Editor note: I came across this article, first published in 2017, on the debate around that time over whether China is socialist or capitalist, and whether it’s imperialist, among the Chinese left. The author themselves argues that China is capitalist and imperialist, but they introduce and present a range of different views from academics and online communities in great details. I think it’s a useful read, not the least for showing that there are extensive debates on these issues and there isn’t a single “Chinese left” position. One thing worth keeping in mind is that the article was written in 2017, when Chinese capital’s global expansion and its growing dominance in some advanced manufacturing sectors was much less visible than it is today. In that sense, the debate it captures is a snapshot of its moment and sheds lights on how things have developed since. The piece only discusses political economy and pays little attention to political institutions or culture. Below is AI translated and proofread by me. The original post contains infographics and screenshots that are omitted here.
Debate on the nature of Chinese society among the Chinese left
by 太平洋的风
Over the past one or two years, more and more comrades on the left have been paying attention to the question of the nature of Chinese society, and related discussions have grown increasingly in-depth. Last year, several scholars, including Lu Di and Pun Ngai engaged in a fierce debate on the Potu website over whether China is the “center of world capital.” In recent months, several left-wing comrades—including Lu Di—have published articles expressing their views on whether China has already become an imperialist country. Clearly, the repeated emergence of debates over social nature within the left is by no means driven merely by intellectual curiosity; rather, it is a political reflection of the dramatic changes taking place in real economic and political relations.
At this point, probably no one on the left would deny the drastic changes brought about by reform and opening up, nor would anyone deny that the main aspect of these changes has been the increase of capitalist elements within Chinese society. The focus of the debate lies in how to evaluate these capitalist elements: have they developed to the point of changing the nature of Chinese society, or do they merely function as a supplement to socialist elements?
When Lenin polemicized with the Narodniks in What the “Friends of the People” Are and How They Fight the Social-Democrats, he pointed out that once Capital appeared, “the question of the ‘destiny of Russian capitalism’ became the main theoretical question for Russian socialists; the most heated debates centered on this question, and the resolution of the most important programmatic principles hinged upon it.” Similarly, once the Chinese left began to question whether reform is capitalist or socialist in nature, it could not avoid the broader question of whether society as a whole is capitalist or socialist. The resolution of the most important programmatic principles within the left must inevitably hinge on this question. If one believes that China is still socialist, then one must necessarily insist on “preserving” and “saving” it; if one acknowledges that China has already become a capitalist country, or is even moving toward imperialism, then, starting from Marxist–Leninist principles, “tearing down the wall” and “sinking the ship” become natural conclusions.
For this reason, we believe that the current debate is extremely important and of immeasurable significance for the development of the movement. It is therefore necessary to understand the different viewpoints within the left regarding the nature of Chinese society. In this article, we intend to comment on the main differing understandings that have appeared within the left concerning China’s social nature, in the hope that this will be helpful to readers.
“The path is wrong, but it is still socialism”
The so-called reform and opening up, judging from its actual trajectory, has been the gradual transformation of a socialist planned economy into a capitalist market economy. The object of reform was naturally the socialist economy centered on state-owned enterprises. However, China’s economic reform has had its own particularities. Unlike the Soviet Union and Eastern European countries, China implemented market-oriented reforms at an early stage, but its state-owned economy was not privatized all at once. The marketization and privatization of state-owned economic units unfolded step by step over a relatively long historical period. Moreover, in certain foundational sectors such as energy, telecommunications, and finance, the state never intended to relinquish control. This gradual reform strategy was also reflected in the political line and theory of the socialist movement.
Most of the left that emerged during the reform process came from groups harmed by reform, such as workers in state-owned enterprises, as well as veteran comrades within the ruling party who continued to uphold socialist ideals. They maintain intricate ties with the so-called “system” (体制). The formal continuity of the political system since reform and opening up, the continued important role of the state in the economy, and leaders’ expressions in certain contexts of “not forgetting the original mission” have inevitably led many on the left to harbor strong hopes for a leftward turn within the system. However, for the “left-turn” thesis (左转论) to hold, there is a minimum prerequisite: China must not yet have become a capitalist country. If China has already become capitalist, then the ruling party that personally carried out this historic transformation must necessarily be a bourgeois party. Anyone with a Marxist theoretical background would find it impossible to believe that a bourgeois party could “turn left” into a proletarian party, or to fantasize that a capitalist society could “turn left” back to socialism without a violent revolution. Therefore, in the eyes of the “left-turn” camp, China is a socialist country that has been eroded by capitalist elements. China as a whole remains a socialist state.
Opposing the capitalist orientation of reform and opening up while insisting that China remains a socialist country was once the mainstream view within the Chinese left, especially during the early period of the left’s resurgence. Let us take a look at how veteran leftists themselves have articulated this position:
“So why has China achieved such results during the crisis [2008 financial crisis]? This is related to China’s practice of a socialism with Chinese characteristics model. In this model, there are socialist economic factors, while the existence of capitalist factors is also permitted, which is why some people distort it as ‘capitalism with Chinese characteristics.’ Simply put, China allows marketization and privatization to develop, but not thoroughly, and with certain reservations. For example, it has maintained fairly strong state-owned power in key and important sectors. For another example, fiscal, taxation, and financial policies in recent years have greatly strengthened state-controlled fiscal and financial capacity, including maintaining large foreign exchange reserves. Yet another example is that while establishing a socialist market economic system, macroeconomic regulation has been strengthened, especially by retaining room for state planning and regulation, such as continuing to formulate and implement annual plans, five-year and ten-year medium- and long-term plans, and preserving large planning bodies like the National Development and Reform Commission. The major measures taken to respond to this crisis demonstrated the capacity for swift action, heavy blows, and concentrating resources to accomplish major tasks—capacities of planned regulation admired by some capitalist countries. In addition, China has been relatively cautious in integrating into economic globalization, for example by not fully liberalizing the capital account and by keeping banking operations from fully aligning with foreign systems. All of this has meant that China’s economy was less affected by the world economic crisis and performed relatively well in handling it. In short, China has not copied the European and American free-market economic model and has not followed the neoliberal ‘Washington Consensus.’ Although there are capitalist components in our economy, in reality we are still adhering to the socialism with Chinese characteristics model, and this is the main reason for our relatively outstanding performance during this crisis.”
“In China’s current socio-economic conditions, both socialist and capitalist economic laws are at work. On the one hand, they are closely intertwined; on the other, they are entangled in complex contradictions and struggles. Because the ruling party has clearly stated that it will not change its banner and has solemnly declared its commitment to socialism with Chinese characteristics, socialist socio-economic laws still have broad room to function, ensuring that reform and opening up develop in a socialist direction. To uphold the socialist direction of reform and opening up, on the one hand we must fully utilize the role of market economy and private ownership permitted in the primary stage of socialism to promote the development of productive forces; on the other hand, we must guard against falling into the quagmire of the negative consequences of capitalist socio-economic laws. We must participate in fair economic globalization on our own terms, independently grasping the breadth and depth of opening up, and break free from the traps of capitalist world economic cycles. We must adhere to the path of socialism with Chinese characteristics and oppose distorting it into capitalism with Chinese characteristics. We must uphold public ownership as the mainstay while allowing multiple forms of ownership to develop together; uphold market-oriented reform under the guidance of state macro-planning; uphold distribution according to labor as the main principle and place greater emphasis on social equity; and use basic socialist principles to oppose capitalist privatization, marketization, liberalization, and polarization, restricting the operation of capitalist socio-economic laws to a limited range. Only in this way can we hold high the red banner of socialism and continue to advance amid the murky currents of capitalist cyclical economic crises.” (Liu Guoguang, The Relationship Between China’s Performance in the Current World Economic Crisis and the Socialism with Chinese Characteristics Model)
Whether the views of these veteran comrades are correct cannot be determined by consulting textbooks; reality must be examined. The key question is how far reform and opening up has already gone. If reform has proceeded to the point where socialist elements are few and far between, or have become disconnected from the majority of the population, then no matter how eloquent the veteran comrades’ arguments may sound, they lack validity because they are divorced from reality.
Veteran comrades emphasize the strength of state regulation in China, seeing this as a manifestation of socialist elements. In fact, this view is not very defendable. Socialism is a specific mode of production in which wage labor disappears and workers work in enterprises that they collectively own. The closer a society is to socialism, the higher the proportion of workers employed in enterprises under ownership by the whole people; conversely, if the proportion of workers employed in such enterprises is lower than that in non–people-owned enterprises, it is naturally difficult to regard the society as socialist. Therefore, we can assess whether China is a socialist country by examining employment figures across different types of economic ownership.
The National Bureau of Statistics publishes annual data on employment by different types of urban enterprises, and its website provides charting functions that visually display the proportion of employees in people-owned enterprises—namely, state-owned enterprises—within total urban employment.
Data from the early period of reform and opening up are no longer available on the statistics bureau’s website, but we know that at that time there were virtually no private business owners, at most a small number of self-employed households, and the vast majority of people worked in state-owned and collective enterprises. By the turn of the century around 2000, only 54 percent of urban employed personnel worked in state-owned enterprises—just over half. Most urban workers were still employed in state-owned enterprises. Regardless of whether these enterprises had already been transformed in accordance with capitalist principles, at least formally it was still barely tenable to argue that socialist elements predominated. This was the social basis for the dominance of the view that China remained a socialist country during the early resurgence of the left.
The steadily declining proportion of urban workers employed in enterprises under whole-people-ownership corresponds to a steady decrease in the number of people within the left who insist that China is a socialist country. Older people, due to their lived experiences, find it difficult to make this shift, but young Marxists have basically drawn a clear line between themselves and this viewpoint. After all, reality educates people: when the vast majority of young people, after graduating, can only find work in non-public enterprises, it is no easy task to convince them that China is still socialist without engaging in a significant degree of self-delusion.
Of course, ideology still exerts a powerful influence on individuals. As long as the political system of the state remains unchanged in form, and as long as the basic situation of strong state control over the economy remains unchanged, the “left-turn camp” will not disappear. Instead, it will adjust its rhetoric in a timely manner and continue to influence the movement.
“A society in transition from socialism to capitalism”
Given the reality, it has become very difficult to prove that China is still a socialist society. However, if one steps back and refrains from arguing that China is socialist, and instead merely argues that China has not yet become capitalist, the task becomes much easier. After all, China retains a large number of institutional legacies from the socialist period. These legacies inevitably cause China’s economic operations to differ in certain respects from those of most capitalist countries, and these differences can be used to demonstrate one point: that China is not yet a capitalist country.
In his debates with Pun Ngai and others, Professor Lu Di employed precisely this logic to rebut the claim that China is the “center of world capital.” In a series of articles, he attempted to demonstrate that China’s economy has characteristics that clearly differ from those of Western capitalist countries, and that these characteristics show that China is not yet a capitalist country.
“The identification of capitalist operational logic can be divided into three levels of criteria: at the general level, capitalism as a mode of production is characterized by systematic profit orientation; at the level of historically specific capitalism, it is characterized by the accumulation imperatives of hegemonic capital; and in today’s global neoliberal reality, it takes the form of ‘accumulation by dispossession.’
“Measured against these criteria, China’s reality cannot be conclusively identified as capitalist. One could even say that the judgment that should be reached is that ‘capitalism has not become dominant.’ The basis for this is that, to this day, ownership—or at least control over the use—of China’s economic surplus remains in the hands of the state, and is to a significant extent free from the compulsion of profit orientation.
“More specifically, the use of China’s economic surplus is primarily manifested in persistently high levels of productive investment over the long term (thereby driving increases in labor productivity, wage levels, consumption levels, and overall social development). This is a global exception, and thus can be said to systematically resist both the ‘accumulation by dispossession’ characteristic of global neoliberalism and the operational logic of hegemonic capital under historical capitalism. Moreover, high investment rates have been maintained even during periods of sustained decline in the overall profit rate and in profit rates within productive sectors. From this, one can judge that systematic factors resisting capitalization are at work.
“We can therefore say: up to now, China’s social composition remains hybrid in nature. Capitalist factors and anti-capitalist factors are still locked in a tug-of-war, and it still cannot be said that capitalist factors have irreversibly come to dominate the entire society.”
(Lu Di 卢荻, Viewing China in the Face of the West (-centrism) 面对西方（中心主义）看中国)
The actual situation is that the Chinese government controls most banking capital. Although the share of state-owned enterprises in the economy is no longer large, it is by no means negligible. This enables the Chinese government to intervene in the economy far more forcefully than governments in Western countries. Veteran leftists have noticed this and believe it shows that China remains a socialist country. Professor Lu Di has also noticed this, but he believes it indicates that China has a mixed economy; placed within the historical context of reform and opening up, it represents a transitional economy moving from socialism toward capitalism—similar to Lenin’s New Economic Policy, though with the direction reversed.
Professor Lu Di considers this point fundamental to determining the nature of Chinese society, and believes that other social phenomena—such as workers’ struggles—cannot demonstrate much on their own. Concrete phenomena are insufficient to overturn his judgment regarding China’s economic structure (and thus its social nature):
“Sui Ming and other commentators with similar views, while appealing to political–intellectual positions, often also invoke ‘vivid local experience’ to affirm their stances and arguments. The most representative formulation is this statement: ‘The tens of thousands of collective struggles by workers against capital currently taking place in China, along with other “mass social incidents,” are surely indisputable facts.’ They are indeed facts, and for the most part legitimate struggles—this is not in question. However, to elevate these struggles into a negation of the overall political–economic structure is clearly far from sufficiently justified. It lacks the process of first clarifying the overall reality before making judgments and guiding practice.”
(Lu Di 卢荻, The Third World Left Facing Historical Capitalism—A Response to Sui Ming and Others 面对历史资本主义的第三世界左翼——回应燧鸣等的商榷)
Professor Lu Di believes that the state’s ability to directly carry out large-scale productive investment is sufficient to demonstrate that China is still not a capitalist society. This view certainly has its rationale, and it does show that China differs in certain respects from countries that fully implement neoliberalism. Most leftists—even the most revolutionary ones—would not deny this. The problem, however, lies in the criteria by which we should judge whether China’s economy is primarily capitalist. Taking neoliberalism as the sole standard for capitalism is obviously inappropriate, since other forms of capitalism also exist. The question, then, is how to define capitalism in a general sense, beyond its specific historical variants.
At the very least, Marxists can still refer to Marx himself. In Capital, Marx clearly described the defining characteristics of the capitalist mode of production:
“The capitalist mode of production has two characteristic features from the outset.
First, it produces commodities. What distinguishes it from other modes of production is not that it produces commodities, but that being a commodity is the dominant and determining character of its product. This means, in the first place, that the worker himself appears only as a seller of commodities, and thus as a free wage laborer; labor therefore appears as wage labor… In commodities, and especially in commodities as products of capital, there is already contained the objectification of the social determinations of production characteristic of the entire capitalist mode of production, and the subjectification of the material foundations of production.
The second characteristic feature of the capitalist mode of production is that the production of surplus value is the direct purpose and determining motive of production. Capital essentially produces capital, but it produces capital only insofar as it produces surplus value.”
(Marx, Capital, Volume III)
We can examine whether China’s economy conforms to these two criteria outlined by Marx. The products produced by Chinese enterprises and individual businesses are almost entirely commodities—this is hardly in dispute among Chinese people. Moreover, the charts presented earlier clearly illustrate the reality that the majority of Chinese workers have become wage laborers. Thus, Marx’s first criterion is satisfied.
As for the second criterion, we can make a rough inference based on the proportions of fixed-asset investment by different types of enterprises published by the National Bureau of Statistics. In 2015, state-owned investment accounted for only 24.86 percent of total fixed-asset investment in society, less than that of private enterprises. In terms of trends, since reform and opening up, the share of state-owned fixed-asset investment has declined year by year, while the share of investment by private enterprises and other non-public economic actors has steadily increased. Everyone knows that non-public economic investment has only one purpose: to obtain profit. If the non-public economy dominates fixed-asset investment, this indicates that the direct purpose and determining motive of social production in China is primarily the production of surplus value.
Professor Lu Di may believe that China’s state-owned economy is sufficiently strong to determine the nature of social production in China. In reality, however, although the state-owned economy has a high technological level and a high degree of concentration, its overall scale is not as large as commonly imagined. Once the private sector grows beyond a certain point, the state’s capacity to regulate the economy weakens. For example, in 2016 China’s fixed-asset investment growth rate was relatively low, only 8.1 percent. In fact, the state-owned sector had already gone against the trend and carried out a great deal of investment, but because the growth rate of private-sector fixed-asset investment was too low, the overall downward trajectory could not be reversed. The total volume of private fixed-asset investment has already far exceeded that of state-controlled enterprises. As a result, no matter how frantically state-owned enterprises invest under government orders, the overall investment rate remains relatively low. This shows that the state can no longer determine the broad direction of China’s economic trajectory. What it can do at most is to cool the economy somewhat when it overheats, or warm it slightly during an economic winter. But hot remains hot, and cold remains cold: the cyclical operation of the capitalist economy is something the state no longer has the capacity to eliminate. In a society where overall social production is already driven primarily by the production of surplus value, this is all that can be expected.
Thus, Marx’s second criterion is also satisfied. Marxism emphasizes seeking truth from facts and proceeding from reality rather than from wishes. If both of Marx’s criteria are met, then as Marxists, what grounds remain for believing that China is not a society dominated by capitalism, but rather some kind of “mixed economy” or transitional society?
Already a capitalist society
When commenting on Professor Lu Di’s views, we cited a number of economic statistics to argue that China may already be an economy in which capitalism is dominant. This viewpoint is relatively popular among the revolutionary left and the youth left.
Accordingly, when Lu Di published articles advancing the “mixed economy” thesis and the argument that there is “insufficient evidence that capitalism is dominant,” he immediately attracted a wave of criticism. Articles by Professor Lu Yingxi published on the Potu platform and articles by “Sui Ming” published on the Red Reference public account are particularly representative.
“Professor Lu Di seems to strongly disagree with the claim that China has already become a ‘center of capital.’ He argues that in China’s strategic integration into the world capitalist system, there has thus far been both submission and persistent resistance. I may be rather dull, but I fail to see any great feats of persistent resistance on the part of China’s top elites. What I do see is the new guiding principle from the center: ‘letting the market play a decisive role in the allocation of resources.’ Even Obama would probably not dare to say this, because what plays a decisive role in the market, if not capital? Would Obama dare to openly declare himself a spokesperson for capitalists?”
“The facts are already very clear: contemporary capitalism is a reformed capitalism, whereas what China is practicing is closer to the ‘fundamentalist’ capitalism that Marx criticized—a capitalism in which capital holds decisive discursive power.”
(Lu Yingxi 卢映西, Is China Not the Center of Capital? 中国不是资本的中心？)
“According to a large body of contemporary sociological and economic statistics (Peking University’s China Livelihood Report 2014 and the 2016 China report by Piketty’s team), the top 1 percent of China’s population controls about one-third of the country’s total social wealth, while the top 10 percent controls about two-thirds. This is without even mentioning the expansion of relative inequality in social services, cultural and educational resources, housing, and healthcare (against a background of absolute growth). The share of the state-owned economy in overall social production has steadily declined to below 30 percent (with a clear trend toward further marketization), while the social and economic status of ordinary workers has deteriorated (with most of the labor force participating in marketized employment and less than 20 percent employed in state-owned enterprises). Even if we set aside the question of whether marketized state-owned enterprises still possess socialist characteristics, does the overall relationship between labor and capital, the mode of social wealth distribution, and the class character of state power within China today conform to the aforementioned socialist characteristics?
“Within the capitalist world system, reliance on export-oriented development based on cheap labor and resources during the early stages of development is not unique to China, nor is it unique to the present. As early as the nineteenth century, Germany, as a late-developing capitalist country, relied on cheap labor to export low-quality, low-priced products to drive economic growth. This was followed by Japan, South Korea, and Southeast Asian countries. Today, the ‘Foxconn model’ is also not unique to China. In Central and Eastern European countries (such as Poland and Slovakia), large numbers of cheap foreign workers are recruited to serve multinational corporations like Foxconn, Samsung, and Compal through the establishment of economic zones that fail to uphold basic labor laws—this too is a common phenomenon.
“Professor Lu Di argues that China’s economic structure still contains ‘resistance to neoliberalism,’ but is this really resistance by non-capitalist elements, or competition among different participants within the capitalist world system? Today, we see many policies of the Trump administration in the United States striving to promote ‘domestic production orientation,’ including the recent announcement that Foxconn will build factories in the U.S. Should we then interpret Trump’s policies as ‘resistance to neoliberalism’? Or rather as the United States’ own strategic adjustments within the capitalist world system—by the world’s leading hegemonic power seeking to reassert control over industrial capital and real production in order to shore up its declining hegemony?”
(Sui Ming 燧鸣, “Submission vs. Resistance,” or “Collusion vs. Competition?” “屈从vs抵抗”，还是“共谋vs竞争”?)
It is clear that these leftist comrades and Professor Lu Di focus on very different points. Those on the left who argue that China is capitalist base their judgments largely on the proportion of the state-owned economy and the proportion of wage laborers among workers. Professor Lu Di’s judgment, by contrast, is based on the fact that the state-owned economy in China—which allegedly operates “beyond profit logic”—plays a much greater role in economic production than in Europe or the United States. We will then discuss China’s state-owned economy and analyze its nature below.
Frankly speaking, China still possesses several hundred trillion yuan in state-owned assets, and most banking assets remain state-owned. Compared to Western countries where private financial capitalists dominate everything, China’s situation is indeed different. To deny this difference and insist that China is exactly the same as other capitalist countries would certainly be incorrect. But to exaggerate this difference and claim that it signifies resistance to capitalism is clearly a violation of basic Marxist principles.
Marxism holds that, unlike private capitalists whose vision is limited to profit, the bourgeois state serves the interests of the bourgeois class as a whole and must take into account its long-term interests. Some basic industries—such as railways and other infrastructure—require enormous investment and have long capital-recovery periods, making private capitalists reluctant to enter them. Yet these industries are crucial for economic development, especially in the context of economic globalization. To ensure long-term economic development, the state must therefore invest heavily in these sectors. Likewise, when the economy enters a downturn, private capitalists are unwilling to invest and engage in massive layoffs, easily triggering social conflict and even threatening the ruling order. To ensure the orderly reproduction of capitalism, the state must use its economic resources to invest heavily and stimulate the economy.
The state’s ownership of large-scale infrastructure and its heavy investment in infrastructure are precisely what a bourgeois state is supposed to do. We cannot claim that China is “resisting capitalism” simply because the U.S. government has not made such investments while the Chinese government has. In fact, neoliberal countries such as the United States, having neglected infrastructure construction for many years, now find their roads and bridges severely outdated and deteriorated, and are themselves forced to refocus on such development. The state must ensure that the normal conditions for capital accumulation are in place; if it fails to do so, it is not a competent bourgeois state. In this sense, the Chinese model is indeed superior to the American model.
Small-government capitalism is capitalism; large-government capitalism is also capitalism. Engels pointed this out clearly more than a century ago:
“In any case, with trusts or without trusts, the official representative of capitalist society—the state—will ultimately have to undertake the direction of production. This necessity for conversion into state property is felt first in the great institutions for intercourse and communication—the post office, the telegraphs, the railways.
But neither the conversion into joint-stock companies and trusts nor the conversion into state property does away with the capitalistic nature of the productive forces. In the case of joint-stock companies and trusts this is obvious. And the modern state, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments of both workers and individual capitalists. The modern state, no matter what its form, is essentially a capitalist machine—the state of the capitalists, the ideal collective capitalist. The more productive forces it takes over, the more it becomes the real collective capitalist, the more citizens it exploits. The workers remain wage laborers, proletarians. The capitalist relation is not abolished; it is rather brought to a head.”
(Engels, Socialism: Utopian and Scientific)
With regard to the state-owned economy, Engels also proposed a specific criterion:
“State ownership of the productive forces is not the solution of the conflict, but it contains within itself the formal means, the key to the solution. But this solution can only consist in the recognition of the social nature of the modern forces of production, and therefore in the harmonizing of the mode of production, appropriation, and exchange with the socialized character of the means of production. And this can only come about by society openly and directly taking possession of the productive forces which have outgrown all control except that of society as a whole. But since Bismarck went in for state-ownership, a spurious kind of socialism has arisen, degenerating at times into a form of servility, which uncritically proclaims every state-ownership—even that of Bismarck—as socialist. If the taking over by the state of the tobacco industry is socialist, then Napoleon and Metternich must be numbered among the founders of socialism. When the Belgian state, for quite ordinary political and financial reasons, built its own main railway lines; when Bismarck, not for any economic necessity, but simply to make the railways more serviceable in wartime, to train railway officials as government voting cattle, and above all to secure a new source of income independent of parliamentary decisions, nationalized the main Prussian railway lines—this was in no sense a socialist measure, directly or indirectly, consciously or unconsciously. Otherwise the Royal Maritime Trading Company, the Royal Porcelain Manufacture, and even the army clothing factories—or even, as was seriously proposed in the 1830s under Frederick William III, state-run brothels—would also have to be regarded as socialist institutions.”
(ibid.)
According to Engels’s criteria, state control of railways is progressive and something the left should support, but this does not mean that state-owned railway companies represent socialist elements. Even if such elements exist, they are only latent, in the sense of “preparing the ground for society itself to take possession of all productive forces.” Other forms of state ownership, such as tobacco monopolies, cannot be counted as socialist elements at all. In general, Engels emphasized that state-owned enterprises within capitalist society remain components of the capitalist economy. Their existence is not intended to abolish or resist capitalism, but to protect and consolidate it.
In China’s case, the “mixed-ownership reform” is an even clearer signal: it means that the bureaucratically controlled state-owned economy is being integrated with privately controlled capital, intertwining interests so that each penetrates the other and all are bound together. At the same time, the state’s management of the state-owned economy is increasingly shifting toward “managing capital,” with an emphasis on profitability. The effects of state-owned enterprise reform are evident, with profits rebounding rapidly. How has this been achieved? Of course, through the same measures used by loss-making private capital: layoffs, efficiency drives, and the closure of unprofitable enterprises.
We all still remember last year’s massive layoffs, which were said to involve 1.8 million workers—though it is unclear how many were actually laid off in the end [In 2016, Ministry of Human Resources and Social Security stated that, in order to address excess capacity, China’s coal and steel industries are expected to lay off 1.8 million workers]. Judging from the results, however, the effect was quite “good.” Take Wuhan Iron and Steel (WISCO) as an example: after getting rid of tens of thousands of workers, profits rebounded. Presumably, other state-owned enterprises followed much the same approach.
If the existence of the state-owned economy serves only to ensure the functioning of the capitalist economy, and if in its treatment of workers it differs in no essential way from private capitalist enterprises, then such a state-owned economy—even if it has a certain progressive aspect—possesses no socialist character of any real significance.
Marx and Engels repeatedly pointed out that the proletariat should support the big bourgeoisie in opposing the reactionary fantasies of the petty bourgeoisie. Similarly, today’s proletarian political forces should oppose reactionary fantasies about privatizing infrastructure and public services such as railways and telecommunications. However, while opposing neoliberalism in all its reactionary aspects, we should not forget that this ideology and Keynesianism—which advocates a large government—are both bourgeois ideologies. We must not excessively elevate the struggle against the particular reactionary character of neoliberalism, nor raise the defense of state-owned enterprises to the level of defending socialism.
An economic colony of imperialism
If China is no longer a socialist country but a capitalist one, then what position does this capitalist country occupy within the world system?
Many comrades would undoubtedly say that China has already become an imperialist country. We will discuss this view later. However, the theory that China is imperialist actually emerged relatively late—after 2008. Before that, the most popular view within the left was that China had become an economic colony of imperialism.
The most important advocate of this view was the well-known leftist standard-bearer Zhang Hongliang. In 2006, in an article commemorating Mao’s birthday, Zhang Hongliang dramatically painted a terrifying picture of the Chinese nation on the brink of destruction at the hands of imperialism:
“From the perspective of foreign trade, China’s astonishing ‘blood transfusion’ of wealth to Western developed countries has already reduced China to the most miserable colonial economic status. The prices of China’s export products are so low that they are almost given away for free. In history, aside from the period when white people hunted Black people in Africa without paying, no colony has ever been plundered through trade to such an extent.
“From the perspective of foreign capital, China on the one hand uses massive surplus capital to support U.S. economic construction, and on the other hand introduces foreign capital on a large scale at the cost of sacrificing national resources and even sovereignty. The foreign-capital economy has already become the economic foundation through which Western developed countries comprehensively control China. Under conditions of globalization, foreign investment entering China is itself a normal economic phenomenon, but the manner in which we introduce foreign capital is creating a historical catastrophe for the Chinese nation.
“The current struggle of the Chinese people—marked by the construction of a harmonious society—as a return to Eden is, in terms of its historical nature, a new national salvation movement. At the turn of the nineteenth to the twentieth century, China was politically carved up by the Western powers; at the turn of the twentieth to the twenty-first century, China has once again been economically carved up by the Western powers. The only difference is that in the late nineteenth and early twentieth centuries, the Western powers carved us up through various treaties, whereas today they carve us up through various rules. The main sign of China being carved up is that it is becoming a ‘cash cow’ that Western developed countries can squeeze at will—its body filled with wealth-extracting tubes inserted by international monopoly capital. Through destructive resource exploitation that cuts off future generations, enormous wealth is drained like mighty rivers into Western developed countries, raising their living standards and driving global economic growth, while uniquely sacrificing the welfare of the Chinese people—not only the welfare of the present generation, but, more frighteningly, hollowing out the resource base of future generations.”
(Zhang Hongliang 张宏良, China’s Economy Has Once Again Reached Its Most Dangerous Moment 中国经济再次到了最危险的时候)
This rhetoric may sound somewhat absurd today, but at the time it did have a certain basis in reality. There was once an article that became extremely popular, titled “Foreign Capital Controls 21 of China’s 28 Major Industries,” which discussed the extent of foreign control over China’s economy:
“According to the Ministry of Commerce’s 2004 Report on Multinational Corporations in China, in key industries such as light industry, chemicals, pharmaceuticals, machinery, and electronics, the products produced by subsidiaries of multinational corporations already accounted for more than one-third of the domestic market. According to China’s Industrial Map (China M&A Research Center), the top five firms in every opened industry in China are controlled by foreign companies, and in 21 of China’s 28 major industries, foreign capital holds majority control over assets.”
The article went on to provide detailed descriptions of individual industries:
“Beer industry: among more than 60 large and medium-sized enterprises, only Tsingtao and Yanjing remain as national brands; all others are joint ventures;
Glass industry: the top five companies are all joint ventures;
Elevator industry: the top five are all foreign-controlled, accounting for over 80% of national output;
Home appliances: 11 of 18 state-designated enterprises are joint ventures;
Cosmetics: controlled by 150 foreign enterprises;
Pharmaceuticals: 20% foreign-controlled;
Automobile industry: foreign brands account for 90% of sales!
…”
This article is still reposted on many websites today, giving many people the feeling that national collapse is imminent. But the actual situation is not like this.
Take the automobile industry as an example. The article claimed that the market share of domestic brands was less than 10 percent. This may have been true in 2001, when China had just joined the WTO, but today the situation has changed dramatically. Domestic brands now command nearly half the market.
“In 2016, total sales of domestically branded passenger vehicles reached approximately 10.5039 million units, with a growth rate of 20.75%, far exceeding the overall passenger vehicle market growth rate of 14.93% in 2016, as well as the sales growth rates of Japanese, German, American, Korean, and French brands (12.70%, 12.81%, 13.89%, 6.74%, and −11.82% respectively). At the same time, the market share of domestic-brand passenger vehicles continued to rebound, rising rapidly from a low of 38.31% in 2014 to 43.24% in 2016.
“Among listed automobile companies that disclosed 2016 sales data, domestic brands generally achieved high growth. Guangzhou Automobile Passenger Vehicles, Jiangling Yusheng, SAIC Passenger Vehicles, Dongfeng Passenger Vehicles, and Geely Automobile all recorded annual sales growth rates exceeding 50% in 2016—specifically 90.66%, 90.05%, 89.23%, 57.40%, and 50.21%. Only Changan Automobile, Lifan Co., and FAW Xiali saw declines in domestic-brand passenger vehicle sales.”
(Analysis of 2017 Sales and Market Share of China’s Domestic Passenger Vehicle Brands)
The elevator industry shows a similar pattern. It was once dominated by foreign capital, but today domestic brands account for around 40 percent of the market, and the share is still growing. The changes in the mobile phone industry mentioned in the article are even more dramatic. In China’s domestic mobile phone market, domestic brands now occupy an absolute dominant position, especially in the low-end segment, which is entirely controlled by domestic phones. The same applies to other sectors such as PCs and telecommunications equipment. Although some industries—such as cosmetics—are still dominated by foreign capital, there is hardly any country in the world where domestic brands dominate all sectors of the domestic market. China, although a large country, has no reason to be an exception.
Such dramatic economic changes inevitably shape how people understand society. The theory of China as an economic colony, associated with Zhang Hongliang and the Utopia (Wuyouzhixiang) left, has already diverged from reality, and fewer and fewer people accept it. However, this kind of rhetoric that exaggerates foreign threats has not disappeared; it has merely shifted from the economic realm to the biological one—from opposing imperialist economic colonization to opposing imperialism’s alleged use of genetically modified organisms to wipe out the Chinese people. Since this article focuses on the economic sphere, we will not elaborate further on that here.
Imperialist state
Last year, the issue debated by Professor Lu Di and Professors Pan Yi, Lu Yingxi, and others was whether China is a “center of capital.” More recently, the polemics between Professor Lu Di and other leftist comrades (with rebuttals published on platforms such as Red Reference, Studies in Modern Capitalism, and Jiliu) have focused on whether China’s capitalist development has already entered the imperialist stage.
The theory that China is imperialist has existed for some time, and as Lu Di has noted, it first emerged among the youth left and has mainly circulated there. The author first came into contact with the left around 2006. At that time, leftist understandings of socialism were still limited to positions such as the socialism thesis, the colony thesis, and the capitalism thesis, and most believed that China’s capitalist development had little future; no one stood up to argue that China would grow into an imperialist state. Around 2008, however, as the West became mired in economic crisis while China continued to maintain rapid growth and outbound investment surged, discussions began both domestically and internationally about China replacing the United States. Many authors followed the trend and published books. For example, Martin Jacques published When China Rules the World in 2009, discussing Western decline and China’s rise. Even well-known liberal figures such as Mo Luo made a 180-degree turn, switching sides to nationalism and statism and becoming a “wumao.” He published China Stands Up, which was collectively criticized by liberals, with many severing relations with him. Quite a few leftists also took note of these changes. For instance, Wang Hui, a leading figure of the New Left, discussed the global significance of China’s rise in an article published in Cultural Horizons in 2010:
“As the center of gravity of economic growth partially shifts toward the Pacific region or the major economies of East Asia, global power relations are undergoing structural change. Even under conditions of economic crisis, China’s economic growth rate, though relatively slowed, remains among the fastest in the world. This rate of growth is a positive factor for the world economy, even though growth alone also brings many problems for China’s structural adjustment. China’s rapid economic growth is not an isolated phenomenon. Compared with other regions, East Asia as a whole is a rapidly growing region, and economic integration in this region is also advancing quickly. China’s rise does not mean that China will replace the United States, but the rise of China and this region within the global economy will change the traditional three-worlds structure and contribute to the formation of a multipolar world. This financial crisis is a landmark event; it is not a routine adjustment, but one link in a major structural transformation.”
(Wang Hui 汪晖, The Experience of China’s Rise and the Challenges It Faces 中国崛起的经验及其面临的挑战)
Overall, the left has tended to take a positive view of China’s rise. However, a segment of the left—mainly younger people who are critical of the Utopia (Wuyouzhixiang) camp—put forward the theory that China is imperialist. This so-called “China as imperialist theory” (中帝论) holds that after roughly thirty years of reform and opening up, China has not only thoroughly become a capitalist country, but has also grown into an imperialist state. However, China does not yet possess the capacity to comprehensively challenge the United States and is therefore a second-tier imperialist power.
The earliest proponents of this view were members of the once highly active “Marxism–Leninism–Maoism Forum.” The forum’s administrators and main contributors were fiercely critical of nationalism and put forward the theory of “China as a second-tier imperialist power,” completely undermining the moral foundation of left-wing nationalism. The article The Characteristics of Chinese Revisionist Imperialism and the Historical Destiny of the Chinese Working Class, written by Chimei, systematically articulated the main content of the “China imperialism theory”:
“Revisionist China (中修) is an imperialist country—that is, a capitalist country dominated by monopoly capital, independent, and participating in global market competition and struggles over spheres of influence.
“However, Chinese revisionism is also a second-tier imperialist power. Its second-tier character is manifested in the following: its overall strength still lags behind that of the established imperialist powers of Europe, the United States, and Japan; it does not possess the global hegemonic status of the U.S.-led old imperialist powers, and its sphere of influence remains relatively small and unstable; as the world’s factory, it still to a considerable extent occupies a downstream position within the economies of the old imperialist powers, with a significant portion of the surplus value created by the Chinese working class still shared with them; and among the excess profits plundered globally by imperialism, Chinese revisionism occupies only a small share, with a considerable gap compared to the old imperialist powers.
“However, as the old imperialist powers become increasingly parasitic and decadent, they find themselves in deep crisis and their strength steadily declines. Chinese revisionism, as the world’s factory, has become a key link in the global capitalist system and, relative to the old imperialist powers, still exhibits comparatively greater vitality and an upward trend in strength. When we say that Chinese revisionist imperialism is in an ascending phase, we do not mean that it is truly vibrant and flourishing, but rather that, due to the extreme decay and gradual decline of the old imperialist powers, the relative strength of the rising Chinese revisionist imperialism appears to be increasing by comparison. This shift in the balance of power will inevitably lead to intense struggles among imperialist powers.
“Internal contradictions within Chinese revisionism also force its bourgeoisie to ‘rise’—that is, to compete with the old imperialist powers for hegemony. Precisely because, as a second-tier imperialist power, Chinese revisionism possesses a vast working class subjected to deep oppression and exploitation, and because it faces sharp and profound social contradictions, the Chinese revisionist bourgeoisie, in order to maintain its rule and mitigate social tensions, can only strive to compete with the old imperialist powers for hegemonic status and excess profits. Without doing so, it can never escape severe revolutionary crisis.
“But the process of this ‘rise’ will not be smooth. It will inevitably encounter powerful counterattacks from the old imperialist powers, which will never relinquish their hegemonic status and will fight desperately to defend it. Moreover, the struggle for hegemony will necessarily intensify internal contradictions.
“Therefore, when we say that Chinese revisionist imperialism is in an ascending phase, this does not mean that it can truly rise to first-tier imperialist status and achieve global hegemony. On the contrary, Chinese revisionist imperialism will inevitably intensify both internal and external contradictions during this ‘rise’ and sink into deep crisis, thereby creating great revolutionary opportunities for the working class. The main characteristics of Chinese revisionist imperialism determine that the Chinese working class harbors enormous revolutionary potential and an extremely promising revolutionary future.”
The main argument of the article can be summarized as follows: China is already imperialist, but weaker than the United States. In terms of trends, U.S. imperialism is in decline while Chinese imperialism is rising, and conflict or even war between the two is inevitable. Imperialism necessarily becomes mired in contradictions during struggles for hegemony, and this in turn creates conditions for proletarian revolution.
At the same time, the article emphasized that the greatest difference between Chinese imperialism and U.S. imperialism lies in the dominance of the bureaucratic bourgeoisie:
“It is precisely because Chinese revisionist imperialism emerged from the restoration of capitalism after socialism that the bureaucratic bourgeoisie—transformed from the party-based bourgeoisie of the socialist period through the usurpation of proletarian political power—became the ruling class of Chinese revisionist imperialism. This class seized the massive former state-owned economy as its economic foundation, transforming it into bureaucratic monopoly capital, and later, through so-called state-owned enterprise reform, into state monopoly capital. It was this class that fostered the private bourgeoisie and introduced multinational capital. For more than thirty years since the restoration, it has firmly held political and economic power in its hands, while other bourgeois elements can only share some rights at its pleasure. The monopolistic position of the bureaucratic bourgeoisie and the particular strength of state monopoly capital constitute a major feature distinguishing Chinese revisionist imperialism from other imperialist powers. On the one hand, this feature makes the Chinese ruling class appear relatively ‘strong’ and capable of handling crises. On the other hand, it produces profound contradictions between all social classes and the bureaucratic bourgeoisie; even within the bourgeoisie, many harbor deep dissatisfaction with it. The monopolistic position of the bureaucratic bourgeoisie sharpens social contradictions. Though it appears extremely powerful and arrogant, it actually sits atop a volcano. And the working class is the subterranean fire beneath it.”
(Chimei 赤眉, The Characteristics of Chinese Revisionist Imperialism and the Historical Destiny of the Chinese Working Class 中修帝国主义的特点与中国工人阶级的历史命运)
However, the article did not provide detailed economic data to prove that China has already entered the imperialist stage, which made it easier for Lu Di and others to criticize it.
Lu Di’s counterargument is that China’s outward expansion does not involve financial plunder and does not exploit much local labor, and therefore does not constitute imperialist expansion:
“The vast majority of China’s direct investment in the developing world—such as in commercial services, wholesale and retail, finance, construction, and so on—serves trade. Investment that actually employs local labor in production has only gradually increased in recent years, meaning that capital’s exploitation of labor has not yet become a systematic phenomenon. Moreover, during the same period, China’s trade with the developing world has consistently run large deficits, which runs counter to imperialist theories centered on the struggle for market share.
“In the era of neoliberal globalization, imperialism manifests as financial plunder and labor absorption. In this context, China is primarily among the exploited rather than the exploiters. Furthermore, China’s political–economic essence remains, to this day, predominantly production-oriented. This constitutes a tenacious resistance to neoliberalism and offsets the global shortage of productive investment and crisis tendencies produced by neoliberalism. It is precisely this essence that, by promoting productive investment in China itself and in the broader developing world, has become an important force resisting global speculative orientation.”
(Lu Di, China in the Face of “New Imperialism” 中国面对“新帝国主义”)
In response to Lu Di’s defense, the Studies in Modern Capitalism public account cited a series of real-world cases to rebut him:
“From the perspective of capital accumulation, if surplus Chinese capital cannot tolerate lower profit rates than those of European and American investors, and is unwilling to undertake additional economic assistance, it may find it difficult to secure projects at all—thus failing even to obtain those modest profit rates. The facts have already shown that China’s overseas investment follows the logic of capital accumulation, which will fully reveal itself under appropriate conditions.
“For example, reports have noted that ‘when Shougang initially acquired the Peruvian iron mine, it signed an agreement pledging to invest an additional $150 million over the next three years to promote the development of the mine and its surrounding community, but in reality invested only $35 million, resulting in a $14 million fine. Local residents complained that Shougang Hierro Perú showed little concern for community development beyond mining operations.’ … A report pointed out that since 2001, relations between Shougang Hierro Perú and its employees and surrounding communities have steadily deteriorated: workers complained of low wages, health risks, and frequent labor accidents… Residents of Marcona accused the company of exploiting labor, polluting the surrounding coastline, and failing to take responsibility for community development.”
“What role has finance played in the expansion of Chinese capital? To a certain extent, it has also taken on a hegemonic function. Global Times reported: ‘The Industrial and Commercial Bank of China will provide massive loans for Russia’s development of iron ore deposits near the Chinese border… which has become a source of concern for some Russian experts. They claim that attracting Chinese investment may come at the cost of turning the Far East into a resource supply base for China. Russia lacks the funds to invest in the region and can only borrow from China, which means having to make concessions on prices.’ According to The Guardian, Ecuador’s government, facing fiscal strain, applied to China for loans, and China demanded mining rights in return. Because mining would destroy large tracts of primary forest, local environmental groups and indigenous peoples protested. As a result, the government shut down the environmental organizations, and three indigenous leaders died under mysterious circumstances.”
(Zheng Ziyan 郑姿妍, On Lu Di: Is Capital “Good” or “Bad”—Do statists Decide? 评卢荻：资本是“好”是坏，国家主义者说了算？)
However, even if Lu Di is correct that China’s outward expansion mainly takes the form of productive investment, and even if Chinese imperialism is indeed marginally “better” than U.S. imperialism, this does not justify the conclusion that China is not imperialist. Take railways as an example. It may appear that China’s construction of railways in Africa is simply helping African people with development, unrelated to imperialist behavior. But this is not the case. For instance, when China provides personnel and funding to build railways in Ethiopia, it ostensibly does so to develop Ethiopia’s transportation sector, but in reality it is to facilitate investment by Chinese capitalists. Caixin recently published a report on Ethiopia that vividly described how Chinese capital is reproducing sweatshop conditions there:
“The Huajian International Light Industry City in Addis Ababa is a landmark project of Chinese investment in Ethiopian light manufacturing. Caixin reporters encountered many young Ethiopians working in manufacturing there. This industrial park, still under construction, officially claims a total investment of $1 billion, covering an area of 137.8 hectares with a planned building area of 1.5 million square meters, and is scheduled for completion in 2020. In the parts of the park already built, many white factory buildings remain vacant, awaiting tenants. In factories already in operation, large numbers of local workers employed by the Huajian Group are engaged in shoe production, mainly as subcontractors for Western brands such as GUESS. Basic assembly-line processing is performed by African workers, while Chinese employees are mainly responsible for upper-level management.
“Similar to China’s earlier experience in developing export-processing zones and industrial parks to attract foreign or joint-venture capital, the Ethiopian government has provided a series of tax incentives for this Chinese-invested industrial park, including exemption from import tariffs on capital goods and construction materials; duty-free imports of footwear and materials; export tax rebates for exporting enterprises; and ten-year corporate income tax reductions for industrial park firms.
“Huajian Group chairman Zhang Huarong told Caixin reporters that the greatest challenge for Chinese enterprises going global is developing local human resources. He said Huajian plans to provide employment for 100,000 local people by 2030, and claimed that these trends all conform to market economic principles. Recalling Huajian’s decision to invest in Ethiopia, Zhang stated, ‘Huajian does not run enterprises for politics, but runs enterprises well in order to serve politics.’”
(Qing Ying 卿滢, How Far Has an “African Version of China” Modeled on the Chinese Experience Gone? 参考中国模式的“非洲版中国”走了多远)
For China to relocate industries to Ethiopia and for Chinese capital to invest there, certain infrastructure is naturally required to ensure the normal process of capital accumulation. Continuously transporting goods produced by Ethiopian workers to ports and exporting them to other countries to generate profits for capitalists—that is the most important function of railways. This is precisely why Lenin evaluated railways in this way:
“Railways are the most striking index of the growth of world trade and of bourgeois-democratic civilization, and are the result of the development of the most important branches of capitalist industry, coal and iron… To bourgeois professors who are paid to embellish capitalist slavery, and to petty-bourgeois philistines, railway construction appears to be a peaceful, useful, democratic, cultural undertaking, spreading civilization. In reality, capitalist threads, in their thousands of invisible meshes, bind such enterprises to private ownership of the means of production, and turn this instrument into a means of oppressing a billion people (in the colonies and semi-colonies), i.e., more than half the world’s population, as well as the wage slaves of capital in the ‘civilized’ countries.”
(Lenin, Imperialism, the Highest Stage of Capitalism)
The pattern of China’s overseas investment over the past decade has already shown that the purpose of Chinese capital’s expansion abroad is to obtain profits, not to improve the welfare of people in the Third World. China has clearly embarked upon the old path of imperialist states, and no benevolent intentions can change this fact.
A semi-peripheral capitalist great power
Among those comrades who acknowledge that China is a capitalist country, some oppose the claim that China is an economic colony of the United States, while also rejecting the theory that China is imperialist. They are more inclined to view China as a semi-peripheral great power.
Shortly after the Donglang standoff ended, the Red Reference public account published an article criticizing the China-imperialism thesis. The article argued that China is still primarily a hired hand for developed countries and lacks the capacity to challenge U.S. hegemony:
“With regard to China’s position in the world capitalist system, China is a semi-peripheral country (and in economic terms still retains considerable peripheral characteristics); with regard to its function within the global capitalist division of labor, the main ‘comparative advantage’ of Chinese capitalism lies in export-oriented manufacturing based on the exploitation of cheap labor and cheap resources. These basic characteristics determine that the fundamental interests of the Chinese bourgeoisie and the U.S. bourgeoisie are highly aligned. In the fundamental aspects of capitalist accumulation, Chinese and U.S. capitalism not only do not conflict, but Chinese capitalism is also highly dependent on U.S. imperialism economically and militarily. Yuanhang No. 1 predicts that not only will there be no war between China and the United States, but there will not even be armed conflict between China and the client states of U.S. imperialism.”
(Yuanhang Yihao 远航一号, The “China Imperialism Theory” Can Be Put to Rest—On the Donglang Incident Drawing to a Close “中帝论”可以休矣——评洞朗事件告一段落)
What is the difference between semi-peripheral and peripheral countries? Another Red Reference article responding to Lu Di pointed out that semi-peripheral countries exploit peripheral countries. That is, semi-peripheral countries like China are exploited by core countries such as the United States on the one hand, while exploiting peripheral countries on the other.
“Contrary to Professor Lu Di’s understanding, it is not due to a lack of perspective on ‘the center and periphery of the world system,’ but precisely because we recognize the reality that ‘core countries and semi-peripheral countries within the capitalist world system exploit the vast peripheral countries,’ that we must discuss whether a ‘social-democratic’ model is a realistically possible path for China today. And if such a path were feasible in reality, what would its realization mean for China’s national character, class relations, and for the entire world capitalist system and its internal order?”
(Sui Ming 燧鸣, “Submission vs. Resistance,” or “Collusion vs. Competition?” “屈从vs抵抗”，还是“共谋vs竞争”?)
This view—that China is somewhat better off than other Third World countries but remains essentially a hired hand for imperialist powers—is not uncommon on the left. One might even say it is quite popular. Han Deqiang, who still calls himself a leftist, once described China’s rise as the “rise of a long-term farmhand” [长工, a social class in traditional Chinese agrarian economy] in a 2011 lecture:
“In my view, the claim of ‘China’s rise’ itself is not necessarily valid. At best, we can say that China’s total economic volume has swollen. Our aggregate has grown—this is true—but the structure has been destroyed, and the high-end segments of the structure have been occupied by multinational corporations. Is this really China’s rise, or the rise of multinational corporations in China? This must be clearly distinguished… China could originally have been an autonomous economic and social organism, but now what are we? We have become a ‘long-term hired hand’ of the world economy. We are the hired hand, while developed countries like the United States and Japan are the landlords of the world economy. We are the hired hand who still has work to do; India, Russia, and Brazil are unemployed hired hands. Their situation is even more miserable. In this sense, China, this hired hand, at least still has work and enough to eat—so this is what I call the ‘rise of the hired hand.’”
(Han Deqiang 韩德强, The Human Path of the “China Model” “中国模式”的人间正道)
But is China’s rise really nothing more than the “rise of a hired hand”? Chinese people may be accustomed to viewing themselves as low-end workers for imperialist countries, but this is no longer the full picture. The situation has changed significantly.
Du Jianguo has written several articles specifically addressing the rise of China’s high-end manufacturing sector:
“Aside from a few areas such as large passenger aircraft, the phenomenon described by Mr. Jia Genliang—where Western multinational corporations occupy or even monopolize the Chinese market—is not common across the high-end manufacturing sector as a whole. At present, Chinese enterprises not only occupy most of the domestic market for high-end equipment manufacturing, but their share of the global market is also steadily expanding. Australia exports ore to China and imports Chinese mining and transportation machinery; the United States exports products such as disposable chopsticks to China and imports increasing quantities of electromechanical products; Norwegian oil companies use Chinese deep-sea drilling equipment; Israel imports Chinese high-speed rail technology; and the new Bay Bridge in San Francisco is being constructed by a Chinese enterprise. These concrete facts better reflect the broader trend of shifting industrial strength between China and the West. The deeper causes of this trend can be set aside for now, but the fact itself must be confronted.”
(Du Jianguo 杜建国, Do Not Underestimate the Strength of China’s High-End Manufacturing 别低估中国高端制造业的实力)
We have looked into several key manufacturing sectors, and the situation is broadly similar across them: domestic brands dominate the mid- and low-end segments; breakthroughs are occurring at the high end; and some key components still need to be imported.
Take machine tools as an example. Domestic CNC machine tools already dominate the market in China, and the share of foreign machine tools is declining:
“From January to December 2016, China imported 11,330 CNC machine tools, a year-on-year decline of 16.7%; total import value was USD 2.612 billion, down 13.1%. Meanwhile, total output value of China’s machine tool industry in 2016 was approximately USD 22.9 billion, up 3.6% year on year. Among this, production of CNC metal forming machine tools reached 318,000 units, an increase of 4.3%. The decline in CNC machine tool imports and the rise in domestic output indicate steady improvement in China’s CNC machine tool technology and an increasingly clear trend of import substitution.”
(Analysis of Market Demand and Market Share in the Machine Tool Industry, 2017)
China’s high-end machine tools have even begun to be exported to countries with highly developed manufacturing sectors, such as Germany:
“At 11 a.m. yesterday, Dalian Kede CNC Co., Ltd. held a departure ceremony for the export of a VGW400-U high-speed, high-precision five-axis vertical machining center to Germany at its newly built 15,000-square-meter underground factory—the largest of its kind in China. Following the brief ceremony, the high-precision five-axis machine tool began its journey. The buyer was Knuth Machine Tools of Germany. This marked the first time China had exported such equipment to Germany. Wang Weiming, deputy director of the Equipment Department of the Ministry of Industry and Information Technology, stated: ‘The export of this high-end CNC machine tool to Western developed countries is an important milestone for China’s machine tool manufacturing industry.’
“At the ceremony, Yang Jiping, deputy director of the 31st Institute of the China Aerospace Science and Industry Corporation, held up a core component of aerospace equipment and told reporters: ‘This component previously had to be processed using imported CNC machine tools. Now, with Kede’s independently developed equipment, we have not only broken Western technological monopolies, but also more than doubled processing efficiency compared with imported machines.’”
(China’s First Export of Five-Axis Machine Tools—German Machine Tools to Be Made by China’s “Mother Machines”, Guancha News)
Other high-end manufacturing sectors show similar trends. Take semiconductors as another example. China was long regarded merely as a mobile phone assembly workshop, with chips entirely imported. But in recent years, with major advances by companies such as HiSilicon (Huawei), domestically produced smartphone chips have captured over 20 percent of the market.
Western countries have long held monopolistic positions in many key technologies—this is true—but these monopolies are now being rapidly challenged by China. More and more technologies have been broken through by Chinese firms, and once a particular technology is mastered by Chinese companies, Western competitors’ market shares usually shrink sharply. This is largely attributable to China’s vast pool of highly skilled yet relatively inexpensive engineering labor.
As noted in a Zhihu article reposted by the Communist Youth League’s official WeChat account, many Chinese companies now possess the capacity to compete with Western firms, and quite a few have in fact achieved global dominance—yet remain little known within China. One such company is Wanhua Chemical Group, a chemical enterprise based in Shandong:
“MDI (methylene diphenyl diisocyanate) is the world’s sixth-largest plastic after polyethylene, PVC, polypropylene, polystyrene, and ABS (and has now surpassed ABS to become the fifth-largest plastic).
Due to the large capital requirements and high technical barriers, the MDI industry exhibits a monopolistic structure. Wanhua Chemical, Germany’s Covestro (formerly Bayer MaterialScience), Germany’s BASF, the U.S.’s Huntsman, and Dow Chemical—five companies across three countries—together account for over 85% of global capacity. Adding Japan’s NPU brings the total to six firms controlling about 90% of global capacity.
In 2016, global MDI capacity stood at 8.58 million tons, with China accounting for 3.09 million tons per year, or 36% of the total. Wanhua Chemical’s MDI capacity reached 1.8 million tons per year, compared to 560,000 tons for second-place BASF and 500,000 tons for third-place Covestro.
Wanhua Chemical not only holds global pricing power, but its lead continues to expand. In 2016, Wanhua achieved sales revenue of 30.1 billion yuan, up 54% year on year; net profit of 3.7 billion yuan, up 129%; and a net profit margin of 12.3%.
In April 2017, one of the hottest pieces of news in China’s chemical industry was that ‘Wanhua Chemical will invest USD 954 million to build a 400,000-ton-per-year MDI plant in the United States,’ with the project expected to be completed by 2020.”
(Ning Nanshan, Besides Huawei, Which Other Chinese Companies Are Competing for Global Dominance?)
China is continuously breaking through technological monopolies held by developed countries, sometimes at remarkable speed. This reflects China’s formidable manufacturing base and technological potential:
“From early October to early December, in just two months, the Copper Foil Equipment Division of the Xi’an Aerospace Power Machinery Plant under the Fourth Academy of China Aerospace Science and Technology Corporation secured product orders worth 200 million yuan. This small factory, with only 60 employees, won the market by transferring high-end aerospace welding and spinning technologies to civilian industry. The key equipment it developed for copper foil production—a 2.7-meter cathode roller—broke the monopoly previously held by Japanese products in the domestic market.”
(Shaanxi Aerospace Technology Transfers to Civilian Use, Breaking Japanese Monopoly; 60-Person Factory Secures 200 Million Yuan in Orders in Two Months)
Although many high-end technologies are still controlled by Western companies, if current trends continue, China may well catch up with Western countries in the vast majority of high-tech fields within the next decade or two. Even at present, China’s high-end manufacturing sector has already achieved considerable strength. While gaps remain in areas such as semiconductors compared to manufacturing powerhouses like Japan, China is fundamentally different from countries like Mexico that merely serve as assembly workshops for multinational corporations.
There are many labor-intensive enterprises along China’s coast that have joined the international division of labor of multinational corporations and occupy low positions in the value chain. These firms are indeed what Han Deqiang calls “hired hands.” But we must recognize that China is a vast country with a huge population: tens of millions work in low-tech manufacturing, while several million are employed in higher-tech manufacturing sectors. Several million may seem like a small fraction of tens of millions, but this “small fraction” should not be underestimated, because the total number of workers employed in Japan’s entire manufacturing sector is roughly of the same order, and not much smaller than manufacturing employment in the United States. In other words, the scale of China’s high-end manufacturing sector is comparable to that of Western manufacturing powers. It is true that China works for developed countries and acts as their junior partner, but it is also true that Chinese capitalism is rising rapidly and that China is challenging the hegemony of established imperialist powers.
The problem with comrades who oppose the China-imperialism thesis is that they see only China’s dependence on the United States, but not China’s challenge to it, and they place excessive emphasis on military hegemony. In responding to the China-imperialism thesis, they casually retort, “Have you ever seen such a cowardly imperialism?” But anyone with even a basic understanding of international politics knows that today there is only one truly global superpower: the United States. The post–Cold War era has been a history of the United States systematically dismantling former Cold War adversaries. The wars we have seen in Yugoslavia, Iraq, Libya, Georgia, Ukraine, and now Syria are all instances of the U.S. government—or rather the transnational capital behind it—moving to crush forces relatively independent of itself. At present, the capitalist countries that can maintain their independence and refuse to join the U.S. camp are limited to a few, such as China, Russia, and Iran. Under such conditions, how should one judge whether a country is imperialist? Must a country dare to fight the United States or its allies in order to qualify as imperialist? Or is maintaining political and military independence while expanding globally already sufficient? If fighting a war is the criterion, China may not qualify—but Russia, which is weaker than China, might. If independence is the criterion, then perhaps only China and Russia qualify. Opponents of the China-imperialism thesis may respond that China and Russia are being encircled—what kind of imperialist country is constantly encircled? Yet today, the only states that the United States does not dare to issue explicit military threats against are precisely nuclear-armed military powers like China and Russia. For other independent states, the choice has been destruction or the threat of destruction.
Lenin’s theory of imperialism had a concrete political purpose: to demonstrate the inevitability of imperialist war and to reveal its economic roots. In today’s world, however, it must be acknowledged that the prospect of war between imperialist powers is not as acute. Times have changed, and the concrete forms of imperialism—and the ways contradictions between imperialist states manifest—have also changed. We should use Lenin’s theory of imperialism to analyze reality, rather than mechanically comparing today’s world with the imperialist powers of Lenin’s era. We should not insist on seeing China openly challenge the United States before acknowledging that it is imperialist, nor wait until China initiates—or is forced into—an imperialist war before suddenly exclaiming that China had long since become an empire.
Chenchen Zhang 