If you think the capitalists have been crushed in Red China, meet Liu Nyan Tse of Shanghai

Lyn Harrington May 2 1966


If you think the capitalists have been crushed in Red China, meet Liu Nyan Tse of Shanghai

Lyn Harrington May 2 1966


If you think the capitalists have been crushed in Red China, meet Liu Nyan Tse of Shanghai

Lyn Harrington

IF THERE WAS ONE character I didn't expect to meet in Red China, it was that personification of the capitalist system, the shrewd, aggressive, millionaire industrialist. Yet my husband and I spent a long afternoon recently with such a man in Shanghai’s wealthiest suburb. Superficially at least, he seems to have been untouched by the Marxist revolution. He lives in the same opulence as ever, attends the same Protestant church, runs the same business. and all with the approval of China’s Communist regime.

Liu Nyan Tse is a "transformed capitalist,” second richest of the ninety thousand in Shanghai who live in surprising harmony within the Communist system. These “capitalists” survived the purges of the early 1950s because the Communists needed the skills of businessmen.

Our appointment with him was made through the local protocol office, and promptly at 2.30 our taxi rolled through the big gates of a walled compound containing four large brick houses. A dapper Chinese businessman waited at one entrance. “My name is Liu. N. T.." he said. As we shook hands, a pretty woman emerged wearing a cheongsam (the traditional Chinese tight-fitting dress slit to the knees), makeup and jewelry. "My wife. Toh Pien Yu." said Liu.

He showed us into the pleasant living room, and as we sat looking through French doors into a walled garden, an elderly bound-foot woman brought tea and cookies.

Liu Nyan Tse told his story fluently in unaccented English, his gestures and facial expression anything but inscrutably Oriental. “I'm not a Communist, I'm a capitalist,” he began. "I draw a million yuan a year on my investments, and as general manager of the China Wool Manufacturing Company, my salary is 525 yuan a month."

MY ARITHMETIC MAKES that an investment income of $420.000 (Canadian) plus $225 monthly — more than Mao Tse Tung's reputed salary, and three times that of Liu’s stateappointed co-manager. The investments, he went on. were divided among those members of the Liu family who had stayed in China. Some sixty-five other Chinese families are in the same happ\ position of drawing nearly half a million dollars a year.

Liu Nyan Tse runs the wool mill, one of fourteen enterprises started by his father, the late Liu Hung Seng. He is concerned chiefly with technical production and, like every office type in China, spends part of his time in the shops among the workers. Even so. he said, he gises more energy to his unpaid job as depuis director of the Shanghai Wool & Jute Association, made up of lifts companies.

“I never had it so good nor felt so well as

I do today,” he said. “I have no more worries about competition. Chinese or foreign, and sve can now compete in the world market. We produce six times as much as before liberation. of far better quality and greater variety.”

Not every millionaire would sum up Liu's situation so cheerfully. And, since our meeting, I iu himself has somewhat less than before to be cheerful about. Though his income remains large, it has been reduced by a state take-over of his plant's machinery. But he retains ownership of the building, and his investment income continues. It's unlikely that Liu will feel the pinch, for there is little a millionaire in China can do wath his money anyway. Nobody buys yachts, for conspicuous luxury is abhorrent. The moral code is puritanical, so the life of a playboy is out of the question. Nightclubs don’t exist. Speculation is forbidden. There arc no real-estate deals, no property or income taxes, no charity drives. Even tipping is taboo. Upkeep of Liu’s house, two cars, three servants, his wife’s wardrobe and pocket money for their three children still at school amount to less than five hundred dollars a month. “We don’t even pay for university tuition,” Liu marveled.

His own father spent a wad on educating his nine sons and three daughters. Old Liu Hung Seng clawed his way up from dire poverty and made a fortune by twenty-one, his son told me proudly. Then he added a match factory, enamel and cement plants, three clocks and seven textile mills.

To make sure his heirs stayed on top, the father shrewdly dispersed them among the imperialists’ best schools in England, Japan and the United States. He couldn't guess that one day his fourth son would be taking a subject he couldn't study in England; how to live with the Communists.

Under the name Johnson Liu, Nyan Tse was educated at Cambridge and the London School of Economics and returned to Shanghai in 1934. In his father's mishmash of businesses. economics meant touching the bank for a loan, cooking the books, and squeezing profit by any possible means, even to labeling their worsted fabric “Made in England.”

"I'm not kidding, business here was cutthroat competition with other Chinese and with the foreign interests. The British were openly imperialistic, the Americans covered it up, and the Japanese just moved in. We were till ruthless in exploiting workers. Our factories were a shambles, we fired anyone sick or injured.”

In those days. Liu couldn't walk through his mills without a muscleman guarding him. He would have been mobbed by workers demanding a living wage, or safety devices, or complaining about brutal bosses.

"We used whips — everybody did. We hired kids nine, ten years old because they were cheap and easily bullied. I hated going

into the match plant, not because it troubled my conscience, but they were so awful to look at — the phosphorus ate away the jawbone.”

I already knew from dozens of interviews with workers that Liu was not exaggerating. If anything, conditions were even grimmer than he described them.

Mrs. Liu got a word in. “We lived in constant fear of thugs. My husband never went out without two armed bodyguards, and our chauffeurs were trained for a quick start. My father-in-law always had a car ahead of his and another behind, plus seven armed men. Even so, our young nephew was kidnapped by a corrupt police official, and the family had to pay thirty thousand dollars to ransom him. I worried all the time about my husband and our children.”

Some of the Liu businesses collapsed during the runaway inflation of the 1940s. Liu told me that he’d sell flannel in the morning, and by afternoon the money wouldn't buy raw wool. One of his uncles went bankrupt. There were many suicides.

“After VJ Day, Chiang’s financiers talked a lot about rebuilding

continued on page 27

'Tm not a Communist, I’m a capitalist,” says Liu Nyan Tse. '1 never had it so good nor felt so well as I do today. I have no more worries about competition”

COfl till iied fro,ii page 24

Mao said “Stay”—but was it a trap?

Chinese industry through UNRRA. Wt wanted to buy machinery, but were told we'd have to wait five years. Instead, products were dumped on China, better than we could make and cheaper, even with sweated labor. California cement made us close down our Portland cement plant. And Chang started fighting the Communists again."

By April 1949 the Red army was nearing Shanghai. Suddenly, the port was empty of foreign warships — for the first time in a century. Liu was thrilled, then alarmed. If the U. S.arnted Kuomintang was fleeing, what would happen to industrialists like himself, who had supported them? He knew the peasants had risen against oppressive landlords: he fully expected workers would be merciless toward exploiting industrialists. He remembered furious rows he had had witn dockers, and his own "efficient" handling of the situation. Mrs. Liu was terrified by rumors of the communal use of women—talk that there w'ould be no marriage, that all women would be for all men. (It turned out that there was free choice in marriage and easy divorce.)

In panic, the entire Liu clan prepared to bolt. They salted money overseas and paid heavy bribes for airplane tickets. They listened tensely to radio news of the advancing Red army.

One morning, the Communists beamed a message directly at old Liu Hung Seng. “Don’t run away. Stay and help build the country. Having invested in Chinese industry, you are a national capitalist, anil yourself a victim of foreign imperialism. China needs your ability and experience."

Was it a trap? Some of the family insisted the soft line was just a preliminary to a takeover. Others recalled that persuasion was a favorite Communist technique in China.

"My father wanted to stay if there was a chance of saving his industries,” I.iu recalled. “Besides, we’d lose seven

million dollars if we all fled. Some of us stayed, though we were scared, and later another brother came baek from Hong Kong."

The Communists took Shanghai in May, and at once slapped high taxes on everything in an effort to conquer inflation. As an economist. Liu Nvan Tse was astonished at how well the taxes worked. The currency was stabilized within a year. Marshal Chen Yi called in the I.ius and other capitalists. and laid it on the line: "Abide by the laws and you’ll be protected. You can run your own businesses, but we’ll control costs, wages and profits. If you have problems, consult vour workers.”

That was a laugh. I iu thought. When did workers ever have a useful idea? As for the allocation of raw materials, a well-placed bribe would fix anything. But here was a special surprise, for his first overture about a bribe was sharply rebuffed. Dealing with the government was a novel experience — the new regime was incorruptible.

He was equally wrong about the workers. When Shanghai was bombed from Taiwan, it was the workers who kept the Liu cement and wool mills going. Liu wanted to close up. but they shamed him with their courage. "They even went into the machine shops and repaired the damaged rollers, and made the parts we couldn't import because of the Kuomintang blockade.” he said. “The working class gave us an infinitely better deal than we ever gave them."

Liu's days of fear were not over even yet. Capitalists who had collaborated with the Japanese or been middlemen for foreigners were tried and many executed, some of them Liu's friends. But even throughout a campaign sloganed “Censure the Putrid Life of the Capitalist Class.” the Liu family was spared. When it was all over, the authorities had closed the racetracks, the ever-open bars, the brothels, the gambling halls and the

Price for a share of the profits: Communist “re-education”

opium dens. Imported luxuries were gone from the stores, crime anti sex films were banned, anti gangsters and prostitutes were being channeled into honest jobs.

Mrs. Liu is still thankful. “Now our four children arc growing up in a moral atmosphere, and it's better for my husband, too. He isn't thin and

tense any more, and doesn't need sleeping pills at night. We used to have terrible quarrels when he lost thousands of yuan in gambling, and there were those other temptations.”

I gathered Liu Nyan Tse had been something of a playboy.

For some time after the revolution, Liu worked hard to preserve his inde-

pendence; yet his business kept slipping. It was hard to compete with state-run companies. Liu's workers hadn't the incentive to avoid waste, to improvise better work methods or to work overtime.

By 1953 the Lius had had enough. “We were at the end of our tether,” Liu remembered. “Besides, we were

beginning to be proud of China. The Korean armistice proved the U. S. wasn’t invincible. The new Five Year Plan impressed us economists with its practical realism. Then my father was called to Peking for a talk with Chairman Mao.”

Liu Hung Seng returned converted. “Chairman Mao talked frankly — you know that joking-serious way he has. He said the state wouldn’t seize our properties, that we were destroying them ourselves. He advised us to go into joint state-private ownership. My, he is a magnificent leader!”

Obviously Heaven had transferred its “mandate to rule” to the Communists, and the Chinese are primarily realists.

“I was one of the first to apply for state-private ownership,” Liu went on. “Not that we were more patriotic than others, only more desperate. It certainly wasn’t any take-over. I had endless interviews with party leaders. ’Why do you want this change? Do you need it for your own good? Will it benefit the country?’ Questions, questions ... it wasn’t easy for a stubborn person like me. They made me write out everything, then rewrite it until 1 knew exactly where I stood.”

Liu hadn’t known where he stood financially. After complete reassessment, the state auditors informed the Lius they were a million dollars richer than they had reported.

“You see, we always kept the books confused to evade taxes,” Liu confessed.

So in 1954. Liu sold shares to the state to the value of his invested capital, receiving in return five percent annually even if the enterprises lost money. In addition, he got a capitalist share of profits, which still goes on.

The catch was, he had to be “remolded.” He didn’t mind re-education or his factory being transformed, but he struggled as hard as any sinner ever did against personal reformation. "My husband is very self-willed,” Mrs. Liu explained. “It took a lot to change him."

Remolding meant frequent meetings with party members and other capitalists. Liu couldn’t sit silent with mental reservations but must denounce his past ways. Self-accusation is an ancient Chinese custom, and Liu’s conversion seems genuine. If he ever feels like backsliding, he can think about one of his best friends w'ho had fled to Hong Kong and in the roughand-tumble of capitalistic society had lost so heavily in his investments that he committed suicide.

And his wife will steady him. The revolution was pure gain to Toh Pien Yu, as to all Chinese women. She has been elected deputy to the Congress in Peking, and Nyan Tse appointed a member of the Political Consultative Conference. He enjoys the new respect as well as personal freedom from bodyguards, and can even risk the occasional joke about the old days with veteran workers.

“Joint state-private management is quite a drastic change,” he admits. “It took me a long time to accept the whole idea. I’m glad, of course, to have my brain washed clean of the old attitudes, though money-making’s in my blood. I still catch myself thinking how I'd make a killing, if only I could speculate.” ★