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Will depopulation sink China?

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

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

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

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

This article originally appeared in the Turkish daily newspaper Aydinlik.

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

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

China falls back to second place

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

From Belgrade to Beijing: Comparing socialist economic reforms in Eastern Europe and China

We are very pleased to republish this important article by Roland Boer, Professor of Marxist Philosophy in the School of Marxism at China’s Dalian University of Technology, and a member of our advisory group.

Professor Boer makes a detailed and systematic theoretical and comparative analysis of the economic reforms undertaken in China since the end of the 1970s and the earlier reforms carried out in a number of East European socialist countries, particularly the two countries whose reforms were most extensive – Yugoslavia, with its decentralised system of self-managed worker enterprises in a ‘labour-managed market economy’, developed following the country’s expulsion from the Cominform in 1948; and Hungary, which initiated its New Economic Mechanism (NEM) in 1968.

He notes that the results were very different. With the exception of Belarus, Eastern Europe devolved into capitalist “shock therapy”, whereas “China took its reforms to a point where we are now entering yet a new stage in socialist construction, based on the prosperity that has been achieved. Along the way, many lessons have been learned, concerning planning, markets, ownership and liberation of productive forces, and indeed how the relations and forces of production interact with one another during socialist construction. It is precisely in light of these experiences that a systematic comparison becomes possible.”

His comparison looks at four major aspects:

1) The de-linking of a market economy from a capitalist system, and the concomitant de-linking of a planned economy from a socialist system;

2) The question as to whether a market economy is a neutral instrument that can be used in any system, or whether it is a component that is shaped by the system of which it is a part;

3) Planning and markets within a socialist system;

4) The relationship between ownership of the means (and forces) of production and liberation of productive forces, and thus the interactions between relations and forces of production.

Boer notes that both Eastern Europe and China achieved rapid economic growth by adopting the centrally planned economic model in the years following the establishment of a socialist state. Indeed, in the case of China, he notes: “This was necessary at the time, not merely in terms of overcoming the devastating effects of semi-colonialism, feudal relics, and comprador capitalism, but also to get the economy moving from decades of revolutionary struggle and war. The results were stunning for a time, outstripping any other developing country.”

However, in both Eastern Europe and China, contradictions gradually mounted, leading to the search for a new economic paradigm. He further notes that whilst China took the road of economic reform later, it has also taken its reforms much further.

Boer poses the question of how one should define a market economy. In Eastern Europe it was seen as a mechanism, or neutral tool, but the author argues that China has taken “an important step beyond the instrumentalist position, in which a market is simply a neutral tool that can be used in different social systems. Instead, the institutional forms of market and planned economies are shaped, are determined in their nature, by the system in question.” Therefore, the institutional form becomes not “market socialism” but rather a “socialist market economy”. As a Chinese scholar cited by Boer observes: “There is no market economy institutional form that is independent of the basic economic system of society.”

Having analysed some of the factors that caused socialism in Eastern Europe to collapse but to prevail in China, Boer notes that: “In the midst of China’s stunning economic success, a spate of well-documented and widely-studied problems became apparent during the ‘wild 90s,’ and even into the early 2000s: declining conditions for workers and consequent unrest; illegal appropriation of collectively owned village lands; a growing gap between rich and poor regions; environmental degradation; ideological disarray, with proposals ranging from the recovery of Confucianism to bourgeois liberalisation; and a rift between the CPC and the common people, leading to corruption and lack of knowledge of Marxism even by leading cadres.”

Tackling these issues has become the theme of the next, and current, stage of the Chinese revolution, since Xi Jinping assumed the leadership of the party in 2012. Boer argues that: “We can already begin to see clear results: about 800 million rural and urban workers have been lifted out of poverty, with almost 500 million now in a ‘middle-income’ group (and not a ‘middle class’); the gap between rich and poor has been decreasing now for about a decade; rural and urban workers are engaged in all aspects of China’s ever-strengthening socialist democratic system; in light of ecological civilisation, China has become a world leader in ‘green growth’; and the almost 100-million strong CPC is more united, more knowledgeable about Marxism, and more focused on the task ahead than at almost any time in its past.”

This is an extremely important article which deserves close study. It was originally published in the journal World Review of Political Economy (published by the Chinese Academy of Social Sciences and produced and distributed by Pluto Journals).

Abstract: This study offers a comparative analysis of economic reforms in Eastern Europe and China. Some CMEA countries—especially Yugoslavia and Hungary—undertook reforms in the 1960s, while China launched its reform and opening-up in 1978. In light of the lessons learned—concerning planning, markets, ownership of means of production and liberation of productive forces, and the interaction of relations and forces of production during socialist construction—it is possible to provide a systematic comparison. After providing background to the reforms, the comparison has four steps: 1) de-linking a market economy from a capitalist system, and the concomitant de-linking of a planned economy from a socialist system; 2) whether a market economy is a neutral instrument usable in any system, or whether it is a component shaped by the system of which it is a part; 3) planning and markets within a socialist system; 4) the relationship between ownership of the means of production (and control over the forces of production) and liberation of productive forces in the process of socialist construction. The fourth topic leads to the more foundational question of the dialectical interactions between relations and forces of production, since on this matter the economic definition of socialism turns.

Key words: Eastern Europe; China; economic reforms; comparison

In light of the renewed interest in the nature of market reforms within socialist systems, I offer a systematic comparative analysis of Eastern European and Chinese experiences. Some CMEA countries—especially Yugoslavia and Hungary—undertook such reforms in the 1960s, while China launched its reform and opening-up in 1978. That they had very different results is well known, with Eastern Europe (apart from Belarus) devolving into capitalist “shock therapy” while China took its reforms to a point where we are now entering yet a new stage in socialist construction, based on the prosperity that has been achieved. Along the way, many lessons have been learned, concerning planning, markets, ownership and liberation of productive forces, and indeed how the relations and forces of production interact with one another during socialist construction. It is precisely in light of these experiences that a systematic comparison becomes possible. The comparison that follows has four main steps: 1) the well-established de-linking of a market economy from a capitalist system, and the concomitant de-linking of a planned economy from a socialist system; 2) the question as to whether a market economy is a neutral instrument that can be used in any system, or whether it is a component that is shaped by the system of which it is a part; 3) planning and markets within a socialist system; 4) the relationship between ownership of the means (and forces) of production and liberation of productive forces, and thus the interactions between relations and forces of production. While the first three items concern the specific question of markets and planning within a socialist system, the fourth topic opens up the comparison to the more foundational question of the relations and forces of production. Foundational, since on this matter the very definition of socialism turns, specifically in terms of economic matters. While the topic itself concerns economic reform in a socialist context, my underlying concern is philosophical, seeking to determine the theoretical underpinnings of the similarities and differences between Eastern Europe and China.

Background to Economic Reforms

For readers not familiar with the historical background, I offer a brief summary.[1] Many of the countries in the Council of Mutual Economic Assistance (CMEA)[2] began experimenting with market reforms in the 1960s. Initially, the new communist governments had seized control of production from the former ruling class and instituted old-style centralised planning. However, by the 1960s the early breakaway economic growth began to falter, and new contradictions emerged. A range of reforms began, with all of them entailing elements of market relations (Wagener 1998a, 8–9). Some went cautiously, maintaining a predominance of centralised management, such as the Soviet Union, Bulgaria, Romania, and—after an initial burst of more far-reaching reforms—Czechoslovakia.[3] The DDR (East Germany) also had a period of reform in the 1960s, drawing lessons from the practice so as to enhance its centralised planning in the 1970s (Melzer 1982; Kraus 1998). The most significant market reforms took place in two countries, Yugoslavia and Hungary. The specific steps and mechanisms may have differed due to local conditions, but they shared an overall framework in terms of the scope of reforms, institutional adjustments, planning, and market incentives.

Yugoslavia made its initial moves early (due to expulsion from the Cominform in 1948) and eventually developed a decentralised system of self-managed worker enterprises in a “labour-managed market economy.”[4] They felt their way forward, since the path had never before been followed. By the 1960s, Yugoslavia had ended central planning, permitted worker-managed enterprises to determine what would be paid as salaries and what would be retained, transferred money from “social investment funds” to the banks, and sought integration with the global economy. Decentralisation was the watchword, moving ever outward to the republics, banking sector, and basic organisations of associated labour (BOALs). While Yugoslav economists spoke of moving from political to economic determination of the economy, from the state owning the means of production to workers doing so, questions remain as to how far they actually went.

In Hungary, the major step was the New Economic Mechanism (NEM) of 1968, which took on the dialectical challenge of improving planning by stepping back from direct planning.[5] The approach was described as “indirect centralisation,” preferring indirect economic levers. In place of centrally determined input and output, state-owned enterprises (SOEs) were to compete, establish supply chains, set prices in light of material needs and production, be sensitive to consumer demands, and be driven to innovate. The result was a growth of worker cooperatives and a substantial non-state sector of the economy. While Hungary sought a fine balance between planning and a market, it experienced significant swings back and forth between what they saw as the centralising tendency of planning and the decentralising pull of markets (Szamuely and Csaba 1998).

China stuck to a centrally planned economy longer than the countries of Eastern Europe (although not the Soviet Union), but it has also taken the process of reform much further. For the first thirty years, accelerated socialised ownership of the means of production and a planned economy were the notable features. This was necessary at the time, not merely in terms of overcoming the devastating effects of semi-colonialism, feudal relics, and comprador capitalism, but also to get the economy moving from decades of revolutionary struggle and war. The results were stunning for a time, outstripping any other developing country (Cheng and Cao 2009; Cheng 2020, 99–101), but they eventually faced mounting contradictions leading to the launch of the reform and opening-up in 1978. At first tentative, drawing on farmer experiments in household responsibility and on market economic mechanisms in light of the overall planned economy, soon enough the reforms gathered speed. The four modernisations took off, the drive to prosperity became a major focus, and a socialist market economy became a foundational feature of logistics and distribution, albeit always coupled with a planned economy. It is constantly emphasised that all these developments have been undertaken for the purpose of socialist construction in light of the Four Cardinal Principles, so as to avoid rightist (bourgeois liberalisation) and leftist (an over-hasty leap to communism) deviations. We are now at a recognised point that China is moving into yet another stage, but I will say more in the comparative material to follow.

De-linking

In light of this background summary, I move to comparing the experiences in Eastern Europe and China. To begin with, both Eastern European and Chinese approaches assume the necessity of de-linking: a “market economy” is not by definition a capitalist market economy; and socialism is not exclusively defined by a planned economy. This de-linking is by no means new, but a few too many are still influenced by the deceptive slogan of one of the godfathers of a now defunct neoliberalism, Count Ludwig von Mises (1932, 142): “the alternative is still either Socialism or a market economy.” Why deceptive? Mises slipped in the assumption that socialism means a planned economy and that a market economy means a capitalist market economy. It is perhaps better if Marxist analysts do not hold to such a neoliberal assumption.

By contrast, the de-linking move has a long history, from Marx’s observations concerning the ancient Roman slave market economy, through ancient military market economies and feudal markets, before we even arrive at the possibility of markets within a socialist system (Marx [1894] 1983, 583–599; Boer 2015; Kula 1976). Thus, market economies have existed throughout human history, but only one form has become a capitalist market economy. As for the theoretical possibility of a market economic form within socialism, this emerged in an explicitly Marxist framework in the proposals of the Polish economist, Oskar Lange, and became a given position in Eastern Europe (Lange 1936, 1937; Bajt 1989; Horvat 1989).[6] By the 1970s in China, we find that Deng Xiaoping and his circle began to reaffirm this insight from Eastern Europe, now developed in light of Chinese conditions (Deng [1979] 2008, 236; see also Yang 2009, 174; Yang 2010, 11–13).[7] Clearly, we are on common and uncontroversial ground on the question of de-linking, although some of those who are unfortunate enough to have been brought up in a Western liberal context still need to be reminded of this common position.

Mechanism or Institutional Form

Given that a market economy is by no means coterminous with capitalism and can be deployed within other systems (including socialist ones), the next point of comparison concerns how one is to define a market economy. The dominant position in Eastern Europe was that a market is an “economic mechanism” (Szamuely 1982, 1984). In other words, a market was seen as a neutral economic instrument or tool that could be used within different systems. For example, Kornai (1959) argued in an earlier work that a market economic mechanism could be deployed in a socialist system through direct and indirect levers. The direct levers should be centralised through the state: direction of production, allocation of production materials, regulation of foreign trade, and managerial appointments. For Kornai, the problem thus far had been over-centralisation and the dominance of direct levers. Thus, he proposed a greater role for a number of indirect levers, specifically investment, the monetary system, the price system, and the wage fund.

Some of the earlier Chinese material—especially from the 1980s—used similar terminology: we find “method [方法fangfa],” “means [手段shouduan],” and “mechanism [机制jizhi]” (Deng [1990] 2008, 363–364; [1991] 2008, 367; Zhao 1987). Here too was a tendency to see a market as a neutral instrument, which could be deployed to “serve [服务fuwu]” the community and the common good. However, by the early 1990s specific terminology began to be used, distinguishing between an overall socialist system (制度 zhidu) and the specific institutional forms or structures (体制 tizhi and at times 体系 tixi)[8] within such a system (Deng [1992] 2008, 370; Jiang [1992] 2006; Huang 1 994). In economic matters, there are two main institutional forms: a market economy and a planned economy. The institutional form of a market economy organises the forces and relations of production in a particular way, allocating resources and distributing products by means of the law of value, price signals, and competition. A planned economy organises the forces and relations of production by means of regulation, long-term calculation of means and ends, dealing with challenges, and setting perimeters for what can and cannot be done. The key point is that these two institutional forms are not necessarily antagonistic, for they may also work together within an overall system.

The specific terminology and the conclusions reached were the result of considerable debate in the late 1980s and into the 1990s. But why make this crucial distinction? It takes an important step beyond the instrumentalist position, in which a market is simply a neutral tool that can be used in different social systems. Instead, the institutional forms of market and planned economies are shaped, are determined in their nature, by the system in question.[9] Thus, if one has a foundational or “basic socialist system [社会主义基本制度shehuizhuyi jiben zhidu]” (Peng 1994, 13), then the institutional form of a market economy becomes not “market socialism” (which assumes an instrumentalist position), but a “socialist market economy.”[10]

We may also use the terminology of universal and particular: a market is a universal or commonality that may be deployed in the particularity of different systems, whether ancient Rome, feudal Europe, Western capitalism, or socialism. As Peng Lixun points out, the difference between a socialist market economy and a capitalist market economy is “not the generality [一般性yibanxing] of the market economy, but the particularity [特殊性teshuxing] of combining it with the basic socialist system” (Peng 1994, 13; see also Huang 1994, 4). Thus, to confuse an overall system with an institutional form is a profound category mistake. One final step: lest one still entertains the illusion that a market economy is an independent entity (“the market” as the neoclassical ideologues would have it), Huang Nansen (1994, 5) observes: “There is no market economy institutional form that is independent of the basic economic system of society .” One cannot have the institutional form of the market economy separate from the system of which it forms a part.

Planning and Markets

The third point of comparison concerns how the relations between market and planning were and are understood in Eastern Europe and China.

Eastern Europe: The Limit of Hard Budget Constraints

In Eastern Europe, they could not really get past the either-or opposition between planning and markets. The opposition took a number of forms, such as centralisation and decentralisation, state control and worker (economic) democracy, or vertical and horizontal relations. Much turned on whether one valued market relations or the state’s role. For some, the state was a hindrance, blocking the full development of a market “proper”;[11] for the majority, however, the state was seen as a distinct positive, especially since a strong and efficient state was the initial means for transforming the economy, society, education, and culture in a socialist direction (Brus 1973, 1975, 65; Brus and Laski 1989; Kozma 1982, 94). The ideal became “central planning with a regulated market” (Brus 1973, 1–20), with market relations functioning in many areas while the state oversaw the whole process and ensured equity, since the interest of society could not be reduced to the sum-total of individual interests. These remained ideals, for too often planning and markets were seen in opposition to one another. Thus, there were starts and stops, two steps forward and then a step back, as well as the differences between Hungary and Yugoslavia (which went much further) and other CMEA countries that retreated to central planning after tentative experiments.

How far did they go? How many market mechanisms could one use? As many Eastern European economists argued, market socialism includes market choices by individuals and enterprises, supply-and-demand price mechanisms, “profit” as a necessary bottom line for an enterprise’s viability, division of labour, and wage differentials. However, they stopped short in three crucial areas: hard budget constraints (entry and exit) for enterprises; pricing determined fully by market dynamics; and the law of value. Let me use the example of budget constraints in Yugoslavia, which had one of the most developed forms of market socialism. Despite the complexity of “soft” budget constraints, with the need for perpetual bargaining and elements of “hard” constraint where the state enforced reforms to ensure economic viability, the Yugoslav government was ultimately not willing to allow enterprises to “exit” if they failed to be financially viable (Kornai 1986, 1992, 487–496; Nove 1991). Thus, the state continued to “underwrite” enterprises so that none of them would suffer bankruptcy. As for prices, these were always regulated in some way, and they were never really able to tackle the law of value.

China: Reshaping the Law of Value

The contrast with China is notable. Here they have “gone all the way,” as it were, implementing all of the crucial common features of a market institutional form. This includes market pricing for most goods, hard budget constraints and thus “entry” and “exit” for many enterprises (including inefficient SOEs in the 1990s), and the law of value. Of course, the key SOEs, which remain the main economic drivers in China, are subject to “soft” budget constraints. But—staying with the metaphor—there is a distinctly hard edge to such constraints: the SOEs have been undergoing constant reform, learning from market efficiencies, ensuring the budget bottom line, and emerging as hubs for innovation and expansion.

Let me say a little more concerning the law of value, which is seen as a basic principle (基本原则jiben yuanze) of Marxist political economy. This is not an ossified basic principle, unchangeable for all time, since even the basic principles need constant deepening and development in light of the theoretical implications of specific solutions for particular problems (Cheng 2020, 102). In terms of the Marxist law of value, the distinction between use value and exchange value, and the identification of surplus value produced by workers as the key to capitalist exploitation, arose through the analysis of a capitalist system. But does the labour theory of value also apply to socialist construction and a socialist system? If so, how? One may find plenty of statements to the effect that one must have a law of value if one has a market institutional form (Yang 1994, 6; Zhang and Zhuang 1994, 5; Gao and Zheng 1996, 4; Huo 2011).[12] But how does it work in the qualitatively different context of a socialist system?

On this matter, Cheng Enfu and his colleagues have been among the foremost proponents for reworking this basic principle, which they see as an inescapable part of a market institutional form (Cheng, Wang, and Zhu 2005, 2019; Cheng 2007, 16–21). Cheng defines Marx’s theory as follows:

all labour that directly produces material and immaterial goods for market exchange, as well as labour that directly serves the production and reproduction of labour goods, including the internal management labour of natural and legal entities and scientific and technological labour, are value-creating labour or productive labour. (Cheng 2007, 16)

Already we can see the effort to develop the theory beyond Marx’s focus on: a) production of material goods in industry, agriculture, construction, and so on; b) transport or circulation of goods. Cheng and his colleagues go much further, arguing that value is also produced in: c) “intangible spiritual [无形精神wuxing jingshen]” goods, by which is meant activities that contribute to cultural vitality, such as education, research, art and literature, media, and so on; d) “service labour [服务劳动fuwu laodong]” involved in activities such as medical care, health, and sports; e) management and direction of enterprises, in the sense that such labour involves the management of socialised labour, along with the surplus value that arises from private ownership; f) changes in the objective and subjective conditions of labour (leading to complex outcomes depending on where changes are located), with the main trajectory of such changes being the increase in the complexity, proficiency, and intensity of labour so as to improve the total value of goods and the total social value. This brief summary indicates sufficiently well the effort at reworking the labour theory of value, although Cheng also adds wealth and distribution, in terms of the “total factors involved in wealth production” (land, resources, finance, ecology) and “distribution according to work [按劳分配anlaofenpei]” (along with other forms of distribution).[13] Together, these three—living labour, wealth, and distribution—form a whole, with labour at the core.

What is the outcome of this proposal concerning the “creation of value by living human labour [活劳动创造价值huolaodong chuangzao jiazhi]”? First, the theory of value applies not merely to the industrial worker (工人gongren) but to all forms of labour (劳动laodong)—of which there are hundreds recognised in China. Second, this proposal clearly emphasises the social production of value: it takes place not merely through the selfish individual producer seeking self-aggrandisement (as assumed by neoclassical economics [Cheng 2007, 21–24]), but is a social reality. Third, it follows that the theory of value applies not merely to the socialist market economy, but to the whole of socialist society. On this matter, there is some difference of opinion among Chinese scholars, with some arguing that the law of value applies only to the market institutional form, while others argue that it should be extended to embrace social or public value. I suggest that Cheng Enfu’s proposals also move in the latter direction, especially when he speaks of the increase in “total social value [社会价值总量shehui jiazhi zongliang].” Or, as he proposes elsewhere, the “Gross Domestic Welfare Product [国内生产福利总值guonei shengchan fuli zongzhi],” or GDWP, which draws together the areas of economy, nature, and society in order to determine a comprehensive “final gross welfare product [最终福利总值zuizhong fuli zongzhi]” (Cheng and Cao 2009; Cheng 2020, 101).

Planning, Market, and Non-antagonistic Contradictions

To return to the question of relations between planning and market, we find in Chinese scholarship a range of formulations, although they are not mutually exclusive: fairness of planning and efficiency of a market; benefits for all and innovation; public economy and private economy; regulation according to proportion and regulation according to value; and so on. Through such formulations, the emphasis is on seeking ways for the two institutional forms to enhance one another, with planning focused on improving conditions for market mechanisms and ensuring that they work for the public good, and markets providing insight into improved efficiency and functionality for planning. But let me step back for a moment and put this in more philosophical terms: in the context of contradiction analysis, the category of non-antagonistic contradictions is the key. Stemming from Lenin and thoroughly reworked in a Chinese context, it is very clear that during socialist construction contradictions continue to appear.[14] But such contradictions are now by default non-antagonistic. To be sure, they need to be managed so as to maintain such a non-antagonistic nature (Mao [1957] 1977), but this is to ensure the norm rather than trying to soften the hard edges such as in—for example—a rampant capitalist system. So also with the institutional forms of planning and market. It is in this light that we should understand the moves to speak of a dialectical transcendence (超越chaoyue) or sublation (扬弃yangqi, a translation of the German Aufhebung) of the old opposition of planned and market economies in what more and more are beginning to see as a distinct new stage of China’s development (Zhang 2009, 139; Fang 2014, 63; Zhou and Wang 2019, 41).

Ownership and Liberation of Productive Forces

The question of planning and market leads to the wider question of the relationship between ownership of the means (and forces) of production and liberation of productive forces, which is a specific manifestation of the foundational dialectic of relations and forces of production. But let us step back for a few moments: since this topic is a basic principle of Marxist analysis and takes us to the heart of the economic definition of socialism, I begin with some exegesis of texts by Marx and Engels. These texts will enable me to establish a framework for identifying the historical emphases and shifts in Eastern Europe and then China.

Marx and Engels

In the “Manifesto of the Communist Party,” Marx and Engels look forward to the exercise of power by a communist party after a successful proletarian revolution for the sake of socialist construction:

The proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeoisie, to centralise all instruments of production [Produktionsinstrumente] in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total of productive forces [Produktionskräfte] as rapidly as possible. (Marx and Engels [1848] 1974, 481)

There are two main parts in this sentence. The first concerns the gradual—“by degrees”—seizure of capital and the centralisation of all the instruments or means of production in the hands of a proletariat that now controls the reigns of power. In short, this is the centralised ownership of the means of production by the proletariat embodied—at this point—in the state. The second part concerns the accelerated increase of productive forces, or what we may call, following standard Chinese practice, the liberation of productive forces (解放生产力jiefang shengchanli).[15] Clearly, for Marx and Engels both ownership of the means of production and liberation of productive forces are needed for the process of socialist construction.

Let us stay with ownership for a moment: does such ownership pertain only to the instruments or means of production? Here Engels’s overview in “Karl Marx” is revealing:

The productive forces of society [gesellschaftlichen Produktivkräfte], which have outgrown the control of the bourgeoisie, are only waiting for the taking possession [Besitzergreifung] of them by the associated proletariat in order to bring about a state of things in which every member of society will be enabled to participate not only in production but also in the distribution and administration of social wealth, and which so increases [steigert] the productive forces of society [gesellschaftlichen Produktivkräfte] and their yield by planned operation of the whole of production that the satisfaction of all reasonable needs will be assured to everyone in an ever-increasing measure. (Engels [1877] 1985, 109; see also [1847] 1972, 377; [1894] 1973, 263–264)

Notably, Engels takes a step further than the “Manifesto,” speaking here of “productive forces” (Produktivkräfte 生产力) in regard to both ownership and liberation. Thus, the productive forces require a seizure, a taking possession (Besitzergreifung) by the proletariat, with the outcome that the productive forces will increase (steigert). In this case, the taking possession or ownership also leads to a planned economy, as the flow of Engels’s text indicates. For Engels, ownership—entailing a range of meanings that includes seizure, possession, and control—applies to both the means of production and the forces of production. It is in this sense that I will use the terminology of “ownership” below.[16] However, some questions remain. Are these relatively brief programmatic statements relevant only after the initial seizure of power through a proletarian revolution? Is there a causal relationship between one or the other term?[17] How will the dialectic of liberation and ownership unfold over the long process of socialist construction? Marx and Engels were very careful to note that they had no experience of the construction of socialism, with a communist party in power, so they stressed that the actual results could be determined only from experience and “only scientifically [nur wissenschaftlich]” (Marx [1875] 1985, 22), and that to “attempt to answer such a question in advance and for all cases would be utopia-making” (Engels [1873] 1984, 77).

One further question: what is the starting point of ownership (of both means and forces of production)? Given that this ownership is by the proletariat as a class, the perspective is that of the relations of production. By contrast, liberating the productive forces begins from the perspective of such forces, which include human labour and means of production.[18] It follows that the questions of ownership and liberation are specific manifestations of the core dialectical interaction between relations and forces of production.[19] Let me emphasise that this is a dialectical relation, requiring both features in a constantly unfolding process: the one needs the other, with constant readjustments as one side leaps ahead and the other side needs to be brought up to speed (Stalin [1952] 1997, 196–205).[20]

The First Stage: An Emphasis on Ownership

I have devoted some attention to the material from Marx and Engels and its implications, since it provides the necessary framework for understanding how economic emphases have unfolded in the historical process of socialist construction. We may distinguish initially between two periods, which for now can be designated in terms of an emphasis on ownership of the productive forces, and then by a shift in favour of their liberation—albeit always in a dialectical relation to one another.

To begin with, in both Eastern Europe and China there was a common assumption that the emphasis immediately after a revolutionary seizure of power should be radical changes in the relations of production, manifested specifically in terms of the seizure, ownership and thus control of the means and indeed forces of production. The logic behind this move was straightforward: drawing from Marx and Engels, they identified the main contradiction of a capitalist system in terms of socialised labour and the private ownership of the means and forces of production by the bourgeoisie and remnants of the landlord class. It followed that a communist party in power should seek to transcend the contradiction by socialising such ownership (Engels [1894] 1973, 260). Other factors made this a necessary move, particularly the need to prevent counter-revolution and instigate the economic structures needed both to overcome the previous system and begin the process of socialist construction—abolition of bourgeois private property, industrialisation in light of “backward” economic conditions, collectivisation of agriculture, and a fully planned economy.

Not unexpectedly, this initial move led to an intense focus on production relations, predicated on the belief that the elimination of private ownership would produce equality and social justice. In Eastern Europe, it was very soon assumed that production relations constituted the main subject of Marxist political economy and thus policy-making. In some cases, this focus moved in a volitional direction, assuming that human beings could create, amend, and abolish economic laws themselves (Kraus 1998, 286).[21] In China and in light of its cultural tradition, we do not find such extreme expressions. Already from the time of Mao’s lectures on dialectical materialism (Mao [1937] 1984), the dialectical interaction of the forces and relations of production was a crucial analytic approach. Thus, while Mao did seek to overcome the contradiction inherent in capitalism (Mao [1937] 2009, 318) through the socialisation of ownership, he saw this as a means to liberate production forces (Mao [1945] 2009, 1079; [1956] 2009).

This is precisely what happened in the initial period. There is abundant evidence to show that in both Eastern Europe and China economic production leapt ahead. For example, the Soviet Union, Czechoslovakia, and East Germany became highly industrialised economies, and the other countries of the CMEA saw significant growth (Höhmann 1982, 1–2; Kozma 1982, 99–104). In China, the “first economic miracle” included significant developments in science and technology, an independent industrial and national economic system, development of education, culture and health, population growth (in numbers and life expectancy), great improvement in socio-economic well-being, and China’s emergence in international affairs, all the way from the United Nations to increased appeal in and engagement with developing countries (Cheng and Cao 2009, 6–8).

The Second Stage: New Means of Liberating Productive Forces

Nonetheless, internal contradictions began to mount. In Eastern Europe, the almost exclusive public ownership (through the state) and the fully-planned economy was showing signs of a limit-point, with supply-side structural blockages, rapid and uneven development over a relatively short period, constant tensions between expanding or modernising production, the risk of overspending national incomes for the sake of production so as to meet consumption demands, and the decline in creative solutions. In short, economies began to stagnate, leading to increased tensions in the relations of production that threatened to become antagonistic (Kozma 1982, 172–176; Kraus 1998, 315–316). In China too problems started to become apparent. Even with all of the achievements noted above, there had been signals of mounting contradictions including the persistence of poverty in rural areas and many regional cities, the emphasis on class struggle in the 1960s, and the increased focus on liberating productive forces through sheer volitional effort (Lin 1969, 8).[22] By the 1970s, intractable contradictions in China’s economic development had become all too apparent (Deng [1982] 2008, 16; Wang and Yang 1994, 105).

The response in both Eastern Europe and China was to seek alternative ways to liberate productive forces, and the approach was to develop in various ways a market institutional form within a socialist system. As already noted, the Eastern European efforts were tentative: they were feeling their way forward along a new path and never managed to resolve many of the new questions in the time they had remaining. China managed to avoid the snares that caught Eastern European countries, in part through careful studies of what went wrong in Eastern Europe, and in part through “pilot projects” that carefully tested new measures before they were implemented country-wide. Thus, while the Soviet Union and Eastern Europe succumbed to the contradictions and suffered the devastating effects of capitalist-imposed “shock-therapy,” China launched itself on a path that has led to its status today as a global economic power. While nominally the “second largest economy” in terms of GDP, on other measures it contributes more than any other country to the global economy (more than 30%), its industrial output and foreign exchange reserves are the highest in the world, it has the largest internal market, it has developed a comprehensive system of quality education, health, and welfare, and it has seen Hong Kong and Macao return (Cheng and Cao 2009; see also Cheng 2018, 2–3; Cheng 2020, 99–101).[23]

Let us pause for a moment and assess the shift to the second stage of economic development. In terms of the dialectic of forces and relations of production, the initial period entailed radical transformations in the relations of production, focused on ownership of the means of production and control over productive forces, so as to spur economic development. Over time, the relations of production became a drag on productive forces, since the latter had leapt ahead and the former had not kept pace. Hence the reforms in Eastern Europe of the 1960s and the reform and opening-up in China from 1978. However, this was not necessarily the way such developments were perceived on the ground. As noted earlier, in Eastern Europe there was a tendency to focus on the tensions between planning and market, with questions turning on the nature of ownership. By contrast, it can be argued that in China the key was liberating productive forces: the question concerned the best means to enable such liberation. Was it to be accelerated ownership of the productive forces, which was the emphasis of the first stage? Or was it to be a socialist market economy in conjunction with planning, as in the second stage?

In order to understand this emphasis, let us turn to another country with the same initial problem as China: Vietnam. Here too was a poverty-stricken country seeking a socialist path of development, but Vietnam was able to enter into this path somewhat later and thus benefited from the experiences and insights of others. Here the emphasis on productive forces never really slipped into the background. For example, a consistent theme of Le Duan’s speeches from the 1960s—before the success of the revolutionary struggle that united north and south—is that the new production relations require an adequate content through the advancement of productive forces. More concretely, this means building “a material and technical basis for socialism” that is embodied in “large-scale industry capable of providing all branches of the national economy” with the necessary technical equipment. The reason: “only on this basis can we carry out a rational new division of labour in our society, a rational utilisation of our country’s labour power and resources, and attain a high labour productivity” (Le 1963, 180; emphasis added; see also Le 1960, 22–23). In Vietnam, this dialectical coordination of the forces and relations of production was seen as the only way to satisfy the people’s material and cultural needs. Clearly, the lessons from China, and indeed from Eastern Europe, had pressed upon Vietnam the need for economic development, of emphasising the inescapable importance of productive forces and their liberation, so as to provide content for the relations of production.

This was, of course, the signature emphasis of Deng Xiaoping. While he acknowledged the fact that Mao Zedong too had wanted to develop productive forces, Deng pointed out that “not all of the methods Mao used were correct” (Deng [1985] 2008b, 116). For Deng the “development of the productive forces . . . is the most fundamental [最根本zui genben] revolution from the viewpoint of historical development” (Deng [1980] 2008, 311). “Poor socialism” is not socialism; instead, socialism should seek to develop productive forces, improve the country’s strength and the lives of the people (Deng [1986] 2008, 172; [1992] 2008, 372).

A New Stage: Dialectical Sublation (扬弃yangqi)

Thus far, I have outlined two main stages in the path of socialist construction. With varying emphases and time-frames, we can see these stages in both Eastern Europe and China. That the second stage, involving a market institutional form, went in diametrically opposed directions in each place is well-known—albeit not for want of hoping for a fully functional “market socialism” in Eastern Europe (Balcerowicz 1989; Bajt 1989; Brus 1989, 1992; Dyba 1989; Horvat 1989).[24] At this point, Eastern Europe drops out of our analysis, but it needs to be asked: why did Eastern Europe—with the notable exception of Belarus[25]—devolve into “shock therapy” capitalism? Many are the potential answers, but in terms of the analytic framework used here, I propose two reasons. First, they did not embrace the dialectical need to develop a full market institutional form for the sake of the socialist road. Instead, it was precisely the half measures, the swerving this way and that, that set up a capitalist turn. Second, they lacked the strong state structures—a crucial feature of socialist systems since the Soviet Union in the 1930s—to enable such a dialectic.[26] On both counts, China has succeeded.

As a result, in China it is becoming apparent that a new and third stage is now well underway. This stage is usually dated from 2012, the beginning of Xi Jinping’s tenure as General Secretary of the CPC and President of the People’s Republic of China. Before considering the many indicators of such a stage, let me step back a moment and focus on the new contradictions that arose as a result of the resolute emphasis on liberating productive forces during the decades of the reform and opening-up. In the midst of China’s stunning economic success, a spate of well-documented and widely-studied problems became apparent during the “wild 90s,” and even into the early 2000s: declining conditions for workers and consequent unrest; illegal appropriation of collectively owned village lands; a growing gap between rich and poor regions; environmental degradation; ideological disarray, with proposals ranging from the recovery of Confucianism to bourgeois liberalisation; and a rift between the CPC and the common people, leading to corruption and lack of knowledge of Marxism even by leading cadres. In light of these new contradictions, two core questions arose. First, were they systemic to the reform and opening-up, as a few too many Western observers assumed, or were they contingent and incidental to the overall process? The answer comes straight of Marxist dialectical analysis: they were incidental to the larger process of socialist reform (Lo 2007, 120–121, 129). Second, what was to be the solution? Here the answer too is dialectical, deploying contradiction analysis: the way to solve these internally generated contradictions was to deepen the reform process itself (CPC Central Committee 2013; Xi 2018; Zan 2015).

One way to consider the results in China is in terms of public ownership. In light of repeated warnings from scholars and policy advisers such as Cheng Enfu concerning a drift away from public ownership as the mainstay (Cheng 2007; Cheng and Xie 2015, 59–60), there has been a notable tightening up on private companies,[27] and a strengthening and reform of state-owned enterprises so that, as efficient hubs of innovation, their role as the backbone of the economy is being enhanced (Xi 2017). But this is only one perspective, and it risks seeing the shift in emphasis as a type of return to the features of the first stage.[28] Instead, the process of deepening reform is far more comprehensive (全面quanmian), covering a full range from the economic base to superstructural components. We can already begin to see clear results: about 800 million rural and urban workers have been lifted out of poverty, with almost 500 million now in a “middle-income” group (and not a “middle class”[29]); the gap between rich and poor has been decreasing now for about a decade; rural and urban workers are engaged in all aspects of China’s ever-strengthening socialist democratic system; in light of ecological civilisation, China has become a world leader in “green growth”; and the almost 100-million strong CPC is more united, more knowledgeable about Marxism, and more focused on the task ahead than at almost any time in its past. The formulations of the new stage vary, such as China “has stood up, become better off, and grown in strength [从站起来、富起来到强起来]” (Xi 2020b, 12) and the “third economic miracle [第三个经济奇迹di san ge jingji qiji]” (Cheng and Cao 2009, 6) or “socialism with Chinese characteristics for a new era [新时代中国特色社会主义]” (Xi 2020b, 1).

Conclusion

In this comparison between Eastern Europe and China, I began with the specific question of market and planning institutional forms within a socialist system. On this matter, I found common ground on the question of de-linking, and in terms of the underlying dynamics that led to reforms in Eastern Europe in the 1960s and China from 1978. Differences also emerged: in seeing a market as a neutral “economic mechanism” or as an institutional form that is shaped by and indeed inseparable from the system of which it is a part; in a tendency to see planning and market in an either-or tension and thus seeking a delicate balance, or to seeing them in a both-and relation, with the one enhancing the other in terms of non-antagonistic contradictions.

The treatment of planning and market led me to address the more foundational question of ownership (of both means and forces of production) and liberation of productive forces, and thus the dialectic of relations and forces of production. There is no need to repeat the detail of that discussion here, so let me conclude with a more philosophical observation concerning the approach to contradictions. Eastern Europe reveals some influences from the Western philosophical tradition’s emphasis on either-or, or zero-sum.[30] Thus, we found a heavy focus on ownership—at least in the initial stage—and a tendency to see this emphasis in tension with liberating productive forces through a market mechanism. As noted earlier, this either-or approach was manifested in a series of related oppositions: centralisation and decentralisation, state control and economic democracy, or vertical and horizontal. By contrast, in countries such as China and Vietnam the emphasis has arguably been on finding the best way to liberate productive forces. Undeveloped economic conditions, as well experiences of European imperialism, play a significant role in this emphasis, but there is also a cultural and philosophical emphasis on both-and, in the sense that “what is contradictory is also complementary [相反相成xiangfan-xiangcheng].” In Marxist terminology, we may speak of non-antagonistic contradictions in socialist construction. So the key question was: how to enable such liberation? Through radical transformation of the relations of production, characteristic of the first thirty years? A resolute emphasis on productive forces, as we find with the reform and opening-up? Or a people-centred approach, as a dialectical transformation of the first two stages? Historically, the answer is obviously affirmative for all three questions. That there will be new contradictions—such as the policy of “dual circulation [双循环shuang xunhuan]”—goes without saying.

[1] For more detail, see a couple of earlier works (Boer 2021a; 2021b, 115–138).

[2] The CMEA included all Eastern European countries, along with Mongolia, Cuba, Vietnam, and Yugoslavia as an equal trading partner in 1964.

[3] Country by country economic surveys may be found in Nove, Höhmann, and Seidenstecher (1982) and Wagener (1998b).

[4] On Yugoslavia there is a wealth of rarely-studied material available (Vanek 1972; Dubey 1975; Rusinow 1977; Estrin 1983; Lydall 1984; Brus and Laski 1989, 87–101; Nove 1991, 175–184; Gligorov 1998; Mencinger 2000).

[5] Again, there are many studies of the Hungarian experience (Brus and Laski 1989, 61–72; Nove 1991, 162–175; Swain 1992; Szamuely and Csaba 1998; Bockman 2011, 105–132).

[6] Lange’s approach was that of Marxist political economy, but he was heir to a longer non-Marxist theoretical tradition that examined the possibilities of markets and competition in a “socialist state.” Thus, Walras suggested that only such a state would provide the necessary institutions for market competition and just distribution, and Pareto and Barone argued for a “Ministry of Production” that would ensure competitive markets, determine equilibrium prices, and so maximise socio-economic well-being, including redistribution where needed. For Barone, this may be conceivable theoretically, but was—he opined—practically impossible. In part, Lange’s studies sought to show that it was very much possible (Walras [1896] 2014; Pareto 1896, 56–59; 1902; Barone [1908] 1935).

[7] In a Chinese context, the issue was raised in an initially ignored study by Yu Zuyao (1979), only to be picked up by Deng Xiaoping and others within a few months.

[8] If one consults a Chinese dictionary, one will find 体制tizhi translated as structure, organisation, and set-up. But since the terminology became very specific, I translate the word as “institutional form,” a term drawn from Régulation Theory (Boyer and Saillard 2002). An “institutional form” is a specific building block or component of a larger system, and it is one among others.

[9] Of all the Eastern European sources I have studied, only Horvat (1989, 233) makes this point: “It is not the market that determines a social system; it is, on the contrary, the socio-economic system that determines the type of the market.”

[10] As Xi Jinping observes,

The term “socialist” is the key descriptor, and this is something that we must never lose sight of. We call our economy a socialist market economy because we are committed to maintaining the strengths of our system while effectively avoiding the deficiencies of a capitalist market economy. (Xi 2020a)

[11] This position is particularly noticeable in Janos Kornai, who began as a proponent of a market mechanism within a socialist system and ended up as an ideologue for a capitalist system (Kornai 1992, 1993; 2006, 273–275).

[12] The necessity of a law of value was already emphasised by Mao Zedong in the late 1950s, and came to the fore again in the 1980s with Deng Xiaoping (Mao [1959] 2009; Deng [1985] 2008a, 130; [1988] 2008, 262).

[13] 按劳分配anlaofenpei is a four-character rendering of the principle of socialism initially identified in the Soviet Union of the 1920s and 1930s: from each according to ability, to each according to work (Boer 2017, 30–36).

[14] As Lenin famously put it in his notes on Bukharin: “Antagonism and contradiction are not at all the same thing. Under socialism, the first will disappear, the second will remain” (Lenin 1920, 391). Drawing on Engels and Marx, Lenin ensured that the category of non-antagonistic contradictions would become a staple of Marxist dialectics until this day (Boer 2021b, 55–84).

[15] We already see this terminology emerging in the 1950s (Mao [1956] 2009), and it became a signature emphasis of Deng Xiaoping.

[16] It should be noted that the terminology was not fully clarified in the works of Marx and Engels (see especially Engels [1894] 1973, 263–264), and it would take later developments to achieve such clarity. Most of the terminology was developed and established in the Soviet Union, and one may usefully compare the three editions of the authoritative Great Soviet Encyclopedia to see how the terminology was clarified (Berestnei 1940; Malyshchev 1955; Vasilchuk 1975). Here we find that the productive forces are defined as the combination of human labour power with the means of production so as to transform the raw materials of nature in the creation of socio-economic well-being (and thereby determine the level of society). In this definition, the means of production are a subset of the forces of production, but the term has a specific meaning: the means of production constitute all of the materials necessary for human beings to engage in production. Or, as Marx suggests in the first volume of Capital (Marx [1867] 2004, 131), labour resources (劳动资料laodong ziliao) and the objects of labour (劳动对象laodong duixiang) together constitute the means of production.

[17] Engels in particular suggests that there is a causal relation, as the text quoted above indicates, as well as his fuller statement in Anti-Dühring (Engels [1894] 1973, 263–264).

[18] Here I follow standard usage (see note 16): while human labour is one of the productive forces, the specific relations of human beings to one another in the process of production, which is often manifested in terms of class relations, constitute the relations of production (生产关系shengchan guanxi).

[19] This is not to say that the framework of forces and relations of production is the only way to analyse developments. For sake of clarity and focus, I leave aside—or at least mention briefly—the question of volitional or ideological features at certain points, the role of the state not merely in planning but also in overseeing a market institutional form, and the relations between formal and real socialisation (see footnote 27).

[20] Stalin pointed out that certain economic laws have a valence in socialist construction—not least the contradictions between the forces and relations of production. On the one hand, the radical shift in relations of production—public ownership and collectivisation—had a profound effect on unleashing productive forces after the October Revolution; on the other hand, the dialectic of forces and relations of production changes in light of specific conditions. In a certain situation, the forces of production lag and become a fetter on production relations, while in another situation the reverse applies. The solution: the laggard needs to be brought up to speed. Notably, Stalin’s text produced a temporally shortening effect: while the Soviet Union had already experienced three decades of socialist construction, with the consequent experience of new problems in Eastern Europe Stalin’s text appeared early in the piece in relation to their economic development. It would take a decade or more for the practical implications to emerge in terms of the reform programs.

[21] This emphasis led to significant debate concerning the nature and range of ownership, which included: the nature of private property in a socialist system in which public ownership of the means of production was the norm; the various types of ownership that were emerging; and the distinction between public ownership (by the state on behalf of society) and social ownership, in the sense of society having effective disposition over the means of production it owns (Horvat 1969; Brus 1975; Brus and Laski 1989).

[22] In some respects, the emphasis on volitional solutions, characteristics of leftist emphases, may be seen as an over-compensation for the initial inability to overcome the problem of lagging productive forces. Many thanks to Antonis Balasopoulos for this insight.

[23] During this time, we also find a significant reassessments of the category of ownership. The oft-repeated principle is that public ownership should be the mainstay, while other forms of ownership can also exist in a “mixed ownership economy [混合所有制hunhe suoyouzhi].” In this context, there was an emphasis on the diverse forms that public ownership may take. Instead of a single form of public ownership, we find state-owned enterprises, cooperatives, collectively owned farm land, and the public dimensions of private enterprises with their CPC units and social responsibility reports. While a significant diversity of private ownership also arose, this was never seen in terms of neo-liberal privatisation (Thesis Group 2009, 94–95; Cheng and Xie 2015, 61).

[24] I have deliberately not included Gorbachev’s perestroika in the Soviet Union, since this was a distinctly non-socialist experiment.

[25] The case of Belarus requires another study. Belarus responded to the chaotic and economically destructive privatisation in the former Soviet Union with a deliberate shift to realising “market socialism” when Lukashenko came to power in 1994. For a careful study, see Li and Cheng (2020).

[26] On the Soviet Union and its breakdown, see further Cheng Enfu and Liu Zixu (2018, 70–71), who identify ideological confusion from the time of Khrushchev’s extreme negation of Stalin, the breakdown of organisational discipline that enabled non-communists to rise to leadership, and resultant disavowal of scientific socialism by such leaders. A major reform and renewal of the socialist path requires a united, disciplined, and theoretically knowledgeable communist party, and thus a well-functioning governmental apparatus to see the process through.

[27] This strengthening and tightening up of regulation may be seen more recently with regard to Ant Group and Evergrande.

[28] On this question, another level of analysis can also be deployed, now in terms of formal and real socialisation of production. While this approach would require a different study from the present one, it may be argued that the initial stage of socialist construction tended towards formal socialisation, with accelerated ownership of the means of production and control over the forces of production. By contrast, real socialisation can take place only with the liberation of productive forces, thereby providing substantive resources for socio-economic well-being. This liberation—as argued—began in the second stage, but is beginning to be realised in the third stage, with its emphasis on common prosperity for all. I would like to thank one of the anonymous reviewers for suggesting this perspective.

[29] This brief observation touches on a topic of significant debate in China that would require another paper to address adequately. My comment takes sides in a debate, indicating that “middle class [中产阶层zhongchan jieceng]” in English carries with it a semantic field associated with the growth of capitalism in Europe, especially traders and merchants in towns who came to form a “bourgeoisie” (the term originally meant town-dwellers) that eventually were the agents of bourgeois revolutions. It is due to these connotations with capitalist development that “middle class” in English is inappropriate for socialist construction. Thus, the more neutral “middle-income group [中等收入群体zhongdeng shouru qunti]” is the appropriate term. On this matter, I follow the trend of recent research (Cai 2018; W. Li 2018; 2021; Liu and Liu 2021).

[30] Given the either-or emphasis in the Western tradition, it is notable that Western definitions of socialism focus on the ownership of the means and forces of production and neglect the liberation of such forces. It should also be obvious that such an emphasis arises from contexts where—at least until recently—productive forces have been relatively highly developed.

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Xi stresses revitalization of northeast China

Chinese President Xi Jinping recently conducted an extensive inspection tour of Liaoning province. Situated in north-east China, Liaoning is one of China’s old industrial bases and borders the Democratic People’s Republic of Korea (DPRK).

President Xi visited a revolutionary memorial, a river and lake management project, an enterprise and a residential community, meeting people from all walks of life. The party’s goal of realizing common prosperity was a major theme of his tour and the President stressed that no political consideration is higher than the people – so long as the party maintains its ties with the people, breathes the same air as the people, shares the same destiny, and stays connected to them, it can obtain the power to triumph over any difficulty.

He also noted that the local people had sacrificed a great deal for the liberation of north-east China and made massive contributions to the development of New China and the victory in the War to Resist US Aggression and Aid Korea, adding that, “We will never allow our socialist country to change its nature. Nor will the people.”

Xi also laid stress on ecological conservation and green development, flood control and prevention, independent innovation, promoting self-reliance in science and technology and boosting the country’s grip on core technologies, and developing elderly care programs whilst also ensuring healthy growth of the younger generation.

He told local residents that Chinese-style modernization means common prosperity for all, not just a few. “More efforts must be made so that the people feel the CPC serves the people wholeheartedly and is always with the people,” he stressed.

The below report was originally carried by the Xinhua News Agency.

President Xi Jinping has stressed greater sense of responsibility and endeavors in the revitalization of China’s northeast region in the new era.

During his inspection tour in Liaoning Province from Tuesday to Wednesday, Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, called for breaking new ground in the revitalization and development of the northeastern province.

Xi called for coordinating the COVID-19 response with economic and social development, balancing development and security imperatives, fully and faithfully implementing the new development philosophy, and firmly promoting high-quality development.

Efforts should be made to promote common prosperity for all, advance the modernization of China’s system and capacity for governance, and deepen the Party’s full and rigorous self-governance, to set the stage for the 20th National Congress of the CPC, said Xi.

During the inspection, Xi went to the cities of Jinzhou and Shenyang, where he visited several places, including a revolutionary memorial, a river and lake management project, an enterprise, and a community.

Time for pursuing common prosperity

The following article by Friends of Socialist China co-editor Carlos Martinez, written for China Daily, outlines the progress made in China over the past decade, and describes the rising emphasis on common prosperity and sustainable development.

After eradicating absolute poverty at the end of 2020 following the most systematic and extensive poverty alleviation program in history, China achieved its goal of becoming a moderately prosperous society in all respects. This achievement is nothing short of extraordinary, and reflects the enormous commitment of the Chinese leadership, government and people to fundamental human rights.

What’s more, the goal of eliminating extreme poverty was fulfilled while the country was concurrently battling the COVID-19 pandemic which has driven millions into poverty around the world.

What does it mean for a Chinese person to have risen out of extreme poverty? It is more than simply surpassing the World Bank-defined income threshold of $1.90 per day. China’s definition also includes two assurances (for adequate food and clothing) and three guarantees (access to medical services, safe housing with drinking water and electricity, and at least nine years of free education).

Anyone who has visited rural areas elsewhere in the developing world－whether in Asia, Africa, Latin America, the Middle East or the Caribbean－will understand that for a huge country of 1.4 billion people to be able to meet the basic needs of every citizen is a historic accomplishment. Such an accomplishment is built on the firm foundations of the Chinese revolution, the strength and wisdom of the Communist Party of China, and the system of whole-process people’s democracy.

With the completion of the targeted poverty alleviation campaign and the accomplishment of the first centenary goal of building a moderately prosperous society in all respects, China has scored an important victory. Yet the war on poverty continues, with focus now shifting toward tackling relative poverty: improving per capita GDP, revitalizing rural areas, and reducing inequality between regions and groups. It is time for “making the cake bigger and better and sharing it fairly,” as Foreign Ministry spokesperson Wang Wenbin put it recently.

When it comes to China’s development, Hukou reform is inevitable

In this useful article, republished from China Daily, Keith Lamb provides an overview of the Hukou household registration system and the reasons for the recently-announced plans to reform it. Lamb notes that Hukou was originally introduced in order to prevent uncontrolled urban migration and the accompanying problems (in particular the emergence of slums, which can be found in practically all other recently-industrialized countries). However, the economic and social needs of a modern, increasingly urbanized socialist country require loosening restrictions on household registration and improving the rights and living conditions of people migrating to the cities. As the author observes, “when it comes to building a modern socialist state, inequality in accessing services must eventually, on principle, be transformed into a state of equality.”

China’s National Development and Reform Commission recently announced that the household registration system, popularly known by its Mandarin name Hukou, will be streamlined to encourage urbanization. All cities with a population under 3 million will have Hukou limits removed and registration for an urban Hukou in cities with a population between three and five million will be eased.

The modern Hukou, which reached maturity in 1958, determines who has access to local social amenities, such as education, healthcare and employment. Originally, it was an effective measure that prevented mass internal migration when China had an undeveloped economy based on agricultural production.

Checking mass migration from rural to urban centers prevented slums from building up, which was common in neighboring developing countries. Labor was also paired with the land which was important considering it was the location where the majority of production took place, allowing agriculture to be used in the service of industrialization.

Real debt trap: Sri Lanka owes vast majority to West, not China

With world attention still focused on the multiple crises – political, economic, humanitarian – gripping the South Asian island nation of Sri Lanka, we are very pleased to republish this admirable and thorough article by our Advisory Group member Benjamin Norton, originally carried on Multipolarista. With the Sri Lankan situation being cynically distorted into a supposed example of alleged Chinese ‘debt trap diplomacy’, Benjamin makes clear that 81% of Sri Lanka’s external debt is owed to US and European financial institutions, along with those of Japan and India. China accounts for just 10%. Sri Lanka has already suffered the imposition of no less than 16 IMF structural adjustment programs – a key factor in the country’s economically parlous state.

Benjamin notes that the Sri Lankan protests have been “driven by skyrocketing rates of inflation, as well as rampant corruption and widespread shortages of fuel, food and medicine – a product of the country’s inability to pay for imports.” He considers claims that the popular protests constituted some kind of “anti-China uprising” in the former British colony to be “even more detached from reality” than those suggesting ‘debt trap diplomacy’ on the part of Beijing. With regard to that issue, he shows in detail how both the BBC and mainstream academics have debunked such notions.

Facing a deep economic crisis and bankruptcy, Sri Lanka was rocked by large protests this July, which led to the resignation of the government.

Numerous Western political leaders and media outlets blamed this uprising on a supposed Chinese “debt trap,” echoing a deceptive narrative that has been thoroughly debunked by mainstream academics.

In reality, the vast majority of the South Asian nation’s foreign debt is owed to the West.

Sri Lanka has a history of struggling with Western debt burdens, having gone through 16 “economic stabilization programs” with the Washington-dominated International Monetary Fund (IMF).

These structural adjustment programs clearly have not worked, given Sri Lanka’s economy has been managed by the IMF for many of the decades since it achieved independence from British colonialism in 1948.

As of 2021, a staggering 81% of Sri Lanka’s foreign debt was owned by US and European financial institutions, as well as Western allies Japan and India.

This pales in comparison to the mere 10% owed to Beijing.

According to official statistics from Sri Lanka’s Department of External Resources, as of the end of April 2021, the plurality of its foreign debt is owned by Western vulture funds and banks, which have nearly half, at 47%.

The top holders of the Sri Lankan government’s debt, in the form of international sovereign bonds (ISBs), are the following firms:

BlackRock (US)
Ashmore Group (Britain)
Allianz (Germany)
UBS (Switzerland)
HSBC (Britain)
JPMorgan Chase (US)
Prudential (US)

The Asian Development Bank and World Bank, which are thoroughly dominated by the United States, own 13% and 9% of Sri Lanka’s foreign debt, respectively.

Deciphering the Chinese economic miracle: lessons for the developing world

We are pleased to publish this important article by Associate Professor Efe Can Gürcan, which sets out what he describes as the ‘Chinese miracle’, “that China has enjoyed unprecedented economic success in world history despite enormous historical, demographic, geographical and geopolitical adversities.” Despite this, he notes, “China has developed an exemplary model of economic development that inspires much of the developing world.” Therefore, “to decipher the formula behind China’s historic economic success” is to “offer fundamental hints to guide developing countries in their endeavours to reach an advanced stage of economic development.”

Professor Gürcan surveys the various stages of China’s socialist development under Mao Zedong, Deng Xiaoping, Jiang Zemin, Hu Jintao and Xi Jinping, noting that “the roots of the Chinese economic miracle can be traced back to the early phase of the Chinese revolution under the leadership of Mao,” who he sees as the real originator of the concept of socialism with Chinese characteristics. Deng Xiaoping developed this, including by digging deeper into Mao’s work, for example his, ‘A Critique of Soviet Economics’, and he highlights Deng’s view of the essence of socialism lying in the “liberation and development of the productive forces, elimination of exploitation and polarisation, and the ultimate achievement of prosperity for all.”

Professor Gürcan concludes by stating that: “In contrast to Western capitalism, the Chinese economic miracle does not originate from forced accumulation, wars, and colonialism. On the contrary, it springs from peaceful development and international cooperation. Understood as such, China’s model also constitutes the living example of the rising relevance and superiority of socialism over the capitalist system.”

This is an extremely important article that is worthy of careful study. It was originally published in Volume 3 Issue 2 of the Turkish journal Belt and Road Initiative Quarterly (BRIQ) and is reproduced with thanks. The article can be also be read/downloaded in PDF form.

Abstract

Despite enormous historical, demographic, geographical, and geopolitical adversities, China has enjoyed unprecedented economic success in world history. This article aims to decipher the formula behind China’s historic economic success and distill policy lessons for developing countries in their endeavors to reach an advanced stage of economic development. Based on descriptive case study and statistics, the article suggests that the Chinese economic miracle can be explained by a four-fold formula: a) devising an autocentric economic model aspiring to improve national autonomy and cushion the impact of foreign interference, b) insisting on socialism and the leadership of the Communist Party of China (CPC), which allows for strategic coherence and long-term planning to overcome free-market anarchy, c) creating a state-driven industrial base fueled by national science and technology policies, and d) adopting a balanced approach to development centered on attaining a higher sociocultural and ecological quality of life. The findings also help to debunk the myths surrounding the Chinese miracle, particularly the “cheap labor thesis”, the “technology theft thesis”, the “foreign investment and capitalist integration theses”, the “imperialism thesis”, and the “Mao-the-monster thesis”.

Keywords: Chinese miracle,economic development, Mao Zedong Thought, socialism with Chinese characteristics, Xi Jinping Thought

Deciphering the Chinese Economic Miracle: Lessons for the Developing World

The “Chinese miracle” has become a widely used term in development studies, inspiring developing countries to achieve high levels of prosperity, living standards, and stability over the last decade. The popularity of this term can be explained in large part by the fact that China has enjoyed unprecedented economic success in world history (Zakaria, 2011; Gürcan 2021a), despite enormous historical, demographic, geographical, and geopolitical adversities. China was one of the world’s poorest countries before the socialist revolution in 1949. In the early revolutionary era, China struggled much to overcome its crippling semi-colonial legacy characterized by the medieval conditions of an agricultural economy and the weakness of its industrial base. History aside, China is the largest country by population size, which currently accounts for 22% of the world’s population. This goes hand in hand with China’s resource scarcity problem as a structural adversity constraining its development potential. China possesses only 7% of the world’s arable land and freshwater resources and 8% of the world’s natural resources. Furthermore, only 19% of its surface area is suitable for human habitation, and 65% of its surface area is rugged. This severely cripples China’s farming capabilities and facilitates ethnic heterogeneity as a potential impediment to political cohesion (Morton, 2006; Naughton, 2018). Another adversity threatening China’s economic development concerns geopolitical circumstances. Cases in point are how China’s membership in the United Nations was stalled until 1971, and the US resorted to military interventions in China’s neighboring regions to suffocate the revolution. The current geopolitical circumstances find their sharpest expression in the current US containment strategy and the US-led trade and technology war against China (Gürcan, 2019; Gürcan, Kahraman & Yanmaz, 2021).

Despite such adversities, China has developed an exemplary model of economic development that inspires much of the developing world. Since 1979, China is the only country that has remained untouched by any economic crisis. The 1979-2018 period testified to an average economic growth rate of 9.4% in the lead of the CPC, making China the world’s second-largest economy, top producer, and the leading exporter of technological goods (Hu, 2020). By 2015, China came to assume the global production of 40% of washing machines, 50% of textiles, 60% of buttons, 70% of shoes, 80% of televisions, and 90% of toys. Recently, China has made significant progress in producing higher-value added products in the computer, aviation, and medical technology sectors, among others. One should also note that China has risen to the world’s largest lender to the developing world, second-largest investor in foreign direct investment (FDI), and top leader in green bonds and credits. China’s contributions to green finance also bring to mind China’s global leadership in sustainable development. China has recently emerged as the world’s top leader in green transportation as the largest producer of electric buses and the largest market for electric vehicles and bikes. Similarly, China’s status as the world’s top producer of solar, wind, and hydroelectric power is closely related to its reputation as the world’s top investor in sustainable energy technology (Gürcan, 2021a). Besides China’s historic success in economic and environmental development, one should also note that the Chinese economic miracle is credited for 70% of global poverty eradication between 1990 and 2015 (Gardner, 2018).

Cheng Enfu: Economic development in socialist countries – great achievements and future prospects

We reproduce below the text of a speech given by Cheng Enfu – former president of the Academy of Marxism at the Chinese Academy of Social Sciences (CASS), currently Academician of CASS, principal professor of the University of the Chinese Academy of Social Sciences, and president of the World Association for Political Economy (WAPE) – at the recent book launch we co-hosted for Elias Jabbour and Alberto Gabriele’s ‘Socialist Economic Development in the 21st Century’. In his brief but comprehensive speech, Professor Cheng describes the trajectory of socialist economic development, starting with the extraordinary achievements of the Soviet Union, and continuing with China’s “three miracles”: the period of early socialist construction, which broke China out of underdevelopment and “fundamentally reversed the trend of China’s marginalization in the world system”; the Reform and Opening Up period from 1978, within which China became a major economic power; and the construction of socialism with Chinese characteristics in the new era since 2013, in which China’s “scientific, technological, economic and ecological construction has jumped to a new level.” Cheng discusses the escalating New Cold War, which is the imperialist camp’s response to China’s rise and humanity’s multipolar trajectory, concluding that “bad things can also become good things” and that the socialist countries – China, Vietnam, Laos, Cuba and the DPRK – will continue to achieve greater economic and social development in the face of the US-led onslaught.

Alberto Gabriele and Elias Jabbour’s monograph on the economic development of several socialist countries in the 21st century deserves careful reading and great attention. In the following, I will address a few potentially controversial points on the subject of economic development in China and the Soviet Union, as two representative examples of socialist countries, in response to the misconceptions prevailing in the world.

The first point: the Soviet Union has made great achievements in economic and social development. This year is the 100th anniversary of the establishment of the Soviet Union, which is worth commemorating, but because of the betrayal and subversion of the Soviet Union by the Gorbachev and Yeltsin leadership groups, the Western world generally denies the achievements in economic and social development of the Soviet Union. In my opinion, after the October Revolution, the Soviet Union, under the leadership of Lenin, established the dictatorship of the proletariat and the centralized democratic system, carried out large-scale economic, social, educational and cultural construction, repelled the armed aggression of 14 capitalist countries, and developed a series of theories and successful practices for building socialism in one country under the siege of capitalist countries.

On the sinicization of Marxism

We are very pleased to publish (for the first time in English) this detailed and insightful article by Carlos Miguel Pereira Hernández, Cuba’s ambassador to China. Comrade Pereira delves into the meaning of Socialism with Chinese Characteristics, carefully noting that it should be understood on its own terms, rather than being compared against a one-size-fits-all model: “There is no unique definition of socialism, and any analysis on the issue must start by accepting that visions of it are diverse.”

Pereira analyses the trajectory of sinicized Marxism-Leninism, noting that this begins not with the Reform and Opening Up period from 1978 but with the early development of the Chinese Revolution. The author cites Mao Zedong’s 1956 speech, On the Ten Major Relationships, as a turning point in the development of a specifically Chinese socialism that rejected the “mechanistic copying of foreign models.”

Pereira does not shy away from the contradictions of modern Chinese socialism, including the existence of a capitalist class, a large private sector, and stark inequality. The danger always exists that these by-products of market reforms will corrode the economic foundations of socialism. Yet, the author notes, China’s handling of the Covid-19 pandemic, and the fact that “political criteria were weighted above market mechanisms”, highlight the reality that the capitalist class is not the ruling class. The same is true of the government’s commitment to poverty alleviation and its renewed emphasis on common prosperity.

Comrade Pereira concludes that “the current model in China, including the corrections introduced at each stage, remains on the path to socialism”, and indeed that sinicized Marxism deserves to be widely studied, as many of its innovations may well have relevance beyond China.

This article was first published in Spanish – La sinización del marxismo, las ciencias sociales y la cuestión del modelo propio – in the Cuban journal Política Internacional. The English translation was kindly provided to us by the author.

ABSTRACT

The present analysis begins with a call for attention to the discussion about the existence or not of a “Chinese Marxism”, that is, the sinicization of Marxism, an officially coined formulation within the Chinese narrative and understood as the adaptation of the Marxism to the conditions and particularities of China and which comes to life in the notion of socialism with Chinese characteristics.

The above-mentioned element is key to understand, and even to clarify, how both nature and the national peculiarities of each country affect – or might affect – and if that gives rise to the existence of their own models of socialist construction.

The analysis focuses on the period from 1978 to the present, which coincides with the beginning and development of the reform process, considered by Chinese sources as a “driving force” for the improvement and development of the socialist system within the Chinese conditions. For this, it has been considered essential to provide criteria that allow establishing, without any doubt, that the current model in the Asian country –which includes the corrections introduced at each stage– remains on the road to socialism; also to verify how the political narrative produced and reproduced by Western theoretical development has been contrasted with another Chinese-own narrative, based on the concepts that are analyzed in this work and that reflect the important role of social sciences and theoretical and academic debate as an important regularity of the Chinese socialist process.

Keywords: China/Reform/Socialism/Marxism/Social science

Book launch: Socialist Economic Development in the 21st Century

We are excited to be co-hosting, with the International Manifesto Group, this online book launch for the English version of Socialist Economic Development in the 21st Century, by Elias Jabbour and Alberto Gabriele.

Date: Saturday 28 May 2022
Time: 9am US Eastern, 9pm China, 2pm Britain
Location: Zoom and YouTube
Registration: Eventbrite

In this launch event for the English-language edition of ‘Socialist Economic Development in the 21st Century’, authors Elias Jabbour and Alberto Gabriele are joined by several experts in Marxist political economy from China, Britain and Canada to discuss the book’s central thesis: that, a century since the first socialist revolution broke the global monopoly of capitalism, socialist economic construction continues to offer the most viable alternative to the globalized capitalist crisis. We will pay particular attention to the achievements, complexities and contradictions of the evolving model of socialist economic development in China, Vietnam and Laos. This panel is jointly organised by the International Manifesto Group and Friends of Socialist China.

Speakers

Elias Jabbour is Adjunct Professor at the Faculty of Economic Sciences, Postgraduate Programs in Economic Sciences, and International Relations at the State University of Rio de Janeiro. He is co-author of Socialist Economic Development in the 21st Century.

Alberto Gabriele is a Senior Researcher at Sbilanciamoci, Rome, Italy. He is co-author of Socialist Economic Development in the 21st Century.

John Ross, Senior Fellow at Chongyang Institute for Financial Studies, Renmin University of China. Since 1992, and the publication in Russia of his ‘Why the Economic Reform Succeeded in China and Will Fail in Russia and Eastern Europe, ’he is the author of over 500 published articles on China’s economy and geopolitical relations. He has more than one million followers on Weibo, the Chinese equivalent of Twitter. His articles on China’s economy have won several prizes in China. He is author of two best-selling books published in Chinese ‘ –The Great Chess Game ’and ‘Don’t Misunderstand China’s Economy’. His new book in English ‘China’s Great Road ’is published this month.

Radhika Desai is a Professor at the Department of Political Studies, and Director, Geopolitical Economy Research Group, University of Manitoba, Winnipeg, Canada. She is the author of Geopolitical Economy: After US Hegemony, Globalization and Empire (2013), Slouching Towards Ayodhya: From Congress to Hindutva in Indian Politics (2nd rev ed, 2004) and Intellectuals and Socialism: ‘Social Democrats’ and the Labour Party (1994), a New Statesman and Society Book of the Month, and editor or co-editor of Russia, Ukraine and Contemporary Imperialism, a special issue of International Critical Thought (2016), Theoretical Engagements in Geopolitical Economy (2015), Analytical Gains from Geopolitical Economy (2015), Revitalizing Marxist Theory for Today’s Capitalism (2010) and Developmental and Cultural Nationalisms (2009).

Mick Dunford is an Emeritus Professor, University of Sussex, Visiting Professor, Chinese Academy of Sciences, Managing Editor, Area Development and Policy.

Cheng Enfu (video recording and with Liu Zixu’s assistance) is an academician at the Chinese Academy of Social Sciences (CASS), Director of the Research Center for Economic and Social Development (CASS), principal professor at the University of the Chinese Academy of Social Sciences, President of the World Association for Political Economy, president of Chinese Society of Foreign Economic Theories, and member of the People’s Congress of China.Cheng Enfu spoke through his translator, Zixu Liu.

Prof. Peng Zhaochang taught at Rollins College in the US before going back to China and now working at Fudan University in Shanghai. He received his Ph.D. from UMass Amherst where Prof. David Kotz was his chief adviser.

Michael Roberts worked as an economist in the City of London for various financial institutions for over 40 years – in the heart of the beast! He has written several books including: The Great Recession – a Marxist view (2009); The Long Depression (2016); Joint ed: World in Crisis (2018); Marx 200 (2018); and Engels 200 (2020). He is joint author with G Carchedi of a forthcoming book published this summer by Pluto Press: Capitalism in the 21st century – through the prism of value.

Moderator – Jenny Clegg an independent writer and researcher, a long time China specialist, and a lifelong member and now a vice-President of SACU. A former Senior Lecturer in International and Asia Pacific Studies, her published work includes China’s Global Strategy: towards a multipolar world, Pluto Press, 2009). She is active in the peace and anti-war movement in Britain

Developing nations should jointly deal with fallout of Western sanctions on Russia

We’re pleased to republish this thought-provoking opinion piece from Wang Jiamei in the Global Times. Wang notes that the unilateral sanctions being imposed by the major Western countries are causing significant economic harm around the world, driving up energy and food prices, along with inflation. Furthermore, the extreme financial sanctions (such as removing Russia from the SWIFT system) may affect the ability of developing countries to trade with Russia, and serve as a reminder that the developing countries need to deepen their coordination in order to insulate themselves from the negative effects of the decisions taken by the imperialist countries.

It seems that a gradual embargo on Russian oil has become the focus of the latest round of US-led economic sanctions against Russia, which may lead to further volatility throughout the world economy.

Leaders of the Group of Seven (G7) nations committed on Sunday to “phasing out or banning the import of the Russian oil” in an aim to remove reliance on Russian energy supplies, according to a joint statement.

The G7 decision came just days after Ursula von der Leyen, president of the European Commission, announced a plan last week to phase out Russian crude oil within six months and refined products by the end of the year.

Book review: China’s Great Road – Lessons for Marxist Theory and Socialist Practices

By John Ross, Praxis Press, 2021
Reviewed by Dr Jenny Clegg

Updated 09 April 2022: John Ross contacted us to note that the review incorrectly quoted him as describing Deng Xiaoping as “the greatest Marxist of all time”. This should have been “the world’s greatest economist.”

John Ross has, for some years now, been one of the most forceful advocates of the present Chinese road to socialism on the Western left. His ‘China’s Great Road’ (for which we held an online launch) presents his key arguments. In this detailed review, Dr Jenny Clegg, writer, China specialist, peace campaigner and Friends of Socialist China advisory group member, acknowledges Ross’s useful contribution to the debate, but also draws attention to what she considers its flaws, regarding both the complexities of China’s recent trajectory and the historical record of socialism under Stalin and Mao.

Introduction

Literature on China’s supposed ‘reversion to capitalism’, whether of the neoliberal or state-led kind, abounds. It has been argued over again that China’s success over the last four decades came as a result of its abandoning ideology for pragmatism so as to follow policies of ‘reform and opening up’. Either that or the wholesale embrace of markets unleashing the creativity of its individual capitalist entrepreneurs. John Ross, a Senior Fellow at the Chongyang Institute for Financial Studies at Beijing’s Renmin University, swims hard against this tide in his book, China’s Great Road, arguing the exact opposite:that China’s remarkable achievements are the result, not of a reversal of Marxism, but in fact a return to basic Marxist tenets.

The book comprises a collection of recent articles, some originally published in Chinese, others in English, which makes for some repetition, but leaves no doubt as to the arguments. Ross’s aim is to persuade others on the international left to look seriously at China’s socialism and see what can be learnt from its success.

The book presents two key propositions.

The first, that China has achieved far more than any other country in history in improving the well-being of its people, is set out with the help of easy-to-read graphs. The evidence, as Ross shows, is all there in World Bank figures: China has lifted over 900 million people out of poverty, raising livelihoods and life expectancy at unprecedented rates, whilst exceeding every other economy in output, wage growth and household consumption over the last 30 years.

Elias Jabbour: Understanding the possibilities the Chinese socialist experience offers for humanity

Below is the video and text of a speech by Elias Jabbour, economics professor and author of Socialist Economic Development in the 21st Century: A Century after the Bolshevik Revolution, at our recent event 21st Century Socialism: China and Latin America on the Frontline. Elias discusses how China’s model of socialism and its engagement with global markets is creating an invaluable space for the countries of Latin America to assert their sovereignty and more forward on the long road towards socialism.

I am immensely grateful for the opportunity to be with friends gathered in this group. In fact, one of the great honors I’ve had in my life has been speaking to comrades who have political clarity about how things work in the real world.

In Brazil and Latin America, we are still a long way from a level of political consciousness on the left to be capable of perceiving the centrality of China and the possibilities that the Chinese socialist experience offers for humanity.

I used to say that China has been noted for building the most advanced social and human engineering of our time. It’s in that country, although still embryonic and taking its first steps, that socialism presents itself as a clearer historical form.

Furthermore, I have said that the current historical form in which socialism presents itself is still far from abstract concepts, among them – for example – the abolition of private property.

When will China become a high-income country?

We are pleased to reprint this important speech, recently delivered at Peking University, by Dr. Justin Yifu Lin, one of China’s leading economists and a former Vice President of the World Bank, which addresses the speed of economic growth in China this year; the relationship between economic growth and innovation; how to achieve common prosperity; and when will China become a high-income country.

Dr. Lin concludes: “Up to now, the population living in high-income countries only accounts for 16% of the world’s population. If China also becomes a high-income country, the world’s population living in high-income countries will double, from 16% to 34%. I believe that we will have the opportunity to witness this history.”

The speech was published in English by Asia Times and originally in Chinese on guancha.cn

This article is compiled from a speech by former World Bank Vice-President Justin Yifu Lin at the Peking University National School of Development’s “China Economic Watch No 60: Interpretation of the Two Sessions and China’s Economic Prospects” event. This article has not been reviewed by the speaker himself.

Good afternoon, everyone, online and offline. As a member of the Chinese People’s Political Consultative Conference (CPPCC), I am glad to have this opportunity to talk to you about some of the hot issues that were of concern to the delegates and members of the CPPCC during the two sessions.

I will mainly talk about three points. First, the speed of economic growth this year; second, economic growth should be innovative; third, how to achieve common prosperity? When will China become a high-income country?

First of all, for China, the economic growth rate is the biggest big picture, because we want to build a new development pattern mainly based on a large domestic circulation. In fact, the larger China’s economy is and the higher the share of the service sector is, the greater the share of the domestic circulation is bound to be.

So, how to make the economy bigger and increase the share of service industry? Of course, we need to raise income levels and economic growth.

Second, we need to have two big pictures in mind. One is the overall strategic picture of the great rejuvenation of the Chinese nation, which includes politics, culture, and many other aspects, but the economy is the foundation.

To achieve the great rejuvenation of the Chinese nation, the goal is to set China’s GDP per capita at 50 percent of that of the United States at purchasing power parity (PPP) – about the level of South Korea in 2002 – a requirement that should be in place. But China’s GDP per capita at PPP is currently just over 20% of the US. To go from just over 20% to 50%, and to achieve it by 2049, would require a relatively high rate of economic growth.

Another big picture is that we are now facing a major global change that has not been seen in a century. How should we manage this big change? Only if China’s GDP per capita at purchasing power parity reaches 50% of the US, the U.S. will accept China as the number one economy by then, because by then, the US will probably have no means to jam our necks.

USA vs China: Whose Economy is Winning?

What is the real state of the world economy? This webinar on 28 January 2022, organized by the International Manifesto Group, assessed the relative strengths of the two most important protagonists, China and the US. As the rift between them deepens with the threat of direct military confrontation looming, propaganda has virtually replaced hard facts. Speakers included Michael Hudson, Mick Dunford, Michael Roberts and Alan Freeman. The webinar was introduced and moderated by Radhika Desai. This report was originally published on New Cold War.

Introduction by Radhika Desai

Rumour and speculation are swirling about the USA’s post-COVID recovery whilst allegations that China is suffering a ‘slowdown’ are hard to distinguish from simple Cold War hype. At stake also are the social systems of the two economies, as the USA still struggles to throw off the pandemic by opening the vaults to Big Pharma, whilst China reigns in its property speculators and private technology companies ,and goes ever more green, at the same time ambitiously recentring its economy in response to the USA’s aggressive trade and technology restrictions. Our panel’s three experts will dissect the war of words and detach facts from flimflam.

A Comprehensive and Accurate Understanding of “The New Road of Chinese-Style Modernisation”

We are pleased to publish this paper by Han Qingxiang, from the Party School of the Communist Party of China (CPC) Central Committee, who is also a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC). Han presents a detailed outline and explanation of the CPC’s understanding of the new phase of China’s socialist modernisation, highlighting both the new aspects since the first phase of China’s reform and opening up, as well as the continuities, along with its antecedents in Marxist theory, specifically work by Marx and Engels in the 1840s and 1850s. The paper was delivered at the Cloud International Workshop on “New Forms of Human Civilization from a World Perspective,” held by the School of Marxism, Dalian University of Technology (DUT), 29-31 October 2021. We are grateful to the DUT Translation Team for their work, as well as to Professor Roland Boer for his meticulous sub-editing and cooperation.

General Secretary Xi Jinping’s speech at the celebration of the 100th anniversary of the founding of the Communist Party of China (referred to as the “7.1” speech) pointed out:

Following our own road – this is the firm foothold of all the theories and practices of our Party. More than that, it is the historical conclusion our Party has drawn from its struggles over the past century. Socialism with Chinese characteristics is a fundamental achievement of the Party and the people, forged through untold hardships and great sacrifices, and it is the correct path for us to achieve the great rejuvenation of China. By upholding and developing socialism with Chinese characteristics and promoting the coordinated development of material, political, spiritual, social and ecological civilisations, we have created a new Chinese-style path of modernisation and a new form of human civilisation.[1]

Here, from “following our own road” to “the road of socialism with Chinese characteristics” and then to “the new road of Chinese-style modernisation” provides a comprehensive exposition of the Chinese road’s formative and developmental logic, essential characteristics, important position, and comprehensive elaboration of global significance, all of which has rich political and scientific value.