Democracy and Class Struggle take an extract from a Pao yu Chings article on current phase of Imperialism and China published in Lenin's Imperialism in the 21st Century in 2016 for discussion.
China’s role in the new phase of imperialism Since 1980 especially since China joined the WTO at the end of 2001, China has played the most important role of a developing country in the internationalization of production.
The Chinese government has cooperated closely with global capital in setting up China’s place in the global assembly line. Once set up, China has participated in the internationalization of production in earnest.
The sheer size of China’s industrial workforce (from 40 million in 2004 to 80 million in 2014) significantly increased the global labor supply and intensified the downward pressure on wages in all countries.
In the last two decades China has occupied all sectors of labor-intensive production, from clothing, toys, shoes, electronics, and assembling computers, iPhones and iPads; it has also produced watches, bicycles, TVs, washing machines, refrigerators, airconditioners, microwave ovens, players and recorders, circuit boards, and motorcycles for export.
In the process of internationalizing production, global monopoly capital has also been able to shift high-energy consuming and highly polluting industries, such as crude steel and computer assemblage to China and other developing countries.
Additionally China has provided the space for all major automobile manufacturers to produce auto-parts and assemble automobiles. In addition to providing space for global production, Chinese consumers who have the purchasing power also provided a large market for global consumer durables and products.
Even though the Chinese people as a whole only consume less than 40% of what China produces, China’s newly arrived urban middle class (around 10% of the population) has provided a large consumer goods market to absorb surplus products spilling out of the international capitalist system.
Consumers in the upper middle-income bracket purchased 24 million cars in 2016, which was 37% more than the second largest US auto market, and car sales in China alone were larger than the entire world automobile market in 1979.
The very rich in China (less than 1% of the population) who buy high-end designer clothing, handbags, shoes as well as expensive wine, imported race cars and stay in luxurious hotels – constitute a significant share of the world luxury goods and services market.
In the past three and a half decades China has played a very important role in moderating the contradictions of world capitalism by providing a seemingly inexhaustible labor supply, an ample space for global capital to invest, and a market to absorb large quantities of global consumer goods.
China’s participation in imperialist globalization gave global monopoly capital extraordinary opportunities to expand and thus enhanced the power of other imperialist countries, especially the United States.
Additionally large quantities of cheap consumer goods imported from China have helped lower the costs of living in imperialist countries.
China’s high rates of GDP growth, which averaged more than 10% in the 1990s and early 2000s, helped raise the growth rate of the global capitalist system.
It is not an exaggeration to say that since the early 1990s the active participation of China along with other developing countries in the international capitalist system has significantly mitigated the crisis of capitalist production and accumulation for the past three and a half decades.
However, inevitably China’s high growth rates have had to come to an end.
Its current official growth rate has dropped to 6 - 7% (the real figure could be lower) as the global demand for Chinese exports slowed, and as overbuilt productive facilities, infrastructure, and housing reach beyond the saturation point.
In the years to come China is likely to become a de-accelerating force (very much like the present day Japan) in the global capitalist system when it has to deal with its severe problem of excessive over-capacity, and figure out how to continue recycling the US dollar to avoid a financial crisis.
Most importantly the Chinese government will be facing stronger and larger scale of resistance by Chinese workers, environmentalists, and ordinary citizens demanding change.
China is a developing country at the same time it has become known as an emerging imperialist power
On the one hand, China has experienced similar treatment as other developing countries in this phase of imperialism.
On the other hand, there are significant differences between China and other developing countries.
From 1949 to 1979 China was politically independent.
It developed an independent industrial system and an independent military.
These differences have made it possible for China to expand its sphere of influence after becoming part of the international capitalist system.
The Chinese government would very much like to emulate what the US has done, though on a much smaller scale, in order to reap bigger profits.
With its large US dollar holdings it has invested in other developing countries in Asia, Africa, and Latin America and established bilateral trade and investment relations with many countries including Russia.
The Chinese government has also sought to establish other supranational institutions, such as the BRICS’ Investment Bank and the Asian Infrastructure Investment Bank as alternatives to IMF and World Bank.
However, China’s ability to expand its influence is limited.
In today’s world order, countries other than the United States cannot eliminate capital control (letting capital flow in and out of the country freely) and maintain an independent monetary policy and stable exchange rate all at the same time.
China’s wish to internationalize the renminbi (RMB) cannot be realized without opening up its capital market.
China has tried to maintain the level of RMB not high enough to hurt its exports, at the same time it has to be careful not to depreciate the RMB, causing capital flight.
The slight depreciation of RMB in August 2015 and the subsequent decrease of its foreign exchange holdings from 4 trillion dollars to 3 trillion dollars in the year that followed gave rise to fear of further capital flight. China’s actions now clearly demonstrate its plan to expand internationally.
Even the power of the United States to achieve these three objectives at the same time is limited due to the power of global capital.
Monetary policy that changes the level of interest rate affects the capital flow and thus the exchange rate.
However, China’s capitalist economy is so closely tied to the almighty dollar in the world capitalist system and because China’s capitalist class has benefited tremendously from the current imperialist system, it does not have reason or the ability to challenge the imperialist system as exists today.
Consequences for Chinese people, its resources, land, environment and its future development China’s participation in the current phase imperialism has had serious consequences for the Chinese people, its resources, land, environment; it polarized the Chinese society and has deprived China of long-term sustainable development.
Although China has huge capacity to produce, only a small percentage of people live opulently while the majority of Chinese people lack adequate healthcare, a livable environment, and educational opportunity.
Those families whose children have left the countryside depend on money their children sent home for their daily existence. Younger people who migrate to cities to work in the exporting industries and in construction (totaling about 300 million) labor long hours (10 to 12 hours or more a day) for 6 days a week and receive meager wages.
They work under repressive conditions in unsafe environments and have been treated brutally by their employers, who unilaterally deduct their wages, and/or delay wage payment, and/or refuse to pay their share of the social security to which workers are entitled.
Although the general standard of living has risen for the Chinese population, the majority of Chinese are trapped at an income level barely above subsistence, with no or little healthcare/ retirement, and very little job security.
In more recent years, an increasing number of employers with heavy debts simply closed their shops and fled.
Mistreatment of workers intensifies as employers’ profits decline. Workers have risen to resist worsening conditions by strikes and protests, the number of which increased from less than a total number of 200 in 2011 to 2,650 in 2015.
Since 2015 the Chinese government has responded with harsher measures to crack down on this overt resistance by savagely beating up and sometimes killing strike workers and jailing their leaders.
There are also extreme consequences to China’s exhausted resources and severely polluted environment. China has very limited access to fresh water and is one of the 13 countries with the lowest per capita water supply.
Water in 85% of China’s six biggest river systems is undrinkable even after treatment.
The percentage of ground water that is polluted reached 60% in 2013.10 Currently, 400 out of China’s 600 major cities do not have adequate water for their residents. Cities continue to dig deeper for water, causing depletion of ground water. China’s Ministry of Water Resources stated that this practice not only further aggravates the water shortage, but also lowers water
See: http://www.cnn.com/2017/02/22/asia/china-labor-unrest-we-the-workers/index.html 10 The Economist, May 17th-23rd 2014, quality and increases the risk of earthquakes and landslides.
Air pollution in China is just as serious.
In Northern cities air pollution has reached extremely toxic levels. Readings of particulate matter no more than 2.5 microns in size (PM2.5), the most harmful type of toxic smog, routinely reaches 40 times the maximum level allowed by the World Health Organization.
In order to raise the GDP growth rate, the Chinese economy has become seriously distorted. Government and business investment reached 38.7% of GDP in 2006 – a very high level when compared with both developed and developing countries.
Then the government responded to the aftermath of the 2008 crisis with an economic stimulus plan of $586 billion, most of which were spent on a wide range of investment projects. Thus investment as percentage of GDP was further raised, and is currently over 50 percent.
Consistent high levels of investment caused not only overcapacity in factories, but also in all kinds of infrastructure, and in commercial and residential housing.
Many four-lane highways built in small towns are deserted, while whole cities and towns with rows and rows of residential and commercial buildings, roads, hotels and exhibition centers stand empty.
In the past three decades China’s production charged ahead with such force and speed, it led to the belief that China has become a newly emerging imperialist power. However, a closer look shows the forces supporting this emerging phenomenon are losing their strength.
Looking ahead As we examine carefully the current phase of imperialism we find a seemingly unstoppable monstrous system sweeping the world through the unleashed global monopoly capital, ruthlessly ripping apart the people, land, and environment.
The insatiable need for capital to expand has led to over-production that over-tills the land, over-grazes the pastures, over-fishes the rivers and seas, and pours fatal amounts of chemicals and wastes into ground, air, and water, causing irreparable damage to the earth.
Imperialism immensely benefited monopoly capital but is devastating the majority of the world’s population, deteriorating its resources and destroying its natural environment.
Lenin pointed out 100 years ago that imperialism was decadent. It is now obvious its decay has rapidly accelerated. However, at the same time, a closer look shows that this monstrous system is also very fragile – built on a house of cards (paper US dollars).
In the years to come we will see monopoly financial capital continue to be unsatisfied by the slower rates of accumulation.
It will again infuse the global economy with enormous liquidity to inflate asset prices and cause more widespread and deeper crises (Hudson, 2012). 11 “China’s Water Shortage to Hit Danger Limit in 2030” People’s Daily Online: http://english.peopledaily.com. cn/ 12 See IMF working paper “Is China Over-Investing and Does it Matter?”
The global capital class has become more integrated in their interests than any other time in the history of capitalism /imperialism.
At the same time strong peoples’ resistance from below, all over the world, is seriously challenging imperialism. Therefore, the material conditions for international solidarity of the working class is more favorable than at any time in the past.
It is up to us to analyze the current phase of imperialism, to strategize and organize our struggle against it, and to defeat it. Labor and environmental struggles in China today are rising to unprecedented level despite the recent brutal official crackdown.
China’s working class should shoulder more responsibility due to its size and importance and also due to the legacy of revolution and socialism it possesses.
China’s experiences over the recent decades have given people a deeper understanding of why Mao placed China’s political and economic independence as the highest priority and why only under socialism can such independence be achieved.
REFERENCES: Eichengreen, Barry, Exorbitant Privilege, The Rise and Fall of the Dollar and the Future of the International Monetary System, Oxford University Press, 2011 Helleiner, Eric, States and the Reemergence of Global Finance from Bretton Woods to the 1990s, Cornell University Press, 1994 Hudson, Michael, The Bubble and Beyond, Fictitious Capita; Debt Deflation and Global Crisis, ISLET – Verlag, 2012 Lapavitsas, Costas, et al., Crisis in the Euro Zone, Verso, 2012 Lenin, Imperialism, the Highest Stage of Capitalism, Petrograd 191
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