China: new realities and old dogmas

Submitted by Matthew on 12 February, 2014 - 11:16

This book contains many good things — an assessment of the nature of capitalism that has developed in China over the last two decades; analysis of the burgeoning Chinese working class; and avid descriptions of recent workers’ struggles. However these fine efforts are spoiled by its treatment of the Maoist period which is falsely characterised as some kind of workers’ state.

Au Loong Yu’s political economy of the current Chinese social formation is broadly correct. He defines China as “bureaucratic capitalism”, a term first used ironically by the Chinese Communist Party (CCP) during the 1940s to depict the kind of capitalism that the nationalist Guomindang had created.

Au Loong Yu argues that bureaucratic capitalism is most appropriate for China because “it captures the most important feature of China’s capitalism: the central role of the bureaucracy”. Chinese bureaucrats are “simultaneously entitled to a salary (plus benefits) and a share of the surplus value… Bureaucratic capitalists monopolise the most profitable sectors of the national economy and become the core group of the new bourgeoisie”. However he also accepts bureaucratic capitalism is “still a type of state capitalism”.

China’s rulers and their state began to turn towards capitalism in 1978. Au Loong Yu argues that the class character of the state began to change in 1988, when the CCP amended the constitution, legalising private enterprises and the sale of land-use rights. Capitalism was decisively restored from 1992 onward. In 1992 by Deng Xiaoping marked the “great leap forward to capitalism” in the social and economic arena.

China started waves of privatisation in 1996 when the CCP announced the “seize the big and let go of the small” policy, under which it would simply sell off the small state-owned enterprises (SOEs). In fact many medium-sized enterprises were also privatised. The waves of privatisation resulted in a great shrinkage of the state sector, from 80% in 1979 to one third of industrial output. By 2001, 86% of state industrial enterprises had been restructured, and 70% had either been partially or fully privatised.

One of best elements of the book is its emphasis on the weaknesses and limits of China’s economic development, which is often forgotten by many on the left eager to welcome a rival to US hegemony.

Bruno Jetin refers to IMF data using current exchange rates, which estimates that China’s GDP in five years’ time will still be 35% below the US, although twice the size of the Japanese economy and three times the size of the German economy. US GDP per capita in purchasing power terms (PPP) in 2011 was almost 6 to 1 compared with China, although the difference could narrow to 4 to 1 over the next decade.

Although China is the recipient of huge amounts of foreign direct investment (FDI), its own outflowing FDI is much smaller — while expanding fast. It is currently behind a dozen developed countries but is top amongst developing countries. The export drive has enabled China to accumulate a huge amount of foreign reserves. It is estimated that two thirds of the reserves are US bonds and securities. China has now become a major player in the global financial market.

Au Loong Yu points out that although some Chinese transnational corporations (TNCs) are now big enough to be listed in the Fortune 500, they are “chiefly monopolistic companies or primary productive companies like the power industry, oil, banks, telecommunication and foreign trade”. Their present position “owes more to strong government support than effective management or innovations”. Most of them are government owned.

The book emphasises the interdependence between China and the USA. Today, the USA accounts for almost two-fifths of China’s exports, while the Chinese state holds most of its foreign exchange reserves in dollars. Au Loong Yu argues that “China and the USA have common interests in maintaining the global production chain, but Chinese bureaucratic capital is determined to fight for a greater share, while US monopoly capital is trying to keep its portion”. China’s economic interests “are now so fully integrated with the USA and the EU that war is excluded in the medium term”.

Another merit of the book is its outline of the growth and recomposition of the Chinese working class over the past quarter century.

Au Loong Yu points out that today, “the working class comprises more than two-fifths of the Chinese working population. Industrial workers account for one quarter of the world’s total. Service workers account for one fifth”. Under rapid industrialisation, wage-earning workers have risen quickly at the expense of farmers “to the extent that it will soon constitute half or even more than half of the population”. The working class is a growing class while the peasants are a declining class.

This growth masks incredible restructuring. Over the last two decades, the state sector has nearly halved its workforce, from 100 million to 61 million workers, meaning that “the majority of the present day working class is composed of rural migrant workers who have no collective memory as a class prior to coming to the cities”.

Meanwhile, since the mid-1990s, a new working class composed of 250 million rural migrants was formed. While the number of SOE workers in China fell substantially, the overall body of wage labourers ballooned to nearly 400 million. China’s working class population “has never been this enormous. If this reversion to capitalism has anything positive about it, this is it”.

Au Loong Yu argues that the working class is increasingly the main class in democratic struggles in the future because it has a stake in winning democracy and the potential to win it. Either the working class “eventually achieves democracy by taking the lead in the struggles, or it will continue to suffer in a barbaric capitalism indefinitely”.

The book has a good summary of the last 25 years of workers struggles in China. It contains a lengthy discussion of the working class involvement in the mobilisations of 1989, which ended with the Tiananmen Square massacre. The account of the Beijing Autonomous Workers’ Federation is based heavily on the Hong Kong Trade Union Education Centre book, A Moment of Truth: Workers’ Participation in China’s 1989 Democracy Movement and the Emergence of Independent Unions (1990). It explains how workers’ demands and independent forms of organisation grew during this opening triggered by students, only to be smashed by the Stalinist bureaucracy.

A chapter by Bai Ruixue quotes official figures that between 1993 and 2003, the number of “collective incidents” grew from around 10,000 to 60,000, with the number of participants involved growing from 730,000 to over 3 million. In 2005, when the Public Security Ministry stopped publishing figures, the number of collective incidents had grown to 87,000. With the beginning of the economic crisis in 2008, the number of labour disputes has grown even further as factories closed and large numbers of workers were laid off.

The book also describes recent workers’ struggles, such as the Zhengzhou Paper Mill workers’ struggle in 2000, the Liaoyang metal workers dispute in 2000-02, the Daqing Oil workers’ struggle in 2002 and the Chongqing 3403 factory dispute in 2004.

In 2004, there were more than 30 strikes reported in the Pearl River Delta alone that involved more than one thousand workers (there are no official statistics on the number of strikes).

In 2006, workers established the Ole Wolff Yantai Trade Union, the first local enterprise union in China to actively seek international solidarity and receive assistance from unions overseas.

The Tonghua steel workers anti-privatisation struggle of July 2009 led to the death of a factory boss and victory for the workers, when plans to privatise the steel mill were dropped. Around the same time, workers at the Linzhou Steel Company also won their fight against privatisation.

These struggles “show that SOE and collective enterprises workers can still be a formidable force”.

In May 2010, probably the most high profile strike in China’s recent history began when Honda workers in Guangdong took action, calling for higher wages and, perhaps even more significantly, the reorganisation of their workplace trade union. This triggered a wave of strike action by workers in foreign-owned car plants that summer. More than 50% of those who took part in the first strike were high school students. Au Loong Yu and Bai Ruixue argue that the strike represents “the actions of a new generation of Chinese workers, who have no memory of their own of the defeat of the 1989 democracy movement — in fact most of them probably do not know of the event at all because of censorship — and who are prepared to fight to improve conditions at their own workplace”.

The book is rightly highly critical of the All China Federation of Trade Unions (ACFTU), China’s union body — in reality a labour front tied to the state. Bai Ruixue describes how, following the 1949 revolution, the ACFTU was re-established and became China’s sole trade union organisation (it was temporarily dissolved during the Cultural Revolution).

By the end of 2009, total ACFTU membership had reached 226 million, which included 80 million rural migrant workers. The ACFTU’s “strong ties to the Chinese Communist Party and the pursuit of its agenda is a key factor in explaining why the ACFTU has not and will not act in the interests of workers”. Indeed, “the ACFTU has been an organ of the Communist Party ever since its establishment”. Under Chinese employment law, workers have no freedom of association and cannot simply join a trade union of their choice. To be a legally recognised union, all trade unions must be affiliated to the ACFTU; all independent trade unions and other such organisation by workers is prohibited.

The book navigates the debate about international union relations with the ACFTU. The ITUC has an approach of “engaging in critical dialogue” with the ACFTU, with some unions developing links, while others have virtually “no contacts”.

In some recent struggles, workers have used local elements of the ACFTU or works councils (Staff and Workers Representative Councils) to advance their initial organisation. Au Loong Yu is critical of Han Dongfang and the China Labour Bulletin, who he says now call for the “depoliticisation” of the labour movement (and for work within the ACFTU), instead of their previous position of fighting for an independent trade union movement. This is an important strategic and tactical debate.

It is very unfortunate that this book is marred throughout by a gargantuan political error that undermines the efforts to get to grips with current realities.

The mistake concerns the nature of the 1949 revolution which brought Mao Zedong and the CCP to power and the nature of the regime they established.

The authors suggest that China had some sort of socialist revolution in 1949 and that China was some sort of post-capitalist workers’ state from 1949 throughout the Maoist period until the 1990s.

The so-called Fourth International, reconstituted after World War Two on the basis of very different politics from the time of Trotsky, initially defined the Mao’s regime as a “workers’ and peasants’ government”, before deciding in 1951 that it was a “deformed proletarian dictatorship” or “deformed workers’ state”. This is the depiction by Pierre Rousset in The Chinese Revolution: Part II: The Maoist Project Tested in the Struggle for Power (1987).

It clear from this book that key contributors retain this assessment. Rousset’s chapter attempts to iron out the contradictions, but his weasel words are unconvincing. Rousset refers to the idea of a socialist revolution in China in 1949 as “iconoclastic”, claiming that it confirms Trotsky’s theory of analysis of combined and uneven development, and the theory of permanent revolution. In the absence of working class agency, the events of 1949 do nothing of the sort. Sadly his musings are repeated by Au Loong Yu, who claims that China “lived through socialist revolution” and that the bureaucracy “originates from a workers’ and farmers’ revolution”.

Rousset asks: which party conquered power in 1949? However his answer is miserably evasive. He states: “No abstract definition can replace a concrete and dynamic historical analysis. Let’s just say than in 1949, the CCP was at the same time the party of a great victorious social and national revolution, hence the depth of its links with the population, and also the new state-party within which the ruling elites will become autonomous and constitute itself as a bureaucracy. It will become, through sharp crises, the party of the bureaucratic counter-revolution before becoming the party which will steer the (re)formation of a Chinese capitalism.”

Rousset states that “the Chinese Revolution and the Maoist leadership have contributed a great deal to the development of Marxist strategic thinking”. In particular he highlights Mao’s conception of the “protracted people’s war”. Apparently, “the failure of the Great Leap Forward should not make us forget that the Maoist leadership was attempting to respond to real problems”. Although “senile Maoism offers us only ‘negative lessons’, “this tragic ending should not overshadow the richness of the Chinese revolutionary experience”.

This is toxic politics. The Maoist CCP was not a workers’ party in 1949. It was a party-state composed of peasants and led by Stalinists, who surrounded the cities and pulverised the Chinese workers and peasants into submission from the beginning.

The bureaucracy acted and functioned as a ruling class from the start, savagely exploiting workers and peasants —with perhaps 45 million dying during the so-called Great Leap Forward. The CCP atomised the Chinese working class, bonded it to the state while it extracted huge amounts of surplus labour, sometimes in semi-slave labour camps, barracks-like state factories and forced-march communes.

The authors fall back on the argument that Trotsky predicted that the Stalinist bureaucracy (in the USSR) would either have to restore capitalism or be swept away by workers’ revolution. But Trotsky expected the USSR, which he defined as a degenerated workers’ state (because it had at least had a workers’ revolution in 1917), to collapse during the Second World War. In the last months of his life he recognised that the Stalinist USSR had spread its relations of production through Red Army bayonets into Eastern Poland. However his judgments were conjunctural and fluid. He did not make the argument that workers’ states could be created without the active intervention of the working class. Yet this is the absurdity the book expects readers to swallow.

Au Loong Yu warns of the dangers of “nostalgia for Mao's crude communism” among the today’s New Left (as the only ideological alternative to neoliberal discourse). He also warns against the Deutscherite position, namely that the Chinese bureaucracy retains some semblance of “socialism” at its core, or that it has the capacity for progressive self-reform. This will generate “illusions” within the Chinese working class. He rightly criticised Monthly Review writers such as Mingqi Li, who prettify and cover for the Maoist period.

None of this should be dismissed as “squabbles among little sects”. The abstract political formulas are important, as they are a guide to real struggles in the real world. In fact Au Loong Yu comes close to identifying some the main mechanisms of exploitation under Mao, when discussing the workers’ position as one of “institutionalised dependence”. Workers were “denied the freedom to choose their occupations or the freedom to choose the particular enterprises they worked in. In the same way, they were also denied the freedom to resign from their enterprises and shift to other plants of their free will”.

Workers’ “personal files were held in the hands of the party committee and were kept secret from them”. These included “records of things which they might have said before, especially where they were critical of the party or cadres. All this could be used to incriminate them in possible future political purges”. All in all, workers had to behave under this system and became part of a system of personal dependence with a feudal flavour”.

Similarly, Au Loong Yu points to the hukou (household registration) system. Although dating back millennia, under the CCP government “the hukou system’s functions of political and social control grew to unprecedented levels”. Whereas all previous practices had not nullified the peasants’ right to move around the country, it was the CCP which did that. With the onset of “socialist transformation” in 1956, “the party began to restrict the peasant’s right to move as part of its plans to put in place the command economy”. In 1958, the state passed laws to prevent the peasants from entering the cities altogether. In 1975 “the nominal right to movement was simply deleted from the constitution altogether, and remains so until today”. Since the middle of the 1990s the hukou system has been gradually relaxed — although it is not expected to disappear soon.

At one point Au Loong Yu asks how, “if workers had always been the genuine ruling class since Mao’s era, how was it possible that they were defeated without even an open and nationwide struggle?”

This is the right question, but one that cannot be answered satisfactorily within the theoretical framework of this book. If China had a socialist revolution in 1949 and a workers’ state, however mangled, was created, then the transition to capitalism in the 1990s was an historical retrogression (the line taken, wrongly but at least consistently, by Socialist Action). If so, why did workers not seek to defend the state in which they were, at least nominally, the ruling class? And how can this transition have taken place without conceding, in Trotsky’s words, that the film of reformism was running backwards? The idea of China as a workers’ state simply collapses.

But an alternative explanation is available. The 1949 revolution was never a socialist revolution and the working class has never ruled China. The Maoist-Stalinist bureaucracy was always an exploiting ruling class, although its mode of exploitation was not capitalist for its first 30 years.

This bureaucracy developed the productive forces, but only by savagely exploiting Chinese workers and peasants after 1949. When that mode of exploitation reached its limits, the ruling class opted to integrate with the global capitalist economy and in doing so, become a capitalist class itself. This sideways move in the 1990s, although not without contradictions, is now largely complete.

Transitions from one class society to another can be “cold” from above or “revolutionary” from below. But the only transition that must be carried out consciously, smashing to the old state and creating another, is a socialist revolution carried out by the working class. This road lies ahead for the Chinese working class — if it can develop the ideology, leadership and organisation necessary.

Marxism and socialism are both discredited in China, because of the association with Maoism. For the Chinese working class to cast off this excrescence, there can be no concessions about the nature of Maoist Stalinism. For the Chinese workers to be free, they need to look to the authentic Communist traditions from the early 1920s, continued by the Chinese Trotskyists under Chen Duxiu and Wang Fanxi.

The emerging Chinese working class movement is a great source of hope: to fulfil this potential it will have to remove Stalinist obstacles from its path.

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