The following article was first published in Proletarian Revolution No. 70 (Spring 2004).

Imperialism’s China Card

With each passing week, China becomes a more central cog in the world class struggle. In the more immediate sense, this has presented great opportunities for world capitalism. China has become a great oasis of super-exploitation for the capitalists of the world, the number-one destination for setting up industrial shop. This process has been played with great effect against workers in other parts of the world and has done much to prop up sagging imperialist profits.

But in large part as a result of those same processes, China has undergone great class turmoil. Struggles by workers and peasants have multiplied and deepened in sophistication over the past several years. These developments are of great concern to the world’s imperialists, not to mention the ruling Stalinist bureaucracy in the Chinese Communist Party (CCP) to which they are increasingly tied.

Given the CCP regime’s revolutionary origins, it is especially important to have a genuinely Marxist understanding of the social forces at work in the most populous country on earth. Various organizations considering themselves Trotskyist have thrown up a hodgepodge of analyses of China, using their criticisms of Stalinism as a cornerstone of their revolutionary claims. But their understanding of Chinese Stalinism is damning evidence against their pretensions. They end up in one form or another as defenders of Stalinist rule and thereby of imperialism’s China card—the CCP.

The Stalinist Conquest

Central to a genuine revolutionary analysis is an understanding of the nature of Stalinism as it has evolved over the years. While Stalinism has always served capitalist interests in China and the world—even when that wasn’t readily apparent to either the capitalists or the Stalinists themselves—its character, directness and intensity has changed with circumstances. It was a great tragedy that the CCP was from early times dominated by leaderships subservient to the strategy of class collaboration dictated by the Communist International controlled by Stalin.

In the 1920’s, though only in the early stages of its degeneration, the Comintern was already fashioning a disastrous strategy for a ripening revolutionary situation in China. Western capitalism had greatly contributed to the fragmentation of the country over the course of a century, but it had helped produce a potent working class increasingly radicalized by class and national oppression. This proletariat, leading a restive peasantry, had the potential to fuse the democratic and socialist revolutions in an all-out fight to seize power from the imperialists and their Chinese compradors. To this strategy, developed by Leon Trotsky and his Chinese supporters, Joseph Stalin counterposed one that sought to limit the struggle to a “democratic” stage. This meant slavishly supporting the bourgeois-nationalist Chiang Kaishek, and thus setting the stage for the subsequent butchering of millions of workers, peasants and party members in a catastrophic counterrevolution in 1927.

For over two decades following this massive defeat, the country was plunged into warlordism, Japanese occupation and near-economic ruin by Chiang. Capitalism had made the country virtually unmanageable. For the good of the system itself, imperialism needed a force other than its compradors to run the society.

This role would be filled by the Chinese Communist Party, which had hardened in its support of capitalism. By the late 1930’s, Stalinism internationally had become a consistently counterrevolutionary force, its center in the Soviet Union a statified capitalism secured through bloody counterrevolution. The CCP itself had abandoned its links to the working class, through both the defeat of the 1925-27 revolution and the pursuit of a rural-based strategy championed by Mao Zedong. Its program for China was unmistakably one of bourgeois nationalism. But the hostility of Chiang and imperialism (in both Western and Japanese forms) invested the CCP with a credibility among the Chinese masses that would in the end serve well the imperialists themselves.

In the late 1940’s, the CCP’s final victory in the civil war with Chiang’s dissolving armies was a decisive display of the Stalinists’ capitalist nature. Paramount to Mao and other party leaders was insuring that the workers did not become an independent, militant force. The CCP instructed Chiang’s secret police to keep order, and commanded workers to co-operate with their bosses—many of whom welcomed the Communists’ victory—in the interest of promoting production. Shortly after the Stalinists took over China’s cities, they jailed a thousand Trotskyists and their sympathizers, the vanguard of the proletariat.

Not until the working class was safely corralled and the Stalinists were threatened by American armies invading Korea, did the CCP begin stripping control of industry from private hands. And even then the takeovers had to be posed as fights against corruption and incompetence rather than in more explosive class terms. The capitalists were duly compensated and even allowed to stay on as managers until party officials themselves could take over.

In this manner the CCP leadership solidified its bourgeois-democratic revolution and began performing its role as a regent ruling class; it substituted as a state-capitalist ruling class for a native bourgeoisie that was too weak and compromised to rule itself. The Stalinists performed an invaluable service for the world bourgeoisie. They kept an important and potentially rebellious working class in check, and they stabilized an economy whose implosion would have brought chaos to a strategic area of the world.

But imperialism had to pay a stiff price for the mess the Stalinists were cleaning up. Western imperialism was kicked out after decades of humiliating and exploiting the Chinese. The USSR at first demanded the same imperial privileges in China that Tsarist Russia had once enjoyed; then it looted Chinese industries in Manchuria in the wake of World War II and then offered “assistance” to Maoist China on exploitative terms. China was a harsh critic of imperialist practices for years and itself an inspiration—if a misleading one—for many of the world’s oppressed masses.

Getting rid of the imperialist boot was one of the genuine gains of the Stalinist revolution and its aftermath. There were others, like the seizure of landlords’ holdings for distribution among the peasants, as well as in health, education and women’s rights. Over time urban workers would win rights to jobs. But these were not the achievements of a workers’ revolution; indeed they were allowed only in the absence of a proletarian alternative and as a result were very limited in their democratic and class content.

To have a direct presence in China again, imperialism would have to bide its time. Before that happened, important leaders of the Stalinist regency would have to be convinced that their system had to be drastically altered. The theory of statified capitalism put forth by the League for the Revolutionary Party in our book, The Life and Death of Stalinism , not only analyzed the laws of motion of the Stalinist system but foresaw the inevitable devolution of that system towards the adoption of forms characteristic of private capitalism.

Maoists versus Pragmatists

The years following the successful consolidation of power provided the fuel for such a commitment. There was a major split within the ruling class: “pragmatic” elements adhered to a Soviet-style technocratic economic model, but “radicals” led by Mao were in charge for the most part. The political break with the Soviet Union in the late ’50’s was driven in part by distrust of Russian imperialism. As Nikita Khrushchev wrote in his memoirs, “In many areas of our economic relations we had thrust ourselves into China like colonizers. … Stalin’s demands for concessions from China were intolerable.”

The break was also connected to the distinct strategy of development that Mao initiated. The Maoists emphasized political adherence to “Mao Zedong thought,” as opposed to technical expertise in economic management. Material incentives for increased production were de-emphasized in favor of a voluntarist concept of “moral” incentives of ideological exhortations, often through orchestrated mass campaigns. This was part of a systematic effort to present a façade of egalitarianism to the society.

There were historical and material roots for such a strategy. In a huge but fragmented country facing hostile imperialist powers, the isolationist, labor-intensive effort at development that characterized the Maoist period appeared viable. But it proved to be disastrous in both economic and political terms. It created gross inefficiencies and, at the height of the “Great Leap Forward” and Mao’s “Great Proletarian Cultural Revolution,” virtual economic breakdown.

The Cultural Revolution in the late 1960’s succeeded in stirring up workers, both those who opposed it and those who took Maoist rhetoric about fighting bureaucracy seriously. Workers’ uprisings, along with Mao’s youthful “Red Guard” supporters, were suppressed by the People’s Liberation Army on Mao’s orders.

After the atrophy of the Cultural Revolution, Mao’s death in 1975, the subsequent jailing of prominent Maoists and the ascension of Deng Xiaoping to power, the party pragmatists took control. But the Soviet model of development they identified with seemed unviable: Chinese Stalinism lacked the strength and centralization that the Soviet regime had inherited from the Bolshevik Revolution; moreover, it started from an even lower technical base relative to the imperialist powers. China was falling further behind not only the imperialist powers but also other countries in the region. Taiwan, for example, to which Chiang had fled in 1949 and imposed his rule, was successfully exploiting Cold War rivalries and the raw exploitation of their own working masses to begin climbing up the capitalist food chain.

It was clear to Deng & Co. that important changes had to be made. They chose the path of an economic opening to the West and its capital and advanced technology (a political opening had already occurred under Mao) and the more direct use of capitalist economic techniques and organization within the economy internally. The underlying purpose of all this was a more efficient and intense exploitation of the Chinese masses.

These desires neatly meshed with those of the imperialists, whose own economies were in varying states of stagnation and in need of increasing labor exploitation. A huge deal was in the offing. More than a few capitalists saw a mass Chinese consumer market as the main payoff. But the most important and successful component of the emerging partnership was that China became an arena for super-exploitative capital investments. The imperialists, now with a greater technological ability through automation, reclaimed China as a base for industries previously reserved for the imperial centers.

In our article, “China’s Capitalist Revolutions,” in Proletarian Revolution No. 53, we analyzed Chinese Stalinism’s need for this agreement and what it did to fulfill its end of the bargain.

In planning a new direction, Deng was aware of the Asian capitalist success stories and their basis, as well of the fermenting mass discontent in his own country. For two interrelated tasks—expanding the capital base and buying off urban discontent—he sought to apply basic elements of the same strategy in China. For this aim he held a trump card; the enormous mass of exploitable labor—not so much in the existing urban work force as in the vast population of hungry and underemployed rural dwellers. It was necessary to utilize foreign capital and later the internal operation of Chinese capital as to maximize this potential.

Political conditions and the economic climate of the time reinforced this effort. China had the leverage to import needed capital and technology while protecting much of its home industry from foreign competition; there also were ready foreign outlets like the U.S. for cheap exports. The Cold War gave China maneuvering room between the Soviet and American rivals, and it faced no imminent conflicts with it sources of foreign capital. (China did fight a brief but bloody war with Vietnam in 1979, but that had no serious effect on its development plans.) The final ingredient, a stable but highly repressive state apparatus, was supplied by the Stalinist regime.

By far the most important and enduring of the advantages the CCP held were the abundant cheap labor supply, and the tight control by the Stalinist regime itself. It was able to parlay one of capitalism’s cruelest weapons—the labor reserve army—to an extent and in a fashion other “third-world” regimes could not possibly match. This set up the orgy of super-exploitation that has followed. Neither the Chinese rulers nor the imperialists were originally aware of how extensive and deep the partnership would become. But it has an absolutely lawful development, a variant of the devolution of statified capital toward private capital that our tendency predicted in analyzing the nature and direction of the Stalinist Soviet Union.

Introduction of “Free Market” Features

The original steps Deng undertook were relatively modest: agricultural reforms that allowed peasants long-term leases on their land and raised procurement prices for their products, and highly restrictive openings to foreign investments in Special Economic Zones in coastal regions. The lengthy process has seen some retrenchments, notably after the vicious repression of the protests of workers and students in 1989 in Tiananmen Square, and in the wake of mass protests of workers and peasants in the mid-90’s. Nonetheless, what has occurred over the last quarter of a century is the transformation of China into a society illustrating the most naked forms of capitalist exploitation—under the rule of an allegedly communist regime.

The main reforms have had overlapping aspects: allowing foreign capital to develop export industries; opening the internal economy to foreign ownership and control; privatization of much of the statified sector. After a period in which foreign firms had to accept joint ownership with Chinese firms, they have been given far more freedom for their own ventures. With changes introduced by then-President Jiang Zemin in 1997, and the introduction of China into the World Trade Organization in 2001, foreign firms have not only proliferated in the export regions but have entered the Chinese market en masse. Almost 25,000 foreign investment projects were approved in 2002, an enormous number itself and a 33.4 percent increase from the year before. In 2002 alone, $50 billion of foreign investment projects poured in.

China’s economy has shifted in basic ways towards privatization. There are now over 2 million private firms (compared to 800,000 in 1988) employing 70 million workers. Openly private domestic industry accounted for 17.9 percent of economic output in 2001, according to government statistics; but collective and joint-ownership enterprises often mask firms of genuinely private ownership and control. The year 2001 marks the point at which private companies were outproducing the public sector, and the trend has expanded. Very recently, for example, the government arranged a mass sell-off of state firms; in October, the party Central Committee approved the sale of 196 “strategic” companies in energy and natural resources that had previously been protected.

Among the main beneficiaries of the CCP’s privatizing have been the adult children of party leaders, the “princelings” whom the masses hate and deride. This reflects the very real phenomenon of inheritance, which becomes more naked with each passing year.

Inheritance has long existed under statified capitalism, including in China. The regency in its earlier times handed down power, status and wealth through indirect means. Ruling-class officials used political power and connections to secure privileges for their offspring. As with the more general phenomenon of property in statified capitalism, it was collective in form but private in content.

But this method of passing down power between ruling-class generations is contradictory. It has to resolve itself: over time, form and content must align. In China there has long been a trend towards traditional forms of capitalist private property. By the mid-80’s, private wealth, including ownership of the means of production, was made inheritable. By itself a landmark of sorts, this feature was given more teeth as property itself increasingly assumed a private form—both in the growing private sector and the conversion of state to private property. The whole process was recently given an important codification with the insertion into the Constitution of a statute protecting private property “legally obtained.”

Capitalist Super-Exploitation

The Chinese devolution has meant wrenching, harsh changes for hundreds of millions of working people already hard-pressed, even as a middle class and bourgeoisie have begun to bloom. Deteriorating conditions in the countryside, including pollution, tax-gouging by corrupt and empowered local officials and more open forms of unemployment with de-collectivization, have helped to drive an estimated 150 million peasants and agricultural laborers into urban areas in the largest internal migration in history. They move out of necessity and because they are now allowed to, given the relaxing of restrictions on moving to cities from the countryside. (At the same time, migrants are denied residence permits and the dwindling but real benefits associated with them.) Stalinist officials are becoming increasingly hip to the notion that bourgeois “freedoms” mean above all the freedom to exploit and be exploited.

Many migrants found jobs in town and village enterprises (TVE’s)—but not enough, and the TVE’s themselves are in decline. Millions of others found jobs in the coastal Special Economic Zones (SEZ’s). The regularly employed are the lucky ones. For others, moving to cities has often meant vying for the worst forms of menial and transient labor (for example, an elaborate class structure has developed over collecting scraps from garbage), or simply and desperately roaming or laying idle.

Meanwhile, masses of workers in the state industries that are either privatizing or collapsing are undergoing layoffs. This is most pronounced in the “rust belt” of the Northeast, once China’s strongest industrial area. Official government figures conclude that over 26 million have been laid off in state industries since 1998 alone, while only a little over 17 million have found other work. And it’s a downward spiral: if 50 percent of those laid off found new work in 1998, only 9 percent laid off in the first half of 2002 had successfully landed other jobs. These workers are the prime victims of the demise of the “iron rice bowl” of job guarantees and benefits that was a central Stalinist concession to the masses, even while the new “safety net” of unemployment benefits and the like is in a pathetic state.

Given the immediate and historical circumstances of the working masses, Chinese wages are among the lowest in the world, even when compared not just to workers in imperialist areas but also to other third-world workers. While the average wage in China is about 40 cents an hour, in Mexico it is about $1.60. For capitalists across the globe desperate to expand or even maintain profits, this is a big difference, made even more significant by the fact that Chinese wages have been relatively stagnant for a long period while those in other third-world areas have typically risen with increased proletarianization.

It is no wonder, then, that international capitalism has been racing to set up in China, transforming it into the “workshop of the world”—more accurately, the sweatshop of the world. In addition to the horrid wages, much of the labor has been performed in abysmal and dangerous conditions, with workers locked in dormitories after working the better part of the day and being gouged by employers with no protection from the state or non-existent unions. Indeed, China has become the country most popularly identified with sweatshop oppression.

International Effects of Super-Exploitation

The more capital has shifted production to China, the greater the impact has been on the working class internationally. While labor bureaucrats and domestic manufacturers in the imperialist countries have exaggerated the impact of these capital shifts to East Asia for protectionist purposes, the impact is real, particularly in the garment and textile industries in the U.S. where hundreds of thousands have lost jobs and factories have moved or closed. Increasingly, workers in poorer countries in Eastern Europe and Latin America are also seeing their jobs outsourced. At the same time, capital has honed the skill of throwing the workers still employed onto the defensive. In Mexico, for example, where over 300 manufacturing plants were moved to China in the past two years, wages were cut in plants where the bosses opted to stay.

The pauperized unemployed and underemployed masses constitute the “reserve army of labor,” a phrase coined by Marx. Malleable and desperate, the jobless have everywhere been used as the objects of the worst forms of exploitation and as a hammer against better-situated workers. The devolution in China has transformed relatively hidden and indirect forms of unemployment into open tools of capitalism, a centerpiece of the “race to the bottom” that is the preferred international capitalist strategy for development. It is ironic that in a country where the laws of capitalism were supposedly dispensed with, one of the most characteristic weapons in the capitalist arsenal has received its greatest historical expression.

With such a massive influx of capital, it should be no surprise that CCP leaders can boast of a number of important successes under the reforms. This is certainly true in terms of raw industrial output. For example, 50 percent of cameras, 30 percent of air conditioners, 25 percent of washing machines and 20 percent of the refrigerators now produced in the world are now made in China. By the end of 2002, China was the world’s 5th largest trading nation, with $266.2 billion of exports in that year alone. It is also the home for sectors of high-end production, like computer chips. It has made advances in attracting information technology (even its skilled labor is dirt cheap) and has directly appropriated or parlayed the development of advanced technology to run Mag-lev trains and become the third nation to send people into space.

All this has caused consternation among the imperialist states and classes. The CCP leaders’ dream of crashing the imperialist party as a political, military and economic competitor is a nightmare among ruling circles in Japan, the U.S. and elsewhere. The imperialists’ thirst for quick and necessary profits has produced the very conditions they find threatening. But however the Chinese challenge plays itself out in a world and region of rising and dangerous rivalries, China will not rise to imperialist status. Those neighbors that were somewhat successful in climbing the ladder of imperialist status are far smaller in size and population, and were allowed a window of opportunity not available to their massive neighbor. Capitalism in this epoch of decay does not allow the elevation of a third-world country and people on such a scale. Indeed, the premise of China’s recent development has been the conditions that its backwardness helped create. At the same time, China’s development has come at the expense of other world regions.

Even now, the problems stand out in sharp relief. Growth rates claimed by the Chinese government of between 7 and 10 percent between 1998 and 2001 appear as substantially exaggerated (even if they do stand out in a world of capital stagnation). In fact, one estimate based on energy consumption claims the economy has actually been shrinking in recent years. And a huge debt problem is mounting, a result of easy loans for development and the maintenance of thousands of decrepit state industries. By the summer of 2003 outstanding debt was equal to 138 percent of GDP—up from 88 percent in 1995 and above levels considered safe in other countries.

Even the center of its success in manufacturing has numerous and serious qualifications. Among them:

In general, the Chinese economy and society remain mired in backwardness. China is terribly distorted in its industrial mix and even more so in its regional development, with the hinterlands largely shut out of the investment binge. The inevitable slide into worldwide recession or worse will have a magnified effect in the export-dependent economy. It is a measure of the country’s fragmented development that imperialism worries as much about it falling apart as it becoming a serious rival.

For its part, world imperialism will deepen the contradictory character of its attitude towards and its role in Chinese capitalism. On the one hand, various sectors of the international bourgeoisie are fueling the protectionist and nationalist clamor against outsourcing to China, for political and military as well as economic reasons. The rivalries between imperialist powers and China, and among the imperialist powers themselves, will intensify in the coming period as East Asia becomes an increasingly dangerous and strategic “hot spot” in a world made more hostile by capitalist stagnation.

On the other hand, imperialist firms will continue heading to the Chinese exploitation heaven. As President Bryan Huang of Bearing Point Co. says: “Where can we sustain our cost advantage for the next 40 years? We’re convinced that China is the only place.” (Business Week, Aug. 11.) Fiat boss Cesare Romiti has proclaimed that, “China is becoming the America of the future.” And on a basic class level, imperialists are wising up to the essential role of the Stalinists in this operation. More and more they see the CCP not as a necessary evil to deal with but as a trusted police agent for their interests.

Thus, the level of propaganda against party suppression of protest has declined markedly since the Tiananmen massacre: a function not only of a general awareness of the Stalinist role but the realization that the protests are more and more consciously aimed at the reform process the imperialists back. A more specific benchmark of this appreciation is the reaction to the recent SARS crisis. The Chinese authorities initially stonewalled evidence of the disease; but their later efforts using the party machinery to control the outbreak impressed imperialist observers who saw potential in other areas as well:

Some now argue that a more accountable party is the only organization with the reach and strength to build a national surveillance system to handle future epidemics. And the party may also use its muscle to overcome local protectionism and insure that recalcitrant industries live up to the market-opening commitments to the World Trade Organization. (Business Week, June 23)

Of course, no one should expect the imperialists to openly say they appreciate the Stalinists’ counterrevolutionary role in suppressing the proletariat. They are not Marxists, and in any case would not wish to embarrass the Stalinist rulers with such a frank observation. Revolutionists are obliged to comprehend the evidence and do just that, however.

Capitalist investors in China are making a tenuous assumption: that the Chinese masses will, with a few carrots and many sticks, go along with the rates of exploitation that have been inflicted on them. But the Chinese workers have asserted their interests in this period of devolution. The Tiananmen demonstrations were a dramatic example of protest both against, and with higher expectations of, the reform process. Waves of mass protests have characterized the scene since.

Mass Protests by Workers and Peasants

Much of this protest has taken place among the peasantry. The peasants were generally supportive of the initial reforms and were a sort of political bastion against the Tiananmen events. But they have turned increasingly bitter over time and have taken actions, often violent and often against party officials. Given their sheer mass and their historical weight, this shift is of fundamental importance.

But even more critical is the mounting resistance by the working class. Much is centered in the “rust belt” amid the collapsing state sector. There have been various forms of protests by hundreds and even thousands of workers against layoffs, unpaid pensions and wages and other promises of a “social net.” But there has been ferment as well in the strategic SEZ’s. For example, in April of last year, more than 1000 workers occupied a toy factory in Guangdong province.

Capital has relied on the fact that most workers in the SEZ’s, often coming from desperate circumstances, will actually see their toil in the sweatshops as a step up from their previous existence. Many do, as they continue to pour in from the countryside. This is an unquestionably conservative influence. But the accumulating collective experience of the workers in the concentrated factories is building class awareness and resentments, and the potential for massive and militant action grows. The bosses try to counteract this by moving some work to isolated regions (with hints of moves to the devastated Northeast). But there are limits to such mobility, and the integrated nature of production in the coastal zone is irresistible. In the end, class struggle goes wherever the capitalists build their factories.

Even the use of the labor reserve army has its drawbacks for capital. The millions and millions of unemployed are a powerful source of discontent and instability, and capital’s police agents in the CCP are well aware of that. They want to keep a lid on things, but turmoil is inevitable.

While of course much news is suppressed there is unmistakable evidence of the growing resistance. This includes:

All this reportedly led the new Party leader, Hu Jintao, to warn the CCP Politburo that the state of society was “forcing people to rise up, to rebel and to seek to overthrow the leadership of the Communist Party.”

The whole reform process, as we have noted, has a central motive of appeasing the restless masses with capitalist prosperity. This was an underpinning to Deng’s original reforms a quarter of a century ago. And it was behind the declarations of a recent Central Committee meeting to develop the cities still further to soak up rural discontent. There is an obvious contradiction here: the very means designed to appease the masses have in fundamental ways added to their ferment. And the rapid growth of industry over a period of time, despite the layoffs of recent years, has added to the social weight of the proletariat, and its potential to rule society. The class struggle in China is a beacon for the international proletariat.

Pseudo-Trotskyists at Sea over China

The blatantly pro-capitalist orientation of the CCP leadership and its subordination of the Chinese workers and peasants to the profit needs of international imperialism exposes nakedly the falseness of all claims that China is either socialist or proletarian. Indeed, many of the political tendencies claiming to be Trotskyist are now saying that China is no longer a “deformed workers’ state.” This was the label given to the Stalinist states erected after World War II, which were not created through proletarian revolutions but were nonetheless held to be proletarian because the Stalinists seized power, had nationalized property and had introduced a planned economy. The formulation was invented by Michel Pablo, the leader of the degenerating Fourth International, to account for the Stalinists’ crushing of working-class movements at the same time that they remodeled their countries after the allegedly proletarian USSR. (See The Life and Death of Stalinism , Chapter 7.)

While all of Pablo’s theoretical followers have acknowledged that China has moved in a capitalist direction—no one claiming political sanity could say otherwise—they have come up with wildly varying explanations of whether and when China has reverted to capitalism. Their rampant confusion is not surprising, given that they all left the firm ground of Marxist class analysis when they decided that a workers’ state had come into being without the conscious revolutionary defeat of capitalism by the workers—and with the deliberate defeat of the working class by a party that had long before abandoned its working-class roots.

Part of the theory was based on fact: the statification of the major means of production. But another part was fiction: even at its most statified, the Stalinist economy was never “planned” in any Marxist sense of the term. It was a command economy, with party officials and technocrats drawing up and passing along directives based on unscientific, arbitrary and myopic assumptions, and which could never be carried out according to prescription. No Stalinist economy was ever truly centralized in the sense of coordinated, regulated functioning. In fact, the highly bureaucratized political centralism was intended to compensate for the atomized economy—and ultimately contributed to it. In China, it is no accident that the most centralized phases of this “planning” turned into the biggest failures. The “Great Leap Forward,” which ended up starving an estimated 30 million peasants, was a disaster not only because the backyard furnaces producing worthless steel diverted agricultural production, but also because production figures were falsified by lower party officials eager to please.

Certain aspects of the economy bring the reality of “planning” out in sharp relief. Information and data—the vital infrastructure for genuine planning—have always been distorted. In 2000, former Prime Minister Zhu Rongji warned that “falsification and exaggeration of statistics are rampant.” National statistics are cobbled from provincial ones; and each province and town reports figures to satisfy state targets. When the government does audit, it admits that more than two-thirds of the biggest Chinese companies falsify auditing (as opposed to an estimated 5 percent of American companies). Similarly, the extent of regional protectionism inhibiting the national economy is truly amazing. Today, for example, the city of Shanghai prohibits non-Shanghai truckers from entering the city between 7 am and 9 pm, to aid local shippers. Can one imagine this occurring in the U.S., or for that matter Taiwan?

The formal aspects of statification that the Pabloites cling to are themselves vanishing. The State Planning Commission, which drew up the Five-Year Plans, was swept aside in 2003, and the percentage of industry under state ownership (not including the collectives and joint enterprises) is estimated at 25 percent and dropping—less than in a number of Western countries at stages in their capital development. Thus the form is merely playing catch-up to the reality of economic anarchy that is in many ways worse than in pluralist capitalism.

Because their basic analysis of Stalinist societies was nothing but a rationalization, the Pabloites could never account for, let alone predict, the evolution of those societies. Long ago our tendency, in analyzing Stalinist states as forms of statified capital, noted that Stalinism was historically weak compared to the familiar forms of monopoly capitalism; we predicted their devolution towards the latter. This insight was dramatically borne out by the collapse of Stalinism in the Soviet Union and Eastern Europe. It is being further proved by the transformation in China and other surviving Stalinist-ruled countries.

Abandoning the Chinese “Workers’ State”

Those Pabloites who hold that capitalism has been restored in China have done nothing to repudiate the method of Pabloism—indeed, they are applying it again, in reverse. (To use Trotsky’s image, they are running the film of reformism backwards.) They still believe that the CCP established a workers’ state by substituting for the working class. They have simply become convinced that too much of the “workers’ state” has been undermined to maintain the fantasy. So now, in addition to a “socialist revolution” not made by the working class, they invent a capitalist transformation made by a ruling class that in effect overthrew itself.

That is, another central tenet of Marxism is that the overthrow of a class society like a workers’ state requires a decisive and violent change of class rule, the smashing of the state apparatus. When Stalin overthrew the remnants of workers’ rule in the Soviet Union in the 1930’s, he unleashed a sustained and bloody purge that killed, imprisoned and enslaved millions. It was a necessary act for consolidating the capitalist class. No such thing has occurred in China. Not only has there been no decisive class overthrow; in fact, the transformations in Chinese society have taken place through a relatively peaceful and orderly conduct of affairs within the political elite, at least compared with the factional bloodletting of the Maoist years.

Since there has been nothing decisive in class terms to specify when the supposed workers’ state was overturned, the various groups pick different criteria, policies, etc., to determine when the change took place. Take the Australian Democratic Socialist Party, which has a wide influence among the left in Southeast Asia. The DSP says that the 14th Congress of the CCP in September 1992, which approved building a “socialist market economy,” “signaled a qualitative change in the class nature of the Chinese state”:

While the process of capitalist restoration in China was not yet complete, there was sufficient evidence to conclude that this process was the outcome of a conscious orientation by those who commanded political power and therefore China, like Russia and the former Soviet bloc countries, was ruled by a capitalist state. (Green Left Weekly, Jan. 27, 1999.)

For Marxists, the role of consciousness is indeed decisive in a creating and maintaining a workers’ state—the revolutionary consciousness of the working class and its advanced leadership. It was the consciousness of the Russian revolution—by revolutionary elements still embodied in the working class and even in sections of the already Stalinized Communist Party—that had to be wiped out by the Stalinist counterrevolutionaries to consolidate Soviet capitalism. For the DSP, in contrast, the decisive element is the change in consciousness of the ruling bureaucracy, even though it was always independent of and hostile to the working class.

Another adherent of Pabloism-in-reverse is Workers Power (WP) of Britain, the flagship of the newly renamed League for the Fifth International. WP looked back at “the change of policy [that] culminated in the adoption of a new programme for a ‘socialist market economy’ by the Fourteenth Party Congress in October 1992” and admitted, eight years later:

With hindsight we can now see that this was the point at which the character of the state changed. Whilst continuing to be a bonapartist regime that had to secure its own economic base and at the same time balance between the main social classes, it consciously decided to transform its economic base from a planned economy to a state capitalist one. (Website statement “China: capitalism triumphant in the 1990s,” November 2000.)

What may be unique to WP’s position is the contention that capitalism did not triumph in the economy until some time after the alleged workers’ state had ceased to exist. For they also say:

Capitalism was restored in China by 1996. The fact that this was carried out relatively smoothly under the continued rule of the Chinese Communist Party was made possible by two principal factors. First, nearly two decades of “market reforms” had created powerful capitalist sectors within China, and secondly, the crushing of working class political opposition in the aftermath of the 1989 massacre in Tiananmen Square had removed the most important social obstacle to capitalism’s return.

Fumbling for an explanation tied to the class struggle, WP treats the bloody suppression of the Tiananmen Square protest as the set-up for the transition. But a set-up is not the transition itself, which somehow managed to occur quite peaceably years afterward. And while the Tiananmen crackdown was a real setback for the masses, it was by no means a decisive defeat. Its immediate effect (as WP admits) was to slow the march to privatization. And there have been massive waves of protest since, even if not as politically concentrated.

For the mainstream Pabloites, the forms of the so-called planned economy were a key factor that made them declare China and the other Stalinist-ruled countries to be workers’ states. For Workers Power, these forms were not only independent of a state genuinely ruled by workers, but also (for a period at least) independent of even their pseudo-workers’ state. Only when these forms seemed to be of no decisive importance does WP judge the economy to be truly capitalist. This position is a beautiful extension of Pabloite logic: economic forms exist independent of actual class relations.

As if to refute WP’s position that the economic transformation, however long delayed, took place by 1996, it wasn’t until 1997 that a new wave of devolutionary reforms was introduced; until then privatization had been in a relative stall. This wave was, however, the decisive signal for another Pabloite outfit, the United Secretariat, to give up on its “workers’ state.” And its rationalization is perhaps the worst of all. An article by G. Buster explains the transformation as follows:

The last symbol of a planned economy has thus disappeared with the definitive installation of the market as regulatory mechanism. But when and how did China become capitalist? … The CCP said its farewell to the working class in October 1997 when it announced the privatization of public sector enterprises, with the dismissal of 200 million workers in five years. Capitalist restoration was already an irreversible fact. (International Viewpoint, December 2003.)

That layoff figure, however, comes close to the total number of workers in the country; if true, it would mean that the CCP had indeed bade farewell to the Chinese working class by liquidating it. Fortunately for the prospect of proletarian revolution, the actual number of layoffs of the 1997 privatization drive has been reasonably estimated at about one-tenth Buster’s figure. But why be careful about the fate of couple hundred million workers when you’re desperate to get out from under a nonsensical and increasingly indefensible theory? The false figure got through because it enhances a date that saw no smashing of the state or civil war.

A former United Secretariat affiliate, the Pioneer group in Hong Kong, dates the transformation a decade earlier: to 1988, when China’s constitution was amended:

In 1982 and 1988 the constitution was twice amended, so as to explicitly permit the long-term growth of private capitalist economy. A state which engaged itself in the long-term development of capitalist economy while at the same time denied the working class all democratic rights, could not have been a workers’ state in any sense. In such a state the working class could only be an oppressed and exploited class, i.e., a subjugated class. … Therefore, when China amended its constitution in l988, it signified that the class nature of the state machinery had changed, and that a bourgeois state had already been restored.

Thus instead of a revolutionary change from one ruling class to another changing the state, we have the state apparatus itself changing its class content. It is Marxism, not the state, that has been turned upside down.

The deformed workers’ state theory is no theory at all, just a convenient label that allows one to say that nationalization is good, bureaucracy is bad. Any adherent can interpret it any way, so every conceivable date is provided for the decisive moment when the alleged workers’ state disappeared. At none of these moments did the hundreds of millions of Chinese workers rise up to defend “their” state. The workers have fought hard battles to defend gains that had been granted to them out of fear of their power. But any who had illusions that the Stalinist state was on their side would have been gravely weakened in the struggle.

Sticking with the Chinese “Workers’ State”

Some mice refuse to leave a sinking ship. That is, there remain Pabloites who have stuck to China’s supposed proletarian status; and they too offer varying reasons. One such group is the Brazilian Liga Bolchevique Internacionalista, which argues that “The possibility of a peaceful transition of a workers’ state to a capitalist economy (whether called state capitalism or not) is a fiction.” (Luta Operária, March 97.) That is true enough, but as we have pointed out, this argument really works in reverse: since China today has a capitalist economy but has had no violent counterrevolution, the claim that it had been a workers’ state without a workers’ revolution is all the more vacuous.

The LBI’s insistence on waiting for a genuine counterrevolution before they give up calling China a workers’ state may seem admirable, but it comes a bit late in the day. For they and others have already accepted the loss of their “workers’ states” in the USSR and East Europe through peaceful, gradual transformations. The stick-with-China school of Pabloism has therefore to twist even harder to find arguments that keep China “proletarian.”

The Spartacist League takes almost perverse pleasure in sticking with the Stalinists. But though the SL raises a number of separate points as evidence that a workers’ state exists, in the end it comes down to one: the CCP remains in power.

Nevertheless, they do assert the economic superiority of Stalinism, China included. The SL maintains that the Soviet Union was productively superior to Western capital. (They tried to demonstrate this with blatantly doctored growth statistics that only their members or the truly ignorant could possibly believe; see PR 68 for our refutation.) The economic collapse of the Soviet Union made a mockery of this claim, but they continue in a backhanded manner to press this argument for China. Not long ago they favorably compared the Chinese economy to Russia’s after Stalinism’s collapse, and chalking it up to the class differences in regimes:

Whereas the gross domestic product in Yeltsin’s Russia has plummeted by 60 percent since 1991, the Chinese economy has been growing at an average annual rate of 10 percent for the past few years. (Workers Vanguard, Dec. 15, 1995.)

But of course this growth was due to the imperialist investment pouring in and the growing private sector—the very things that the SL believes are threatening the workers’ state!

Since then, the Spartacists have been forced to discuss more the embattled nature of the state economy. But even with this proviso, they continue to trumpet the advantages of the statified economy. For example:

It is the “socialist” (i.e. collectivist) aspects which are responsible for the positive economic developments in China in recent years: the vast expansion of investments in infrastructure (e.g. urban construction, canals, railroads and the giant Three Gorges Dam project), the ability of China to have navigated successfully through the 1997-98 East Asian financial economic crisis and then a generalized world capitalist recession. (WV, Nov. 21, 2003.)

There are undoubtedly productive things going on in Chinese public works—just as there are in public works in any capitalist country. But it is a measure of the SL’s desperation that they include the Three Gorges Dam—a project renowned for its corruption, callousness towards millions of displaced residents and financial and ecological waste—as a positive example. As for the Stalinists’ “navigation” through economic crises, this is a rehash of the previous bankrupt argument. Now as then, it is the privatized and imperialist sectors that keep China afloat and provide financing for the public works.

Another piece of evidence the SL offers is the system of inheritance in China (or in their eyes, the lack of it), which of course is related to property ownership in general. To the SL, establishing the right to inheritance in China would mean destroying the Stalinist state:

The aims of China’s would-be exploiters—centrally to secure the right to buy and sell property and hand it down to their offspring—can only be achieved through smashing the existing state apparatus by one means or another and replacing it with a new one based on the principle of private ownership of the means of production. (Spartacist, Summer 1997.)

But as we have pointed out, inheritance already exists in reality. The SL needs a lot better excuse than this.

Stalinist Power = Workers’ State

For the Spartacists, the biggest proof that China remains a workers’ state is the Stalinist regime itself. The Stalinist party is the alpha and omega of the alleged workers’ state. Its rise to power defined that state’s beginnings. And the SL considers the state apparatus created, ruled and maintained by the Stalinists as the central structure that has to be smashed before capitalist exploitation is triumphant.

For example, the SL rejects the notion that Stalinists can allow a pluralist economy under their control. To this end, they approvingly quote Sujian Guo, an academic emigré from China: “The experience of other former communist countries has shown that there is no single case of making privatization successful with the communist party remaining in power and its political system intact.” That is true, because Soviet and Eastern European Stalinists thought they could manage the economic transition without preserving party power. It is precisely those examples that propelled the CCP onto its pluralist path—not privatizing every single enterprise, of course—while feverishly plotting to maintain party authority.

The SL has traditionally been more critical of the CCP leaders than some other Pabloite groups, and they can’t ignore the march towards private capitalism. But even at their most critical, they see the Stalinists as “contradictory,” meaning that they have a good side. It is in this light that they interpret actions and events.

The Beijing bureaucracy essentially acts as a transmission belt for the pressures of the imperialist-dominated world market on the workers state. The brittle and contradictory character of this bureaucratic caste can be seen in the fact than in the face of working-class unrest, the current regime has often reversed some of its economic “reforms” and occasionally put some of its own on trial for corruption, sometimes with a penalty of execution. (WV, May 17, 2002.)

But any capitalist class can—and at times must—be able to make concessions in the face of mass pressure. And this often involves disciplining members of the ruling class itself. As for being “brittle,” this is true only in the sense that the capitalist class in general is brittle before its proletarian gravediggers in this epoch. But the Chinese rulers have proven to have the stability a hardened capitalist class demands. The fact that Stalinist ruling classes in Europe and the ex-USSR have been able to morph into traditional bourgeoisies with without bloody counterrevolutions is evidence enough of their class character. (And as we earlier noted, the transition is China has been taking place with a marked lack of discord within the ruling circle itself.)

The Spartacists’ outlook leads them to downplay the bureaucracy’s openly capitalist functioning, even as it has to acknowledge the process. Thus, in arguing against other leftists’ trumpeting of the recent decision to legitimize the membership of capitalists in the Party, Workers Vanguard stated:

According to an official survey of China’s two million business owners 600,000 are party members and have been for some time. The overwhelming majority of these were longtime CCP managerial cadre who took over the small state-owned enterprises they were running when these were privatized over the past several years. (Nov. 21, 2003.)

In other words, the fact that the involvement of private capitalists in the Party is even deeper and of longer standing than the recent decision suggests is presented as a reason not to take the Party’s public welcome to capitalists too seriously!

Similarly, the SL downplays the openly capitalist manifestations of the Chinese economy. While they lash out against the increasing unemployment, the exploitation in SEZ enterprises, low wages in collectives, etc., they refuse to discuss this in Marxist terms: it is the superexploitative extraction of surplus value through use of the labor reserve army by the government and the imperialists. They warn that the imperialists’ “ultimate goal is to reduce China to a giant sweatshop under neocolonial subjugation”—overlooking that China already is a giant sweatshop which, while not under the direct control of imperialism, is most certainly a subordinate and critical link in the chain of world imperialism.

At the same time, China is a vast country engaged in political, economic and at times even military competition with the imperialists. Despite our rejection of any notion that “Communist” China was ever a workers’ state, China is certainly a country oppressed by imperialism. Consequently we stand for the defense of China against imperialist attacks, whether through military or economic means.

CCP: Prop for Imperialism

While the imperialists have always feared most the workers taking power into their own hands, they are more and more apprehensive about any disruption of the Stalinist regime that has proved essential for the cauldron of exploitation in China that so powers the world capitalist machine. Thus any political defense of the fictitious “workers’ state” in China becomes ever more obviously a defense of the world order of imperialism.

In this context, China’s naked but steady devolution to an increasingly privatized capitalism has left the pseudo-Trotskyist theorists in disarray—not even to speak of the Maoists and others who once held China up as a socialist model.

Many on the far left gave their support to Stalinism on the grounds that “the enemy of my enemy is my friend”—that is, no matter how viciously the Stalinist regimes acted against the working classes they ruled over, at least they were an alternative to imperialism. Our analysis, in contrast, pictured the Stalinist regimes, above all the Russian, as props for imperialism during the post-World War II period when the world was in upheaval. The Chinese Stalinist rulers are providing an even more devastating case. They have dreams of becoming a serious rival to the Western imperialist powers, which will not happen. But they already serve as imperialism’s loyal compradors in the most massive super-exploitation yet seen on the planet.

That this is done by a regime still speaking in the name of even a maniacally distorted Marxism (along with “Mao Zedong Thought and the Theories of Deng Xiaoping”) is a crime against human sense. That the super-exploiting state has long been defended, and regarded as proletarian, by would-be communist revolutionaries shows that they have turned from bowdlerized Marxism to unconscious defense of the imperial order.

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