N°16-septembre 2021 In China the Communist Party (CCP) celebrates its 100th anniversary by a large-scale demonstration in Beijing with its first leader Xi Jinping and its more than 90 million adherents.
From its creation in Shanghai in July 1921 by a handful of activists to today's celebration time has passed and the China of 2021 bears very little resemblance to that of 1921. Since seizing power 72 years ago in 1949 – in a China marked by the domination of the Western powers, the Japanese invasion, the second world war and the civil war, in a poor, agrarian, backward and ruined country, has emerged a leading industrial, technological and financial power, now largely urbanized and which has significantly reduced poverty by lifting millions of human beings out of misery. This was achieved in a relatively short time.
In his speech Xi Jinping underlined the growing and now major role of China in the world economy and its weight in international relations as well as its determination to preserve its national independence. He emphasized what he refers to as the socialist character of China's development, referring to Marxism to support the direction given by the state leadership. This claim of a socialist development of China is put forward including at the international level. In this regard a recent symposium of "Marxist" political parties was organized by the CCP, attended by 58 communist parties from 48 countries. This symposium’s main purpose was to assert that China was indeed a socialist country and that its defense was part of the "anti-imperialist" struggle against the USA in a world that has become multipolar since the disappearance of the USSR. Does such an approach reflect reality, or does it aim to mobilize political and social forces around the world in order to protect and support Chinese interests?
This question is strategic for the development of the class struggle and revolutionaries must answer it. This is what this article is trying to do.
China is presented by some as a means of developing the productive forces in China under the control of the CCP and as a counterweight to US imperialism. In this view it would be appropriate to regard the orientation of the CCP's policy as a huge NEP and therefore to support it to isolate US imperialism. On the contrary others underline that the predominance of capitalist social relations in China, its participation in the process of internationalization and accumulation of capital in a market described as "global" places it into the imperialist system as analyzed by Lenin. It is in fact by drawing on Lenin's analysis of imperialism that we will insist on the economic conditions of China's development today.
What can we say about it and what point of view do we take to analyze the development of China and the policy of its leaders? We do this by examining and analyzing the economic realities and the nature of the production relations which determine the political orientation and the international positioning. It is therefore on the basis of realities that an assessment should be made of the nature of the economic, social and political development of this country, of the nature of the relations of production.
1. The development of productive forces
In a few decades, the share of the private sector in the GDP has increased from 10% to 70% in a volume of wealth produced multiplied by 100. A 2018 Xinhua News Agency statement quoting Gao Yunlong, chairman of the All-China Federation of Industry and Commerce, stated that: "China's private sector has made an important contribution to economic growth," adding: "The sector now contributes more than 60 percent of China's GDP growth and brings in over half of China's fiscal revenue, said Gao Yunlong. …Meanwhile, more than 60 percent of China's fixed-asset investment and outbound investment has been made by private investors... The private economy is also playing a stronger role in China's job creation and innovation drive by providing over 80 percent of jobs and contributing more than 70 percent of technological innovation and new products in the country." At the end of 2017, there were 65.79 million individually-owned businesses and 27.26 million private enterprises in China, which employed some 340 million people."
State plans are increasingly linked to major strategic works: major communication routes, agricultural development which remains a vital issue. Although"centralism" is still the basis of political functioning, this hardly disturbs capital as it has leverage over the appointment of leaders at the regional level.
All these elements converge to highlight the development of capitalism in China as being the predominant social relations. This obviously has important social consequences. While extreme poverty has been largely eradicated, social inequalities have soared. In the mid-1980s China was poorly developed and was still very egalitarian. Inequalities have gradually increased with the emergence of a well-to-do, and even very wealthy class. In 2010 China was in fact the country with the most billionaires after the United States according to the ranking of Forbes magazine. Growing inequalities went along with rising living standards. The median income (half earn less, the other half more) rose from 800 yuan in 1985 to 3,000 yuan in 2008 (inflation taken into account), or the equivalent of 300 euros, at the exchange rate of that time. The absolute poverty rate- below $ 1.25 a day- fell drastically, from 84% in 1981 to 26% in 2005. However, relative poverty, equivalent to half of the median standard of living, rose from 12% to 18%, as the middle strata’s living standards increased a lot more than that of the poorest. The inhabitants are distinguished between those whose status is linked to the "city" residence permit and those of the "country"; there are also 250 million rural people working in the city and not having the same rights in matters of health, wages, right to housing… Social rights are regulated at the regional level, not at the state level. Thus, wages differ sharply from region to region. The average salary in Shanghai is twice that of Nanchang (Jiangxi).This is leading powerful private companies like Foxconn to relocate to the West following social struggles in Guangdong that resulted in the doubling of wages. This internal relocation operation was carried out with the agreement of the government.
What role do workers play in China today?
The place of trade unions illustrates the little weight they have in economic life and on the decisions taken in the life of public or private companies. The National Federation of Trade Unions of China is a powerful institution with around 300 million members in 2017. One can speak of a co-management unionism even if sometimes the FNSC unions take part in the struggles. The FNSC supports reforms, ensures social stability and social peace and thereby fulfills the role assigned to it by the state relatively well. Its place in the State apparatus prevents it from being the expression of the workers' voice. Within the company it owes allegiance to local Party bodies as well as to management; while it manages to retain control of social movements, it fails to prevent increasing conflicts. In fact, it is often unrelated to important movements. It should be understood that the development of social conflicts is linked to the growth of the working class and its exploitation. They are sometimes violent. This can go to the point of challenging the CCP and sometimes looting party headquarters. Repression is intense and brutal. In the private sector, bosses are comfortable with controlled unionism but fear that the absence of truly representative employee organizations will undermine conflict management.
2. The financial system and its integration into the global capitalist system.
Most large public and private companies are listed on the stock exchange. According to the World Bank, there are a total of 3584 listed companies in China in 2018. In comparison there were 465 in 2017 in France and 4,397 in the USA. There are four international stock exchanges: Beijing (11th), Shanghai with 1460 listed companies (6th), Shenzhen with 2179 listed companies (18th) and Hong Kong with 2161 listed companies (3rd) totaling a capitalization of 6.324 billion US Dollars according to the World Bank in 2018. In comparison, the USA’s market capitalization is 30.436 billion and France’s 2.749 billion. The Shanghai and Shenzhen stock exchanges are connected to that of Hong Kong, which will soon be connected with that of London, allowing faster exchanges for investors. According to the newspaper “les Echos” of October 16, 2018 under the title: "London Shanghai Stock Connect: The Chinese authorities published, a few days ago, their draft rules governing the future link between the Shanghai and London stock exchanges. Objective: to promote investment flows between Europe's largest stock exchange and China's main stock market ".
The biggest banks are the Bank of China and the Agricultural Bank. The Agricultural Bank is the first and is headed by a deputy member of the CC of the CCP, Jiang Choliang. It has been listed on the stock exchange since 2010. It is, according to Forbes Global 2000, the sixth global company in 2017.
China has scheduled the expansion of access to the Chinese stock exchange to foreign individuals. Chinese President Xi Jinping, in the midst of a trade war with the United States, insisted on formalizing a new measure as part of his promise of economic and financial openness. The China Banking and Insurance Regulatory Commission (CBIRC), an agency authorized by the State Council to regulate the banking sector of the People's Republic of China- with the exception of the territories of Hong Kong and Macao- has indeed announced that it now authorizes foreign banks to invest up to 100% in the capital of Chinese financial giants. "China is showing that it keeps its promises and that Chinese financial regulators are interested in opening, rather than closing. [...] In view of the current commercial dispute, this decision may prove to be very useful,"said Chen Long, economist at the Beijing-based research firm Gavekal Dragonomics, quoted by Bloomberg. Since December 2003, the China Banking Regulatory Commission (CBRC) has only authorized participation of up to 20% per foreign establishment. The total investments of banking groups in a Chinese institution not appearing on a negative list could reach up to 25%. The potential gains are attractive. With this new measure, the American and European financial giants would gain access to a market of 40 trillion (40,000 billion) dollars. According to Bloomberg's simulations, they could increase their income tenfold by 2030. According to data from the CBIRC, foreign banks held 2.9 trillion yuan (about 366 billion euros) of assets in China at the end of 2016, or about 1.3% of market share. In addition, in November 2017, China began to open up its financial markets. Foreign firms had in fact obtained authorization to increase their participation in joint ventures in securities and derivatives brokerage and investment funds from 49% to 51% currently. Last May Bloomberg estimated that a 6% market share by 2030 would represent assets of $ 1.8 billion (around € 1.5 billion) for foreign fund managers. At present, no bank has really taken a decision to embark on large operations in Chinese finance, but a few foreign players have expressed the intention to increase their activity in the country. UBS, for example, last May was the first bank in the world to apply for a majority stake in its investment joint venture in China. Nomura, a Japanese financial holding company, and JPMorgan, the leading American bank in terms of assets under management, have already sought to take advantage of this relaxation, in particular by creating joint ventures with local partners. For its part, the Chinese bank, Bank of Communications is said to be open to HSBC’s increased participation in its capital, according to the secretary of the board of directors of the Chinese banking institution, Gu Sheng, quoted by Bloomberg. All international banks are present in China.
In conclusion, the Chinese financial system is therefore intimately connected internationally and its development participates in the movement of capital throughout the capitalist world.
3. China a major player in world trade.
China has been a member of the WTO since December 2001 and since April 17, 1980 of the IMF. Renminbi is integrated as an international currency. China is a global exporter of capital. According to Xinhua on October 7, 2018: "China's cumulative foreign direct investment (FDI) reached $ 1.8 trillion at the end of 2017, climbing to second place in the world rankings, according to an official report. " adding " China has made investments in 189 countries and regions around the world, its cumulative FDI representing 5.9% of the world total," said Zhang Xingfu, an official with the Chinese Ministry of Commerce (CMC). The report, released by the ministry, the State Bureau of Statistics and the National Exchange Administration, also says that China's FDI reached $ 158.29 billion in 2017 alone, ranking third worldwide, after the United States and Japan. The Chinese authorities have stepped up the review of the authenticity and compliance of FDI since the end of 2016, especially on projects that do not concern the real economy or neglect environmental protection, consumption of energy and security. Mr. Zhang said that this kind of control has helped investors become more mature and rational, helping to modernize the structure of FDI. Chinese companies will continue to invest abroad, he said, adding that China is keen to achieve mutual development with host countries and their people and boost global economic growth. Investments in six sectors accounted for 86.3% of the country's accumulated FDI, namely rental and business services, wholesale and retail trade, software and information technology services, finance, mining and manufacturing. According to the newspaper Le Monde, Chinese investments in Europe between 2010 and 2019 amounts to 150 billion euros. In Africa, in 2018, Chinese direct investment (FDI) flows amounted to 5.4 billion dollars, a growth of 31.5% compared to the previous year and representing 11.7% of the Total FDI received by Africa during the past year. During the same period, investments in countries along the "Belt and Silk Road" accounted for more than 12% of Chinese FDI, up 31.5% year-on-year. While China seeks to present itself as a model in economic and political relations with other states, highlighting the status it gives itself as a "developing country" promoting a model of national growth, it is pretending to ignore that the unequal development of capitalism, including within itself between East and West, is one of the means of domination of the most powerful imperialist centers. Thus, the least developed countries are places where they fiercely compete for the plundering of natural resources, the exploitation of cheap labor, the control of communication and trade routes… If China offers loans and investments that are competitive compared to other capitalist countries and especially the United States, it uses them to ensure in particular sources of energy and agrifood supply, so that these companies invest in productions with lower labor force costs than those practiced in coastal eastern China and to open up markets. It also invests in the means of communication that enable it to supply and transfer goods to places that irrigate its own trade. It sets up military presences on the basis of state-to-state agreement, within the framework of international interventions such as the fight against "piracy". In the field of capital acquisitions and mergers, we will give two examples: the port of Piraeus in Greece and the Gelly company in France. Generally speaking, China invests in port areas and communication hubs vital for its trade. Among the investments abroad we find the acquisition and rental of arable land, this is the case in France, Asia, Russia and Africa. In Africa, China is present in almost all countries and all major capital-intensive sectors (exotic timber, purchase of agricultural land, energy, minerals, communications, transport, etc…). The activities of China and its public or private enterprises hardly differ from those of other powers. It develops from large monopolies of international size which participate in the grabbing of resources and the exploitation of the labor force like in Ethiopia with the relocation of textile companies, and more recently in Pakistan.
The participation of the Chinese economy in international trade, its integration into the financial system, therefore participates in the restructuring of capitalism on a world scale and in the development of its own capitalism. To take but one example, Chinese capital is playing an active role in global mergers and acquisitions. In 2016, there were 601 transactions, compared to 441 in 2015. The takeover of Syngentan by the Chinese group Chem China represented a transaction of 46.7 billion US dollars.
4. A military power at the service of its international strategy.
In recent years, China has significantly strengthened its armed forces. It is a nuclear power. It is the 3rd largest military budget in the world behind the USA and Europe. It was 95.9 billion euros in 2015. The largest army in the world with around 2.3 million men has been undergoing restructuring since December 2015, with operational changes aimed at enabling it to defend national territory. The tonnage of its maritime military vessels amounts to 1 million tonnes. It is 3,100,000 for the USA, 387,000 for Japan, and 1,100,000 for Russia (2013). China has Russia as a neighbor to the north, as well as all the former USSR republics which are part of the SCO (Shanghai Cooperation Organization), and to the east the two Koreas, Japan. The Pacific is a vast area covered by the APEC association, (Asia Pacific Economic Cooperation: all the neighboring countries of the Ocean are found there from North to South, Canada, USA, Mexico, Central America, Colombia, Australia, Japan, India, Pakistan etc...To the west are former Soviet republics, Afghanistan, to the south Pakistan, India, Nepal, Burma, Cambodia and Vietnam. Vietnam has conflicting interests with China in many areas and concludes cooperation agreements with Japan. China under the pretense of protecting maritime transport, in agreement with the UN and the regional powers, operates towards the Gulf of Aden, the Strait of Malacca, and for nearly 10 years has ensured the maritime security of all access between Northern Asia and the Suez Canal. China plays an important role in the Korean conflict. This conflict, which dates back to the imperialist aggression against Korea in 1950, with the support of the UN, ended in an armistice which in 1953 divided Korea into two states. The South has become a US military base and its economy is largely dominated by US monopolies. In the north, the regime very jealous of national independence is however largely dependent on China. Special economic zones allow China to be present economically. Korea is at the center of the confrontation between China and Russia on one side and the US and Japan on the other.
In Africa, in 2018, the Chinese military carried out maneuvers in Cameroon, Gabon, Ghana and Nigeria while its medical units worked with their counterparts in Ethiopia, Sierra Leone, Sudan and Zambia to strengthen their capacity to take care of the victims of combat. These efforts come under long-established relationships that also include arms sales and intelligence cooperation.
In conclusion, it is by integrating into the capitalist and imperialist processes on a world scale, by participating in the accumulation of capital at the national and global level that the Chinese monopolies, public or private, become part of the capitalist competition and that the policy of the Chinese state is fundamentally determined.
This capitalist development of China, its role on a regional and world scale comes into conflict with the other imperialist powers and especially the USA. The latter have launched a trade war with China and are trying to drag their allies around the world into it. As we wrote earlier, Asia has become the hot spot for clashes within imperialism. Internationally, as with many peoples, US imperialism- still dominant militarily- is still and remains enemy No. 1. But seeking to exploit the inter-imperialist contradictions in the struggle for a socialist revolution by supporting one imperialism against another would be a deadly policy for the revolutionary movement.