Michael Roberts Blog — Xi takes full control of China’s future

And American imperialism is scared. U.S. Commerce Secretary Wilbur Ross has described the plan as an “attack” on “American genius.” In an excellent new book, The US vs China: Asia’s new cold war?, Jude Woodward, a regular visitor and lecturer in China, shows the desperate measures that the US is taking to try to isolate China, block its economic progress and surround it militarily. But she also shows this policy is failing. China is not accepting control by foreign multi-nationals; it is continually developing trade and investment links with the rest of Asia; and, with the exception of Abe’s Japan, it is succeeding in keeping the Asian capitalist states ambivalent between China’s ‘butter’ and America’s ‘arms’.’ As a result, China has been able to maintain its independence from US imperialism and global capitalism like no other state.

This brings us to the question of whether China is a capitalist state or not? I think the majority of Marxist political economists agree with mainstream economics in assuming or accepting that China is. However, I am not one of them. China is not capitalist. Commodity production for profit, based on spontaneous market relations, governs capitalism. The rate of profit determines its investment cycles and generates periodic economic crises. This does not apply in China. In China, public ownership of the means of production and state planning remain dominant and the Communist party’s power base is rooted in public ownership. So China’s economic rise has been achieved without the capitalist mode of production being dominant....

And here I can provide some new evidence that, as far as I know, has not been noticed by any other commentators. Recently the IMF published a full data series on the size of public sector investment and its growth going back 50 years for every country in the world. This data delivers some startling results.

It shows that China has a stock of public sector assets worth 150% of annual GDP; only Japan has anything like that amount at 130%. Every other major capitalist economy has less than 50% of GDP in public assets. Every year, China’s public investment to GDP is around 16% compared to 3-4% in the US and the UK. And here is the killer figure. There are nearly three times as much stock of public productive assets to private capitalist sector assets in China. In the US and the UK, public assets are less than 50% of private assets. Even in ‘mixed economy’ India or Japan, the ratio of public to private assets is no more than 75%. This shows that in China public ownership in the means of production is dominant – unlike any other major economy....

The battle is on.

As the paper puts it: “The Chinese Communist Party (CCP), by controlling the career advancement of all senior personnel in all regulatory agencies, all state-owned enterprises (SOEs), and virtually all major financial institutions state-owned enterprises (SOEs) and senior Party positions in all but the smallest non-SOE enterprises, retains sole possession of Lenin’s Commanding Heights.”

The reality is that almost all Chinese companies employing more than 100 people have an internal party cell-based control system. This is no relic of the Maoist era. It is the current structure set up specifically to maintain party control of the economy.

This is, of course, the opposite of capitalism, where private ownership ("capital") controls the commanding heights of the economy and representative democracy" is tends toward plutocracy under bourgeois liberalism.

Workers are in control in neither.

It can be argued that under Western liberalism, the people have a say through elections. It can also be argued that the CCP is heavily influenced by public opinion, which is polled on an ongoing basis to ensure social harmony, which the party recognizes is essential to the party staying in power peacefully.

Similarly, the great expansion of infrastructure investment after 2008 to counteract the impact of collapsing world trade from the global financial crisis and Great Recession hitting the major capitalist economies was no Keynesian-style government spending/borrowing, as mainstream and (some) Marxist economists argue. It was a state-directed and planned programme of investments by state corporation and funded by state-owned banks. This was proper ‘socialised investment’ as mooted by Keynes, but never implemented in capitalist economies during the Great Depression, because to do so would be to replace capitalism.

Where are workers better off policy-wise? Obviously, this cannot be approached on an absolute basis economically, since the West is developed and China is still emerging. Bur relatively, Chinese workers are doing very well and increasing their positions for the most part with the government even targeting the poorest, while Western workers are not for the most part and the ranks of the poor and precarious are growing.

A recent survey by the Pew Research Center found that 77% of those asked believe that their way of life in China needs to be protected from “foreign influence”. Political scientist Bruce Dickson collaborated with Chinese scholars to survey public perceptions of China’s ruling Communist Party. Researchers conducted face-to-face interviews with some 4,000 people in 50 cities across the country. Dickson concluded: “No matter how you measure it, no matter what questions you ask, the results always indicate that the vast majority of people are truly satisfied with the status quo.”

This is not to say that China is utopia. But it is far from the hell-hole that Western propaganda would have the naive believe. Even self-styled "Marxist economist" Michael Roberts is critical.

I am much more sanguine from a realist point of view as well as from the perspective of having some knowledge of Chinese culture and thought. Looking at China and the Chinese through Western eyes is challenging since the contrast is much greater than the comparison. China will never become Western and the West will never become Chinese. But both will influence each other profoundly in the course of the world shrinking.

China really cannot be compared to the West owing to geographical and historical differences, as well as population size and the challenges that this presents. Communist China can be compared with democratic India, however, which are roughly comparable in size and the starting point of development post WWII, although India had somewhat of an advantage at the outset owing to the British Raj, while China was devastated by the Japanese invasion and occupation.

Michael Roberts Blog — blogging from a Marxist economist

Xi takes full control of China’s future

Michael Roberts

See also

Stumbling and Mumbling
Capitalist triumphalism: a brief history
Chris Dillow | Investors Chronicle