A question of State and Revolution: China and Market Socialism

We are very pleased to republish this important article from the website Workers Today on the important question of China and market socialism. Rigorously argued and theoretically well grounded, it puts forward six main theses:

  • That Chinese market socialism is a way to address the backward state of productive forces
  • That market socialism in China is a Marxist-Leninist tool that is important to socialist construction. Here it draws on both Marx’s Critique of the Gotha Program and Lenin’s The Tax in Kind
  • That the CPC’s continued leadership and control of this economy is central to Chinese socialism
  • That Chinese socialism has catapulted a workers state to previously unknown economic heights
  • That China’s successful development of a modern industrial economy has laid the basis for higher forms of socialist economic organisation
  • That China’s application of market socialism to its relations with other developing countries plays a major role in the fight against imperialism

Although issued by Workers Today on 18 November 2021, the article originally appeared on the Return to the Source website in May 2011. It may have been written a decade ago, but its analysis and conclusions remain highly relevant.

Though each face very specific obstacles in building socialism, these five countries–the Republic of Cuba, the Socialist Republic of Vietnam, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and the People’s Republic of China–stand as a challenge to the goliath of Western imperialist hegemony. Among them, however, China stands unique as a socialist country whose economic growth continues to supersede even the most powerful imperialist countries.

Though an embarrassing number of Western “left” groups challenge the designation of any of these five countries as socialist, no country raises greater opposition than China. Many Western “left” groups claim that modern China is a full-fledged capitalist country. Owing their ideological heritage to bogus theoreticians like Leon Trotsky, Tony Cliffe, and Hal Draper, some groups argue that China was never a socialist country, claiming instead that the Chinese state is and has been state capitalist.

I counter their outrageous reactionary assertions with six theses:

First, Chinese market socialism is a method of resolving the primary contradiction facing socialist construction in China: backwards productive forces.

Second, market socialism in China is a Marxist-Leninist tool that is important to socialist construction.

Third, the Chinese Communist Party’s continued leadership and control of China’s market economy is central to Chinese socialism.

Fourth, Chinese socialism has catapulted a workers state to previously unknown economic heights.

Fifth, the successful elevation of China as a modern industrial economy has laid the basis for ‘higher’ forms of socialist economic organization.

And sixth, China applies market socialism to its relations with the Third World and plays a major role in the fight against imperialism.

From these six theses, I draw the conclusion that Marxist-Leninists in the 21st century should rigorously study the successes of Chinese socialism. After all, if China is a socialist country, its ascension as the premiere world economic power demands the attention of every serious revolutionary, especially insofar as the daunting task of socialist construction in the Third World is concerned.

Market socialism is a method of resolving the primary contradiction facing socialist construction in China: backwards productive forces.

The Chinese revolution in 1949 was a tremendous achievement for the international communist movement. Led by Mao Zedong, the Chinese Communist Party (CCP) immediately charted a course of socialist reconstruction in an economy ravaged by centuries of dynastic feudalism and imperial subjugation from both Europe and Japan. The CCP launched incredible campaigns designed at engaging the masses in constructing socialism and building an economy that could meet the needs of China’s giant population. One can never overstate the incredible achievements of the Chinese masses during this period, in which the average life expectancy in China rose from 35 years in 1949 to 63 years by Mao’s death in 1975. (1)

Despite the vast social benefits brought about by the revolution, China’s productive forces remained grossly underdeveloped and left the country vulnerable to famines and other natural disasters. Uneven development persisted between the countryside and the cities, and the Sino-Soviet split cut China off from the rest of the socialist bloc. These serious obstacles led the CCP, with Deng Xiaoping at the helm, to identify China’s underdeveloped productive forces as the primary contradiction facing socialist construction. In a March 1979 speech at a CCP forum entitled “Uphold the Four Cardinal Principles,” Deng outlines the two features of this contradiction:

First, we are starting from a weak base. The damage inflicted over a long period by the forces of imperialism, feudalism and bureaucrat-capitalism reduced China to a state of poverty and backwardness. (2)

While he grants that “since the founding of the People’s Republic we have achieved signal successes in economic construction, established a fairly comprehensive industrial system,” Deng reiterates that China is nevertheless “one of the world’s poor countries.” (2)

The second feature of this contradiction is that China has “a large population but not enough arable land.” Deng explains the severity of this contradiction:

When production is insufficiently developed, it poses serious problems with regard to food, education and employment. We must greatly increase our efforts in family planning; but even if the population does not grow for a number of years, we will still have a population problem for a certain period. Our vast territory and rich natural resources are big assets. But many of these resources have not yet been surveyed and exploited, so they do not constitute actual means of production. Despite China’s vast territory, the amount of arable land is limited, and neither this fact nor the fact that we have a large, mostly peasant population can be easily changed. (2)

Unlike industrialized Western countries, the primary contradiction facing China was not between the proletariat and the bourgeoisie–the proletariat and its party had already overthrown the bourgeoisie in the 1949 revolution–but rather between China’s enormous population and its underdeveloped productive forces. While well-intended and ambitious, campaigns like the Great Leap Forward would continue to fall short of raising the Chinese masses out of poverty without revolutionizing the country’s productive forces.

From this contradiction, Deng proposed a policy of “socialism with Chinese characteristics,” or market socialism.

After Mao’s death in 1975 and the end of the Cultural Revolution a year later, the CCP ,under the leadership of Chairman Deng Xiaoping, launched an aggressive campaign of modernizing the underdeveloped productive forces in China. Known as the four modernizations–economic, agricultural, scientific & technological, and defensive–the CCP began experimenting with models for achieving these revolutionary changes.

Modernization wasn’t something extraneous to socialist construction in China. In the wake of the Great Leap Forward and the turbulent unrest of the Cultural Revolution, the CCP understood that building lasting socialism required a modernized industrial base. Without such a base, the Chinese masses would continue to live at the mercy of natural disasters and imperialist manipulation. Deng outlined this goal in an October 1978 speech before the Ninth National Congress of Chinese Trade Unions:

The Central Committee points out that this is a great revolution in which China’s economic and technological backwardness will be overcome and the dictatorship of the proletariat further consolidated. (3)

Deng continues by describing the necessity of re-examining China’s method of economic organization:

Since its goal is to transform the present backward state of our productive forces, it inevitably entails many changes in the relations of production, the superstructure and the forms of management in industrial and agricultural enterprises, as well as changes in the state administration over these enterprises so as to meet the needs of modern large-scale production. To accelerate economic growth it is essential to increase the degree of specialization of enterprises, to raise the technical level of all personnel significantly and train and evaluate them carefully, to greatly improve economic accounting in the enterprises, and to raise labour productivity and rates of profit to much higher levels.

Therefore, it is essential to carry out major reforms in the various branches of the economy with respect to their structure and organization as well as to their technology. The long-term interests of the whole nation hinge on these reforms, without which we cannot overcome the present backwardness of our production technology and management. (3)

These proposed reforms launched market socialism in China. Beginning with the division of the Great Leap Forward-era People’s Communes into smaller private plots of land, market socialism was first applied to China’s agricultural sector to boost food production. From the 1980s to around 1992, the Chinese state delegated greater authority to local governments and converted some small and medium sized industries into businesses, who were subject to regulations and direction from the CCP.

Since the implementation of market socialism, China has experienced unprecedented economic expansion, growing faster than every other economy in the world. Deng’s market socialism decisively lifted the Chinese masses out of systemic poverty and established the country as an economic giant whose power arguably exceeds the largest imperialist economies of the West.

Market socialism in China is a Marxist-Leninist tool that is important to socialist construction.

While Deng’s concept and implementation of market socialism is a significant contribution to Marxism-Leninism, it’s not without precedent. Proletarian revolution has historically broken out in the countries where the chains of imperialism are the weakest. One of the uniting characteristics of these countries is backwards productive forces; underdeveloped because of decades of colonial and imperial subjugation. Far from the first instance of communists using markets to lay an industrial foundation for socialism, China’s market socialism has its roots in the New Economic Policy (NEP) of the Bolsheviks.

Facing similar levels of underdevelopment and social unrest, the Bolsheviks implemented the NEP, which allowed small business owners and peasants to sell commodities on a limited market. Designed and implemented by Lenin in 1921, the NEP was the successor to Trotsky’s policy of war communism, which prioritized militarizing agricultural and industrial production to combat the reactionary White forces. Because of their economically backward material conditions, peasants overwhelmingly resisted war communism, which resulted in food shortages for the Red Army. Correctly perceiving the importance of forging a strong alliance between the peasantry and the urban working class, Lenin crafted the NEP as a means of modernizing Russia’s rural countryside through market mechanisms.

In a piece explaining the role of trade unions in the NEP, Lenin succinctly describes the essence of the concept that Deng would later call ‘market socialism’:

The New Economic Policy introduces a number of important changes in the position of the proletariat and, consequently, in that of the trade unions. The great bulk of the means of production in industry and the transport system remains in the hands of the proletarian state. This, together with the nationalisation of the land, shows that the New Economic Policy does not change the nature of the workers’ state, although it does substantially alter the methods and forms of socialist development for it permits of economic rivalry between socialism, which is now being built, and capitalism, which is trying to revive by supplying the needs of the vast masses of the peasantry through the medium of the market. (4)

Do not neglect the gravity of Lenin’s words in this passage. He acknowledges that the introduction of markets into the Soviet economy does nothing to fundamentally alter the proletarian character of the state. More provocatively, however, is his characterization of the Soviet economy as an “economic rivalry between socialism, which is now being built, and capitalism.” (4) According to Lenin, capitalist relations of production can exist within and compete with socialism without changing the class orientation of a proletarian state.

Recall that Deng argued that market socialism was essential to modernizing China’s productive forces and consolidating the dictatorship of the proletariat. Lenin would have agreed wholeheartedly with Deng’s assessment, as articulated in an April 1921 article entitled “The Tax in Kind.” Lenin writes:

Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. It is inconceivable without planned state organisation which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution. We Marxists have always spoken of this, and it is not worth while wasting two seconds talking to people who do not understand even this (anarchists and a good half of the Left Socialist-Revolutionaries). (5)

The ideological roots of Deng’s market socialism go back farther than Lenin, however. In an August 1980 interview with Italian journalist Oriana Fallaci, she asks Deng if market reforms in rural areas “put in discussion communism itself?” Deng responds:

According to Marx, socialism is the first stage of communism and it covers a very long historical period in which we must practise the principle “to each according to his work” and combine the interests of the state, the collective and the individual, for only thus can we arouse people’s enthusiasm for labour and develop socialist production. At the higher stage of communism, when the productive forces will be greatly developed and the principle “from each according to his ability, to each according to his needs” will be practised, personal interests will be acknowledged still more and more personal needs will be satisfied. (6)

Deng’s answer is a reference to Marx’s 1875 Critique of the Gotha Program. Marx describes the process of socialist construction in terms of ‘higher’ and ‘lower’ stages:

What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society — after the deductions have been made — exactly what he gives to it.

But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby. (7)

Agree with market socialism or don’t, but the facts are in:

Fact: Market socialism is in accordance with Marxism-Leninism.

Fact: Lenin’s view is that markets and some capitalist relations of production do not fundamentally alter the proletarian class character of a socialist state.

Fact: Lenin believed that countries could build socialism through the use of markets.

Fact: The principle that informs Deng’s market socialism–”to each according to his work”–comes directly from Marx.

The Chinese Communist Party’s continued leadership and control of China’s market economy is central to Chinese socialism.

Western commentators have predicted that China’s market reforms would lead to the downfall of the CCP since Deng announced market socialism in the late 1970s. These same commentators have repeated this claim for the last 30 years and are constantly proven wrong as China lifts itself out of poverty with the CCP at the helm. Market reforms have not altered the fundamental socialist underpinnings of Chinese society because the masses and their party continue to rule China.

The so-called ‘privatization’ of small and medium-sized state industries in the mid-1990s and early 2000′s provoked an outcry from Western ‘leftists’, claiming that this represented the final victory of capitalism in China. But since ‘left’ groups are so often subject to bickering over obscure definitions and irrelevant (but no less verbose!) debates about distant historical questions, let’s see what the capitalists themselves have to say about ‘privatization’ in China. In a May 2009, Derrick Scissors of the Heritage Foundation lays the issue to rest in an article called “Liberalization in Reverse.” He writes:

Examining what companies are truly private is important because privatization is often confused with the spreading out of shareholding and the sale of minority stakes. In China, 100 percent state ownership is often diluted by the division of ownership into shares, some of which are made available to nonstate actors, such as foreign companies or other private investors. Nearly two-thirds of the state-owned enterprises and subsidiaries in China have undertaken such changes, leading some foreign observers to relabel these firms as “nonstate” or even “private.” But this reclassification is incorrect. The sale of stock does nothing by itself to alter state control: dozens of enterprises are no less state controlled simply because they are listed on foreign stock exchanges. As a practical matter, three-quarters of the roughly 1,500 companies listed as domestic stocks are still state owned. (8)

While the so-called ‘privatization’ process of allows some private ownership, whether domestic or foreign, Scissors makes clear that this is a far cry from real privatization, as occurs in the United States and other capitalist countries. The state, headed by the CCP, retains a majority stake in the company and guides the company’s path.

More striking are the industries that remain firmly under state control, which are those industries most essential to the welfare of the Chinese masses. Scissors continues:

No matter their shareholding structure, all national corporations in the sectors that make up the core of the Chinese economy are required by law to be owned or controlled by the state. These sectors include power generation and distribution; oil, coal, petrochemicals, and natural gas; telecommunications; armaments; Aviation and shipping; machinery and automobile production; information technologies; construction; and the production of iron, steel, and nonferrous metals. The railroads, grain distribution, and insurance are also dominated by the state, even if no official edict says so. (8)

No capitalist country in the history of the world has ever had state control over all of these industries. In countries like the United States or France, certain industries like railroads and health insurance may have state ownership, but it falls drastically short of dominating the industry. The importance of this widespread state ownership is that the essential aspects of the Chinese economy are run by the state headed by a party whose orientation is towards the working class and peasantry.

Particularly damaging to the China-as-state-capitalist argument is the status of banks and the Chinese financial system. Scissors elaborates:

the state exercises control over most of the rest of the economy through the financial system, especially the banks. By the end of 2008, outstanding loans amounted to almost $5 trillion, and annual loan growth was almost 19 percent and accelerating; lending, in other words, is probably China’s principal economic force. The Chinese state owns all the large financial institutions, the People’s Bank of China assigns them loan quotas every year, and lending is directed according to the state’s priorities. (8)

The People’s Bank of China (PBC) highlights one of the most important ways in which the CCP uses the market system to control private capital and subordinate it to socialism. Far from functioning as a capitalist national bank, which prioritizes facilitating the accumulation of capital by the bourgeoisie, “this system frustrates private borrowers.” (8) The CCP floods the market with public bonds, which has a crowding-out effect on private corporate bonds that firms use to raise independent capital. By harnessing supply and demand in the bond market, the PBC prevents private firms, domestic or foreign, from accumulating capital independently of socialist management.

Although modern China has an expansive market system, the CCP uses the market to both secure and advance socialism. Rather than privatizing major industries, as is often alleged by detractors, the state maintains a vibrant system of socialist public ownership that prevents the rise of an independent bourgeoisie. Deng talked specifically about this very deliberate system in the same interview with Fallaci:

No matter to what degree we open up to the outside world and admit foreign capital, its relative magnitude will be small and it can’t affect our system of socialist public ownership of the means of production. Absorbing foreign capital and technology and even allowing foreigners to construct plants in China can only play a complementary role to our effort to develop the productive forces in a socialist society. (6)

Western analysts seem to believe that the CCP has accomplished this goal. The capitalist Australia-based Center for Independent Studies (CIS) published a July 2008 article that says that those who think that China is becoming a capitalist country “misunderstand the structure of the Chinese economy, which largely remains a state-dominated system rather than a free-market one.” (9) The article elaborates:

By strategically controlling economic resources and remaining the primary dispenser of economic opportunity and success in Chinese society, the Chinese Communist Party (CCP) is building institutions and supporters that seem to be entrenching the Party’s monopoly on power. Indeed, in many ways, reforms and the country’s economic growth have actually enhanced the CCP’s ability to remain in power. Rather than being swept away by change, the CCP is in many ways its agent and beneficiary. (9)

While the CIS goes on to cry crocodile tears about the lack of economic and political freedoms in China, Marxist-Leninists read between the lines and know the truth: China isn’t capitalist, the CCP isn’t pursuing capitalist development, and market socialism has succeeded in laying the material foundation for ‘higher socialism’.

Chinese socialism has catapulted a workers state to previously unknown economic heights.

While the Great Leap Forward was an ambitious attempt at laying the industrial foundation necessary to build socialism, the facts are in: China’s gross domestic product (GDP) in 1960, after the GLF, was $68.371 billion. (10) In 2009, China’s GDP sits just under $5 trillion, making it the second largest economy in the world. (11) In other words, the modern Chinese economy is about 73 times the size of its economy following the Great Leap Forward, which was previously the largest socialist economic overhaul in Chinese history.

The cruel irony of Chinese socialism is that the bulk of its international admirers are not ‘leftists’, but rather capitalists. Far from approving of socialism, these capitalists are in awe of China’s manipulation of markets to build a thriving modern society without resorting to free markets. They hate China’s accomplishments and its socialist path, but they cannot deny its thriving success. Even Scissors acknowledges in the same Heritage Foundation article that, “between June 2002 and June 2008, China’s GDP more than tripled and its exports more than quadrupled.” (8)

China’s incredible GDP growth is of vital importance to socialism. Scissors continues:

This rapid GDP growth has created jobs: by the end of June 2008, the unemployment rate among registered urban voters was a mere four percent — even lower than the government’s ambitious target of 4.5 percent. That figure may understate true joblessness by ignoring rural and unregistered urban employment, but it accurately reflects trends in the broader job situation. So many migrant workers from rural areas were absorbed into the urban labor force that the 20 million such workers reported to have lost their jobs in late 2008 still left well over 100 million rural migrants with jobs in cities. (8)

That China can essentially guarantee full employment for workers highlights another way in which the CCP uses markets to advance socialism. In addition to achieving de facto full employment, “Urban wages have climbed significantly, by 18 percent between 2007 and 2008,” representing serious material gains for the Chinese working class. (8)

Unlike the dispossessed masses of capitalist countries, the Chinese masses are consistently more satisfied with and favorable to their own nation’s economy. A July 2008 study conducted by the Pew Global Attitudes Project polled a diverse cross section of people in 24 developed countries, including China prior to the Beijing Olympics. Pew’s findings confirm the popularity of market socialism among the Chinese masses:

“As they eagerly await the Beijing Olympics, the Chinese people express extraordinary levels of satisfaction with the way things are going in their country and with their nation’s economy. With more than eight-in-ten having a positive view of both, China ranks number one among 24 countries on both measures in the 2008 survey by the Pew Research Center’s Pew Global Attitudes Project.” (12)

Incidentally, Pew finds that “Chinese satisfaction with these aspects of life has improved only modestly over the past six years, despite the dramatic increase in positive ratings of national conditions and the economy.” (12) While the Chinese masses celebrate the recent dramatic increase in the nation’s standard of living, the longevity of their satisfaction reflects a deeper relationship with the state.

Among Pew’s most interesting findings was the level of people in China concerned with growing income inequality. While inequality is a chief concern for the dispossessed masses in capitalist countries, the wealthy are not concerned with income inequality at all, as it constitutes the cornerstone of their class. The Chinese masses, however, respond to this critical concern very differently. Pew finds:

“About nine-in-ten (89%) identify the gap between rich and poor as a major problem and 41% cite it as a very big problem. Worries about inequality are common among rich and poor, old and young, and men and women, as well as the college-educated and those with less education. In that regard, despite economic growth, concerns about unemployment and conditions for workers are extensive, with 68% and 56% reporting these as big problems, respectively.” (12)

The universality of concerns about income inequality, concerning even wealthier citizens, demonstrates the continued supremacy of socialist values in China. Cultural norms and values arise from the material conditions and relations of production. If China was a capitalist country, the widespread prevalence of socialist values–cutting across income levels–would not exist. To contend otherwise is to abandon a materialist analysis of culture.

The successful elevation of China as a modern industrial economy has laid the basis for ‘higher’ forms of socialist economic organization.

The market is not a mode of production; rather, the market is a form of economic organization. Deng explains this distinction well in a lecture series he gave in 1992. He states:

The proportion of planning to market forces is not the essential difference between socialism and capitalism. A planned economy is not equivalent to socialism, because there is planning under capitalism too; a market economy is not capitalism, because there are markets under socialism too. Planning and market forces are both means of controlling economic activity. (13)

Markets are neither capitalist nor socialist, just as economic planning is neither capitalist nor socialist. Both of these forms of economic organization are just tools in the toolbox, and in some situations, markets are a useful tool for socialist construction.

For 30 years, the CCP has successfully used markets as a tool for revolutionizing the country’s productive forces. Precisely because of this success, the state is rapidly moving towards more advanced forms of socialist industrial organization to replace the market mechanism.

Market socialism was first implemented in the agricultural industry with the same aim as Lenin’s NEP: to aggressively expand and modernize food production. However, the CCP introduced markets as a tool to build socialism, rather than as a permanent functioning mode of economic organization. This is a very important distinction because it means that Deng and the CCP viewed market reforms as a transient form of ‘lower socialism’, to borrow a term from Marx, that they would replace with collectivized agriculture after the material conditions changed. Deng explains this in a talk delivered to the Central Committee in May 1980. Entitled “On Questions of Rural Policy,” Deng addresses concerns about contemporary market reforms to the agricultural sector:

It is certain that as long as production expands, division of labour increases and the commodity economy develops, lower forms of collectivization in the countryside will develop into higher forms and the collective economy will acquire a firmer basis. The key task is to expand the productive forces and thereby create conditions for the further development of collectivization. (14)

Deng understood that building a socialist agricultural economy capable of meeting the needs of China’s enormous population required developing the productive forces in the countryside, which markets could accomplish. Only after revolutionizing the productive forces of the entire country could the material basis for a full-scale collective economy–’higher socialism’–exist.

Mao said that “Practice is the criterion of truth,” and after 30 years of practice, Deng’s statements have come true. In 2006, the CCP announced a revolutionary overhaul of the Chinese countryside and pledged to use China’s newly acquired wealth to transform rural areas into what President Hu Jintao calls a “new socialist countryside.” (15) Even today, most of China’s population remains in rural sections of the country, but the application of modern farming techniques and mechanized agricultural practices have generated a net surplus of grain production in China. Among this new policy’s many provisions, China’s new rural policy promises “sustained increases in farmers’ incomes, more industrial support for agriculture and faster development of public services.” (15) Additional provisions allow peasant students to “receive free textbooks and boarding subsidies,” and the state will “increase subsidies for rural health cooperatives.” (15)

Massive state investment in agricultural infrastructure is “a significant shift away from the previous focus on economic development.” (15) Because of the success of modernization, “greater weight will be given to the redistribution of resources and a rebalancing of income.” (15) Instead of viewing market socialism as an end in itself, the CCP has harnessed the market as a means to generating an industrial base sufficient to build ‘higher socialism’. China’s extraordinary GDP growth and technological development via market socialism makes it possible to implement these sweeping revolutionary changes.

On health care, Austin Ramzy of TIME Magazine reported in April 2009 that “China is laying out plans to dramatically reform its health care system by expanding coverage for hundreds of millions of farmers, migrant workers and city residents.” (16) These plans consist of spending “$125 billion over the next three years building thousands of clinics and hospitals and expanding basic health care coverage to 90% of the population.” (16) Rather than a reversal of the Deng-era reforms, China’s move back towards public health care is the logical progression of the more modernized and expansive health care system achieved through 30 years of market socialism.

As foreign capital entered China, the corporations of imperialist countries–attracted by China’s vast labor pool–exploited some Chinese workers through capitalist relations of production. The exploitative behavior of foreign corporations constitutes a major contradiction in the Chinese economy that the CCP has taken concerted steps towards resolving. While all people in China retain access to essential goods and services like food and health care, the CCP places restrictions on foreign corporations’ ability to operate in China that severely curtail their politico-economic power in China.

Far from abandoning Chinese workers in the pursuit of modernization, the CCP announced the Draft Labor Contract Law in 2006 to protect the rights of workers employed by foreign corporations by ensuring severance pay and outlawing the non-contract labor that makes sweatshops possible. Viciously opposed by Wal-Mart and other Western companies, “foreign corporations are attacking the legislation not because it provides workers too little protection but because it provides them too much.” (17) Nevertheless, the Draft Labor Contract Law, which “required employers to contribute to their employees’ social security accounts and set wage standards for workers on probation and overtime,” was enacted in January 2008. (18)

The recent series of labor disputes between Chinese workers and foreign corporations testify to the working class orientation of the Chinese state. In response to widespread strikes at Western factories and manufacturing plants, the CCP undertook an aggressive policy of empowering Chinese workers and backing their demands for higher wages. Beijing’s regional government raised the minimum wage twice in six months, including a 21% increase in late 2010. (19) In April of this year, the CCP announced annualized 15% wage increases with “promises to double workers’ wages during the 12th five-year plan that lasts from 2011 to 2015.” (20)

Dramatic increases in wages and benefits for Chinese workers, particularly migrant workers, is a serious blow to foreign corporations and makes China a decisively less attractive hub of cheap labor for foreign investors. (21) Contrary to the actions of a capitalist state in the face of labor unrest, which generally consists of petty reforms or brutal repression, China’s response is to launch an offensive against the hoarding of wealth by foreign corporations by forcing them to pay substantially higher wages.

The state is an instrument of class oppression. Bourgeois states reluctantly give the working class reforms, like minimum wage, when no other course of action is possible. Their orientation is towards improving conditions for the bourgeoisie and subordinating labor to capital. Proletarian states boldly support and immediately respond to the collective demands of the workers because they constitute the ruling class in the society. Greater willingness by the CCP to confront and attack foreign capital in the interests of the working class is the deliberate product of market socialism’s success in developing China’s productive forces. Having resolved the primary contradiction–backwards productive forces–the CCP is breaking ground on the contradiction between foreign capital and labor.

Turning to the macroeconomic situation, China’s application of market socialism has led to serious disparities in income. While undoubtedly a defect of ‘lower socialism’, the Chinese state takes this contradiction very seriously and announced an unprecedented government spending campaign in March 2011 aimed at closing the income gap. (22) By increasing public spending by 12.5% in the next year, the CCP will allocate enormous government resources “for education, job creation, low-income housing, health care, and pensions and other social insurance.” (22) Far from a move designed to placate any social unrest, this monumental boost in social spending demonstrates the Chinese state’s continued proletarian and peasant class orientation.

A correct position on China requires above all else a holistic examination of the country’s economy placed within the context of the CCP’s path towards modernization. Focusing too narrowly on China’s market economy and its defects clouds the most important facts, which is that the working class and peasantry still rule China through the CCP and the success of modernization via the market economy has paved the way for ‘higher socialism’.

China applies market socialism to its relations with the Third World and plays a major role in the fight against imperialism.

Understanding that markets are a neutral tool–non-intrinsic to capitalism and usable by both capitalist and socialist states–is paramount to correctly analyzing China’s international position. Unlike the features of imperialism–colonialism, neocolonialism, superexploitation, nurturing dependency–China’s market socialism fosters cooperation, collective advancement, independence, and social development. (23)

Though bourgeois news sources decry China’s economic relationship with Africa as ‘imperialist’, this is a reflection of the Western trade mentality that cannot understand any economic relations in terms other than ruthless exploitation. Premier Wen Jiabao said at a 2006 summit in Cairo that Chinese-African trade relations are designed to “help African countries develop by themselves and offer training for African professionals.” (24) The focus of the summit, according to Wen, is “reducing and remitting debts, economic assistance, personnel training and investment by enterprises.” (24) Wen continues:

“On the political front, China will not interfere in internal affairs of African countries. We believe that African countries have the right and capability to solve their own problems.” (24)

This is not the attitude of imperialism. Wen’s declaration here doesn’t even reflect the rhetoric of imperialism. The US and its allies in Europe constantly uphold their right to pursue their own interests in other nations, specifically those nations that have received substantial Western capital. China’s approach is markedly different, as it uses trade as a means of developing African social infrastructure–underdeveloped because of centuries of Western colonial oppression–and functions chiefly on a policy of non-intervention. This reflects the CCP’s commitment to the Marxist-Leninist understanding of national self-determination.

China’s relationship with Africa reflects these principles in practice. In November 2009, China pledged $10 billion in “preferential loans directed towards infrastructure and social programmes” to the entire African continent. (25) In addition to providing the resources for infrastructural development, “the financing would go to cancelling debts” and “helping states cope with climate change.” (25) These new loans represent a 79% increase in Chinese direct investment, which has mostly come in the form of “Chinese companies building roads, ports, railways, housing and oil pipelines.” (25)

Geopolitically, China offers an entirely separate international camp for nations at odds with US imperialism. As the US ratchets up tensions with Pakistan and continues to violate its national sovereignty in the wake of Osama bin Laden’s assassination, China announced on May 19, 2011 that it would remain an “all-weather partner” for Pakistan. (26) Premier Wen added, “Pakistan’s independence, sovereignty and territorial integrity must be respected.” (26) Coupled with an editorial published the same day in China Daily, the official state newspaper of China, entitled “US actions violate international law,” one can easily see the mammoth discrepancies between the imperialist camp and China. (27) These positions are virtually identical to the minority of left academics in the US, like Noam Chomsky, and contrast sharply with any mainstream account of US military involvement in Pakistan.

China has continually acted as a bulwark against US aggression towards other socialist countries, like the DPRK and Cuba. (28) (29) In neighboring Nepal and India, China has provided geopolitical support for the two communist insurgencies during their respective periods of people’s war. (30) (31) After the Nepalese Maoists overwhelmingly won the country’s parliamentary elections, Chairman Prachanda visited China immediately after he was sworn in as Prime Minister. (32) Even in Latin America, China forged deep economic and military ties with Venezuelan President Hugo Chavez, as the country continues to move forward in resisting US imperialism and advancing towards socialism. (33)

While China has its shortcomings in terms of foreign relations, particularly its refusal to veto the UN Security Council resolution against Libya, it pursues a qualitatively different foreign policy from any capitalist countries. In terms of trade, China promotes independence and self-determination, where the West promotes dependence, exploitation, and subjugation. Geopolitically, it supports genuine people’s movements against imperialism and provides support to the other existing socialist countries. This is a foreign policy of cooperation deeply influenced by Marxism-Leninism.

Marxist-Leninists in the 21st century should rigorously study the successes of Chinese socialism.

Those countries that resisted the onslaught of counterrevolution after the fall of the Soviet Union demand rigorous study by Marxist-Leninists in the 21st century. Each of the five socialist countries pursued different paths of survival that offer lessons, but China has indisputably enjoyed the greatest success.

Rather than echoing the counterrevolutionary lies of Trotskyite and left-communist groups about China’s lack of commitment to their abstract and utopian definitions of ‘socialism’, Marxist-Leninists should embrace China as a model of successful socialism whose economic power outstrips that of the greatest imperialist countries. At the core of these Trotskyite/left-communist falsehoods is a chronic pessimism about socialism that reflects the capitalistic cynicism towards proletarian revolution. China’s socialist economy is thriving and more than 1/5 of the worlds population were lifted out of poverty, and their silly irrelevant faction isn’t in power yet! According to them, China must be doing something wrong!

Of course, Marxist-Leninists know otherwise. China is a socialist country and is arguably the most economically successful in history. That realization carries tremendous magnitude and should push Marxist-Leninists to seriously study the model and the works of Deng Xiaoping. Even today, other socialist countries are experimenting with variations of China’s model and see similar successes. If Deng’s concept of market socialism is a correct policy for proletarian states facing severely underdeveloped productive forces, then revolutionaries must recognize him as a significant contributor to Marxism-Leninism.

As China ascends into building ‘higher socialism’, revolutionaries across the world should look East for inspiration as they struggle to throw off the chains of imperialism and actualize people’s democracy.

Long live the universal contributions of Deng Xiaoping to Marxism-Leninism!

Stand with the Chinese masses, and their party, in the exciting process of socialist construction!

Swift victory to the international proletarian revolution!


(1) Mobo Gao, The Battle for China’s Past: Mao & The Cultural Revolution, Pluto Press, 2008, pg. 10

(2) Deng Xiaoping, “Uphold the Four Cardinal Principles”, March 30, 1979

(3) Deng Xiaoping, “The Working Class Should Make Outstanding Contributions to the Four Modernizations,” October 11, 1978

(4) V.I. Lenin, “Role and Function of Trade Unions Under the New Economic Policy,” December 30, 1921 – January 4, 1922

(5) V.I. Lenin, “The Tax in Kind,” April 21, 1921

(6) Deng Xiaoping, “Answers to the Italian Journalist Orianna Fallaci,” August 21 and 23, 1980

(7) Karl Marx, “Critique of the Gotha Programme,” Part I, May 1875

(8) Derek Scissors, Ph.D. “Liberalization in Reverse,” May 4, 2009, Published by The Heritage Foundation

(9) John Lee, “Putting Democracy in China on Hold,” May 28, 2008, Published by The Center for Independent Studies

(10) World Bank, World Development Indicators, Gross Domestic Product, Accessed through Google

(11) Justin McCurry, Julia Kollewe, “China overtakes Japan as world’s second largest economy,” February 14, 2011, Published in The Guardian

(12) Pew Global Attitudes Project, “The Chinese Celebrate Their Roaring Economy as They Struggle with its Costs,” July 22, 2008, Published by The Pew Research Center

(13) Deng Xiaoping, “Excerpts from Talks Given in Wuchang, Shenzhen, Zhuhai and Shanghai,” January 18 – February 21, 1992

(14) Deng Xiaoping, “On Questions of Rural Policy,” May 31, 1980

(15) Jonathan Watts, “China vows to create a ‘new socialist countryside’ for millions of farmers,” February 22, 2006, Published in The Guardian

(16) Austin Ramzy, “China’s New Healthcare Could Cover Millions More,” April 9, 2009, Published in TIME Magazine

(17) Jeremy Brecher, Tim Costello, Brendan Smith, “Labor Rights in China,” December 19, 2006, Published by Foreign Policy in Focus

(18) Xinhua, “New labor contract law changes employment landscape,” January 2, 2008, Published in People’s Daily Online

(19) Jamil Anderlini, Rahul Jacob, “Beijing city to raise minimum wage 21%,” December 28, 2010, Published byFinancial Times

(20) Caijing, “China Targets at Annualized Wage Rise of 15Pct,” April 19, 2011

(21) Zheng Caixiong, “Wage hike to benefit migrant laborers,” March 3, 2011, Published on China Daily

(22) Charles Hutzler, “China will boost spending, try to close income gap,” March 6, 2011, Associated Press, Published on boston.com

(23) Dr. Armen Baghdoyan, “Part 1: The Relevance of Marx’s Das Kapital To the Contemporary Chinese Market Economy,” April 26, 2011, Published on Nor Khosq

(24) Xinhua, “Chinese premier hails Sino-African ties of cooperation,” June 18, 2006, Published on China View

(25) Mike Pflanz, “China’s $10 billion loan for African development ‘motivated by business not aid’,” November 8, 2009, Published by The Telegraph

(26) Li Xiaokun, Li Lianxiag, “Pakistan assured of firm support,” May 19, 2011, Published by China Daily

(27) Pan Guoping, “US action violates international law,” May 19, 2011, Published by China Daily

(28) Andrew Salmon, “China’s support for North Korea grounded in centuries of conflict,” November 26, 2010, Published by CNN

(29) Reuters, “China restructures Cuban debt, backs reform,” December 23, 2010

(30) M.D. Nalapat, “China support spurs power grab by Maoists,” May 4, 2009, Published by United Press International

(31) RSN Singh, “Maoists: China’s Proxy Soldiers,” July – September 2010, Published in the Indian Defence Review, Vol. 25, Issue 3

(32) The Times of India, ”After Maoists, China woos Nepal’s communists,” April 16, 2009

(33) Simon Romero, “Chávez Says China to Lend Venezuela $20 Billion,” April 18, 2010, Published in The New York Times

3 thoughts on “A question of State and Revolution: China and Market Socialism”

  1. En la URSS se dogmatizaron las empresas estatales, sin tener en cuenta que Marx siempre hablaba de “propiedad social de los medios de producción”. También se dogmatizó la transición al comunismo, sin tener en cuenta que la Ley del Valor burguesa sólo podrá desaparecer al final de la fase socialista de desarrollo. No importa que haya empresas privadas mientras el poder y el control macroeconómico este centralizado y planificado por el Partido y el Estado socialista, que son en última instancia los dueños de Toda la economía y su desarrollo.

  2. La URSS tuvo que pagar el precio de ser la primera experiencia de revolución socialista con sus lógicos errores. Como decía Deng Xiaoping hablando de la restauración burguesa en la URSS, en la transición del feudalismo al capítalismo también hubieron restauraciones feudales transitorias (en España aún quedan muchos residuos de ello). Nadie hace las cosas perfectas la primera vez. Mientras más atrasado es un país, mayores son los errores y mayor el tiempo de aprendizaje en base a la práctica social prolongada. “La práctica es el único criterio de la verdad”.

  3. El problema que creo nos toca ahora a nosotros debería ser aportar algo positivo para la construcción de un verdadero Partido Comunista en nuestro país partiendo de las luchas reales y sintetizando las experiencias del movimiento obrero y popular en España durante los últimos 100 años. Crear contrapoderes para deslegitimar las Instituciones burguesas, en vez de fortalecerlas. Lo contrario, esperar que China cambie por sí sola el mundo, sería un grave error. Sería pretender repetir el paternalismo “internacionalista” de la época de Bresnev en la URSS, que llevó a la URSS a la autoliquidación y que China es seguro que no repetirá. Si queremos apoyar a China nuestra mayor aportación sería un Partido Comunista, de verdad, en España, que hoy por hoy yo desconozco que exista en la práctica.

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