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Understanding the role of the private sector in the Chinese economy

We are pleased to publish below the text of a speech by Dr Jenny Clegg at a public meeting in Manchester, Britain, organised by the Greater Manchester Morning Star Readers and Supporters Group. The title of the event was China and the Western Left, and it aimed to uncover the nature of China’s political economy and its role in the world. The other guest speaker was Friends of Socialist China co-editor Carlos Martinez.

Jenny’s speech seeks to explain the role of the private sector in the current phase of China’s development. Jenny lays the ground for understanding today’s domestic capitalist class by uncovering the role of the national bourgeoisie in the history of the Chinese Revolution, including in the massive strike wave of the 1920s, the United Front to resist Japanese invasion, and the period of rebuilding during the New Democracy phase between 1949 and 1956. Jenny posits that this group, while not always reliable, “had an anti-imperialist side” and furthermore “was prepared to accept CPC leadership in the right circumstances – something still influencing the CPC’s attitude to today’s private entrepreneurs.”

The speech explains the unusual nature of China’s socialist market economy, in which the public and private sectors have an essentially symbiotic relationship, and where the state maintains overall control.

“The majority of large-scale private enterprises are linked into the state through mixed-ownership arrangements, with the state investing and divesting to shape industrial growth according to overall plans… Around 40 percent of private entrepreneurs are Party members and around half of private enterprises have CPC cells organised within them. Over 40 percent of workplaces so far are unionised, more than twice the rate here in Britain.”

As such, “the relationship then between the socialist state and the private sector is one of unity in developing the economy as well as struggle to ensure public benefit.”

A member of our advisory group, Jenny is a retired academic and an activist in the anti-nuclear, peace and friendship movements. She is the author of China’s Global Strategy: Towards a Multipolar World, published by Pluto Press.

The major stumbling point for the Western Left in understanding China as a socialist country is the question of the growth in recent decades of market relations and the private sector. This question requires in the first place a consideration of the contribution that the domestic capitalist class made in China’s revolutionary process before getting some measure of the private economy in China today.

The historical role of the national bourgeoisie in the Chinese revolution

One hundred years ago – minus one year – in 1925, on May 30, a British officer ordered the police in the Shanghai British concession to open fire on Chinese protestors, killing at least nine of them. The protests were part of a mounting strike wave in which the Communist Party of China (CPC) – founded in 1921 – was very active, and the incident sparked some momentous developments as anti-imperialist feelings surged.

Ayear-long strike in Hong Kong, starting in 1925, dealt a great blow to British imperialism, which from its island base had extended its influence, becoming the leading imperialist power not only in China but across Southeast Asia. The fact that Chinese capitalists supported and funded the strike, showing they too had an anti-imperialist side, was a particular lesson for the CPC.

The Kuomintang (KMT), supported by the CPC in the first United Front, began to prepare its army for the Northern Expeditionwhich set off in 1926to overthrow the feudal warlords and imperialist rule. As it advanced, peasant associations spread like wildfire.

The British Tory government launched a 20,000 strong expeditionary force; and in due course cities along the Yangtze came under British bombardment.

And in Britain, Hands off China became the largest anti-imperialist movement during the General Strike.

The situation in China became highly radicalised as peasants’ moderate demands for rent reductions gave way to land seizures and workers took over the British concession in Wuhan. These developments caused KMT Nationalist army officers to take fright, and what followed was a brutal massacre of communists in Shanghai, ordered by KMT head Chiang Kai-shek. Too late, the remaining CPC activists formed their own Red Army but, failing to capture an urban base, retreated to the mountains to set up worker-peasant soviets.

Over the next ten years, the CPC carried out various land reform policies with limited success. It was Mao who recognised the Leftist errors thatfailed to take capital into account in implementing reforms to eradicate feudal relations. Taking corrective measures, following the Long March (1934-35), by the time the Japanese escalated its occupation of China in 1937, the CPC was ready to meet the new anti-imperialist upsurge by entering a second United Front of resistance with the KMT.

In the red base areas under its control, the CPC moderated its land reform policies, and the two-class Soviet strategy was replaced with a New Democratic alliance including the national bourgeoisie as well as the petty bourgeoisie.

These adjustment proved a great success: in the eight years to the defeat of Japan in 1945, the red bases grew from a population of one million to nearly 100 million people, almost a quarter of China, and the Red Army from 30,000 to 900,000.

New Democracy was to continue through the ensuing years of civil war (1945-49), the founding of the People’s Republic (1949), up to the 1956 transition to socialism.

In 1949, whilst others fled, some capitalists stayed on to make valuable contributions to China’s recovery. The fact that China was able to stabilise within three years to 1952 after a century of wars and economic ruin was truly remarkable.

Then in 1956, when private enterprises were nationalised, these former owners stayed on as managers, as Mao declared the contradiction with the national bourgeoisie, now antagonistic under socialism, was to be handled in non-antagonistic ways, that is by ideological struggle.

History thus shows the important role the nationalist capitalist class played in the Chinese revolution: if not always reliable, not only did it have an anti-imperialist side but it was prepared to accept CPC leadership in the right circumstances – something still influencing the CPC’s attitude to today’s private entrepreneurs.

BRICS+ and the future of the international order

This thought-provoking article by Elias Jabbour – associate professor of theory and policy of economic planning at Rio de Janeiro State University, and member of the Friends of Socialist China advisory group – explores the shifting dynamics of global power and the emergence of BRICS+ as a significant factor in the evolving international order. The article underlines the significance of China’s socialist development in particular – which has positioned it at the centre of a rising multipolar world – and an emerging “globalisation with Chinese characteristics” which promotes development, peace and common prosperity, in contrast to the enforced inequality and violence that characterise imperialist globalisation.

Elias notes the resurgence of the Global South as a key factor in the transformation of the international order, and the role of BRICS+ in this process. While the Global South is made up of “a heterogeneous set of countries, with differentiated levels of development”, these countries collectively “have the ability to converge on some fundamental issues for their own future, and for that of humanity itself.” Put in other words, the countries of the Global South have a shared interest in opposing imperialism, defending sovereignty and pursuing peaceful development. China stands at the centre of the process of uniting the countries of the Global South in promoting a multipolar, democratic and fair system of international relations.

The article also highlights the significance of the Belt and Road Initiative as a key component of China’s global strategy, and the potential for BRI to transform the global economic landscape by promoting infrastructure development, economic integration, and a shift away from the financialised neoliberal model associated with the US.

Elias discusses the disastrous consequences of the collapse of the Soviet Union and the concurrent global imposition of neoliberalism. On the other hand, the US’s moment of triumph did not last long, and the last decade and a half have witnessed “the erosion of the ability to reinvent capitalism due to financialisation and the emergence of a socialist country (China) as an economic power whose path reflects nothing of the neoliberal recipes sold by the IMF and the World Bank have contributed to the acceleration of a systemic transition, in which a new globalisation centered on China is only its greatest expression.”

In conclusion, the article argues that the political future of BRICS+ and the broader Global South is intricately linked to China’s trajectory and its ability to offer a developmental model that counters neoliberalism. It suggests that the global struggle against underdevelopment and for independence is gaining momentum, with BRICS+ playing a pivotal role in shaping a more equitable global order.

This article first appeared in Geopolitical Economy Report.

The emergence and rise of new poles of power to the detriment of existing ones is nothing new in history. Since the 18th century, there have been countless examples of transitions in international hegemony. This accelerated with the emergence of industrial capitalism in England, which was more advanced than the Portuguese and Spanish commercial capitalism that for centuries had dominated much of the world, especially Latin America.

Even the capitalist dynamic inaugurated by England has characteristics that are not unfamiliar to economic historians with great theoretical and conceptual rigor.

Well known is Vladimir Lenin’s discovery of the uneven nature of the development of nations and the tendency of the most developed countries to lose dynamism while others begin to enjoy what economist Alexander Gerschenkron called the “advantages of backwardness”.

So the international order cannot be observed, from a historical point of view, as a march where countries change positions like in a military parade.

The emergence of monopolistic capitalism brought with it the tendency toward war, for example. We have witnessed two great world wars where the center of the dispute was world power, with results that consolidated new political actors on the international stage, mainly the United States.

A new systemic transition

I start from the historical principle that reality has shown Lenin to be correct, regarding the uneven development of the system and the tendency toward stagnation in the developed centers. These processes open spaces of power in the world.

I also say that we will have little to offer in terms of explanation for the future if we do not relate the transformation of the United States into a unified continental economy at the end of the 19th century, and its impacts on the development of the international capitalist system, with what we have witnessed in China over the past decades: the emergence of a unified continental economy in the third-largest country in the world, which is generating huge impacts on the international political economy – and is still little investigated by so-called experts.

This is a fundamental point when we want to develop a sophisticated thinking about the BRICS+ and the future of the international order. I will return to this point.

On the other hand, we are witnessing a new wave of systemic transition today. This time, there is the emergence of new poles of global power on one side, while on the other there is an accelerated stage of political, social, moral, and economic decomposition of a hegemonic power: the United States of America.

It is interesting to note that the new order that is emerging is itself the product of the order created by the United States after World War II, which accelerated in the late 1970s with the rise of neoliberalism, and especially after the end of the Soviet Union.

Globalization led by the powerful finance of the United States was a reality that transformed the economic geography of the world, but which is eroding within its own limits. Since the moment when financialization became the dominant dynamic of accumulation in capitalism, and neoliberalism won hearts and minds around the globe, the world has entered a spiral of greater instability and unpredictability.

Ken Hammond: Through 45 years of reform, the CPC has remained committed to the original goals of the revolution

In this article for Global Times, China expert and Friends of Socialist China advisory group member Professor Ken Hammond reflects on the 45th anniversary of China’s Reform and Opening Up, initiated in December 1978.

Ken observes that the material basis for reform was China’s prevailing relative poverty and underdevelopment: “Slow but steady growth in the economy had modestly exceeded population growth, so that while there had been significant improvements in life expectancy and public health, housing provision, education, and other social services, in 1978 China remained a poor country.” In order to build a socialist society that was “abundant enough to meet not only basic needs but to allow all people to pursue their self-development, to fulfill their potential as human beings and members of society”, China’s leaders introduced policies “to revise the organization and operation of Chinese enterprises and to open the country to foreign capital in order to drive a process of development which would give China the capacity to produce goods and services in much greater volume and at much lower costs.”

There is a near-consensus in China that the reform process has been hugely successful, in that the vast majority of people live better lives than they used to, and China is far stronger than it was. “China has become a world leader in innovation and creativity, and is at the forefront of the fight to save the planet from the menace of climate change through the development of alternative energy and the building of an ecological civilization. China is playing a central role in improving the lives of people in developing countries around the world through its Belt and Road Initiative and other efforts to support the flourishing of a multipolar world with a future of shared prosperity.”

Nonetheless there have inevitably been problems and contradictions associated with market reforms, including inequality and environmental degradation. Ken writes that the Chinese leadership always understood these contradictions, and calculated that they could be overcome and managed over time as long as the guiding role of the Communist Party of China was maintained (this can be usefully contrasted with Gorbachev’s perestroika, which was accompanied with a sidelining of the Communist Party of the Soviet Union and a hollowing out of the institutions of working class power).

Ken points out that, particularly over the last decade, “the CPC has managed the complexities of policy and practice, guiding the processes of development and the intricate dialectic between the socialist core and the private sector, remaining committed to the original goals of the revolution, and navigating China’s re-emergence as a significant participant in global affairs.” He concludes that, “guided by the insights of Marxist theory and the deep historical experience of China’s ancient civilization, and with the ongoing leadership of the CPC, the road ahead is one of hope.”

In December 1978 the leadership of the Communist Party of China (CPC) made a momentous decision to open a new program of economic development. Over the first three decades of the People’s Republic of China, a foundation for a modern socialist system had been built, but this had been an arduous process, with advances and retreats, successes and failures, and much contention about how best to pursue the goals of enhancing production in industry and agriculture and of improving the material conditions and the livelihoods of the Chinese people.

Slow but steady growth in the economy had modestly exceeded population growth, so that while there had been significant improvements in life expectancy and public health, housing provision, education, and other social services, in 1978 China remained a poor country. China had achieved a kind of egalitarianism of poverty, but this was not the goal of the revolution. Socialism is a society of shared prosperity, based upon the equitable distribution of the wealth produced by social labor, wealth which should be abundant enough to meet not only basic needs but to allow all people to pursue their self-development, to fulfill their potential as human beings and members of society. To achieve this, China’s leaders understood that this required bold new measures and a radical will to experiment.

Deng Xiaoping and others formulated new policies designed to utilize the mechanisms of the market to develop the productive economy. Marxists have long recognized the historical role of markets in the rise of the capitalist system, including the massive expansion and enhancement if productive capacities. The aim of the new policies, which came to be labeled as reform and opening-up, was to revise the organization and operation of Chinese enterprises and to open the country to foreign capital in order to drive a process of development which would give China the capacity to produce goods and services in much greater volume and at much lower costs. This would not happen overnight, and it would entail certain risks and challenges.

Markets can generate growth and development, but they also generate contradictions. The Chinese leadership understood this, and recognized that the key to success, the key to survival and flourishing of the socialist project, would be the guiding role of the CPC. They anticipated that rapid development using market mechanisms could create contradictions involving inequality, corruption, environmental stresses, as well as other problems. If the markets and foreign capital were simply allowed to run unregulated these could overwhelm the country and lead to the end of the socialist venture and the abandonment of the goals of the revolution. They understood that all of this would take time, that, as Deng Xiaoping famously said, some people would get rich first, and make accommodations with the global capitalist system in order to acquire the capital, technology and other resources needed to advance along the path of development.

As China marks the 45th anniversary of the reform era, we can see that much has been achieved. China has reached the primary stage of socialism, a society of modest prosperity, in which more than 800 million people have been lifted out of absolute poverty, in which health, education and social services have been dramatically improved. China has become a world leader in innovation and creativity, and is at the forefront of the fight to save the planet from the menace of climate change through the development of alternative energy and the building of an ecological civilization. China is playing a central role in improving the lives of people in developing countries around the world through its Belt and Road Initiative and other efforts to support the flourishing of a multipolar world with a future of shared prosperity.

All of this has been possible because of the leadership of the CPC. Over the past decade under General Secretary Xi Jinping, the CPC has managed the complexities of policy and practice, guiding the processes of development and the intricate dialectic between the socialist core and the private sector, remaining committed to the original goals of the revolution, and navigating China’s re-emergence as a significant participant in global affairs. There is much work to be done. The contradictions of development remain as factors which must be carefully attended to, and the tensions in global geopolitics as the world goes through an era of structural transformation and some long-established powers find it difficult to embrace the newly emerging realities pose serious challenges.

It is time to celebrate what has been accomplished, and to reaffirm commitment to the tasks which lie ahead. Guided by the insights of Marxist theory and the deep historical experience of China’s ancient civilization, and with the ongoing leadership of the CPC, the road ahead is one of hope.

Michael Roberts: debt trap accusation “does not hold much water”

In the following article, which was originally published on the author’s blog, the renowned Marxist economist Michael Roberts dissects the oft repeated claim that China is ensnaring countries, in this case specifically Sri Lanka, in a debt trap and then taking over the country’s assets.

This widespread charge, he notes, “does not hold much water. It leaks badly… China is not a particularly large lender to poor countries like Sri Lanka compared to Western creditors and the multi-national agencies.” Whilst China holds 10% of Sri Lanka’s debt, commercial lenders, from the imperialist countries, account for nearly 50%.

Moreover, he argues, the rise in the country’s debt burden did not result from any trap set by China, but rather from the desperate needs of the previous Sri Lankan government. After the 2008 global financial crisis, Roberts explains, interest rates fell globally, and Sri Lanka’s government looked to international sovereign bonds to further finance spending. But the country was then hit by the Covid pandemic, which ravaged the tourism sector, on which Sri Lanka was heavily reliant.

As for the port project at Hambantota, which is the most frequently cited example of China’s supposed debt trap, “China did not propose the port; the project was overwhelmingly driven by the Sri Lankan government with the aim of reducing trade costs.”

Noting a recent US district court case, Roberts explains that “it is the obscure Hamilton Bank that is opposed to any agreement [on the restructuring of Sri Lanka’s debt] and instead is demanding full repayment [of US$250 million plus interest] on its holding of Sri Lankan bonds. Hamilton is what is called a ‘vulture’ fund’, buying up the ‘distressed debt’ of poor country governments at rock bottom prices and then pushing for full repayment at par (the original bond issue price), using the blackmail of refusing to agree to any ‘restructuring’.”

He adds that in a presentation, the bank, whose directors include former British Conservative MP, government minister and personal assistant to Margaret Thatcher, Sir Tony Baldry, says that “suing a sovereign for non-debt payment can be a justified and lucrative business.”

Last week a US district court granted Sri Lanka’s request for a six-month pause on a creditor lawsuit against the country. Hamilton Reserve Bank holds a big chunk of one of Sri Lanka’s now-defaulted bonds and had been suing it for immediate repayment.

The court decided that there should be a pause in Hamilton’s demand for immediate repayment so that Sri Lanka could arrange a deal with other private sector creditors and bilateral lenders, as well as obtaining new funds from the IMF. The IMF has been unwilling to cough up money as long as it considered Sri Lanka unable to pay back its debt obligations. It is insisting that all creditors agree to a ‘restructuring’ of existing debt before agreeing to new IMF funding (which would also be accompanied by strong ‘conditionalities’ ie fiscal austerity, privatisations etc).

The IMF, World Bank and other Western creditors have claimed that what is holding up a rescheduling is China. In turn, China is refusing to agree to a deal unless all other parties are agreed on the terms, and it does not like the terms currently proposed.

In the case of Sri Lanka and many other poor peripheral countries in serious debt distress, it is regularly argued that they are in a ‘debt trap’ caused by taking loans from China to such an extent that they cannot repay them and then China insists on taking over the country’s assets to meet the bill. Indeed, US President Biden reiterated this charge only this week in a speech claiming that the West was ready to help poor countries expand their infrastructure.

China and the purity fetish of Western Marxism

In this essay, extracted from the book The Purity Fetish and the Crisis of Western Marxism, Carlos Garrido takes a detailed look at China’s socialist market economy and seeks to understand why so much of the Western left insistently misunderstands it.

Carlos discusses the assorted tropes about China’s ‘authoritarianism’ and ‘totalitarianism’, as well as the obscene slanders that are thrown at it in relation to human rights in Xinjiang. However, the central focus of this essay is the Reform and Opening Up process introduced from the late 1970s, specifically addressing the claims that the existence of markets and private capital in China make it a capitalist country.

The author explains that markets have existed in human society for long before the advent of capitalism (citing Marx that “market economies have existed throughout human history and constitute one of the significant creations by human societies”) and that the character of any given market is determined by its overall socioeconomic context. Deng Xiaoping made this point with particular clarity: “We cannot say that market economy exists only under capitalism. Market economy was in its embryonic stages as early as feudalist society. We can surely develop it under socialism… As long as learning from capitalism is regarded as no more than a means to an end, it will not change the structure of socialism or bring China back to capitalism.”

Carlos writes that the reform strategy responded to a specific set of circumstances and needs, “wherein an overly centralized economy, combined with imperialist-forced isolation from the world, stifled development and necessitated reforms which would allow China to develop its productive forces, absorb the developments taking place in science and technology from the West, and ultimately, protect its revolution.” Given that China has emerged as a science and technology powerhouse; given the extraordinary increase in living standards; and given the continued legitimacy and popularity of the CPC-led government, it seems uncontroversial to say that the strategy has been highly successful.

In the context of an escalating New Cold War against China, “all progressive forces in the West should unite against the US and NATO’s anti-China rhetoric and actions.” China “stands as the main global force countering US/NATO led imperialism. Its rise signifies much more than the end of US unipolarity – it marks the end of the Columbian era of European global dominance that began in 1492.” As such it is imperative that the Western left develop its understanding of Chinese socialism and build solidarity with People’s China, rather than “parroting state-department narratives on China with radical-sounding language.”

One debateable assertion the essay makes is in regard to Hua Guofeng, who served as top leader of the CPC for two years following Mao’s death in 1976. Carlos writes that “Hua Guofeng’s two whatevers (‘We will resolutely uphold whatever policy decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave’) perpetuated the sort of book worshiping which not only sucked the living spirit out of Marxism-Leninism and Mao Zedong Thought, but proved futile in dealing with the problems China faced.”

This is at odds with recent research presented by Isabella Weber in her book How China Escaped Shock Therapy: The Market Reform Debate. Weber writes that the two whatevers slogan was essentially a means of emphasising loyalty to the Chinese Revolution and socialist construction, and that “paying tribute to Mao in the year after his passing was not unique to Hua.” Meanwhile, “Hua redefined revolution itself as ‘liberation of productive forces’ and elevated national economic development to the highest priority” and in so doing “paved the way for the Deng-era reforms.” It was under Hua that major efforts were first made to attract foreign investment. Weber considers it “remarkable that such drastic changes occurred under a leader who has frequently been described as a relatively unremarkable Mao loyalist.”

This article first appeared on Midwestern Marx.

The stakes of the imperialist West’s New Cold War against China are as great as they can get. This means that the Western left’s role as controlled counter-hegemony and left-wing delegitimizers of socialist states – a role ideologically grounded in their purity fetish outlook – is as dangerous as it can get. In our current geopolitical climate, all progressive forces in the West should unite against the US and NATO’s anti-China rhetoric and actions. Unfortunately, what we find from large portions of this Western left is parroting of state-department narratives on China with radical-sounding language. Leading ‘socialist’ outlets in the US often echo baseless ruling class propaganda such as the ‘Uyghur genocide,’ Zero Covid authoritarianism, Belt and Road imperialism, debt trapping, and other similar fabrications.[1] Far from a concrete-dialectical study of China, in many of these spaces the claims of the ruling class are just assumed to be true, and anyone who dares to question them – and henceforth, bring the real truth to light – is labeled a puppet of Xi Jinping and the ‘CCP’ (which, like the Western bourgeoisie, is continuously labeled by these ‘socialists’ as CCP and not CPC in order to play on CCCP fears from the last cold war).[2]

Most of these tactics center on age-old claims of communist ‘authoritarianism,’ ‘totalitarianism,’ and all other such words used to equate fascism with communism and judge ‘democracy’ according to Western liberal-bourgeois standards. These assumptions and purity fetish engagements with Chinese socialist governance blind the Western Marxist from seeing China’s de facto geopolitical role as a beacon in the anti-imperialist struggle, in the Covid struggle, in the struggle for environmental sustainability, and in the struggle to develop with the darker nations which have been kept poor by centuries of colonialist and imperialist looting, debt traps, and superexploitation.[3]

The unquestioned, purity fetish grounded, and Sinophobic assumption of Chinese ‘authoritarianism’ and ‘lack of democracy’ also prevents the Western Marxist from learning how the Chinese socialist civilization has been able to creatively embed its socialist democracy in “seven integrated structures or institutional forms (体制tizhi): electoral democracy; consultative democracy; grassroots democracy; minority nationalities policy; rule of law; human rights; and leadership of the Communist Party.”[4] It has withheld them from seeing how a comprehensive study of this whole-process people’s democracy would lead any unbiased researcher to the conclusion Roland Boer has arrived at: namely, that “China’s socialist democratic system is already quite mature and superior to any other democratic system.” This is a position echoed by John Ross (and many other scholars of China), who argues that the “real situation shows that China’s framework and delivery on human rights and democracy is far superior to the West’s.”[5]

The purity fetish Marxists of the West love to think about democracy in the abstract, and hold up as the pure ideal a notion of democracy which is only quantitatively different from the bourgeois notion. Then, this ideal notion of bourgeois democracy is measured up against the atrocity propaganda riddled caricature of socialist states which their ruling classes paint – and they unquestioningly accept. When the caricature of reality fails to measure up to the ideal, reality – which they have yet to engage with – is condemned. What the Western Marxist forgets – thanks to the purity fetish and their social chauvinism – is that in societies divided by class antagonisms we can never talk about ‘pure democracy,’ or abstract democracy in general; we must always ask – as Lenin did – “democracy for which class?”[6] The ‘democracy’ and ‘democratic freedoms’ of capitalist to exploit and oppress will always be detrimental to working and oppressed peoples. Only an all-people’s democracy (a working and popular classes’ democratic-dictatorship) can be genuinely democratic, for it is the only time ‘power’ (kratos) is actually in the hands of ‘common people’ (dēmos).

To claim – as American capitalists, their puppet politicians and lapdog media, and their controlled counter-hegemonic ‘socialists’ do – that the US is a ‘beacon of democracy,’ and China an ‘authoritarian one-party system,’ is to hold on to a delusional topsy turvy view of reality.[7] If democracy is considered from the standpoint of the capitalist’s ability to arbitrarily exert their will on society at the expense of working people and the planet, then, of course, the US is a beacon of this form of so-called ‘democracy,’ and China an ‘authoritarian’ regime that stands in the way of this ‘freedom.’ If instead, democracy is considered from the standpoint of common people’s ability to exert their power successfully over everyday affairs – that is, if democracy is understood in the people-centered form it etymologically stands for – then it would be indisputable that China is far more democratic than the US (and any other liberal-bourgeois ‘democracy’).

However, the object of this text is not to address and ‘debunk’ all the assertions made about China (or any other socialist country) from the Western left – specifically the Trotskyites and the Democratic Socialists. That would, for one, require a much more expansive project, and two, is a task that has already been done many times before. Projects like Friends of Socialist China and Qiao Collective consistently engage in the practice of debunking the propaganda on China proliferated by the Western ruling class and the ‘left.’ The objective of this text is different; it seeks not only to point out falsities in the Western left’s positions, but to understand the worldview which consistently reproduces these. I have called this worldview the purity fetish. In it we can find the ideological roots for the Western Marxist positions on China.

In the Western Marxist’s purity fetish assessment of China, it is held that because China doesn’t measure up to the pure socialist Ideal in their heads, because China does not have, as Samir Amin notes, “the communism of the twenty-third century,” – it is not actually socialism.[8] The question of democracy and authoritarianism has already been assessed in previous chapters – it is a classic of the Western Marxist condemnation toolbox. My focus in this chapter will be on those who claim China is ‘capitalist’ because it developed private ownership and markets with the period of Reform and Opening Up in 1978. This form of the purity fetish centers on their inability to understand, in a dialectical manner, how markets and private property function within China’s socialism. China, according to these Western Marxists, took the ‘capitalist road’ in 1978. As Roland Boer has shown in his article “Not Some Other -ism”—On Some Western Marxist Misrepresentations of Chinese Socialism,” there are four major ‘sub-forms’ through which this first form of condemnation occurs: 1) capitalist socialism; 2) neoliberalism with Chinese characteristics; 3) bureaucratic capitalism; and 4) state capitalism. Often, variations of these can be found within the same critic, as none are the result of a rigorous, principled analysis.

As US and Western imperialist powers ramp up the New Cold War against China, Western Marxism’s erroneous purity fetish view of Chinese socialism requires closer examination.

Forecasting China?

In the following article, which was originally carried by Sidecar, the blog published under the auspices of New Left Review, on 8 September 2023, Nathan Sperber addresses some typical but fundamental western misconceptions concerning the Chinese economy.

He begins with the observations of Nobel Prize-winning economist Paul Krugman that “China is in big trouble. We’re not talking about some minor setback along the way, but something more fundamental. The country’s whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits…the only question now is just how bad the crash will be”; only to then note that Krugman had been writing in the summer of 2013.

In fact, China’s GDP grew by 7.8 percent that year and in the ensuing decade its economy has expanded by 70 percent in real terms compared to 21 percent for the United States.

Similar dire predictions were made, the article points out in the early 2000s, “when runaway investment was thought to be ‘overheating’ the economy; in the late 2000s, when exports contracted in the wake of the global financial crisis; and in the mid-2010s, when it was feared that a buildup of local government debt, under-regulated shadow banking and capital outflows threatened China’s entire economic edifice.” Today, the trigger for such doom mongering is the relatively low growth figures for the second quarter of 2023.

Sperber asserts that the existence of structural weaknesses in the Chinese economy is not in dispute. But he also considers that a fundamental weakness in much Western coverage of the Chinese economy is that it responds to the needs of the ‘investor community’:

“The most salient preoccupations of Western commentators reflect the skewed distribution of foreign-owned capital within the Chinese economy. China’s economy is highly globalized in terms of trade in goods but not in terms of finance: Beijing’s capital controls to a large degree insulate the domestic financial sector from global financial markets. Overseas financial capital has only a handful of access points to China’s markets, meaning international exposure is uneven. China-based companies with foreign investors, offshore debt or listings on stock markets outside of the mainland (that is, free of China’s capital controls) generate attention precisely in proportion to their overseas entanglements.”

To illustrate his argument, he notes how countless news articles have been devoted to the travails of real estate giants Evergrande (Hong Kong-listed and reliant on dollar-denominated debt) and, more recently, Country Garden (Hong Kong-listed and again carrying offshore debt). Readers of the Wall Street Journal or the New York Times will be far less likely to read about State Grid, the world’s largest electricity provider, or China State Construction Engineering, the world’s largest construction firm – “two companies less dependent on global finance and over which international investors are unlikely to lose any sleep.”

Noting how the “slow-motion collapse” of Evergrande has been portrayed in the Western media as a “calamity in waiting for the entire Chinese economy”, Sperber adds that this “elides the fact that the Chinese government deliberately prevented highly indebted property developers, including Evergrande, from accessing easy credit in the summer of 2020… Of course, no large-scale corporate default and restructuring is desirable per se. But it appears that failures like Evergrande’s have been treated by Chinese authorities as the price of disciplining the property sector as a whole and reducing its weight in the broader economy.”

Although not mentioned by Sperber, his above point also serves, inter alia, to underline how, again contra to much western reportage (even by some progressive scholars not unfriendly to China), China has not strategically departed from President Xi Jinping’s insistence that homes are for living in not for speculation. Against the common western narratives, Sperber argues that a more level-headed approach would be to put China’s current economic moment in a longer-term perspective. China’s economy was comprehensively transformed in the 1980s and 1990s, and “since this era of intense institutional restructuring ended in the early 2000s, China’s GDP has more than quadrupled in real terms but the country’s fundamental economic structure has remained stable, in terms of both the balance between state-owned enterprises and private capital, and the precedence of investment over consumption.”

Nobel Prize-winning economist Paul Krugman does not mince his words:

the signs are now unmistakable: China is in big trouble. We’re not talking about some minor setback along the way, but something more fundamental. The country’s whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.

That was in the summer of 2013. China’s GDP grew by 7.8 per cent that year. In the decade since, its economy has expanded by 70 per cent in real terms, compared to 21 per cent for the United States. China has not had a recession this century – by convention, two consecutive quarters of negative growth – let alone a ‘crash’. Yet every few years, the Anglophone financial media and its trail of investors, analysts and think-tankers are gripped by the belief that the Chinese economy is about to crater.

The conviction reared its head in the early 2000s, when runaway investment was thought to be ‘overheating’ the economy; in the late 2000s, when exports contracted in the wake of the global financial crisis; and in the mid-2010s, when it was feared that a buildup of local government debt, under-regulated shadow banking and capital outflows threatened China’s entire economic edifice. Today, dire predictions are out in force again, this time triggered by underwhelming growth figures for the second quarter of 2023. Exports have declined from the heights they reached during the pandemic while consumer spending has softened. Corporate troubles in the property sector and high youth unemployment appear to add to China’s woes. Against this backdrop, Western commentators are casting doubt on the PRC’s ability to continue to churn out GDP units, or fretting in grander terms about the country’s economic future (‘whither China?’, asks Adam Tooze by way of Yang Xiguang). Adam Posen, president of the Washington-based Peterson Institute, has diagnosed a case of ‘economic long Covid’. Gloom about China’s economic prospects has once again taken hold.

That there are structural weaknesses in the Chinese economy is not in dispute. After two waves of dramatic institutional reform in the 1980s and 1990s respectively, China’s economic landscape has settled into a durable pattern of high savings and low consumption. With household spending subdued, GDP growth, slowing over the past decade, is sustained by driving up investment, enabled in turn by growing corporate indebtedness. But despite this slowdown, the current bout of doomsaying in the English-language business press, half investor Angst, half pro-Western Schadenfreude, is not an accurate reflection of the fortunes of China’s economy – plodding, but still expanding, with 3 points of GDP added over the first six months of 2023. It is rather an expression of an intellectual impasse, and of the flawed conditions in which knowledge about the Chinese economy is produced and circulated within the Western public sphere.

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.

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.

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.

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.

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.

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.

“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.

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.

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.

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.

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.