The following article was first published in Proletarian Revolution No. 53 (Winter 1997).
China, the world’s most populous country, is touted by bourgeois propagandists as the second largest and fastest growing economy – proof of the benefits of privatization and a source of enormous potential profits. Alternatively, some on the left uphold China as a bastion of socialism, or at least a socially progressive workers’ state, in the wake of the fall of “communism” in the USSR and East Europe.
But China is neither of these things. It is a crisis-ridden society plagued by both the particular contradictions of Stalinist statified capitalism and its rulers’ foredoomed effort to win a place in world imperialism by selling superexploited labor power on the domestic and international markets.
The rapidly expanding and increasingly class-conscious Chinese proletariat has other ideas. Workers drew the rulers’ particular wrath during the Tienanmen movement of 1989, and labor struggles have accompanied the enormous infusion of foreign capital in recent years. China exemplifies Marx’s axiom that capitalism creates its own gravedigger. It is critical for the Chinese working class to adopt a revolutionary strategy and construct an internationalist proletarian vanguard – in time for the inevitable showdown with imperialism and indigenous capitalism. Given China’s size and importance, the fate of the world proletarian struggle could lie with its working class.
The Chinese class struggle can only be understood by examining China’s relationship to world capitalism. The post-World War II prosperity bubble that offered partial camouflage to the reality of capitalist decay ended a quarter of a century ago. Capitalism has been fighting off a debilitating worldwide crisis since; its need to deepen its exploitation of the working class has grown accordingly. To this end it increasingly cast an eye towards productive investments in imperialized regions of the world.
This is nothing new, but it is a shift in emphasis from the previous period. Then, imperialism’s “third-world” exploitation stressed plundering raw materials and marketing finished goods, an arrangement that perpetuated desperate conditions. Capital now is compelled to tap that backwardness as a source of super-cheap exploitable labor, using the threat of capital flight (“globalization”) as a hammer against the better paid workers in the metropolitan nations. And it is more able to: with technical innovations (in particular, computerization and telecommunications) controlled by imperialism, capital movement is easier. The result has been a massive shift of industrialization and trade towards selected portions of the “third world.”
The focus of this activity has been East Asia, largely because of relatively stable but highly repressive regimes capable of policing the grinding exploitation. While large portions of the enormous surplus value pumped out of the workers landed in the hands of imperialist powers, several nations in the region emerged as models of capitalist success. Known as the “four tigers,” Taiwan, South Korea, Hong Kong and Singapore graduated from backward, domestic-based economies into export-minded, labor-intensive ones, and even to a significant degree into more sophisticated niches of world capital (e.g. high technology industry and banking). In the process they have obtained some of the privileges previously reserved for charter members of the imperialist club – major league conglomerates, higher income levels, technical sophistication.
At the same time, these countries (particularly South Korea) have seen the growth of concentrated, militant working classes whose rising wage demands cut into profits and whose strength implicitly threatens capitalist rule. So increasingly other countries in the area have become sites for capital infusion – not only from imperialist powers like Japan and the U.S., but from the “tigers” themselves. These include Thailand and Indonesia – and most prominently, China. Reforms initiated in the past two decades by Chinese leader Deng Xiaoping opened up the country to imperialist investment and exploitation.
How could this come to pass? How could “Communist” China, once supposedly a beacon for the world’s masses against imperialism, become so central to imperialism’s plans for super-profits and stabilization? The answer that China is not Communist in any sense is correct but insufficient. It requires a historical understanding of China’s subordination to imperialism and the utter inability of Stalinist leadership based on statified capital to provide a genuine alternative.
Pre-capitalist China had once been among the most advanced societies on earth. A series of dynasties, periodically replaced under the blows of mass peasant rebellions, ruled through the centralized political bureaucracy. China’s dynastic centralism, however, could not achieve the centralized, modern nation-state and economy that capitalism could in its progressive epoch.
The last, Manchu, dynasty was already in decline by the 1800’s, the point at which Western capitalist encroachment became substantial. The next century saw the acceleration of this decline under the pressure of British-led opium-peddling and gunboat diplomacy. Whole regions were carved into spheres of imperialist influence, and the Chinese masses were subjected to intense degradation and exploitation. But through this process came the creation of modern classes, above all the proletariat, within the pre-capitalist society.
By the beginning of this century, the dynasty was but a hollow shell, requiring little to topple it. The push came from a series of limited revolts culminating in the nationalist revolution of 1911. But the middle-class led forces lacked the energy, cohesion and class base to implement and sustain a bourgeois-democratic program; the result was a decomposition of power into the hands of regional warlords. In the imperialist epoch, capitalism too was unable to unify China.
The masses would soon gather forces for a new rebellion. This was the 1925-27 revolution of workers and peasants, a critical focal point in the international class struggle. It was also a key test of competing strategies in the Third International, the organization constructed after the victory of the workers’ revolution in Russia in 1917, to which the Chinese masses looked for aid and advice.
By the mid-1920’s, the Stalin-led Comintern was pursuing a policy of subordinating proletarian struggles to an “anti-imperialist” bourgeois-nationalist stage. This meant placing a militant working class and the young Chinese Communist Party (CCP) at the mercy and disposal of the nationalist Kuomintang (KMT) and its leader, Chiang Kaishek. Stalin justified this strategy on the grounds that Chinese society was imperialized, backward and primarily agrarian, so the struggle could not go beyond a bourgeois stage.
The revolutionary leader Leon Trotsky countered by pointing out that China’s forms of pre-capitalist economy were wedded to a world capitalist system that was in decay; therefore a stage of bourgeois-democratic development could not be completed by capitalist forces. Trotsky argued that the Chinese proletariat had a strategic role far out of proportion to its numbers: to lead the Chinese masses in a socialist revolution that, in the course of advancing proletarian goals and spurring world revolution, could solve the uncompleted bourgeois-democratic tasks.
Thus Trotsky extended his theory of permanent revolution, originally applied to Russia, to other oppressed nations. Russia, both imperialist and imperialized, had had a more centralized structure under the Tsars than did dynastic China. But real centralization could only come under workers’ rule.
As Trotsky foresaw, Chiang joined the side of imperialism and reaction, in the process butchering countless workers and peasants. Trotsky’s theory was confirmed, but in the negative. And the proletarian defeat not only secured imperialism in Asia but further isolated the embattled workers’ state in Russia. The resulting cynicism, as Trotsky anticipated, helped consolidate Stalin’s position.
In the wake of the 1925-27 disaster and subsequent setbacks, the CCP became isolated from the working class and its struggles, and operated as a rural-based organization under middle-class leadership. This state of affairs corresponded with the rise of Mao Zedong as party leader. Mao had shown a flair for capitulating to Chiang in the failed revolution. But he had been in the wing of the party emphasizing rural struggle (in opposition even to the Comintern agents) and had been a leader of the short-lived “peasant soviet” in Jiangxi province. When the party became isolated from the working class and was in desperate retreat from Chiang, Mao acquired the credentials to assume leadership.
The Maoists were strengthened by their role in combatting the Japanese invasion of the ’30’s and ’40’s. In this period, the weak Chinese bourgeoisie faced the trauma of occupation and then the spectacle of the KMT taking over whole industries from the withdrawing Japanese and turning them into individual fiefdoms for officials. Corruption and inflation mounted. A planned KMT offensive against the Maoists after the defeat of Japan turned into a rout, as whole KMT armies melted away in front of CCP forces. When the CCP rolled to military victory, Chiang and the KMT established a regime on Taiwan (trampling on the native Taiwanese in the process).
The final victory by 1949 was as much a product of the Kuomintang’s implosion as the CCP’s own efforts. Thus the compromising and wary Maoist forces embarked on a disguised bourgeois democratic revolution without the capacity to complete it, much less to establish socialism.
The workers’ movement had revived when the Japanese retreated at the end of the war. Workers in Shanghai seized factories when the KMT armies approached, and the KMT could not curb the subsequent strike wave. But economic misery weakened the struggle. When Chiang collapsed in the late ’40’s, the working class played a passive role, a situation that Mao actively pursued. The CCP moved quickly to stabilize capitalism, above all by insuring labor discipline. It ordered the workers to cooperate with their bosses in the interest of developing production. And it instructed the KMT’s secret police to keep order as it took over the cities.
With the disciplining of the workers, Chinese capitalists were promised that private industry would have a “glorious future.” But once the CCP had contained the workers, it began moving in on the private capitalists, aiming for more complete control of the economy and independence from imperialism. It began with a series of campaigns (the “three antis” and “five-antis”), which because of their appeal to the masses, had to be posed not in explosive class terms but as fights against corruption, tax evasion and the like. By the mid-50’s, the frightened bourgeoisie had sold its enterprises to the state at bargain prices; the capitalists were compensated and allowed to stay on as managers until party officials could grasp the reins.
Mao addressed a top businessmen’s group in 1956:
We have reformed all capitalist industrialists and businessmen eliminating them as a class and taking them all into our fold as individuals. ... We cannot say the bourgeoisie is useless to us; it is useful, very useful. The workers do not understand this because in the past they have had conflicts with the capitalists in the factory. (Quoted by Nigel Harris in The Mandate of Heaven, p.43.)
Mao moved more radically against private capital only when his overtures to the U.S. during and after the world war were turned down; the Americans were aligned totally with Chiang. It was the Korean war, when the U.S. directly threatened China, that compelled the Maoists to undertake the intensified statification of the 1950’s.
Despite the ruling party’s Marxist pretensions, it established nothing resembling proletarian rule. What was set up by the mid-1950’s was a statified capitalist economy run by and for a reorganized ruling class. Controversial though such an analysis appeared at the time of the CCP’s defeat of imperialism’s lackeys, and especially in the prime of Maoist influence on the Western left in the 1960’s, it has been proved correct by more recent history’s illumination of the capitalist nature of China’s rulers.
Unable to crush the masses or to develop as rapidly as necessary, given the Cold War and the Russian threat, the CCP had to institute a series of measures embodying important democratic and material gains. These included distribution of the land to peasants and the destruction of landlord power in the countryside; elevating the status of women; kicking out imperialist firms and providing a measure of unity to a badly fragmented country; raising health and educational standards; beginning a system of job guarantees for urban workers. In the same period, the regime tamed inflation and corruption and increased industrial production, using the Soviet model of development. All this won it a large measure of popular support and willingness to sacrifice.
But there was no systematic securing of the demands of the democratic revolution. From basic issues of women’s equality and national consolidation to elementary political liberties, rights and conditions were not only denied but actively combatted by the Maoist state. The cruel practice of foot-binding was abolished, prostitution was curbed, freedom of divorce was granted and women gained entry into the modern work force and limited access to political power. But women’s participation in industry varied according to the need and dictates of the Stalinist leadership. Their roles in political leadership was marginal. And employed or not, they bore the brunt of domestic labor.
Working-class rights especially were trampled under the “workers’ state.” Revolutionists were persecuted, independent workers organizations like soviets and factory committees were not allowed, and the “trade unions” have been mere appendages of the bureaucracy. The system of job guarantees and benefits of state workers – the “iron rice bowl” – was an important concession. But like all concessions under bourgeois rule, it serves as an instrument of social control. It is tied with and dispensed through the danwei, or basic work unit. Through the danwei the individual workers receive not only their pay and benefits but have them regulated and contained – from recreation to marriage and having children. And (with modifications in recent years) workers are tied to a unit for life. The aim was to divide workers, to atomize and isolate work units from each other.
Despite early successes, the dominant sections of the CCP felt compelled by 1957 to initiate a sharp break from reliance on Soviet aid and much of the Soviet organizational model. Mao denounced the USSR as imperialist, claiming with ample evidence that the Soviet Union under the cover of socialist brotherhood was pursuing its own, hostile interests: the Soviets had sacked much of the industry in Manchuria in the wake of Japan’s defeat, expected its aid to China to be repaid, and assumed Beijing’s subservience. For most of the next two decades, Chinese economy and society would be dominated by a variant of Stalinism.
Maoist China isolated itself as much as possible from international capitalism. It emphasized management of economic affairs by party officials chosen for their political adherence to “Mao Zedong thought” rather than technical expertise. In place of material incentives for increased production there were “moral” incentives – ideological exhortations, often through orchestrated mass campaigns. This was closely linked to a voluntarist concept that material and technical shortcomings could be overcome through ideologically-driven manual efforts. It was also accompanied by a systematic effort to present the society as egalitarian. Recruitment to the party emphasized peasant and worker backgrounds; displays of rank and privilege were discouraged, and there was a certain leveling of wages.
Behind this facade was a different reality. The upper layers of the bureaucracy enjoyed vast if unpublicized amounts of wealth and privilege. Mass recruitment to the party was not designed to prepare the proletariat to rule but to create a loyal and privileged layer. The formal de-emphasis of rank did not eliminate the reality of a stratified and highly regimented society.
The Maoist social model had historical and material roots. A huge but backward and fragmented country, China faced not only a hostile Western imperialist world but by the 1960’s a militarily powerful Soviet enemy on its borders. There were thus intense external and internal pressure on Chinese statified capital to expand and preserve itself through an isolated and massive labor-intensive effort as a substitute for modern economic innovation. Thus the CCP that came to power was intensely nationalist and self-reliant.
But the economic successes necessary to underpin any chance of independence were absent: the worst economic times in fact occurred when specifically Maoist policies were most dominant. The Great Leap Forward of the late ’50’s, characterized by such projects as drafting peasants for labor in “backyard furnaces” which produced virtually worthless steel, led to the greatest famine on earth. The “Great Proletarian Cultural Revolution,” using student “Red Guards” initiated by Mao in the mid-’60’s as a factional weapon, at its height virtually paralyzed the economy. It so stirred up workers that Mao was forced to turn to the People’s Liberation Army (PLA) to rein it in.
By the time of Mao’s death in 1976, China was falling further behind not only imperialist Japan but the emerging East Asian “tigers.” Government studies carried out over the next two years would reveal that the average peasant was no better off than a quarter of a century before, and rural mass unemployment was a thinly disguised fact. Rural and urban discontent was growing, punctuated by events like the political demonstration at Premier Zhou Enlai’s funeral and the creation of the “Democracy Wall” in Beijing. Mao’s own designated successor, Hua Guofeng, jailed the most prominent Maoists as the “Gang of Four” and rehabilitated Deng Xiaoping, a party veteran who had long been lightning rod for Maoist hostility. Hua, lacking any real base and with no sense of direction, was himself muscled aside by Deng by the end of the decade. In the process, the reform era extending to today was ushered in.
As for Mao’s vaunted anti-imperialism, in the absence of a genuine internationalist proletarian strategy, accommodation was inevitable. The strident anti-imperialist militancy of the ’50’s and ’60’s was primarily a reflection of the bureaucracy’s self-interest under conditions of isolation; it was not a simple matter of choice but one largely imposed in different ways by the Western and Soviet blocs. Like Maoist egalitarianism, this militancy included window dressing (e.g., aid projects to Africa) that covered for a pro-imperialist policy. For even at the height of this period, China helped prop up some of the most reactionary regimes in the world, like Pakistan’s military and the Shah of Iran.
When Nixon in the early 1970’s signalled the U.S.’s willingness to use China to counter the Soviets, Mao obliged. The strident tone against the U.S. was modified and a strategic alliance was conceived. Deng’s later opening to the West and China’s self-conscious pursuit of big-power status was no counterposition to Maoism but its logical extension.
In planning a new direction, Deng was aware of the Asian capitalist success stories and their basis, as well of the fermenting mass discontent in his own country. For two interrelated tasks – expanding the capital base and buying off urban discontent – he sought to apply basic elements of the same strategy in China. For this aim he held a trump card: the enormous mass of exploitable labor – not so much in the existing urban work force as in the vast population of hungry and underemployed rural dwellers. It was necessary to utilize foreign capital and alter the internal operation of Chinese capital so as to maximize this potential.
Political conditions and the economic climate of the time reinforced this effort. China had the leverage to import needed capital and technology while protecting much of its home industry from foreign competition; there also were ready foreign outlets like the U.S. for cheap exports. The Cold War gave China maneuvering room between the Soviet and American rivals, and it faced no imminent conflicts with its sources of foreign capital. (China did fight a brief but bloody war with Vietnam in 1979, but that had no serious effect on its development plans.) The final ingredient, a stable but highly repressive state apparatus, was supplied by the Stalinist regime.
Begun under the slogan of the “Four Modernizations” (agriculture, industry, science and technology, defense) Deng’s program called for openings to foreign investment and a turn towards a mixed economy. Though Deng has been reviled as a “capitalist roader” by Maoists, his aim was not to dismantle the statified system but to prop it up; his allies included elements in the bureaucracy who wanted a return to the Stalinist model. None of them at the time had an idea how far the reforms would go towards traditional capitalism.
Some benefits were needed for quelling mass discontent and jump-starting the reforms. Urban workers got their first wage increase in many years. Peasants were allowed a long-term lease of their land, and the government raised procurement prices for their products. The result was an impressive growth in agricultural output for several years.
In industry, the lure to foreign investment was key. In the early ’80’s such investments were few and highly restricted, but they grew as restrictions were lifted. The sources were largely ethnic Chinese based in Hong Kong and Taiwan. These superexploitative undertakings centered in Special Economic Zones (SEZ’s) set up by the government in coastal areas and granted hugely favorable wage and tax policies; they produced labor-intensive exports like toys and clothing.
Major imperialist powers like the U.S. and Japan have been pouring capital in, especially in heavy industrial ventures like aircraft. By the ’90’s foreign capital was arriving at a feverish pace: in 1993, China was the largest receiver of foreign investment in the world, garnering over $20 billion. International capital was attracted by cheap land, tax breaks and above all cheap labor.
The other major prop was the growth of the xiangzhen qiye, or town and village enterprises (TVE’s). Built primarily in rural areas, the TVE’s are a complex mix of private and local government firms geared towards the open market. Contributing nearly a third of the national product by 1990, they have been favored by the regime for several reasons. They soak up rural unemployment; they exploit workers without generally having to guarantee jobs and benefits as in the state industries; and isolated rural settings are preferable to large cities where workers can more easily organize.
Fueled by these reforms, all sorts of unabashedly capitalist projects have sprung up, often in partnership with (if not initiated by) party officials at all levels, often secretly and disregarding central directives. Even the army is in on the act, setting up everything from television factories to brothels. The level of interpenetration between state and private capital is far greater than formal structures would suggest.
The result of all this has been a rapidly growing economy, expanding at an average rate of 10 percent since 1978 and 12 percent in the ’90’s. Emboldened by its gains and increasingly turned to the outside world, China’s ruling class is preparing itself to be the regional geopolitical power. The military budget has expanded faster than economic growth, and political-military forays are being launched. These include sending warships to the Spratly Islands, a potentially oil-rich outcropping in the South China Sea astride major shipping lanes; military maneuvers backing reasserted claims to Taiwan; and claiming oil fields controlled by Indonesia.
Important concessions have been thrown to the masses along the way. Over 100 million peasants have been lifted out of absolute poverty, and living conditions rose for many others. For this of course the masses can only really thank themselves for the sweat and toil that created the great mass of surplus value. The greatest benefits went to the capitalist class: the entrepreneurs and enterprising party officials (often the same). In a time when “paramount leader” Deng was proclaiming that “to get rich is glorious,” the newly-acquired wealth and status was now flaunted – with a vengeance.
Its achievements notwithstanding, Chinese capitalism has deep problems. The bloom went off the agricultural sector years ago, after the initial reforms and resulting productivity gains. In fact, since 1985 the grain produced per person has declined every year. Chinese agriculture has never genuinely broken from its backward state. And the chaotic industrialization of the countryside led to the spoilation of large areas.
There is an industrial crisis as well, most pronounced in the state industries. One reason, a favorite target for Western economists, is the “iron rice bowl” which allegedly under-utilizes and over-compensates state-industry workers (relative to private and local industries). But that is not the only reason. Local bosses’ self-interest, the emphasis on filling quotas rather than quality production (leading to shoddy, useless products), distorted accounting techniques – these have been inherent problems in Chinese state industry and other national Stalinist economies. About one-half of state firms are losing money. The government has recently pumped more money into the state industries, but with a less than proportional increase in output. By now, state industry produces only 43 percent of the national output but commands over 70 percent of its capital resources. As in other capitalist countries the state assumes some unprofitable but necessary tasks private capital won’t undertake, so the figure is an exaggeration – but the downward trend is clear.
Even as industry flourishes in other sectors, the whole is less than the sum of its parts. Normally economic growth would help national cohesion, but in China it has contributed to fragmentation. Foreign investment has widened the gap between the interior and the coastal provinces, pulling the latter in different directions according to which foreign capitalists predominate: Guangdong province (Canton) leans toward Hong Kong; Fujian to Taiwan across the strait; Shandong to South Korea across the Yellow Sea; the Laodong/Shenyang corridor to Japan and South Korea.
Meanwhile, as much economic authority has passed to regional and local authorities, they have used their power to build competing bases. Local protectionism has risen to extraordinary levels. Many cities ban large factories from obtaining goods from non-local manufactures; Shandong province’s insistence on producing textiles from the cotton grown there led Shanghai textile mills to import cotton from abroad! Critical construction projects, like the Three Gorges Dam on the Yangtze River (a study in mass social dislocation, gross overspending and ecological disaster), have had even technical specifications like the dam’s height become the basis for negotiations between local governments reflecting relative power relations. Thus Deng’s reforms, like Chiang’s and Mao’s, are proving unable to unify China. Indeed, under imperialist pressure, they are deepening China’s internal divisions.
With the reforms has also come the growth of awesome levels of corruption, not seen since the days of Chiang Kaishek. It has contributed incalculably to economic inefficiency and underlying instability of the regime. The government has moved to curb the worse excesses, including convicting and executing leading officials. But everybody knows their crimes are just the tip of the iceberg.
The glitter of China’s foreign investment and trade is misleading. China has a rising foreign debt burden, already over a $100 billion. The value of annual exports (which dropped 8 percent the first half of 1996) barely exceeds that amount now.
The window of favorable trade relations is closing for China, in part a victim of success. The U.S. in particular has been unhappy with China’s trade, having sustained an almost $40 billion deficit with China the past year alone, on a level with the contentious deficit with Japan. It gripes about copyright piracy, and though U.S. capital is happy to exploit Chinese workers, it frets that the high technology transfers involved in operations like the joint venture between Ford and Jianglin Motor Co. to build mini-vans will make China too competitive. One senior Clinton official states China “is a far more formidable economic concern for us than Japan.” This is hardly true, but the U.S. can assert its imperialist ambitions more easily over China.
The U.S. has ratcheted up its strong-arm tactics: it continues to block China’s entry into the World Trade Organization, demands stronger copyright enforcement and continually threatens trade sanctions. “We don’t want them to be at the party without meeting their real global responsibilities,” said Dana G. Mead, chairman of the National Association of Manufacturers. (Business Week, Oct. 16, 1995.) The U.S. asserts imperialist prerogatives against China in ways that it cannot against its real imperialist rival, Japan.
Thus the favorable geopolitical alignment is disappearing, as China’s drive for regional power alarms not only its neighbors but every imperialist with regional designs. The Spratly Islands are a flashpoint, with six Asian nations claiming them (and the U.S. Navy claiming the Pacific Ocean). Taiwan is another. The Diaoyu Islands are disputed by China and Japan. East Asia is awash in old nationalist scores to settle, new ones emerging and enormous economic and human resources up for grabs. The U.S. has begun pursuing just what the Chinese leaders accuse it of, a policy of containment. At the moment, this is at a low level, e.g., toying with the notion of using Vietnam as a counterweight, and limiting its disputes with Japan.
U.S. imperialism is caught between contradictory tendencies. On the one hand, it is compelled by the class struggle and international competition to exploit Chinese labor to the maximum. On the other hand, the prospect of a new regional power (rising from a land and people who had their noses rubbed in the dirt for so long) is threatening – particularly in a region staked out by the U.S. for geopolitical dominance for most of the century.
The contradiction expresses itself in the differing agendas of corporations and the government. Many firms continue to pour capital into China and want a minimum of political friction; others fear Chinese competition, compelling the government to make waves. As the president of the U.S.-China Business Council, Robert Kapp, complains: “What we see is a colossal discordance between the rhythms of global business and American politics.” (Business Week, Feb. 12, 1996.) Still, there has been near-unanimous agreement on some tactical questions (e.g. ending copyright piracy); after all, increasing the power and profits of imperialism is in the hearts and minds of all involved.
Overlapping this dilemma is an even more basic one: how to keep the aspirations of the Chinese rulers in check while enabling them to maintain their hold over the masses. Imperialism is deeply worried that China’s ruling institutions cannot contain a mass explosion. A debate over the army illustrates the balancing act involved in limiting if not clashing with China’s ruling institutions while propping them up:
Some members of Congress now advocate imposing penalties on China’s military industries to punish China for its record on human rights, an idea that some China specialists warn would be counterproductive. Specialists argue that because the military is expected to be the key institution for stability in China after the death of Deng Xiaoping, the senior leader, punishing military industries is fraught with problems of definition and practicality. (New York Times, May 24, 1994.)
What a dilemma for the poor U.S.! As the world’s chief imperialist, it seeks a strong national center in China to stabilize exploitation, while individual capitals seek private spheres of interest and a more accommodating regime.
Things should get nastier. What may be emerging is a struggle over China between the U.S. and Japan. Japan has significant productive investments in China, which, like the other East Asian countries, is a necessary source of superexploited labor and raw materials. And while China’s power is growing, it is fragile, based in large part on foreign-controlled capital and with national cohesion so questionable that Pentagon planners wonder aloud whether China will break up after Deng’s death. The very size that makes China appear formidable in its expansionist aims is an enormous weakness in the context of continuing backwardness and division. Imperialism will make China pay for its ambition.
Greedy from past ventures, eager to find new forms of exploitation yet facing rising constraints on its prosperity, the Chinese ruling class has launched an offensive against the masses. This has been longer and more pronounced in the countryside. The lowering of procurement prices in 1984 marked the end of concessions to the peasantry, and rural living standards are now declining. By the ’90’s, the state was even resorting to giving the peasants promises of future payment instead of cash. But the peasants were paying more for machinery and fertilizer. The chronic underemployment in the countryside has been aggravated, and despite the growth of rural industry, an estimated 100 million peasants have been “freed” from the land to roam the cities looking for whatever work or handouts they can find. Particularly hateful is an array of new taxes imposed on the rural masses by local Stalinist officials, whose aims and methods rival those of the former landlords.
An intensified drive to superexploit the workers has also been under way. It is no accident that the greatest growth rates have been in the SEZ industries: this is where working conditions are the worst. Workers are denied the rights and benefits of jobs in state industries. They are crammed into barracks and face all sorts of hazards. (Their ordeal gained prominent attention only when fires at two foreign-owned firms killed 150 workers. Locked doors blocking exits and other violations of safety codes, made possible by employer payoffs to party officials, led to the carnage. One plant was a virtual prison, with workers locked inside the compound, not having been paid for weeks). Not accidentally, the TVE’s are tending more towards becoming outright private ventures, where wages and benefits are lowest.
Meanwhile, the “iron rice bowl” is being emptied. Workers entering the urban work force since 1984 are no longer guaranteed a job. Layoffs (often under the guise of “vacations”) have occurred in some state industries, and in many others workers simply aren’t paid. The government is utilizing the migrant peasants in a way capitalism has always used the floating reserve army of unemployed: as labor for the most rotten jobs under short-term, low-benefit contracts, and as competition against better-situated workers. (Some reports say that over 100 million ex-peasants have migrated to the cities in search of work.)
Even as they step up the attacks, the bureaucrats shed even further the pretense of representing the masses. Party recruitment is more slanted towards the intelligentsia. The passing of power and privilege from party leaders to their children (Deng himself has two daughters high in the bureaucracy and a real estate tycoon for a son) has reached so far that the top leaders’ offspring are known derisively as the “princes’ party.” Party officials ever more openly use their position to share in the booty. In February of this year, three People’s University researchers published a paper concluding that income inequality in China in 1994 was higher even than in the U.S. (Cited in October Review, Sept. 30, 1996.)
A ruling class that exposes its class character by increasing, open corruption and attacks the masses is sure to provoke social explosions. Indeed, the temperature of the class struggle has risen sharply in recent years.
The brutally suppressed mass demonstrations in Tiananmen Square in 1989 revealed sharply that the capitalist bonanza would evoke a mass response. The Western press chose to emphasize the student content of the demonstrations and the illusions in bourgeois democracy of many. But the most promising development, the most threatening to the rulers, was the growing participation of workers. Fed up with inflation and corruption, workers’ protests and strikes had been percolating prior to Tiananmen; the protests in the square became a lightning rod for their grievances. Workers poured into the movement and became its most potent defenders. It is no accident that the most brutal attacks by the regime were against workers’ positions; the subsequent repression came down far worse on working-class militants. (See our coverage in PR 34.)
While the bureaucrats were successful in suppressing an uprising, they could not prevent the emergence of struggles on the local level and at the point of production. A confidential government report listed over 6000 illegal strikes and 200 riots in 1993 alone; and the rate had risen in the first part of 1994. (We have not seen more recent figures.)
Working-class resistance has centered in the SEZ’s and against cutbacks in state industry. Shenzhen is the largest SEZ, adjacent to Hong Kong; royal Hong Kong dollar notes are legal tender, and labor costs average 15 percent of Hong Kong rates. In 1993 and 1994 there were over 1100 cases of “collective labor disputes” (i.e., strikes); there are reports of underground unions proliferating. Workers in state industries are resisting, often fiercely, the cutbacks in benefits and security. In March 1994, tens of thousands marched in Manchuria protesting pay cuts. And a more recent wave of layoffs in Shenyang prompted the following report:
“Some workers tried to set a statue of Mao Zedong on fire with gasoline,” said Xu Ping, 30, an industrial engineer. “That’s how angry they were. People with families are seeing their livelihoods disappear and they are asking, ‘What kind of workers’ state is this?’” (New York Times, June 18, 1995.)
Such protests are the major reason behind recent party decisions to slow its privatization drive and even increase funding for state ventures.
Peasants have also been rising up. While they were considered staunch backers of the reforms in the early days, and a support of the regime in the wake of Tiananmen, this is evaporating. Some resistance is passive, like refusing to cultivate land, or abandoning it. Some is much more active: unrest was reported in 20 of China’s 29 provinces in 1993, including 3000 violent attacks on tax collectors. Twice in Sichuan province that year, thousands of peasants attacked officials, trashed their fancy homes and fought battles with police. These are ominous developments for the ruling class, which knows well the long history of Chinese peasant revolts.
The fact of mass revolts is not surprising; it might be asked why they haven’t been even deeper. One reason is state repression, but a more fundamental factor has been the continued economic boom in sectors developed during the reform era. This has led to feelings of mobility and faith in continued expansion – and for many workers, material gains. And while incredible levels of superexploitation remain, wages have risen in the SEZ’s to the extent that some imperialist firms are shopping around in even lower wage areas like Vietnam. Now Beijing hopes to counter some regional disparities by advertising the lower-wage interior provinces!
For many workers, even superexploitation can be a step up from the gnawing poverty of rural life. Consider the conversation among workers and the journalist Nicholas Kristof:
I returned to Zhou and again tried to chat up her daughter. “So how much do you make a month?” I asked.
“Six hundred yuan each,” replied her mother. At that time, 600 yuan was worth a bit more than $100 – more than a university professor’s salary and a large sum in their home village. Still, it was a tiny amount compared with the huge profits the factory owner was earning from the sweat of her brow.
“It’s kind of a tough life here, I guess,” I suggested.
“Oh, it’s better than the village,” the mother gushed. “We earn lots of money here, and the life is pretty good.”
“What about your husband?” I asked. “Is he happy about you leaving him and coming to work here?”
Zhou smiled patronizingly at me. It was clear she thought I had asked a stupid question. “How could my husband object?” she asked. “Look at how much money I’m making!” (China Wakes, pp. 325-6.)
This example shows the regime’s predicament. It was critical to improve mass living conditions. The CCP is now finding this more difficult to achieve, even as it has increasingly relied on buying off the masses. At the same time, the prevailing wages and benefits can no longer sustain workers at the new levels of modernity and proletarian concentration: the masses are less willing to tolerate crass exploitation and more able to do something about it.
This is true not only of China. We noted the growing strength of workers in Korea. Now countries like Thailand and Indonesia are becoming cauldrons of class struggle, where even limited political unrest has unnerved imperialism and its local hatchetmen. Wherever capital moves, its industries turns into an Achilles heel of capitalism and a source of power and hope for the proletariat.
The decisive element missing in this volatile mixture is an authentic Marxist revolutionary party leadership to organize, cohere and provide political direction to the scattered upsurge. Workers’ ambivalence, confusion and cynicism toward Marxism is understandable: it has been the alleged ideology of an oppressor for nearly fifty years. Yet at the same time many look to the Stalinist imitators of Marxism as protection against the harsh realities posed by reform.
In the absence of authentic communist leadership, different elements have led or attempted to lead the resistance. Pro-Western trade union advocates like Clinton’s favorite, Han Dongfang, at best have terrible illusions in imperialism and at worst are its paid agents. There are various stripes of Stalinists. And there are many serious militants. As hard as the task is, there is enormous potential to win class-conscious workers to the revolutionary Trotskyist program that opposes all forms of capitalism. Unfortunately, while occasional reports suggest underground efforts toward building far left groups, at the point we have no information about them.
Chinese capital aims to reap the benefits of the “Asian miracle” and reproduce on a vastly larger scale the achievements of the smaller “tigers.” But the miracle itself is running out of steam. Export growth has drastically slowed across the region. South Korea, for example, suffered a record $9.3 billion account deficit in the first half of the year, forcing the resignation of its finance minister. Attempts to move further in high-end industry face stiffened resistance from imperialist powers, particularly Japan, whose recent and prolonged recession spelled an end to the longest and greatest regional success story.
Further down the chain, the problems are more daunting. Thailand saw export growth plunge from 23.4 percent in 1995 to 4.4 percent this year, with an account deficit expected to hit $15 billion by 1997. Indonesia has $100 billion in foreign debt. Bourgeois economists consider the slowdown natural for “maturing” economies. But the masses are not receiving the benefits of maturity and the truly “mature” (imperialist) economies will be themselves in crisis.
So becoming an imperialist power is not the future of China; internal contradictions and the designs of world imperialism prevent this. At best, there will be sectoral modernization lashed to continuing conditions of backwardness. As the world capitalist crisis deepens, China, like all “developing countries,” will be forced to submit to imperialism’s political domination and economic exploitation, as long as capital rules.
China’s future more resembles that of Mexico. Both countries have suffered under the yoke of imperialism and had democratic revolutions in this century that were partially successful in curbing foreign domination and enacting land reforms. But the leaders of both the CCP and Mexican PRI determined over time that cutting a deal with imperialism was the only way to enhance their own wealth and power. The terms of this deals were strikingly similar, in view of the low-wage foreign-owned maquiladoras of Mexico’s North and the SEZ’s of China’s coast. Both ruling classes saw enough success to think they could sit at the imperialist table. As to differences, Mexico’s profit balloon already exploded with the recent debt crisis. China’s is waiting to happen.
The Chinese ruling class faces a crisis of leadership. Deng is sick and feeble and could die any day. Party chief Jiang Zemin and Prime Minister Li Ping head a list of aging, mediocre bureaucrats that serve as an interim leadership. Not having Deng’s historical base or opportunity, they will at best muddle through temporarily. There is an inherent drive to find more decisive leadership and strategy to address the rising social struggles, gathering economic crisis and international conflict. There are several possibilities:
Such a transition might occur under the slogan of “democracy.” But while the intelligentsia and entrepreneurs may acquire more elbow room, political democracy for the masses is too much a liability for the needs of capital. As well, centrifugal forces already splintering the ruling class would be further aggravated. Indeed, under imperialist influence, regional satrapies could become increasingly independent of Beijing even while the facade of national unity is maintained.
Events in Russia, where hard-line Stalinists and reactionary nationalists have formed alliances, illustrate how these tendencies can overlap. Most important is that all factions of the bureaucracy share an opposition to proletarian rule and any upsurge of the workers. While they may differ, even violently, over the methods employed, they all aim to suppress the workers’ interests. But none can solve the deepening crisis.
The development of Stalinist China has fundamentally confirmed the conception of capitalism put forth by Marx, Lenin and Trotsky. It has also led to and confirmed the path along which our own tendency has developed Marxist theory.
Mao’s seizure of power was a bourgeois-democratic revolution of sorts, a defeat for imperialism. But as noted, the reforms were limited; they did not complete all the bourgeois democratic tasks of national unification, independence, modernization and political equality. That they are being reversed shows they were not fundamental to the system. Thus with Deng’s reforms, women’s relative status to men has actually slipped, prostitution has re-emerged, and kidnapping women and selling them into virtual domestic slavery is widespread.
The steps toward national consolidation did not fundamentally overcome the country’s fragmentation. As we have seen, the system itself has operated on and reinforced an intense internal parochialism. Neither could the CCP solve the land question. Despite Mao’s professed feeling of kinship with peasants, and concessions to and support from them in the early years, the logic of statified capital in China impelled Mao into an antagonistic relation to this class. At the same time, rights for national minorities like the Tibetans have been ruthlessly suppressed. The denial of bourgeois-democratic freedoms of political expression and organization is systemic.
The theory of permanent revolution says that it is the task of the proletariat to complete the tasks of the bourgeois democratic revolution in the course of carrying out the proletarian revolution. This is indeed a central objective remaining in China for the future workers’ state. Capitalism, which in its progressive epoch could achieve the democratic program, is now the barrier to them.
Events obliged us to introduce a corollary to permanent revolution as formulated by Trotsky in the first half of the century. A central reason the bourgeoisie abandons its own program is its need to lock arms with other reactionary forces in the face of the proletarian threat to property. But Mao’s revolution and world events in the period following World War II demonstrated something new. When the proletariat is demoralized, contained and above all decapitated (its leadership destroyed), it can be defeated. With its threat to property removed and when local ruling classes are weak, alternate forces may carry out limited bourgeois reforms, gain the support of the masses and widen conditions for capitalist development.
Mao could pose a “revolutionary dictatorship of several classes” or a “bloc of four classes” under conditions in which none of those classes could effectively wield power; the petty bourgeoisie was inherently incapable of ruling, and the proletariat and bourgeoisie were conjuncturally weak. The real ruler was the CCP, which eventually incorporated the tiny, corrupt and ineffective bourgeoisie into a new embodiment of capital. This shift was palmed off as the “socialist” transformation from “New Democracy.”
The direction Chinese society has taken also confirms our theory of Stalinism. Two decades ago, well before Deng’s reforms, we noted a central contradiction of Stalinist capitalism: proletarian property forms (i.e. state ownership of industry) under capitalist rule. State property embodies gains conceded to the working class, but it burdens the statified economy with blatant inefficiencies from the point of view of capitalism. The system becomes less and less “efficient” compared to traditional monopoly capitalism: it prevents both competition between workers from driving wages down, and competition between firms from forcing the weakest out of business. Thus, we said, there is an inevitable tendency for statified capitalism to devolve towards market-type forms of operation and ownership, through twists and turns and even reversals. We also noted that the private forms could not eliminate state capital, which remains necessary for mobilizing resources, absorbing the brunt of crises and carrying out less profitable but essential economic tasks. Today the two forms coexist in a dubious equilibrium.
Thus the failure of the Maoist strategy was an inevitable outcome of an attempt to circumvent the realities of capitalism on the basis of capitalism itself. Deng’s reforms are a logical response of statified capitalism to its own failures. They are in line with the collapse of Stalinist rule in Eastern Europe and the former Soviet Union.
Deng’s reforms are also a confirmation of the Marxist notion of the epoch of decay. Despite the appearance of capitalist prosperity, the key to the boom period has not been a systematic development of the productive forces, but the use of one of capitalism’s oldest techniques, the sweatshop, and other forms of raw superexploitation.
Moreover, the Asian boom came at the expense of other sectors. Industrial production has fallen in whole sectors of the imperialist world, and living and working conditions of workers have plummeted, as firms from Boeing to small garment shops have “outsourced” or completely moved production to China and similar areas. In other regions, particularly Africa, the drying up of productive investments has contributed to social collapse. The imperialists are not only more able technically to invest in areas like China, but they are obliged to by the conditions of capitalist crisis.
To many on the left, China still serves as a socialist beacon. In part this is reinforced by the CCP’s efforts to shore up the statified sector and by its verbal commitment to socialism. Isolated and imperialist-dogged Stalinist leaders like Castro now look to Beijing for aid and comfort.
Others consider China today to be reactionary because they see Deng as having betrayed Mao and overthrown socialism. But while differences between Mao and Deng are apparent, their regimes do not differ fundamentally: where and when did a class counterrevolution take place? The Maoist answer that this was accomplished by clever maneuvers at the top denigrates the masses’ role in political upheaval even as it lauds it. For proletarian Marxists, the answer is that Deng could turn so easily to imperialism and private exploitation because China was never a workers’ state.
There were very understandable reasons why Maoism was such a potent attraction to begin with. Against heavy odds and brutal conditions, Mao defeated Chiang and stood up to imperialism. He was a charismatic person of color in a white-dominated world. He led a society with the trappings of egalitarianism and mass participation. Unlike Stalin, he attached importance to theoretical matters, and (definitely unlike Stalin) could write with clarity and interest.
But this did not make his revolution socialist. Maoism represented radicalized middle-class politics. The core of the CCP’s leadership came from the middle-class intelligentsia; Mao himself was from rich-peasant stock and was radicalized as a student. Much of the cadre and a number of party leaders came from poor-peasant backgrounds; but their conditions in the besieged enclaves of the ’30’s and ’40’s, the party ideology and the securing of official positions once in power led them to a different outlook and behavior from the parochialism and isolation of the typical peasant. They assumed the world view of the pseudo-collectivist, social-engineer bureaucrat.
It would be tempting today to relegate Maoism to the dustbin of history, after Deng’s reforms and the collapse of most Maoist currents internationally. But we have already noted its potential in the growing Chinese upheavals. Elsewhere, Maoism attracted many who saw it as an anti-imperialist alternative to Soviet Stalinism, and it still provides ideological fuel for guerrilla movements like “Shining Path” in Peru. As struggles of workers and the oppressed heat up, its popularity among middle-class radicals frightened of working-class independence could revive.
While most Maoists no longer regard China as progressive, pseudo-Trotskyists still laughably consider it a “deformed workers’ state.” Their theory has been proved totally bankrupt by history. It could not explain when or how capitalist states in East Europe in the 1940’s became proletarian without a workers’ revolution or a revolutionary workers’ party; indeed, the Stalinist takeovers were accompanied by alliances with the traditional capitalist parties and the crushing of workers’ movements. Today the theory cannot decide whether, when or how the same states have restored capitalism. While Trotsky’s epigones dispute the current class nature of East Europe, they all say China is still proletarian – despite superexploitation of labor and the blatant privileges of capital. They debase Trotsky while claiming his mantle.
Trotsky could never have accepted such a theory. He characterized Russia of the 1930’s as a degenerated workers’ state, still embodying gains of the October Revolution however tenuously; the Stalinist bureaucracy was a Bonapartist force, balancing between classes without an independent base of its own. As he saw it, the situation was extremely unstable and temporary: either the proletariat would sweep the bureaucracy away in a victorious political revolution, or else a successful counterrevolution would restore capitalism. The looming world war would provide the acid test. (See our book, The Life and Death of Stalinism, Chapter 4.)
We believe Trotsky’s assessment of the degenerating workers state was no longer correct after the late ’30’s. But it was based on that state’s origin in a proletarian revolution led by a revolutionary party. This foundation was totally missing from the newer Stalinist states like China.
As to China, Trotsky predicted in the early 1930’s that the CCP, basing itself on a peasant army, would come into conflict with the revolutionary working class in the cities.
He was extremely accurate in foretelling the Stalinists’ relation to the working class as they marched into the cities. (The Life and Death of Stalinism, pp. 320-324.) The last thing he could have accepted was that they could establish a workers’ state – or that “Trotskyists” would proclaim it one! [See also Was Trotsky a Pabloite?.]
One example of such thinking comes from the Spartacist tendency, which favorably compares China’s economy to Russia’s, claiming a class difference between the regimes.
In the former Soviet Union and throughout East Europe, capitalist restoration has resulted in the collapse of industrial production, the pauperization of millions of workers, the closure of large numbers of big factories and mines and hyperinflation reaching annual rates of 2,000 percent. This is to say nothing of the bloody nationalist, racist frenzies besetting the region. The effects of counterrevolution have been brutally apparent.
This bears little resemblance to China. Whereas the gross domestic product in Yeltsin’s Russia has plummeted by 60 percent since 1991, the Chinese economy has been growing at an average annual rate of 10 percent for the past few years.... Nonetheless, the danger of capitalist counterrevolution is quite real. (Workers Vanguard, Dec. 15, 1995.)
As even the Spartacists know, China’s grossly unequal “prosperity” has everything to do with the regime’s opening the country to imperialist and private exploitation, as well as to its enormous supply of miserably paid labor in the countryside. Implying that successful superexploitation makes a state proletarian must be a new low in rationalizing the moribund deformed workers’ state theory.
The deformed workers’ statists present the idea of a modern society with no internal laws of motion, an impossibility for Marxists. Similar in this respect are “third camp” theories that depict societies without an internal dynamic, neither capitalist nor transitional to socialism. An unusually explicit formulation of such a “bureaucratic collectivist” theory for China appears in an article by Richard Smith, “The Chinese Road to Capitalism” (New Left Review, May-June 1993.)
Smith reasons that the market reforms have barely affected the still mainly state-run industries.
The leading Chinese theorists of market reform took great pains to insist that “the law of value” must be operational in China’s “planned commodity economy” because, according to them, ownership is entirely irrelevant to the day-to-day operation of the enterprises....
[But] ... the real power to direct the pace and pattern of development ... remained lodged outside and above the level of the firm – in the hands of the party-bureaucracy. It is these real structures of property and surplus extraction – class relations of exploitation, power and domination – which were historically formed and which, so far, have been left largely intact by the reforms, that limit market reform within the system ....
However, Smith also observes that “much of the bureaucracy itself has become a force for capitalism,” alongside the foreign and domestic capitalists. The only force remaining with a stake in the old system seems to be the working class.
For capitalist social-property relations to conquer China today would require the expropriation of workers from their guaranteed jobs, their right to let their children inherit their jobs, their right to housing, medical care, and many subsidies essential to subsistence – in a word, breaking their “iron rice bowls.” These have to be broken in order to open them up to capitalist exploitation. At the same time, legal ownership of society’s means of production must pass – by one means or another – into the hands of a class of capitalists.
Of course, under Deng the ruling bureaucracy is already moving rapidly to undermine these workers’ gains. So the agent of capitalism is the bureaucratic collectivist class – a ruling class undermining and supposedly even overthrowing itself!
But the privatizers will not be able to go all the way, as East Europe shows (and our theory predicted). Capitalism in its epoch of decay requires a high level of state intervention, both to stabilize the economy and discipline and pacify the working class. Smith overlooks that the fact that elements in the ruling class defend statified property does not mean that they can’t be capitalist. Some are tied to specific state firms or industries; others more broadly seek to temper the immediate extraction of surplus value to achieve social peace and stability – and thereby gain more surplus value in the end.
The deformed workers’ state and bureaucratic collectivist theories have predicted nothing. In their original forms (by Ernest Mandel and Max Shachtman, respectively), along with Tony Cliff’s version of state capitalism, they both saw the Stalinist system as more dynamic than traditional capitalism – and the inevitable successor to it. All three have been proved false by the collapse of the Stalinist regimes in East Europe and the USSR – and now once more by China.
Economic disaster, wars of mass destruction, heavy repression – the specific mix cannot be predicted, but these are the ingredients of the capitalist future. The worst can be averted, class, if a revolutionary workers’ leadership is built.
Central to the revolutionary program is the understanding that the existing Chinese state cannot be reformed in any fundamental way to serve the masses’ interests. Like any capitalist state, it serves the ruling class. It needs to be overthrown and replaced by a state of the working class, organized through its own institutions: unions, workers’ councils, factory committees and above all the revolutionary party.
Under capitalist leadership of any form, Maoist or openly bourgeois, China will remain prey to imperialism. The global predators seek to revive the pre-revolutionary warlords and protectorates, even under nominal central sovereignty, in order to more freely and directly carry out their superexploitation. Only a workers’ state can truly unify China.
Within China, the fundamental conflict is not between sections of the ruling class, state bureaucrats and managers versus outright capitalists and party proponents of private capital. It is between the working class and the ruling class as a whole. The greatest disaster of the deformed workers’ state and bureaucratic collectivist theories is that, at times of revolutionary upheaval, they led militants to rely on dissident reformist figures ultimately loyal to the ruling class like Imre Nagy in Hungary in 1956, and Lech Walesa in Poland. If the independence of the proletariat and its revolutionary party is abandoned, there is no way forward for the working class.
An old lament says that “the lives of Chinese have no worth.” Superexploitation, famines, imperialist domination and corrupt dictatorships have combined to give the saying a tragic appearance of truth. But these times are coming to a close. The size, volatility and strategic situation of the Chinese working class – in one of the weak links in the capitalist chain – invest it with a tremendous revolutionary potential. The Chinese proletariat needs to build its revolutionary party in time to meet the looming crisis.