The China-India Conflict (IV. China as an Emerging Great Imperialist Power)

 

 

 

Let us now analyze more fundamentally the class character of the two states involved. In the following chapter we will briefly summarize the RCIT's analysis of China as an emerging imperialist power which we did already elaborate in a number of studies and documents. [1]

 

We begin with a brief summary of the Marxist definition of an imperialist state as we elaborated it on the basis of the writings of Lenin and Trotsky. [2] For a somewhat more extensive discussion of our theoretical understanding of imperialist states we refer readers to the appendix of this document.

 

In short, we define an imperialist state as follows: An imperialist state is a capitalist state whose monopolies and state apparatus have a position in the world order where they first and foremost dominate other states and nations. As a result they gain extra-profits and other economic, political and/or military advantages from such a relationship based on super-exploitation and oppression. However, irrespective of their common principle, one has also to consider that each imperialist power has its own specifics based on their different historic development, national characteristic, size and level of influence, etc.

 

China emerged as a new imperialist power in the late part of the first decade of the 2000s. The main reasons for China’s successful development into an imperialist power were:

 

i) The continuing existence of a strong, centralized Stalinist bureaucracy which could suppress the working class and ensure its super-exploitation;

 

ii) The historic defeat of China’s working class in 1989, when the bureaucracy bloodily crushed the mass uprising at Tiananmen Square and throughout the entire country;

 

iii) The decline of US imperialism which made room for new powers.

 

This continuing existence of a strong, centralized Stalinist bureaucracy and the historic defeat of China’s working class in 1989 enabled the new capitalist ruling class to subjugate the majority of the tremendously expanding proletariat to super-exploitation. Based on this, the capitalists – both Chinese and foreign – could extract massive surplus value for capital accumulation. On this basis, China has become a major economic power. This is reflected in a number of facts.

 

Measured in US-Dollar China had become the second-largest economy in 2016, behind the U.S., with a share of 15.1% of the global GDP (Nominal). In industrial production – the core sector of value production for capitalism – China has even become the world’s leading economy. By 2015, 28% of world’s manufacturing came from China while less than 20% originated in the US economy. [3] Parallel to this it has become the world’s leading exporter.

 

 

 

China’s Monopolies

 

 

 

In today’s global economy, China’s monopolies play a leading role. In the Forbes Global 2000 – an index of the largest, most powerful companies in the world – China already ranks second among home countries. Chinese companies on the list number 249, superseded by only the US (540 companies) but before Japan, Germany and all other Great Powers. [4]

 

The same dynamic appears in another list of the largest capitalist monopolies – the so-called Fortune Global 500. In 2001, 197 corporations among the Fortune Global 500 had their headquarters in the US, while there were only 12 in China. However, by 2016 this had dramatically changed: While the US was still leading the list with 134 corporations, China was already closely behind, ranking second with 103 corporations. In other words, while the US share among the world’s largest monopolies had declined from 39.4% (2001) to 26.8% (2016), China’s share grew during the same period from 2.4% to 20.6%! (See Table 1)

 

 

 

Table 1. US and China: Their Share among the World’s 500 Largest Corporations, 2001 and 2016 (Fortune Global 500 List) [5]

 

USA                                                                                   China

 

Number               Share                                                    Number                                Share

 

2001                                      197                        39.4%                                                   12                           2.4%

 

2016                                      134                         26.8%                                                   103                         20.6%

 

 

 

The rulers of China have also created a strong capitalist class. It a significant manifestation of China’s rise is that in 2016 it overtook the US as the home of the largest number of billionaires. According to the latest issue of the Hurun Global Rich List, out of 2,188 billionaires 568 reside in China (not including those in Hong Kong and Macao) while “only” 535 are from the US. The Hurun Report also announced sensationally that “Beijing Replaces New York To Become The Billionaire Capital Of The World For First Time.[6] The Forbes Billionaire List gives slightly different numbers but here, too, China ranks as a leading country, second only to the US. According to Forbes “the US has 540 billionaires, more than any other country in the world. It's followed by mainland China with 251 (Hong Kong has another 69) and Germany with 120. Russia has 77.[7]

 

Today, the majority of China’s industrial output is produced by the private sector, as is attested to by figures published by the World Bank and the Chinese Development Research Center of the State Council. Both of these institutions attribute 70% of the country’s GDP and employment to non-state sectors. The state sector’s share in the total number of industrial enterprises (with annual sales over 5mn RMB) fell precipitously from 39.2% in 1998 to 4.5% in 2010. During the same period, the share of State Owned Enterprises in total industrial assets dropped from 68.8% to 42.4%, while their share in employment declined from 60.5% to 19.4%. [8] Having said this, the state-capitalist sector continues to play a central role in China’s economy.

 

 

 

Super-Exploitation of the Working Class

 

 

 

The Chinese capitalist regime has succeeded in introducing the capitalist law of value into its economy, thereby transforming the preponderance of its workers into wage laborers. A decisive step in implementing the capitalist law of value in China’s state-owned enterprises was a ruthless wave of layoffs. According to official figures published in the Chinese Communist Party’s mouthpiece People’s Daily, more than 26 million workers were laid off between 1998 and 2002. [9] If we examine the longer period of time between 1993 and 2006, there are estimates that the Chinese capitalist class fired approximately 60 million state-owned enterprise employees. [10]

 

This wave of mass layoffs was an integral part of the full implementation of the capitalist law of value in China’s state economy. According to a report by the Chinese researcher Dongtao, by 2005 over 85% of small and medium-sized SOEs had been restructured and privatized. [11]

 

Another decisive instrument was the utilization of the old household registration system set up by the Stalinist bureaucracy in 1958. According to this system (called hukou in China) “residents were not allowed to work or live outside the administrative boundaries of their household registration without approval of the authorities. Once they left their place of registration, they would also leave behind all of their rights and benefits. For the purpose of surveillance, everyone, including temporary residents in transit, was required to register with the police of their place of residence and their temporary residence. By the 1970s, the system became so rigid that ‘peasants could be arrested just for entering cities.[12]

 

Following the implementation of capitalism in China, the so-called migrant workers (i.e., those who work outside their home province) soon became a major motive force in the process of super-exploitation. The number of migrant workers in China grew exponentially from about 30 million (1989), to 62 million (1993), 131.8 million (2006) and, by the end of 2010, their number grew to an estimated 242 million! In the capital city, Beijing, about 40% of the population are migrant workers, while in Shenzhen nearly 12 million of the total 14 million inhabitants are migrants. These migrant workers are usually pushed into physically-hard, low-wage jobs. According to the China Labour Bulletin, migrants make up 58% of all workers in industry and 52% of those employed in the service sector. [13]

 

 

 

China’s Capital Export

 

 

 

China’s rise as an imperialist power is also reflected in the enormous increase of its capital export. This is reflected by both the level of productive investment abroad as well as on the sums of monetary capital (bonds, loans, etc.) transferred as financial investments to outside the country. As a result of its immense and rapid accumulation of capital, Chinese imperialism has also accumulated huge volumes of monetary capital, expressed in an extraordinarily fast expansion of its foreign exchange reserves. These reserves positively skyrocketed from US$165 billion in 2000 to US$3.3 trillion in March 2012 and to US$3.08 trillion in July 2017. [14] As such, China’s foreign exchange reserves equal the combined sum of the next six largest foreign exchange reserve holders!

 

However China’s capital is not only active on the international loan and bond market, but also as a foreign investor in the industrial and raw material sectors. Its capital export (without the figures for Hong Kong) grew dramatically by 3,800% during the past 15 years, and has come close to reaching the volume of capital export of Japan! (See Table 2)

 

 

 

Table 2.            Foreign Direct Investment Stock of Great Imperialist Powers, 1990, 2000, 2015 (Millions of $US) [15]

 

Country                            FDI inward stock                                                            FDI outward stock

 

                            1990                      2000                      2015                      1990                      2000                      2015

 

USA                   539,601                2,783,235             5,587,969             731,762                2,694,014             5,982,787

 

Japan                 9,850                     50,322                   170,698                201,441                278,442                1,226,554

 

Britain               203,905                63,134                   1,457,408             229,307                923,367                1,538,133

 

Germany          111,231                271,613                1,121,288             151,581                541,866                1,812,469

 

France               97,814                   390,953                772,030                 112,441                925,925                1,314,158

 

China                20,691                   193,348                1,220,903             4,455                     27,768                   1,010,202

 

Russia               -                              32,204                   258,402                -                              20,141                   251,979

 

 

 

As a result, Chinese monopolies play a very strong role in a number of countries. To give just a few examples: In 2010 China became the third-largest investor in Latin America behind the US and the Netherlands. [16] China is also Africa’s biggest trading partner and buys more than one-third of its oil from that continent. [17] According to a recently published study from McKinsey Chinese corporations already play a dominant role in Africa. About 10,000 Chinese corporations (90% of which are private capitalist firms) operate in Africa. They control about 12% of the continent’s total industrial production and about half of Africa’s internationally contracted construction market. In Africa, China is also a leader in “green field investment” (i.e., when a parent company begins a new venture by constructing new facilities outside of its home country); in 2015-16, China invested USD 38.4 billion (24% of total green field investment in Africa). [18]

 

 

 

China as a Military Power

 

 

 

The economic changes of the past decade or two have naturally also had consequences in the political and military spheres. Among other things, this is reflected in China's position as a leading exporter of weapons as well as its status as a nuclear power. While the US remains the world’s No. 1 arms merchant, China is ranked as third-largest exporters of weapons and as the fourth-largest nuclear power. [19]

 

Naturally, as we have noted many times, none of this changes the fact that China is still a new, emerging and hence backward imperialist power. And Russia – another state which emerged as an imperialist power in the early 2000s – while being a strong military power, is economically much weaker than China. Among others things, this is reflected by the substantially lower labor productivity of these two countries compared with that of the old imperialist powers like the US, Western Europe or Japan. However, the sheer size of the Chinese economy and Russia’s political and military power enable both these states to join the club of the world’s leading imperialist Great Powers. Those who refuse to characterize China and Russia as imperialistic due to their economic backwardness, ignore the concrete history of imperialism and the conclusions which Marxists have drawn from it. As we have elaborated in detail in other studies, a constant feature of the epoch of imperialism, which started at the turn of the 20th century, has been the simultaneous existence of imperialist Great Powers of different types – from the strongest, most modern and dynamic ones (like Britain, the US or Germany) to weaker and more backward ones (like Russia, Japan, Italy or Austria-Hungary). [20] The dialectical thinking of Marxists enabled them to understand that such unevenness is a natural characteristic of the imperialist epoch and, hence, it is only logical that different types of Great Powers are fighting for their share of the loot. [21]Thus, Lenin and Trotsky not only characterized states like Britain, the US or Germany as imperialistic, but also Russia, Japan, Italy and Austria-Hungary.

 

In conclusion, we can say that China has become a key factor in today's world politics. Marx characterized England and Russia as the key powers in second half of the 19th century when he wrote:

 

"Russia and England are the two great pillars of the present European system. All the rest is of secondary importance, even la belle France et la savante Allemagne [Splendid France and learned Germany, Ed.]." [22]

 

Similarly we can say today that the US and China have become the two great pillars of the present global system, while the other imperialist powers play a secondary role.

 



[1] See, e.g., Michael Pröbsting: China‘s transformation into an imperialist power. A study of the economic, political and military aspects of China as a Great Power, in: Revolutionary Communism No. 4, http://www.thecommunists.net/publications/revcom-number-4; RCIT: World Perspectives 2017: The Struggle against the Reactionary Offensive in the Era of Trumpism, 18 December 2016, https://www.thecommunists.net/theory/world-perspectives-2017/; RCIT: World Perspectives 2016: Advancing Counterrevolution and Acceleration of Class Contradictions Mark the Opening of a New Political Phase, 23 January 2016, https://www.thecommunists.net/theory/world-perspectives-2016/; Michael Pröbsting: Is Lenin’s Theory of Imperialism Incompatible with the Concept of Permanent Revolution? 5 May 2015, https://www.thecommunists.net/theory/imperialism-theory-and-permanent-revolution/; Michael Pröbsting: The China Question and the Marxist Theory of Imperialism, December 2014, https://www.thecommunists.net/theory/reply-to-csr-pco-on-china/; Michael Pröbsting: China’s Emergence as an Imperialist Power, Summer 2014, https://www.thecommunists.net/theory/imperialist-china-new-politics/; Michael Pröbsting: No to chauvinist war-mongering by Japanese and Chinese imperialism! Chinese and Japanese workers: Your main enemy is at home! Stop the conflict on the Senkaku/Diaoyu-islands in the East China Sea! 23.9.2012, in: Revolutionary Communism No. 6, http://www.thecommunists.net/worldwide/asia/no-war-between-china-and-japan/; Michael Pröbsting: Lenin’s Theory of Imperialism and the Rise of Russia as a Great Power. On the Understanding and Misunderstanding of Today’s Inter-Imperialist Rivalry in the Light of Lenin’s Theory of Imperialism, August 2014, http://www.thecommunists.net/theory/imperialism-theory-and-russia/; Michael Pröbsting: Russia and China as Great Imperialist Powers. A Summary of the RCIT’s Analysis, 28 March 2014, in: Revolutionary Communism No. 22, http://www.thecommunists.net/theory/imperialist-china-and-russia/; Michael Pröbsting: More on Russia and China as Great Imperialist Powers. A Reply to Chris Slee (Socialist Alliance, Australia) and Walter Daum (LRP, USA), 11 April 2014, in: Revolutionary Communism No. 22, http://www.thecommunists.net/theory/reply-to-slee-on-russia-china/; Michael Pröbsting: The Great Robbery of the South. Continuity and Changes in the Super-Exploitation of the Semi-Colonial World by Monopoly Capital Consequences for the Marxist Theory of Imperialism, chapter 10, 2013, http://www.great-robbery-of-the-south.net/; RCIT: On the 100th Anniversary of the Outbreak of World War I: The Struggle against Imperialism and War. The Marxist Understanding of Modern Imperialism and the Revolutionary Program in Light of the Increasing Rivalry between the Great Powers, Revolutionary Uprisings, and Counterrevolutionary Setbacks, 25.6.2014, http://www.thecommunists.net/theory/struggle-vs-imperialism-war/; RCIT: Escalation of Inner-Imperialist Rivalry Marks the Opening of a New Phase of World Politics. Theses on Recent Major Developments in the World Situation Adopted by the RCIT’s International Executive Committee, April 2014, in: Revolutionary Communism (English-language Journal of the RCIT) No. 22, http://www.thecommunists.net/theory/world-situation-april-2014/; RCIT: Aggravation of Contradictions, Deepening of Crisis of Leadership. Theses on Recent Major Developments in the World Situation Adopted by the RCIT’s International Executive Committee, 9.9.2013, in: Revolutionary Communism No. 15, http://www.thecommunists.net/theory/world-situation-september2013/; RCIT: The World Situation and the Tasks of the Bolshevik-Communists. Theses of the International Executive Committee of the Revolutionary Communist International Tendency, March 2013, in: Revolutionary Communism No. 8, www.thecommunists.net/theory/world-situation-march-2013

[2] See on this e.g. Michael Pröbsting: The Great Robbery of the South. Continuity and Changes in the Super-Exploitation of the Semi-Colonial World by Monopoly Capital Consequences for the Marxist Theory of Imperialism, RCIT, Vienna 2013, http://www.great-robbery-of-the-south.net/; Michael Pröbsting: Greece – A Modern Semi-Colony. The Contradictory Development of Greek Capitalism, Its Failed Attempts to Become a Minor Imperialist Power, and Its Present Situation as an Advanced Semi-Colonial Country with Some Specific Features, RCIT, Vienna 2015, http://www.thecommunists.net/theory/greece-semi-colony/.

[3] Credit Suisse: China In Pictures: Under Pressure, September 9, 2015, p. 7

[4] Forbes: The World’s Biggest Public Companies, http://www.forbes.com/global2000/

[5] Fortune 500 List, http://beta.fortune.com/global500; David Shambaugh: Are China’s multinational Corporations really multinational?; in: EAST ASIA FORUM QUARTERLY, Vol.4 No.2 April–June 2012, p. 7; Chinese companies push out Japan on Fortune Global 500 list, By Agence France-Presse, July 9, 2012, http://www.rawstory.com/rs/2012/07/09/chinese-companies-push-out-japan-on-fortune-global-500-list/

[6] Hurun Global Rich List 2016, http://www.hurun.net/en/ArticleShow.aspx?nid=15703; see also Michael Pröbsting: China’s “Socialist“ Billionaires, 16.11.2015, http://www.thecommunists.net/worldwide/asia/china-s-billionaires/

[7] Forbes 2016 World's Billionaires: Meet The Richest People On The Planet, 01.03.2016, http://www.forbes.com/billionaires/

[8] The World Bank, Development Research Center of the State Council, the People’s Republic of China: China 2030. Building a Modern, Harmonious, and Creative High-Income Society, p. 104

[9] China's State-owned Enterprise Lay-offs Finding New jobs: Minister, People’s Daily, October 27, 2002, http://english.peopledaily.com.cn/200210/27/eng20021027_105729.shtml

[10] Paul Mozur: Review of William Hurst’s ‘The Chinese Worker After Socialism’, in: THE FAR EASTERN ECONOMIC REVIEW, May 2009, http://www.viet-studies.info/kinhte/chinese_worker_after_socialism.htm

[11] Qi Dongtao: Chinese Working Class in Predicament, in: East Asian Policy Volume 2, Number 2, Apr/Jun 2010, p. 6

[12] China Labour Bulletin: Migrant workers in China, 6 June, 2008, http://www.clb.org.hk/en/node/100259

[13] China Labour Bulletin: Migrant workers in China, 6 June, 2008

[14] South China Morning Post: China’s foreign exchange reserves rise to nine-month high of US$3.08 trillion, 07 August, 2017, http://www.scmp.com/news/china/economy/article/2105801/chinas-foreign-exchange-reserves-rise-nine-month-high-us308; Financial Times: Chinese foreign exchange reserves swell by $24bn to 2017-high fast, June 7, 2017, https://www.ft.com/content/1bb073cb-01bb-371f-9c59-91142f38d6d9; The People’s Bank of China: Foreign Exchange Reserves in March 2012, http://www.pbc.gov.cn/publish/html/2012s09.htm

[15] UNCTAD: World Investment Report 2014, pp. 209-212 and UNCTAD: World Investment Report 2016, pp. 200-203 (The figures for China do not include those for Hong Kong which is listed in the UNCTAD statistics separately.)

[16] Miguel Perez Ludeña: Adapting to the Latin American experience; in: EAST ASIA FORUM QUARTERLY, Vol.4 No.2 April–June 2012, p. 13

[17] The Chinese in Africa: Trying to pull together. Africans are asking whether China is making their lunch or eating it; in: The Economist, Apr 20th 2011, http://www.economist.com/node/18586448?story_id=18586448; see also SA, not China, Africa's biggest investor: study, 23 July 2010, http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=9049:sa-not-china-africas-biggest-investor-study&catid=7:Industry&Itemid=116; Sanne van der Lugt, Victoria Hamblin, Meryl Burgess, Elizabeth Schickerling: Assessing China’s Role in Foreign Direct Investment in Southern Africa, Oxfam Hong Kong and Centre for Chinese Studies 2011, pp. 68-74; UNCTAD: Asian Foreign Direct Investment in Africa. Towards a New Era of Cooperation among Developing Countries (2007)

[18] Irene Yuan Sun, Kartik Jayaram, Omid Kassiri: Dance of the lions and dragons. How are Africa and China engaging, and how will the partnership evolve? McKinsey & Company, June 2017, p. 10 and pp. 29-30

[19] SIPRI Yearbook 2016 (Summary), p. 20 and p. 23

[20] See e.g. Michael Pröbsting: Lenin’s Theory of Imperialism and the Rise of Russia as a Great Power

[21] We have dealt with the law of uneven and combined development in greater detail in our essay (by Michael Pröbsting) Capitalism Today and the Law of Uneven Development: The Marxist Tradition and its Application in the Present Historic Period, in: Critique: Journal of Socialist Theory has in its latest issue (Volume 44, Issue 4, 2016), https://www.thecommunists.net/theory/law-of-uneven-development/

[22] Karl Marx: Letter to Laura and Paul Lafargue (5 March 1870), in: MECW 43, p. 450