Economics Archives - Friends of Socialist China

Key party meeting sets stage for China’s next five-year plan

The 20th Central Committee of the Communist Party of China (CPC) convened its fourth plenary session in Beijing from October 20 to 23, 2025, with its main business being to work on developing the country’s 15th Five-Year Plan for National Economic and Social Development, which will be formally adopted at next year’s annual parliamentary session of the National People’s Congress (NPC).

The communique released following the conclusion of the plenum noted that, “China is now on the verge of accomplishing the major objectives and tasks of the 14th Five-Year Plan. It was also noted that we had recently commemorated the 80th anniversary of the victory in the Chinese People’s War of Resistance against Japanese Aggression and the World Anti-Fascist War. This occasion has greatly lifted the national spirit, inspired a strong sense of patriotism among our people, and further pooled strength for our country’s collective endeavours.”

It added that: “In the face of a complicated international landscape and the challenging domestic tasks of advancing reform, promoting development, and ensuring stability, the CPC Central Committee with Comrade Xi Jinping at its core has united the entire Party and Chinese people of all ethnic groups and led them in meeting difficulties head-on and forging ahead with determination. This has allowed us to withstand the severe shocks from a once-in-a-century Covid-19 pandemic, respond effectively to many major risks and challenges, and secure significant new achievements in the cause of the Party and the country.”

According to some of the most salient points in the communique:

It was pointed out that socialist modernisation can only be realised through a historical process of gradual and ongoing development. It requires the unremitting hard work of one generation after another. The period covered by the 15th Five-Year Plan will be critical in this process as we work to reinforce the foundations and push ahead on all fronts toward basically achieving socialist modernisation by 2035. It will thus serve as a key link between the past and the future. In this period, China’s development environment will face profound and intricate changes.

At present, China remains in a phase of development where strategic opportunities exist alongside risks and challenges, while uncertainties and unforeseen factors are rising. Our economy is on solid foundations, demonstrating advantages in many areas, strong resilience, and great potential. The conditions and underlying trends supporting long-term growth remain unchanged. More and more, we are seeing the strengths of socialism with Chinese characteristics, China’s enormous market, its complete industrial system, and its abundant human resources all coming to the fore.

We must maintain strategic resolve and enhance our confidence of success. We must proactively identify, respond to, and steer changes, demonstrate the courage and competence to carry forward our struggle, and dare to brave high winds, choppy waters, and even dangerous storms. We must seize the historical initiative to overcome difficulties, combat risks, and confront challenges, focus on managing our own affairs, and write yet another chapter on the miracles of rapid economic growth and long-term social stability, opening up new horizons for Chinese modernisation.

We must continue to pursue economic development as our central task, with high-quality development as our main focus, reform and innovation as the fundamental driving force, meeting the people’s ever-growing needs for a better life as our fundamental goal, and full and rigorous Party self-governance as the fundamental underpinning for all our efforts. We must promote higher-quality economic growth while achieving an appropriate increase in economic output and make solid headway in promoting well-rounded personal development and common prosperity for all. All of this will allow us to secure decisive progress toward basically achieving socialist modernisation.

The Central Committee also set the following major objectives for the 15th Five-Year Plan period: significant achievements in high-quality development; substantial improvements in scientific and technological self-reliance and strength; fresh breakthroughs in further deepening reform comprehensively; notable cultural and ethical progress across society; further improvements in quality of life; major new strides in advancing the Beautiful China Initiative; and further advances in strengthening the national security shield. Building on this, we will work hard for a further five years to see that by the year 2035 China’s economic strength, scientific and technological capabilities, national defence capabilities, composite national strength, and international influence will all be markedly stronger, that its per capita GDP will be on a par with that of a mid-level developed country, that its people will live better and happier lives, and that socialist modernisation will be basically realised.

We should keep our focus on the real economy, continue to pursue smart, green, and integrated development, and work faster to boost China’s strength in manufacturing, product quality, aerospace, transportation, and cyberspace. The share of manufacturing in the national economy should be kept at an appropriate level, and a modernised industrial system should be developed with advanced manufacturing as the backbone.

We should achieve greater self-reliance and strength in science and technology and steer the development of new quality productive forces. We must seize the historic opportunity presented by the new round of technological revolution and industrial transformation to boost China’s strength in education, science and technology, and human resources in a well-coordinated manner. We should enhance the overall performance of China’s innovation system, raise our innovation capacity across the board, strive to take a leading position in scientific and technological development, and keep fostering new quality productive forces. We should promote advances in original innovation and breakthroughs in core technologies in key fields, facilitate full integration between technological and industrial innovation, pursue integrated development of education, science and technology, and talent, and advance the Digital China Initiative.

Guided by the strategy of expanding domestic demand, we should work toward improving living standards while increasing consumer spending and coordinate investments in physical assets and human capital. We should see that new demand drives new supply, that new supply helps create fresh demand, and that positive interactions are fostered between consumption and investment and between supply and demand.

We should accelerate agricultural and rural modernisation and take solid steps to advance all-around rural revitalisation. We must continue to place issues related to agriculture, rural areas, and rural residents at the top of our Party’s work agenda. We need to promote integrated urban-rural development, continue to consolidate and expand our achievements in poverty alleviation, basically ensure modern living conditions in rural areas, and secure faster progress in building up China’s strength in agriculture.

We should inspire the cultural creativity of our entire nation and foster a thriving socialist culture. We must uphold the guiding role of Marxism in the ideological domain, remain firmly rooted in the broad and rich Chinese culture, and follow the trends of information technology. On this basis, we should develop a socialist culture with Chinese characteristics for the new era that has the power to guide, unite, and inspire our people and enjoys strong international influence.

We should work harder to ensure and improve public wellbeing and promote common prosperity for all. In line with the principle of doing everything within our means, we must ensure that public services are inclusive, meet essential needs, and provide a cushion for those most in need, while working to resolve the pressing difficulties and problems that concern the people most… We should promote high-quality and full employment, refine the income distribution system, develop education that meets the people’s expectations, improve the social security system, and facilitate high-quality development of the real estate sector.

We should accelerate the green transition in all areas of economic and social development in an effort to build a Beautiful China. We must unwaveringly uphold the principle that lucid waters and lush mountains are invaluable assets and put it into concrete action. Guided by our goals of achieving peak carbon and carbon neutrality, we should make concerted efforts to cut carbon emissions, reduce pollution, pursue green development, and boost economic growth… We should press ahead with the critical battle against pollution and the drive to upgrade ecosystems, move faster to develop a new energy system, work actively and prudently toward peak carbon emissions, and accelerate the shift to eco-friendly production practices and lifestyles.

We should work for long-term prosperity and stability in Hong Kong and Macao, promote the peaceful development of relations across the Taiwan Strait and advance the cause of national reunification, and secure further progress in building a community with a shared future for humanity.

It was stressed that to run the country well, we must first run the Party well; only a Party that is thriving can make our country strong. The more effective our Party is in supervising and governing itself, the better it will be able to provide guarantees for our economic and social development. We must have the resolve and tenacity to persist in the always ongoing endeavour of Party self-governance. In exercising full and rigorous self-governance, we must firmly act on the Party’s requirements for self-reform, devote sustained and consistent efforts to improving conduct, and combat corruption resolutely, thereby providing a strong guarantee for fulfilling the major objectives for economic and social development in the 15th Five-Year Plan period.

We should ramp up efforts to address wage arrears, improve basic public services, and work harder to resolve the pressing difficulties and problems that concern the people most. We must do a good job in post-disaster recovery and reconstruction. Appropriate arrangements should be made for disaster victims to ensure that their basic living needs are met and that they have warm shelter for the winter.

We must ensure workplace safety and safeguard stability. We must make sure that all responsibilities concerning workplace safety are fulfilled and that oversight systems are rigorously implemented, and we must work with firm resolve to prevent and mitigate major and serious accidents. We should strengthen whole-of-chain supervision and administration of food and drug safety.

The meeting adopted the Recommendations of the Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan for National Economic and Social Development.

Comrade Xi Jinping, General Secretary of the CPC Central Committee, delivered an important explanatory speech.

He noted that: “Formulating medium- and long-term plans to guide economic and social development is an important means by which our Party governs the country… Throughout the drafting process, the Central Committee followed a democratic approach and drew on a vast pool of wisdom, conducting in-depth surveys and studies and seeking opinions from all quarters. On January 22, the Central Committee issued the Notice on Soliciting Opinions on Recommendations for the 15th Five-Year Plan to Be Studied at the Fourth Plenary Session of the 20th CPC Central Committee, in order to gather opinions from certain Party members and non-Party figures. In late February, the Central Committee organised six teams to conduct research projects in 12 provincial-level regions. Meanwhile, it requested certain central Party and state departments to conduct research on 35 key topics. On April 30, I presided over a symposium in Shanghai on economic and social development during the 15th Five-Year Plan period for certain provinces, autonomous regions, and municipalities directly under the central government. Thereafter, I entrusted Comrade Li Qiang with presiding over three separate symposiums for the economic community, the scientific and technological community, and representatives from the primary level. We also solicited opinions online, receiving more than three million comments, which were then sorted through and condensed into over 1,500 suggestions.”

He added that: “The general conclusion is that during the 15th Five-Year Plan period, China will face both strategic opportunities and risks and challenges in development, as well as increasing uncertainties and unforeseen factors. Nevertheless, the conditions for and underlying trends of long-term economic and social growth will remain unchanged.”

Further explaining the drafting process for the document, he continued: “On August 4, a draft document was issued to certain Party members, including some retired senior Party officials, for consultation. Opinions were also sought from the central committees of other political parties, leaders of the All-China Federation of Industry and Commerce, and prominent figures without party affiliation… Those consulted submitted many constructive opinions and suggestions on the draft. The drafting group worked through these one by one and incorporated as many of them as possible into the text. In total, we made 218 additions, revisions, and simplifications to the document based on 452 opinions and suggestions… It is fair to say that the drafting work for this document is yet another vivid example of intra-Party democracy and whole-process people’s democracy in action.”

Speaking on several of the key issues related to the next Five-Year Plan, Xi said: “Socialist modernisation can only be realised through a historical process of gradual and ongoing development. It requires the unremitting hard work of one generation after another. The draft document points out that the 15th Five-Year Plan period will serve as a critical stage in building on past successes to break new ground for basically achieving socialist modernisation… It is important that we seize this window of opportunity to consolidate and build on our strengths, remove development bottlenecks, shore up areas of weakness, seize the strategic initiative amid intense international competition, and secure major breakthroughs in strategic tasks of overall importance to Chinese modernisation. All of this will allow us to secure decisive progress toward basically achieving socialist modernisation… An important benchmark for basically achieving socialist modernisation by 2035 is that China’s per capita GDP will be on a par with that of a mid-level developed country by that time. This dictates that we must maintain an appropriate rate of economic and social development during the 15th Five-Year Plan period. On the basis of thorough research and scientific analysis, the draft document puts forward a range of important objectives, such as ensuring the economy keeps growing within an appropriate range, realising steady gains in total factor productivity, fully unleashing the potential for growth, ensuring personal incomes increase in step with economic growth and remuneration rises in tandem with labour productivity increases, and continuing to expand the middle-income group.”

Intelligence artificial, profits fictitious

In the following article for Struggle La Lucha, Gary Wilson argues that the US economy’s apparent strength is illusory, sustained not by genuine productivity or innovation but by speculation — particularly around artificial intelligence. He describes the so-called AI revolution as a massive financial bubble: stock prices have soared far beyond the real value produced by technology or labour, echoing the speculative manias of the past.

The author observes that capitalism’s need for constant expansion drives investors to seek new frontiers when previous ones — such as smartphones and social media — stagnate. Artificial intelligence, and especially the dream of Artificial General Intelligence (AGI), has become the latest speculative frontier, attracting trillions in investment despite limited real-world returns. Big tech companies have seen valuations reach absurd levels, even as AI products remain unprofitable.

This “fictitious prosperity”, built on credit and hype, fuses finance capital with US imperial ambitions. The military, intelligence agencies and tech monopolies now form a military-tech-industrial complex, with AI development justified in terms of national security and global dominance. “Silicon Valley has metastasized into a merger of big capital, big tech, and big war. The empire’s newest weapon isn’t a missile — it’s the algorithm.”

In contrast, China treats AI as a practical tool for production — applying it to manufacturing, logistics, and energy — rather than a casino for speculative profit.

China, by contrast, is treating AI not as a casino chip but as a tool. Instead of betting on abstract intelligence for future profit, China applies AI to real sectors — manufacturing, logistics, energy, and urban planning… While the U.S. bankrolls hype, China retools for production. This isn’t just a tech race — it’s a clash between two systems: finance-driven capitalism versus planned development.

The author was among the speakers at our webinar on DeepSeek and the challenge to US technological hegemony, held in February 2025.

The U.S. economy isn’t booming — it’s levitating. What keeps it up isn’t productivity or innovation, but speculation.

The so-called “AI revolution,” hailed as a new industrial dawn, is in reality a massive bubble — a speculative fever driving stock prices far beyond what the technology can actually deliver.

The anatomy of a bubble

A speculative bubble forms when the price of something — like tech stocks — rises far beyond its real, sustainable value.

That real value comes not from market hype or quick profits, but from workers’ labor power — their capacity to create more value than they’re paid for.

But in a bubble, prices rise not because real production or value creation is expanding, but because investors are chasing promises — each betting that someone else will pay even more for the same asset.

The pattern isn’t accidental. It’s built into capitalism itself.

Step one: Capital needs to expand

Capitalism runs on an “expand or die” engine. Every firm must grow constantly to survive — outspending, outproducing, and out-innovating its rivals.

When one wave of growth slows, capital hunts for another.

The real reason the West is warmongering against China

In the opinion piece below, originally published in Al Jazeera, Jason Hickel and Dylan Sullivan argue that Western hostility towards China is not driven by serious concerns over China’s putative threat to the “international rules-based order” but rather by its very real challenge to the imperial economic order. Over the past two decades, US policy has shifted from cooperation to confrontation, with sanctions, trade restrictions and military build-up. The authors write: “Washington wants people to believe that China poses a threat. China’s rise indeed threatens US interests, but not in the way the US political elite seeks to frame it.”

The article situates US-China tensions in the framework of the capitalist world system, where the core imperialist states rely on cheap labour and resources from the Global South. For decades, China provided low-cost but skilled labour for Western supply chains. However, wages in China have risen from under $1 an hour in the early 2000s to over $8 today, undermining Western firms’ profits and reducing the West’s ability to extract value through unequal exchange. Strengthened public services and state intervention over the last two decades have further empowered Chinese workers.

At the same time, China is putting an end to the West’s monopoly in advanced technology, and now leads in sectors like renewable energy, electric vehicles, AI, and high-speed rail. This gives developing countries alternative suppliers and threatens the West’s strategy of maintaining dependency. The authors observe that this “poses a fundamental challenge to the imperial arrangement.”

Beijing has used industrial policy to prioritise technological development in strategic sectors over the past decade, and has achieved remarkable progress. It now has the world’s largest high-speed rail network, manufactures its own commercial aircraft, leads the world on renewable energy technology and electric vehicles, and enjoys advanced medical technology, smartphone technology, microchip production, artificial intelligence, etc. The tech news coming out of China has been dizzying. These are achievements that we only expect from high-income countries, and China is doing it with almost 80 percent less GDP per capita than the average “advanced economy”. It is unprecedented.

This poses a problem for the core states because one of the main pillars of the imperial arrangement is that they need to maintain a monopoly over necessary technologies like capital goods, medicines, computers, aircraft and so on. This forces the “Global South” into a position of dependency, so they are forced to export large quantities of their cheapened resources in order to obtain these necessary technologies. This is what sustains the core’s net-appropriation through unequal exchange.

China’s technological development is now breaking Western monopolies, and may give other developing countries alternative suppliers for necessary goods at more affordable prices. This poses a fundamental challenge to the imperial arrangement and unequal exchange.

In response, the US has turned to sanctions and escalating military rhetoric, presenting China as a threat to global security. But this is transparent propaganda.

The material facts tell a fundamentally different story. In fact, China’s military spending per capita is less than the global average, and 1/10th that of the US alone. Yes, China has a big population, but even in absolute terms, the US-aligned military bloc spends over seven times more on military power than China does. The US controls eight nuclear weapons for every one that China has…

Furthermore, China has not fired a single bullet in international warfare in over 40 years, while during this time the US has invaded, bombed or carried out regime-change operations in over a dozen Global South countries. If there is any state that poses a known threat to world peace and security, it is the US.

The authors conclude that the real reason for Western warmongering is that “China is achieving sovereign development and this is undermining the imperial arrangement on which Western capital accumulation depends”. That is, China’s rise, its alignment with the countries of the Global South and its promotion of multipolarity are posing an existential threat to the imperialist world system.

Over the past two decades, the posture of the United States towards China has evolved from economic cooperation to outright antagonism. US media outlets and politicians have engaged in persistent anti-China rhetoric, while the US government has imposed trade restrictions and sanctions on China and pursued military build-up close to Chinese territory. Washington wants people to believe that China poses a threat.

China’s planning holds lessons for Britain – Morning Star

The Morning Star published a significant editorial on August 5 arguing that historic Soviet and contemporary Chinese economic and social planning can provide valuable lessons and reference material for developing a progressive agenda for Britain.

It notes that in 1931 the London publishers Jonathan Cape brought out a 218-page book ‘Moscow has a Plan’, which “contrasted the crisis conditions in the Depression-era economies of the capitalist West with the great progress being made in constructing the Soviet Union’s socialist economy. [It was] remarkably free of hyperbole and grounded in the hard-headed realism of people directly building socialism.” (A full PDF of the book is available here.)

The editorial continues: “Today China is preparing for the next stage in its economic and social development with its fourteenth economic plan. The conditions are vastly different but understanding the continuities between the stellar success of the early Soviet economy and China’s contemporary achievements is critical.”

The editorial grounds these continuities in the fact that, “In the year the book was published in an English translation Stalin warned the Soviet peoples that they had a decade in which to prepare for an attack from the West. It was to the success of their planned socialist economy – combined with a vast patriotic and internationalist mobilisation – that the Nazi extermination machine was itself exterminated.”

Likewise, “A quarter of all World War II casualties were Chinese with 20 million dead, and the Chinese communists took power in a backward country ruined by Japanese occupation and civil war.”

China, it argues, has been remarkably creative in finding ways to integrate into the global capitalist economy, tap into advanced technologies, find markets for their expanding industries and has leveraged the socialist and planned elements in their economic management to challenge the capitalist world.

It also affirms the emphasis placed on expanding the social security, health and education sectors, in perfecting urban planning and in shifting to a carbon neutral economy.

China’s five-year plans democratic, people-centred and grounded in material reality

In a wide-ranging interview with Global Times, Friends of Socialist China co-editor Carlos Martinez describes China’s Five-Year Plans (FYPs) as democratic, people-centred, and grounded in material reality. He emphasises that China’s success in planning stems from its ability to align governance with popular needs and long-term strategy. “China is known globally for its effective governance and for its record of keeping its promises”, he notes, citing the 13th FYP’s targeted poverty alleviation campaign as a key example of practical planning based on extensive grassroots research.

Carlos stresses that these plans are not top-down decrees but involve widespread consultation, making them highly democratic and responsive to the needs of the people.

China’s five-year plans are well-received by the people because they are based on extensive consultation with the people, and are responsive to the needs, wishes and aspirations of the people. Every plan is based on discussions with, and feedback from, the people. In that sense, the plans are highly democratic, and accord with Chinese emphasis that “the people, and the people alone, are the motive force in the making of world history.” The basic methodology of the mass line – from the masses, to the masses – has been well employed by the government and the Party in devising goals and plans.

China’s evolving development strategy, he argues, is responsive to shifting realities. Early plans focused on light industry and technological catch-up; today, priorities include green energy, advanced manufacturing, and digitisation. “Quality, rather than quantity, has become a more important feature of the country’s growth”, he observes.

Carlos credites President Xi Jinping with combining short-, medium-, and long-term planning rooted in the principles of common prosperity and ecological sustainability. Furthermore, Xi’s strategic thinking increasingly has global applicability, as seen in initiatives like the Belt and Road and the Global Development Initiative.

Contrasting China’s approach with the short-termism of Western governments, Carlos points out that, unlike the West’s shareholder-driven model, China’s system prioritises the long-term interests of the people. “Ultimately, the ‘institutional advantage’ is the political power of the working people, and the fact that, in China, people come before profit.”

GT: In China, the scientific formulation and consistent implementation of five-year plans stand as an important piece of experience in the CPC’s approach to governing the country. Why do you think China places significant emphasis on scientific formulation and consistent implementation of five-year plans?

Martinez: China is known globally for its effective governance and for its record of keeping its promises. Its objectives and plans are developed over a long period of time, and are firmly grounded in material reality and the needs and aspirations of the people.

For example, China’s 13th Five-Year Plan (2016-20) codified the central leadership’s poverty-reduction decision into the state will that is operable in practice. The targeted poverty alleviation campaign included sending officials to the countryside to identify the communities, families and individuals living in extreme poverty. Once the “facts on the ground” were established, a comprehensive plan was developed – at national, provincial, county and village levels – to sustainably lift everyone out of extreme poverty, so that they had a steady income, along with guaranteed housing, food, clothing, education, healthcare, modern energy and running water.

China keeps its promises, and it does so by mobilizing enormous resources toward key projects. In 2020, President Xi announced the country’s commitment to peaking its carbon dioxide emissions before 2030. This goal informed the current (14th) five-year plan, and appropriate targets were set at every level, throughout the country.

In summary, China develops plans that are realistic and flexible, that meet both the short-term and long-term needs of the people and that contribute to the country’s overall strategy. Once the blueprint is agreed and established, different parts and levels of the government work closely with the central government, with state-owned enterprises, private businesses, educational institutions, as well as community organizations and NGOs to implement the plan. The whole country works together to realize an agenda that aligns with the collective interest. This embodies the spirit of socialism.

Planned obsolescence of capitalism versus sustainable Chinese alternatives: a clash of ideologies

We are pleased to republish below an interesting opinion piece by Bhabani Shankar Nayak, arguing that the fierce hostility of Western elites toward China stems to a significant degree from an ideological clash between neoliberal capitalism and China’s alternative development model. Unlike the US system – driven by profit and sustained through planned obsolescence – China promotes long-term, sustainable, people-centred development aimed at public well-being and common prosperity.

Bhabani includes examples such as China’s breakthrough in nuclear battery technology by Betavolt, with a 50-year lifespan that threatens the Western consumer electronics model reliant on constant upgrades. Similarly, China’s Cross-Border Interbank Payment System (CIPS) challenges US financial dominance by providing an alternative to the SWIFT network. These innovations, alongside China’s space program and infrastructure development, reflect a vision rooted in durability and public interest rather than profit.

The article critiques the Schumpeterian notion of ‘creative destruction’ as a myth that masks the exploitative nature of innovation under capitalism, whereby the creative potential of labour is entirely subordinated to private profit. It argues that capitalism commodifies both material goods and human emotions, perpetuating waste and insecurity.

In contrast, China offers a civilisational alternative that fundamentally threatens both the economic viability and ideological foundations of capitalism. This dynamic is a major part of what drives the ongoing campaign to contain and encircle China and to suppress its rise.

Bhabani Shankar Nayak is a Professor of Business Management at London Metropolitan University. He is the author or editor of numerous books and articles on China and other issues related to development in the Global South. This article was first published in Countercurrents.

Why do the American ruling elites, both in the Republican and Democratic parties, oppose China so strongly?

Since taking office, President Donald Trump imposed tariffs of up to 145% on Chinese goods. But it doesn’t stop at trade and tariffs. The American imperialist strategy—marked by political, economic, and military bullying—continues in an unprecedented scale in an effort to pressure China into submission under imperialist hegemony. The core objective is to undermine China’s development and its alternative path, which challenges the foundations of the capitalist system.

What has China achieved that fundamentally challenges the very foundation of American capitalism?

One striking example is the development of a miniature nuclear battery by the Chinese company Betavolt, with support from the Chinese government. This battery boasts a lifespan of 50 years, eliminating the need for recharging in devices such as mobile phones and electric vehicles. Such a breakthrough not only renders frequent charging obsolete but also disrupts the business models of American and European electronics companies, which rely heavily on planned obsolescence—a strategy that encourages repeated consumption through short-lived products and continual upgrades. For example, Apple Inc. products like iPhones continuously changes every year.

China has not only developed its own space station and lunar exploration program but has also created an international transaction system known as the Cross-Border Interbank Payment System (CIPS). This system has the potential to completely bypass the Western-dominated SWIFT (Society for Worldwide Interbank Financial Telecommunication) network used for global banking and international transactions.

These are just a few examples of the achievements stemming from China’s scientific, political and economic system, which fundamentally contrasts with the American and European capitalist model. Unlike the Western approach, which is largely driven by profit, China’s scientific and technological advancements are geared toward improving the well-being of its people and promoting sustainable development and long-term prosperity. Such alternatives pose a direct challenge to the American-led imperialist capitalist order—one that the ruling elites find deeply threatening and, therefore, unacceptable to their capitalist hegemony.

The Schumpeterian notion of capitalism as a process of “creative destruction”—where innovation leads to the replacement of outdated industries by newer, more efficient ones—is, in reality, a myth. The Schumpeterian sympathy for capitalism stems from its lenient understanding of capitalist innovation. What is truly creative and innovative is labour itself. However, under capitalism, the creative potential of labour is not liberated but rather controlled and exploited to sustain and expand a profit-driven system. Capitalism continually restructures itself to either accommodate or dominate the productive and creative capacities of labour. This dynamic reinforces the strategy of planned obsolescence, accelerating the exploitation of both nature and human beings—as producers and consumers.

Rapid technological advancement, rather than serving human progress, is often harnessed to sustain this exploitative system. The capitalist logic of planned obsolescence deliberately designs products with artificially limited lifespans, ensuring they become quickly outdated. This fuels a “use-and-throw” culture—one that perpetuates constant consumption and reinforces commodity dependency. Far from promoting genuine innovation, this cycle serves to undermine it, replacing durable progress with short-term profitability.

Technological progress under American and European capitalism is primarily driven by the logic of planned obsolescence. It functions not to meet genuine human needs, but to manufacture ever-new desires for commodity-based consumption. Products and services are deliberately designed with short lifespans, encouraging constant replacement and repeat purchases—strategies rooted in corporate interests aimed at sustaining perpetual profit. This cycle not only accelerates the depletion of natural resources but also fuels consumer anxiety, particularly through the psychological pressure of the “fear of missing out.” In this way, capitalism commodifies both material goods and emotional experience, reinforcing a culture of disposability and dependency.

However, China’s scientific and economic progress is guided by a long-term vision centered on the well-being of its people—an approach fundamentally opposed to the capitalist strategy of planned obsolescence. Unlike the American and European market-led systems, which prioritise profit based on exploitation, the Chinese model places public welfare at the core of its technological and developmental agenda. This alternative model threatens the very foundations of Western capitalism by offering a path rooted in sustainability, resilience, and durability—countering the wasteful “use-and-throw” culture that has emerged from capitalist cycles of consumption and planned obsolescence.

In this context, China presents not just a geopolitical rival, but a civilisational alternative—one that challenges the dominance of profit over people. It is precisely because of this that American imperialism, along with its European allies, relentlessly seeks to undermine and weaken China and its achievements. The fear is not merely rooted in economic competition, but in the example that China sets: a political model of planned economic development grounded in peace, progress, and prosperity—one that dares to envision a future beyond capitalist exploitation and its foundation in planned obsolescence.

There is growing need in the West to learn from successes of China’s Five-Year Plans

This article by Keith Lamb, originally published in Global Times, explains the role of Five-Year Plans in China’s economic development. These plans “function as comprehensive blueprints for national social and economic development. They outline goals, strategies, and priorities to address evolving historical challenges. In doing so, they align society toward the common good, chart a course for a better future and function as instruments for strengthening China’s democracy.”

Westerners are primed to think of socialist planning as being a highly bureaucratic and top-down affair. In reality, however, “Chinese citizens are invited to share their suggestions, concerns, and aspirations”, and “experts from a wide range of fields are consulted to ensure the plan’s feasibility”.

Keith explains how, for large-scale and long-term projects, directed toward meeting the needs of the population, state-led planning works far better than laissez-faire neoliberal economics. “Recognising China’s long-term planning as a key instrument in building a democratic reality and a sustainable future, it comes as no surprise that China now leads the world in green technology, electric vehicles, high-speed rail, and desert reclamation. Such achievements would not have been possible if capital, driven by short-term profit cycles, dominated the state at the cost of democracy and environmental well-being.”

The article notes that the current (14th) Five-Year Plan, which draws to a close this year, “has propelled China to the forefront of numerous technologies, particularly in green innovation. Consumer choice has expanded dramatically, and the countryside now boasts modern infrastructure, a thriving tourism sector, and advanced agricultural practices.”

As more Westerners begin to see beyond the corporate media narratives that demonize China, there is a growing need to learn from its successes – or risk continued decline. By prioritizing the common good, China’s Five-Year Plans are democratic, delivering material, social, and increasingly cultural improvements for the majority, not just a select elite.

As China’s 14th Five-Year Plan nears completion, the country is already setting its sights on the next plan, which Chinese President Xi Jinping has stated “must focus on the goal of basically realizing socialist modernization, with a view to building a great country and advancing national rejuvenation” at a Wednesday symposium on China’s economic and social development in the 15th Five-Year Plan period (2026-2030).

China’s Five-Year Plans function as comprehensive blueprints for national social and economic development. They outline goals, strategies, and priorities to address evolving historical challenges. In doing so, they align society toward the common good, chart a course for a better future and function as instruments for strengthening China’s democracy.

Behind Trump’s wishful thinking on ‘reindustrialisation’: Why China can do it and the US can’t

We are pleased to republish the following article by Sara Flounders, analysing the Trump administration’s proposed strategy to reindustrialise the US. Sara notes that Trump is not the first president to talk about the need for reindustrialisation; “Reindustrialisation was a huge promise of the Jimmy Carter and Ronald Reagan administrations in the 1970s and 1980s… Trump promised this eight years ago during his first term and former President Joe Biden promised a vast program to ‘Build Back Better’ and reindustrialise the US economy and modernise infrastructure.”

Action has never lived up to rhetoric, and US manufacturing continues its protracted decline. Trump’s tactic is to essentially pin the blame on China, imposing tariffs as a means of reordering the international economic system and forcing manufacturing to return to the US. “This is wishful or magical thinking”, writes Sara.

“The US, as a capitalist country, really can’t and won’t reindustrialise, because that is a fabulously expensive process involving many years of investment of the capitalists’ own money… Corporate CEOs know they will only survive by maximising profits and guaranteeing hefty returns every quarter. Any attempt to reindustrialise requires a rethinking of, and massive investments in, infrastructure and education needed for such an economy. This takes decades of investments.”

In reality, domestic investment in the US is directed to where private companies can make a quick buck: the military-industrial complex. “Investment money gravitates relentlessly to the highest guaranteed profits, and that is usually the military budget with its huge, guaranteed, multibillion-dollar annual subsidy”. Hence Donald Trump’s record-breaking trillion-dollar Pentagon budget.

China, by contrast, “has a socially planned economy where the greatest sources of wealth in society are owned by the whole nation”. As such, economic strategy and investment policy are controlled by the people, led by the Communist Party. Socialist economic policies and reorganisation of society “have ended dire poverty for 800 million people and transformed one of the poorest countries on the planet into today’s modern marvel”.

Sara concludes:

The interests of workers and oppressed people in the US are bound up with the development of the people of the whole world. Only through increased cooperation and solidarity will our class here develop the ability to solve the enormous global problems.

The ability to rationally plan and invest socially created wealth into rapidly improving technology and infrastructure is decisive. This requires socialism.

This article first appeared on Workers World.

In the 1950s, when Japan and much of Europe was in ruins, the U.S. accounted for 50% of the world’s global production. By the 1960s, this was 35%, declining to 25% by the 1980s. By 2025, the U.S. share of global production had fallen to 12% as production grew elsewhere. (itif.org, Feb. 18)

The capitalist class in the U.S. has grown frantic about this reversal. Its focus is on China, and it blames China for its spectacular level of modern industrial development. In advanced technology manufacturing the future is clear: China holds 45% of the global share to 11% for the U.S.

Higher levels of production need a high-tech infrastructure to move what is produced to global markets. China dominates the global commercial shipbuilding market, producing over 50% of the world’s new ship orders, while the U.S. share has dwindled to less than 1%. China’s shipbuilding industry is backed by a vast industrial base with government support, allowing it to compete on a larger scale than the U.S.

China’s high-speed railroads connect 500 cities and reach through Central Asia into Europe. Meanwhile in the U.S., freight and passenger railroads are in decline.

Can this precipitous decline of U.S. capitalist hegemony be stopped? Can it be reversed? President Donald Trump would have us believe so, but evidence points to a negative answer. The corporate media presents the competition between the U.S. and China as a contention between two nation states, falsely accusing the Chinese government of not playing fair. In reality, China’s advantage arises from the sharp difference in two wholly different forms of organizing society.

Fears of global financial collapse haunt capitalists

The head of the world’s largest hedge fund, billionaire investor Ray Dalio of Bridgewater Associates, recently warned of a global financial system collapse. Trump’s aggressive and erratic tariff policies and ballooning debt could trigger a breakdown of the global financial system. “I’m worried about something worse than a recession if this isn’t handled well,” Dalio said on Meet the Press on April 13.

British Steel crisis leads to wave of anti-China propaganda

The following article by Paul Atkin, originally published in Socialist Economic Bulletin, analyses the response by British politicians and journalists to the announcement by Jingye – the Chinese company that acquired British Steel in 2019 – that it would be closing the blast furnaces at its Scunthorpe plant on account of making losses of £255 million per year. This response has been characterised by thinly-veiled Sinophobia and anti-China propaganda, with British politicians accusing Jingye of attempting to sabotage the country’s steel industry, and demanding that Chinese companies be prevented from future investment in British infrastructure.

Paul contrasts this hysteria with the relatively muted response to a very similar crisis at the Port Talbot steel works in 2024. “Both plants owned by companies based overseas. Both seeking a way out of unprofitable production. Both in negotiation for subsidy from successive governments for outcomes that would lead to massive job losses. Both looking to close aging blast furnaces earlier than originally planned because they have been making significant losses.” However, “Indian based Tata Steel’s ownership of Port Talbot was certainly mentioned in news coverage, but not on the blanket, verging on obsessive scale that British Steel’s Chinese ownership has… After Port Talbot, there has been no denunciation of Indian investment into the UK, nor any calls in the media or Parliament for any ‘urgent review’ into India’s role in the UK, or paranoid accusations … that the attempted closure is part of a dastardly plot to sabotage a strategic British industry”.

The article points out that the narrative on British Steel serves two purposes for the British ruling class. First, it feeds into building popular support for the US-led New Cold War on China. Second, it contributes to the fossil fuel industry’s resistance to meaningful action on climate change, given China’s global leadership in renewable energy and electric transport.

Paul notes that Spain is taking a considerably more far-sighted and progressive approach, “both encouraging inward Chinese investment – like the joint venture between CATL and Stellantis to build a battery factory in northern Spain – and deals signed last year between Spain and Chinese companies Envision and Hygreen Energy to build green hydrogen infrastructure in the country.”

It is crucial that environmental activists in the West do not fall into the Sinophobic trap being laid for them by the Cold War hawks in Washington and London.

The contrast between the way the crises in steel production at Scunthorpe and Port Talbot has been stark. Both plants owned by companies based overseas. Both seeking a way out of unprofitable production. Both in negotiation for subsidy from successive governments for outcomes that would lead to massive job losses. Both looking to close aging blast furnaces earlier than originally planned because they have been making significant losses.

In the case of Port Talbot, this led to a deal to convert to Electric Arc Furnaces to secure sustainable steel production at the site, but with the loss of 2,500 jobs and only 300 retained. This was dependent on a subsidy from the government of £500 million. A similar deal was not clinched at Scunthorpe, as the crisis was brought forward by Trump’s imposition of a 25% tariff on UK manufactured steel – which led to an announcement of imminent closure from the company the following morning. A closure would mean 2,700 jobs lost – on the same scale as Port Talbot.

In Port Talbot, in the absence of a serious just transition process involving the unions, which were excluded from the discussions by the company and the then Tory government, the job losses are being dealt with by the same sort of offers of retraining as have been proposed for the Grangemouth oil refinery in Scotland. In the case of Scunthorpe, also with no just transition process, the government has rightly stepped in to take charge of the plant to keep the blast furnaces running in the short term; which means that the losses previously borne by the company will now be borne by the Exchequer. With the company losing £255 million a year, the governments £2.5 billion steel transformation fund can absorb this in the short term. Workers at Port Talbot have expressed some bitterness that this was not considered for them.

What has been different is the mobilisation of Sinophobia around British Steel’s ownership by a Chinese company, Jingye. Indian based Tata Steel’s ownership of Port Talbot was certainly mentioned in news coverage, but not on the blanket, verging on obsessive scale that British Steel’s Chinese ownership has. Tata’s brinkmanship in negotiations was also mentioned, but they were not accused of “negotiating in bad faith” in the way that Jingye have. Both companies have behaved as you’d expect a capitalist company to behave, though if you read Jingye’s Group Introduction you can see how their operations inside China are turned to more positive social objectives – from a high wages policy to greening their workplaces – from being based in a country run by a Communist Party, not by their own class. But here, both Tata and Jingye are in it for the money. Their UK operations have only been viable as a tiny loss making fragment of a much larger business, as part of an attempt to implant themselves in a variety of global markets in the hope of profitability in the medium to long term. Steel production at Port Talbot in 2022, for example, was just 10% of Tata’s global production of 35 million tonnes.

After Port Talbot, there have been no denunciation of Indian investment into the UK, nor any calls in the media or Parliament for any “urgent review” into India’s role in the UK, or paranoid accusations made explicitly by Farage but echoed by “senior Labour figures” as well as Tories in the media but not in the recent Saturday debate in Parliament, that the attempted closure in Scunthorpe is part of a dastardly plot by the Chinese government to sabotage a strategic British industry, not a commercial decision in which a company is seeking to cut its losses in all the ways British capitalist company law allows them to; including cancelling orders for the raw materials they’d need to keep running the blast furnaces they want to close. Instead, there has been serious negotiations with the Indian government to set up a trade deal, which was reported last week as “90% done”.

No decoupling there.

The attack on commercial engagement with China fulfills two objectives. One is a straightforward attempt to mobilise popular sentiment in defence of steel workers jobs behind a Cold War sentiment in a wider context in which the Trump administrations policies have shaken up popular faith in deference to the US. An anti Chinese attack distracts from that and pushes people back towards habitual hostilities.

The other opens another front in the resistance to any serious action on climate change that could threaten the profits of the fossil fuel sector. Accusations from the Right have been:

The blast furnaces could have been kept running with locally sourced coking coal from the cancelled Whitehaven mine. This misses the point that the coke from this mine – had it been developed – would have had such a heavy sulphur content that it was too poor quality to be used at Scunthorpe, so this is a consciously mendacious and fundamentally unserious talking point.
High energy prices in the UK are because of “Net Zero”. This, as they know, is the opposite of the truth. The UK has high energy costs because they are tied to the price of gas far more than any other country in the G7. See Figure 1. We should also note that the oft repeated “solution” to this problem from Reform or the Tories is massive investment in nuclear power instead. The problem with this is that the cost per Kilowatt hour of energy generated by nuclear power is higher than gas, which is higher than renewables. See figure 2. So their way forward would actually compound the problem. Paradoxically, their attack on Chinese investment in UK nuclear power development, and the withdrawal of Chinese investment from Sizewell C in Suffolk and Bradwell in Essex, is making the financing of these projects almost impossible. So, in this case, the contradictions of their politics means they will neither have their cake, nor eat it.

These themes came together in a front page broadside from the Times on 15th April directed at Ed Miliband’s recent trip to China aiming to improve relations and develop better sharing of expertise on the climate transition. Miliband’s is the head that the right wing press is keenest to have on its trophy wall of sacked ministers, hence quite limited and inadequate targets being described as “swivel eyed” and “eye watering” in a constant hammering of lead articles from the Sun to the Telegraph and all the low points in between. Attacks on solar panel installations are increasingly taking the form of accusations of “forced labour” in China, which are untrue, but because it is almost universally believed at Westminster, this threatens a reactionary result on the basis of an apparently progressive concern – as China is the source of 80% of the world’s solar panel supply. However, even if the UK sabotages its green transition by impeding imports of Chinese solar panels this will have little effect globally, as China is increasingly exporting them to the Global South.
See Figure 3 Miliband is nevertheless the most popular government minister among Labour members in Labour List’s survey – in which he has a positive rating of 68, compared to Keir Starmer’s 13 – because he is seen as getting on with something positive and progressive, while Liz Kendall and Rachel Reeves are in negative territory.

The call from Dame Helena Kennedy for “an urgent security review of all those Chinese companies operating within our infrastructure which could pose a threat to our national interests – and maybe not just confined to China” threatens to compound the damage already done by the UKs removal of Huewei’s investment in the 5G network, ensuring that the version the country has is slower and more expensive, and the financial difficulty set for Nuclear power station projects by the removal of Chinese investment on the basis of “national security” paranoia. Applied more widely, this neatly lines the UK up with Trump’s trade war against China and sets the UK up for a potential trade deal in which US capital is looking hungrily at the NHS, wants to sell chlorinated chicken and other additive saturated and nutrition less food from their agricultural industrial complex and open up a tax and regulation free for all for their abusive big tech companies, while their President is actively sabotaging global progress towards sustainability by doubling down on fossil fuels. China is doing none of these things. A more positive approach is that being taken by the PSOE government in Spain, which is both encouraging inward Chinese investment – like the joint venture between CATL and Stellantis to build a battery factory in northern Spain and deals signed last year between Spain and Chinese companies Envision and Hygreen Energy to build green hydrogen infrastructure in the country.

Farage, and others on the Right are arguing for nationalisation as a temporary measure just in order for the company to be “sold on” – treating nationalisation as an emergency life support process for private capital -is that there is not exactly a huge queue of companies waiting to buy, and any that did would most likely to be looking at asset stripping. Jingye was the only company interested in 2019, when previous owner Graybull capital gave up on it.

This would also be the government’s preferred approach, because they are nervous of the capital costs involved in making the plant viable. There are three intertwined problems with this.

Attracting a viable private company prepared to put serious money into reviving the plant means attracting overseas capital. Given that more than 50% of global steel production is made by Chinese companies (see figure 4 below) Jonathan Reynolds has changed his tune since the weekend debate in Parliament. That Saturday he was decrying allowing Jingye into UK steel manufacturing as a national security issue, but by mid-week, a few days later, he was prepared to be more pragmatic about it.
Making the plant viable cannot mean investing in new blast furnaces. These would become stranded assets before they had reached the end of their design life. Despite the determined rearguard action from Trump and others, trying to carry on as though the world isn’t changing makes no business sense. In 2024, for example, all new steel plants developed in China were Electric Arc Furnaces, designed to use scrap steel as raw material. As yet, production of virgin steel has been dependent on coking coal, but the first production using (green) hydrogen and electricity looks like coming on stream in Sweden by next year; so if virgin steel production is considered an imperative for the Scunthorpe site, that model will have to be looked at and emulated as a matter of urgency.
New investment in different production on the site – like almost all capital investment – replaces labour with capital. As with Port Talbot, far fewer workers would be needed for EAFs. Reynolds has talked about “a different employment footprint” for the plant; which is one way to put it. So, the issue of how the transition can be made in a way that opens up alternative employment with decent terms and conditions has to be negotiated with the workers themselves through their unions.

What’s needed is a clear industrial plan that consolidates the nationalisation as a precedent for other sectors and builds on the Scunthorpe plant’s strengths in producing, for example, 90% of railway tracks used in the UK, as part of a strategic plan for green transition. This has hitherto been focussed on a transition to Electric Arc Furnaces, but linking the production of green hydrogen to new generation furnaces capable of producing the tougher virgin steel needed for a full range of industrial applications should also be part of the process; because blast furnaces can’t be kept open indefinitely if we are to stop the climate running away out of a safe zone capable of sustaining human civilisation by mid century.

Appendix

UK steel production is the 35^th largest in the world, comparable to Sweden, Slovakia, Argentina and the UAE. Its 4 million tonnes in 2024 is just over a tenth of the production of Germany, a twentieth of the United States, a thirty seventh that of India and a 250^th that of China.

The niche, almost token, position of UK based steel manufacturing reflects a wider process in which UK based capital is no longer primarily engaged with manufacture.

The last time the steel industry in the UK was nationalised in 1967 it had 268,500 workers from more than 14 previous UK based privately owned companies with 200 wholly or partly-owned subsidiaries. These companies were considered increasingly unviable because they had failed to invest and modernise, so were increasingly uncompetitive. This is part of a wider story about how the UK capitalist class has transformed itself since the 1960s. While the quantity of manufactured goods has increased since then, the proportion of manufacturing in the economy has shrunk from 30.1% in 1970 to 8.6% in 2024. The service sector has grown from 56% to more than 80%. UK based capital primarily makes money from selling services, mostly financial, to manufacturing capitalists at home and abroad. They are spectacularly bad at large scale manufacturing start ups, as the debacle of British Volt (whose approach of setting themselves up a luxurious executive office suite before they’d secured funding to even build their factory might be described as cashing in on your chickens before you’ve sold any).

What that means is that most of “British Industry” is owned by firms based overseas, so might be better described as “manufacturing that happens to take place in Britain”. Consider the automotive sector. While there are locally based SMEs in the supply chain, all the big manufacturers depend on overseas investment. Nissan, Stellantis, BMW, VW, Geely, Tata (again). As with locally based steel production, firms like Morris, Austin, even Rover, are long gone for the same reasons as BSA – once the world’s biggest motorcycle company – now only builds retro classic designs as a niche luxury product and Guest Keen and Nettlefold had to be nationalised to save its assets.

Chinese Embassy comments on government takeover of British Steel

Republished below are the remarks by a spokesperson for the Chinese Embassy in London regarding the UK government’s takeover of British Steel.

The spokesperson points to the surge of anti-China propaganda among politicians and in the media following the announcement by Jingye, the Chinese company that owns British Steel, that it would be shutting down the blast furnaces at its Scunthorpe plant. For example, UK business secretary Jonathan Reynolds told Sky News that the British government had in the past been “far too naive” about UK-Chinese trade. Various commentators have resurrected tropes about China using its investments in Britain to conduct espionage or to “disrupt infrastructure for geopolitical leverage”. This sort of anti-China rhetoric is “extremely absurd, reflecting arrogance, ignorance and a twisted mindset”.

The spokesperson notes that the Jingye Group is a private enterprise that works on the basis of normal commercial principles, and that the Chinese government has no control over its operations. Having poured vast amounts of money into British Steel and lost hundreds of millions of pounds in the process – and given negotiations with the UK government over the future of the plant had failed to yield results – Jingye made a commercial decision to shut down the blast furnaces. “British Steel’s plan to close its blast furnaces and build electric arc furnaces is a normal decision, and it is understandable that the company conducted negotiations with the government on investment for the transition.”

The comment notes that, in general, “Chinese companies in the UK have operated in compliance with law and achieved steady progress”. Given the importance of Chinese investment and trade in supporting the Labour government’s stated commitment to economic growth, it seems foolhardy to politicise the issue of Jingye’s operations and create a discriminatory business environment.

This message was reiterated by Chinese Foreign Ministry spokesperson Lin Jian: “We hope that the British government will treat Chinese companies investing and operating in the UK in a fair and just manner, protect their legitimate rights and interests, and refrain from turning economic and trade cooperation into political and security issues lest it should undermine the confidence of Chinese companies in their normal investment and operation in the UK.”

The remarks by the embassy spokesperson also highlight the hypocrisy in fiercely criticising China whilst not offering even the mildest critique of the Trump administration’s unilateral tariff war. “At a time when the US is wielding the tariff stick against all countries, the UK included, and engaging in unilateral and protectionist trade bullying, those British politicians just keep slandering the Chinese government and Chinese enterprises instead of criticising the United States.”

The comments were first published on the website of the Chinese Embassy in the UK.

Question: Recently, there have been various comments in the UK regarding the government’s takeover of British Steel. Several politicians took the opportunity to attack all Chinese companies and the Chinese government. What’s your comment?

Embassy Spokesperson: The anti-China rhetoric of some individual British politicians is extremely absurd, reflecting their arrogance, ignorance and twisted mindset. Regarding the issue of British Steel, I’d like to share a few basic facts.

1. The Jingye Group is a private Chinese enterprise that makes business investments in the UK on the basis of market principles and conducts operation on its own.

2. It is well-known that British Steel had been losing money for many years before its acquisition by Jingye in 2020 and actually went into compulsory liquidation in 2019. After taking over, Jingye put in substantial funding to keep the company afloat to this day. Had it not been for the involvement of this Chinese company, British Steel workers might have already faced the risk of unemployment.

3. It is understood that under the UK government’s net zero strategy, steel companies that use iron ore to make steel must achieve net zero emissions by 2035. To that end, British steel companies including British Steel have all negotiated with the government to find a path to decarbonisation transition. Among them, the Port Talbot Steelworks in Wales closed its blast furnace in July 2024. British Steel’s plan to close its blast furnaces and build electric arc furnaces is a normal decision, and it is understandable that the company conducted negotiations with the government on investment for the transition.

4. Generally speaking, Chinese companies in the UK have operated in compliance with law and achieved steady progress. They have made positive contributions to the local economy. According to statistics available, Chinese companies in the UK have contributed over 115 billion pounds to the UK economy and created nearly 60,000 jobs.

5. At a time when the US is wielding the tariff stick against all countries, the UK included, and engaging in unilateral and protectionist trade bullying, those British politicians just keep slandering the Chinese government and Chinese enterprises instead of criticizing the United States. What on earth are they up to?

6. Any words or deeds that politicise or maliciously hype up business issues will undermine the confidence of Chinese business investors in the UK and damage China-UK economic and trade cooperation. We urge the British government to follow the principles of fairness, impartiality and non-discrimination and to make sure that the legitimate rights and interests of Chinese companies in the UK are protected. At the same time, it is hoped that the British government will continue to engage in consultations and negotiations with Jingye to actively seek a solution acceptable to all parties. We will continue to follow the development of this situation.

China Daily editorial: the US is not getting ripped off by anybody

We are pleased to republish below a brief editorial in China Daily about the US administration’s hysterical claims that China and other countries are “ripping off” the US via their trade policies. The editorial notes that such claims are being used to justify the US’s unilateral imposition of tariffs, which in turn “provides leverage for the US administration to extract concessions in terms of the real trade war it is waging against China and in reshaping the bilateral relations with the US’s other trade partners in favour of the US by extorting undue concessions”.

The author writes that the US’s trade deficit is not the result of unfair trade practices pursued by other countries, but rather the US’s own economic policies of several decades, pursued in the specific interests of the US capitalist class. What’s more, even if the unilateral tariffs result in more companies investing in manufacturing in the US, this will not create the vast wave of employment being touted by the White House. “The cost of labour in the US means it is more economically viable for machines to do the work than humans.”

In reality, “the US is not getting ripped off by anybody. The problem is the US has been living beyond its means for decades. It consumes more than it produces. It has outsourced its manufacturing and borrowed money in order to have a higher standard of living than it’s entitled to based on its productivity. Rather than being ‘cheated’, the US has been taking a free ride on the globalisation train.” These comments were sufficiently persuasive that they were reported more-or-less neutrally in the Guardian, which is notable given the paper’s usual anti-China stance.

The editorial concludes:

The US should stop whining about itself being a victim in global trade and put an end to its capricious and destructive behaviour. Instead, it should commit itself to working with its trading partners to establish a fair, free and WTO-centred multilateral trading system that is in line with the times.

The US administration has long accused foreign countries of taking advantage of the United States at the expense of domestic jobs and US industries. In US President Donald Trump’s view, the US has received less return value and resources for what it has given the world in terms of the amount of money, trade preferences and other resources. “They’re ripping us off” is his constant refrain.

It is this fabricated premise of a long-standing grievance that has been the launchpad for his administration’s sweeping “Liberation Day” tariffs targeting almost all foreign imports, and which have set up a global trade war and promise to upend the decades-old global trading order.

Though the US leader hit a 90-day pause button on many of the tariffs after his radical power play resulted in US stocks volatility, bond yields surging and recession fears intensifying, his administration’s haughty demolition job on the global trade system is far from over, not least because there is still a 10 percent tariff on virtually all exports to the United States. This provides leverage for the US administration to extract concessions in terms of the real trade war it is waging against China and in reshaping the bilateral relations with the US’ other trade partners in favor of the US by extorting undue concessions.

One of the aims of the US administration is to use the tariffs to close, if not reverse, the trade deficits with nearly all of the US’ trade partners. The preoccupation with trade deficits stems from a warped idea that they are proof that the US has been exploited by other countries. This has also made the US president and his trade advisers wrongly claim that the current rules governing global trade have put the US at a distinct disadvantage.

This is contrary to the belief of mainstream economists that a trade deficit simply means a country is importing more goods and services from a given country than it is exporting to that market, and has nothing to do with the state of a country’s economic health.

While bemoaning surging deficits in the US’ trade of goods with other countries, the US administration has deliberately ignored the fact that the US sells far more services than it buys from other countries, which means the US’ service sector enjoys a trade surplus with almost every trading partner around the world, including those at the center of the ongoing trade war such as China and the European Union. The service sector includes retailers, software, internet and telecom providers, movie studios, as well as health care providers, law firms and accounting agencies. According to the US Commerce Department, the US’ trade surplus in services rose to $293 billion in 2024, up 5 percent from 2023, and 25 percent from 2022.

Trade in services, especially finance, legal, entertainment, and high-tech services, has become a major source of US economic strength. In 2023, US services exports were worth more than $1 trillion, accounting for 13 percent of the global total, and they expanded a further 8 percent last year, according to the World Trade Organization. “Global trade in services … is booming. And there is a clear winner on this front: the United States,” wrote Ngozi Okonjo-Iweala, WTO director-general.

Moreover, Trump’s claim that foreign countries steal US manufacturing jobs through unfair trade practices, and that only sweeping tariffs will help the US reverse the decades-long decline in manufacturing and create related jobs is out of step with historical realities.

This is because service sector jobs have long driven the US economy — the sector employed 57 percent of private sector nonfarm workers in 1939, when the US Labor Department started tracking US employment, and today, service sector businesses account for 84 percent of those jobs.

The modern manufacturing reality suggests that, even if US companies do reshore, the cost of labor in the US means it is more economically viable for machines to do the work than humans.

The US is not getting ripped off by anybody. The problem is the US has been living beyond its means for decades. It consumes more than it produces. It has outsourced its manufacturing and borrowed money in order to have a higher standard of living than it’s entitled to based on its productivity. Rather than being “cheated”, the US has been taking a free ride on the globalization train.

The US should stop whining about itself being a victim in global trade and put an end to its capricious and destructive behavior. Instead, it should commit itself to working with its trading partners to establish a fair, free and WTO-centered multilateral trading system that is in line with the times.

Some aspects of China’s development model

The following article by Shiran Illanperuma, originally published in the Sri Lankan daily newspaper The Island, explores some of the key elements of China’s economic rise, in particular debunking the myth put forward by neoclassical economists that China is “the model par excellence of market liberalisation and the superiority of private sector driven growth”.

Shiran argues that the main competitive advantage of China’s labour force is not its low cost – after all, there are far cheaper labour markets in the world – but the fact that it is well-educated and healthy, and benefits from excellent transport and energy infrastructure. “This, combined with a domestic value chain, is China’s main strength and why economic growth has been combined with rising wages and standards of living.”

Foreign direct investment (FDI) has been leveraged very purposefully in China particularly from the 1990s onwards in order to develop the domestic economy, and to build up the country’s technological capabilities. Meanwhile, “state-owned enterprises (SOEs) are the elephant in the room when it comes to China’s development model”.

Broadly speaking, SOEs in China perform four ‘macroeconomic’ functions. First, they conduct the low-cost production of upstream inputs such as metals, chemicals, and rare earth minerals. Second, they manage essential commodity reserves and intervene in commodity markets to stabilise prices. Third, they engage in countercyclical spending on public works during economic downturns. Fourth, they are deployed to respond during emergencies and external shocks such as the 2008 Sichuan earthquake and the COVID-19 pandemic. The through line in these functions is to keep costs low and smoothen out business and commodity cycles. This is why China has not yet faced a recession comparable to many capitalist economies.

The leading role of the CPC in China’s economic strategy is also crucial:

The Communist Party of China, which has around 100 million members (almost five times the population of Sri Lanka!), has been key to the process of China’s development. The party remains committed to developing Marxist-Leninist philosophy and applying it to the country’s concrete conditions. It retains deep roots in all levels of Chinese society, engaging in consultation during the policymaking process.

As such, China’s remarkable rise cannot be separated from its system of Socialism with Chinese Characteristics.

Shiran Illanperuma is a researcher at Tricontinental: Institute for Social Research and a co-editor of Wenhua Zongheng: A Journal of Contemporary Chinese Thought

China’s rapid development over the last few decades has been the source of much debate among economists. Some claim China as the model par excellence of market liberalisation and the superiority of private sector driven growth. Others equally argue that China’s model is one of planning and state intervention.

On 28 March, I was invited by Nexus Research to deliver a presentation on China’s development model alongside former Ambassador to China Dr. Palitha Kohona. Unfortunately, the contents of this presentation have been misreported in an article in the Island published on 4 April (Dr Kohona: developing countries should covet China model). The article claimed that my presentation touched on “low-cost labour, foreign direct investments, and global trade agreements”. In fact, such simplistic tropes were precisely what I had intended to counter.

China’s development model challenges many of the axioms of neoclassical economics. If low-cost labour were the decisive factor for take-off, then investment should be pouring into much-cheaper labour markets in sub-Saharan Africa. On the contrary, rising wages in China have not led to the outflow of capital one would expect under such a model. This is because the advantage China offers is a healthy and skilled workforce (relative to price) and an infrastructural system that keeps non-wage operating costs (such as transport and energy) low. This, combined with a domestic value chain, is China’s main strength and why economic growth has been combined with rising wages and standards of living.

While foreign direct investment (FDI) has been a huge part of China’s success story, it is possible to overstate their importance. First, FDIs only really took off from the 1990s onwards, yet to begin there would be to ignore the decades of work done to develop the country’s agricultural self-sufficiency, basic industrial system, and institutional structure. Second, what has mattered for China is the quality of FDI, which is determined by government policy. By the standards of the OECD Foreign Direct Investment Regulatory Restrictiveness Index, China remains fairly selective on what FDI is allowed and encouraged. FDI is promoted not as an end in itself but as a means to acquire technology that should be transferred to national champions.

Role of Local Government

A significant portion of my presentation for Nexus Research was on the role of local governments economic policy – something that is often neglected (though there is a growing literature on the subject). China has a fairly decentralised system of governance, a product of its vast size and geography, as well as the institutional changes and experiments in direct democracy during the period of the Cultural Revolution.

Chinese economist Xiaohuan Lan, in his book How China Works (2024), has said that “In China, it is impossible to understand the economy without understanding the government.” While the central government in China formulates indicative plans and the overall goals and trajectory for development, implementation of these plans is delegated to local governments. Local governments have a broad remit to interpret these plans, experiment with implementation, and compete with each other for investment. This leads to a much more dynamic and decentralised development process that encourages grassroots participation.

A comparison between China and India on the share of public employment at different levels of government is very revealing. For China, over 60% of public employment is at the level of local government, with federal and state governments comprising less than 40% of employment. In contrast, less than 20% of Indian public employment is in local government. India, therefore, despite its much-touted linguistic federal system, is far more centralised than China. The weakness of Indian local governments remains a significant barrier for its development.

BRICS laying the groundwork for a more balanced global financial system

In the following article, which was originally published in China Daily, Endalkachew Sime, a former Minister of Planning and Development in Ethiopia, who is currently studying for his PhD at Peking University, provides a balanced overview of the trend towards de-dollarisation and the role played by the BRICS+ cooperation mechanism.

He notes that it has emerged as a pivotal actor in this regard, adding: “This strategic shift seeks to reduce dependence on the US dollar in international trade, investments and monetary reserves.” But “far from being an antagonistic move against the United States, it represents a pragmatic effort by the BRICS nations to assert financial autonomy and protect their economies from external shocks.” The New Development Bank, established by the BRICS nations in 2015, represents a concrete institutional response to dollar dominance and China’s trade with such major partners as Russia and South Africa have seen significant shifts away from the ‘greenback’.

BRICS nations have also developed alternative payment systems to bypass traditional US-dominated infrastructure. China’s Cross-Border Interbank Payment System and Russia’s System for Transfer of Financial Messages offer alternatives to SWIFT, while India’s rupee-based trade settlement mechanism challenges the US dollar’s dominance in regional trade. These systems enhance financial sovereignty by providing secure, independent channels for international transactions.

Moreover, by diversifying their foreign exchange reserves into alternative currencies and assets – such as the euro, yen and gold – BRICS countries aim to enhance financial stability. Gold reserves have seen particularly dramatic increases.

Sime notes that: “Developing economies face significant risks when their financial systems are closely tied to the US dollar. Changes in US interest rates, quantitative easing, or other monetary policies can trigger capital flows, currency volatility, and economic instability in dollar-dependent economies. By reducing dollar dependence, Global South nations can insulate themselves from these external shocks and maintain greater control over their domestic economic policies. US sanctions have become a powerful tool of economic coercion, particularly against countries such as Russia, Iran and Venezuela. De-dollarisation efforts provide a mechanism for these nations to conduct international trade and finance outside the reach of US sanctions.”

He adds that the current global financial architecture disproportionately benefits developed economies, particularly the US. By creating alternative financial institutions and mechanisms, BRICS nations contribute to a more multipolar system where multiple currencies and financial architectures coexist. This evolution could lead to greater fairness and representation for developing economies in global financial governance.

However, he goes on to warn: “Despite these advances, challenges remain in establishing a fully integrated BRICS financial architecture. The heterogeneity of economic structures, political priorities, and developmental stages among member countries complicates coordination. Furthermore, the US dollar retains its dominance in global finance, and transitioning to alternative systems requires significant investment and institutional development.”

Nevertheless, he concludes: “By creating alternative financial institutions and instruments, BRICS nations are laying the groundwork for a more balanced global financial system. This shift could potentially reduce the effectiveness of the US’ politically motivated unilateral sanctions, enhance financial sovereignty for developing economies, and promote greater stability in international monetary relations… De-dollarisation represents not a threat to the global economic system but an opportunity to create a more resilient and equitable architecture that respects the sovereign economic interests of all nations. For the Global South, this movement is fundamentally about protecting domestic economies from external shocks, asserting financial autonomy, and participating in a more multipolar world order.”

The “BRICS Plus” grouping — Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Saudi Arabia, Iran, the United Arab Emirates and Indonesia — has emerged as a pivotal actor in the global movement toward de-dollarization. This strategic shift seeks to reduce dependence on the US dollar in international trade, investments and monetary reserves. Far from being an antagonistic move against the United States, it represents a pragmatic effort by the BRICS nations to assert financial autonomy and protect their economies from external shocks.

The US dollar accounted for about 58 percent of global foreign currency reserves and 88 percent of the daily foreign exchange market turnover as of 2023. However, this dominance creates vulnerabilities for countries whose economies are closely tied to its performance.

The New Development Bank, established in 2015 with an initial capital of $50 billion, represents a concrete institutional response to the dollar dominance. By 2023, the NDB had approved over $30 billion in funding for infrastructure and sustainable development projects across BRICS nations, with approximately 30 percent of these funds disbursed in nondollar currencies. Further, the Contingent Reserve Arrangement, a $100 billion financial safety net established in 2014, provides liquidity support in nondollar currencies during financial crises. This mechanism helps BRICS nations mitigate the risks associated with dollar volatility and potential capital flight.

Bilateral trade settlements have seen significant shifts away from the dollar. For instance, the share of the US dollar in Russia-China bilateral trade settlement plummeted from nearly 90 percent in 2015 to 46 percent in the first half of 2020, while the use of local currencies in India-Russia bilateral trade surged from 6 percent to 30 percent between 2014 and 2019. Similarly, the renminbi’s usage in South African trade grew by 65 percent in 2016 alone. These changes reflect a deliberate strategy to reduce exposure to dollar fluctuations and enhance trade stability.

Could China’s rise be Britain’s opportunity?

We are pleased to reprint below the report by Morning Star editor Ben Chacko, carried in that newspaper, of the meeting ‘China in Springtime: Sharing Opportunities with the World’, organised by the China Media Group together with the Chinese Chamber of Commerce in the UK (CCCUK) and the China-Britain Business Council (CBBC), with the support of the Chinese Embassy, and held at the Bank of China, in the City of London, the capital’s financial district, on March 17. The key purpose of the gathering was to report on and discuss China’s recent two (parliamentary) sessions and the resulting prospects for business and economic cooperation between China and Britain from the policies rolled out there.

Reporting on the keynote speech delivered by Chinese Ambassador Zheng Zeguang, Ben notes how he, “referenced President Xi Jinping’s three signature initiatives, the Global Development Initiative (for economic co-operation in place of trade systems that benefit corporations in rich countries at the expense of the Global South), the Global Security Initiative (replacing concepts of security based on power blocs like NATO with an inclusive international security architecture) and the Global Civilisation Initiative, which promotes multipolarity and argues for a world order based on respect for different civilisations, rather than one whose institutions have all been designed in the framework of the European political tradition.”

China would meet its five per cent growth target and its role as a scientific innovator should be recognised, he argued, pointing to its leading role in the global green transition (non-fossil fuels accounting for 40 per cent of Chinese electricity generation last year and 70 per cent of all electric vehicles worldwide being sold in China) as well as its progress in quantum technology and AI, most notably with DeepSeek, the “low-cost, open source large language model [which] has stunned the world.

“On sci-tech, we were playing catch-up but have now become a frontrunner.” But unlike the US, which seeks to stymie China’s development by blocking access to chips and software, “we don’t believe in ‘small yard, high fence’ — we believe in mutual learning and sharing.”

Sir Sherard Cowper-Coles, Chairman of CBBC, contrasted China’s “serious government” to too many in the West, pointing out China has a record of achieving its economic growth targets and should be seen as a key export market for British goods and services.

Lord (Neil) Davidson, Labour Member of the House of Lords and former government minister, said London should view China’s advances as opportunities, not threats.

The City should pay close attention to the “BRICS-Pay project – another platform for trade finance as an addition to the dollar-based system… this could be characterised as a threat to dollar hegemony, but historically the City has looked to assess financial innovations for their objective effects rather than rhetoric,” he argued, hinting that Britain too could benefit from an end to US financial supremacy.

“The view that China can be pressured into policies it rejects, if ever true, is plainly bankrupt. The view that China is dependent on the West for technology is eroding speedily. The view that China is merely a low-cost provider of goods belongs in the past,” he added.

We also carry below the report on the event published on the website of the Chinese Embassy. It noted Ambassador Zheng as stating:

“China will promote the development of new quality productive forces, fostering industries such as biomanufacturing, quantum technology, embodied AI, and 6G, and continuously advancing the AI Plus initiative and AI application in different industries. China will expand higher-standard opening up, strengthening policies to stabilise foreign trade and foreign investment, and increasing the number of countries eligible for visa-free entry. China will promote green and low-carbon transition, improving incentives for green consumption, and accelerating the development of a green and low-carbon economy.”

The Ambassador also pointed out that China and the UK should seize opportunities, expand collaboration and create a new future of mutually beneficial cooperation. In the face of a turbulent and changing world, a stable and constructive China-UK relationship is even more important to both countries and the world.

“The two sides must uphold the principles of mutual respect, non-interference in each other’s internal affairs and equality, and properly handle differences and sensitive issues. We must say no to those who have been trying to talk China down. We must say no to those who have been trying to undermine normal exchanges between our two countries. We must say no to those who have been trying to disrupt China-UK collaboration.”

Following the formal proceedings and a networking reception, Creation of the Gods II: Demon Force, a 2025 historical blockbuster, was screened.

Could China’s rise be Britain’s opportunity?

Will Labour take a more rational approach to China than the Tories did? Or continue the drive to trade decoupling and war led by the United States?

Optimism was in the air at a China Media Group meeting bringing together the country’s ambassador to Britain Zheng Zeguang and business figures earlier this week. The Donald Trump government was not named, but its disruptive character was referenced — Zheng observed that “unilateralism and protectionism are on the rise and power politics runs rampant;” the chairman of the China-British Council, Sir Sherard Cowper-Coles, spoke of the “orange-coloured elephant in the room.”

China in Springtime reported back on the recent Two Sessions, as the simultaneous meetings of China’s national policy-making forums — the legislative National People’s Congress, and the advisory People’s Political Consultative Conference — are known.

Zheng countered propaganda depicting China’s rise as a threat to a “rules-based” — read US-policed — world order. “China champions an equal and orderly multipolar world and universally beneficial and inclusive economic globalisation.”

Here he referenced President Xi Jinping’s three signature initiatives, the Global Development Initiative (for economic co-operation in place of trade systems that benefit corporations in rich countries at the expense of the global South), the Global Security Initiative (replacing concepts of security based on power blocs like Nato with an inclusive international security architecture) and the Global Civilisation Initiative, which promotes multipolarity and argues for a world order based on respect for different civilisations, rather than one whose institutions have all been designed in the framework of the European political tradition.

In China, profit does not rule, social objectives do

While we don’t agree with the author’s characterisation of the Chinese People’s Political Consultative Conference and the National People’s Congress (on which issue readers may be interested in this article by Roland Boer), the article below offers very useful insights into China’s economic policy and performance.

The article notes that China’s GDP (measured in international market dollars, as opposed to purchasing power parity) remains behind that of the US, but the gap is closing fast. This is because, “although China’s annual real GDP growth is no longer in double-digits, it is still growing nearly twice as fast as the US economy.” Furthermore, the US’s relatively high GDP growth of 2.8 percent last year (which compares favourably with the other major capitalist economies) was in part down to an increased size of workforce due to immigration: “More people, more output. US real GDP growth per person was much less.”

The author further notes that “China has had the world’s largest manufacturing sector by output for 15 years running”, with manufacturing contributing 36 percent to GDP, compared with just 10 percent in the US. China’s economy remains firmly grounded in the real economy, and increasingly in new productive forces. “More electric vehicles are on the road in China than in the US, and Beijing’s roll-out of 5G telecommunications networks has been much faster. China’s home-grown airliner, the C919, is on the cusp of mass production and appears ready to enter a market currently dominated by Boeing and Airbus. The BeiDou satellite navigation system is on par with GPS in coverage and precision.”

The article asks: Why has China succeeded in avoiding slumps including the Great Recession and in the pandemic?

It’s because, although China has a large capitalist sector, mainly based in the consumer goods and services sectors, it also has the largest state sector in any major economy, covering finance and key manufacturing and industrial sectors, with a national plan guiding and directing both state enterprises and the private sector on where to invest and what to produce. Any slump in its private sector is compensated for by increased investment and production in the state sector – profit does not rule, social objectives do.

This article first appeared on Michael Roberts’ blog. Michael recently contributed to our webinar ‘DeepSeek and the challenge to US technological hegemony’.

The Chinese government is just completing its annual ‘two sessions’ or lianghui, where China’s political elite approve the economic policy agenda for the coming year. The ‘two sessions’ refers to two major political gatherings: the Chinese People’s Political Consultative Conference (CPPCC), a political advisory committee; and the National People’s Congress (NPC), China’s top legislative body.

Trump’s tariff tantrums

With the Trump administration’s increasingly aggressive tariff measures, economists are warning of the risk of an international trade war, with the US and China as its major antagonists. To provide some much-needed clarity on this issue, we are pleased to republish below two recent articles from British Marxist economist Michael Roberts.

Michael describes the core of Trump’s tariff strategy as aiming to “make America ‘great again’ by raising the cost of importing foreign goods for American companies and households and so reduce demand and the huge trade deficit that the US currently runs with the rest of the world”. According to the US government, this will boost incomes and jobs in the US. Furthermore, the extra tariff revenues will boost Treasury coffers, supporting the administration’s plan to cut income tax and corporation tax.

What will the actual effect of the tariffs be? Michael argues that the tariffs will not reduce the US trade deficit, but will instead raise prices for US consumers and reduce the competitiveness of US companies. Inflation will rise, taxes will be cut, federal spending will be gutted – meaning that the consequences for the US working class will be dire. At a global level, “increased tariffs and other protectionist measures by all sides in retaliation will weaken world trade and economic growth. World trade growth showed some recovery in 2024 after contracting in 2023. Trump’s tariffs will stop that recovery in its tracks.”

Countering those economists who argue that tariffs have always been a valuable tool for nurturing domestic industry, Michael writes: “The US in the 21st century is not an emerging industrial power that needs to protect burgeoning new industries from powerful competitors. Instead, it is a mature economy with a declining industrial sector that will not be restored in any significant way by tariffs on Chinese or European imports.”

Further:

American capital did not invest to sustain its manufacturing superiority because the profitability of that sector had fallen too mcuh. Instead, they switched to investing in financial assets and/or shifting their industrial power abroad. In the last couple of decades they hoped to sustain an advantage in hi-tech and information technology including AI. Now even that is under threat. But this is not the fault of China running an ‘unfair’ industrial trade policy that is based on suppressing the living standards of its people; on the contrary, it is the failure of US capital to sustain its hegemony, just as Britain did in the late 19th century.

The two articles were first published on The Next Recession blog.

Trump’s tariff tantrums

Feb. 4 (The Next Recession) — Over the weekend President Donald Trump announced a batch of tariff increases on US imports of goods from the closest partners of US trade, Canada and Mexico. He proposed a 25% rise in tariffs (with a lower rate for oil imports from Canada). Then he announced a 10% rise in tariffs on all Chinese imports. Thus Trump started his new trade war.

And yet as soon as he started it, he stepped back. Trump announced that he was postponing the tariff increases with Canada and Mexico for a month because their governments had agreed to do something about the smuggling of fenatyl drugs into the US, which he claimed was killing 200,000 Americans every year. This figure is nonsense, of course, because under 100,000 Americans die from drug overdoses from all chemicals each year. As it is, the smuggling of fenatyl over the US-Canadian border is miniscule – certainly compared to the drug cartel operations on the Mexican border. Moreover, as Mexican President Sheinbaum pointed out to Trump, the cartels are able to operate their violent methods because of gun running operated by Americans in the US.

The Canadian and Mexican governments rushed to do a deal with Trump, promising batches of troops on the borders to stop trafficking and more joint anti-drug forces with the US etc. This seems to be enough for Trump to postpone his tariff move, although the tariffs on China will go ahead (no drugs there?). Also small package imports that have been free of import tax up to now will be brought into the customs system – and that will hit internet online purchases made by Americans for goods from abroad.

So what are we to learn from these shenanigans? Are the threatened tariff increases merely being used to browbeat other countries into concessions to Trump? Or is there a coherent economy policy in all this?

There is method in this madness. On the external front, Trump aims to make America ‘great again’ by raising the cost of importing foreign goods for American companies and households and so reduce demand and the huge trade deficit that the US currently runs with the rest of the world. He wants to reduce that and force foreign companies to invest and operate within the US rather than export to it.

He reckons this will boost incomes and jobs for Americans. And with the extra tariff revenues, the government will have sufficient funds to cut income taxes and corporate profit taxes to the bone (indeed, Trump says he wants to abolish income tax altogether). If this is the plan, then the tariffs will eventually be applied fully, with China probably getting an even bigger increase.

The exceptional economy

In the following article, British Marxist economist Michael Roberts responds to the neverending predictions of China’s imminent collapse, which have been a staple of Western commentary for decades.

Comparing the two countries on a range of economic indicators, Roberts finds that China is far ahead of the US in terms of GDP growth, wage levels, controlling inflation, managing debt and building infrastructure.

The Western consensus is that China is mired in huge debt, particularly in local governments and real estate developers. This will eventually lead to bankruptcies and a debt meltdown or, at best, force the central government to squeeze the savings of Chinese households to pay for these losses and thus destroy growth. A debt meltdown seems to be forecast every year by these economists, but there has been no systemic collapse yet in banking or in the non-financial sector. Instead, the state-owned sector has increased investment and the government has expanded infrastructure to compensate for any downturn in the over-indebted property market. If anything, it is America that is more likely to burst a bubble than China.

On accusations of Chinese manufacturing overcapacity, “this is another myth broadcast by Western experts”, since China’s manufacturing growth is primarily targetted at the domestic economy.

Roberts poses the all-important question: why is China exceptional?

It is because it is an economy that is planned and led by state-owned companies, so it can ride most obstacles way better than a privately owned system of capitalist production as in the US… China’s most important industries are run by SOEs: finance, energy, infrastructure, mining, telecommunications, transportation, even some strategic manufacturing. The total capital of companies with some level of state ownership in China is 68% of total capital of all firms (40 million). The vast majority of Chinese companies in the Fortune Global 500 list are SOEs. SOEs generate at least 25% of China’s GDP in the most conservative estimates, and other studies have found them to contribute to 30-40+% of GDP.

Which is to say, the most important reason for China’s continued success is the socialist foundation of its economy.

Next week US president Joe Biden finishes his term of office, to be replaced by the Donald. Biden would have been extremely popular with the American public and probably would have run and got a second term as president, if US real GDP had increased by 4.5-5.0% in 2024, and if during the whole of his period of office since end 2020, real GDP had risen 23%; and if per American, real GDP had risen 26% over those four years. And he would have been congratulated if the Covid death rate during the 2020-21 pandemic had been one of the lowest in the world, and the economy avoided the pandemic slump in production.

Above all, he would have been feted if the inflation of prices in goods and services after he came into office was just 3.6% in total over four years. That would have meant that, with wages rising at 4-5% a year, real incomes for average American households would have risen significantly. At the same time, strong growth would have allowed the financing of important new infrastructure spending in the US that could have led to an extensive rail network across the country using super fast trains; and with bridges and roads that did not collapse or crumble along with environmental projects to protect people and homes from fires and floods, and the introduction of cheap electric vehicles and renewables. How Biden would have been popular.

And with extra revenue from strong growth, the Biden administration would have been able to balance the government budget and curb or reduce government debt. And with zero to low inflation, interest rates on borrowing would have been near historic lows, enabling households and companies to afford mortgages and finance investment in new technologies.

Ken Hammond: In China the interests of the working class are at the heart of everything

In the latest episode of The China Report, embedded below, hosts Amanda Yee and KJ Noh interview Professor Ken Hammond about his new book, China and the World. The three have a wide-ranging discussion about the trajectory of China’s foreign policy over the last half-century, as well as interrogating the dominant narratives about China in the West and exploring the nature of China’s economic development.

Ken details how the rapprochement between the US and China in the early 1970s, starting with the visits by Henry Kissinger in 1971 and Richard Nixon in 1972, opened a path for “China being able to open up to a broader range of outside engagements”, and in many ways enabled the Reform and Opening Up process that began in 1978. While improved relations with the US came at a not-insignificant cost to China’s role in promoting socialist and national liberation revolutions – contributing to some confusion in the West and elsewhere as to China’s political trajectory – “China was pursuing what could be described as a deep game, taking a long-term perspective that required making certain compromises or accommodations in the short term to achieve fundamental objectives in the long term”.

The three talk about China’s economic reforms and how, while they introduced serious contradictions and imbalances into Chinese society, they ultimately enabled China to overcome poverty and underdevelopment. Ken points out that the country achieved an average of 10 percent GDP growth for several decades and that “this growth didn’t just benefit the wealthy; it flowed directly to the people”. On this topic, KJ recounts discussions with Chinese officials in the late 1990s and early 2000s, who described market reforms as “like getting onto a wild horse – but we believe we can contain this horse”. The record shows that they have indeed been able to do so.

Talking about China’s whole-process socialist democracy and its extremely high levels of public consciousness and engagement, Ken describes China as “a state in which the interests of the working class are at the heart of everything that goes on”, and contrasts this with the money-driven politics of the US in which the interests of the capitalist class are at the heart of everything.

China and the World is available to pre-order from 1804 Books.

Goals behind Trump’s tariffs: cut taxes on rich and escalate New Cold War on China

US president-elect Donald Trump has been touting tariffs as a means to reduce both income taxes and the national debt, which currently exceeds 120 percent of GDP. In the article below, Ben Norton describes these claims as “utterly false, and mathematically absurd”.

Ben notes that, during Trump’s first term, significant tax cuts were enacted, primarily benefiting the wealthiest Americans. These cuts resulted in the richest billionaire families paying a lower effective tax rate than the bottom half of US households. Consequently, federal deficits increased from 3.4 percent of GDP in 2017 to 4.6 percent in 2019, prior to the pandemic-induced surge to 14.7 percent in 2020.

The article observes that “every advanced economy got its start through protectionism”, but that the US from the 1940s has been preaching (and sometimes violently imposing) free trade as a means of opening up markets for its exports. “However, something happened in the 21st century that changed everything: the People’s Republic of China carried out the most remarkable campaign of economic development in history.”

China’s extraordinary rise has taken place in parallel with a sharp decline in US manufacturing and an increasing financialisation of the US economy. “The US capitalist class decided it would much rather be the banker of the world rather than the factory of the world, because creating parasitic financial and tech oligopolies that use monopolistic market control and intellectual property to extract rents is much more profitable than actually making things.”

Trump’s proposed tariffs will not help the US to re-industrialise – such a project would require massive long-term investment in infrastructure, education, and research and development. In reality, tariffs will be used “to justify cutting taxes even further on the rich” and, further, “to escalate the new cold war on China, which is a bipartisan gift to the Military-Industrial Complex that will only distract from the domestic problems caused by the US ruling class and externalise the blame”.

This article originally appeared on Geopolitical Economy.

Donald Trump cited billionaire egghead venture capitalist Marc Andreessen to advocate for high tariffs. Trump argued that tariffs will magically replace the income tax and pay off US public debt (which is more than 120% of GDP). This is utterly false, and mathematically absurd.

For Trump, tariffs are just another convenient excuse to cut taxes on the rich — which will in fact increase the US deficit, and therefore public debt.

Thanks to Trump’s tax cuts during his first term, the richest billionaire families in the US paid a lower effective tax rate than the bottom half of households in the country. Meanwhile, US federal deficits increased from 3.4% of GDP in 2017 to 4.6% of GDP in 2019 (before the deficit blew out to 14.7% of GDP in 2020, due to the necessary stimulus measures during the pandemic).

As Trump continues to reduce taxes on fellow oligarchs, tariffs will decidedly not make up for the lost revenue. A study by the Wharton School, the elite business school of the University of Pennsylvania, estimated that Trump’s economic policies will increase the US deficit by $5.8 trillion over the next decade.

Nevertheless, the sudden interest in tariffs shown by US billionaires is about much more than just taxes; what it is really about is industrial hegemony and economic dominance.

Here is the actual history, which oligarchs like Trump and Andreessen don’t know:

In the 19th and early 20th centuries, the United States used tariffs as a form of infant industry protection, to build up its domestic manufacturing capabilities, following the dirigiste ideas of Alexander Hamilton.

Every advanced economy got its start through protectionism (including Great Britain, France, Japan, South Korea, etc.). The state needed to protect infant industries during the initial industrial “catch-up” period, because it is very difficult for a developing economy to compete with a dominant economic power that already has an established industrial base that benefits from economies of scale.

By the 1940s, the US became the dominant industrial power on Earth, especially after World War Two destroyed its competitors in Europe. In 1946, US net exports were 3.2% of GDP; then, in 1947, they were 4.3% of GDP. This was a peak the US would never see again. (US net exports have been negative without exception since 1976, as the US has run the largest consistent current account deficits ever seen in history, which have only been possible to balance due to the fact that the US prints the global reserve currency, and can thus sell more and more Treasury securities and other financial assets to foreign holders of dollars.)

In the 1940s, US industry no longer had significant competition, so Washington lifted tariffs and began to preach “free trade”. This benefited the US, because at that time it had a large surplus, and insufficient domestic demand, so by imposing “free trade” (often forcibly), it could open new markets for its exports.

The US wasn’t concerned about losing local market share to a foreign manufacturer, because there weren’t any left at the top of the value chain. So US companies could dominate both foreign and domestic markets.

What the United States did was not unique; the British empire did the exact same thing in the mid 19th century. After the UK established industrial dominance, it repealed the Corn Laws in 1846, moved away from strict protectionism, and began to impose “free trade” on its colonies. (This history was detailed by economist Ha-Joon Chang in his groundbreaking book Kicking Away the Ladder.)

However, something happened in the 21st century that changed everything: the People’s Republic of China carried out the most remarkable campaign of economic development in history.

By 2016, China overtook the United States as the largest economy on Earth (when GDP is measured at purchasing power parity, according to IMF data).

Even more importantly, China rapidly industrialized and established itself as
the “world’s sole manufacturing superpower”, responsible for 35% of global gross production.

Meanwhile, the US lost its industrial hegemony, due to the deindustrialization and financialization of its economy in the neoliberal era. The US capitalist class decided it would much rather be the banker of the world rather than the factory of the world, because creating parasitic financial and tech oligopolies that use monopolistic market control and intellectual property to extract rents is much more profitable than actually making things.

Just 10% of US GDP consists of manufacturing. More than double, 21%, is made up by the FIRE sector: finance, insurance, and real estate.

Today, US companies can no longer compete with Chinese firms. So what is the response of the US government, which is the representative of US monopoly capital? It has abandoned the “free trade” ideology it had spent decades imposing on the world, and has instead returned to its old strident protectionism.

During his first administration, Trump launched a trade war on China. But this is totally bipartisan (as is the case with almost all US wars). Joe Biden has continued Trump’s trade and tech war on China, imposing even more tariffs.

Demagogues such as Trump like to scapegoat China for the problems that were caused by US oligarchs like him and Andreessen, who got much, much, much richer thanks to the deindustrialization and correspondent financialization of the US economy.

Now they think tariffs are the panacea that will fix everything. But they won’t, because the US industrial base has seriously eroded, and that can’t be rebuilt quickly; it takes many years.

Even more importantly, billionaire oligarchs on Wall Street — who are close friends and allies of Trump, Andreessen, Vivek Ramaswamy, and Elon Musk — will fight tooth and nail against a significant devaluation of the dollar, which would be needed to re-industrialize, reduce production costs, and disincentive imports. Financial speculators want a strong dollar, to keep inflating the biggest bubble in the history of US capital markets.

So the logical result of this is that Trump will use tariffs not truly to re-industrialize, but rather for two main reasons: one, to justify cutting taxes even further on the rich (thereby increasing US public debt, which will be pointed to to demand neoliberal austerity and slashes to social spending); and two, to escalate the new cold war on China, which is a bipartisan gift to the Military-Industrial Complex that will only distract from the domestic problems caused by the US ruling class and externalize the blame.

While the US provokes chaos, China promotes development

Embedded below are the video and transcript of the 36th episode of Geopolitical Economy Hour, in which Radhika Desai, Michael Hudson and Mick Dunford discuss the significance of the 75th anniversary of the Chinese revolution; the reasons for China’s continued economic successes; China’s role in the construction of a multipolar system of international relations; China’s people-centred development versus the West’s capital-centred development; the structure of the Chinese economy and land ownership; the likely impact on China of a new Trump presidency; and much more.

The video and transcript were first published on Geopolitical Economy, edited by Ben Norton.

Transcript

RADHIKA DESAI: Hello and welcome to the 36th Geopolitical Economy Hour, the show that examines the fast-changing political and geopolitical economy of our world. I’m your host, Radhika Desai.

MICHAEL HUDSON: And I’m Michael Hudson.

RADHIKA DESAI: And working behind the scenes to bring you our show every fortnight are our host Ben Norton, our videographer Paul Graham, and our transcriber Zach Weisser.

Thanks to many conferences I’ve been to, our usually fortnightly show has become a monthly show, that is, it’s been a month since our last show. And what a month it’s been. The historic U.S. election results came in while I was at the Valdai Discussion Club conference.

Traditionally, it ends with a speech, usually a landmark speech, by President Putin. This time was no different. Two days after the U.S. election results had been declared, Putin reviewed the fundamental principles of Moscow’s foreign policy, giving a wide berth to the U.S. election results. However, he ended with two key sentences that laid bare Moscow’s stance towards them.

Putin said, “Everyone should be clear that putting pressure on us is useless, but we are always prepared to sit down and talk based on the consideration of mutual legitimate interests in their entirety.”

“In that case, there may be little doubt that 20 years from now, in the run-up to the 100th anniversary of the United Nations, future guests of a Valdai Club meeting will be discussing much more optimistic and life-affirming topics than the one we are compelled to discuss today.”

That was what Putin said at Valdai.

The U.S. election results were followed by the almost immediate collapse of the German government. A Western discursive shift from the illusion that Ukraine could defeat Russia to talk of a negotiated end to the conflict, even with territorial concessions. Announcements of layoffs in German industry, which picked up pace at a funereal drumbeat.

Trump’s cabinet appointments, the resumption of the Syrian conflict, the apparent ceasefire between Israel and Hezbollah, which has been immediately violated, a Georgian attempted color revolution, the Baku COP meeting, the Sri Lankan elections that brought a Marxist to power; the list is very long.

Indeed, in retrospect, the liminal period between the U.S. presidential election in early November and the U.S. presidential [inauguration] in late January was bound to be rocky, and so it is proving to be. Our conversation will likely touch on many of these topics.

However, for the leitmotif of the conversation today, we’ve chosen a topic we’ll be meaning to cover this year; the 75th anniversary of the Chinese Revolution, which most of you know took place in 1949.

For if the United State’s destructive and malevolent presence can be seen in each one of the events rocking the world today, so is China’s constructive and benign [presence].

An entire army of U.S. and Western commentators are busy trying to talk down the Chinese economy, the foundation of China’s international influence.

It is allegedly suffering from the prospect of deflation, faces Japanification, has a real estate crisis and is losing domestic legitimacy. Moreover, we are told, it will not be able to stand up to U.S. sanctions.

So clearly, to understand China’s role in countering the U.S., we need to understand the secrets of the longevity of the Chinese Revolution.

To do this with us today is a familiar guest, Professor Mick Dunford of Sussex University and of the Chinese Academy of Sciences. Mick, as you know, is a geographer and a scholar of China. And as we have seen in other shows, he also keeps a keen eye on events in Russia, in Europe, and the world in general. So welcome, Mick.

MICK DUNFORD: All right. Thank you very much, Radhika. And thank you, Michael. It’s a great pleasure to join you again.

RADHIKA DESAI: Yes, we’re really pleased to have you. And I want to start, Mick, with a very important article you wrote recently, in which you provided a framework for the understanding of the history of revolutionary China’s success along two parameters.

One was about how China’s development has been determined by the interaction of internal and external constraints, and these constraints caused regular crises, but China had to operate within them.

And the other parameter was exactly how the Communist Party of China experienced these crises and these constraints and responded to them. So perhaps you can start us off by laying out briefly how you understand China’s achievements.