In January 2020, when the World Health Organization had not yet declared the status of a Pandemic for the evolution of the COVID-19 threat, we began to work on this article to analyze and characterize the Chinese economic structure, its military, geopolitical consequences and its evolution as an ascending capitalist power with an expansionist vocation. The article was finished when the quarantine began in Wuhan, the Chinese city where the first cases of the epidemic apparently appeared. Once the virus and the measures to deal with it became global, a new world scenario begins to be drawn that has not yet been designed. The crisis of the capitalist system that had been developing since before the pandemic combined with it, opening a crisis without comparative points in the last century or century and a half. The impact of the current crisis on where the countries were and their dynamics are closely related to the role that these actors will play. And China is one of the most important among them. In order to have a basis for the analysis of what is coming in relation to the crisis of capitalism, we decided to publish the article as it was written between the end of January and the beginning of February of this year.
By Carlos Carcione
In the 30 years that have passed since the consummation of its capitalist restoration, China has completed a journey of development that took other world powers over a century to cover. It went through different stages: from “factory of the world” to taking up the challenge of history´s greatest investment in global infrastructure with the One Belt, One Road (OBOR) project and the Made in China 2025 plan that aims to achieve autonomy in design, engineering and production of parts and components to complete its industrial chain. From the production of low-quality, low-priced goods to being at the forefront of 5G technology and threatening to challenge US dominance in Artificial Intelligence (AI). From receiving massive foreign investments to becoming an exporter of capital. From relating to the world of global finance, more or less illegally, through the territories of Hong Kong and Macao when they were still colonies, to being a leading actor in that field in their own right. In this period, strongly stimulated by and intertwined with the CCP leadership, a dynamic local bourgeoisie was formed. While supported by its industrial development and making it possible, a new and young working class was formed that exceeds 300 million proletarians, replacing the one that existed during the stage of counterrevolutionary workers´ state. This singular process, which is not exempt from multiple contradictions and critical points, shows the first opportunity in history in which a semi-colony becomes a world power, having gone through a non-capitalist experience along the way.
In the last two decades, the rest of the world observed the phenomenon through different lenses: first calling it a “miracle,” due to its sustained economic growth; then, in the face of the 2008 crisis, with the expectation that it would become the locomotive that would pull the world economy up from one of the most important crises on record. More recently, the “trade War” with the United States, but above all the nationalist drive provided by the leadership of Xi Jinpin, put China´s technological, scientific and military development under scrutiny and the strategic ambitions of its ruling caste began to be perceived, studied and debated.
For ten years, China has been the second world economy, measured by its GDP, in spite of the reduction of its growth after 2008, and the world´s leading commercial power. From 1980 to 2018, though it is still far from the average of the most developed countries, it multiplied its per capita GDP 50 times.
The sectors of the international left that disseminate, propagate and maintain the mistaken idea that what is developing in China is “market socialism” or socialism with its own specificities are very small. But among those who recognize capitalist restoration, there are those who still see a turn-around possible; those who propose it as a model for underdeveloped countries, those who define the country as a model dependent on the dominant imperialism and point out that its function is to maintain the current world order in their region and collaborate in maintaining this order at a global level. There are also those that characterize it as a new imperialist country, more or less mature or under construction, with contradictions and weaknesses.
This is not an academic debate. The definition of China is fundamental for revolutionaries, especially in the world situation of economic depression, of “trade war” and strong geopolitical and military tensions between the United States and the Asian country and a revitalized global wave of revolts and rebellions. Defining the current nature of China is functional to and necessary for the elaboration revolutionary politics.
Capitalist Restoration and Bourgeois Counterrevolution
The capitalist restoration of the People´s Republic of China did not come at once nor was it surprising. Unlike what happened with the former USSR and the countries of Eastern Europe, this process was controlled from the beginning to the end by sectors of the Communist Party and State bureaucracy. But the metamorphosis was neither peaceful nor linear, it took place in an acute class struggle process, and in the context of the shock wave of the 1970s crisis of world capitalism. Revolutionary movements and counterrevolutionary crack downs were necessary to complete a journey that was probably not in the original plans of those who initiated it.
What started with the reforms of the 1980s, seems to have been more intended to respond to the regime´s internal crisis caused by the tremors of the Cultural Revolution and its brutal crushing and the world economic crisis, than to take up a conscious plan of capitalist restoration. The first measures were taken fundamentally in the countryside to stimulate agricultural production, along with the first design of new special economic zones opened to multinationals. Throughout the 1980s, these first reforms were expanded.
But it was in the 1990s when this trend accelerated and consolidated in all areas and sectors, after the crushing of the revolutionary uprising of the Tienanmen in 1989. The process of privatization and closure of state companies unfolded with force: from 1995 to 2005, for example, the number of state companies fell from 118,000 to 50,000. While the number of workers employed by the state went from 145 million to 75 million, private participation multiplied, reaching over 50% of GDP today.
While the non-enforcement of the law that prevented internal migration from the countryside culminated the process of training a working class of “illegal internal migrants” without labor, salary or basic benefits such as health, education and social welfare, the state and companies also started a process of privatization.
In the countryside, peasants were authorized to sell their production of what came from their private plots to the market, to expand the expropriation from peasant communities of large areas of land near cities to turn them over to massive construction, urbanization and the creation of dozens of new cities, some of which remain uninhabited. In a process of valuation that has not concluded and that, despite being threatened by bubbles such as real estate, it cannot stop and is preparing to continue advancing with the privatization of arable land.
In this process, a new bourgeois class was formed, dominated by the so-called “red princes,” sons of the Party hierarchs, associated with Chinese international capital in Hong Kong and Taiwan. Tightly controlled by high levels of government, as was western corporate capital invested in the country.
There are still many forms of ownership in China. In addition to the increasingly threatened communal ownership of land, there are strategic sectors, such as banking, communications and energy that remain, in part, in the hands of the state, though progress is being made in the sale of share packages of some of them. There is also a sector of mixed economy or of associations between international capitals and local capitals, and others backed by both the national state and local governments, with limits that are not very clear. But, though a process of planning decentralization has begun, giving space to local governments to develop their own plans, control by the national state is strict. An example of this control can be seen in the recent coronavirus epidemic, for example: the state forces a selection of large investors, such as insurance companies, to intervene in stock markets that collapsed when the severity of the epidemic was known, in order to sustain the price of the most damaged stocks.
The gigantic changes that have taken place in such a short period of time explain the diversity of the forms of property and social relations that still survive, but the essential thing is that the bourgeois counter-revolution has been completed. The Law of Value operates at the national level, the extraction of surplus value from the exploitation or overexploitation of wage labor, and the formation of social classes essential for the existence of capitalism with imperialist characteristics has taken place. The important thing, in any case, is not the photograph that this data can record today, but the sustained and prolonged trend that they show. This is what determines a characterization.
Economic, Military and Geopolitical Expansion
In capitalism in its imperialist phase, that is to say the historical period in which industrial and financial capital merge, the dispute between countries develops and intensifies in a total way in the world market. It is a global system, independent of the different degrees of insertion and national forms that may exist in it. The entire planet has become a field for the permanent and brutal extraction of natural resources with the consequential depredation and suffocation of the environment, the global overexploitation of the labor force and the worldwide circulation of goods and capital. It is in this context that the degree and relationship of China’s aggressive economic expansionism, its military policy and its inalienable geopolitical interests must be analyzed. Just as the struggle between classes and class sectors in each country is the local expression of world phenomena, the role and place of each country in the system must be measured closely related to the world capitalist market.
The OBOR project is perhaps the clearest expression of the point where Chinese capitalist development and its contradictions in the economic field are. It is a huge infrastructure project, with the construction of land and sea routs, railways, ports, gas and oil pipelines, infrastructure for the use of the Internet of Things and even a new interoceanic canal. This project already covers more than 80 countries on the five continents. And it is the basis for conveying Chinese international trade and its productive overcapacity.
This project is also associated with a series of purchases and mergers by Chinese companies, especially towards European companies, but not only with high technology development, in which they not only seek control or high shareholding, but also place their own personnel in leadership and management, and improve their technological progress in the field test. The recent agreement with London, despite protests from the United States, to install Chinese-made 5G technology, as it has already done in many other important European countries, is also part of this expansionist course. Like the purchase of land in large quantities for mining or agricultural exploitation, especially in Africa, loans to countries from which China needs a supply of raw materials, or to facilitate the placement of its production of merchandise.
The volume of production achieved, the monumental world trade expansion, and the still weak aggregate demand in the country, is a sample of the accumulating contradictions. With wages that have increased since the beginning of the capitalist experience, but which continue to be comparatively low and do not stimulate domestic consumption. With the plan to direct a part of production to its gigantic national market not showing positive results, China is obliged to continue and maintain its global commercial expansion.
The change that has taken place at the level of the country’s economic structure is expressed sharply in the military field. A change of paradigm in the organization of its armed forces is taking place full speed. Firstly: From being a land army, associated with the Maoist vision of defense of the country, the main articulating force against any possibility of foreign intervention, a new structure of articulation of these forces has been given a green light, leaving the central place to the Navy, with the ambition of having a presence in all the globe´s seas to guarantee the transit of its trade and its expansionist ambition. First of all, in the so-called China Sea. A powerful military-industrial complex has also been developed that, in addition to dedicating enormous resources and efforts to scientific technological research, placed China as the world’s fifth largest supplier of weapons. These, which are already the second largest armed forces in the world from a quantitative point of view, have the weakness that their effectiveness has not been proven in significant actions.
From the point of view of the geopolitical dispute, the country has priorities that it cannot ignore. In the first place, complete national unity with the complete incorporation of Hong Kong and Macao, colonial territories returned to the country´s orbit in the late 1990s but which maintain a special status. At the same time, the situation in Taiwan, which is, in fact, a US protectorate, is pending resolution, making this task a permanent source of tension. Secondly, the need to consolidate its dominion over the so-called China Sea in all its extension.
One of Xi Jinping’s first strategic decisions was to seize control of the southern part of that sea, declaring that it is an inland sea under Chinese authority. Taking advantage of vacillating US policies with Obama and Trump’s first years, China has managed to use all its advantages over the other coastal states to conquer a prevalence that is supported by its military and economic superiority and its political influence. It built seven artificial islands at record speed that currently house important military installations. The militarization of the South China Sea is a fact, and it is to China´s benefit. Certainly, Beijing cannot deny the passage of the US 7th fleet or block international transit, but Washington cannot roll back Chinese presence without sparking an acute conflict either.
China has gone further. The government has vindicated historical possessions further north, responding very actively militarily to Japan’s control over the small Senkaku archipelago, thereby conflicting with Japan and challenging the United States here as well.
However, while concentrating on East Asia as a priority, China has not abandoned seeking to influence the rest of the world. The OBOR “silk roads” have, in addition to their clearly economic objective, an important component of geopolitical dispute. For this reason, and although it is only just beginning and it cannot be certain if it will fully unfold, the planned investment of close to a trillion dollars illustrates its determination to not abandon the dispute with other powers in the rest of the continents and begins to be accompanied by the installation of military bases in other countries, at first with supposedly scientific objectives.
The Emergence of Capitalism With an Imperialist Vocation in a Tumultuous World
In order to understand both the emergence of China as a world power and its dynamics, that is, the formation with imperialist characteristics of its capitalism and expansionist vocation, it is essential to explain how its internal transformation was possible and at the same time analyze the international context in which it occurred.
Studying the origin of English capitalism as a classical formation of the system, Marx discovered that primitive accumulation is essential in the formation of capitalism. This primitive accumulation is formed during a long process that leads to changes in ownership and control over the land on the one hand and the violent expulsion of the peasants who maintained a relation of servitude with those lands, to the cities, to make them the base of a new free working class able to sell its labor power. China partially completed this process, developing one of its aspects in a dizzying way and making the other more gradual without yet completing it. The non-enforcement of the legislation that prevented internal migration in the country released a force of almost 300 million peasants who moved to the cities and became the base of their new working class. Contrary to what happened with the proletariat formed after the revolution, this is a mass of super-exploited workers, with very low wages and without any of the rights that the previous one had. Taking advantage of their status as “illegal” or “without papers,” they do not enjoy the labor rights or the advantages of free education and health care, retirement and housing that the bureaucratic state or state companies guaranteed. A first generation working class that was improving its living conditions but starting from a miserable situation that recalls the realities described by Frederick Engels in 1845 when he wrote The Situation of the Working Class in England.
On the other hand, the law of uneven and combined historical development of capitalism, discovered by Marx and completed by Trotsky, was verified in this process. That explains that backward countries are not obliged to repeat the evolution of the advanced countries step by step and, on the contrary, can “benefit” from their backwardness.
China was able to take advantage of the colonial situation of Hong Kong, Macao and Taiwan protectorate. Through these, it maintained its connection with the world, even during Mao’s period. China increasingly obtained foreign exchange from Hong Kong and was able to sustain more or less illegal trade from Macao. If under Mao a third of all currency that China obtained came from its relationship with Hong Kong, after the restoration process began in the 1980s, these increased significantly, allowing the process of modernization of its economy to begin.
Access to the world market through these colonies was completed by a close relationship with the Taiwan protectorate, from which it not only received investments or capital for association with the nascent continental bourgeoisie, but was also essential for the transfer of technology, mainly in the semiconductor industry. These investors were also very important for the development in China of provinces like Guangdong. And just as China currently has more than 250,000 citizens studying science and cutting-edge technology in the United States, most of them at Silicon Valley campuses, the engine of technological development in that country, so it took advantage of the long experience of Hong Kong human resources, which mainly provided it with business management professionals.
If these internal conditions facilitated rapid Chinese development, the international conditions in which this process advanced are no less important. The world economic crisis of the mid-1970s, which retrospectively and, due to its global impact, was a prelude to the 2008 crisis and the US military defeat in Vietnam caused a relative withdrawal of US imperialism, leading to a policy of economic penetration. Meanwhile, the collapse of the Soviet bloc focused imperial eyes on that long disputed space. On the other hand, the 2008 crisis and the permanence of its consequences until today confirms the decline of the United States, which does not mean in the least that it has lost its relative superiority and extreme aggressiveness in its senile stage.
This international context that helped China achieve its status as a global power is also an essential factor in the threats that the Asian country faces. The growing threat of a new economic crash, the sharp global polarization caused by the non-resolution of the depression that developed over a decade ago, stimulate a new wave of revolutions, revolts and social upheavals that shape the tumultuous world in which China is obliged to prove to be worthy of the place it aspires to occupy. Especially when the threat comes from Hong Kong itself, which is an important part of this worldwide wave of sharpening class struggle.
Regardless of the degree of maturity that China’s capitalist development has reached, it cannot stop its aggressive imperialist expansionism at the risk of opening an internal crisis that will bring its powerful and young working class onto the scene. A class whose second generation aspires to live much better than its mothers and fathers and will undoubtedly move to achieve this.
For all or any of these reasons, China will not be an element of stabilization of a system in crisis; on the contrary, it will contribute to making the current world more uncertain and tumultuous. A world with more opportunities for the virus of revolution.
Karl Marx, Leon Trotsky, Au Loong Yu, Pierre roussete, Ho-fung Hung, Orlando Caputo, Michael T. Clark, Martine Boulard, Héctor Palacios, Claudio Katz, Michael Roberts