Beware Falling BRICS: South Africa and China

Strategic Alliance: Jacob Zuma bows to Hu Jintao

The Marikana Massacre has exposed the reactionary ANC regime as a client state of imperialism. The ANC is attempting to head off a growing mass uprising of workers by building a new ‘strategic partnership’ with China in the hope that this will produce ‘win-win’ deals to allow the country to develop its economy and reap the wealth produced. China, however, is no saviour as it is no different to the former colonial exploiters. As an emerging imperialist power its interest is in the super-exploitation of South African workers. The global crisis is creating a militant opposition to the rule of capitalist imperialism everywhere. In South Africa, as elsewhere, for workers to live they will have to unite to overthrow capitalism. Forward to the South African Revolution!

Marikana – A South African Spring?

What is behind the Marikana Massacre? It is a re-opening of the democratic revolution that has the potential for permanent revolution similar to that of the Arab Spring? Why does the national democratic revolution need re-opening? In 1952 the ANC and SACP joined forced to lead the national democratic revolution to power. The ANC adopted its program on national development, the Freedom Charter, from the Stalinist SACP which held that SA must go through a bourgeois stage of capitalist development to create the pre-conditions for socialism.

We trace this Stalinist theory of stages to the Menshevik position in Russia in 1923 which Stalin reverted to once he was in power in the Soviet Union. The democratic revolution would empower the working class to nationalise the means of production to speed up the transition to socialism. This would be possible if the bourgeois state was under the control of the ANC representing the Black majority working class. The Freedom Charter written in 1955 made ‘nationalisation’ of the mines central to its program of national development. Thus ‘nationalisation’ meant ownership by the bourgeois state ‘governed’ by the ANC, not the social ownership of the working class in a socialist workers’ state. The working people would delegate this task to the ANC and not have direct control over its implementation.

When the ANC came to power in 1994 the SACP program of ‘nationalisation’ was already realised in the Soviet Union by its return to state capitalism. The Stalinist policy of Perestroika and Glasnost had opened the road to the restoration of the capitalist market. Yeltsin in 1992 defeated any resistance to capitalist restoration forcing state property to be privatised or the remaining SEOs to be subject to the law of value in global capitalist market. This translated globally as a retreat from not only workers property, but from bourgeois ‘nationalisation’, to the ‘mixed economy’ dressed up sometimes as ‘market socialism’. So by 1994 the Stalinist world was already rejecting ‘nationalisation’ as the preferred road to socialism. Thus the bourgeois national revolution in SA was deformed at birth as part of a historic defeat of the world working class that brought the downfall of the degenerate workers states including the Soviet Union, destroying workers property, the main gain of the October 1917 Revolution.

In coming to power in 1994 the ANC junked the Freedom Charter for a developmental state model of ‘market socialism’ where the state regulates the market to meet the goals of ‘socialism’. It wasn’t until 2002 that it succeeded in overcoming resistance to the nationalisation of mineral resources in the ground. Today the ANC leadership still rules out nationalisation of the mining companies’ assets as too costly and politically destabilising. It says the nationalisation of the assets of listed mining corporations would cost $1 Trillion and bankrupt the country leaving it at the mercy of a Structural Adjustment Program. It therefore continues to opt for a range of taxes, royalties and other ‘value-sharing’ measures to implement its particular brand of ‘national development’.

Has the national revolution created the pre-conditions for socialism?

The ANC/SACP policy of the bourgeois national revolution is one of using the state to redistribute surplus value towards the gradual social ownership of the means of production. Imperialism is understood as based on unequal exchange where normal profits (surplus-value) are inflated into super profits by extracting ‘super-value’. The two main mechanisms are using a reserve army to force de-value wages below the level of reproduction, and undervaluing the price of the commodities produced and exported via transfer pricing. This means that on top of normal capitalist profits (surplus value), imperialist corporations ‘steal’ super-profits (super-value). The ANC/SACP policy is that the national revolution ‘empowers’ workers governments to tax or regulate imperialism to reduce or eliminate unequal exchange as the basis of super-profits. There have been ongoing attempts to achieve this using a number of rules including the latest attempts to stop transfer pricing. But there is now a growing consensus that this has failed and that SA is one of the most super-exploited semi-colonies on earth.

This means that in practice for 18 years the ANC has proven that its Stalinist SACP theory of the progressive national revolution is a fraud. It has presided over the return of EU and US multinationals into the mining industry and failed to put an end to imperialist super-exploitation of low wages (reflected in the poverty living standards of workers) and transfer pricing. The lion’s share of value pumped out of mining continued to go into the coffers of the mining multinationals, Anglo-American, Lonmin, Glencore etc. The rate of super-profit remains massive. The minority share that came to the regime via royalties, taxes and minority shareholdings such as the BEES (Black Business Empowerment) did not benefit the mass of South Africans, but went into the pockets of a newly emerging Black bourgeoisie. The ANC is now shown up by its failed national revolution as the party of a new Black national bourgeoisie presiding over the super-exploitation of the South African working class.

All of this was predicted decades ago by revolutionary Marxists who fought the Stalinist degeneration of the Soviet Union. The Stalinist popular front empowered a bureaucracy and a new bourgeoisie by disempowering the working class. These revolutionaries are once again vindicated by events in South Africa. The ANC Tripartite regime has trapped SA into dependency on Western imperialist super-exploitation. It has led to the rise of a Black bourgeoisie and crony capitalism, and the rising mass dissatisfaction with the successive leadership of the ANC, its statified union Congress, Cosatu, and of its political leadership in the SACP, is today beginning to rise up. The miners of Marikane are but the first wave of mass insurrection that rejects the ANC regime and its state force and is embarking on the road to workers power!

ANC Response

Despite the recent attempts at Polokwane to outline a new plan for national development based on a greater share of the resource rent these pathetic paper proposals have been overwhelmed by the global crisis and falling demand for minerals which has put pressure on the regime to contain and discipline mining workers to screw down labour and production costs to restore levels of super-profits. This created a wave of dissatisfaction with the NUM and the series of disputes that ultimately led to the Marikana Massacre.

The ANC response to the Massacre has been to resort to police suppression of the militants to defeat and contain the miners’ strike, and at the same time try to keep control of the moderates by holding a public inquiry and promising major economic reforms. These reforms amount to promises to tax the mining super-profits via tougher Resource Rent Tax that will create a Sovereign Wealth Fund to invest in national and economic social development. This conception of national development is tied to SA’s membership of the BRICS led by China. It is being promoted as an attempt to reduce its dependence on Western imperialism by collaborating with the ‘market socialist’ giant whose developmental model can be copied. Instead of ‘Western’ imperialist exploitation the ANC sees China as an alternative economic power with which it can enter a “win-win” partnership based on “equal exchange”.

Thus in the SIMS plans launched in March 2012 the ANC proposes that on the back of a SWF funded by the 50% RRT it can develop upstream in energy (power and infrastructure) and downstream, manufacturing, education, housing etc much as China has. It wants to build Pilot Beneficients Hubs based on the Chinese SEZs which allow new investment, technology etc to drive up the ‘value chain’ to add-value and fund jobs and rising living standards. This, they say will allow SA to follow China’s path to national development overcoming the barriers of super-exploitation, unemployment and poverty.

For some in the ANC this is not enough to stop super-exploitation. By its own calculations, SIMS proposed 50% RRT taxes only half the super-profits of mining companies. Julius Malema, the expelled ANC Youth League leader, and his faction want to replace the leadership of the ANC and its policy of taxing profits. Their main demand is ‘nationalisation without compensation’. Here we can see that Malema is trying to contain the political radicalisation of workers to rescue the ANC and the Tripartite Alliance by promising a more radical reform than the current leadership. Malema is popular with the striking miners who support more militant moves to share the wealth. Many are now breaking with the NUM and Cosatu and calling for directly negotiated share of the profits.

Malema’s factional fight inside the ANC does not break with the popular front. Nationalisation without compensation is still a bourgeois nationalisation. This is not a nationalisation from below based on workers occupation and workers control! ‘Nationalisation’ undertaken by the ANC would be a bourgeois nationalisation. The process will remain one led by the Tripartite Alliance of the ANC, Cosatu and SACP in which a bourgeois state is the agent of national capitalist development continuing to act as a junior partner of imperialism. Malema is unlikely to win a majority in the upcoming ANC Congress for ‘nationalisation’ as a panacea, because the ANC leadership is confident that its reforms will be bankrolled by China. “This time round” the global crisis which has now burst to the surface at Marikana and spreading to all the mines is pushing the ANC leadership to ‘reinvent’ itself by modelling SA development on China’s ‘market socialism’.

In other words ANC wants SA to “takeoff” and raise living standards like China and the other BRICS. “Not surprisingly then, the new investments from China will be centred on “geology and mineral resources” as well as on financial cooperation between the Development Bank of South Africa and China Development Bank. But according to Kgalema Motlanthe, South Africa’s deputy president, things are different this time around. The deals, he said, are meant to “strike a healthy balance” in trade volume between the two countries.“This financial cooperation agreement is between development banks and the specific projects in which they are going to invest, they have to identify these projects,” Motlanthe, who is on a three-day trip China, was quoted by Reuters as saying. “To that end, the difference is, instead of just exporting these minerals as raw materials, there will be…value add to create jobs on both sides,” he added.”

In other words a ‘win-win’ deal. China may be investing in the old ‘imperialist’ ventures of energy, minerals and banking, but it won’t be extracting super-profits! Or at least the super-profits will be divided equally – hence ‘win-win’ for both Chinese and South African bourgeoisie! A recent delegation from the province of Gauteng visited China to sign up to a deal on infrastructure projects. It was led by Gauteng Premier Nomvula Mokonyane who said: "Our people's lives will improve because after this partnership is sealed, we will see a massive roll-out of infrastructure projects. Already in Tshwane, we have a number of flagship projects in the pipeline including the construction of the Tshwane International Conference Center and Rainbow Junction, among others," said Ramokgopa.

Can South Africa develop like China?

Let’s look at this prospect. The global crisis and the slump in demand for minerals as well as the hardship facing workers that led to Marikana, may speed up the China connection. China continues to keep the economies of the BRICS steaming along so long as its own economy is still growing rapidly. The current slowdown in China from 8% to maybe 7% is still a raging boom by comparison with Western imperialist states. In this sense China appears to be different from the established imperialist powers in continuing to keep the world economy from slumping into deep depression.

So is Chinese investment an alternative to imperialist super-exploitation? Is China different to the Western Powers? Can it sustain the world economy and in particular the BRICS. Will South Africa be able to attract more trade and investment out of China, and also increase its share of the rent from mineral extraction? And will he Chinese model of development reproduce in SA an increase in added value based on transfer of technology and knowledge?

Deborah Brautigam of China in Africa: The Real Story sees China as different from the European powers, but still expecting a commercial advantage from its investments in Africa. China is not copying European colonisation which sucks out resources and labour power without concern for upstream or downstream development, but can see the benefits in developing Africa after the Chinese model. Not only is China exporting its model to semi-colonies like South Africa but since 2000 and the policy to “Go Out” and membership of WTO, it is demonstrating this process of going up the value stream from cheap labour to high tech in its FDI in SA. This shows that China has used FDI in semi-colonies like South Africa to launch its “Go Global”. It does not compete directly against the established brands of EU, US and Japanese corporate, but starts cheap or contracts to established brands to develop a competitive product and then develop its own brands globally.

In SA Chinese FDI took off after 2000 where it used SA as a ‘learning arena’ for the globalisation of its banks and industries. So China is not only doing swaps of loans for resources, it is investing in upstream energy and infrastructure, and downstream consumer goods such as domestic appliances, electronics and communications. “Adding these estimates suggests that Chinese assets in South Africa in mining alone were probably worth close to US$700 million at end of 2007. This suggests that MOFCOM’s figure of US$702 million was reasonably accurate, in contrast to the SARB figure of US$70.” The Edge, p8. “The period since 2000 has seen a major expansion in the Chinese presence in South African mining with the doubling of Sinosteel’s investment during 2006, and the entry of other mining companies as discussed above. Several major Chinese corporations have entered the banking and construction sectors.” Ibid p 18. Thus China’s ‘demonstration effect’ is a major factor in reviving hopes that ‘win-win’ deals will see South Africa and other African states make the same leap from underdevelopment to development made by China. 

China’s 21st century imperialism

This is not the familiar 19th or 20th century imperialism, but rather a supersession of 19th and 20th century imperialism as a new form of 21st century imperialism. On the surface it is easy to see why semi-colonial governments can hope to do ‘win-win’ deals with China. Moreover, the Chinese developmental model which is regarded widely as a form of ‘market socialism’ fits snugly with the central role of the state in ownership and control of African economies in the ideology of the ANC, ZANU PF and other African governments. All of this hinges on the assumption that China is a new form of economy – a hybrid of a socialist state and the capitalist market – which is not governed by the laws governing the economies of the other big powers. Thus it appears that China has escaped the trap of Western imperialism and shows the way for the rest of the BRICS and other ‘developing’ countries to follow the same road.

But on closer analysis, China is not essentially different from Western Imperialist economies as its policies are dictated by the laws of motion of monopoly capital and by the growing rivalry with other imperialist states. Standard neo-liberal economic theory argues that China’s Overseas FDI is different from established developed economies as they are not global leaders in any sector. This view is echoed on the left, that China cannot catch up with imperialism because it does not have competitive advantage in any global sector of production. Some argue that this fits with Lenin’s concept of imperialism where imperialist firms must be world leaders to monopolise a sector of production, e.g. oil, banks, steel, autos etc.

What this theory overlooks is that China with its centralised state capitalist apparatus is able to leverage its 100s of millions of low paid workers to create huge surpluses to catch up with its stagnating rivals. This means that it has a massive accumulated super-profits to buy existing assets or resources and form joint ventures to break into sectors where seeks to dominate in the future. In South Africa as well as FDI in minerals and financial services China sought markets for assembled CKD goods and offer more competitive, cheaper, brands and services on the basis of technology transfer arising from FDI inside China itself.

Thus, China has been able to ‘capitalise’ on its history as a Degenerated Workers State to accumulate surplus value rapidly and ‘go out’ by applying its developmental model in key countries like South Africa. So not only has China demonstrated by its rapid expansion that it is an emerging imperialist power, it is also proving that it is not immune to the deepening global capitalist crisis and is showing signs of overproduction of capital. This is now becoming evident as China’s economy is slowing down. Perhaps China’s slowdown is only because it is tied to the global market, and not due to any inherent crisis of overproduction? This is the most common view on the reformist left, a view shared by the ANC and other African regimes. Because the ANC views capitalism as capable of being reformed into ‘socialism’ by equalising exchange, China is ‘socialist’ to the extent that it can use ‘Keynesian’ state deficit spending to compensate for falling trade. But in a capitalist economy state investment in infrastructure will generate stagflation unless that infrastructure contributes to the production of commodities that China can sell in the world market.

China’s crisis then, exposes for all to see, the limits of ‘market socialism’ as dependent on the underlying laws of global capitalism. The BRICS look to the ‘China model’ of state managed development to strengthen trade and investment relations and move toward swap deals where China provides long term loans or infrastructure deals in exchange for resources. Yet the BRICS categorised as ‘emerging markets’, hides essential differences behind surface similarities. The essential differences are that Russia and China are imperialist countries and have no interest in ‘developing’ the other BRICS unless they can reap super-profits. This means that BRICS like South Africa cannot escape the ‘sphere of influence’ of Chinese and Russian imperialism without a socialist revolution.

Russia and China are newly emerging imperialist countries having made the transition from DWS back to capitalism. Despite massive problems associated with capitalist restoration, their strong state and relative independence from existing imperialist states has allowed them to escape the fate of the other BRICS which remain trapped in their colonial dependence. We can see how Russia and China have formed a new imperialist bloc competing with the US led bloc by creating its own sphere of influence in Asia, Africa and Latin America. This sphere of influence now includes the other BRICS (Brazil, India and South Africa) as well as other intermediate states such as Iran, Venezuela etc. Yet inevitably this sphere of influence is one in which Russia and China dominate and super-exploit their semi-colonial clients. India, Brazil and South Africa are all characterised by the continued dominance of imperialist FDI which limits their ability to develop an independent bourgeoisie and accumulate capital on their own account.

Way Forward

Our conclusion is that the ANC cannot lead South Africa out of imperialist super-exploitation by following China’s development model. It has proven that the bourgeois democratic revolution cannot be completed by means of a popular front government but in fact holds back its completion by trapping the working class in a client state of imperialism. This will prove to be the case with China also. China is not a new form of society that can escape capitalist crisis. It is an emerging imperialist power that is now the main rival of the US bloc in Africa. The ANC’s strategic alliance with China will see it staying trapped in semi-colonial super-exploitation and its people trapped in poverty and misery.

The miners of Marikana will not win freedom or economic security without leading a socialist revolution in SA. For that to happen the workers need their own Revolutionary Party and a program that opens the road to revolution. It is necessary to build a working class movement based on the mines; workers councils in every workplace and township; workers defence militias; for the seizure of power and formation of a Workers and poor farmers Government to expropriate imperialist and capitalist property and plan a socialist economy!

Build a Workers Party that unites the militant vanguard from China the Middle East to the USA!

For a new World Party of Socialist Revolution!

Liaison Committee of Communists

Revolutionary Workers Group (Zimbabwe)
Communist Workers Group (USA)
Communist Workers Group (Aotearoa/NZ)