How did China rise?

Over the last 30 years, China has moved from being a poor developing country to one with the status of a global power, progressively contesting US hegemony. With 1.3 billion inhabitants, a fifth of the planet’s population, and the second largest economy, which some predict will equal that of the US by 2020, China is in a position to influence the course of events in the world. China is also home a quarter of the world’s industrial workers and a fifth of service workers. Fred Leplat argues that the rise of capitalist China has thus significantly altered the geo-political considerations of imperialism, and socialists now also need to refocus their world outlook.

Some on the left believe that China is somehow still a non-capitalist, or even a socialist, country. But the Chinese Communist Party (CCP) deliberately drove the restoration of capitalism by opening up the country to foreign private investment and embarking on a massive programme of privatisation. The CCP is not embarrassed about the direction of the economy as it amended the country’s constitution in 1992 to describe it as a “socialist market economy with Chinese characteristics”, although it would be more accurate to describe it as a “capitalist economy with Chinese characteristics”.

The fuzzy distinction between the cadres of the CCP, the managers of public enterprises and state officials, enabled the creation of a bureaucracy which has ruled China since the revolution of 1949. When the country introduced the market reforms in the 1980s, this bureaucracy was in the best position possible to enrich itself and become owners of privatised state enterprises, or of new private companies often in a joint venture with foreign capitalists.

State-owned Enterprises (SOEs) are among the biggest enterprises in China, have a monopoly in critical areas and are investing abroad. Some are becoming major multinational companies in sectors ranging from oil to banking. In 2012, China ranked second in Fortune magazine with 73 of the world’s top 500 corporations, two-thirds of which are SOEs, just behind the USA which had 132.

The tremendous rate of growth over the last 20 years has reduced the number of absolute poor dramatically from 84 per cent of the population in 1981 to 8 per cent in 2008. But the income gap between the poor and the rich has widened, and China is now among the most unequal countries on a par with the USA and some Latin American countries. The combined wealth of the richest 70 members of China’s National People’s Congress rose to 565.8 billion yuan ($89.8 billion) in 2011, which compares to the $7.5 billion net worth of all 660 top officials in the three branches of the U.S. Government. Premier Wen Jiabao’s family alone has amassed vast wealth worth at least $2.7bn.

This dramatic change has occurred over the last 30 years, but in particular since the 1989 Tiananmen Square massacre – which occurred the same year as the fall of the Berlin Wall. These events marked a turn towards the restoration of capitalism in both the USSR and China.

The Chinese Communist Party in the mid-1980s under Deng Xiaoping consciously adopted a policy of privatisation. This was led by state and party officials who enriched themselves by accumulating capital through their management, and then private ownership of state-owned enterprises. To accelerate this, over 40 million workers in SOEs were sacked in the mid-1990s and replaced with migrant workers from rural China who were employed on worse conditions in barracks-like factories. The hukou system, or household registration, a system dating back a two thousand years, is still used to regiment workers and introduce ‘social apartheid’.

Mainstream conservative economists failed to notice the changes that were occurring, believing that the collapse of the USSR in 1989 meant that capitalism was at last victorious, and that the process would be repeated in China. They were blinded by their neo-liberal agenda, thinking that the introduction of privatisation and Structural Adjustment Plans by the IMF and the World Bank would be sufficient for the countries of the former “Soviet bloc” and China to fall into the hands of imperialism.

One of the “Chinese characteristics” which enabled the country to successfully re-introduce capitalist modes of production is that the bureaucracy stayed united and did not fragment like that of the former USSR. The Chinese bureaucracy transformed the state from one which was deeply hostile to capitalism to one which is now one of the most business-friendly in the world. That’s why the description of the state in China today as “bureaucratic capitalist” captures best its nature.

Paradoxically the 1949 revolution in China which abolished the capitalist mode of production and gave the country its independence from imperialism, also contained the conditions for the successful restoration of capitalism 50 years later. The bureaucracy which appeared in the wake of the revolution was able to transform itself into a new bourgeoisie without being dependent on US or Japanese imperialism.
The victory in 1949 could not have been achieved without the CCP, which was seen as the party of a great social and national revolution by the population and was personified by the leadership of Mao Zedong. Maoism was not just a Chinese copy of Stalinism, but also an attempt at a ‘sinification’ of Marxism by the Chinese revolutionary left which was pluralist at its birth.

But the CCP failed to develop a ‘Chinese road’ to socialism because pluralism in the party was obliterated during the revolutionary war. Two decades after the 1949 victory, the Maoist leadership disintegrated in the chaos of the ‘Cultural Revolution’, a failure which laid the ground for the completion of the bureaucratic counter-revolution and, later, for the bourgeois counter-revolution.

The reforms gradually introduced by Deng Xiaoping during the 1980s facilitated the convergence of sections of the bureaucracy with transnational Chinese capital established in Taiwan, North America and elsewhere. The CCP encouraged investments of expatriates and welcomed big capitalists into the party. In turn, the CCP appeared to be the only force able to maintain social order and guarantee the unity of the country. All this encouraged a gradual process of transformation of sections of the bureaucracy into a bourgeoisie – initially through the illegal privatisation of public assets and then legitimising the theft by changing the laws.

The uprising of workers on a tremendous scale in 1989 eventually led to the CCP into an existential crisis. Deng Xiaoping decided that it was therefore necessary to crush the democracy movement in Tiananmen Square, but also by decisively go down the road of the restoration capitalism.

Recent successful struggles suggest that workers are not only beginning to overcome the demoralization inflicted by the crushing of the democracy movement in 1989, but that they are building up their confidence in fighting against this unjust system. The memory of the dramatic defeat at Tiananmen Square is slowly being overcome as a new generation of workers has had their expectations raised with the hope of a greater share in the wealth of their country. The obvious corruption and lack of democracy immediately politicise social conflicts, and recent struggles of workers and farmers are becoming more and more audacious. Four hundred million Chinese workers could develop into the most dangerous class on the planet and their awakening may yet determine the future of socialism on the planet.

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