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Comments on the Chinese Question

posted 12 Sept 2011, 07:44 by heiko khoo   [ updated 12 Sept 2011, 07:50 by Admin uk ]

The following is a contribution from Claudio Belotti one of the leaders of the Italian section of the International Marxist Tendency. The article is a challenge to the IMT's official position that defines China as capitalist.      


The process of capitalist penetration in China presents us with some features which have no historical precedent, both in terms of what we have seen in the past few decades in the ex-Soviet bloc and in some fundamental points of Trotsky's analysis in the Revolution Betrayed. One fundamental difference is on the economic plane. Trotsky had predicted that capitalist restoration would have led to a catastrophic economic and cultural collapse. This prediction was only too eloquently borne out in the events that unfolded in the former USSR, former Yugoslavia, etc. However, in China in the last 20 years or more, the introduction of capitalism and the penetration of foreign capital have coincided with an unprecedented development of the productive forces. This is an element of crucial importance in determining the tempo, the duration and the gradual nature of the process.   

 Another fundamental difference is that in the former Soviet bloc the more or less gradual opening up to market forces went hand in hand with an increasing corrosion of the power of the bureaucracy, which rapidly lost its authority both internally and internationally, up to the point where this created the conditions for the sudden collapse in 1989-91.

On the other hand the Chinese bureaucracy today sees its prestige growing on a world scale. After one and a half centuries China is once again a major player in world politics.

A satisfactory definition of the process that is presently taking place can therefore only be achieved through an understanding of the process as it has developed historically, in its concrete evolution and in its peculiarities. In the given context, seeking a simple label to attach to what is happening in China risks us making important mistakes when we come to develop the perspectives. A definition of the process and the tasks that flow from this must be rooted in the analysis of the phenomenon and not imposed on it.

With the opening up to the market and to private property, new contradictions are emerging within the Chinese economy.

First of all, one must not forget that in spite of the enormous development (not only in the last 20 years, but also since 1949) the Chinese economy is still relatively weak compared to the main capitalist countries. Participation in the world market, combined with what is still strong control on the part of the state, has undoubtedly produced, and will continue to produce, important and even spectacular successes, as the successes of the space programme underline. However, this is not enough to define the general position of the Chinese economy which, without the strong control that the state continues to exercise, would not be able to compete with the main capitalists economies.

If China were really open to capitalist competition, without the role played by the state and the bureaucracy, it would be reduced once again to being a semi-colony as it was prior to the 1949 revolution. The ruling elite of the CCP is well aware of this and,

in spite of all the opening up so far carried out, it takes great care not to allow the country to go in this direction and tends to keep control of the necessary instruments.

Stephen Roach sums up the present situation the Chinese economy finds itself in:

"China chose the occasion to announce a critical transition point on the road to reform. For the first time since the Communist Revolution in 1949, the old numerical targeting and sectoral allocation conventions of central planning have all but been eliminated from the multi-year framework. Only broad aggregate growth guidelines remain - 7.5% average gains in real GDP through 2010 - but they were presented as more of a forecast than a top-down edict. In effect, the Chinese leadership is telling us that the dawn of a new market-based approach to macro policy management is at hand. (...)

"At this point in time, however, the transition is more in theory than in practice. China basically has only one leg in the Promised Land of the market system - the other remains planted firmly in the old framework of centrally-directed controls. While Chinese ownership conventions are shifting away from state-owned to private-sector enterprises, the transformation to market-based pricing continues to lag. That's certainly true of the legacy system of administered pricing of many goods and services that still exists for utilities, public transport, coal, natural gas, oil, gasoline, and indirectly for food due to state-sponsored agricultural inventory management programs. But it is also true of the prices on a variety of financial instruments - namely, interest rates, the currency, bank credit lines, and bond prices. These prices are still tightly controlled by leadership decisions made at the highest levels of the Chinese power structure. As financial sector reforms continue apace, I have no doubt that market-based pricing will spread into these areas as well. But for now, that is far from the case.

"The resulting hybrid system is not without some serious problems. (...) China evidently does not yet feel that the institutional conventions of its newly reformed system are strong enough to withstand the full-blown pressures of market-driven forces." (S. Roach, Inside the China Debate) []

The preponderance of Foreign Direct Investment (FDI) has had the effect of creating an imbalance in its weight within the economy and a relative weakness of the bourgeoisie proper. In this sense we can make a comparison between these investments and other similar kinds of investments that in the past have been used by the imperialist powers to set up their industries in colonial and semi-colonial countries. However, this analogy reaches its limits at the decisive point. In the latter examples economic dependence led to direct political dependence. The State was merely the local storekeeper for the imperialist masters. This was the position of pre-revolutionary China, with its hundreds of territorial, economic and military "concessions" to the imperialist powers, which rendered it a semi-colonial state even though it was fomially independent. Today that situation cannot be repeated without breaking down the structure of the Chinese state, i.e. without a fight to the death with the bureaucracy. Today's Chinese state is radically different from the state that existed towards the end of the imperial era or even of the "nationalist" period of the 1920s and 1930s, which was a state in decomposition. Today it is a sovereign state

that feels sure of its own strength, as its growing willingness to participate in world politics demonstrates.

Precisely because of these reasons, whatever the immediate advantages the multinationals may reap from their investments in the country, the attitude of imperialism towards China and its regime remains one of distance, suspicion and hostility. Yes, there are different points of view about the relationship with China. The extremist wing - that has the vain hope of overthrowing the regime, possibly by using the national question - is not in the driver's seat. This is in spite of the fact that Bush has defined China as no longer being a "strategic partner" but a "strategic enemy" — which in any case comes far closer to describing the real situation. Another wing, which is making huge profits by investing in China, declares angelically that "sooner or later" economic growth and relations with the outside world will bring about the "democratisation" of China. Although this may seem more subtle, this second position is more than anything else an admission of weakness. In any case, neither of these two wings of the bourgeoisie thinks that the Chinese state, its bureaucracy and the Communist Party can be trustworthy instruments in defending their historical interests.

The Chinese bureaucracy is getting stronger and has been legitimised even on the political and social plane, above all with the constitutional changes in 2004 and the CCP opening its doors to the capitalists. However, the latter remains a weak class that still relies on cultivating good relations with those who have "power", i.e. with the CCP. The fact that 30% of the capitalists interviewed in an opinion poll joined the Party, rather than indicating the strength of the bourgeoisie, indicates that it feels so weak that it cannot express itself through its own party.

This is how one author of a recent analysis of the Chinese "reforms" expresses herself:

"In the PRC, however, there is little chance for the leaders of the private economy to play a central role in China's political change in the near future. The delayed development of private industry has resulted in a sector that, while growing rapidly in terms of employment and output, remains small in scale, often dependent on local governments for support, and still facing discrimination in credit opportunities. In fundamental ways, FDI has become the substitute for large scale private industry in China. This substitution has important effects on the possibilities for democratization in China." (Mary Elizabeth Gallagher, Contagious Capitalism - Globalization and the Politics of Labor in China)

Replace "democratization" with "restoration of capitalism" and the meaning of what is being said becomes abundantly clear. The weakness of the Chinese bourgeoisie is clearly demonstrated in its inability to express itself through its own party: "The main slogan of the liberals is 'down with the Communist Party'. But the workers make a distinction between the Party of the Maoist era and today's Party, which increases further their conflict with the liberals" (interview with one of the editors of the China Workers website, closed down by the authorities). This statement is of the utmost importance: the liberals, or rather the political and ideological spokespersons of the bourgeoisie, dream of destroying the CCP. However, the real flesh and blood capitalists join that very same party: it is clearly a confirmation of the weakness of the Chinese bourgeoisie, not of its strength.

In the course of capitalist restoration in the USSR the CPSU fragmented and was destroyed. Leaving aside the different interpretations of that process, it is indisputable that there were several breaking points and qualitative turns that are clearly identifiable: 1989 with the opening of the borders and the collapse of the East European satellite regimes; the failed coup in August 1991 that led to the dissolution of the USSR and the disbanding of the CPSU, a party that on paper counted 18 million members was banned without it putting up any serious resistance; this was a blow that objectively dislocated the bureaucracy leaving it at the mercy of the restorationist forces led by Yeltsin.

In 1993 the conflict erupted once more with the clash between the President (Yeltsin) and the White House (the parliament, around which were gathered the forces that in some way were trying to put a break on and block the process of capitalist restoration). This was a clash that verged on civil war, and from which once again Yeltsin emerged victorious.

To date, none of this has happened in China. The cause undoubtedly is to be found in the radically different economic situation, which has allowed for a reconciliation of different interests with the prospect of development for all. However, this has had the effect of keeping substantially intact the political domination of the CCP, i.e. of the bureaucracy.

This does not mean that the problem has been resolved with gradualist methods, but rather that the decisive confrontation has been delayed.

The question of the CCP and of the nature of the state remains an open one. The position that states that the bureaucracy has become nothing less than an instrument of the new bourgeoisie is one-sided. The CCP was and remains the backbone, the skeleton of a powerful bureaucratic apparatus still capable of imposing its interests and decisions on the nascent bourgeoisie. In a certain sense one could say that to date it is the bureaucracy that is using the bourgeoisie to achieve its own aims rather than the other way round.

The development of Chinese capitalism can only be understood within the context of the general perspectives for world capitalism. For at least a decade the process of capitalist restoration in China has had a stabilising effect on a world scale. Industrial development and the rapid proletarianisation of the population have provided fields of investment and above all they have kept up the rate of profit on a world level. This reduced the impact of the 1997 "Asian crisis" and, at least to date, has allowed the US economy to defy the laws of gravity and to continue to grow in spite of its gigantic trade deficit, which is covered precisely by the finances generated by the Chinese and more general Asian growth.

The thesis of the "completed transition" implies recognising that effect has been transformed into cause, taking the whole process onto a higher level. According to this way of thinking, the relative softening of the contradictions of capitalism on a world scale have allowed for the completion of the process of Chinese restoration in a molecular and almost imperceptible manner. Thus in China we would have the possibility of new development similar to that in the USA in the 19th century, with all the effects that this would have on a world level. Capitalism would thus have found in China a terrain for its own rejuvenation, a new "frontier". This would be the case not only on the economic plane but also on the level of the class struggle, if one takes into account what the consequences would be of a victory obtained through the mere application of economic pressure. A new historical phase would open up, a long historical period of slow accumulation of the contradictions, before any new revolutionary possibilities would appear on an international scale. Our characterisation of the epoch would have to be profoundly revised.

However, such a development is excluded for now precisely because of the inherent contradictions within the process of capitalist restoration in China and the consequences of all these both internally and internationally. Should the process continue along the same lines that we have seen so far, (and as things stand this is the most likely perspective) a breaking point will be reached which will be determined by the contradiction between the bourgeoisie, both national and international, and the Communist Party, i.e. the bureaucracy. The very successes of the "reforms", at a certain point would pose the new bourgeoisie with the following question: why should we the owners of the country have to live under the totalitarian (and very costly!) domination of an all-powerful, greedy, corrupt and authoritarian apparatus? Just as we govern the economy, we must control the state, the bureaucracy, the army, and the political system.

An analogy can be made with the USSR in the 1920s when the very success of the NEP led to a rupture between the renascent bourgeoisie and the bureaucracy. It is worth remembering that the first blow was struck not by the bureaucracy but by the rich peasants, event though in the end the bureaucracy won out.

Secondly, the penetration of foreign capital at a certain point could put in doubt the national independence of China. This is a perspective that the bureaucracy, and in particular the army, would never accept and against which they would fight with all the means at their disposal.

Thirdly, the social consequences of the march towards the market could spark off the struggle of the proletariat, which has been enormously strengthened. This struggle would inevitably have an effect on the official trade unions and the CCP itself.

Obviously it is true that the corrosion produced by private capital, the corruption, the social and regional differences, in the long run can all weaken the possibility of resistance on the part of the bureaucracy, strengthen the openly bourgeois wing within the bureaucracy and put into question the final outcome of this conflict. However, it is one thing to say that the outcome of the process is uncertain and that the balance of forces could eventually tip in favour of the restorationist forces. It is a radically different thing to say that this confrontation has already taken place and that the elements of contradiction are merely residual. The first statement is true, the second is false.

The position according to which the transition has been completed implies clear political consequences. The first concerns the definition of the state: a bureaucratic-

totalitarian state that defends the interests of capitalism implies a clear choice of slogans, programme and tactics. The labour movement would have to pose itself the problem of presenting transitional demands of a democratic character: freedom of the press, parliamentary democracy, etc.

However, such an approach would not correspond at all to the real situation inside the country, nor would it allow us to connect with the most advanced layers, who — as is also demonstrated by the material published by our international — are well aware of the need not to be confused with the "democratic" demands raised by the liberals (inside and outside China).

The development of the class struggle inside China will express itself also in the form of a conflict within the CCP, involving not just rank and file elements but also higher levels of the apparatus that tomorrow could find themselves in opposition to the bourgeois line. Given the traditions of the CCP and of the country, it is practically inevitable that the conflict would express itself also at the highest levels of the Party and thus of the bureaucracy, although at the moment it is not possible to accurately anticipate the timing and the forms in which this would unfold. The history of post-revolutionary China is one of sudden and violent turns which on more than one occasion have brought the country to the brink of civil war. These ruptures within the leadership have taken place even though every time right up to the last minute everything seemed to be under control and on the surface there seemed to be conciliation between the different positions and interests.

A correct definition of the process now taking place is indispensable if we want to develop demands and a programme that we need for the intervention in China. It is not by chance that the position of the "completed transition" remains silent on this question. What should be the economic and social programme'? What political demands should we raise? What is the relationship between the democratic and the economic demands? The question of the programme helps to place the analysis on a concrete plane.

What should our demands be?

Firstly, the right to organise trade unions and to set up workers' committees in the factories, as essential tools in the struggle to win decent wages and living conditions; - a programme of social welfare protection (healthcare, education, pensions, etc.) which would guarantee egalitarian social conditions, something which is completely missing at this moment in time. - A review of the agreements reached with the foreign investors, which would guarantee the basic interests of the workers and of the Chinese people; expropriation of those companies that refuse to accept the new conditions. - A new plan of short, medium and long term investments to redress the huge social imbalances that the rush towards capitalism has created, and that rationalises economic development with the aim of meeting the needs of the workers and peasants. - An offensive against the widespread corruption. - A public investigation under the direct control of the workers of all the privatisations that have taken place in the recent years, at the end of which a decision would be taken on which sectors and which companies should be renationalised.


The political demands flow directly from the economic and social programme: trade union rights, workers' control, workers' and peasants representation at all levels (factory councils, soviets) right of recall of the leaders, the right of expression and of organisation for all genuinely socialist positions.

Democratic demands which we would put forward in a normal capitalist context (parliamentary elections, freedom of the press, etc.) should be considered in an extremely conditional manner precisely because of the nature of the party in power in China (and thus of the regime that flows from this), which, over and above the labels we place on it, we cannot treat purely and simply as if it were the bureaucracy of a "normal" capitalist state.

Even now a genuinely proletarian government could apply such a programme without the need for a thorough social revolution. The State still has control of the financial and fiscal levers and of the strategic industries (often belonging to the army). It is evident that we have here is a "hybrid" programme in which certain tasks of the social revolution are mixed together with those of "reform" (in the sense given to that word by Trotsky when he refers to the political revolution being a "reform" of the Soviet state). This is dictated by the hybrid and still uncompleted nature of the process taking place.

To define the process of restoration as uncompleted and the bureaucracy as still a distinct organism from a normal bourgeois bureaucracy does not mean hypothesising a simple "return backwards" guided from above. What it means is that we take into account the following: 1) The decisive conflicts provoked by the process of restoration are not behind us in the past, but still have to unfold in the future; 2) The dynamics of the forces that are being played out cannot be reduced to two sides, proletariat and new bourgeoisie, with the state apparatus and the CCP being mere instruments of the latter; 3) The process can be considered as completed only once a genuinely bourgeois state apparatus is in place, which is not yet the case. On this road the bourgeoisie will have to come into conflict with important sections of the bureaucracy and also with the working class. The conditions for this conflict and the relationship between the different forces on the ground are yet to be defined. 4) This conflict will decide the future of the CCP, which will be torn apart by the two opposing camps. 5) Twenty years or more of opening up to the market have greatly strengthened the position of the bourgeoisie and imperialism. However, the outcome of this conflict will not be automatically determined solely by the forces operating within China, but will be deteimined by the world context as a whole.


May 23, 2006