with a national ranking. This meant that China Merchants developed Shekou as a direct expression of national policy, and Yuan Geng could hire and deploy an educated workforce, as well as negotiate legally binding contracts. In contrast, Wanfeng was a village with traditional land rights, but limited appeal to urban educated intellectuals and limited knowledge of international business practices. Nevertheless, Wanfeng Village boomed, with 145 companies opening factories in village industrial parks and when the documentary was made, village fixed assets were estimated to be over 20 yi yuan or 316.5 million US dollars (based on today’s exchange rate), earning Wanfeng the nickname, “the first village in the South (南国第一村)”.

In 1985, Pan Qiang’en spearheaded the transformation of Wanfeng from a hybrid village-brigade into a stock-holding corporation in which stock and property rights were determined by one’s status as both a villager and a worker in the collective. Pan Qiang’en did not call his experiment a stock holding company, instead, he referred to it as “socialist collective holding system (社会主义公有制)”.

According to the blog 中国法制 (China’s Legal System), the Wanfeng Model had three distinguishing characteristics:

  1. The means of production belong to all villagers. The model has five kinds of stock options — state holdings, enterprise holdings, legal person holdings, workers’ holdings, and personal holdings. The first three stock options are collective and the final two are private;
  2. Government and enterprise are completely separate, specifically, the enterprise is completely responsible for economic losses, and thus enjoys all rights to profit. Government administration is based on a different budget and thus the government has no right to interfere with economic decisions made by the enterprise;
  3. Villagers stock holdings were based on three considerations: their salary as a worker in the collective; their status as an owner of collective property; and, their rights to social welfare.

In 1990, the Chinese Academy of Social Sciences held a conference on the Wanfeng Model (万丰模式) and in 1992, the president of the Academy came to Wanfeng, declaring that the Village had out urbanized urban areas. Wanfeng’s national influence reached its highest point in 1993, when the People’s Daily published,”The Wanfeng Model: On the Farmer and Social Philosopher Pan Qiang’en and His Social Praxis (万封模式--记农民社科理论家潘强恩和他的实践). Subsequently, village leaders from throughout the country came to learn from Wanfeng.

However, in 2001, when Pan Qiang’en decided to stop paying dividends in order to finance the village’s expanding enterprises, opposition to his leadership became increasingly widespread. By 2006, he was openly opposed as a “village tyrant (村霸)” and he stepped down from power in favor of his son. The documentary ends here, speculating on the relationship between individual effort and historic transformation.

However, an important footnote follows. Also in 2006, Shenzhen nationalized all land within the city borders, taking away villagers’ absolute right to the land. Henceforth, the city and district governments also shared in the profits generated by village land sales. This would have critical consequences for Wanfeng, where Pan Qiang’en’s son and government cronies sold village lands without either notifying villagers or distributing dividends, generating huge profits for those involved in the sales. Consequently, in 2012, Wanfeng Village “learned from Wukan” and brought down the Pan Qiang’en’s son, and elected a new village head to investigate how much of “collective holdings” had been expropriated by Pan Qiang’en, his immediate family, and corrupt officials.

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