Category: Economics

Jeffrey Sachs: The US economic war on China

In this latest article from his syndicated New World Economy column, Professor Jeffrey Sachs (Director of the Center for Sustainable Development at Columbia University) argues convincingly that – despite its protestations to the contrary – the US is waging an economic war on China, and that the US is losing.

Sachs writes that “starting around 2015, US policy-makers came to view China as a threat rather than a trade partner”, following the realization that China was not going to accept a permanent position at the bottom of US-led global value chains, but was in fact advancing “to the cutting edge of robotics, information technology, renewable energy, and other advanced technologies.”

The Trump administration launched a full-scale economic war against China, which the Biden administration has only escalated. One result is a significant decrease in US-China trade: “Between June 2022 and June 2023, US imports from China fell by a whopping 29 percent.” Naturally this has affected China’s economy in the short-term, but the long-term damage will be to the US, since China’s deep economic relations with the countries of Africa, Asia, Latin America, the Middle East, the Caribbean and the Pacific render it relatively less vulnerable to the US’s coercion. “China can substantially increase its exports to the rest of Asia, Africa, and Latin America, through policies such as expanding the Belt and Road Initiative.”

Sachs concludes that “the US attempt to contain China is not only wrongheaded in principle, but destined to fail in practice.”

China’s economy is slowing down. Current forecasts put China’s GDP growth in 2023 at less than 5%, below the forecasts made last year and far below the high growth rates that China enjoyed until the late 2010s. The Western press is filled with China’s supposed misdeeds: a financial crisis in the real-estate market, a general overhang of debt, and other ills. Yet much of the slowdown is the result of US measures that aim to slow China’s growth. Such US policies violate World Trade Organization rules and are a danger to global prosperity. They should be stopped.

The anti-China policies come out of a familiar playbook of US policy-making. The aim is to prevent economic and technological competition from a major rival. The first and most obvious application of this playbook was the technology blockade that the US imposed on the Soviet Union during the Cold War. The Soviet Union was America’s declared enemy and US policy aimed to block Soviet access to advanced technologies.

The second application of the playbook is less obvious, and in fact, is generally overlooked even by knowledgeable observers. At the end of the 1980s and early 1990s, the US deliberately sought to slow Japan’s economic growth. This may seem surprising, as Japan was and is a US ally. Yet Japan was becoming “too successful,” as Japanese firms outcompeted US firms in key sectors, including semiconductors, consumer electronics, and automobiles. Japan’s success was widely hailed in bestsellers such as Japan as Number One by my late, great colleague, Harvard Professor Ezra Vogel.

In the mid-to-late 1980s, US politicians limited US markets to Japan’s exports (via so-called “voluntary” limits agreed with Japan), and pushed Japan to overvalue its currency. The Japanese Yen appreciated from around 240 Yen per dollar in 1985 to 128 Yen per dollar in 1988 and 94 Yen to the dollar in 1995, pricing Japanese goods out of the US market. Japan went into a slump as export growth collapsed. Between 1980 and 1985, Japan’s exports rose annually by

7.9 percent; between 1985 and 1990, export growth fell to 3.5 percent annually; and between 1990 and 1995, to 3.3 percent annually. As growth slowed markedly, many Japanese companies fell into financial distress, leading to a financial bust in the early 1990s.

Continue reading Jeffrey Sachs: The US economic war on China

Mao Zedong’s ‘A Critique of Soviet Economics’: bringing the ‘political’ back into ‘economy’

We are very pleased to republish this important article by Dr. Joe Pateman, which originally appeared in the World Review of Political Economy (Volume 13 Issue 4).

In his article, Joe presents a detailed analysis of Mao Zedong’s ‘A Critique of Soviet Economics’, which was published in unofficial translation by Monthly Review Press in 1977.

The author argues that, since its inception, Marxism has showcased the scientific superiority of political economy over economics. Mao Zedong, he notes, played an important role in demonstrating this superiority. In ‘A Critique of Soviet Economics’, the Chinese revolutionary leader criticised Soviet political economy for its economic focus, which underestimated the importance of politics and ideology. Mao’s critique addressed both Soviet leader JV Stalin’s 1951 work, ‘Economic Problems of Socialism in the USSR’ as well as a more substantial early post-Stalin Soviet textbook on political economy, reserving considerably more stringent criticism for the latter.

It was essential, Mao argued, to explore how the political and ideological superstructure affects the economic base. Only then can political economy scientifically understand the processes of socio-economic development, most notably the socialist revolution and period of socialist construction. Joe’s article further contends that Mao’s arguments retain key insights for the study and development of Marxist political economy today. They remain especially important in the People’s Republic of China. By upholding and enriching Mao’s insights into the critical role of politics and ideology under socialism, the Communist Party of China has ensured the successful development of socialism with Chinese characteristics.

Developing his arguments, the author begins by outlining the historical context, contents, and ideological perspective of Mao’s argument. He then examines the work itself, focusing on Mao’s theses concerning the relationship between the economic base and the political–ideological superstructure in the study of political economy, specifically as they relate to the processes of social change, socialist revolution, and socialist construction. Finally, the article argues that Mao’s analysis provides contemporary insights into the theory and study of political economy, the socialist revolution, and the successful construction of socialism in modern China.

Giving a historical context, Joe notes that the approach adopted by Mao can be traced at least as far back as the Yan’an period (late 1935 to early 1947), citing, in particular, the Chinese leader’s articles, ‘On Practice’ and ‘On Contradiction’, along with his lecture notes on dialectical materialism, all of which were written in 1937. He further tackles such issues as the role of politics and ideology in the socialist revolution, that socialist revolutions are more likely to occur in economically backward countries, the role of politics and ideology under socialism, the law of value under socialism, the relationship between industry and ideology, between economic and political rights, between economic and ideological incentives, and the role of politics and ideology in the Great Leap Forward.

Regarding the thesis that socialist revolutions are more likely to occur in economically backward countries, Joe notes that Mao referenced a quotation from Lenin claiming that the socialist revolution would be more difficult for the more backward countries. Although, according to Mao, this view was correct when Lenin expounded it in the late nineteenth and early twentieth centuries, it had become obsolete by the mid-twentieth century. In fact, the opposite proposition was now true.

“In connection with this, Mao supported Lenin’s [later] view that the socialist revolution will occur in the countries constituting the weakest links of the imperialist chain, not the strongest ones. In making this point, he emphasised that revolutions sometimes begin in the political and ideological superstructure before extending to the economic base. For the most part, this principle remains true. Most socialist revolutions have occurred in countries with relatively low levels of economic development and/or weak superstructures. Today, the developed Western capitalist countries are the countries least likely to undergo socialist transitions, precisely because they have developed pervasive capitalist ideologies and resilient political systems. The socialist movements are at their weakest in these countries, since many of the workers support capitalist ideology, and because the political systems are durable. By contrast, the socialist movement has been stronger and more successful in Latin America, where the living standards are lower due to slower economic growth, and where the political systems are fragile and corrupt. In these countries, the masses have been more supportive of socialist ideologies.

“Accordingly, when examining the prospects of socialist revolutions in the near future, political economists should focus their attention upon the countries with slow economic growth and weak superstructures, and not the countries of the developed capitalist world. In the short term, the future spread of socialism will occur first in the developing Global South, rather than the developed Global North. Mao Zedong was a leading proponent of this idea.”

Turning to the contemporary relevance of Mao’s work, Joe notes that his critique encouraged the Chinese party to depart from the Soviet approach more completely, and thereby develop an independent Marxist approach to political economy. Upon the basis of Mao’s insights, and under his leadership, the CPC was able to chart its own course of economic development, one that more accurately reflected the application of Marxism-Leninism to China’s unique circumstances.

After Khrushchev took office, Joe continues, the CPSU began to weaken its leading role in society, and it neglected the tasks of party building. This also resulted in the party’s distancing and alienation from the masses. When the CPSU lost its leading role, the Soviet Union collapsed instantaneously. However:

“The remaining socialist states—China, Cuba, Vietnam, Laos, and North Korea—have survived the Soviet collapse and have flourished precisely because they have not underestimated the role of politics and ideology in the process of socialist and communist construction. Whilst recognising the importance of economic factors, including the productive forces and relations of production, these countries have also sought to develop strong and stable political systems, whilst imbuing the people with socialist ideology. These two factors—politics and ideology—have been key to the successful functioning and development of the modern socialist states. They have developed their economic systems not in isolation from the political and ideological superstructure, but instead under the close guidance of this superstructure. Once again, this is something that economic analyses have failed to recognise.”

Specifically regarding China, the CPC has consistently maintained Mao’s principles of “politics in command” and the “mass line” as core characteristics of socialism with Chinese characteristics. Since Mao’s death, the CPC has taken seriously the tasks of party building, as well as the principle of enhancing the party’s leading role in every sphere of society. The CPC’s emphasis on developing its leadership capacity is rooted in Mao’s legacy. During every moment of economic development, and at every stage of the gradual reform and opening of China’s economic system, the CPC has led the process, and has retained total oversight over the structural economic development of Chinese socialism. At no point has the CPC decided that economic forces should dominate the political ones in the stabilisation and growth of its socio-economic system.

Hence the author contends that, if Soviet society had managed to preserve a powerful willpower factor associated with the political superstructure, as happened in China, then the economic difficulties of the 1980s would not in themselves have posed a mortal threat to the Soviet system. The Chinese experience of economic reforms shows that in the presence of political will, a socialist society, in principle, is capable of successfully solving any economic problems. He adds:

“Mao’s ‘A Critique of Soviet Economics’ also illuminates the essence of socialism and communism. In contrast to the Soviets, who viewed economic factors as the primary indicators of socialism, Mao argued that the political factors are just as essential. This insight remains relevant today. Since Deng Xiaoping began China’s economic reforms, Western analysts have accused China of abandoning socialism for capitalism. They claim that China is a capitalist country, rather than a socialist one, because it contains private enterprise and markets. This widespread perspective is founded upon the erroneous tendency to define socialism in purely economic terms. As Mao established, however, socialism is not a purely economic phenomenon.

Socialism is also fundamentally a political phenomenon. It entails the political supremacy of the working class, in addition to its economic supremacy. Once the political aspect is considered, it becomes evident that China is in fact a socialist country, since supreme political power is in the hands of one class, the working class, with the Communist Party of China as its leading representative. In China, the working class wields supreme political power, and it uses this political power to regulate and direct the economic sphere of society. As such, there is no basis for the view that China has abandoned socialism for capitalism. This claim is false in both the economic and political senses.”

However, Joe argues that, as well as offering contemporary insights, Mao’s arguments concerning the role of politics and ideology under socialism also contain limitations. “Like Soviet political economy, Mao’s one-sided analysis underestimated the importance of socialist commodity–production relations…Mao’s approach and Soviet policy shared the same fundamental error—they both underestimated the importance of commodity–production relations. In the Soviet case, this error had grave consequences. It contributed to economic stagnation and the collapse of socialism. In the case of China, Mao’s error was not fatal to socialism, though it was a factor in the Great Leap Forward’s failure to advance China’s economy as successfully as possible…Thankfully, however, Deng Xiaoping corrected Mao’s errors when he took office. Whilst upholding Mao’s achievements, Deng showed a greater appreciation for the importance of objective factors in the development of socialist society associated with the dialectics of productive forces and production relations. And now, in a new era of socialism with Chinese characteristics, China clearly demonstrates the creative synthesis of Mao Zedong’s ideas aimed at strengthening political power, and Deng Xiaoping’s ideas related to the conscious use of commodity–production relations for the development of the productive forces of a socialist society.”

In conclusion, Joe writes that: “Mao defended his ‘A Critique of Soviet Economics’ not with abstract principles, but by advancing a concrete analysis of modern society, and by pointing to the actual historical experience of socialism, especially the development of socialism in China. His defence of political economy has been vindicated by the success of the Communist Party of China, which has managed to produce the most rapid economic growth in human history. The CPC achieved this growth by retaining the principle of politics in command, by relying on the masses, and by utilising the power of socialist ideology to solve the tasks of communist construction. These principles of political economy draw directly upon Mao’s intellectual labours; and will guarantee the future prosperity and success of China.”

Joe Pateman is currently a Teaching Associate at Sheffield University in the UK. His key research interests include Marxism-Leninism, the politics of the Democratic People’s Republic of Korea (DPRK), and the black liberation struggle, as well as their interrelationship. He is the co-author of two books and the author of numerous articles published in academic and scholarly journals.

World Review of Political Economy (WRPE) is a quarterly, peer-reviewed journal, published by Pluto Journals as the official publication of the World Association for Political Economy (WAPE). The WAPE Secretariat is based at the Shanghai University of Finance and Economics and the WRPE Editorial Office is located at the Academy of Marxism, Chinese Academy of Social Sciences, in Beijing.

Abstract

Since its inception, Marxism has showcased the scientific superiority of political economy over economics. This article argues that Mao Zedong played an important role in demonstrating this superiority. In his A Critique of Soviet Economics, Mao criticised Soviet political economy for its economic focus, which underestimated the importance of politics and ideology. It was essential, Mao argued, to explore how the political and ideological superstructure affects the economic base. Only then can political economy scientifically understand the processes of socio-economic development, most notably the socialist revolution and period of socialist construction. This article argues that Mao’s arguments retain key insights for the study and development of Marxist political economy today. They remain especially important in the People’s Republic of China. By upholding and enriching Mao’s insights into the critical role of politics and ideology under socialism, the Communist Party of China has ensured the successful development of socialism with Chinese characteristics.

Continue reading Mao Zedong’s ‘A Critique of Soviet Economics’: bringing the ‘political’ back into ‘economy’

What we defend, what Wall Street wants to destroy

The following article by Sara Flounders unpicks US Treasury Secretary Janet Yellen’s recent demands that China “shift to a market-oriented system”, drop its putative “coercive actions against American firms”, and participate in the US’s unilateral and unenforceable sanctions against Russia.

Sara points out that the US is in no position to complain about China’s subsidies to state-owned enterprises, given that “every capitalist economy, including that of the US, subsidizes key industries”; some of those who suffered ruinous poverty as a result of the 2008 financial crisis may remember the trillions of dollars of subsidies that bailed out the banks rather than the poor. Meanwhile calls for China to end “barriers to market access for foreign firms” ring decidedly hollow in the light of hundreds of US trade barriers and sanctions on China.

China’s use of “non-market policies” is not in itself the source of the US’s escalating hostility. “Most frustrating to the imperialists is that the socialist development of the economy is guided by the 90-million member, popularly supported Communist Party of China. There is a party cell in every workplace, school and neighborhood. This is what US politicians and corporate investors consider a ‘dictatorship,’ restricting their freedom. On the other hand, unelected billionaires making all decisions are proof of ‘democracy.'”

Sara observes that China’s socialist strategy has brought about “the largest and most rapid improvement in material conditions in modern history”. Furthermore, via its Belt and Road Initiative and other programs, China is enabling the emergence of a truly multipolar order – a serious threat to the US-led imperialist system. The article concludes that Chinese socialism is creating important gains for the global working class, and should be defended and supported. “It is in the interests of workers here to defend China and condemn the onerous demands of US imperialism.”

The article was first carried in Workers World.

What is the material basis of the growing hostility on every level of the U.S. ruling class toward China?

No great struggle is based on the personalities or aspirations of individuals. At the root is a very concrete, material basis that drives the conflict. Otherwise, meetings, discussions and diplomacy would succeed. These techniques can paper over differences – but not fundamentally resolve them.

Secretary of the Treasury Janet Yellen’s talk on June 7 to a group of U.S. businesspeople at the American Chamber of Commerce in China exposed how well these U.S. corporate heads understand the basic, irreconcilable difference. They are deeply frustrated about their inability to maintain their dominant global position, as well as by China’s non-compliance with their self-proclaimed “rules-based order.” (tinyurl.com/2s45jh53)

Yellen is a top capitalist economist. She is a former Chair of the Federal Reserve and headed the White House Council of Economic Advisors. Yellen has taught economics at Harvard, Yale and the London School of Economics. Her words carry weight and reflect the thinking of imperialist think tanks, strategists, politicians and businesspeople. 

Yellen’s talk in China was similar to a longer presentation she gave at the Johns Hopkins School of Advanced International Studies on April 20, published in preparation for her announced trip to China. It sharply defined the Biden administration’s demands on China. 

Continue reading What we defend, what Wall Street wants to destroy

How China became the world’s industrial superpower – and why the US is desperate to stop it

In this detailed and informative video explainer on Geopolitical Economy Report, Ben Norton discusses China’s extraordinary rise and the economic dynamics of the New Cold War.

Ben notes that in 1950, China represented just 5 percent of global GDP. In purchasing power parity (PPP) terms, it currently represents 19 percent of global GDP, compared to 15 percent for the US. No other country in history has undergone such a dramatic transformation in so short a period. Ben makes the critically important point that this progress is the result of socialist, not capitalist, economics. He notes that in China’s socialist market economy, the commanding heights, including finance, infrastructure, transport and energy, are run by the state, and that the state continues to guide the economy overall, via five-year plans and multiple other mechanisms. China’s strategy has succeeded in transforming an overwhelmingly agrarian country into a leading industrial power, thereby creating the resources needed to develop more advanced socialism.

China’s rapid industrialization has led to it becoming the world’s largest manufacturer, and a leading innovator in advanced industry. This has some important – and contradictory – consequences for the West. Firstly, the West – and particularly the US – has been deindustrializing while China has been industrializing, and it now finds itself in a position where it is unable to outcompete China in terms of industrial innovation. This leads the US towards notions of ‘decoupling’ and trying to engage in various forms of economic coercion to suppress China’s rise. Secondly, however, China has become the global manufacturing center, and its high levels of productivity and innovation make it integral to multiple crucial value chains. As such, Western companies tend to be unwilling to ‘decouple’ or divest from China.

These competing needs are fomenting divisions within the Western ruling classes and are leading to decidedly incoherent foreign policy in Washington, London and elsewhere. The US is intent on preventing China from continuing to develop and becoming the world’s foremost economy, and yet the US’s financialized capitalism lacks the means to compete with (or indeed decouple from) China.

Richard D Wolff: The fatal contradictions of China-bashing

This short essay by Marxist economist Richard D Wolff assesses the frenzied China-bashing that the US political and media mainstream is currently engaged in. Wolff observes that the wave of sinophobic propaganda is designed to “provide convenient cover” for US attempts to militarily intimidate and economically strangle China.

Additionally, scapegoating China provides a convenient way for the US ruling class to deflect criticism of a vicious neoliberal capitalism that has working people experiencing a chronic decline in living standards. “Scapegoating China joins with scapegoating immigrants, BIPOCs, and many of the other usual targets. The broader decline of the U.S. empire and capitalist economic system confronts the nation with the stark question: whose standard of living will bear the burden of the impact of this decline?” As long as China can be blamed for all problems, the US government can continue with its program of austerity, deregulation and inflation.

The author points out that antagonizing, and decoupling from, China could prove to be highly detrimental to the US economy. He calls on people to “see through the contradictions of China-bashing to prevent war, seek mutual accommodation, and thereby rebuild a new version of the joint prosperity that existed before Trump and Biden.”

This article was originally published in Asia Times.

The contradictions of China-bashing in the United States begin with how often it is flat-out untrue.

The Wall Street Journal reports that the “Chinese spy” balloon that President Joe Biden shot down with immense patriotic fanfare in February did not in fact transmit pictures or anything else to China.

White House economists have been trying to excuse persistent US inflation saying it is a global problem and inflation is worse elsewhere in the world. China’s inflation rate is 0.7% year on year.

Financial media outlets stress how China’s GDP growth rate is lower than it used to be. China now estimates that its 2023 GDP growth will be 5-5.5%. Estimates for the US GDP growth rate in 2023, meanwhile, vacillate around 1-2%.

China-bashing has intensified into denial and self-delusion – it is akin to pretending that the United States did not lose wars in Vietnam, Afghanistan, Iraq and more.

The BRICS coalition (China and its allies) now has a significantly larger global economic footprint (higher total GDP) than the Group of Seven (the United States and its allies).

China is outgrowing the rest of the world in research and development expenditures.

The American empire (like its foundation, American capitalism) is not the dominating global force it once was right after World War II. The empire and the economy have shrunk in size, power and influence considerably since then. And they continue to do so.

Putting that genie back into the bottle is a battle against history that the United States is not likely to win.

Continue reading Richard D Wolff: The fatal contradictions of China-bashing

Renewable energy development is less important than stopping Chinese industry!

In this brief but incisive blog post, Canadian anti-imperialist writer Justin Podur unpacks the contradictory remarks made by US Treasury Secretary Janet Yellen during her visit to Beijing, complaining about China’s use of state subsidies in certain parts of its economy. As Justin points out, “if the market system is the best and most efficient, why would Yellen complain about China using state subsidies or protections and interfering in it? Wouldn’t that just allow the US to use the market to win the game?” And why would they want China to adopt measures that would – according to free-market fundamentalism – accelerate its rise?

The reality is that the US wants Beijing to adopt an economic strategy that “would actually destroy the basis of China’s growth and ensure its subordination to the US.” One side-effect of this is that it would cause a major disruption to the solar energy industry, in which China is dominant (Justin notes that China holds 80 percent of photovoltaic patents worldwide). As such, “the imperialist anxiety to stop the rise of Chinese industry conflicts with the green priority for a transition to renewables.” But in this battle of priorities between hegemonism and the environment, the US is siding with hegemonism. An important reminder that the struggle against the New Cold War is also a struggle to keep the planet habitable.

Janet Yellen went to China and warned them there would be consequences if they didn’t adopt a market economy. There’s so many admissions in this little statement that shouldn’t go unnoticed. If the market system is the best and most efficient, as its proponents claim, why would Yellen complain about China using state subsidies or protections and interfering in it? Wouldn’t that just allow the US to use the market to win the game? If the market is the “cheat code”, as the gamers say, then how could China “cheat” by using non-market mechanisms? The flip side of the coin is also there. If the US, as its officials repeatedly cry, is desperate to stop the rise of China, why would they advise China to take steps (like market reforms) that should, according to market theory, only accelerate China’s rise? Perhaps it is because Yellen knows market reforms would actually destroy the basis of China’s growth and ensure its subordination to the US.

I want to talk about one of these Chinese industries that has grown up under state subsidy and protection that is – again according to Western environmentalists – very important in the struggle against climate change: photovoltaics (solar panels) and other renewable energy technologies.

There’s this video from a youtube channel called Tech Teller that outlines some details about the rise of China’s PV industry. The news hook for the video was the arrest of a Chinese PV executive, Pu Yonghua of Jiangsu Green Power New Energy, in Germany. It looked like Germany was going to pull a Canada (with the kidnapping of Meng Wanzhou of Huawei) and get into a pointless years-long conflict at US urging. But it looks like Pu Yonghua was released a few days later.

Tech teller’s video provides some “startling figures” about China’s dominance in PV:

  • of 150,000 PV patents worldwide, Chinese companies hold 120,000 of them.
  • The top ten PV companies in the world are all Chinese.
  • Chinese PV has a market share of 60% in the US and peaked at 95% in the EU. EU’s domestic PV capacity accounted for 3% of market share there.
  • 200 countries are customers of Chinese PV products.

The EU’s attempt to raise its renewable energy use to reduce its dependence on Russian gas is ultimately a plan to transfer its dependence on Russia — to China.

China’s PV industry is so far ahead that the US and EU industries are going to have a lot of difficulty catching up. This despite, as the video tells, depraved and repeated attempts to stop China from developing by both the US and EU.

There are problems with PV, as environmentalists like Stan Cox have noted, including the mining footprint of rare earths and the use of fossil fuels in their production. But there is a Green consensus on the need to get off of fossil fuels and PV technology will be key to get there. The imperialist anxiety to stop the rise of Chinese industry conflicts with Green the green priority for a transition to renewables. It is another case of Western imperialism vs the environment. If you believe climate change is an existential issue for the species like nuclear war, you could use Chomsky’s phrase and consider it a choice between Hegemony or Survival.

Which do you think the US will choose?

Strategies of denial: Bidenomics and the New Cold War on China

In this insightful article on New Left Review’s Sidecar blog, Grey Anderson explores the Biden administration’s new industrial strategy (incorporating the American Rescue Plan, the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act), and its connection with the ongoing efforts to suppress China’s economic rise.

Anderson writes that this anti-China orientation is not an “unfortunate by-product” of the $4 trillion spending plan, but its “motivating purpose”. The logic governing the new era of infrastructure spending is fundamentally geopolitical; “its precedent is to be sought not in the New Deal but in the military Keynesianism of the Cold War, seen by the ‘Wise Men’ who waged it as a condition for victory in America’s struggle against the Soviet Union.”

The article notes that export restrictions on AI and semiconductor components are specifically geared towards preventing China from emerging as a major player in these crucial industries, and as such constitute “a veritable declaration of economic war.” The New Cold War, however, is not solely economic, given the US’s renewed commitment to the Quad alliance, its creation of AUKUS, its huge and expanding array of military bases, its growing expenditure on hi-tech weaponry, and its increased supply of arms and military advisors to Taiwan.

The author notes that Washington is currently in a difficult position, in that it must “reconcile the imperative to prevent any state other than itself from dominating one of the great centres of world power (Asia, Europe, the Persian Gulf) with evidence of its citizens’ likely disinclination to back a major international war abroad, after twenty years of unending armed escapades.” The proposed ‘solution’ to this problem appears to be seeking to lure China into aggressive actions, thereby “hardening the resolve of the peoples in the broader coalition to intervene and for those engaged to intensify and widen the war to a level at which they would win it.”

There has been a lively debate on the American left about the Biden Administration’s industrial strategy. Discussion has focused on the prospects opened up by the massive stimulus – totalling some $4 trillion, if we factor in the American Rescue Plan, the Bipartisan Infrastructure Law and the CHIPS and Science Act alongside the Inflation Reduction Act – from training up ‘progressive technocrats’ to retrofit buildings to the feasibility of capitalist state-led ‘decarbonization’ under conditions of global overcapacity and falling economic growth.

So far, assessments have been mixed, differentiating ‘the good, the bad, the ugly’, albeit with the stress on the first. If the boost to employment and ‘green’ good works promised by the IRA cannot be dismissed, nor can its shortcomings: lack of funding for housing and public transport, neutered regulatory standards in the electricity sector, leasing agreements that give oil and gas producers access to public land. ‘The IRA’, a representative appraisal in Jacobin reckoned, ‘is at once a massive fossil fuel industry giveaway, a historic but inadequate investment in clean energy, and our best hope for staving off planetary catastrophe’.

In other words, the left critique has gone beyond ‘good, but not big enough’ – but perhaps not very far beyond. Almost entirely absent in these discussions is the geostrategic rationale that powers this national-investment drive, reshoring production on the US mainland, bagging lithium mines and sponsoring construction of microchip factories, in a militarized bid to outflank China.

Viewed from the halls of power, the anti-China orientation of US industrial policy is not an unfortunate by-product of the green ‘transition’, but its motivating purpose. For its conceptors, the logic governing the new era of infrastructure spending is fundamentally geopolitical; its precedent is to be sought not in the New Deal but in the military Keynesianism of the Cold War, seen by the ‘Wise Men’ who waged it as a condition for victory in America’s struggle against the Soviet Union.

Today, as after 1945, policymakers find themselves at an ‘inflexion point’. ‘History’, wrote future National Security Advisor Jake Sullivan during the 2020 presidential campaign, ‘is again knocking’:

The growing competition with China and shifts in the international political and economic order should provoke a similar instinct within the contemporary foreign-policy establishment. Today’s national security experts need to move beyond the prevailing neoliberal economic philosophy of the past forty years… The US national security community is rightly beginning to insist on the investments in infrastructure, technology, innovation, and education that will determine the United States’ long-term competitiveness vis-à-vis China.

Detailed at length in a report for the Carnegie Foundation, under the signature of Sullivan and a camarilla of other Biden advisers, ‘foreign policy for the middle class’ collapsed factitious distinctions between national security and economic planning. Hopes that globalized doux commerce might permanently induce other powers to accept US hegemony had been deceived. Another approach was in order. ‘There’s no longer a bright line between foreign and domestic policy’, Biden declared in his inaugural foreign policy speech. ‘Every action we take in our conduct abroad, we must take with American working families in mind.’ Trump’s victory, forged in the deindustrialized heartlands of the opioid crisis and ‘American carnage’, had shaken the Democrat establishment. What’s good for Goldman Sachs was no longer, it seemed, necessarily good for America.

Continue reading Strategies of denial: Bidenomics and the New Cold War on China

On economic coercion: Imperialist hypocrisy reigns supreme

In this article for the Morning Star, Andrew Murray takes issue with the G7’s accusations against China over ‘economic coercion’. Andrew points out that this obscenely hypocritical accusation is just the latest excuse for China-bashing. “With Hong Kong now quiet, the Covid pandemic abating and the Dalai Lama asking young followers to suck his tongue, the world’s great capitalist powers have instead united around challenging China’s economic relations with the rest of the world.”

The article details the extensive economic coercion practised by the US, including sanctions on Afghanistan, Belarus, China, Cuba, Eritrea, Russia, Sudan, Syria, Iran, Libya, Myanmar, North Korea, Nicaragua, Venezuela, Yemen, Zimbabwe and Palestine – almost none with UN backing. “The US really loves its sanctions.” Aside from which, the US’s financial domination is built precisely on coercion, in the form of forced austerity, privatisation and deregulation.

China, meanwhile, “has been lending money to countries across the global South to help power their development and give them an option beyond dependence on London and Washington.” Certainly it’s true that China benefits from its loans and investments, but with the all-important difference that “there is no Chinese McDonnell Douglas lurking in the small print of their deals. Beijing is not going to invade or bomb anyone, nor subvert a sovereign government.”

Andrew concludes that the G7’s China-bashing is simply a manifestation of the US and its allies refusal to accept that the days of their “rules-based world order” (ie hegemony) are numbered: “The G7 attacks on China are the sound of the departing masters of the universe raging against the passing of their power.”

A brand new spectre is haunting the head honchos of the world economy — it is “economic coercion.”

Who is doing the coercing? The People’s Republic of China of course.

Having decided to convene, wildly inappropriately, in Hiroshima last month, it was perhaps inevitable that the leaders of the G7 states would devote some time to stoking up international conflict.

Today, that means above all finding fresh reasons to confront China. With Hong Kong now quiet, the Covid pandemic abating and the Dalai Lama asking young followers to suck his tongue, the world’s great capitalist powers have instead united around challenging China’s economic relations with the rest of the world.

Now to accuse imperialists of hypocrisy is akin to accusing the Pope of believing in the resurrection or Keir Starmer of believing in nothing much at all. It is not just a statement of the obvious, it is a key part of the job specification.

Continue reading On economic coercion: Imperialist hypocrisy reigns supreme

“Peak China” – a new low in Western attempts to persuade China to commit suicide

In this detailed article for Guancha (originally published in English on MR Online), British economist John Ross addresses the recent (rehashed) claims by The Econonist that China’s economic development has peaked and that its growth is likely to dramatically slow in the near future.

Noting that The Economist has been making similar pronouncements for the last quarter century, John assesses the specific rationale underlying this most recent claim of ‘Peak China’, which is centered around China allegedly losing its ‘population advantage’. One obvious answer to this is that “China’s average annual population growth from 1978-2022 is 0.9% and China’s annual average GDP growth in the same period is 9.0%.” As such, population size clearly hasn’t been the most important factor driving economic progress in the last four decades, and there’s no reason to believe it would have magically become a key determining factor now.

Far more important to China’s development has been its very high level of investment, coupled with a highly regulated, state-led socialist market economy, with a clear political orientation to meeting the immediate and long-term needs of the Chinese masses. John correctly observes that “it is the CPC, no other political force … which has produced the greatest reduction in poverty in any country in human history, and which overall has produced the most rapid sustained improvement in the living standards of any country in human history.”

That is, China’s extraordinary economic progress is not primarily driven by its large population but by its socialist system and the exceptionally competent and wise leadership of the Communist Party of China.

One of the latest covers of the magazine The Economist carries a headline “Peak China”. This, as its name suggests, is a claim that while during the last seven decades China’s has enjoyed a peaceful “rise”, specifically in relation to the U.S., this has now ended:

Whereas a decade ago forecasters predicted that China’s GDP would zoom past America’s during the mid-21st century (at market exchange rates) and retain a commanding lead, now a much less dramatic shift is in the offing, resulting in something closer to economic parity… One view is that Chinese power will fall relative to that of its rivals… The Peak China thesis rests on the… observation that certain tailwinds are turning to headwinds… All of this is dampening long-run forecasts of China’s economic potential. Twelve years ago Goldman Sachs thought China’s GDP would overtake America’s… and become over 50% larger by mid-century. Last year it revised that prediction, saying China would… peak at less than 15% bigger. Others are more gloomy. Capital Economics, a research firm, argues that the country’s economy will never become top dog, instead peaking at 90% of America’s size in 2035… the most plausible ones [of these projections] seem to agree that China and America will approach economic parity in the next decade or so—and remain locked in this position for decades to come.

The first reaction, was really to literally laugh at what, as will be seen, was the latest of decades long wildly inaccurate predictions by The Economist regarding China. Indeed, the record shows that probably a good working guide to what will happen in China is to take what The Economist says and assume that the opposite will occur! Second, to reflect on what are the deep reasons for such a combination of ignorance and arrogance that it leads to a refusal to make any balance sheet of entirely wrong analyses repeated for these decades but when it still claims to be taken seriously on an issue on which it has such a provenly lamentable record. As the latter applies not only to The Economist but to many other Western publications that make similar claims it will be returned to at the end of this article.

Continue reading “Peak China” – a new low in Western attempts to persuade China to commit suicide

Interview with Roland Boer on the nature of Chinese socialism

In this very interesting and detailed discussion, Roland Boer and Ben Norton delve into a number of the key issues from Roland’s book Socialism with Chinese Characteristics: A Guide for Foreigners. The core of the discussion is around answering the left critique of China’s post-1978 economic reforms: that these constitute a return to capitalism; that Deng Xiaoping and his colleagues were capitalist roaders who sought to overturn socialism via the introduction of market mechanisms.

Roland points out that markets go back thousands of years, long pre-dating capitalism. As such, there’s no equals sign between capitalism and markets; markets existed before capitalism and they can exist after capitalism. The question for socialists is how to use markets within a socialist context; how to use market mechanisms within a framework of an overall planned economy which is directed at meeting the immediate and long-term needs of the people, and preparing the ground for an eventual transition to a classless society.

Roland makes an important distinction between two key aspects of socialism: that of common ownership of the means of production, and liberation of the productive forces. The two do not necessarily always advance in neat and predictable correlation. This is something that is understood by all existing socialist societies – in China, Vietnam, Cuba, Laos and the DPRK. Deng Xiaoping and his colleagues understood very well that a high level of the productive forces was a material prerequisite for China’s development of an advanced socialism and ultimately for communism. The whole purpose of the reform process has been to develop China’s productive forces whilst simultaneously pursuing the fundamental socialist objective of improving people’s lives. On both counts, the process has been phenomenally successful.

Ben contrasts the level of development and living standards in India and China, noting that hundreds of millions in India continue to face devastating poverty, while China is responsible for at least 70 percent of all poverty alleviation in the last four decades. He points out that this disparity is primarily a manifestation of the two countries having different social systems.

The two take on a number of other key questions, including the nature of socialist democracy, the treatment of migrant workers, the household responsibility system, corruption, and the consolidation of Marxism in China under the leadership of President Xi Jinping.

The video was first posted on Ben’s Geopolitical Economy Report channel.

US push to strip China’s developing country status an attack on development itself

The following article by Danny Haiphong, first published on his blog CGTN, discusses the unanimous vote in the US House of Representatives in favour of the ‘PRC Is Not a Developing Country Act’, which directs the State Department to seek the removal of China’s status as a developing country.

Noting that China’s developing country status is very much consistent with its per capita income (five times lower than the US) and overall development level, Danny demonstrates that this action is yet another component of the US’s broader strategy to contain China’s economic rise and geopolitical influence, and is driven by the US’s inability to compete with China’s rapidly advancing state-led economy. Other components of this strategy include the attempt to ban TikTok and the ban on semiconductor exports to China.

As Danny points out, the ‘PRC Is Not a Developing Country Act’ is an attack on development itself. “It is a warning to nations around the world that they risk economic warfare should their success be perceived as a threat to US hegemony.”

On March 28, the U.S. House of Representatives passed the “PRC Is Not a Developing Country Act” by a unanimous vote of 415-0 in yet another demonstration of the solid bipartisanship that exists in the United States when it comes to containing and isolating China. Under the terms of the bill, U.S. Secretary of State Antony Blinken would be directed to seek the removal of China’s status as a developing country from international organizations and institutions.

The United Nations, the International Monetary Fund (IMF) and the World Bank all recognize China as a developing country for good reason. China’s GDP per capita, while rising, is $12,700 or about five times smaller than the U.S.’s. China’s Human Development Index is 79th in the world. It’s committed to improving living standards for all people and has taken its commitments to the international community seriously. Of course, the “PRC Is Not a Developing Country Act” has nothing to do with facts and everything to do with curbing China’s development.

Ending China’s developing country status prematurely would come with consequences. The World Bank and IMF could rescind tariff preferences and low-interest loans. China’s carbon emissions target may increase and the time-frame for meeting them decrease. In other words, China’s development path would become more difficult, which is exactly what the “PRC Is Not a Developing Country Act” hopes to achieve.

Continue reading US push to strip China’s developing country status an attack on development itself

Bank rescue implies US insecurities about technological hegemony

We are pleased to publish this original article by Serena Sojic-Borne – a community organizer in New Orleans and member of Freedom Road Socialist Organization – about the economics and geopolitics of the banking crisis.

Serena locates the origins of this crisis in overproduction in the US technology sector, along with the risk-taking behavior inherent to venture capital. She further explores the link between the situation of the US technology sector and the escalating US-led New Cold War on China. In contrast to the chaos and declining innovation of the tech industry in the US, China is “successfully regulating larger firms and taking advantage of smaller start-ups to fuel technological growth for the socialist state”. The only response the US has is, contrary to all its free market rhetoric, to resort to protectionism. The article cites former chair of the National Security Commission on Artificial Intelligence Jon Bateman recommending that Washington “institute controls in technology areas where China seems close to securing unique, strategically significant, and long-lasting advantages.” This provides important context to, for example, the attempts to ban TikTok.

Hence Cold War attacks on China are, to a significant degree, an expression of a capitalist system that’s running out of steam.

Less than one month before Silicon Valley Bank collapsed, the Chinese Foreign Ministry released “US Hegemony and its Perils,” a report outlining the strategies of US imperialism. Technological monopoly, important among them, now exposes its contradictions. The recent banking panic reflected just how much American capitalism threatens its own technological growth, and the lengths the US will go to salvage it.

SVB relied on the tech industry. During the height of the pandemic, tech boomed as it provided for work and education going remote. The bank’s main depositors came from this sector. As firms rushed to corner their share of the expanding market, SVB scrambled to make new deposits profitable. Lending money wasn’t easy, because the industry rolled in revenue faster than it could re-absorb it. So the bank invested in held-to-maturity securities, such as long-term bonds. The longest-term bonds yielded the best interest rates of the time, even though these rates are unprofitably low today.

The writing was on the wall when the tech industry reached a point of overproduction and reversal in 2021, months before the Fed’s aggressive interest rate hikes began. Big companies laid off workers and small ones closed down. SVB’s loans failed and its deposits started declining. Higher rates only lit the match, and burned up the value of bank’s low interest assets. Silvergate and Signature suffered similar fates because of their similar reliance on a tech-related expansion in cryptocurrency.

Some commentators say this is the story of an interest rate crunch, and blame SVB for failing to diversify its assets. Others recognize the difficulty of doing so when lending opportunities were scarce, and will still blame SVB for being too reliant on one economic sector.

Continue reading Bank rescue implies US insecurities about technological hegemony

China’s Iran-Saudi peace deal is big blow to US economic hegemony

The following thoughtful article by Ben Norton, originally published in Geopolitical Economy Report, discusses the potential geopolitical ramifications of the recently-announced Iran-Saudi peace deal, brokered by China.

The article focuses in particular on the waning power of the US dollar and the possibilities for ending decades of dollar hegemony. Ben points out that the petrodollar system, which the US has leveraged to maintain the dollar as the global reserve currency, is now weaker than it has been since its inception, with China setting up multiple deals in recent years to purchase energy in yuan. The Iran-Saudi peace deal will create space for a further development of this trajectory away from the dollar, and has the potential to fundamentally alter the power balance in the Middle East, with Saudi Arabia shifting away from its traditional role as a regional proxy for US interests.

As Ben writes, “Riyadh’s gradual move away from its historical role, firmly ensconced in the heart of the US-led camp, reflects a larger global trend toward a multipolar world.” At the heart of this global trend is China’s emergence as the world’s largest economy (in PPP terms) and its increasing diplomatic activity in support of multipolarity and a reconfiguration of international relations, based on the principles of the UN Charter. Given that Saudi Arabia now does more trade with China than the US (as is the case for two-thirds of the world’s countries), it is only logical that it should attempt to balance its international relations. Certainly it would be utterly self-defeating for the Saudis to submit to US pressure to join a New Cold War strategy aimed at isolating China and Russia.

The article cites Zbigniew Brzezinski, in his famous The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, warning that “the most dangerous scenario” for Washington’s unipolar hegemony “would be a grand coalition of China, Russia, and perhaps Iran, an ‘antihegemonic’ coalition”. Unfortunately for his successors, and fortunately for the masses of the world, Brzezinski’s nightmare is becoming reality. As Ben concludes, “decades from now, historians will likely look back at the Iran-Saudi agreement as a watershed moment, reflecting China’s new role on the global stage as a negotiator of peace, symbolizing the end of US unipolar hegemony and the rise of a multipolar world.”

China surprised the world on March 10, announcing that it had successfully sponsored peace talks between rivals Saudi Arabia and Iran.

Four days of secret negotiations in Beijing led to a historic agreement in which the two West Asian nations normalized relations, following seven tense years without any official diplomatic ties.

Iraq had previously hosted peace talks between Saudi Arabia and Iran, but these were sabotaged in January 2020 when US President Donald Trump ordered a drone strike to assassinate top Iranian official Qasem Soleimani, who had been involved in the negotiations.

China’s diplomatic breakthrough is part of a larger process of Asian integration, and constitutes a step toward bringing both Iran and Saudi Arabia into the BRICS system and institutions like the Shanghai Cooperation Organization.

In addition to encouraging stability and peace in a region that has been devasted by decades of US wars and meddling, this deal will have huge economic repercussions across the planet.

More tangibly, the agreement is a significant blow to the petrodollar system that the United States has used to maintain the dollar as the global reserve currency, thus threatening the very foundation of its economic hegemony.

Saudi Arabia has long been one of the world’s leading producers of oil, in the top three (along with the US and Russia). Iran has consistently been among the top 10 producers of crude.

As de facto leader of OPEC, Saudi Arabia has significant influence over the price of oil on the global market. Since the 1970s, Riyadh has agreed to sell its crude in dollars and then invest those petrodollars in Treasury securities, helping to strengthen the value of the greenback and increasing global demand for the US currency.

But the petrodollar system is facing new challengers. The Saudi government publicly confirmed in January that it is considering selling oil in other currencies.

This declaration came just a few weeks after Chinese President Xi Jinping took a historic trip to Riyadh. There, Beijing signed agreements with the Gulf Cooperation Council (GCC) and Arab League.

Continue reading China’s Iran-Saudi peace deal is big blow to US economic hegemony

Book review: China’s Economic Dialectic, by Cheng Enfu

We are pleased to republish Andrew Murray’s thoughtful and critical review of ‘China’s Economic Dialectic’, a recent book by Cheng Enfu, one of China’s foremost Marxist scholars, published by New York-based International Publishers. It was originally published in the Morning Star.

Andrew begins by noting that “there are few more important endeavours for the international left than understanding China’s extraordinary development and its meaning for world socialism,” and bemoans the general lack of reference to the work of Chinese scholars and the Communist Party of China in this regard.

Noting that Professor Cheng “locates the present mix of public ownership with substantial private enterprise and preponderant market relationships as appropriate for the primary stage of socialism, but looks forward to advancing to a fully public model to be attained under advanced socialism and finally communism,” Andrew points out that the author is “far from blind to the problems that have emerged as a result of the reforms” and “not afraid to criticise the Chinese government from within a position of overall support.”

In outlining his view of the shortcomings in Cheng’s work, Andrew cites a lack of “real reflection on the strengths and shortcomings of the ‘planned product economy’ as it actually existed in the USSR and in China itself until 1978.”

In conclusion he recommends it as “rewarding for those wanting to really grapple with the exceptional dynamics of China’s development and its socialist nature.”

The editors of this website do not necessarily agree with all of Andrew’s observations and assertions, but we unequivocally welcome the serious attention given to this subject by one of Britain’s most erudite Marxists and his contribution to a vital debate.

AS THE late Giovanni Arrighi stated: “If China is socialist or capitalist it is not like any previously encountered model of either,” and there are few more important endeavours for the international left than understanding China’s extraordinary development and its meaning for world socialism.

Such work is often bedevilled by an over-reliance on Western-generated analyses of China, as if the studies and understandings of Chinese scholars and the Communist Party of China themselves were of little use.

Cheng Enfu’s book is extremely helpful in this context. Cheng is a leading Chinese Marxist academic who has clearly thought deeply about China’s development as a socialist state.

His book examines economic policy in China from a variety of angles.

He locates the present mix of public ownership with substantial private enterprise and preponderant market relationships as appropriate for the primary stage of socialism, but looks forward to advancing to a fully public model to be attained under advanced socialism and finally communism.

Correctly, he claims that “the tremendous achievements China has realised during its 30 years of reform and opening up are not the result of following Western mainstream economics, or of implementing policies the derive from it”, and not least in respect of making the finance sector serve the productive economy.

Continue reading Book review: China’s Economic Dialectic, by Cheng Enfu

Cheng Enfu: Marx’s Capital still shines with the light of truth

We are pleased to publish this speech by Professor Cheng Enfu on the contemporary relevance of Marx’s Capital, given at a recent webinar organised by the International Manifesto Group.

The core theme of Cheng’s presentation is that Capital has lost none of its relevance or applicability, and indeed is enjoying a resurgence of interest in response to the imperialist crisis. “Whenever the world faces a major dilemma or encounters a major setback, Marx always reappears in a new way, and people always look to Capital to find a way out of the global problems of the day.” Although Volume 1 of Capital appeared over 150 years ago, there is still “no theory in mainstream Western economics comparable to Capital in terms of understanding the reality and development of the contemporary world.”

In terms of the relevance of Marx’s economic teachings to contemporary Chinese socialism, Cheng points to the contradictory nature of capital: as a force for technological progress, and as a force for reproducing poverty and vast inequality. The unlimited expansion of financialized capital “has led to the intensification of the basic contradictions of capitalism in all countries and the whole world, with widening gap between rich and poor in wealth and income distribution within and between countries, leading to increasingly serious global problems.” The key lesson for China’s socialist market economy is the crucial importance of “overcoming the greedy nature and the disorderly expansion and monopoly of non-public capital” such that capital can better serve the interests of the people.

Professor Cheng joins the dots between Marx’s economic analysis and today’s global anti-imperialist struggle, stating that “we must resolutely oppose private monopoly capital, international financial monopoly capitalism and neo-imperialism, work together to actively safeguard the rights and welfare of the working class and the working people at large, resist the US-led West’s efforts to contain the peaceful development of China, Russia, North Korea, Iran and Syria, and bring into better play the economic role of progressive Third World countries such as China.”

Professor Cheng Enfu is Principal Professor of the University of the Chinese Academy of Social Sciences, and Editor-in-Chief of World Review of Political Economy and International Critical Thought.

Hello everyone. Today, the title of my presentation is The Essence of Capital and Its Contemporary Value.                   

The capitalist world has changed dramatically since the publication of Capital, but this work of Marx has not become obsolete. Whenever the world faces a major dilemma or encounters a major setback, Marx always reappears in a new way, and people always look to Capital to find a way out of the global problems of the day. As long as capitalism and the market economy exist, Capital as a work that reveals its mysteries and economic laws, is unlikely to leave the stage. As a “Marxist encyclopedia,” the methodology and principles contained in Capital still shine with the light of truth and are of great practical significance.

First, Capital provides a scientific approach to understanding societies. In Capital, Marx organically integrates philosophy with economics, applies dialectics to the study of political economy, and has historical materialism and dialectics highly unified in the analysis of the evolution of the life and death of the capitalist market economy. Capital is mainly a study of the economic mode of capitalist society. Marx regarded the development of society as the result of contradictory movements and believed that the law of contradictory movements of the productive forces and relations of production as well as that of the economic base and superstructure is the general law of development of human society and its fundamental driving force. It determines the change of social formation and the basic trend of historical development. Marx analyzed the operation and development of capitalist economy by applying the law of unity of opposites, the law of quantitative and qualitative changes, and the law of the negation of negation, as well as methodologies such as class analysis; he studied the process of capitalist social and economic development by applying the scientific findings of historical materialism, and came to the scientific conclusion that capitalist system is not eternal, but is bound to be replaced as the contradiction between the productive forces and the relations of production evolves. To date, there is no theory in mainstream Western economics comparable to Capital in terms of understanding the reality and development of the contemporary world. I recently edited a textbook titled New Political Economy. The English version will be published soon. It is a synthesis of Marx’s Capital and his planned six volumes on political economy, creating a new system of “five processes” in modern political economy. I wish that the textbook may be available to you in some way since your comments and suggestions would be very valuable.

Second, it establishes the subject status of workers. Labor theory is at the core of Capital, and is a line running through historical materialism, political economy and scientific socialism, which is of great significance to the world today in firmly establishing the subject position of workers in the creation of wealth and value. Marx once pointed out that as long as society does not yet revolve around labor as the earth around the sun, it can never reach a state of equilibrium. Marx’s comparison of labor to the sun is sufficient to see the position of labor in his thought. Labor is the core of the Marxist paradigm and system. Not only does labor determine and condition the structure, nature and appearance of society, but the labor conditions would determine the conditions of human development. Marx presents the labor theory of value in Capital, arguing that living labor is the only source of value creation, making it the cornerstone of the theory of surplus value, and on that basis proposed the idea of labor emancipation. Even under the increasingly mature digital economy, intelligent economy and other high-tech conditions, as long as it is in a capitalist society or a capitalist enterprise in a socialist country centering on private capital, labor would still be characteristic of the dependence on things, workers be enslaved by private capital, and various forms of alienation persist. In future society where the factors of production are publicly owned, labor will become the “sun,” that is, labor will be completely liberated, thus truly realizing the free and comprehensive development of human beings. We must always stand in the position of international working people, establish a view in our value system that respects labor and workers, insist on the subject position of workers in social development and wealth creation, and refute the fallacy of “exploitation creates wealth” that has been popular for thousands of years.

Third, it clarifies the contradictory movement of capital. The theory on capital, as a key term in Marx’s works, is one of the three main categories throughout the book, i.e., labor, capital and surplus value, and is of great importance to our understanding of the nature and role of capital in the context of globalization. Capital is a product of a certain stage of human history. It is a historical category. Capital is a factor of production, a value that can bring surplus value. Capital in essence is not a thing, but a certain social and economic relationship, which in turn must be manifested through things. This gives rise to a double logic: a logic of creating material and economic civilization by the power of things, and a logic of value-added with pursuit of profit maximization. From private capital to private monopoly capital, national monopoly capital, and then to international monopoly capital, the expansionist nature of capital keeps driving forward the process of economic globalization, which constantly intensifies the globalization of production, trade, finance and business operation, with an ever more greedy capital today that is based on private appropriation and characterized by virtual capital. The unlimited expansion of such capital has led to the intensification of the basic contradictions of capitalism in all countries and the whole world, with widening gap between rich and poor in wealth and income distribution within and between countries, leading to increasingly serious global problems. Under the conditions of China’s socialist market economy, while attaching importance to the role of public capital, we must pay close attention to overcoming the greedy nature and the disorderly expansion and monopoly of non-public capital. The relationship between capital and labor as social axis must be well handled, and making various forms of capital better serve the national economy and people’s livelihood.

Fourth, it reveals the laws of development of market economy. In Capital, Marx has scientifically explained many economic laws of human society, such as the general law of commodity production, the common law of socialized mass production, the law of economic globalization and the world market. The laws of capitalist economic operation are systematically analyzed, which covers wage, cost, profit, credit, interest, land rent, reproduction, virtual capital and virtual economy, economic cycle and crisis. All these provide guidance for a correct understanding of the laws of operation of socialist market economy.

Fifth, (Marx’s ideas in) Capital must be applied in a flexible manner in practice. At present, we must resolutely oppose private monopoly capital, international financial monopoly capitalism and neo-imperialism, work together to actively safeguard the rights and welfare of the working class and the working people at large, resist the US-led West’s efforts to contain the peaceful development of China, Russia, North Korea, Iran and Syria, and bring into better play the economic role of progressive Third World countries such as China. Today, China has become a major trading partner of more than 140 countries and regions, ranking first in the world in total trade in goods and leading the world in attracting foreign investment and outbound investment. Between 2012 and 2021, China’s gross domestic product (GDP) grew from 54 trillion yuan to 114.9 trillion yuan, accounting for 18.5 percent of the world economy and firmly ranking second in the world. In 2021, China’s total GDP at market exchange rates reaches $17.8 trillion, equivalent to 77 percent of the US GDP. Between 2013 and 2021, China’s average contribution to global economic growth reaches 38.6 percent, more than the combined contribution of the G-7 members. China has signed more than 200 cooperation documents with 151 countries and 32 international organizations to build the “Belt and Road.” The Belt and Road Initiative will lift 7.6 million people out of extreme poverty, increase global trade by 1.7–-6.2%, and increase global income by 0.7%–2.9%. Currently, the Asian Infrastructure Investment Bank (AIIB) has grown from 57 founding members to 106 members from six continents, making it the second largest international multilateral development institution in the world. The above achievements have been made through the dominant role of China’s state-owned capital, collective capital and equity-based cooperative capital. In light of that, I would argue, as in an already published paper, that China has got rid of its “dependent” and “semi-dependent” position in the world economic system and is now in a “quasi-center” position and will reach the “center” by 2035. By 2050, it will achieve a status of one of the top “countries in the center,” completing the three major tasks, i.e., Chinese modernization, reunification of the mainland and Taiwan of China, and international anti-hegemonic struggle.

That is all I have to say here. Thank you.

Will depopulation sink China?

In the following article, Adnan Akfirat, Chairman of the Turkish-Chinese Business and Development Friendship Association, and a member of our advisory group, analyses the recent demographic changes in China, which see the population not only age but start to fall, with India on course to become the world’s most populous nation this year, if it has not already done so. 

Adnan notes that whilst a young population has a positive impact on economic development, it is not the only way to develop. What is really important is to increase labor productivity. He further dissects the  media claims that these trends are a harbinger of an economic crisis in China, noting that, “on the contrary, the history of western developed countries has proven that fertility rates tend to decline and the desire for children tends to decrease as societies become wealthier with better living standards.”

He also looks at ways in which China is dealing with this issue, noting that with around 10 million graduates every year, the country’s population advantage is shifting from quantity to quality. With massive investment, China has already surpassed the US in robot density and has the aim to double its robot manufacturing by 2025 compared with 2020.

Adnan concludes: “Since China has developed thanks to socialism, not cheap labor, population decline will not sink China’s economy.”

This article originally appeared in the Turkish daily newspaper Aydinlik.

China has been the most populous country in the world for hundreds of years. In 1750, its population was estimated at 225 million. This was more than a quarter of the world’s population at that time. India, which was not a united country at that time, had a population of about 200 million and was in second place. 

India will become the world’s most populous country this year. The UN estimates that India’s population will overtake China’s on April 14, 2023. India’s population this year is expected to be 1 billion 425 million 775 thousand people. (1)

China falls back to second place

China will fall to second place in the world in total population for the first time in more than 60 years, since 1960, when the UN began keeping China’s population records. The population of the People’s Republic of China fell to 1 billion 411 million 800 thousand people last year, while the population growth rate fell to negative. The population growth rate in China this year is minus 0.6 per thousand people.

China’s National Bureau of Statistics announced that deaths outnumbered births in China this year and the total population decreased by 850,000 people. Last year, 9 million 560 thousand babies were born in China. However, this number was 10 million 620 thousand in 2021.

The death rate per thousand people in China was 7.37 per thousand last year. The difference between the birth rate and the death rate per thousand people was 6 per ten thousand. China ended the one-child policy in 2016 and lifted all restrictions in 2021. But birth rates have continued to fall.

As the number of new births falls, China increasingly becomes an aging society. By the end of 2022, China’s population aged over 60 reached 280 million people. The proportion of elderly Chinese reached 18.9 percent. By 2035, this proportion is expected to rise to 30%, or more than 400 million people. China’s working-age population (those between the ages of 16 and 59) totaled 875.56 million by the end of 2022, 62 percent of the population. The number of working-age Chinese peaked a decade ago. By 2050, the country’s median age will be 51.

Continue reading Will depopulation sink China?

The Chinese path to modernization provides a reference for other developing countries

The following article, which was originally carried by China Daily, was a keynote speech delivered by Justin Yifu Lin at the Third Think-Tanks Forum on National Governance in Developing Countries. Originally from Taiwan Province, Lin is one of China’s leading economists. Currently the Dean of the Institute of New Structural Economics and Honorable Dean of the National School of Development at Peking University, he was Chief Economist and Senior Vice President at the World Bank, 2008-2012.

Noting how modernization was initiated by the West so as to shift from a traditional agricultural society to a modern industrial one, Lin notes that China’s modernization is a socialist modernization under the leadership of the Communist Party. It therefore combines features common to those of modernization as undertaken by the western countries along with its own unique features. These latter include the modernization of a huge population, of common prosperity for all, of harmony between humanity and nature, and of peaceful development.

Having summarized the key features of Chinese-style modernization, as first elaborated by President Xi Jinping, Lin advances the idea that governments in developing countries should facilitate industrial development, based on the country’s comparative advantage. “An efficient economy,” he notes, “could create wealth rapidly, and fair income distribution could lay a solid foundation for common prosperity.”

Whilst China’s development not only generates wealth for itself, but also brings more development opportunities to other countries, thereby promoting global peaceful development, “the practices have shown that there is barely any developing country that has achieved modernization by following the Western path. The few developing countries that have realized modernization did not copy the Western model.”

“Copying the Western model of modernization is the result of a wrong perception of modernization. According to Marx’s historical materialism, what Western nations possess, what they are good at doing, and what matters to them are all determined by their economic bases… In comparison, the Chinese path to modernization provides a reference for other developing countries that are exploring their own paths to modernization.”

Modernization is an important historical process that was initiated by the West since the Age of Discovery in the 15th century, especially after the Industrial Revolution in the 18th century. It features a shift from the traditional agricultural society to a modern industrial one, rapidly developing science and technology and booming the economy with increasingly improved livelihoods. The modernization which first started in a few Western countries spread all over the world, becoming the common aspiration of people in all countries. Chinese modernization is socialist modernization under the leadership of the Communist Party of China. It contains elements that are common to the modernization of Western countries, and also boasts features unique to the Chinese context.

Chinese modernization is modernization of a huge population. If China achieves modernization and becomes a high-income country, it will more than double the percentage of the world’s population living in high-income economies from the current 16 percent to 34 percent.

Chinese modernization is modernization of common prosperity for all. While Western modernization has created huge amounts of wealth after the Industrial Revolution, the process has also resulted in growing polarization between the rich and the poor.

Continue reading The Chinese path to modernization provides a reference for other developing countries

Capitalism’s senility and socialism’s vigor are increasingly apparent to world

We are pleased to republish this important interview with Professor Radhika Desai, Convenor of the International Manifesto Group and member of our advisory group, originally published by Global Times. The focus of the interview is the ever more stark demarcation between stagnating western capitalism and booming socialist China.

Analysing the turn to neo-liberalism, particularly in the wake of the 2008 global financial crisis, Radhika asserts: “Liberal democracy is a contradiction in terms… Capitalism is not in the interests of the vast majority of working people.”

Questioned on the premise of earlier Western engagement with China, and its expectation that it would lead to the demise of socialism, Radhika notes: “China’s development is entirely attributed to the country’s adherence to socialism, both in the early period under Mao and in the later reform and opening-up period… After reform and opening-up, the US stepped up economic engagement with China and the idea, particularly after the end of the Soviet Union in 1991, was that such engagement would also make China more or less capitalist, even neoliberal. However, for China this engagement was only another means to advance socialism… Capitalism’s senility and socialism’s vigor are increasingly apparent.”

For the Chinese people, the past decade has been epic and inspirational. The country, under the leadership of the CPC Central Committee with Comrade Xi Jinping at the core, has made great endeavors in boosting its economy, deepening reforms, improving the rights of its people and acting as a responsible power globally.

The world has been increasingly turbulent in recent years due to multiple crises triggered by the US-led West, while there is an obvious tendency that the West is more and more difficult to maintain its development momentum like in the last century. After the 2008 financial crisis, economic growth in Western countries has remained low, in stark contrast to China’s boom. Global Times (GT) reporter Yan Yuzhu talked to Radhika Desai (Desai), convenor of International Manifesto Group and professor of political studies at the University of Manitoba in Canada, about her opinion toward the weakness of capitalism, the adverse consequences of neoliberalism for Western development, as well as China’s role in making a way to pluripolarity. 

This is the 25th of the series about this special decade.

GT: After the 2008 financial crisis, especially in the last decade, economic growth in the West has remained very low and the crisis of their domestic political system has been highlighted time and again. In contrast, China has maintained a relatively stable momentum of development, and the gap between China and the US has gradually narrowed. What do you think are the reasons for this difference? 

Desai: The low economic growth of major capitalist countries since 2008 is the result of the turn to neoliberalism. It never managed to restore the growth of the 1970s. It occurred because production had outstripped demand and, rather than solving the demand problem, neoliberalism only made it worse. Its attack on organized labor and social spending restricted consumption demand while its encouragement towards financial and rentier activity reduced investment demand, siphoning away funds into speculation and predatory activity. The attempt to compensate for low demand, low growth and low government revenues by extending credit to consumers and governments has only led to mountains of debt and asset bubbles that have regularly burst, weakening economies further. 

This process has been ongoing for more than four decades. At the start, the major capitalist countries were much healthier thanks to their “golden age” of robust growth and the broad-based distribution of incomes. But over time, the disastrous effects of neoliberal policies were assailing ever weaker economies. 

Continue reading Capitalism’s senility and socialism’s vigor are increasingly apparent to world

As Western capitalism faces repeated crises, socialist China achieves spectacular success

We are pleased to reproduce this article by Professor Radhika Desai, which originally appeared in Global Times.

Radhika notes that, “After the disintegration of the USSR, the People’s Republic of China, under leadership of the CPC, not only survived, but succeeded spectacularly…(but) none of this was inevitable.”

The secret behind the success of socialism in China and the failure of capitalism, particularly the variety practiced in the United States and Britain, she argues, is best understood by returning to the teachings of Marx.

A further very important factor identified by Radhika is that “the Chinese revolution, even more than the Russian revolution, was at once socialist and anti-imperialist.” Her conclusion is that, “while China does not aim to be a model for other nations, its experience and policies do serve as a worthy example. Other countries can best benefit from their relations with socialist China if they also adapt China’s experience to their aspirations and circumstances.” This resonates with President Xi Jinping’s important observation that: “It [socialism with Chinese characteristics] offers a new option for other countries and nations who want to speed up their development while preserving their independence.”

After the disintegration of the USSR, the People’s Republic of China, under leadership of the CPC, not only survived, but succeeded spectacularly. The party-state holding overall control of the economy composed of a pragmatic mix of state and private enterprise has managed to harness market forces to build socialism and brought a very poor society to the threshold of moderate prosperity. It has scored many technological achievements along the way. 

None of this was inevitable. All of it required leadership, who has been capable of well-judged decisions, political skill and wisdom, the ability to learn from mistakes, to listen to the people and, above all, to stand up to powerful capitalism and imperialism. It also required a long-standing commitment to China’s original revolutionary principles. 

Continue reading As Western capitalism faces repeated crises, socialist China achieves spectacular success

How China escaped shock therapy in the 1980s: interview with Isabella M. Weber

The process of economic reform in China in the 1980s is not always well known or understood. ‘How China Escaped Shock Therapy: The Market Reform Debate’, published last year, is an important contribution to both understanding and debate. The first book by Isabella M. Weber, Assistant Professor of Economics at the USA’s University of Massachusetts Amherst, it won the 2021 Joan Robinson Prize, named for the renowned Cambridge economics professor and friend of socialist Asia.

The book details the complex debate that took place in China in the 1980s, which involved veteran Chinese leaders from the first generation of the revolution, young Chinese economists, Eastern European economists, and mainstream western economists from international financial institutions and elsewhere.

With the exception of the veteran revolutionary leaders, many of the participants in these debates were pushing a strategy which was to later become known elsewere as shock therapy. Their view did not prevail. Rather, what emerged was an “experimental and radical gradualist economic reform”, that drew from traditional Chinese economic statecraft, the leaders’ experience of hyperinflation before liberation, and the early results of the initial economic reforms in the countryside.

In this interview, originally published in the Czech language on Alarm, and then in English translation on the online East European socialist magazine LeftEast, Isabella expands on some of her book’s key themes. She notes that: “We have to remember that at that time China was unlike Czechoslovakia, Poland, or East Germany in that it was a very poor country. Mao’s reign laid important foundations for the economic reform, like basic healthcare system, public infrastructure, and industrialization, but nevertheless China was still a very poor country with a GDP lower than Sudan or Haiti. Of course, that doesn’t represent the whole level of development of the country, but it gives you a sense of what we’re talking about.”

Making a comparison to the economic reforms carried out in Russia from the end of the decade, Isabella describes this as an example of what was at stake for the Chinese. She draws a clear and very important distinction between the Chinese and Russian leaders and situations of the time:

“In the Chinese case in the 1980s the most powerful people in the leadership were first generation revolutionaries, so they approached the economic reforms with a very different perspective than Gorbachev or Boris Yeltsin. Another difference is that China started the reform coming out of the Cultural Revolution, which meant that at the beginning of the reforms the bureaucratic system was being re-established, whilst in the Russian case the bureaucratic system was very rigid.”

When today’s historiography refers to the debate about economic reforms in Eastern European countries during late communism, it often uses the term the “long transition”. It shows that the economic transformation from state socialism into neoliberalism was a process that took off in some of the countries in Eastern Europe in reaction to the oil crisis in 1973. Their debt was getting out of the control and it forced them to work more closely with Western financial institutions, but it also meant much deeper transformation of the world’s economic system with the end of the gold standard and Bretton-Woods economic system. Cooperation between Eastern European economists and Western financial institutions helped to shape the debate about the need for further economic transformation of state socialist economies. The most radical supporters of the neoliberal economic reform, later known as „shock therapy“, were influenced by Pinochet’s Chile or the military regime in South Korea. But at the same time, very similar debates over economic reform were taking place in China. Political economist Isabella M. Weber‘s astonishing new book How China Escaped Shock Therapy details the complex debate over economic reform in China in the 1980s between, on one side, young Chinese economists, Eastern European economists, and people from Western financial institutions that tried to push through “package reform“ (which would later be known as shock therapy), and, on the other, the old guard of the Chinese leadership who had first cut their teeth in the country. In the end, the latter group decided on their own experimental and radical gradualist economic reform that emerged from traditional Chinese economic statecraft, their experience of hyperinflation among during the Second World War, and the successful agrarian reforms of the 1980s. Why did the Chinese leadership decide that the neoliberal approach to economic reform was not an option for their country? We spoke with Isabella M. Weber,  a political economist and assistant professor of economics at the University of Massachusetts Amherst and the Research Leader for China at the Political Economy Research Institute.

When did the debate about the need for economic reform start to appear in China and what was the driving force behind this push for economic reform?

The debate started after Mao Zedong’s death, but even in the last years of Mao’s reign there were already less official initiatives to rethink the communist project. It also coincided with China’s reapproachment with the USA, which marked a radical shift in China’s foreign relationships. I think that the year of Mao’s death was crucial. The transition period between Mao’s reign and Deng Xiaoping is often overlooked in the historiography of China’s reforms. To my mind this period marks a radical break with the ideas of Cultural Revolution. It was a shift from mass mobilization and revolutionary forms of social organization to a more developmentalist and economistic agenda, but initially this agenda was in the spirit of the “Big Push,“ a ten-year plan that involved importing foreign technologies and capital goods in exchange for Chinese oil, which was predicted to be discovered in larger quantities back then. The problem was that these projected findings of petroleum turned out to be inaccurate, so this plan imploded within the span of two years. So when Deng Xiaoping came into power it was clear that a new economic model was needed.

Continue reading How China escaped shock therapy in the 1980s: interview with Isabella M. Weber