At the beginning of the 21st century, an economic miracle happened in China. An economic boom so great that made capitalist countries started to reconsider socialism. It was the rising of a village named Huaxi, located in Jiangsu Province. 

Huaxi started off as a poor village before Deng Xiaoping’s economic reform. It was a man named Wu Renbao that transformed the village into the Chinese Communist Party’s “model socialist village.”

According to The Guardian, Wu Renbao, then former village chief, was passionate about collectivism. During the Cultural Revolution, Wu Renbao was publicly humiliated for intending to set up a factory in the village. A few years later, when Deng Xiaoping called on the government to give back land to peasants, Wu was again criticized for keeping property under collective ownership.

Despite the Party’s brutal persecution, Wu Renbao didn’t lose faith in the communist regime. Being able to keep up with Deng Xiaoping’s policy, in 1992, Wu foresaw an increase in the price of raw materials. He borrowed money from the bank and started hoarding building materials. Wu’s very first gamble was a success when the price skyrocketed as expected. Since then, steel has become the pillar industry in the village, along with the tourism and textile industry.

Under the ruling of the Huaxi Village Communist Party Committee, Huaxi Group was set up with over 100 subsidiaries investing in various sectors. Named “China’s no. 1 village,” lives here could be described in one of the village’s famous mottos, “Every household lives in a villa, with a per capita savings of millions, and no money for education and medical care.” People here also have access to numerous free social welfare, cooking oil and rice, and many other benefits.

But the golden days didn’t last forever. Over the past five years, Huaxi Group owed nearly 5.7 billion dollars (40 billion yuan) in debt, bringing the village to bankruptcy. According to the public financial report of Huaxi Group, as of the third quarter of 2018, the asset-liability ratio was 67.4%. While the latest performance report showed the parent company suffered the first-ever loss of between 390 million yuan to 435 million yuan in 2020. 

The most affected by this downfall are obviously its shareholders, which are Huaxi villagers. In 2013, villagers were made to check into the village’s five-star hotel to “boost domestic demand.” Earlier this year, mainland media reported the villagers’ dividends had dropped from 30% to just 0.5%. Out of fear, villagers lined up in the rain to withdraw their principal sums. The dream of a socialist economy seems to have ended up in vain. [footage]

Along with the downfall of Huaxi village, many ugly untold stories about the village’s cadres and the political system started to resurface.

10:42 According to the reported data, Wu Renbao’s four sons had 90.7% of the total amount of funds in Huaxi Village.

10:50 and there is a clear gap between the incomes of the villagers, village leaders, cadres, and villagers’ families, which can range from tens of thousands to hundreds of thousands, or even more.

Villagers’ silent struggle under Huaxi utopia

Due to its soaring success, Huaxi village became the CCP’s favorite propaganda example for the regime’s get-rich-quick economy model. But contrary to all the lavishes broadcasted on the media, villagers in Huaxi told a different story.

One of the most controversial topics surrounding Huaxi village is the villagers’ wealth. Becoming a Huaxi villager was once a dream for many outsiders because the privileges were exclusive to villagers only.

0:50 Sister, I heard you say that he sees a doctor here for free, right? 

0:53 Yes! 

0:54 What other benefits are there? 

0:58 You don’t need to spend money to see a doctor, and don’t need to pay for your children to go to school. No cost to eat. 

In 2005, The Guardian reported that the annual salary of residents here was around $1,500. What was deemed unbelievable was a $10,000 bonus and $25,000 dividends. On the surface, the numbers were true. It’s just that the villagers are not allowed to possess their assets in cash. Sun Hai Yan, a member of the village government, told The Guardian, “Our assets belong to the commune, not to the individual. We have a local saying that your dividend lasts only as long as you stay in the village and the factories keep running.” Indeed, 80% of the yearly bonus and 95% of the dividends must be contributed to the commune.

So, how did the insiders feel about that? In 2007, a report by Southern Weekly newspaper revealed that life in Huaxi was not at all what people imagined. The newspaper mentioned a villager named Gong Qingfeng as an example. Gong was a workshop manager at Huaxi Woolen Factory. His wife worked as an accountant for a company in the village. Being considered to be of an upper-middle class family, their incomes came from two main sources. 

The first one was their salaries and bonus, which were based on the village’s rule: “Socialist distribution according to labor, wages and bonuses are paid more for more work.” As for monthly wages, the couple received roughly 3,000 yuan per month. As for the bonus part, in 2010, Gong Qingfeng’s annual bonus income was 480,000 yuan. But there is a rule in the village, which is called “more accumulation, less distribution; less cash, more shares.” Under such a rule, Gong could only receive 20% of bonus income in cash, which was less than 100,000 yuan. The remaining 80% must remain as shares.

According to Southern Weekly, there were also two specific rules for how bonuses were distributed: “two-eight open” and “1333.” The “two-eight open” scheme ruled out that when each village-run enterprise in Huaxi accumulated more profit than their set targets, then 20% of the bonus must be reinvested in the enterprise for reproduction. The leftover 80% would be used for bonus distribution. This was when the “1333” rule took effect. Accordingly, the factory manager would receive 10% of the bonus, while the factory management team and employees would receive 30% each. The remaining 30% to the enterprise as public accumulation.

The second source of income is called “capital dividends in the primary stage of socialism.” At the time of the report, the Gong family owned more than 2 million yuan of Huaxi Village shares, but they were allowed to receive only 20% of the dividend in cash. Now comes the most controversial part. In 2008, the Gong family moved into a three-story European-style villa. Gong told Southern Weekly that the villa was over 500 square meters and worth more than 2 million yuan. However, Gong was made to pay a so-called “rental fee” of over 200,000 yuan per year for 10 years. This amount would be directly deducted from his 20% dividend. This means that the family would only receive 10% of the dividend at the end of the year. To sum up the villa hype, people here only have the right to use them, not the ownership. Hence, these villas cannot be traded on the market.

According to Taiwanese media TNL, with such a small amount of cash, if villagers want to buy something of high value, they must file for cash withdrawal. For example, a villager from Huaxi told the news outlet that when his parents applied to the village committee for 500,000 yuan to buy a Mercedes-Benz, the committee only paid them 100,000 yuan. And not just that, the parents got criticized for not paying attention to practical values and being wasteful. So his parents ended up buying a Kia car.

On top of that, the villagers have to work nonstop under strict supervision from the village authorities. Gong Qingfeng’s family has to work eight hours a day for the village-run enterprises almost all year round, with only two days off during the Spring Festival. Another villager also echoed Gong’s experience. Liao Richun from Huaxi told the Chinese newspaper Legal Weekly that Huaxi villagers had to work 8 days per week. 

As a result, many migrant workers could not bear the long working hours. A man named Cao Cheng from Huaxi Third Village said he came to Huaxi central village to work. But due to the constraints of working hours, he quit the job to drive black taxi in Huaxi village. A migrant worker from Henan Province also said that she could not stand it. She said, “The factory said I worked 9 hours a day, but in reality it was sometimes as long as 16 hours, with non-stop overtime, so I quit my job after two years.” Moreover, migrant workers here in Huaxi also have to face many other setbacks. 

In 2007, mainland freelance writer Wen Kejian, revealed that Huaxi Village is more like an artificial attraction, with the village being walled up, the streets cold and empty, and the exits from the village are heavily guarded. The Daily Mail added that journalists are not allowed to enter the village without the authorities’ permission. There are thousands of residents in Huaxi Village, but you are unlikely to run into them. There are no clubs, cafes, or karaoke lounges in the village, while restaurants close very early. Business Insider wrote that the village was designed for people to go to work and go straight home. 

11:27 As early as 2007, a mainland writer wrote an article, “The Secret of the World’s First Village,”

11:33 revealing this “Huaxi Model”, which is advertised as “Mao Zedong Thought” as the ideological guidance and established under the banner of “public ownership”, 

11:41 is actually a “scam” created by the combination of individual totalitarianism, family control and hereditary system.

The writer also stated that the decline of Huaxi Village has additional significance. It is the decline of socialism and collectivism. The existence of Huaxi Village was supposed to be a consolation for those old souls who still have illusions about “Capitalism with Chinese characteristics.” As for now, when this consolation symbol is no longer reliable, people have to make a choice for the future.

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