China: Socialists at odds over the Yue Yuen strike

Striking Yue Yuen workers mass rally

It’s one thing to say socialists all agree that the self-activity of the working class is the true basis of the march for socialism, but what is the road map? Disagreements over the character of Chinese society as socialist, capitalist, or imperialist, make all the difference to whether the road map leads the marchers to socialism or not. This question was raised specifically during the Yue Yuen strike. We reprint here an edited version of an exchange which took place on the facebook page ‘Trotskyism is Alive and Kicking’.

First, there are that ‘state caps’ or ‘third camp’ like the Cliffites (SWP-Britain) who claim that China since 1919 has been capitalist if not imperialist, so what is new? Tell that to striking Yue Yuen workers who see themselves locked in a struggle to defend their ‘socialist’ pension  rights against the return of capitalism.  The fact is that while the ‘third camp’ judged the Chinese revolution from afar was a bourgeois revolution where the bourgeoisie were expropriated, the Chinese masses knew they had been in a social revolution and the bourgeoisie had disappeared off the stage of history. The Chinese bureaucracy of the CCP has cleverly staged a capitalist counter-revolution by posing as the defenders of the revolution in the apparent absence of a new Chinese bourgeoisie. It is necessary to explain to workers who struggle against the return of wage labour, to see the need to overthrow the CCP as the bourgeois defenders of capitalism and not its destruction.

Then there are the dogmatic Trots like the Sparts and the CWI who say China became a bureaucratically Deformed Workers State after 1949 and remains one today.  They reverse the ‘third camp’ position and insist that the bourgeoisie who were cast off the stage of history by the revolution, cannot re-enter that stage except in the guise of individual capitalists. Incredibly they explain China’s rise to No 1 world economy as the responsibility of the CCP bureaucracy thereby crediting a degenerate workers state with the capacity to develop the forces of production ahead of the imperialist powers.  Tell that to the striking Yue Yuen workers who see the CCP in bed with capitalist corporations, super-exploiting them and getting superrich in the name of ‘market socialism’. 

Then there are the ‘Trotskyists” like the FLTI who claim China has restored capitalism but is not or cannot become imperialist since it is oppressed by the existing imperialist powers. For them, China serves the interests of imperialism as a capitalist semi-colony which allows super-profits to be extracted from cheap Chinese labor and raw materials. Tell that to striking Yue Yuen workers who see their labor and lives pay for China’s rise to the No 1 world economy which is super-exploiting workers in Asia, Africa and Latin America.  

The FLTI is wrong on China. China is not a ‘maquiladora’ of the US. Today China and the US are rapidly shaping up as the major imperialist rivals. China has moved very fast since it opened up its SEZs to FDI 20 years ago. Even 10 years ago it was hard to see it emerging as a new imperialist power. 

All three positions on China have been debated at length by the LCC in a number or articles. Most recently we have taken up a critique of the roots of these different positions in our article: "Why are Russia and China Imperialist Powers and not Capitalist Semi-Colonies?” 

Yet today the US and China are competing to be the No 1 largest economy and invest in each other where the costs of production are nearly equal. We are facing escalating trade, political and military rivalry between the two. Not to acknowledge this fact means, for example, you lack the clinching argument against the Bolivarian's popular front with China for 'market socialism' in Latin America. 

Worse it is a call for the defence of China in wars with other imperialist powers. Here is recent data on comparative costs of production of 25 countries including China and the US:

"The country with the lowest manufacturing costs, we found, is not China. It’s Indonesia, then India, Mexico, and Thailand. China comes next—with Taiwan’s costs just a tad higher and the U.S.’s a bit more than that, ranking America No. 7 in our study. As Chinese labor costs rise, American productivity improves, and U.S. energy expenses fall, the difference in manufacturing costs between China and the U.S. has narrowed to such a degree that it’s almost negligible. For every dollar required to manufacture in the U.S., it now costs 96¢ to manufacture in China, before considering the cost of transportation to the U.S. and other factors. For many companies, that’s hardly worth it when product quality, intellectual property rights, and long-distance supply chain issues are added to the equation."

The response of David Walters on facebook to the above is typical of the FLTI and others trapped in a dogmatic time-warp:

“China plays both roles, as a developing national state capitalist country and as a HUGE repository of maquiladora...basically all of the maquiladora industries have departed Mexico for China. This occurred almost 10 years ago. It is still going on. It's a great sucking hole for low wage 'repetitive injury' jobs and capital.”

CWG replies: “That China plays both roles is not in dispute. Their relative weight and role in the direction of China's capitalist development is. Since restoring capitalism China has re-entered the global capitalist economy without subordinating itself as a semi-colony.

Unlike normal capitalist semi-colonies, China's maquiladora role was not a means of sucking out all of China's surplus into the imperialist countries, but a means of getting a trade surplus and R&D transfer. Thus as the Businessweek article above shows China has gone up the value chain and is no longer the world's cheap labour factory. As the most recent OECD survey shows, China has taken off so it is no longer so dependent on manufactured exports of Foreign Investor Enterprises to maintain its dynamism. "Total FDI peaked at 17.1% of fixed capital formation in China in 1993 and has declined since then to 2.8% in 2010, even though it has risen markedly in absolute terms." 

And consider that North America has a tiny share of the FDI stock compared with other Asian countries. It is China's emergence as a new imperialist power that explains the rising competition between the US and China that we are seeing in every continent. 

Walters replies: “All you are saying is that regular monopoly capital equals state monopoly capital. I'm not disagreeing for the sake of this discussion. I'm saying that for a state to be imperialist, that finance capital has to be THE dominant form of economy within the mode of production. I see zero evidence for this. I see the domination of manufacturing capital, both SOEs and IO/private forms, dominant. That such export of capital from either private sources or, SOE is a small percentage of the overall GDP. China looks essentially like a state capitalist form of the U.S. circa 1898. BTW...I have zero political stake in this discussion. I'm really here to learn and discuss. For China to really be Imperialist, it would have to do its investments, first, in terms of quick return of the dollar (they do use dollars, not their own currency, another issue in terms of being Imperialist but not decisive) and secondly with a rising tendency for speculative investment in finance. China is doing neither. None of its foreign investments, at least not significantly, are designed to return a thing except raw materials which would be more profitable to use domestic resources in many instances. Instead they are building up huge stockpiles in raw materials for further use down the road. This is totally unheard if investments were actually based on profit.”

CWG replies: You make a fundamental and unfortunately common mistake. Lenin defined finance capital as the fusion of banking and productive capital. Productive capital means productive of commodities. “State monopoly capital” was used by Lenin to characterise the form of finance capital at the more concrete level of international relations and the global market where finance capital was fused also with the state. Unlike the prevailing use of the term, capital that quits the productive circuit to speculate in non-productive existing assets is not finance capital but money capital. “Manufacturing capital” is a meaningless term unless you are using it as a non-Marxist proxy for productive capital. If you use Lenin’s conception of finance capital it is immediately obvious that the Chinese state is fused with finance capital devoted entirely to its reproduction.

As for "quick return"? Since when has that been a criterion for imperialism? Super-profits will obviously increase as turnover time increases. But super-profits do not derive from turnover time. And your "Speculative investment"? No.  Export of capital is driven by the need to counter the TRPF with cheap raw materials and labour power. When this fails due to rival state monopoly capitals, surplus capital is driven into speculation. So speculation is a symptom of finance capital being diverted from the production of value to speculation in existing values as money capital. 

As yet China's capital export is countering the TRPF but the increasing organic composition as China develops will bring this to an end before long. This is part of the law of capitalist accumulation. Your argument rests upon voluntarist policies of the CCP able somehow to override the determination of the LOV where China is forced by its need to accumulate capital to enter into a growing rivalry with the US-led imperialist bloc. Not only that, you have to explain the US encirclement of China as a voluntarist response to China's voluntarist expansion. The result is a position like Kautsky's ultra imperialism where the fate of nations hinges not on the law of accumulation but the respective policies of imperialist elites. Ergo imperialist war is an aberration and parliamentary socialism can correct for it by ensuring that capital is invested productively so it continues its historic mission to prepare the conditions for socialism in the never-never.

The Chinese revolution which created a degenerate workers state has not survived capitalist restoration by the CCP. Yet many of the workers still believe they are fighting to defend socialism (albeit with 'Chinese characteristics) . But in truth the only way they can do that is to fight for a socialist revolution against the new capitalist ruling class that is today responsible for China’s emergence as a new imperialist power.