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From The Socialist newspaper, 23 October 2019

China at the crossroads: 70 years since the declaration of the People's Republic of China

In the final part of the Socialist's trilogy marking the 70th anniversary of the Chinese Revolution, Nick Chaffey examines China today and where it's heading.
President of China Xi Jingping is maintaining the Stalinist Chinese Communist Party's iron grip on the state apparatus, photo

President of China Xi Jingping is maintaining the Stalinist Chinese Communist Party's iron grip on the state apparatus, photo   (Click to enlarge)

Seventy years on from the 1949 revolution China stands at the crossroads. A revolution whose official long-term aim was to abolish landlordism and capitalism and emancipate the poor peasants, and workers from exploitation and persecution, has resulted in a communist China in name only.

Billionaires sit in the Chinese Communist Party regime not elected workers' representatives. In fact, the estimated net worth of the 153 members of China's Parliament and its advisory body amounts to $650 billion!

The introduction of market reforms from the 1970s has transformed China from a Maoist-Stalinist planned economy to the second largest economy in the world, increasingly integrated into the global economy.

Decades of double-digit growth, surpassing other capitalist economies, has created a new Chinese capitalist class, 40 million private companies, giant Chinese and foreign-owned corporations and, a huge growth of the working class.

All of this was carried out by a brutal state machine - a Stalinist bureaucracy run by an elite determined to maintain its rule and which continues to control important economic levers.

The result is a regime that the Socialist Party has described as a special form of state capitalism.

Market 'reforms'

Two previous articles in the Socialist have outlined the victory of Mao Zedong's peasant Red Army in China's civil war of 1944-49. However, the CCP's failure to develop a healthy planned economy through democratic workers' control and management led to the bureaucratic mismanagement and economic and social crisis that Deng Xiaoping inherited following the death of Mao in 1976.

Despite this, the planned economy, based on the revolutionary aspirations of workers and peasants, had ensured a basic development of the 'Iron Rice Bowl' ie the establishment of secure jobs, food, housing, health and education for workers in the cities and the commune system in the rural areas.

Deng and his grouping, attempted both to maintain the rule of the elite and to overcome the bureaucracy's stifling effect. He initially introduced market reforms with the aim of trying to boost the planned economy. They were implemented in a series of zig-zags and in brutal fashion. Agriculture, industry, foreign trade and investment was opened up to capitalism.

Since then, China's policies have reflected domestic and international economic and political pressures - particularly the impact of the Tiananmen Square uprising in 1989, the collapse of the Soviet Union and other Stalinist states, the Asia currency crisis in 1997, the Great Crash of 2007-08 and now the developing trade war with Trump and the US.

Carried out under the banner of 'developing a socialist mixed economy', these measures were nothing to do with either socialism or the interests of the working class.

Reforms began in agriculture, where farmers, under the direction of the state, were given fixed price incentives for their produce, stimulating growth and private wealth with the winding up of the rural communes. It was this peasant layer that provided the first new large layer of capitalists.

Industrial reform developed further from 1979 with four Special Economic Zones for foreign investment, primarily in the Guangdong province, close to Hong Kong, through joint enterprises with the state.

State income from foreign trade increased from 15% in 1980 to 35% in 1986. With this the Chinese economy would increasingly become intertwined in the fluctuations and crises of the world capitalist economy.

Industrial investment by the state, the emerging capitalists and foreign companies over this period saw an enormous expansion in the working class.

But the reforms of this period came at a heavy price and in a brutal fashion. To provide the workforce for the growing industries, poor peasants were forced from the land into sweatshops and construction sites. For the growing sections of workers, industrialisation came with intensified exploitation and the continued repression of a monstrous state bureaucracy, with no independent trade unions to defend their interests.

The Tiananmen Square uprising of 1989 did not come out of the blue, but mirrored features of the political revolution previously seen in Hungary in 1956 and Czechoslavakia in 1968.

The accumulated dissatisfaction among workers, youth and students at the impact of inflation and widespread corruption, burst to the surface in 1989 with demands for democratic reforms, freedom of the press and organisation, as well as challenging the control and privileges of the bureaucracy.

But without a farsighted revolutionary party, with roots in the working class, and despite the determination and heroism of the struggle (which opened up splits in the Chinese bureaucracy), the movement was crushed in bloody repression.

Horrified at the scale of the uprising, Deng held to his pro-capitalist view. But the bureaucracy's fear of losing its positions of wealth and privilege led to a strengthening of state repression.

With the economic collapse of the Stalinist Soviet Union in the early 1990s, the Chinese bureaucracy feared a 'big bang' rapid introduction of capitalism through privatisation would destroy the bureaucratic apparatus and the so-called Communist Party they ruled through.

State control

Despite capitalist development and privatisation, dominant sections of the economy remained in the hands of the state - banks, telecoms, transport, energy and defence production while currency control and trade controls meant that the Chinese state bureaucracy retained important levers of control not available to capitalist governments in the west.

In the 1990s, despite the monstrous regime that ruled in China, capitalist governments led by the US and Europe were keen to seize investment opportunities and profits in the land of a cheap but skilled workforce. In this process China opened its economy more to the travails of the world capitalist economy.

As a producer of consumer goods by 2013, China was exporting $4 trillion worth of goods - up from $100 billion in 1988 - opening up a huge trade surplus with the rest of the world and in particular with the US. This surplus reached $232 billion in 2006. Alongside strategic rivalry this has been a source of Trump's trade war with China.

With the huge growth of the working class came class struggle. There are an estimated 263 million industrial workers today, a doubling from the mid-1980s. Bitter struggles have developed especially over unpaid wages, wage increases and over improving working conditions.

Enormous factories, employing tens of thousands in appalling conditions became the norm. In 2010, mass strikes at Foxconn, Honda and Toyota saw workers win wage rises of up to 30%.

Currently the Chinese regime is worried about 'contagion' from the sustained mass protests over democratic rights in Hong Kong of spreading into nearby Guangdong province, the most densely industrialised region on the planet - home to 32 million workers.

How China will develop is a vital question to Marxists and the world revolution. Is it possible, given the trajectory of economic developments in China, that a capitalist counterrevolution could be completed, ending the CCP's monolithic grip?

Or is it more likely that in the face of the growing economic crisis, the development of the mighty Chinese working class could see a revolutionary movement spread across China that would pose the tasks of both the political and social revolutions, bringing the private sector within a restored planned economy but under the democratic control and management of the working class?

A serious consideration in this process is the powerful nature of the Chinese state and the Communist Party. In the world financial crisis of 2007-08 China's growing integration into the world economy meant it was more affected than in the Asian crisis of 1997.

The world recession and economic stagnation that followed the 2007-08 crash meant a sharp fall in the sale of Chinese goods on the world market. Fearful of the political consequences of an economic slowdown, the Chinese state injected an unprecedented $586 billion to invest in new production, mainly infrastructure projects and the imperialist expansion of its 'belt and road' project west towards India.

As a result, China trebled its production of goods and services to $9.5 trillion in 2014, whereas GDP (total output) in Britain fell from $3 trillion to $2.67 trillion in 2014.

While this staved off an immediate crisis, the bureaucracy is unable to extricate itself from the slowdown of domestic growth or further crises developing in the world economy. This will have its reflection politically both within the state and society, among the emerging capitalist class and the working class.

Privileged elite

At this stage many of the capitalist class have links to the state itself and maintain their wealth and privileges through its protection.

A big section are the 'princelings', children of top officials, making up 90% of the billionaires.

But in the face of a new crisis, splits in the state will create different wings with varied outlooks, which would include a pro-capitalist reform wing seeking support for capitalist political change as a basis for ending the current bureaucratic state control and the removal of remaining constraints on the capitalists.

In the same process, under the pressure of a revolutionary movement of the working class, other sections of the state could be pushed to grant reforms in the interests of the working class to try and protect its rule from revolutionary overthrow.

Under the hammer blow of an economic crisis and revolutionary struggle the state bureaucracy will not remain unaffected.

The tasks for the working class and Marxists in China and internationally are to continue to fight for and build independent trade unions and establish the basis for a workers' party with a programme to introduce the eight-hour day, raise wages, invest in social housing, education and healthcare; the introduction of workplace committees for the democratic control and management of the economy and the renationalisation of elements of the privatised economy.

It is on the shoulders of the mighty, multimillion Chinese working class, harnessed in a movement for social and political revolution, that the future of China will be decided.

Workers' democracy

Dengs reforms were not the only option. As Trotsky, one of the leaders of the Russian Revolution in October 1917 explained, a "nationalised planned economy needs democracy as the human body needs oxygen". But the Chinese revolution from its outset was a deformed workers' state, where the working class was pushed aside from playing the leading role in the revolution, replaced by Mao's peasant-based Red Army.

The development of workers' democracy, through workplace committees, on a local, regional and national basis could have provided the outline of a plan that met the needs of society, guided by the working class itself.

A healthy workers' state would have ensured elections of officials and that no official received more than the average wage of the workers they represented; be subject to immediate recall and through the circulation of elected positions among the whole of society ensure the participation of all sections of the working class in the running of society.

With no standing army but an armed people under the democratic control of the workers' committees, a workers' state would have served to defend the gains of the revolution from capitalist counterrevolution and bureaucratic deformation. To do this a political revolution would have been necessary by the working class to remove the bureaucracy and implement workers' democracy.

An internationalist appeal would then have been directed towards the masses in South East Asia and internationally to end capitalism and take the road of the socialist revolution.

Recommended further reading from a series of articles in Socialism Today (the magazine of the Socialist Party) debating the nature of the Chinese state today
see - back issues available 3 each

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