China at the crossroads
Thursday, 24 May 2007.
Perspectives for workers’ struggles, democratic rights and socialism
chinaworker.info
We discuss perspectives to decide how to intervene in struggle and build support for Marxist ideas. As Trotsky said, “Marxism is the superiority of foresight over astonishment”.
This has nothing to do with making definite predictions: When there will be a slump. How long the present regime can stay in power, or when independent workers’ organisations will be created.
These are all important questions. But exact answers are impossible. The role of a perspectives discussion is to identify the main economic and political trends and decide in what direction society is moving. Then, it is necessary to correct and update our perspectives as events unfold.
Most of the capitalist world, with a few dissenting voices, believe the Chinese economy will continue speeding like a bullet train for another two decades. If this should be the case, of course, it would have a big effect on perspectives, creating conditions for greater political stability, at least for a period. But such a perspective is extremely unlikely because of the serious and growing social and economic contradictions in China and globally.
China is now an integral part of the global capitalist economy and the coming crisis in China cannot be anything other than a global crisis. Global political shifts also impact on China more than ever before, shaping the outlook of workers and youth. The Bush presidency and the Iraq war have been disastrous for the US hyperpower, undermining its global prestige and seriously limiting its ability to take military action. But this does not mean new military adventures are ruled out altogether. New conflicts, possibly with Iran, and especially economic conflicts with Russia, the EU and not least with China, are inevitable on the basis of capitalism. These processes are dealt with more fully in the 2007 World Congress document on World Relations and other CWI material.
China is plugged into the global capitalist system by a million different cables. The most important channels are: a) capital flows and investments, b) trade, and c) the transnational corporations that use China as the final link in an all-Asia and indeed global production chain. 50,000 US-owned companies operate inside China. Since 1992 China’s tariffs have come down from over 40 percent to around 5 percent, as almost all the doors to the global market have been opened, especially since WTO membership in 2001. China, like India, has not abandoned capital controls, although new measures that increase the scope for outward investment represent a significant partial liberalisation of these controls. Already, despite the existing controls, the problem of so-called ”hot money” pouring into property and other speculative fields is reminiscent of the Asian ”tiger” economies in the mid-1990s.
Foreign trade is now equivalent to over 70 percent of China’s gross domestic product (GDP) – a greater share than any other large economy. The comparable figure is 26 percent in the USA, 20 percent in Japan and 63 percent in Germany. But most of Germany’s trade is with the Euro bloc, which it dominates. China is energetically trying to organise an East Asian trading bloc as an insurance policy against protectionism or recession in the United States and Europe.
The US-China connection
The dominant trend since the start of this century has been the economic nexus between the US and China. This has become the axis around which the global economy rotates. Under this “grand economic bargain”, as some economists call it, US capitalism borrows heavily from China and other mostly poor countries in order to implement a so-called ‘loose money’ policy at home – a massive expansion of credit. This allows the American people to spend more than they earn, in particular by using rising house prices as security for new loans. Much of this spending goes on imports from China and other donor countries that finance the “grand bargain”.
This arrangement has sustained world growth through the obstacles of the dotcom crash, 9/11 and the surge in oil prices following the Iraq war, and led many commentators to believe it will continue indefinitely. But in reality it is a hugely contradictory set-up that must end in a dramatic ‘correction’ or crisis. US capitalism has become the world’s biggest debtor, with a total external debt of more than $6 trillion – that’s $20,000 for every man, woman and child in the United States.
But also, as a result of the ‘loose money’ policy of the Federal Reserve [US central Bank], the global economy is awash with dollars. In any other period a big increase in inflation would have resulted, forcing the US and other governments to reverse course. But this has not happened yet. The reason is the so-called ‘race to the bottom’ of wages and working conditions as a result of capitalist globalisation, which has cut the global price of mass-manufactured consumer goods. The epicentre of this ‘race to the bottom’ is China, and the 150 million super-exploited mingong [migrant workers] of the coastal cities. What this represents is a massive global shift from wages to profits. Wages in China as a share of GDP have fallen from 53 percent in 1998 to 41 percent today. Similar but less dramatic falls have been recorded in all the world’s major economies.
China, like other countries tied to the monetary policies of US capitalism has lost control over the growth of money supply and credit. The People’s Bank of China (PBoC) is forced to print more yuan in order to soak up the huge flow of dollars into the Chinese economy. This has caused severe distortions in the Chinese economy including a property bubble in the cities and freakish levels of investment. Premier Wen Jiabao used the terms ”unstable,” ”imbalanced,” ”uncoordinated,” and ”unsustainable” to describe the current phase of economic growth at the National People’s Congress in March.
Growth of money supply has overshot government targets for the last four years. Measures to rein in credit have similarly failed. ”We have already introduced several batches of measures in economic control since 2003,” complained China Daily, ”But more often than not, they get ignored or distorted at the local level”. These problems are aggravated by the practises of the state-owned banks, which do not follow central government edicts. An additional problem is the considerable role played by illegal ’underground’ banks, which according to a 2006 government survey, account for 28 percent of all new loans, or about 800 billion yuan every year! This sum is almost double the amount of foreign direct investment entering China on an annual basis.
The current phase of overinvestment cannot continue indefinitely as the Asian crisis of 1997 showed. Already China suffers from a surplus of production and a deficit of consumption. This mismatch must sooner or later correct itself, leading to crisis and very possibly a crash.
In the short-term, however, China’s corporate sector has gained from its ever-closer integration into the global economy, especially as exports have more than tripled since 2001. But even this cannot continue indefinitely. The failure of the WTO to agree a new ‘Doha round’ shows the pressures building up within the capitalist trading system.
The US-China relationship has been compared to the balance of nuclear terror between the old Soviet Union and US capitalism. This was called “Mutually Assured Destruction” – because neither side could afford to attack the other, as both would be wiped out. But capitalism is not a rational system. It is based on the blind pursuit of profit. At some point the US-China economic ‘axis’ will break down whether its governments want this or not.
But we have not arrived at that situation yet. Beijing is particularly anxious not to endanger this relationship. This is reflected in Hu Jintao’s shift of position on Taiwan (to one of suppressing Taipei via Washington) and China’s support in the United Nations for admittedly limited sanctions against two nominal allies – North Korea and Iran. In order to deflect US demands for yuan revaluation, Beijing has increased the tempo of some WTO ‘reforms’ – for example in the banking and insurance sector, allowing US companies greater access and control.
The rate of profit in much of China’s manufacturing industry is extremely low because of its ‘sub-contractor’ status. Profits are creamed off instead by the parent companies, brand owners and patent holders based in the US and other rich capitalist countries. Some ‘strategic’ Chinese companies are succeeding in breaking out of this underdog position and creating their own brands, technology and distribution networks abroad, but for most of Chinese industry this is a long way off. Ironically, it is in the state-owned sector where profits are highest, with profits of the 169 state-owned enterprises (SOEs) under the central government’s jurisdiction up 27.9% in 2005 to a record 627.65 billion yuan. Just 12 companies, however, accounted for four-fifths (79%) of the total profits. These 12 SOEs are all in the energy and mining sectors and their record profits come from the global surge in raw material prices, which is ephemeral.
A US recession will inflict serious damage on China’s economy, not least because the US (directly and indirectly) accounts for half its exports. 100 million people in China are directly or indirectly dependent on the textile sector, which is already, before any downturn, suffering from protectionism in the US and Europe. The prospect of a wave of bankruptcies and factory closures, causing massive political instability, explains why the regime has so far blocked a bigger yuan revaluation despite Washington’s pressure. The textile industry says it loses 8.2 billion yuan of annual profits for every percentage point rise in the currency. Profits in this industry, like many others, have already been squeezed.
”I could make more money selling vegetables on the street corner,” one textile factory owner complained.
This is also why Beijing refuses to use some of its record $1.2 trillion in foreign exchange reserves to repair collapsed health and school systems. To spend this money inside China, they would have to sell dollars and the yuan would rise, cutting further into the profits of China’s exporters. So instead, the government intends to spend some of this dollar fortune on foreign stocks and corporate bonds!
A change of political course?
The Hu-Wen leadership are acutely aware of the mounting discontent in society. Unable to offer a solution, however, it bases itself on empty phrases. Slogans like “new socialist countryside” and “putting people first” are designed to appear populist, a step to the left. For the mass of the population these slogans are like holograms: without substance. The current leadership are copying Deng Xiaoping’s trick of “signaling left while turning right.” This has fooled quite a few foreign observers who interpret the current leadership’s policy as a sharp departure from that of their predecessors. Yet in many respects current policies are more conservative. The budget deficit at 1.1 percent of GDP this year is the lowest of any major economy. Tax cuts for the rich and increased privatisations in sectors like finance and retail hardly denote a shift to the left!
The much-vaunted economic ’miracle’ will soon see China overtake Germany to become the third largest economy. But despite this, the bottom ten percent of the population (130 million people) is poorer today than at the start of the century. In the cities, a sizeable layer have experienced rising living standards. But for many workers, higher wages have increasingly been eaten up by the soaring cost of essentials and vital services. A National of Bureau of Statistics (NBS) survey in 2003-04, placed the incomes gap between rich and poor at the top of a list of public concerns. 76 percent believed the problem was getting worse. Only 3.5 percent thought the gap between rich and the poor was decreasing.
Public services like education and healthcare have been starved of funds since the ‘iron rice bowl’ was smashed by Deng. Private spending on healthcare assumes a higher share of total costs than in the USA (OECD report 2006), while the government spends a lower proportion of GDP on education than many poorer countries such as the Philippines, Peru and India. Rather than spreading prosperity therefore, the pro-capitalist course of the last 25 years has created one of the greatest wealth gaps in the world. All this is preparing a gigantic social explosion.
On all major issues, government policies continue to favour the rich and privileged. One example is the new property law, which legalises the theft of state assets during 15 years of mass privatisations. People’s Daily hailed the law as “a major milestone”, while Premier Wen Jiabao declared the law would help China “create an open and honest market system.”
The sharp public debate surrounding the passage of the new law was extremely significant, reflecting a growing polarisation within the state apparatus, and its appendages in the intelligentsia and media. The main opposition to the law came from Mao loyalists in the media and retired military officers. At the opposite extreme, a brazen neo-liberal wing worships right-wing ideologues such as Hayek and Friedman. The central government attempts to tread a middle course, but this year it decided passage of the property law, after several years’ delay, was essential to avoid accusations that the pace of capitalist ’reform’ is slowing.
The reduction of corporation tax from 33 percent to a flat rate of 25 percent, means China has a lower level of corporation tax than the US or Britain. To soften the blow for foreign companies, which currently pay even less (15-24 percent), Beijing is offering tax breaks for hi-tech and ’green’ investments and a transition period of up to two years. So, while the rhetoric has changed considerably, the pro-capitalist thrust of government policy remains the same.
Centre versus regions
Outwardly, the regime appears to be strong, in command. But this too is misleading. It is a regime of crisis. Despite the boom it cannot extricate itself from the contradictions inherited from its predecessors: rising unemployment (24m new job seekers every year), environmental destruction, rural warfare, an epidemic of unpaid wages etc. Behind a public facade, the strategists of the regime are increasingly panicky about the explosive discontent building up in society. In a 2004 opinion poll by the Chinese Academy of Social Sciences, more than half the experts interviewed said it was “possible” or “very likely” that China was heading for a “comprehensive social crisis”.
The central government’s sphere of control is shrinking as it loses out to market forces at home and internationally as well as to increasingly insubordinate local governments. “Sometimes, policies of central government just cannot go beyond Zhongnanhai,” one vice minister declared. On almost all economic questions, central government policies are obstructed at local level. Examples include rampant illegal sales of farmland, refusal to obey central directives to close unsafe ’illegal’ coalmines, curbing the problem of wage arrears especially for migrant workers, and adopting central government environmental standards. As the Editor of China Economic Quarterly commented, ”The clash is between the central government’s desires and the local government’s pressing economic needs, and in 99 cases out of 100, local government wins out.”
This is the logic of the shift to capitalism, the increasing role of private capital, and the destruction of the old centralised planning mechanism. At the same time, regional governments lobby the centre for favours and support in disputes with other regions. Provincial governments, cities and prefectures have opened 6,000 offices in Beijing for the purposes of lobbying the centre. These offices spend more than 20 billion yuan annually “to build and nurture connections with central government departments” (Xinhua).
China’s regions compete against each other for markets, investments and resources. Central government policies that cause them to lose ground to other provinces are increasingly ignored or watered down. Powerful local alliances of officials and capitalists are being created, with their own (hidden) agendas.
Fujian province initiated the ”West Coast of the Taiwan Strait” economic zone in order to attract more Taiwanese investments away from the Pearl River Delta and the Yangtze River Delta. Meanwhile, the two deltas are themselves locked in a strategic tug-of-war for export markets and capital. Both have elaborate plans to create regional economic blocs to pull the markets and resources of neighbouring provinces into their own orbit. The fragmented nature of the national market is shown by the fact that (imperialist) WTO rules are needed to break down China’s internal trade barriers.
The purge of party leaders in Shanghai in 2006 was a warning strike by Beijing, an attempt to re-establish discipline over all regions, not just Shanghai. Through a series of tactical shifts and behind-the-scenes deals, Hu has had some success in re-establishing political control over party and state organs in the provinces, compared to the situation under his predecessor, Jiang Zemin. But economically, the centre’s grip has continued to loosen. The pressures on provincial and city governments – and the rewards – are so great they continue to pursue their own agendas. While the tendency is towards a further weakening of the centre in economic questions, this does not automatically mean a weakening of the centre politically. However much they fight to decide economic policies locally, the ruling elites in each province need the whip of a ‘strong centre’ to protect them from a movement of the working class and the poor, and to arbitrate in inter-provincial disputes. In future, especially as the crisis deepens, the centre will attempt to reassert its power over economic decision-making. But this process is also fraught with dangers given the complex and often antagonistic relationship between regions and the centre, which existed even in the era of the bureaucratically (Stalinist) planned economy, and has increased enormously since then.
Workers’ struggles and consciousness
This is the background to the astonishing wave of mass protests affecting virtually all parts of the country, all industries and social groups – from coal miners in Anhui, to university students in Henan, to prostitutes in Shenzhen. Not since the 1920s has China experienced such a wave of strikes and protests – with a new protest breaking out every five minutes. In 2005 there were 314,000 labour disputes according to the Ministry of Labour and Social Security, more than double the number in 2000. Most disputes (62 percent) are in the six richest provinces (Beijing, Guangdong, Jiangsu, Shandong, Shanghai and Zhejiang). The sharpening of the class struggle in the most developed regions shows what’s ahead for the whole country. Demands from the working class and the poor peasantry for a greater share of the national wealth could be the trigger for a widespread social movement in the period ahead. History has seen many societies undergoing rapid industrialisation that suddenly run into revolutionary upheavals. This was the case in France 1968, Iran 1978, and South Korea 1986. It was also the case in China 1925.
The surge of militancy among the super-oppressed migrant workers – mingong – has particularly alarmed the regime, because this affects export industry, and because here the state is weakest. Among these workers, the role of young women who make up two-thirds of the workforce in many factories is especially important. Many bosses regard female workers as ”placid” only to discover they often emerge as strike leaders and spokeswomen.
Socialists stand for equal rights for migrants and an end to discrimination and police harassment. Internationally, the CWI has supported and organised campaigns by migrants in Ireland, USA, Greece and many other countries for equal rights, by forming a ”bridge” to the indigenous working class in the form of common organisations and common struggle. Of course, these examples involved workers from abroad whereas China’s migrants are native citizens, but are treated as second-class citizens all the same!
The upheavals in the countryside are unprecedented in the history of the People’s Republic. Huge demonstrations, sometimes exceeding 100,000, have been mobilised on a range of issues from industrial pollution to privatisation of public services. Land seizures by corrupt officials have accounted for 60 percent of protests in the recent period. Crucially, many rural activists are increasingly adopting proletarian i.e. collective methods of struggle – road blockades, occupations, and even local general strikes. This reflects the fact that in addition to farmers those involved are also rural labourers, migrants and other workers.
There is a revival of support for Mao in the countryside, with his portrait, badges and Maoist slogans a common feature on demonstrations. Today, this movement lacks any coherent political line. Rather than conscious acceptance of Mao’s Stalinist ideology and methods, it reflects nostalgia among many, especially the older generation, for the days of the planned economy and the security it provided. This does not mean that Maoism cannot reappear as a more organised force in the period ahead, as the masses search for alternatives. Marxists must distinguish between the reactionary features of this phenomenon (a bureaucrat trying to derail a protest with references to Mao) and progressive features (peasants or workers gravitating towards the idea of struggle, and public ownership).
Large-scale rural unrest has forced Beijing to promise more spending on healthcare, schools and rural infrastructure. While these measures may have a certain effect in some areas, overall the sums are too small. The parlous state of many local governments – some are bankrupt – also means funds will be ”re-directed” from their intended recipients at local level. A power vacuum exists in many rural communities that has seen the re-emergence of clan rule and widespread gangsterism. These problems are the legacy of Deng’s ”reforms” which, despite a temporary boost in farm incomes in the early 1980s, condemned much of the countryside to stagnation and even decline. The peasantry suffered another devastating blow from the grossly unequal terms of WTO membership in 2001: China is the only ’developing country’ in the history of the WTO to give up ’developing country’ status in relation to farm trade. As a result it has lost the right to use a range of subsidies and other measures to protect its farming sector. Subsidised farm exports, particularly from the US, have wiped out millions of jobs in Chinese agriculture over the last six years.
The main advantage of the regime is the still low level of political consciousness of the working class and other oppressed layers. Dictatorship always acts as a brake and tends to throw back consciousness. In the case of Maoism-Stalinism this has meant undermining the very idea of socialism among a wide layer. The Maoist-Stalinist regime uprooted all independent workers’ organisations insuring there was no organised force independent of the state that could resist the subsequent onslaught of capitalist restoration; no forum for workers to debate and clarify their ideas and political demands. Globally too, political consciousness has been thrown backwards as a result of the victory of capitalism in Russia and Eastern Europe, the shift to neo-liberalism of the social democratic parties, and the lack – to date – of a mass-based alternative to capitalism.
Socialism did not fail in China. It was the system of Stalinism, of top-down bureaucratic control, that failed. In the initial decades following the revolution, despite the waste and mismanagement endemic in bureaucratic rule, Mao’s regime led an industrial and social transformation with spectacular growth rates. But as the problem of economic management became more complex, the bureaucratic regime entered a deep and prolonged crisis, during which the possibilities inherent in state-ownership and planning were squandered and society was dragged to the brink of civil war.
The ruling Maoist-Stalinist bureaucracy then turned to the capitalist market, and particularly to East Asia’s brand of state-guided capitalism (Singapore, Taiwan, South Korea) as the only way to save its power and privileges. Above all, this shift was dictated by the bureaucracy’s morbid fear of a movement of China’s working class.
While an advanced layer especially of the youth have begun to draw the correct conclusions on this score, for the masses, especially under conditions of dictatorship, this process has created enormous confusion. But as Marx said, “conditions determine consciousness.” The day-to-day realities of the sweatshops, of land seizures, of environmental collapse, are preparing explosive shifts in the outlook of all social groups.
Until now the carrot-and-stick tactics of the state have largely succeeded in isolating protests to one area and blocking organisational links between cities and provinces. There is still, as an overhang from the past, a gap between workers’ hatred of local officials and a lingering hope that the central leaders are somehow different – “they will listen,” reason many workers, “if only we can reach them”. Such illusions in the “good emperor” will be worn down on the basis of events. In Russia, the 1905 revolution began under a cloud of similar illusions in the Tsar, only to develop into the greatest revolution yet seen. But those events were also enormously accelerated by the existence of a Marxist workers’ party, the Bolsheviks (who grew from a few hundreds to several thousands in the course of 1905).
In China today the masses are beginning to lose their fear of state repression. There is a mood of desperation – “we have nothing to lose!” Also, the regime senses it cannot continue ruling as before. But that doesn’t mean it has a ready alternative. In fact it faces a terrible dilemma. Just as a leopard cannot change its spots, there are powerful built-in factors that limit the regime’s ability to reform itself.
Any slackening of control could unleash the forces of “chaos” – as Deng was fond of warning. Dictatorship by its very nature means a mechanical suppression of society’s centrifugal forces (national and class contradictions) that can fly apart once the ”cage” of dictatorship is dismantled.
This, after all, is what happened in the Soviet Union as a result of the political opening up (glasnost) initiated by Gorbachev in the 1980s. The strategists of the Chinese regime have studied this experience extensively in the hope of avoiding a similar development in China. Unless there is an alternative strong centralising force around which society can be reorganised, a collapse of the current regime could also bring about the break-up of China as a unified state. This was the case after the anti-Manchu revolution of 1911, when China became a ”failed state” ruled by warlords. Then, more than a decade before the Chinese working class emerged as a major player, there was no force in society that could fill the political vacuum. In today’s conditions, only a conscious, fully democratic and socialist movement of the working class, drawing behind it the other oppressed classes, can prevent the break-up of society by opening the way to a new, higher stage of development.
It is the tendency of Bonapartism and military-police dictatorship to shift from one position to another, from concessions to repression and back again. At the same time as the March 2007 NPC meeting was promising “help for the poor”, police violently broke up demonstrations by 20,000 poor farmers in Zhushan, Hunan province, against a doubling of bus fares. Premier Wen was interviewed live on CCTV saying, “We need large-scale political reform... That means democratic elections as well.” But at the same time his government launched a major crackdown on internet cafes as a “harmful influence”.
An important sign came from Dongzhou village in Guangdong, where in March this year 1,000 people gathered for a new demonstration, one and half years after a massacre by riot police in December 2005, in which at least three protesters were shot dead. This shows that state terror cannot succeed indefinitely. The dilemma for the regime is that an attempt to ”kill, kill, kill” its way out of a crisis, as in 1989, may have the opposite effect under today’s conditions, triggering a revolutionary upheaval.
In the situation opening up there can be rapid shifts in consciousness. Especially when workers’ anger overspills the boundaries of one factory, neighbourhood or town, and begins to fuse with other struggles into a regional or national movement. This is what began to happen in the northeast five years ago. This was an inspirational example of struggle, but was unfortunately based only upon laid-off workers or xia’gang. Because production and profits were not directly threatened, the bosses and local officials could ride out the storm before arresting and making examples of the ‘ringleaders’. A similar movement of workers in the coastal economic centres or at foreign-controlled companies might not be dispersed so easily, and could succeed in squeezing big concessions out of the bosses. In this case, an important example and tradition would be established and possibly also the first shoots of independent workers’ organisations. We should not ignore the complexities that exist, such as nationalism, ethnic and clan divisions, which officials and employers can exploit to try to weaken the movement. But the dominant trend will be for workers to pull together as a class to fight for their interests.
The largely moribund and completely discredited ACFTU has been reenergised by the upsurge in workers’ struggles. This has nothing to do with trade unionism and everything to do with control. Where the ACFTU has won access to private companies such as Wal-Mart it does not fight for pay rises or improvements. The ACFTU is an arm of the state that has paid a price for its passivity and now sees a power vacuum in the private and foreign-invested sector.
But this situation provides a certain cover for independent working class organisation. Lenin and the Bolsheviks knew how to combine illegal and legal methods of work. This does not mean we agree with Han Dongfang’s [of China Labour Bulletin] call to “Reclaim the ACFTU”. The idea of winning this organisation over to a democratic, fighting standpoint is completely unrealistic. But in some cases, its workplace branches can provide a ‘shield’ under which independent organisations can grow.
Democratic rights – which force?
The consciousness of the masses in China is entering a democratic phase: a yearning for basic democratic rights including freedom of assembly, democratic control of the police and army, the right to form political parties and free elections for all levels of government. This is a decisive question for Marxism. We fully identify with the democratic aspirations of the masses and seek to play a leading role in every democratic struggle. But we also point out the fundamentally undemocratic character of both capitalism and Maoism-Stalinism. Only a genuinely socialist society can make such democratic rights a reality.
The idea that capitalism and democracy automatically go hand in hand is the biggest myth of our time. Foreign capitalists invest in China precisely because it is a dictatorship. The Chinese and foreign capitalists need the iron fist of the present regime to defend their assets and profits from the working class. The regime equally needs the economic pressure of foreign capitalism and global markets, to discipline the workers into accepting privatisation, downsizing, longer working hours and other attacks. Of course, this symmetry of interests is officially denied by both sides!
Some foreign capitalist commentators continue to demand ”democracy” in China, although their numbers are fewer than ten years ago. In future, in conditions of sharpening imperialist tensions and trade clashes, however, complaints about China’s ”lack of democracy” will undoubtedly rise again, as foreign governments try to mobilise public opinion for confrontation. But concerns about repression of workers and peasants and the lack of basic democratic rights are the last thing on the capitalists’ minds. Their concerns are only about the most effective and secure way to make profits.
In Hong Kong we have a textbook example of the real attitude of the global and Chinese capitalists towards democracy – of implacable opposition. The Beijing regime’s cat-and-mouse game in blocking free elections in Hong Kong has not been learnt in the school of Leninism but in the school of British capitalism, which ruled Hong Kong for 155 years without ever holding an election. In Hong Kong today the tycoons and the CCP are on the same side, vehemently opposing universal suffrage. The tycoons themselves, of course, already have the vote (in the selection committees) and they vote for... the CCP’s nominees!
The standpoint of the capitalists was revealed in a 2006 Hong Kong government report that warned, “if universal suffrage was implemented or functional constituencies abolished hastily, Hong Kong might become a welfare state”(!)
The Beijing regime and Hong Kong’s tycoons also fear the democratic virus will spread to the mainland, acting as a spur to the struggle of workers and poor peasants.
A similar fear explains why Hu has modified his policy towards Taiwan, showing less haste than his predecessors over reunification. Nowadays Beijing’s message is stronger economic ties and a ‘common market’. This does not mean the Taiwan issue cannot flame-up again into military threats and counter-threats, especially during a crisis when governments on either side of the Taiwan Strait need to whip-up nationalism.
But if Hong Kong’s pro-democracy struggle is a destabilising factor for Beijing, it pales by comparison to developments in Taiwan. Taiwan’s reincorporation into the Chinese state under current conditions would introduce a new destabilising force into the mainland’s body politic: a mass-based and extremely vocal Taiwan nationalist movement, with its own media and huge financial resources. This would risk opening a Pandora’s box of demands for ”parity with Taipei” from China’s increasingly unruly provinces. So from Beijing’s standpoint, assuming its minimum conditions are met – i.e. no declaration of independence – the Taiwanese are best left to themselves!
The political landscape is further complicated by the surge in support for the Guomindang [GMD: Taiwan’s main opposition party and the pre-1949 ruling party in China] on the mainland. According to some estimates, this party is organised (illegally) in 15 of China’s 28 provinces and its increasing popularity with the urban middle class and some students is undeniable. Some would say the GMD is more popular today than the ruling party. Beijing’s Taiwan diplomacy, investing a great deal in a GMD victory in next year’s presidential election, has given this party a further huge boost. Beijing’s leaders and the state-run media hail the GMD as ”patriotic”, while a big layer of China’s middle classes look enviously upon Taiwan’s success as a ’knowledge-based economy’, and its (limited) bourgeois democracy, believing the GMD would make for a more efficient and ’democratic’ – but still nationalistic – government. The Taiwan-based GMD leaders keep their distance from their mainland GMD comrades, regarding the push to organise on the mainland as a barrier to good relations with Beijing.
Similarly, the idea of a US-style ’two party system’ has gained wide currency in recent years, based primarily on the same layers. Yet the US political system, dominated by millionaire candidates and Big Business lobbies, is repugnant from the standpoint of the oppressed. The two parties are almost identical – like a choice between Coca Cola and Pepsi Cola! Marxists support the right of all parties, except fascists (which use terror against the working class and all democratic rights), to organise independently of the state. This means we would not oppose the legalisation of the GMD, however much we oppose its anti-working class policies. But from the masses’ standpoint the problem is not how many parties exist, but what type of parties – with the desperate need for a mass workers’ party standing for genuine socialist policies.
Basic democratic rights like the right to vote, freedom of assembly, the right to join a union and to strike, have only ever been won by mass struggle – or the threat of it. Most of Europe did not enjoy universal suffrage until after the Russian Revolution of 1917, which pressured capitalist governments everywhere to make far-reaching concessions. It is particularly the working class and the organisations it creates – trade unions and workers’ parties – that have been the leading force in the struggle for democratic rights, in the face of opposition from the main core of the bourgeoisie. In the mass struggle against white minority rule in South Africa, for example, the black working class and trade unions played the key role. This refutes another popular myth: that democratic rights emerge gradually from the growth of a strong middle class and ‘civic society’. The apologists of capitalism spread this fairy tale in an attempt to obfuscate the role of the working class and the idea of struggle.
There are situations when a ruling class is forced to switch from dictatorial to ‘democratic’ methods in order to diffuse a mass struggle that threatens its rule. This was the case in Indonesia in 1998; and in Russia as its Stalinist system was collapsing in the early 1990s. But ten years on, Russia and Indonesia are hardly blossoming democracies. On the contrary both are pseudo democracies in which real power rests with unelected elites rather than the elected politicians. Of course, workers there are not indifferent to the rights they have won – the right of assembly, to strike, to form political parties etc. – but even these rights are increasingly coming under attack as the capitalist system goes into crisis.
Another example is Taiwan, where the old regime was forced in the 1980s to shift from dictatorial to ‘democratic’ rule in the face of mass protests. But in the absence of a conscious working class leadership that could organise to overthrow capitalism, the outcome is a political system dominated by two corrupt capitalist blocs – the pan-blue and pan-green. As a popular saying goes: it matters little whether the blue or green side wins, politics is ruled by the ‘black’ i.e. corruption!
Capitalism in China has been recreated under the tutelage of the Stalinist ruling party, in close interaction with overseas capitalism through the process of globalisation. The Chinese capitalist class is extremely dependent on this state, primarily to protect it from the working class, and for this reason its democratic ambitions – and desire for regime change – are almost non-existent. In fact, it is hardly possible to speak of an independent bourgeoisie. By one of the ironies in which history is rich, the capitalist class is largely an outgrowth of the former Stalinist state. Of the 20,000 top millionaires, 90 percent are either party members and state officials or their relatives.
Not only do the capitalists need state protection from the workers, but also from their rivals including of course the foreign capitalists. In China today we have an extreme manifestation of the phenomenon of state capitalism as analysed by Lenin, who explained, “state capitalism in a society where power belongs to capital, and state capitalism in a proletarian state are two different concepts. In a capitalist state, state capitalism means that it is recognised by the state and controlled by it for the benefit of the bourgeoisie, and to the detriment of the proletariat.” (Collected Works, vol. 32).
Especially in periods of deep crisis, even more wide-ranging state capitalist measures will be adopted in China. This has happened under Putin in Russia, against foreign capitalists but also against Russian ‘oligarchs’ whose antics have brought them into collision with the state.
The main agent of democratic change is the working class and this is inseparable from the struggle for socialism. The Stalinist so-called ”communist” parties in the past always failed to understand this interconnection. They viewed the struggle for democratic rights as a bourgeois task and either tail-ended the capitalist parties, limiting themselves to bourgeois arguments (i.e. without raising the need for socialism), or they ignored the struggle for democratic rights altogether as a ”distraction” from the class struggle. Of course whenever the Stalinists took power they quickly dispensed with any democratic rights, which are incompatible with bureaucratic rule. Unfortunately many of today’s left groups repeat the mistake of failing to link the struggle for democratic rights with the struggle for socialism. The tasks facing workers in China today are a confirmation in a new and original form of Trotsky’s theory of the permanent revolution.
Workers’ unity and international socialism
A crucial aspect of the struggle for democratic rights is the position of oppressed minorities and nationalities. The Maoist-Stalinist regime by its attempt to ‘solve’ by force the national question in Xinjiang, Tibet, Mongolia and other regions, aggravated historical antagonisms that reverberate today in massive alienation and hostility to Chinese rule. These problems have become worse on the basis of the pro-capitalist policies of Mao’s successors. Today’s regime, having abandoned Mao’s distorted version of ‘socialism’, is more and more dependent on Han nationalism as the ideological ‘glue’ to hold society together and divert attention from its own failings. This was spelt out by Lin Zhibo, a deputy editor at the People’s Daily: “Today in China an ideological vacuum is emerging. What can China rely on for cohesion? I believe that apart from nationalism, there is no other recourse.”
In Xinjiang, Bush’s ‘war on terror’ has provided a convenient excuse to step up repression against the Uyghur Muslim population. All expressions of nationalism among the indigenous population are falsely equated with support for al Qaeda and “terrorism”. This is ironic given that the Beijing regime in common with US imperialism, through their alliance with Pakistan, helped to arm the Taliban, al Qaeda, and other right-wing Islamist groups in Afghanistan and the wider region.
Socialists oppose all forms of national oppression and stress the need for working class unity in struggle as the only way forward. The repressive methods practised and perfected in Xinjiang or Tibet are also used against Han workers and peasants fighting for their rights. In 1989, martial law in Tibet was a dress rehearsal for the much larger and bloodier suppression of June 4th.
Socialists are opposed to chauvinism and the oppression of national and religious minorities and support the right of national self-determination. But this does not mean we support the policies and methods of the bourgeois-led independence groups, from Tibet and Xinjiang, or Taiwan for that matter, any more than we support Chinese capitalism. The bordering countries of Central Asia and the Himalayas are all brutal dictatorships, wracked by poverty and ethnic strife, which shows that on the basis of capitalism and imperialism nominal “independence” offers no way out for the masses. These states are dominated by the major regional powers, Russia, the US, India and now particularly China, as its economic rise casts a shadow over the region. The oppression of one nation by another, like class oppression, can only be eliminated by abolishing capitalism on a global scale.
As with democratic rights in general, a united working class movement fighting for genuine socialism is the only force that can solve the national question. But a genuinely democratic workers’ movement must show extreme sensitivity towards the national and religious feelings of oppressed minorities. Socialists are not in favour of the break-up of China, which would be enormously retrogressive economically and in every conceivable way. But no unified state can be maintained by coercion. Ultimately this is only possible on the basis of a democratic and voluntary union of peoples, of a socialist China within a socialist world.
Socialists are confident for the future. The coming economic typhoons will reshape the political landscape of China, Asia and the world. Despite the difficulties that inevitably present themselves, a new generation of workers will begin to raise their head and set about building a new labour movement. Our task, based on an understanding of perspectives, is to actively assist and guide this process with the ideas of genuine Marxism.
May 2007
chinaworker.info
We discuss perspectives to decide how to intervene in struggle and build support for Marxist ideas. As Trotsky said, “Marxism is the superiority of foresight over astonishment”.
This has nothing to do with making definite predictions: When there will be a slump. How long the present regime can stay in power, or when independent workers’ organisations will be created.
These are all important questions. But exact answers are impossible. The role of a perspectives discussion is to identify the main economic and political trends and decide in what direction society is moving. Then, it is necessary to correct and update our perspectives as events unfold.
Most of the capitalist world, with a few dissenting voices, believe the Chinese economy will continue speeding like a bullet train for another two decades. If this should be the case, of course, it would have a big effect on perspectives, creating conditions for greater political stability, at least for a period. But such a perspective is extremely unlikely because of the serious and growing social and economic contradictions in China and globally.
China is now an integral part of the global capitalist economy and the coming crisis in China cannot be anything other than a global crisis. Global political shifts also impact on China more than ever before, shaping the outlook of workers and youth. The Bush presidency and the Iraq war have been disastrous for the US hyperpower, undermining its global prestige and seriously limiting its ability to take military action. But this does not mean new military adventures are ruled out altogether. New conflicts, possibly with Iran, and especially economic conflicts with Russia, the EU and not least with China, are inevitable on the basis of capitalism. These processes are dealt with more fully in the 2007 World Congress document on World Relations and other CWI material.
China is plugged into the global capitalist system by a million different cables. The most important channels are: a) capital flows and investments, b) trade, and c) the transnational corporations that use China as the final link in an all-Asia and indeed global production chain. 50,000 US-owned companies operate inside China. Since 1992 China’s tariffs have come down from over 40 percent to around 5 percent, as almost all the doors to the global market have been opened, especially since WTO membership in 2001. China, like India, has not abandoned capital controls, although new measures that increase the scope for outward investment represent a significant partial liberalisation of these controls. Already, despite the existing controls, the problem of so-called ”hot money” pouring into property and other speculative fields is reminiscent of the Asian ”tiger” economies in the mid-1990s.
Foreign trade is now equivalent to over 70 percent of China’s gross domestic product (GDP) – a greater share than any other large economy. The comparable figure is 26 percent in the USA, 20 percent in Japan and 63 percent in Germany. But most of Germany’s trade is with the Euro bloc, which it dominates. China is energetically trying to organise an East Asian trading bloc as an insurance policy against protectionism or recession in the United States and Europe.
The US-China connection
The dominant trend since the start of this century has been the economic nexus between the US and China. This has become the axis around which the global economy rotates. Under this “grand economic bargain”, as some economists call it, US capitalism borrows heavily from China and other mostly poor countries in order to implement a so-called ‘loose money’ policy at home – a massive expansion of credit. This allows the American people to spend more than they earn, in particular by using rising house prices as security for new loans. Much of this spending goes on imports from China and other donor countries that finance the “grand bargain”.
This arrangement has sustained world growth through the obstacles of the dotcom crash, 9/11 and the surge in oil prices following the Iraq war, and led many commentators to believe it will continue indefinitely. But in reality it is a hugely contradictory set-up that must end in a dramatic ‘correction’ or crisis. US capitalism has become the world’s biggest debtor, with a total external debt of more than $6 trillion – that’s $20,000 for every man, woman and child in the United States.
But also, as a result of the ‘loose money’ policy of the Federal Reserve [US central Bank], the global economy is awash with dollars. In any other period a big increase in inflation would have resulted, forcing the US and other governments to reverse course. But this has not happened yet. The reason is the so-called ‘race to the bottom’ of wages and working conditions as a result of capitalist globalisation, which has cut the global price of mass-manufactured consumer goods. The epicentre of this ‘race to the bottom’ is China, and the 150 million super-exploited mingong [migrant workers] of the coastal cities. What this represents is a massive global shift from wages to profits. Wages in China as a share of GDP have fallen from 53 percent in 1998 to 41 percent today. Similar but less dramatic falls have been recorded in all the world’s major economies.
China, like other countries tied to the monetary policies of US capitalism has lost control over the growth of money supply and credit. The People’s Bank of China (PBoC) is forced to print more yuan in order to soak up the huge flow of dollars into the Chinese economy. This has caused severe distortions in the Chinese economy including a property bubble in the cities and freakish levels of investment. Premier Wen Jiabao used the terms ”unstable,” ”imbalanced,” ”uncoordinated,” and ”unsustainable” to describe the current phase of economic growth at the National People’s Congress in March.
Growth of money supply has overshot government targets for the last four years. Measures to rein in credit have similarly failed. ”We have already introduced several batches of measures in economic control since 2003,” complained China Daily, ”But more often than not, they get ignored or distorted at the local level”. These problems are aggravated by the practises of the state-owned banks, which do not follow central government edicts. An additional problem is the considerable role played by illegal ’underground’ banks, which according to a 2006 government survey, account for 28 percent of all new loans, or about 800 billion yuan every year! This sum is almost double the amount of foreign direct investment entering China on an annual basis.
The current phase of overinvestment cannot continue indefinitely as the Asian crisis of 1997 showed. Already China suffers from a surplus of production and a deficit of consumption. This mismatch must sooner or later correct itself, leading to crisis and very possibly a crash.
In the short-term, however, China’s corporate sector has gained from its ever-closer integration into the global economy, especially as exports have more than tripled since 2001. But even this cannot continue indefinitely. The failure of the WTO to agree a new ‘Doha round’ shows the pressures building up within the capitalist trading system.
The US-China relationship has been compared to the balance of nuclear terror between the old Soviet Union and US capitalism. This was called “Mutually Assured Destruction” – because neither side could afford to attack the other, as both would be wiped out. But capitalism is not a rational system. It is based on the blind pursuit of profit. At some point the US-China economic ‘axis’ will break down whether its governments want this or not.
But we have not arrived at that situation yet. Beijing is particularly anxious not to endanger this relationship. This is reflected in Hu Jintao’s shift of position on Taiwan (to one of suppressing Taipei via Washington) and China’s support in the United Nations for admittedly limited sanctions against two nominal allies – North Korea and Iran. In order to deflect US demands for yuan revaluation, Beijing has increased the tempo of some WTO ‘reforms’ – for example in the banking and insurance sector, allowing US companies greater access and control.
The rate of profit in much of China’s manufacturing industry is extremely low because of its ‘sub-contractor’ status. Profits are creamed off instead by the parent companies, brand owners and patent holders based in the US and other rich capitalist countries. Some ‘strategic’ Chinese companies are succeeding in breaking out of this underdog position and creating their own brands, technology and distribution networks abroad, but for most of Chinese industry this is a long way off. Ironically, it is in the state-owned sector where profits are highest, with profits of the 169 state-owned enterprises (SOEs) under the central government’s jurisdiction up 27.9% in 2005 to a record 627.65 billion yuan. Just 12 companies, however, accounted for four-fifths (79%) of the total profits. These 12 SOEs are all in the energy and mining sectors and their record profits come from the global surge in raw material prices, which is ephemeral.
A US recession will inflict serious damage on China’s economy, not least because the US (directly and indirectly) accounts for half its exports. 100 million people in China are directly or indirectly dependent on the textile sector, which is already, before any downturn, suffering from protectionism in the US and Europe. The prospect of a wave of bankruptcies and factory closures, causing massive political instability, explains why the regime has so far blocked a bigger yuan revaluation despite Washington’s pressure. The textile industry says it loses 8.2 billion yuan of annual profits for every percentage point rise in the currency. Profits in this industry, like many others, have already been squeezed.
”I could make more money selling vegetables on the street corner,” one textile factory owner complained.
This is also why Beijing refuses to use some of its record $1.2 trillion in foreign exchange reserves to repair collapsed health and school systems. To spend this money inside China, they would have to sell dollars and the yuan would rise, cutting further into the profits of China’s exporters. So instead, the government intends to spend some of this dollar fortune on foreign stocks and corporate bonds!
A change of political course?
The Hu-Wen leadership are acutely aware of the mounting discontent in society. Unable to offer a solution, however, it bases itself on empty phrases. Slogans like “new socialist countryside” and “putting people first” are designed to appear populist, a step to the left. For the mass of the population these slogans are like holograms: without substance. The current leadership are copying Deng Xiaoping’s trick of “signaling left while turning right.” This has fooled quite a few foreign observers who interpret the current leadership’s policy as a sharp departure from that of their predecessors. Yet in many respects current policies are more conservative. The budget deficit at 1.1 percent of GDP this year is the lowest of any major economy. Tax cuts for the rich and increased privatisations in sectors like finance and retail hardly denote a shift to the left!
The much-vaunted economic ’miracle’ will soon see China overtake Germany to become the third largest economy. But despite this, the bottom ten percent of the population (130 million people) is poorer today than at the start of the century. In the cities, a sizeable layer have experienced rising living standards. But for many workers, higher wages have increasingly been eaten up by the soaring cost of essentials and vital services. A National of Bureau of Statistics (NBS) survey in 2003-04, placed the incomes gap between rich and poor at the top of a list of public concerns. 76 percent believed the problem was getting worse. Only 3.5 percent thought the gap between rich and the poor was decreasing.
Public services like education and healthcare have been starved of funds since the ‘iron rice bowl’ was smashed by Deng. Private spending on healthcare assumes a higher share of total costs than in the USA (OECD report 2006), while the government spends a lower proportion of GDP on education than many poorer countries such as the Philippines, Peru and India. Rather than spreading prosperity therefore, the pro-capitalist course of the last 25 years has created one of the greatest wealth gaps in the world. All this is preparing a gigantic social explosion.
On all major issues, government policies continue to favour the rich and privileged. One example is the new property law, which legalises the theft of state assets during 15 years of mass privatisations. People’s Daily hailed the law as “a major milestone”, while Premier Wen Jiabao declared the law would help China “create an open and honest market system.”
The sharp public debate surrounding the passage of the new law was extremely significant, reflecting a growing polarisation within the state apparatus, and its appendages in the intelligentsia and media. The main opposition to the law came from Mao loyalists in the media and retired military officers. At the opposite extreme, a brazen neo-liberal wing worships right-wing ideologues such as Hayek and Friedman. The central government attempts to tread a middle course, but this year it decided passage of the property law, after several years’ delay, was essential to avoid accusations that the pace of capitalist ’reform’ is slowing.
The reduction of corporation tax from 33 percent to a flat rate of 25 percent, means China has a lower level of corporation tax than the US or Britain. To soften the blow for foreign companies, which currently pay even less (15-24 percent), Beijing is offering tax breaks for hi-tech and ’green’ investments and a transition period of up to two years. So, while the rhetoric has changed considerably, the pro-capitalist thrust of government policy remains the same.
Centre versus regions
Outwardly, the regime appears to be strong, in command. But this too is misleading. It is a regime of crisis. Despite the boom it cannot extricate itself from the contradictions inherited from its predecessors: rising unemployment (24m new job seekers every year), environmental destruction, rural warfare, an epidemic of unpaid wages etc. Behind a public facade, the strategists of the regime are increasingly panicky about the explosive discontent building up in society. In a 2004 opinion poll by the Chinese Academy of Social Sciences, more than half the experts interviewed said it was “possible” or “very likely” that China was heading for a “comprehensive social crisis”.
The central government’s sphere of control is shrinking as it loses out to market forces at home and internationally as well as to increasingly insubordinate local governments. “Sometimes, policies of central government just cannot go beyond Zhongnanhai,” one vice minister declared. On almost all economic questions, central government policies are obstructed at local level. Examples include rampant illegal sales of farmland, refusal to obey central directives to close unsafe ’illegal’ coalmines, curbing the problem of wage arrears especially for migrant workers, and adopting central government environmental standards. As the Editor of China Economic Quarterly commented, ”The clash is between the central government’s desires and the local government’s pressing economic needs, and in 99 cases out of 100, local government wins out.”
This is the logic of the shift to capitalism, the increasing role of private capital, and the destruction of the old centralised planning mechanism. At the same time, regional governments lobby the centre for favours and support in disputes with other regions. Provincial governments, cities and prefectures have opened 6,000 offices in Beijing for the purposes of lobbying the centre. These offices spend more than 20 billion yuan annually “to build and nurture connections with central government departments” (Xinhua).
China’s regions compete against each other for markets, investments and resources. Central government policies that cause them to lose ground to other provinces are increasingly ignored or watered down. Powerful local alliances of officials and capitalists are being created, with their own (hidden) agendas.
Fujian province initiated the ”West Coast of the Taiwan Strait” economic zone in order to attract more Taiwanese investments away from the Pearl River Delta and the Yangtze River Delta. Meanwhile, the two deltas are themselves locked in a strategic tug-of-war for export markets and capital. Both have elaborate plans to create regional economic blocs to pull the markets and resources of neighbouring provinces into their own orbit. The fragmented nature of the national market is shown by the fact that (imperialist) WTO rules are needed to break down China’s internal trade barriers.
The purge of party leaders in Shanghai in 2006 was a warning strike by Beijing, an attempt to re-establish discipline over all regions, not just Shanghai. Through a series of tactical shifts and behind-the-scenes deals, Hu has had some success in re-establishing political control over party and state organs in the provinces, compared to the situation under his predecessor, Jiang Zemin. But economically, the centre’s grip has continued to loosen. The pressures on provincial and city governments – and the rewards – are so great they continue to pursue their own agendas. While the tendency is towards a further weakening of the centre in economic questions, this does not automatically mean a weakening of the centre politically. However much they fight to decide economic policies locally, the ruling elites in each province need the whip of a ‘strong centre’ to protect them from a movement of the working class and the poor, and to arbitrate in inter-provincial disputes. In future, especially as the crisis deepens, the centre will attempt to reassert its power over economic decision-making. But this process is also fraught with dangers given the complex and often antagonistic relationship between regions and the centre, which existed even in the era of the bureaucratically (Stalinist) planned economy, and has increased enormously since then.
Workers’ struggles and consciousness
This is the background to the astonishing wave of mass protests affecting virtually all parts of the country, all industries and social groups – from coal miners in Anhui, to university students in Henan, to prostitutes in Shenzhen. Not since the 1920s has China experienced such a wave of strikes and protests – with a new protest breaking out every five minutes. In 2005 there were 314,000 labour disputes according to the Ministry of Labour and Social Security, more than double the number in 2000. Most disputes (62 percent) are in the six richest provinces (Beijing, Guangdong, Jiangsu, Shandong, Shanghai and Zhejiang). The sharpening of the class struggle in the most developed regions shows what’s ahead for the whole country. Demands from the working class and the poor peasantry for a greater share of the national wealth could be the trigger for a widespread social movement in the period ahead. History has seen many societies undergoing rapid industrialisation that suddenly run into revolutionary upheavals. This was the case in France 1968, Iran 1978, and South Korea 1986. It was also the case in China 1925.
The surge of militancy among the super-oppressed migrant workers – mingong – has particularly alarmed the regime, because this affects export industry, and because here the state is weakest. Among these workers, the role of young women who make up two-thirds of the workforce in many factories is especially important. Many bosses regard female workers as ”placid” only to discover they often emerge as strike leaders and spokeswomen.
Socialists stand for equal rights for migrants and an end to discrimination and police harassment. Internationally, the CWI has supported and organised campaigns by migrants in Ireland, USA, Greece and many other countries for equal rights, by forming a ”bridge” to the indigenous working class in the form of common organisations and common struggle. Of course, these examples involved workers from abroad whereas China’s migrants are native citizens, but are treated as second-class citizens all the same!
The upheavals in the countryside are unprecedented in the history of the People’s Republic. Huge demonstrations, sometimes exceeding 100,000, have been mobilised on a range of issues from industrial pollution to privatisation of public services. Land seizures by corrupt officials have accounted for 60 percent of protests in the recent period. Crucially, many rural activists are increasingly adopting proletarian i.e. collective methods of struggle – road blockades, occupations, and even local general strikes. This reflects the fact that in addition to farmers those involved are also rural labourers, migrants and other workers.
There is a revival of support for Mao in the countryside, with his portrait, badges and Maoist slogans a common feature on demonstrations. Today, this movement lacks any coherent political line. Rather than conscious acceptance of Mao’s Stalinist ideology and methods, it reflects nostalgia among many, especially the older generation, for the days of the planned economy and the security it provided. This does not mean that Maoism cannot reappear as a more organised force in the period ahead, as the masses search for alternatives. Marxists must distinguish between the reactionary features of this phenomenon (a bureaucrat trying to derail a protest with references to Mao) and progressive features (peasants or workers gravitating towards the idea of struggle, and public ownership).
Large-scale rural unrest has forced Beijing to promise more spending on healthcare, schools and rural infrastructure. While these measures may have a certain effect in some areas, overall the sums are too small. The parlous state of many local governments – some are bankrupt – also means funds will be ”re-directed” from their intended recipients at local level. A power vacuum exists in many rural communities that has seen the re-emergence of clan rule and widespread gangsterism. These problems are the legacy of Deng’s ”reforms” which, despite a temporary boost in farm incomes in the early 1980s, condemned much of the countryside to stagnation and even decline. The peasantry suffered another devastating blow from the grossly unequal terms of WTO membership in 2001: China is the only ’developing country’ in the history of the WTO to give up ’developing country’ status in relation to farm trade. As a result it has lost the right to use a range of subsidies and other measures to protect its farming sector. Subsidised farm exports, particularly from the US, have wiped out millions of jobs in Chinese agriculture over the last six years.
The main advantage of the regime is the still low level of political consciousness of the working class and other oppressed layers. Dictatorship always acts as a brake and tends to throw back consciousness. In the case of Maoism-Stalinism this has meant undermining the very idea of socialism among a wide layer. The Maoist-Stalinist regime uprooted all independent workers’ organisations insuring there was no organised force independent of the state that could resist the subsequent onslaught of capitalist restoration; no forum for workers to debate and clarify their ideas and political demands. Globally too, political consciousness has been thrown backwards as a result of the victory of capitalism in Russia and Eastern Europe, the shift to neo-liberalism of the social democratic parties, and the lack – to date – of a mass-based alternative to capitalism.
Socialism did not fail in China. It was the system of Stalinism, of top-down bureaucratic control, that failed. In the initial decades following the revolution, despite the waste and mismanagement endemic in bureaucratic rule, Mao’s regime led an industrial and social transformation with spectacular growth rates. But as the problem of economic management became more complex, the bureaucratic regime entered a deep and prolonged crisis, during which the possibilities inherent in state-ownership and planning were squandered and society was dragged to the brink of civil war.
The ruling Maoist-Stalinist bureaucracy then turned to the capitalist market, and particularly to East Asia’s brand of state-guided capitalism (Singapore, Taiwan, South Korea) as the only way to save its power and privileges. Above all, this shift was dictated by the bureaucracy’s morbid fear of a movement of China’s working class.
While an advanced layer especially of the youth have begun to draw the correct conclusions on this score, for the masses, especially under conditions of dictatorship, this process has created enormous confusion. But as Marx said, “conditions determine consciousness.” The day-to-day realities of the sweatshops, of land seizures, of environmental collapse, are preparing explosive shifts in the outlook of all social groups.
Until now the carrot-and-stick tactics of the state have largely succeeded in isolating protests to one area and blocking organisational links between cities and provinces. There is still, as an overhang from the past, a gap between workers’ hatred of local officials and a lingering hope that the central leaders are somehow different – “they will listen,” reason many workers, “if only we can reach them”. Such illusions in the “good emperor” will be worn down on the basis of events. In Russia, the 1905 revolution began under a cloud of similar illusions in the Tsar, only to develop into the greatest revolution yet seen. But those events were also enormously accelerated by the existence of a Marxist workers’ party, the Bolsheviks (who grew from a few hundreds to several thousands in the course of 1905).
In China today the masses are beginning to lose their fear of state repression. There is a mood of desperation – “we have nothing to lose!” Also, the regime senses it cannot continue ruling as before. But that doesn’t mean it has a ready alternative. In fact it faces a terrible dilemma. Just as a leopard cannot change its spots, there are powerful built-in factors that limit the regime’s ability to reform itself.
Any slackening of control could unleash the forces of “chaos” – as Deng was fond of warning. Dictatorship by its very nature means a mechanical suppression of society’s centrifugal forces (national and class contradictions) that can fly apart once the ”cage” of dictatorship is dismantled.
This, after all, is what happened in the Soviet Union as a result of the political opening up (glasnost) initiated by Gorbachev in the 1980s. The strategists of the Chinese regime have studied this experience extensively in the hope of avoiding a similar development in China. Unless there is an alternative strong centralising force around which society can be reorganised, a collapse of the current regime could also bring about the break-up of China as a unified state. This was the case after the anti-Manchu revolution of 1911, when China became a ”failed state” ruled by warlords. Then, more than a decade before the Chinese working class emerged as a major player, there was no force in society that could fill the political vacuum. In today’s conditions, only a conscious, fully democratic and socialist movement of the working class, drawing behind it the other oppressed classes, can prevent the break-up of society by opening the way to a new, higher stage of development.
It is the tendency of Bonapartism and military-police dictatorship to shift from one position to another, from concessions to repression and back again. At the same time as the March 2007 NPC meeting was promising “help for the poor”, police violently broke up demonstrations by 20,000 poor farmers in Zhushan, Hunan province, against a doubling of bus fares. Premier Wen was interviewed live on CCTV saying, “We need large-scale political reform... That means democratic elections as well.” But at the same time his government launched a major crackdown on internet cafes as a “harmful influence”.
An important sign came from Dongzhou village in Guangdong, where in March this year 1,000 people gathered for a new demonstration, one and half years after a massacre by riot police in December 2005, in which at least three protesters were shot dead. This shows that state terror cannot succeed indefinitely. The dilemma for the regime is that an attempt to ”kill, kill, kill” its way out of a crisis, as in 1989, may have the opposite effect under today’s conditions, triggering a revolutionary upheaval.
In the situation opening up there can be rapid shifts in consciousness. Especially when workers’ anger overspills the boundaries of one factory, neighbourhood or town, and begins to fuse with other struggles into a regional or national movement. This is what began to happen in the northeast five years ago. This was an inspirational example of struggle, but was unfortunately based only upon laid-off workers or xia’gang. Because production and profits were not directly threatened, the bosses and local officials could ride out the storm before arresting and making examples of the ‘ringleaders’. A similar movement of workers in the coastal economic centres or at foreign-controlled companies might not be dispersed so easily, and could succeed in squeezing big concessions out of the bosses. In this case, an important example and tradition would be established and possibly also the first shoots of independent workers’ organisations. We should not ignore the complexities that exist, such as nationalism, ethnic and clan divisions, which officials and employers can exploit to try to weaken the movement. But the dominant trend will be for workers to pull together as a class to fight for their interests.
The largely moribund and completely discredited ACFTU has been reenergised by the upsurge in workers’ struggles. This has nothing to do with trade unionism and everything to do with control. Where the ACFTU has won access to private companies such as Wal-Mart it does not fight for pay rises or improvements. The ACFTU is an arm of the state that has paid a price for its passivity and now sees a power vacuum in the private and foreign-invested sector.
But this situation provides a certain cover for independent working class organisation. Lenin and the Bolsheviks knew how to combine illegal and legal methods of work. This does not mean we agree with Han Dongfang’s [of China Labour Bulletin] call to “Reclaim the ACFTU”. The idea of winning this organisation over to a democratic, fighting standpoint is completely unrealistic. But in some cases, its workplace branches can provide a ‘shield’ under which independent organisations can grow.
Democratic rights – which force?
The consciousness of the masses in China is entering a democratic phase: a yearning for basic democratic rights including freedom of assembly, democratic control of the police and army, the right to form political parties and free elections for all levels of government. This is a decisive question for Marxism. We fully identify with the democratic aspirations of the masses and seek to play a leading role in every democratic struggle. But we also point out the fundamentally undemocratic character of both capitalism and Maoism-Stalinism. Only a genuinely socialist society can make such democratic rights a reality.
The idea that capitalism and democracy automatically go hand in hand is the biggest myth of our time. Foreign capitalists invest in China precisely because it is a dictatorship. The Chinese and foreign capitalists need the iron fist of the present regime to defend their assets and profits from the working class. The regime equally needs the economic pressure of foreign capitalism and global markets, to discipline the workers into accepting privatisation, downsizing, longer working hours and other attacks. Of course, this symmetry of interests is officially denied by both sides!
Some foreign capitalist commentators continue to demand ”democracy” in China, although their numbers are fewer than ten years ago. In future, in conditions of sharpening imperialist tensions and trade clashes, however, complaints about China’s ”lack of democracy” will undoubtedly rise again, as foreign governments try to mobilise public opinion for confrontation. But concerns about repression of workers and peasants and the lack of basic democratic rights are the last thing on the capitalists’ minds. Their concerns are only about the most effective and secure way to make profits.
In Hong Kong we have a textbook example of the real attitude of the global and Chinese capitalists towards democracy – of implacable opposition. The Beijing regime’s cat-and-mouse game in blocking free elections in Hong Kong has not been learnt in the school of Leninism but in the school of British capitalism, which ruled Hong Kong for 155 years without ever holding an election. In Hong Kong today the tycoons and the CCP are on the same side, vehemently opposing universal suffrage. The tycoons themselves, of course, already have the vote (in the selection committees) and they vote for... the CCP’s nominees!
The standpoint of the capitalists was revealed in a 2006 Hong Kong government report that warned, “if universal suffrage was implemented or functional constituencies abolished hastily, Hong Kong might become a welfare state”(!)
The Beijing regime and Hong Kong’s tycoons also fear the democratic virus will spread to the mainland, acting as a spur to the struggle of workers and poor peasants.
A similar fear explains why Hu has modified his policy towards Taiwan, showing less haste than his predecessors over reunification. Nowadays Beijing’s message is stronger economic ties and a ‘common market’. This does not mean the Taiwan issue cannot flame-up again into military threats and counter-threats, especially during a crisis when governments on either side of the Taiwan Strait need to whip-up nationalism.
But if Hong Kong’s pro-democracy struggle is a destabilising factor for Beijing, it pales by comparison to developments in Taiwan. Taiwan’s reincorporation into the Chinese state under current conditions would introduce a new destabilising force into the mainland’s body politic: a mass-based and extremely vocal Taiwan nationalist movement, with its own media and huge financial resources. This would risk opening a Pandora’s box of demands for ”parity with Taipei” from China’s increasingly unruly provinces. So from Beijing’s standpoint, assuming its minimum conditions are met – i.e. no declaration of independence – the Taiwanese are best left to themselves!
The political landscape is further complicated by the surge in support for the Guomindang [GMD: Taiwan’s main opposition party and the pre-1949 ruling party in China] on the mainland. According to some estimates, this party is organised (illegally) in 15 of China’s 28 provinces and its increasing popularity with the urban middle class and some students is undeniable. Some would say the GMD is more popular today than the ruling party. Beijing’s Taiwan diplomacy, investing a great deal in a GMD victory in next year’s presidential election, has given this party a further huge boost. Beijing’s leaders and the state-run media hail the GMD as ”patriotic”, while a big layer of China’s middle classes look enviously upon Taiwan’s success as a ’knowledge-based economy’, and its (limited) bourgeois democracy, believing the GMD would make for a more efficient and ’democratic’ – but still nationalistic – government. The Taiwan-based GMD leaders keep their distance from their mainland GMD comrades, regarding the push to organise on the mainland as a barrier to good relations with Beijing.
Similarly, the idea of a US-style ’two party system’ has gained wide currency in recent years, based primarily on the same layers. Yet the US political system, dominated by millionaire candidates and Big Business lobbies, is repugnant from the standpoint of the oppressed. The two parties are almost identical – like a choice between Coca Cola and Pepsi Cola! Marxists support the right of all parties, except fascists (which use terror against the working class and all democratic rights), to organise independently of the state. This means we would not oppose the legalisation of the GMD, however much we oppose its anti-working class policies. But from the masses’ standpoint the problem is not how many parties exist, but what type of parties – with the desperate need for a mass workers’ party standing for genuine socialist policies.
Basic democratic rights like the right to vote, freedom of assembly, the right to join a union and to strike, have only ever been won by mass struggle – or the threat of it. Most of Europe did not enjoy universal suffrage until after the Russian Revolution of 1917, which pressured capitalist governments everywhere to make far-reaching concessions. It is particularly the working class and the organisations it creates – trade unions and workers’ parties – that have been the leading force in the struggle for democratic rights, in the face of opposition from the main core of the bourgeoisie. In the mass struggle against white minority rule in South Africa, for example, the black working class and trade unions played the key role. This refutes another popular myth: that democratic rights emerge gradually from the growth of a strong middle class and ‘civic society’. The apologists of capitalism spread this fairy tale in an attempt to obfuscate the role of the working class and the idea of struggle.
There are situations when a ruling class is forced to switch from dictatorial to ‘democratic’ methods in order to diffuse a mass struggle that threatens its rule. This was the case in Indonesia in 1998; and in Russia as its Stalinist system was collapsing in the early 1990s. But ten years on, Russia and Indonesia are hardly blossoming democracies. On the contrary both are pseudo democracies in which real power rests with unelected elites rather than the elected politicians. Of course, workers there are not indifferent to the rights they have won – the right of assembly, to strike, to form political parties etc. – but even these rights are increasingly coming under attack as the capitalist system goes into crisis.
Another example is Taiwan, where the old regime was forced in the 1980s to shift from dictatorial to ‘democratic’ rule in the face of mass protests. But in the absence of a conscious working class leadership that could organise to overthrow capitalism, the outcome is a political system dominated by two corrupt capitalist blocs – the pan-blue and pan-green. As a popular saying goes: it matters little whether the blue or green side wins, politics is ruled by the ‘black’ i.e. corruption!
Capitalism in China has been recreated under the tutelage of the Stalinist ruling party, in close interaction with overseas capitalism through the process of globalisation. The Chinese capitalist class is extremely dependent on this state, primarily to protect it from the working class, and for this reason its democratic ambitions – and desire for regime change – are almost non-existent. In fact, it is hardly possible to speak of an independent bourgeoisie. By one of the ironies in which history is rich, the capitalist class is largely an outgrowth of the former Stalinist state. Of the 20,000 top millionaires, 90 percent are either party members and state officials or their relatives.
Not only do the capitalists need state protection from the workers, but also from their rivals including of course the foreign capitalists. In China today we have an extreme manifestation of the phenomenon of state capitalism as analysed by Lenin, who explained, “state capitalism in a society where power belongs to capital, and state capitalism in a proletarian state are two different concepts. In a capitalist state, state capitalism means that it is recognised by the state and controlled by it for the benefit of the bourgeoisie, and to the detriment of the proletariat.” (Collected Works, vol. 32).
Especially in periods of deep crisis, even more wide-ranging state capitalist measures will be adopted in China. This has happened under Putin in Russia, against foreign capitalists but also against Russian ‘oligarchs’ whose antics have brought them into collision with the state.
The main agent of democratic change is the working class and this is inseparable from the struggle for socialism. The Stalinist so-called ”communist” parties in the past always failed to understand this interconnection. They viewed the struggle for democratic rights as a bourgeois task and either tail-ended the capitalist parties, limiting themselves to bourgeois arguments (i.e. without raising the need for socialism), or they ignored the struggle for democratic rights altogether as a ”distraction” from the class struggle. Of course whenever the Stalinists took power they quickly dispensed with any democratic rights, which are incompatible with bureaucratic rule. Unfortunately many of today’s left groups repeat the mistake of failing to link the struggle for democratic rights with the struggle for socialism. The tasks facing workers in China today are a confirmation in a new and original form of Trotsky’s theory of the permanent revolution.
Workers’ unity and international socialism
A crucial aspect of the struggle for democratic rights is the position of oppressed minorities and nationalities. The Maoist-Stalinist regime by its attempt to ‘solve’ by force the national question in Xinjiang, Tibet, Mongolia and other regions, aggravated historical antagonisms that reverberate today in massive alienation and hostility to Chinese rule. These problems have become worse on the basis of the pro-capitalist policies of Mao’s successors. Today’s regime, having abandoned Mao’s distorted version of ‘socialism’, is more and more dependent on Han nationalism as the ideological ‘glue’ to hold society together and divert attention from its own failings. This was spelt out by Lin Zhibo, a deputy editor at the People’s Daily: “Today in China an ideological vacuum is emerging. What can China rely on for cohesion? I believe that apart from nationalism, there is no other recourse.”
In Xinjiang, Bush’s ‘war on terror’ has provided a convenient excuse to step up repression against the Uyghur Muslim population. All expressions of nationalism among the indigenous population are falsely equated with support for al Qaeda and “terrorism”. This is ironic given that the Beijing regime in common with US imperialism, through their alliance with Pakistan, helped to arm the Taliban, al Qaeda, and other right-wing Islamist groups in Afghanistan and the wider region.
Socialists oppose all forms of national oppression and stress the need for working class unity in struggle as the only way forward. The repressive methods practised and perfected in Xinjiang or Tibet are also used against Han workers and peasants fighting for their rights. In 1989, martial law in Tibet was a dress rehearsal for the much larger and bloodier suppression of June 4th.
Socialists are opposed to chauvinism and the oppression of national and religious minorities and support the right of national self-determination. But this does not mean we support the policies and methods of the bourgeois-led independence groups, from Tibet and Xinjiang, or Taiwan for that matter, any more than we support Chinese capitalism. The bordering countries of Central Asia and the Himalayas are all brutal dictatorships, wracked by poverty and ethnic strife, which shows that on the basis of capitalism and imperialism nominal “independence” offers no way out for the masses. These states are dominated by the major regional powers, Russia, the US, India and now particularly China, as its economic rise casts a shadow over the region. The oppression of one nation by another, like class oppression, can only be eliminated by abolishing capitalism on a global scale.
As with democratic rights in general, a united working class movement fighting for genuine socialism is the only force that can solve the national question. But a genuinely democratic workers’ movement must show extreme sensitivity towards the national and religious feelings of oppressed minorities. Socialists are not in favour of the break-up of China, which would be enormously retrogressive economically and in every conceivable way. But no unified state can be maintained by coercion. Ultimately this is only possible on the basis of a democratic and voluntary union of peoples, of a socialist China within a socialist world.
Socialists are confident for the future. The coming economic typhoons will reshape the political landscape of China, Asia and the world. Despite the difficulties that inevitably present themselves, a new generation of workers will begin to raise their head and set about building a new labour movement. Our task, based on an understanding of perspectives, is to actively assist and guide this process with the ideas of genuine Marxism.
May 2007
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