The pre-eminent position of the USA as unrivalled global super-power is now threatened by the massive economic growth of China. All the strutting and fulminations of Trump have to be understood in this context. The US has gradually been losing its capacity to pressurise and bully smaller nations at the same time as it has been losing its dominant economic position. The conflict between the USA and North Korea is a symptom of the changing balance of forces in the region. It reflects the declining capacity of the US to dominate.
Traditional “spheres of influence” are being challenged. The rise of China mirrors the long -term decline of the USA. On present trends, China will eventually supersede the USA as the world’s dominant economic power.
North Korea relies on China for 90% of its international trade. The Chinese bureaucracy does not want a nuclear war, but it also does not intend to allow its neighbour to starve, because that would create massive unrest and instability, which in turn would pose a danger to the Chinese bureaucracy. North Korea also acts as an essential buffer between China and US forces.
The Chinese military is modernising itself. China is staking out claims to more territorial waters with its construction of islands in the South China Sea, known to have significant oil reserves. Will China have sufficient economic strength to match US military expenditure? That is a big question posed even more directly in the Trump era.
The USA has been unrivalled as the world’s “top dog” since the middle of the 20th Century. One way or another, ultimately it will not let go of its position without war.
In stark contrast to other parts of the world economy, Chinese growth rates since the world financial crisis of 2008 have been phenomenal, even though they have recently started to decline. According to the World Bank, Chinese industrial production now exceeds the USA’s: it grew from 60% of the USA’s in 2007 to 121% by 2011. Chinese output continued to grow whilst that of the USA, Europe and Japan floundered at pre-2008 levels.
How did this happen? The Chinese economy is very different from the major capitalist economies of the rest of the world. Dominant sections of the economy are owned and controlled by the state, including all major banks. This has facilitated the planning, finance and co-ordination of massive infrastructure projects to avert the threat of falling growth rates, which might otherwise have been the consequence of loss of exports due to the weaknesses of the world economy. The last five-year plan saw 100 million people supplied with low-cost housing by the state.
This is not the paltry “pump priming” that some Western governments have resorted to when their economies stagnated. Every year public investment in China is around 16% of GDP, compared to levels of 3-4% in the USA and the UK. However, some have begun to ask whether the Chinese economy is capable of sustaining the astronomical levels of debt incurred by these actions, including local debts beyond the control of the central authorities.
From the early 1980s, the Chinese rulers began to look for ways of overcoming the weaknesses of a bureaucratically managed economy. They wanted to promote more sophisticated and innovative technology. By the 1990s, in an effort to avoid the sudden and total economic collapse that befell the former Soviet Union, the Stalinist bureaucrats of China tried to experiment with a gradual opening up of China to capitalism. They zigzagged, sometimes making more concessions to the market, sometimes clamping down on “excesses”. At a time of boom in the Western world, capitalism seemed to offer something.
Foreign firms have been encouraged to invest in Chinese free trade zones on China’s eastern seaboard. Here they have been able to take advantage of generous tax and customs concessions and a vast supply of cheap labour, denied trade union rights.
Chinese economic growth has been a key factor in propping up world capitalist markets since the financial crash of 2008. With a population of 1.4 billion, many of whose living standards have been rising, China has imported manufactured goods from Europe and raw materials from Latin America and Oceania. Chinese state-owned companies are engaged in projects in Argentina, Kenya, Pakistan and the UK. “One Belt One Road” is intended to expand China’s economic influence and create opportunities for China to obtain more natural resources and technology. Whether China can sustain he levels of debt created by foreign investment as part of OBOR remains a question.
The scale of production in China has grown gigantically. There are factories employing literally hundreds of thousands. Foxconn, manufacturer of electrical equipment in Shenzhen, employs nearly a quarter of a million.
Thus China has been able to capture world markets with ever-increasing quantities of low-cost goods. In 1990 China produced less than 3% of global manufacturing by value; today it produces over a quarter, including 70% of the world’s mobile phones and 60% of its shoes.
Limitations of the turn towards capitalism
A few years ago all the world’s economic “experts” believed that China was quite quickly going to become fully capitalist. They were rubbing their hands with glee at the prospect of such a huge market opening to unfettered global trade.
Even if a Stalinist economy can grow spectacularly for a while, in the long run without the creative intelligent involvement of the workers it runs up against problems. However, the bureaucrats are utterly blind to the idea of workers’ control because, of necessity, it would end the justification for their own existence as a privileged caste. How then to stem the intractable problem of bureaucratic mismanagement and corruption?
In the stifling atmosphere of a command economy and the suppression of democracy, how to modernise? How to promote initiative and invention? How to raise the quality of production? The Chinese bureaucrats hoped that somehow, gradually, a leavening of capitalist investment would act as a stimulus to bring about innovation.
Yet today they can see what is happening to capitalism globally. Therefore they are wary about moving too quickly in that direction. They have no strong ideological commitment to retaining a state-owned economy; they do, however, want to retain their position as a privileged caste, and they fear being dragged into a spiral of bad debt along with global markets. In China, debt has increased dramatically since 2008, especially with a 75% increase in the shadow banking sector.
Fears of the regime
Thus Xi Jinping at the recent party congress has enshrined “Socialism with Chinese Characteristics” into the constitution. At least for the moment the ruling bureaucrats are shelving plans for further moves towards capitalism. Equally, any hints that there might be a gradual move towards democracy, free elections or the ending of the one party state have been dropped. This is a sign of fear on the part of the regime.
All over the country there is cynicism and hatred towards government officials because of their greed and corruption, Already, even under the existing brutal dictatorship, some communities have become so angry and desperate that there have been protests, demonstrations and riots. The slightest hint of freedom would open up the floodgates of protest.
However, those sectors of the population that have benefitted from the regime’s opening up see the subproletariat, particularly the tens of millions of migrants, as a threat to their prosperity, and in many cases reject the idea of democratic reform because they fear it might expose them to the threat of violent action from below. This is China’s much-vaunted “middle class,” in reality a privileged sector of the working class.
There is huge discontent amongst “national minorities” (actually, majorities in these regions) that they have traditionally inhabited, particular in Xinjiang and Tibet), who regard rule from Beijing as remote and alien. There have been protests and calls for independence for Tibet and Xinjiang. While Hong Kong is in a different position from XJ and Tibet, since its inhabitants are overwhelmingly Han Chinese, hundreds of thousands in Hong Kong , especially of young people, have demonstrated against interference in elections by Beijing. Thus HK threatens to match Taiwan as a destabilising factor in Chinese politics.
Migrant workers within China are treated as second-class citizens in the areas to which they have moved to find work. Rural communities are outraged about land grabs by gangster property speculators, often connected with the government or military. In urban areas too, prime land and property has been stolen from locals. Many communities are angered by police brutality. There have been major riots as police have clashed with street traders in several parts of South China. Many communities have demonstrated to show their concerns about environmental pollution.
To stem the simmering protest movement, the upper layers of government around Xi Jinping have cracked down on a few high profile corruption cases of local leaders and managers. But this only makes examples of a few, without removing the root cause: namely, the bureaucratic system itself. The bureaucracy is incapable of solving the problem. Only a political revolution leading to workers’ control and management of industry can free Chinese society from the dead hand of Stalinism.
Living standards for some in China have risen impressively over the past generation. There has been an increase in the quantity and quality of food consumed. More and more people own phones and cars. Consumer goods and health care are available to wider sections of the population. It is not surprising that one poll showed as much as 77% of the population wanting China to be “protected from foreign influence”. These are reasons why the current rulers may hope to be able to cling on to power. (This nationalism, particularly against Japan, is perversely stoked up by the Beijing bureaucrats, who have run out of any positive platforms.)
Capitalist commentators expected that China’s new middle class would provide an ever-increasing market for consumer goods. Xi Jinping hopes they will provide an element of social stability. It is possible that if the economy continues to grow, the Xi Jinping regime will be able to keep a tight lid on the nascent social unrest and delay the inevitable revolution for a while.
However, with economic development there has also been an intensification of exploitation and a growing disparity between rich and poor.
The Gini index shows levels of social inequality rising to the same levels as the United States. China is now the third most unequal country on earth, after S Africa and Brazil [I think that’s right].) In particular there is a yawning gap between rural and urban areas, inland and costal. Even in urban areas, many workers find it hard to afford decent accommodation, suffer long commutes, and work long hours at below their level of skill.
Workers, young people and the middle class are questioning more and more and demanding democratic rights. (Some middle-class Chinese fear and oppose democracy, since they dread self-assertion on the part of the many losers, particularly domestic migrants, in China’s economic developments.)
The working class
With the growth of China as a major world super-power, the Chinese working class enters the stage as the new driving force of the world revolution.
Over the last thirty years, as industry has developed, some 300 million people, mostly from rural areas, have made their way to the big industrial centres. It is the biggest migration in human history. They speak different languages and come from over 50 different nationalities and a variety of cultural backgrounds. They are mostly young. Many have left children behind with grandparents or neighbours. They often live in accommodation akin to barracks provided by the factories where they work. Many send money back from their wages to those they have left behind. Because of the pressures of competition on world markets their employers are continually trying to cut costs and keep wages down. Jobs are dangerous. Conditions are harsh. Managers are often brutal and abusive.
It comes as no surprise to Marxists that with such vast concentrations of industry, where workers are ruthlessly exploited and denied even the most elementary rights, and where huge profits are being made through their labour, there are strikes and militancy.
In 2015 and 2016 there was a massive strike wave across the whole country, but especially on the east coast where industry is concentrated. Literally tens of thousands of strikes took place, involving in total millions of workers. In desperation and fear, the factory owners made massive concessions. Many groups of workers won significant wage increases, in some cases of 50% or more. When workers go on strike in China it is not unusual for them to go into the workplace to ensure that no-one else does the job: in effect an occupation.
The tactic of the authorities has been to make concessions, and then, when the mass of workers are back at work, have the leaders arrested and put on trial. In some cases protest leaders have even been illegally “disappeared”. Nevertheless, despite all the horrific repression and intimidation they face, the confidence of the Chinese working class is growing. As strike leader Meng Han, recently released from prison, put it:
“The workers own this country… Workers’ protests are rooted in a great injustice: for years the government has strived for economic growth and prosperity, but has completely ignored the workers who created that prosperity.”
In response to rising wage levels some industries, already having outsourced jobs from the West to China, have now outsourced again, this time within Asia to countries where they hope the workers will be more docile. Thus the populations of Vietnam and Malaysia are becoming drawn into the world proletariat.
A significant feature of the most recent strikes in China is that social media have been used by organisers to extend action across companies whose operations are geographically spread across vast distances within China. Despite all the efforts of the Chinese regime to clamp down and control this movement and to police the internet, it is resourceful, young, intelligent, literate and determined to resist exploitation.
We cannot say anything about timescales for the Chinese revolution. However, implicit in the situation is the possibility, as in Poland in the summer of 1980, of a new independent trade union exploding onto the scene. Such a movement would immediately find itself in a life-or-death confrontation with the authorities. They have the guns, the working class has the numbers. There are more industrial workers in China than in the whole of Europe and North America put together. Very rapidly it would transform into a revolutionary movement.
The situation today is not the same as 1990, when global capitalism was growing enough to pressurise the new governments of Eastern Europe to privatise the economy in return for loans.
What a bloody and long way round the revolution has taken in China! The Chinese workers of the 21st century will rediscover the traditions of their parents who made a stand for democracy in Tiananmen Square, and their great-grandparents in 1927 who rose up in revolution against both foreign and Chinese exploiters. A revolution in China today would have an incomparably stronger base from which to establish workers’ democracy. It would transform political consciousness across the world.