Russia and China as Great Imperialist Powers

A Summary of the RCIT’s Analysis

By Michael Pröbsting, Revolutionary Communist International Tendency (RCIT), 28 March 2014, www.thecommunists.net

Note from the Editor: Below we publish a summary of the RCIT's analysis of Russian and Chinese imperialism. It is a short version of the two detailed studies on these countries which we have published in the recent past. It should help readers to make our analysis more accessible.

 

 

This summary contains 5 tables and 3 graphs. While the tables can be viewed in the text version of the document, the graphs can not for technical reasons. They can however be viewed in the pdf version of this document which is attached below.

 

Introduction

 

The world has undergone tremendous changes since the beginning of the new historic period which opened with the Great Recession in 2008. Among the most important new developments is Russia’s increasing strength as an imperialist power and the emergence of China as a new imperialist power. Against the background of the decline of crises-ridden capitalism, this has led to a significant escalation in the rivalry between the imperialist powers – most prominently between the US, the EU, and Japan on the one hand and Russia and China on the other. Examples of the sharpening of inter-imperialist rivalry are the war between Russia and US-allied Georgia in 2008; rising Sino-Japanese tensions around the Diaoyu/Senkaku islands in the East China Sea; the Russian-American disagreement over the civil war in Syria; and, most recently, the international conflict connected with the crisis in the Ukraine. (1)

In order to understand the global political dynamics of this new historic period and to derive the correct tactics for the class struggle, it is incumbent upon Marxists to elaborate a scientific analysis of the class character of all involved great powers. While for decades Marxists have accepted as axiomatic that the US, the EU, and Japan are imperialist states, Marxists still feverishly debate the class character of Russia and China. Many of those participating in this debate either have a superficial, impressionistic understanding of Russian imperialism or they entirely refuse to accept the imperialist character of these two powers. Obviously, aside from its theoretical import, this question also has tremendous practical consequences for developing a revolutionary program. While obviously each conflict needs to be studied concretely, for Marxists in the tradition of Lenin and Trotsky a widely-accepted principle is to adopt a position of revolutionary defeatism in all conflicts between imperialist powers. At the same time, this principle dictates always supporting a semi-colonial country struggling against imperialism.

The RCIT has extensively elaborated the class character of both Russia and China. (2)In order to make our analysis more accessible to Marxists in general, in this document we provide a summary of our analysis of Russian and Chinese imperialism. This analysis is divided into three sections: the first presents our general definition of an imperialist state; the second provides an economical and political overview of China; and the third does likewise for Russia.

I.             What are the Criteria for an Imperialist State?

 

Before we present a concrete overview of the characteristics of Russia as an imperialist state, we shall start by clarifying our definition of an imperialist state. Our methodological understanding of imperialism is based on Lenin’s theory, which became the basis for revolutionary Marxism from the early 20^th century. (3)

Lenin described the essential characteristic of imperialism as the formation of monopolies which dominate the economy. Related to this, he pointed out the fusion of banking and industrial capital into financial capital, the increase in capital export alongside the export of commodities, and the struggle for spheres of influence, specifically colonies. As Lenin wrote in Imperialism and the Split in Socialism – his most comprehensive theoretical essay on imperialism:

„We have to begin with as precise and full a definition of imperialism as possible. Imperialism is a specific historical stage of capitalism. Its specific character is threefold: imperialism is monopoly capitalism; parasitic, or decaying capitalism; moribund capitalism. The supplanting of free competition by monopoly is the fundamental economic feature, the quintessence of imperialism. Monopoly manifests itself in five principal forms: (1) cartels, syndicates and trusts—the concentration of production has reached a degree which gives rise to these monopolistic associations of capitalists; (2) the monopolistic position of the big banks—three, four or five giant banks manipulate the whole economic life of America, France, Germany; (3) seizure of the sources of raw material by the trusts and the financial oligarchy (finance capital is monopoly industrial capital merged with bank capital); (4) the (economic) partition of the world by the international cartels has begun. There are already over one hundredsuch international cartels, which command the entire world market and divide it “amicably” among themselves—until war redivides it. The export of capital, as distinct from the export of commodities under non-monopoly capitalism, is a highly characteristic phenomenon and is closely linked with the economic and territorial-political partition of the world; (5) the territorial partition of the world (colonies) is completed.“ (4)

The characteristic of an imperialist power has to be seen in the totality of its economic, political, and military position in the global hierarchy of states. Thus, a given state must be viewed not only as a separate unit, but first and foremost in its relation to other states and nations. Similarly, by the way, classes can only be understood in relation to each other. An imperialist state usually enters a relationship with other states and nations whom it oppresses, in one way or another, and super-exploits – i.e., appropriates a share of its produced capitalist value. Again this has to be viewed in its totality, i.e., if a state gains certain profits from foreign investment but has to pay much more (debt service, profit repatriation, etc.) to other countries’ foreign investment, this state can usually not being considered as imperialist.

Finally we want to stress the necessity of considering the totality of a state’s economic, political, and military position in the global hierarchy of states. Thus, we can consider a given state as imperialist even it is economically weaker, but still possesses a relatively strong political and military position (like Russia before 1917 and, again, in the early 2000s). Such a strong political and military position can be used to oppress other countries and nations and to appropriate capitalist value from them.

Viewing a state in the context of the global imperialist order is also important because particularly smaller imperialist states (like Australia, Belgium, Switzerland, the Netherlands, Austria, the Scandinavian countries, etc.) are obviously not the equals of the Great Powers, but rather are subordinated to them. Alone they could not play an imperialist role. However, despite their being unequal to the Great Powers – by the way even among the Great Powers themselves there is constant rivalry and no parity – these smaller imperialist states are still not super-exploited by the former. As a result, while there is no significant transfer of value from these smaller imperialist states to the Great Powers, there is a significant transfer of value from semi-colonies to these smaller imperialist states. They ensure this privileged position by entering economic, political, and military alliances with the Great Powers like the EU, OECD, IMF, World Bank, WTO, NATO, and various “partnerships.”

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.

We think such a definition of an imperialist state is in accordance with the brief definition which Lenin gave in one of his writings on imperialism in 1916: „… imperialist Great Powers (i.e., powers that oppress a whole number of nations and enmesh them in dependence on finance capital, etc.)…“ (5)

 

Imperialism and Super-Exploitation

 

An important– albeit not exclusive– aspect of imperialism is the systematic and massive super-exploitation of the colonial and semi-colonial world by the imperialist monopolies and states. In our book, The Great Robbery of the South, we haveelaborated basically four different forms of super-exploitation by which monopoly capital obtains extra profits from colonial and semi-colonial countries:

i) Capital export as productive investment

ii) Capital export as money capital (loans, currency reserves, speculation, etc.)

iii) Value transfer via unequal exchange

iv) Value transfer via migration

Marx noted how foreign trade serves as an important means by which capitalists counteract the tendency of the rate of profit to fall. The basis of this mechanism, one aspect of the capitalist law of value, is that given the lower level of development of productive forces in (semi-)colonial countries, capital invested there has a higher organic composition, i.e., the share of human labor – variable capital expenditures – is higher relative to that of constant capital – machinery, raw material, etc. Because, according to the law of value, only variable capital contributes to the creation of surplus value and the concomitant generation of capitalist profits, investments in (semi-)colonial countries with their higher organic composition – i.e., human vs. mechanized labor – yield relatively more surplus value and, consequently, higher average rates of profit.

Surplus value is the share of capitalist exchange value which is appropriated by capitalists (in order to reinvest it or to consume it), rather than paid for by them as variable or constant capital expenditures (wages, machinery, raw materials, etc). By exporting capital and investing in factories in semi-colonial countries, monopolies can extract extra-profits in one or both of two fashions: (1) By employing the cheaper labor force of semi-colonial countries, the imperialist company reduces its costs, but still sells the produced commodities at the average market price back in the metropolitan country or countries, thereby increasing its profit margins at home. (2) Additionally, the imperialist monopoly can sell the same commodities it produces in the semi-colonial countries, but at a price below the average market price there, thereby out-competing local production which also results in increased profits. The major part of these extra-profits are also repatriated by imperialistic monopolies from the semi-colonies to their parent country.

Furthermore, when the commodities of the more developed (imperialist) countries and those of the less developed (semi-colonial) countries are exchanged on the world market, the law of value also enables imperialist capital to transfer huge amounts of value from capitalistically less-developed to capitalistically more-developed countries due to the inherently unequal exchange arising from the higher productivity of the developed economies: The imperialist monopolies’ cheaper commodities (a function of the labor invested) out-compete the more expensive commodities from the semi-colonial countries, and force the latter to sell their own commodities below their true value. Despite this competitive step, the locally-produced commodities often remain more expensive on the world market than that of its imperialist rivals. Consequently, the stronger (imperialist) capital can sell its commodities above their production price and still remain cheaper on the world market than the commodities of the less competitive (semi-colonial) capital. At the same time, the significance of this is that the semi-colonial countries have to exchange (the equivalent of) more labor time against (the equivalent of) the same labor time of the imperialist countries allowing, once again, the stronger (imperialist) capital to successfully appropriate a part of the surplus value which is created by the weaker (semi-colonial) capital.

This means that unequal exchange provides an important basis for a massive transfer of value from capitalistically less-developed to capitalistically more-developed countries.

Monopolies can also appropriate extra profits via capital export as money capital (loans, currency reserves, speculation, etc.).

Finally, monopoly capital extracts surplus profits not only by means of exploitation of the semi-colonial countries but also via exploitation of migrants from these countries and oppressed nationalities. Imperialist capital draws profit by paying the migrant workers below the value of their labor force in several ways:

i) Capitalists can often exploit the migrants with no or only limited costs for their education, since the migrants are often educated in their home country.

ii) Capitalists often have to pay either no or only reduced costs for the pensions and social security of the migrants since they have limited access to social services, and when they can no longer work due to age they often return to their home country.

iii) Capitalists can usually pay the migrants a wage which is substantially lower than the wage paid to the workers who are citizens of the country in which the work is done. To do so they utilize various forms of national oppression (reduced or no rights for workers who are not citizens of the imperialist country; discrimination against the migrants’ mother tongue; various forms of social discrimination; etc.). These forms of oppression are implemented not only against first generation migrants, but against their children and grandchildren.

For these reasons the RCIT defines migrants as being, in the vast majority, “a nationally oppressed layer of super-exploited labor.”

II.           China as an Emerging Great Imperialist Power

 

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.

In terms of the total output measured by the Gross Domestic Product (GDP) China’s share of global output has experienced huge growth in the past two decades. While China produced 4.1% of global output in 1991, this figure rose to 14.3% in 2011. This makes it the world second-largest economy. During the same time period the US’s share of global output declined from 24.1% to 19.1%. (6)

In manufacturing – the core sector of value production for capitalism – China has even become the world’s leading economy. By 2011, a fifth of world’s manufacturing came from China (19.8%) while 19.4% originated in the US economy. (7) Parallel to this it has become the world’s leading exporter.

China’s economic strength is also reflected in its low level of debt to the global financial market. As a share of its Gross National Income, China’s external debt stocks stand at only 9.3% while its debt service to exports is a mere 2.5%. (8)

 

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 third among home countries. Chinese companies on the list number 121, superseded by only the US (524 companies) and Japan (258 companies). These 121 Chinese monopolies have an aggregate profit of $168 billion, which constitutes 7% of the total profit of the world’s 2000 largest monopolies. (9)

In the Fortune Global 500 – another ranking of the world’s largest corporations which uses different criteria – we see the same prominent and expanding position of China among the home states of the world’s super-monopolies. Here, China has already surpassed Japan as the second-ranked country with 73 of these corporations, exceeded by only 132 US monopolies. As indicated, ranked after China is Japan with 68 monopolies, followed by France and Germany with 32 each (see Table 1).

 

Table 1: Top 10 Home Countries in the Fortune Global 500 Index (10)

 

Rank	Country	Number of Companies
1.	United States	132
2	China	73
3	Japan	68
4	France	32
4	Germany	32
6	United Kingdom	26
7	Switzerland	15
8	South Korea	13
9	Netherlands	12
10.	Canada	11

 

The rulers of China have created a capitalist class. According to the World Wealth Report 2012, published by Capgemini and RBC Wealth Management, China has the fourth highest number of super-rich, only behind the US, Japan, and Germany, but ahead of Britain, France and Canada. (11) A different list of the super-rich – measuring the number of so-called “Ultra high net worth individuals” whose net assets exceed US$ 50 million – ranks China (behind the USA) in second place. (12)

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%. (13) 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. (14) 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. (15)

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. (16)

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.” (17)

Given endemic rural poverty and the opportunities for jobs in the cities, millions upon millions of rural, mostly young, peasants have moved to the cities to seek employment, transforming themselves into what are called in China migrants. In their new milieus, these uprooted former peasants often live illegally – because of the hukou-system – and thus have no access to housing, employment, education, medical services, and social security. The capitalists continually aim to set the wages paid to migrant workers to little more than the minimum necessary to keep them alive. Consequently, the living conditions of these migrant workers are shockingly poor, most of them residing in overcrowded dilapidated housing, tents, under bridges and tunnels, or even in the trunks of cars. (18)

Following the implementation of capitalism in China, these migrants 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. (19)

It is only natural that the Chinese working class is mounting a struggle for its rights despite the draconian measures of the Stalinist-capitalist dictatorship. Developments in the past few years attest to a rapidly growing militancy. According to official statistics compiled by China’s Academy of Social Sciences, popular protests, dubbed by the regime “mass incidents,” increased in a period of one year from 60,000 (2006) to more than 80,000 (2007). The further publication of such statistics was discontinued, ostensibly because the bureaucracy feared that these figures could have an even more inspiring effect on super-exploited migrant and other workers. However, unofficial estimates indicate that in 2009 the number of “mass incidents” had increased to 90,000. The Chinese sociologist Sun Liping estimates that the figure for 2010 was as high as 180,000. (20)

 

China’s Capital Export

 

China has enormously increased 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$3.305 billion in March 2012. (21) As such, China’s foreign exchange reserves equal the combined sum of the next six largest foreign exchange reserve holders!

China is also an active lender of bilateral loans. According to the Financial Times, over the past few years Chinese banks have emerged as major financiers. China is already lending more money to so-called developing countries than the World Bank.

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. Since China has only recently emerged as an imperialist power, it is still globally weaker in this realm than the imperialist powers which have been dominant for more than a century. In Table 2 we compare the annual FDI outward flows of a number of imperialist countries during the last five years. One can see that Chinese imperialism has already overtaken rivals like Canada or Italy in Foreign Direct Investment while it has reached parity with countries like Germany.

 

Table 2: China’s FDI Flow from and to Selected Countries, 2007-2011 (in $US-billions) (22)

 

FDI inward stock							FDI outward stock
Country	2007	2008	2009	2010	2011		2007	2008	2009	2010	2011
World	1.975	1.790	1.197	1.309	1.524		2.198	1.969	1.175	1.451	1.694
France	96	64	24	30	40		164	155	107	76	90
Germany	80	8	24	46	40		170	72	75	109	54
Britain	196	91	71	50	53		272	161	44	39	107
Italy	43	-10	20	9	29		96	67	21	32	47
Canada	114	57	21	23	40		57	79	41	38	49
USA	215	306	143	197	226		393	308	266	304	396
Japan	22	24	11	-1	-1		73	128	74	56	114