In 1939, James P. Cannon, the historic leader of American Trotskyism, remarked:
“Who touches the Russian question, touches a revolution. Therefore, be serious about
it. Don’t play with it” (The Struggle for a Proletarian Party).
Revolutionaries today must approach the “Chinese question” in the same way.
The “market reforms” of the past three decades have reintroduced
capitalist—and in some cases, even pre-capitalist—forms of exploitation for
millions of workers in China. This has led many leftists to conclude that the Chinese
Communist Party (CCP) bureaucracy has transformed itself into a new ruling class and
turned “Red China” capitalist.
CCP censorship and the impressionistic “news management” of the Western
media have contributed to widespread confusion about the nature of Chinese society. Making
sense of recent developments is further complicated by the sheer immensity and diversity
of China. There are vast regional disparities between the booming southeast, rusting
northeast and the comparatively underdeveloped and isolated west. There are also enormous
differences between provinces within the same region, counties within the same province
and even villages within the same county. For example, in Nanjie village in Henan
province, where collectivized agricultural production has been maintained, industrial
enterprises still provide employees with the guaranteed “iron rice bowl”
introduced by Mao Zedong in the 1950s. Yet in other Henan villages state-owned and
collective industrial enterprises have been almost completely privatized.
In the final analysis the class character of a state is based on the underlying social
relations of production. The Chinese Revolution of 1949 created a bureaucratically
deformed workers’ state modeled on the Soviet Union under Stalin. While foreign and
domestic capital was largely expropriated, political control was monopolized by a
privileged caste—the top layers of the CCP—that pursued class-collaborationist
policies internationally while promising to chart an autarkic path to a nationally
isolated “socialist” China.
To assert that China remains a deformed workers’ state is not to deny that the policies
of the CCP over the past several decades have increased momentum toward a restoration of
capitalism. It is, in fact, the only description that provides a coherent explanation of
the class character of the CCP, the origins and development of the state created by the
social overturn of 1949 and the alternative prognoses for the future of the Chinese
Revolution.
Capitalist restoration—that is, the overthrow of the CCP and its replacement by a
regime committed to the privatization of the land, the banks and the rest of the
state-owned sector of the economy—would most immediately impact China’s 1.3 billion
citizens, the vast majority of whom are workers and peasants. It would also have enormous
international repercussions, greatly increasing pressure on Vietnam, North Korea and Cuba,
the world’s other deformed workers’ states. Opening China’s immense market to untrammelled
foreign penetration would set off a chaotic and dangerous struggle involving the United
States and Japan, and possibly other imperialist powers, over the spoils of
counterrevolution.
The Chinese Question Today
China has long been an important touchstone for Marxist internationalists. The bloody
defeat of the Second Chinese Revolution of 1925-27 led Leon Trotsky to generalize his
theory of permanent revolution. Trotsky concluded that, just as in Czarist Russia, the
indigenous capitalists in China and other backward countries were too closely tied to
foreign imperialism, and too fearful of plebeian revolt, to be capable of carrying out a
bourgeois-democratic revolution:
“With regard to countries with a belated bourgeois develop-ment,
especially the colonial and semi-colonial countries, the theory of the permanent
revolution signifies that the complete and genuine solution of their tasks of achieving
democracy and national emancipation is conceivable only through the dictatorship of
the proletariat as the leader of the subjugated nation, above all of its peasant
masses.”
—“What is the Permanent Revolution?”
In the 1930s, under Mao’s leadership, the CCP advocated the Menshevik-Stalinist
strategy of “two-stage” revolution. This class-collaborationist scheme called
for a first, “New Democratic” stage of unity with the
“progressive” bourgeoisie (represented by Chiang Kai-shek’s Guomindang) that
would supposedly benefit both the exploiters and their victims. The socialist
“second stage” was postponed to some hazy point in the indefinite future.
But in the course of a savage and protracted civil war that polarized Chinese society,
the CCP was eventually compelled to abandon any thought of coalition with the Guomindang.
In 1949, the CCP’s peasant armies finally rolled into China’s major cities and Chiang and
his generals fled to Taiwan, along with most of the big capitalists. The CCP’s victory
smashed the existing bourgeois state and freed China from imperialist control. The
property of the gentry-landlord class was expropriated and millions of hectares of
farmland were turned over to poor and middle peasants to cultivate. In the cities,
property belonging to the “bureaucratic bourgeoisie” was nationalized and a
state monopoly of foreign trade was instituted. At the same time, the CCP ruthlessly
crushed all attempts at independent political activity by the workers’ movement and
created a centralized, bureaucratically-planned economy.
The Chinese Revolution stunned Chiang’s imperialist backers and fanned the flames of
anti-colonialism and social revolt throughout East Asia and beyond. It quickly resulted in
enormous advances for the vast majority of China’s population. Women, who were living
under conditions approximating slavery, were able to enter into social and economic life
for the first time. There was a tremendous expansion in literacy, as well as massive
improvements in health care, housing, education and the provision of other basic social
services. Mammoth irrigation and waterworks were constructed, creating the prerequisites
for subsequent advances in agricultural productivity. Life expectancy, which stood at 35
years in pre-revolutionary China, had nearly doubled to 65 by the mid-1970s.
Despite the catastrophic consequences of the “Great Leap Forward” in the
late 1950s, and the chaos of the “Great Proletarian Cultural Revolution” of
the 1960s, China’s economy grew substantially. Between 1950 and 1977, industrial output
expanded at an annual average rate of 13.5 percent, higher than any other major
country—“developing” or “developed”—during that
period. As historian Maurice Meisner observed, “Without the industrial revolution of
the Mao era, the economic reformers who rose to prominence in the post-Maoist era would
have had little to reform” (Mao’s China and After: A History of the People’s
Republic).
Unlike the Bolshevik Revolution led by Lenin and Trotsky, the 1949 Chinese Revolution
led by Mao’s CCP was bureaucratically deformed from the outset. The Russian
Revolution of 1917 was carried out by the Bolshevik Party at the head of a class-conscious
workers’ movement schooled in many years of political struggle. The Bolsheviks sought to
create a state based on institutions of proletarian democracy—workers’
councils—and regarded the October Revolution as the first step in a world socialist
revolution. The CCP’s road to power involved a military-bureaucratic social
overturn, and the institutions it created were closely modeled on those of the degenerated
Soviet Union. The CCP bureaucracy adopted Stalin’s reactionary dogma of “socialism
in one country,” which constituted a denial of the importance of extending the
revolution globally, and emphasized instead development on a nationally-limited scale.
Trotsky viewed the Stalinist bureaucracy that consolidated power in the Soviet Union
after 1923 as a brittle and contradictory caste, rather than as some new kind of
possessing class:
“The class has an exceptionally important and, moreover, a
scientifically restricted meaning to a Marxist. A class is defined not by its
participation in the distribution of the national income alone, but by its independent
role in the general structure of the economy and by its independent roots in the economic
foundation of society. Each class (the feudal nobility, the peasantry, the petty
bourgeoisie, the capitalist bourgeoisie and the proletariat) works out its own special
forms of property. The bureaucracy lacks all these social traits. It has no independent
position in the process of production and distribution. It has no independent property
roots. Its functions relate basically to the political technique of class
rule.”
—“The Class Nature of the Soviet State,” October
1933
The Soviet bureaucracy’s power and privileges paradoxically derived from the
collectivized property of the workers’ state. It “robbed the people” through
endemic social parasitism rather than class exploitation in the strict sense. Trotsky
anticipated that those sections of the bureaucracy that hoped to secure their privileges
through privatization of state assets would align with the forces of capitalist
restoration. More conservative elements, concentrated among those who stood to lose out in
the event of large-scale privatizations, would tend to resist counterrevolution and might
even throw in their lot with an insurgent pro-socialist workers’ uprising. Trotsky
maintained that the ruling Stalinist caste had no necessary social function. In the long
run, if the proletariat did not succeed in wresting power from the bureaucracy through a
political revolution, capitalist counterrevolution would destroy the workers’ state.
Our analysis of the Chinese Revolution is based on the historic contributions of the
Spartacist League (SL) of the 1960s and 70s, when it was still a revolutionary
organization. (For an account of its subsequent degeneration see Whatever Happened to
the Spartacist League?) During the late 1960s, when Mao’s “Cultural
Revolution” was hailed by New Leftists and “Trotskyists” alike, the SL
correctly identified it as an intra-bureaucratic feud, and asserted that all wings of the
CCP constituted obstacles to China’s socialist development, which depended ultimately on
the extension of proletarian revolution internationally. This position was powerfully
vindicated in the early 1970s when Mao’s faction, fresh from its victory over its
“capitalist roader” rivals, formed an overtly anti-revolutionary alliance with
U.S. imperialism against the Soviet degenerated workers’ state.
Despite the enormous changes that China has undergone, there is an essential continuity
between Mao’s regime of the 1970s, Deng Xiaoping’s of the 1980s and Hu Jintao’s today. The
deformed workers’ state created by the 1949 Revolution has not (yet) been destroyed. In
unconditionally defending the Chinese deformed workers’ state against capitalist
restoration, Trotskyists uphold the gains of the social revolution, despite—indeed,
against—the Maoist/Stalinist bureaucrats who monopolize political power
within it.
Impressionists on China: Reformism in Reverse
A decade and a half ago, some leftists imagined that Deng’s “market
socialism” might represent a viable “third road” between planning and
the market (a view we critiqued in 1917 No. 14). Today, there can be no illusions
on this score. Many who once trumpeted “market socialism” currently view China
as a purely capitalist society. Victor Lippit, a prominent China scholar with a leftist
bent who embraced Deng’s “reforms” in the 1990s, has since concluded that some
form of welfare-state capitalism is the most that can be hoped for (Critical Asian
Studies, January 2005).
Lippit, and others who share his pessimistic assessment, tend to a social-democratic
view of the Chinese state as a class-neutral instrument which, if bureaucratic planning
fails, can begin to introduce market elements leading to the gradual emergence of a fully
capitalist society. Trotsky criticized such notions: “He who asserts that the Soviet
government has been gradually changed from proletarian to bourgeois is only, so to
speak, running backwards the film of reformism” (op cit).
Marxists, unlike reformists, consider that, at its core, the state is composed of
“special bodies of armed men” that exercise a monopoly of force in defense of
definite property forms—as Lenin explained in The State and Revolution.
Capitalism can no more be restored in a workers’ state through the quantitative extension
of market relations than it can be eliminated in a bourgeois state through a gradual
expansion of the public sector into banking or manufacturing.
Most accounts of “capitalist restoration” in China are based on the
apparent dominance of market relations in the economy. Even the leading organs of
imperialist finance capital, which are normally acutely sensitive to questions of property
rights, regularly refer to China as “capitalist,” albeit with a modifier of
some sort. The 20 September 2008 Economist, for example, speaks of
“state-led” and “oligarchic” capitalism in both Russia and China.
Elsewhere China’s economy has been described as “authoritarian capitalism,”
“bureaucratic capitalism” and “developmental capitalism.”
One of the more plausible “Trotskyist” attempts to explain how the CCP
supposedly presided over a seamless reintroduction of capitalism appeared in the
December 2007/January 2008 edition of Socialism Today, published by the Committee
for a Workers’ International (CWI). In a statement entitled, “China’s capitalist
counter-revolution,” Vincent Kolo, representing a minority viewpoint within the CWI,
argued that the Chinese Stalinists have carried out a full capitalist restoration. The
article asserts that a “brutal social counter-revolution of the last two
decades…has seen the former Maoist-Stalinist bureaucracy, like its counterparts
in the Soviet Union and Eastern Europe, abandon central planning and shift to a capitalist
position.”
Kolo paints a vivid picture of the devastating effect of CCP “reforms” on
the provision of education and health, which were previously guaranteed through rural
collectives or urban state-owned enterprises (SOEs), but which are no longer affordable
for many. He claims that China is more integrated into the global capitalist system than
Russia or other former Soviet states in terms of trade and penetration of foreign capital.
Chinese companies, he observes, are infamous for union-busting, corruption, environmental
destruction and unsafe working conditions. While admitting that China’s banks, which he
considers “as parasitic as any in the capitalist world,” are tightly
controlled by the state, he argues that this is not particularly unusual in Asia. He
concedes that in China land formally remains state property, but claims that successive
“reforms” have effectively privatized its usage and amount to a
“counter-revolution on the land.”
Kolo points to the fact that employment in the SOEs and collectives fell by half in the
last decade as a result of waves of corporate “reforms,” mergers and
downsizing, management buyouts and public stock listings. Today, three-quarters of the
urban workforce is employed outside the public sector. While conceding that the SOEs
account for the majority of fixed investment, Kolo argues that, as they are supposed to
turn a profit, the state sector amounts to a “lever for developing the capitalist
economy, providing a framework of essential industries such as energy and communications,
plus targeted investments in certain advanced technological sectors after the Japanese and
Korean models.”
There is no question that the SOEs have been reduced in size and pressured to become
profitable. It is also true that the workers in the state enterprises, who could be
considered to constitute the bedrock of pro-socialist sentiment within the Chinese
proletariat, have been forced on the defensive. Yet a close examination of the evolution
of China’s economic “reforms” and their intersection with recent factionalism
within the CCP shows that the Chinese state has not undergone a qualitative
transformation. It remains a deformed workers’ state.
Market ‘Reforms’ & CCP Control
The Chinese Stalinists introduced market “reforms” in 1978 without any
intention of incubating an indigenous capitalist class or undermining the SOEs. On the
contrary, they hoped that the spur of market competition would make state firms more
efficient, boost exports, modernize production technique and thereby accelerate China’s
transformation into a “superpower”—which had been Mao’s goal all along.
But as we have pointed out previously (see 1917 No. 14
and No. 26), the logic of the market cannot be
harmoniously melded with a system characterized by state ownership and central planning.
Capitalist markets impose discipline on workers and managers through the “law of
value”—when labor power becomes too expensive, it is shed; when firms cannot
compete, they go bankrupt. The “efficiencies” of the capitalist market derive
from the commodification of both labor power and the means of production.
Planning in a workers’ state, by contrast, subordinates the law of value to conscious
economic coordination. Evgeny Preobrazhensky, the leading economist of the Left Opposition
in the 1920s, noted in The New Economics that two laws with diametrically opposed
tendencies operate during the transitional period between capitalism and socialism. The
first he identified as the “law of socialist accumulation,” and the second,
the law of value. If the law of value is not overridden when it conflicts with consciously
determined priorities, the planning mechanism will be negated—i.e., scarce
investment resources will be directed by considerations of profit maximization rather than
social utility.
Throughout the 1980s, Beijing’s economic policy oscillated—with bouts of
“reform” alternating with periods of retrenchment—as the negative
consequences of reliance on market indicators became too pronounced. The brutal
suppression of the Tiananmen demonstrations in 1989 was followed by a period of infighting
within the CCP leadership between “conservatives” and pro-market elements
headed by Deng. The victory of Deng’s faction in 1992 produced an uninterrupted wave of
dramatic “reform,” many of the consequences of which are cited as evidence of
China’s capitalist transformation.
The market reforms have resulted in large-scale appropriations of state property by
both legal and illegal means. This has produced many of the phenomena that could be
expected to accompany a social counterrevolution, including endemic corruption,
environmental degradation, mass layoffs and the shredding of the social safety net. Yet,
while clearly indicative of the direction in which China is headed, these developments do
not signify that capitalism has been restored.
An important factor that must be considered is the extent of privatization in the
economy. China’s agricultural sector remains extremely socially and politically
significant because some 700 million people—roughly half the population—still
work the land. Some leftists mistakenly view Deng’s decollectivization of agriculture as
de facto privatization. In fact, land remains state property, and this has
insulated many poor peasant families from the full impact of the vagaries of the market.
While conditions vary widely between regions, it is common for township governments to
redistribute land-use rights, regardless of leases, in order to maintain rough parity in
holdings. Legal prohibitions on farm households using their land for non-agricultural
purposes have limited speculation and capitalist appropriation. Restrictions on land use
have proved to be a lifeline for the millions of migrant laborers now returning to their
home villages in the interior after being laid off by the export industries of China’s
east coast (China Leadership Monitor, Winter 2009).
Legal formalities have not prevented some local governments from selling peasant land
to industrial and commercial interests—nearly half of the 90,000 “mass
incidents” in China last year were sparked by such seizures. The Western bourgeois
press has gleefully reported how some desperate peasants have embraced privatization in an
attempt to protect their land tenure from illegal seizures. Pro-privatization sentiment
certainly exists, but it is by no means universal. In 2008, several hundred angry farmers
in Longzhuaoshu, a village near Beijing, erected a large banner that read:
“Collectively Owned Land Should Not Be Used For Commercial Purposes” to
protest the paltry compensation they were given for the conversion of their farmland to
non-agricultural use (Toronto Star, 15 November 2008). For three days they blocked
trucks, bulldozers and steam shovels. They were eventually dispersed by hired goons and
local police, but their willingness to resist this social parasitism points to the
importance that the land question is likely to have in future political and social
struggles.
China’s entry into the World Trade Organization (WTO) in 2001 potentially threatened
the livelihood of peasant farmers unable to compete against the large-scale, mechanized
production of imperialist agribusiness. While meeting some WTO obligations with lower
tariffs and import quotas, Beijing has thus far shielded small agricultural producers to
avoid bankrupting millions of poor peasant households. The CCP’s “new socialist
countryside” program, which eliminated tuition fees for primary and secondary
schools, reduced agricultural taxes, expanded infrastructure investments and increased
funding for social services, has also eased conditions for many rural families.
In the industrial sector, the SOEs underwent dramatic changes a decade ago when some 30
million workers were laid off, and tens of thousands of small and medium-sized enterprises
were privatized or “corporatized” through issuing shares and entering into
joint ventures (see 1917 No. 26). These
measures were pushed through by the CCP’s Zhu Rongji/Jiang Zemin leadership as a form of
“shock therapy” in preparation for China’s entry into the WTO. Their intention
was to force the largest SOEs to become internationally competitive while retaining state
ownership. In fact, the SOEs survived, regardless of their profitability, as a result of
state control of the banking system.
In 2003, SOEs accounted for some 70 percent of total fixed assets and 30 percent of
non-agricultural production. The state sector remains dominant in most strategic
industries, including heavy machinery, steel, petroleum, non-ferrous metals, electricity,
telecommunications and transportation. In recent years, the privatization of larger SOEs
has virtually ceased. Only a tenth of insolvent SOEs filed for bankruptcy in 2007 and
2008; the rest were prevented from doing so by local officials concerned about losing
access to government resources (Economist, 13 December 2008).
The size of the state sector distinguishes China from its capitalist neighbors,
including the so-called “tigers.” Singapore’s SOEs account for about ten
percent of GDP, South Korea’s five percent and Taiwan’s half that (UBS Investment
Research, “How to Think About China”). The dimensions of the state sector,
combined with land ownership, means that, despite the inroads of private property, the
Chinese economy is still predominantly collectivized. Zhiwu Chen, a Yale economist, notes:
“Despite privatization, there are roughly 119,000 state-owned
enterprises today, with a book value of about $4-trillion. State-owned land is valued at
more than $7-trillion. Combined, these state-owned assets total almost three-quarters of
China’s national productive wealth.
“With the state owning so much, most of the gains in asset values
experienced over the past 30 years have gone into the government’s coffers. When most
households own no productive assets, they cannot share any of the asset appreciation or
property income. For most citizens, wages are the only source of income.”
—Globe and Mail [Toronto], 26 November 2008
Of course, a deformed workers’ state cannot be identified solely by the extent of state
ownership. There are indeed many cases where capitalist states have resorted to extensive
nationalizations in response to major crises or to prop up enterprises in strategic
sectors that are unable to compete successfully on the market. Various semi-colonial
states have also nationalized oil and other natural resources in order to boost revenues
and increase autonomy from imperialist predators. None of these are
“anti-capitalist” acts, but rather attempts to strengthen the position of the
bourgeoisie as a whole.
Those who see China as capitalist claim that nationalized property serves this function
today, and treat the CCP bureaucracy as simply an agent of foreign and domestic capitalist
interests. While it is true that, for the time being at least, China’s capitalists limit
themselves to talk of “reforming,” rather than overthrowing, the CCP, both the
imperialists and the indigenous capitalists look forward to the establishment of a
bourgeois “multi-party democracy” where everyone is “free” to buy
as much political influence as they can afford.
In the economic sphere, bourgeois ideologues tend to focus on proposing
“reforms” to incrementally shrink the state sector and unfetter capitalist
accumulation, thereby strengthening the restorationist forces in anticipation of the
inevitable political crisis that China is drifting toward. A 2006 paper by Wing Thye Woo,
a Chinese economist who teaches at the University of California (Davis), provided a wish
list for those who want to see capitalism restored:
“The most important economic task for China is to adopt the best
economic growth engine that world economic history has identified: a market economy where
com-petitive private enterprises constitute the norm, and where the state focuses mainly
on the provision of public goods and social insurance. The switch to the new growth engine
necessitates that China continues the privatization of non-defense-related state
enterprises that are not natural monopolies, begins the privatization of [state-owned
banks], and reduces drastically the legal discrimination against the private
sector.”
—Journal of Chinese Economic and Business Studies,
February 2006
In December 2008, a clot of “dissidents” presented the world with
“Charter 08,” an even more overtly counterrevolutionary statement named after
“Charter 77,” the 1977 manifesto that served as a rallying point for
capitalist-restorationists in Czechoslovakia. The foreword to Charter 08 dismissed the
1949 Revolution with the claim that: “the Communist defeat of the Nationalists in
the civil war thrust the nation into the abyss of totalitarianism.” The document
contains the following blueprint for social counterrevolution:
“We should establish and protect the right to private property and
promote an economic system of free and fair markets. We should do away with government
monopolies in commerce and industry and guarantee the freedom to start new enterprises. We
should establish a Committee on State-Owned Property, reporting to the national
legislature, that will monitor the transfer of state-owned enterprises to private
ownership in a fair, competitive, and orderly manner. We should institute a land reform
that promotes private ownership of land, guarantees the right to buy and sell land, and
allows the true value of private property to be adequately reflected in the market.”
—reprinted in New York Review of Books, 15 January
The increasing weight of private capitalist enterprises, both foreign and domestic,
strengthens the forces of counterrevolution but does not automatically resolve the
fundamental issue of which class rules. The decisive task of the capitalist
counterrevolution is the political conquest of state power. The massive and continuing
resistance of workers and peasants across China to capitalist encroachment, while so far
entirely politically inchoate, is evidence that the ultimate fate of the Chinese
Revolution has yet to be determined.
CCP’s ‘Left’ Turn
During the Jiang Zemin/Zhu Rongji regime (1996 to 2002), an influential section of the
ruling bureaucracy openly embraced the notion that a gradual and harmonious transition to
a capitalist economy could be accomplished without disturbing the supremacy of the CCP or
touching off major social conflict. But it appears that the majority of party
functionaries recognize that they would have no role to play in a thoroughly privatized
economy. The SOEs are supposed to be profitable—and most have actually made money
during the past few years—but their value to the party bureaucrats is not simply
economic. They provide the foundation for the CCP’s political power, the primary
justification for its existence and a key training ground for its core cadre. All
top-level appointments, promotions and dismissals at the SOEs require the approval of the
party’s Organization Department and Ministry of Personnel.
SOE managers who want to advance their careers must balance the pursuit of
profitability with other requirements laid down by the party. In 2002, two oil executives
were up for promotion from alternate to full members of the Central Committee at the 16th
Party Congress—Ma Fucai of PetroChina and Li Yizhong of Sinopec. They both
had to deal with strikes in their enterprises, but Ma, who had refused to make any
concessions to his workers so that company profits would be higher, was passed over and
remained an alternate, while Li, who took a conciliatory approach more in tune with the
party’s concerns about social cohesion, was promoted to full membership (Erica S. Downs,
“Business Interest Groups in Chinese Politics: The Case of the Oil Companies,”
in China’s Changing Political Landscape).
Fear of social instability has constrained the CCP’s privatization program. Workers in
China’s state sector, which still constitutes the core of the economy, tend to identify
state property as their own and feel antagonistic toward private capitalists. A former
employee at a state window frame enterprise, witnessing the demolition of his factory
after it was sold to a private real-estate developer, remarked bitterly:
“Every inch of grass and every piece of steel in the factory belonged to
us workers. They were our sweat and labor. People had tears in their eyes when they saw
the fallen pieces of window frames left on the burnt ground. Those were state assets and
these officials just squandered them….”
—Theory and Society, Vol. 31 (2002)
In denouncing the incursions of capitalist social relations, state-sector workers
frequently employ the CCP’s own socialist rhetoric. When the Changjiang Sugar Factory was
privatized, its employees protested:
“How to restructure the form of property should be democratically
determined by workers. The county government cannot unilaterally decide
it….Workers are the master of the enterprise and the main body (zhuti)
of reform. Restructuring without consulting the workers’ and staff council and selling the
factory without informing workers are serious violations of workers’ democratic rights. We
demand to get back our democratic rights.”
—Modern China, Vol. 29, No. 2 (April 2003)
Such complaints resonate deeply within Chinese society. There is a widespread
perception that the government operates as a tool of wealthy and powerful elites who have
been enriched by the market reforms at the expense of ordinary working people. The current
administration of President Hu Jintao (who is also CCP General Secretary) and Premier Wen
Jiabao has responded with the CCP’s first “left” turn since the Tiananmen
events, and is attempting to present itself as an opponent of the excesses of the
capitalist roaders and a defender of workers and peasants.
The first indication of this shift came in 2004, when prominent intellectuals of what
has become known as the “Chinese New Left” exposed the massive squandering of
public assets that accompanied the privatization of several prominent state-owned
companies. In November of that year, the government halted management buyouts of
SOEs—the main mechanism for privatization—while the State-owned Assets
Supervision and Administration Commission (SASAC, established in 2003 to manage the SOEs)
implemented measures to maximize the value of state holdings and prevent asset stripping.
The privatization of large SOEs has since stalled. Foreign ownership of steel companies
was prohibited and a number of small private mines (where a spate of deadly accidents had
taken place) were abruptly renationalized.
These measures have been accompanied by new restrictions on both the country’s
“red capitalists” (CCP officials who become “entrepreneurs”) and
foreign investors, the two primary beneficiaries of the WTO-oriented “market
reforms.” The central government has been closely regulating urban land transactions
and has imposed price and expenditure controls, including on food. Collusion between local
officials and private businesses has been targeted, and a massive anti-corruption
campaign, focused on the coastal elites, has been launched.
In 2006-07, the CCP imposed new regulations on foreign capital, increased scrutiny of
foreign-backed mergers and introduced further restrictions on banking, retailing and
manufacturing. These measures, aimed at aiding domestic companies and slowing the growth
of poverty and inequality, led Myron Brilliant (vice president for Asia at the United
States Chamber of Commerce) to complain: “It’s not only a threat to foreign
investors but it also undermines China’s transition to a market-based economy”
(New York Times, 16 November 2007).
The curbs on the private sector, while extremely limited, signal that significant
layers of the CCP, feeling pressure from below, are uneasy about the pace and extent of
“market reform.” In June 2007, state media ran horrific accounts of children
and the mentally ill being forced to work as virtual slaves in brickworks in Shanxi, a
relatively poor interior province. The revelation that local CCP officials apparently
condoned this brutal exploitation sparked fierce popular outrage and renewed public
criticism of pro-capitalist “reform.”
A group of 17 senior CCP cadres, including influential retirees from the military and
industrial ministries, issued an open letter criticizing the extent of foreign penetration
of the economy, the marginalization of the state sector and the low wages that have
accompanied the reforms. The authors urged the approaching 17th Party Congress to reverse
the pro-capitalist course and return to “Mao Zedong Thought,” i.e.,
renationalization and central planning. They warned that if the market reforms continue,
“a Yeltsin-type person will emerge, and the Party and country will tragically be
destroyed very soon” (reproduced on mrzine.monthlyreview.org).
The Maoist oppositionists’ proposals failed to pass. The “conservatives”
are clearly a minority within the CCP and the openly Maoist faction smaller still. But the
17 who signed the letter are not minor figures. While it is impossible to know how
widespread “conservative” sentiments are within the CCP, the tortured history
of China’s property law suggests that they are not insignificant. In 2007, the National
People’s Congress overwhelmingly approved a “Property Rights Law of the People’s
Republic of China,” by a vote of 2,826 to 37, with 22 abstaining. This legislation,
which spelled out the rights of private owners for the first time, had been held up by
“conservative” and Maoist opposition for 13 years. As late as 2006, its
supporters had been unable to have it considered, so it seems safe to presume that
objections are still being aired behind closed doors.
The CCP bureaucracy places a great deal of importance on projecting an impression of
stability by maintaining a united public face, but Hu’s left-populist turn appears to have
increased internal tensions. The “conservatives” view the highly publicized
crackdown on some of the worst examples of unbridled capitalist competition as too
superficial to contain the rising tide of plebeian discontent. The
capitalist-restorationists, or “neo-liberals,” have the opposite concern: they
fear that Hu’s measures may stall the movement toward unrestricted market relations. With
the support of some of China’s most prominent economists, they are proposing that the
leading “dragonhead” SOEs should be the next target for privatization.
For Workers’ Political Revolution in China!
The direction and tempo of future developments are difficult to predict. It is clear
however that, despite the deep inroads made by capitalist social relations and the
emergence of a significant layer of “red capitalists,” China remains a
deformed workers’ state. The CCP bureaucracy has neither transformed itself into some sort
of new possessing class nor become a reliable instrument for foreign or domestic capital.
The Chinese Stalinist bureaucracy remains a brittle and contradictory caste that acts as a
transmission belt for the pressure of world imperialism, but whose political power and
privileges derive from the collectivized property forms established by the social
revolution of 1949. With significant elements within the party’s deeply fractured top
echelon publicly advocating diametrically opposed programs—a return to central
planning versus outright capitalist restoration—it is evident that the CCP’s grip on
power is becoming increasingly tenuous.
Talk of China’s emergence as a global economic “superpower” reached its
peak during the 2008 summer Olympics in Beijing, but the financial crisis that immediately
followed has highlighted the vulnerability of China’s export-led development model, the
depth of domestic social instability and the unrelenting hostility of the imperialist
powers. The negative effects of China’s integration into the capitalist world economy are
being felt most acutely in the heavily privatized and export-dependent south.
Already more than half of China’s toy factories have been forced out of business,
throwing some two million people onto the street. A total of 670,000 small firms closed in
2008, with a loss of 6.7 million jobs. Construction projects have been suspended;
automobile sales have plummeted and property prices are declining. Demonstrations, strikes
and riots by laid-off workers take place every day throughout the faltering export zone.
Although most of these events go unreported in the Chinese media, the CCP leadership is
very concerned by them. In a December 2008 teleconference, Meng Jianzhu, China’s Minister
of Public Security, implored the country’s police chiefs to “be fully aware of the
challenge brought by the global financial crisis and try their best to maintain social
stability” (China Daily website, 19 November 2008).
The basis for the explosive growth of China’s privately-owned export sector was the
explicit and implicit assurance that capital could operate free from government
interference. This has limited the CCP authorities’ ability to intervene. When the Weixu
Shoe Factory in Dongguan, Guangdong went bankrupt and the boss absconded with two months
of back pay owed to his 4,000 workers, a local taxi driver commented: “This is not a
state-owned enterprise….You shouldn’t bother the government about it. It is a
matter between you and a private company” (Financial Times, 11 November
2008). But the CCP bureaucracy fears that if it is too “hands off,” workers
may try to settle accounts with their bosses directly. So local governments throughout the
Pearl River Delta in Guangdong province—where more than a third of China’s exports
originate—have been trying to defuse protests by stepping in to pay overdue
salaries.
The Beijing authorities hope that a massive expansion of state spending may help
ameliorate the effects of the global economic downturn, as it did during the 1997-98 Asian
financial crisis. The CCP is proposing to invest 4 trillion yuan, the equivalent of 16
percent of China’s annual GDP, in a variety of projects including affordable housing,
rural infrastructure, water and power projects, transportation, environmental improvement,
technological innovation, health care and reconstruction following natural disasters.
There are significant differences between the Chinese initiative and the
“stimulus packages” in the U.S. and other imperialist countries, where public
funding is being used to bail out bankers and other financial parasites. In China, central
government spending accounts for only a quarter of the total, with most of the rest
expected to come from the state-owned banks and SOEs, i.e., those sectors most
characteristic of a workers’ state:
“Chris Wood at CLSA, a brokerage, says the effectiveness of the stimulus
hinges on the extent to which China is now a capitalist economy. The more
‘capitalist’ it is, the deeper the downturn now; the more it is still a command
economy, the better the chance of recovery in 2009. State-controlled firms, which account
for one-third of industrial output and almost half of all investment, have been
‘asked’ not to cut jobs and capital spending. All the big banks are state-owned
and their chairmen are appointed by the government. If they get a phone call telling them
to lend more they are likely to do so.”
—Economist, 24 January
China’s government is also committed to shoring up the largely private export-oriented
sector. To ensure cheap labor power, the bedrock of private-sector profitability, the
regime has delayed scheduled increases in the minimum wage, reduced taxes for export
industries and restored subsidies that had previously been rescinded. In an attempt to
re-inflate China’s urban housing market, taxes on real estate transactions were slashed
and bankers encouraged to make new home loans. Deputy Finance Minister Wang Jun estimates
that government revenues will decline by 300 billion yuan in 2009, turning a projected
small surplus into a significant deficit (Caijing website, 24 December 2008). Some
bank directors, who have been pressured for years to turn a profit, are reluctant to
return to the days when non-performing loans made up much of their portfolio. One senior
banker grumbled: “Do you expect banks to lend immediately in response to the
government’s call?…We go through a procedure when signing each loan and it is not
fast” (Caijing website, 26 December 2008).
As China’s private sector contracts, the CCP tops face unpalatable choices. A
sustainable state-sector expansion will mean, at a minimum, sharply increasing taxes on
foreign and domestic capital, thereby squeezing profits and accelerating layoffs and
shutdowns. On the other hand, a failure to expand state spending could produce a social
explosion that undermines the authority and stability of the regime. Popular mobilizations
on the scale of the 1989 Tiananmen protests could split a CCP polarized between
“conservatives” and capitalist-restorationists. In the event of a major
confrontation, the conservative faction would inevitably be forced to rely, if only
indirectly, on support from the plebeian masses, while the pro-capitalist elements would
be backed by domestic entrepreneurs, the substantial overseas Chinese bourgeoisie and
global imperialism.
Those “revolutionaries” who maintain that capitalism has already been
restored in China could only view a split in the CCP as a division within the bourgeoisie.
The logic of this position would either be neutrality, or more likely, supporting the
“democratic” counterrevolution, as the CWI, Workers Power, the United
Secretariat and most other ostensibly Trotskyist groups did in August 1991 when they
backed Boris Yeltsin’s rabble against the decrepit Stalinist remnants of Gennady Yanayev’s
“Emergency Committee.”
In a similar showdown between Chinese Stalinist “conservatives” and open
restorationists, Trotskyists would bloc with the former against the latter, as we did in
the Soviet Union in 1991 (see “Soviet Rubicon & the Left,” 1917 No.
11). This is the only position that is congruent with the policy Trotsky outlined in the
Transitional Program:
“From this perspective, impelling concreteness is imparted to the
question of the ‘defense of the U.S.S.R.’ If tomorrow the bourgeois-fascist
grouping, the ‘fraction of Butenko,’ so to speak, should attempt the conquest of
power, the ‘fraction of Reiss’ inevitably would align itself on the opposite
side of the barricades. Although it would find itself temporarily the ally of Stalin, it
would nevertheless defend not the Bonapartist clique but the social base of the U.S.S.R.,
i.e., the property wrenched away from the capitalists and transformed into State
property….
“Although it is thus impermissible to deny in advance the possibility,
in strictly defined instances, of a ’united front‘ with the Thermidorian section
of the bureaucracy against open attack by capitalist counter-revolution, the chief
political task of the U.S.S.R. still remains the overthrow of this same Thermidorian
bureaucracy.”
The CCP conservatives are inherently incapable of addressing the underlying
contradiction in the Chinese deformed workers’ state between the collectivized property at
its core and the maintenance of the political monopoly of a venal and incompetent
bonapartist bureaucracy. A victory by Stalinist conservatives in a confrontation with a
“fast track” restorationist faction would not put political power directly
into the hands of the working class; but it would give revolutionaries an opportunity, at
a critical juncture, to win the most advanced layers of the Chinese proletariat to the
perspective of a political revolution to wrest power from the CCP. A victory by Chinese
Yeltsinites, on the other hand, would represent an enormous historical defeat for the
working class, both in China and internationally, and create an immensely more difficult
terrain for future struggles.
There are important differences between the situation in the Soviet Union under
Gorbachev and in China today. On the one hand, China’s private sector, while increasing
the size of the industrial proletariat by roughly one hundred million, has produced a
capitalist class that is vastly more powerful and cohesive than the fledgling Russian
bourgeoisie of 1991. Private enterprise contributes 50 percent of China’s GDP and accounts
for up to 70 percent of employment in some cities. On the other hand, China’s workers have
a far clearer understanding of the realities of “free market” exploitation
than did Soviet workers, and have demonstrated a willingness to actively resist capitalist
attacks. The current international economic crisis, which has thrown so many out of work,
can only have reinforced anti-capitalist sentiments among China’s proletarians and their
poor peasant allies.
China’s workers manifestly possess both the social power and fighting spirit necessary
to overthrow the brittle and deeply fractured CCP bureaucracy. A proletarian political
revolution could open the road to an egalitarian, socialist future through the
expropriation of both domestic and foreign capital and the institution of a centrally
planned economy organized on the basis of genuine workers’ democracy. A successful
insurrection will require a mobilization of millions led by a revolutionary socialist
party armed with an internationalist, Trotskyist perspective. Such a party would advance a
program to address the issues faced by workers in private-sector sweatshops and link their
struggles to the defense of state-sector employees against privatizations and layoffs.
Revolutionaries would also take up the particular problems faced by peasants and members
of rural collectives, as well as national minorities, women and other oppressed sectors.
A victorious proletarian political revolution in China would be a world-historic event.
It would instantly transform the entire framework of global politics. It would spark a
revolutionary resurgence from Indonesia and the Philippines through South Korea and Japan,
all the way to the imperialist citadels of Europe and North America. The first step in
realizing this goal is to assemble a nucleus of Chinese Trotskyists committed to the
unconditional defense of the gains of the social revolution of 1949 and to forging a
Chinese section of a reborn Fourth International.