Chairman Mao goes to Anyuan is one of the most famous paintings from the Cultural Revolution era. It shows a very young Mao returning to his home province of Hunan in 1921 to organise a miners’ strike: at the time one of the newly established Communist Party’s first successful labour protests.
His target was the Pinxiang Mining Company, then the country’s largest Chinese-owned industrial conglomerate. It had grown rich thanks to the area’s deep seam of high quality coking coal; its adoption of advanced German technology; and its geographical proximity to the Yangtze River Delta. However, by the early 1920s a calamitous drop in demand (and prices) following the end of the First World War meant that many miners were not getting paid.
Nearly one century on, China finds itself in a similar situation. Supply far exceeds demand and miners once again are going hungry. For instance, one of the country’s biggest mining companies Longmay has been in serious difficulty (see WiC319). That has even led to mass protests by Longmay’s workers in northern Heilongjiang province earlier this year.
While media outlets devoted extensive coverage to the unrest, the Chinese press has mostly focused on the economic consequences of Xi Jinping’s drive to reduce excess capacity in the coal sector.
One exception has been Hunan-based Xiaoxiang Morning Herald, which has taken a different editorial line, offering a more sympathetic view of a coal baron (one of China’s more hated categories of businessmen). It offered its readers a rather contrarian riches-to-rags tale of mine owner, Zhou Tieqiu, whose hard work and ambition have led to his ruin.
The local government forcibly shut down Zhou’s mine in October 2015 leaving him with debts of almost Rmb100 million ($15 million). So far so very familiar since boom and bust is an everyday occurrence the world over. But what makes Zhou’s downfall so interesting is the many ironies it throws up, and the humanity with which the story is told in a country where journalists tend to prefer a torrent of facts.
Zhou’s involvement with the mining industry began when his family was targeted during the Cultural Revolution. After his father was declared a rightist, Zhou and his eight siblings were no longer allowed to attend school. Instead, the young Zhou was sent down the very same mines in Hunan that Mao and his fellow revolutionaries had targeted decades earlier (the Communists established a school near the Pinxiang colliery to educate the then illiterate miners about revolution).
Zhou got his job with the help of a godfather who said he would be joining an honourable profession, enabling him to become a “state worker” rather than a peasant. As he left for his first day at work he recalls his father told him, “Son you must bring glory to the family.”
Zhou tells the Xiaoxiang Morning Herald that he was soon regarded by Party cadres as one of the mine’s model workers. In 1979, this finally paid off when he was sent to the Pinxiang Coal Mine School – ironically an institution not too far from where Mao’s colleagues set up their left wing school.
He retrained and joined an ambulance brigade, spending the next five years as captain of the squad. During this time, he experienced just how little safety standards had improved since the 1920s.
In early Communist China one in five miners died before reaching retirement age. In one instance Zhou’s own team was sent to help a dozen trapped miners, but none survived. He understood what it was to make money by “licking blood from the knife’s edge”, as he told the paper.
Then in the late 1990s his life changed again, radically diverging from any template envisaged by Chairman Mao. By this time he was a vice president at Wangjiashan Mine Labour Service Corp and for the first time since 1949 private capital was being welcomed in the coal industry.
Using his savings Zhou decided to rent a mine. He faced fierce opposition from his father who believed in Mao’s “iron rice bowl” culture of cradle-to-grave employment by state-owned firms.
But the next decade showed that Zhou was in the right place at the right time. Coal prices rose from Rmb105 per tonne in 2000 to Rmb1,050 per tonne in 2008. Zhou’s wealth grew exponentially.
He spent Rmb3 million building a European-style villa with a red roof. He also relates how a mine-owning friend gave 10 of his favourite workers a free Hummer vehicle in thanks for their hard work.
The most recent decade has been far less kind to the private sector bosses of China’s mines. Zhou’s luck started to change in 2010 when he invested all of his savings to buy the Liejiaqiao mine in nearby Xiangtan for roughly Rmb80 million.
In retrospect he wishes he had followed a friend’s advice to move into real estate. That same friend later made a Rmb95 million profit from a property venture and decided to retire on the proceeds.
Zhou, meanwhile, borrowed aggressively to upgrade his Liejiaqiao mine. At one point, two separate companies offered Rmb135 million to buy the mine. This persuaded him it still had value even though coal prices had by 2013 fallen 40% to Rmb600 per tonne.
It proved to be a very expensive decision. Today all he has to show for the mine is Rmb100 million of debt.
Xiaoxiang Morning Herald’s reporter recently visited the now defunct mine with Zhou. The weeds are two-metres tall and Zhou spends the visit crying, while propped up against one of the iron railings.
Liejiaqiao was closed by the Hunan government as part of its ‘consolidation’ of the coal industry (in which sub-scale and less technologically-advanced mines were either absorbed at discount prices by bigger state mining firms or simply shuttered like Zhou’s).
“I’ve spent my whole life in the coal business” he says. “I can’t resign myself to my fate.” Now 60 years-old, he has no idea how to rebuild his life. He describes himself as a “wolf who has grown old and has crows riding on his back”.
His family has moved abroad, and his home has been repossessed. Even his wife’s anniversary jade has gone to his creditors. The friend who purchased the afore-mentioned Hummers has also seen his mine closed down.
The reporter says Zhou suffers from insomnia and relies on sleeping pills to get through the night. Earlier this year, he tried to commit suicide. He was apparently saved after one of his local creditors snatched the pesticide out of his hands.
His sobering tale is a reminder of the vicissitudes of being an entrepreneur in China – particularly when you are on the wrong side of a government policy (in this case the consolidation of an overcapacity sector like coal or steel).
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