In his powerful book, Minqi Li argues that China will be the key battleground of the coming global class struggle, finds Sean Ledwith
Minqi Li, China and the 21st Century Crisis (Pluto Press, 2015), 224pp.
Twice in the last few months, panic in the Chinese economy has sent shockwaves reverberating around the globe. Last summer, a stock-market crash in the world’s second biggest economy saw 45percentwiped off its share values. Earlier this year, there was a lesser scare but still enough to see the markets in Shanghai and Shenzhen shrink by 15 percent. Within a few days of the latter, the Beijing government announced the country’s growth figures had slipped below 7percentfor the first time in a quarter of a century. The IMF recently released a forecast that the Chinese economy will continue to shrink for the rest of this year and throughout 2017. The chain-reaction fall in share prices in London and New York accompanying these developments is testimony to the way the ‘People’s Republic’ is now not only fully integrated into the global capitalist system but has become arguably its crucial linchpin.
In light of this ongoing turbulence. Minqi Li’s new study, Chinaand the 21st Century Crisiscould not be better timed. Even bourgeois commentators are becoming increasingly jittery concerning indicators that the global system is on the eve of another calamitous nosedive. Addressing the annual international confab of financial parasites at Davos at the start of this year, George Soros warned his fellow plutocrats to be wary of what might be around the corner: ‘The source of the disequilibrium is different. In 2008 itwas US sub-prime housing. Today it is China, where a hard landing is practically unavoidable.’
Minqi Li agrees with Soros on the gravity of the current crisis. He observes that ‘thecoming economic and political crisis of Chinese capitalism will take place as the structural crisis of the global capitalist system is approaching’ (p.41). The superiority of Li’s analysis compared to even the most perceptive of establishment commentators like Soros is that the author writes from an explicitly Marxist perspective, and with a consistently affirmative message on the revolutionary potential of Chinese workers. One of his predictions is more noteworthy than anything coming out of either the IMF or the ministries in Beijing:
‘a militant Chinese working-classmovement will emerge. The spectre of a working-class revolution which haunted the European capitalist classes for almost a century after 1848 is resurfacing in China in the twenty-first century’ (p.7).
The author is exceptionally well equipped to offer a combined activist and academic perspective on Chinese affairs. Minqi Li participated in the heroic Tiananmen Square uprising of 1989 and spent the next two years as a political prisoner of the Beijing regime. Upon his release, he made his way to the US where he is now a works as a university lecturer. Apart from this remarkable physical journey, he has also travelled along the ideological spectrum in an impressive manner; starting off as a follower of the Chicago School of free-market economics advocated by Milton Friedman, and ending up today as a trenchant defender of Marxist economic theory. Li’s expertise with both the statistical intricacies of orthodox economics and the conceptual apparatus of Marx’s theory of capitalist crisis make his book a highly instructive guide to the unfolding drama of China's predicament (see this interview).
Li opens his analysis with an insightful studyof the informal factions which compete for control within the country’s ruling class. Most of the time, these loose coalitions co-exist in relative harmony due to a shared interest in maintaining a tight grip on the Chinese Communist Party and maximising the exploitation of the country’s enormous working class. Four years ago, however, the latent tension between the factions erupted in spectacular fashion with the purging and subsequent imprisonment of Bo Xilai, party boss of Chongqing province. Li accepts a popular interpretation among outside observers regarding the divisions within the elite. The development model associated with Bo and his province is premised on prioritising China’s depressed domestic consumption by boosting the spending power of the middle class. In contrast, the Guangdong model (so-called after one of the mega-cities on the East Coast) emphasises closer integration with the global economy and intensified penetration by foreign capital.
Li does not suggest these two economic frameworks are irreconcilable; in fact, the remarkable cohesion of the elite in the decades since the death of Mao in 1976 can be interpreted as evidence for their ability to subsume their differences behind a shroud of secrecy most of the time. The Bo-Xilai episode of 2012 stands out as a rare example of the spotlight being thrown on the competing interests jostling for hegemony at the top of the system. Li characterises it as the ‘outcome of intense struggles between competing factions of the Communist Party leadership, ending with the victory of the neoliberal faction and the defeat of those who were in favour of a state directed, more egalitarian model of development’ (pp.15-16).
The eclipse of Bo enabled Xi Jinping to emerge as President and the most powerful figure in Chinese politics. The author contends that President Xi personifies the current supremacy of the Guangdong model with its preference for a ‘new round of neoliberal economic reforms including privatisation of the remaining state-owned enterprises and financial liberalisation’ (p.1). Xi's willingness to further open up the Chinese economy to Western investment was apparent last December during his state visit to the UK when his itinerary included stop-offs at Manchester City football club and Buckingham Palace!
Li argues the feel-good factor Xi is seeking to generate through such appearances - alongside his banal slogan of the ‘Chinese Dream’- is tenuous and doomed to ultimate failure. The author indicates that the contradictions playing out in the Chinese system are building up to a crisis that will dwarf the tremors we have seen over recent months and potentially sweep aside the manoeuvrings of Xi and his ilk. The Beijing ruling class, he predicts,
‘will be unable to accommodate the growing demands from the Chinese working class and the middle class. China is likely to face an accumulation crisis and a political crisis by the late 2020s’ (p.12).
Li provides a useful synopsis of the historical route that led the Chinese Communist Party to its current position of apparently unchallengeable supremacy. He recounts how in the nineteenth century, an abortive attempt by the country’s semi-feudal ruling class to modernise was blocked by the imperial interests of the Western powers, leading to decades of political turbulence at the beginning of the last century. One of the crucial turning-points in modern Chinese history occurred in 1927 when disastrous guidance by the Stalinist-dominated Comintern led the country’s revolutionary movement into a fatal embrace with supposedly progressive nationalist forces. The decision of the nascent CCP to concede their political independence had calamitous consequences: ‘when the workers in Shanghai took over the city and welcomed the Nationalist army Jiang Jeshi (the new Nationalist leader) decided that it was time to massacre the workers and communists’ (p. 16).
Despite shattering the revolutionary left in the cities, the nationalists were unable to assert control over the vast country’s myriad warlords and the consequent power vacuum enabled the Japanese to invade and occupy the north in the late 1930s. This was the context for the rise of Mao Zedong to supremacy, first within the CCP and then in the country as a whole. Regrettably, Li perceives Mao’s military victory over the nationalists in 1949 as the creation of a ‘socialist state, that is to say, it was the historical product of a great popular revolution based on the mobilisation of the peasants and workers’ (p.17). A more sober assessment would be that although Mao’s triumph undoubtedly involved formidable military skill, the levels of political activism among the Chinese masses in city and countryside were relatively low at the time.
In fact, the CCP’s call for workers to refrain from strikes in 1949 was characteristic of its unenthusiastic attitude to urban class struggle. Mao’s emergence within the Communist Party after the disaster of 1927 represented the organisation’s metamorphosis from a Bolshevik-style vanguard of organised militants implanted in the working class, into a predominantly rural movement led by intellectuals. This is a crucial point not simply for historical analysis, but also to comprehend the subsequent trajectory of the Chinese state up to the present.
Although Li is misguided in regarding 1949 as a victory for some form of socialism, he does succinctly identify the global significance of the event:
‘To mobilise the economic surplus required for modern economic growth, the agricultural surplus product had to be concentrated in the hands of the state … the relationship between China and the capitalist world economy had to be redefined so that the Chinese state could have a monopoly over the domestic market, providing the initial space of expansion for Chinas indigenous industries’ (p.17).
In other words, the historic rationale of the Chinese Revolution, notwithstanding the Marxist rhetoric which accompanied it, was to complete the failed modernisation that had been tentatively initiated by the Manchu dynasty at the end of the nineteenth century. Self-emancipation of the working class has never been part of the agenda of the CCP since Mao’s ascent to power.
There have been numerous twists and turns in the strategic focus of the party’s leadership since 1949 - including the recent contest between the Chongqing and Guangdong factions - but its upper echelons have always been unified on the need to suppress dissent from below or any upsurge that might resemble genuine workers’ participation in planning. Li tends to romanticise Mao’s leadership compared to his successors, arguing that the Cultural Revolution of the late 1960s, for example, represented ‘one last attempt to save the revolution by directly calling upon the workers and the young students to rebel against the bureaucracy’ (p.18). That episode is better interpreted as a cynical ploy by Mao to re-assert control of the party in the face of mounting opposition to a disastrous agricultural policy that had caused mass starvation in the preceding years.
A more valuable aspect of Li’s study is his assimilation of Immanuel Wallerstein’s seminal framework of core, semi-periphery and periphery as conceptual tools to comprehend the evolution of capitalism since its emergence in the sixteenth century. Wallerstein, a Marxist historian and sociologist, pioneered the use of these terms to explain the geographical and historical trajectory of the system, and also to offer a holistic framework for understanding how states in the modern world are interlocked into a global system.
Li posits that in the closing decades of the last century a lethal combination of government debts and working-class resistance in both the core states (mainly Western Europe and North America) and the semi-periphery (such as Latin America and Eastern Europe), necessitated transfers of capital investment by the global elite to the periphery of the global economy in a renewed pursuit of profits. As the author puts it;
‘the industrial capital in the core and semi-periphery needed to be relocated to a new geographic area with a cheap labor force. China became the main beneficiary of global capital relocation in the late twentieth century’ (p.72).
The country’s astonishing economic transformation since the 1990s becomes explicable with Wallerstein’s perspective. Li provides extensive statistical evidence of this tectonic shift in China’s place in the global system. Exports of merchandise rocketed from $62 billion in 1990 to over $2 trillion in 2012. The country’s share of exports in the same period went from under 2 percentto over 11 percent(p.21). The size of the Chinese working class grew by an astonishing nine million in each one of those years (p.26). The other crucial aspect of Beijing’s embrace of globalisation, of course, was its accumulation of a giant dollar currency reserve to be periodically loaned across the Pacific to enable the US to continue buying merchandise produced in China’s new export driven, low-wage mega-cities. The post-Mao leadership consciously cultivated this circuit of dependency as their strategy to maintain political control and to elevate the country’s status in the geopolitical pecking order, thereby achieving a goal that eluded their Imperial and Nationalist predecessors.
From the viewpoint of the ruling class in Beijing, this formula worked brilliantly for a couple of decades, and underpinned the country’s meteoric ascent to superpower status in this century. The perils of dependency on globalisation, however, have been starkly illustrated by developments since the Western economies imploded in 2008. The recession in the core capitalist states has impacted on China in the form of reduced demand for the products assembled in the export driven mega-cities and a slowing down of foreign investment in those locations.
The Beijing elite were only able to inoculate their economy from the full effects of the global contraction thanks to the biggest state stimulus in history. Beijing reacted to the shockwave by encouraging sectors of the Chinese economy to accumulate the very same type of toxic debt that had trashed the Western economies. As Li puts it, the CCP;
‘responded to the global economic crisis by encouraging local government and state owned enterprises to undertake massive investment programs financed by bank loans. From 2008-2013, China’s non-financial sector debt surged from 140% of GDP to 209% of GDP’ (p.96).
The market jitters of 2015-16 are powered by mounting concern both within and without the country about the long-term viability of this vast debt bubble at the heart of the economy. The crisis also underlines the fact that the dynamics of the Chinese economy are as essentially capitalist in nature as its counterparts in the West. Any attempt to present the country as a socialist alternative to the global neoliberal project needs to be rejected entirely.
Li’s thorough dissection of the contradictions building up inside the China state-capitalist system ideally needs to be complemented by an examination of how they are also being manifested in growing military tension between Beijing and the US and its allies in East Asia. Recent alarm among Western strategic planners about China’s militarisation of the Spratly Islands is one indicator that the uneasy economic dependency between the two leviathans of the global system might not be enough to avert a dangerous confrontation at some point in the future.
The prospect of an apocalyptic showdown fortunately appears remote for now, but even its hypothetical possibility underlines the importance of Minqi Li’s powerful message: ‘China will be the key battleground of the coming global class struggle’ (p.169).
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