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Written by IWL (FI)
Tuesday, 03 April 2012 05:06
Slightly over three decades ago, the bureaucracy of what was then the Chinese Workers’ State initiated the implantation of “Capitalism with Chinese Features”. After a fierce internal struggle against bureaucracy wing known under the derogatory name of as the “gang of the four” – who claimed to be the heir of the Maoist ideals and continuation of the Cultural Revolution – Deng Shiao Ping instituted the “four modernisations”.
This was the signal for the opening to foreign capital, privatisation of state-owned companies and the introduction of market mechanisms into the economy – to put it in other words; restoration of capitalism in a workers’ state that had allowed incredible headway for an eminently agrarian population and its working class in a state of permanent poverty in spite of the disastrous policies imposed by Mao.
What remained unchanged was the ironclad dictatorships, now bourgeois, of the Communist Party of China (CPC). That is how, in 2989, when the revolutionary process demanding democratic liberties, end of corruption and free trade unions ended in bloodbath on the Tien An Men Square.
It is embarrassing for all revolutionaries and a stain on our socialist flag that this bloodthirsty dictatorship in the service of capital should still claim to be called “communist” while leading “market socialism”.
The Chinese model and the economic crisis
In the 90s, this model transformed China into a “world factory” and was crucial for the economic expansion of China of the 2000s. The dictatorship guaranteed high profit rates for the bourgeoisie stemming out of the superexploitation of the working class and the settling of the multinationals bent on producing goods for export. During this process, Chinese population saw their living standard sink in proportion to the wealth spawned for the country; this made family consumption sink down to 36% of the GDP while the benefit was for sectors of state bureaucracy, army and a “new middle class”.
China was also fundamental for reducing the economic crisis that began in the USA in 2006 and echoed all over the world with the explosion of the real estate bubble in 2007. Chinese government injected $586 000 million between 2008/9 apart from the $1.5 billion through credits of state-owned banks meant to avoid a world collapse and keep about 150 million migrants, workers with no rights and with extremely low wages and so prevent popular rebellions from flooding the country.
And yet, in spite of the fact that the crisis could be checked lessened, it would not be eliminated. The contrary is true. In the USA it remained in a situation of weak economic growth but it became deeper in Europe, the main importer of Chinese products. This meant that the exporting model sponsored by the government began to wan away. The extremely high level of liquidity of the currency, causing constant pressures for inflation and the increasing difficulty of controlling the exchange, the unpayable debts of the regional economies (nearly 11% of GDP) the existing super production of various sectors, stemming out of easy credit and fiscal encouragement, something quite notable in the real estate market and in steel production, and salary increase produced by the endless struggles of the working class in the private sector, where jobs are precarious make this policy short-lived in spite of the growth higher than the world average.
Actually, the GDP grew 9.2% in 2011 (10.4% in 2010) with the last trimester suffering a reduction of 2.3% (third trimester) for 2.0%. The forecasts are that the first trimester of 2012 will exhibit an even greater fall due to – among other things the 15-day holiday due to Chinese New Year. In January and February we can see some shrinking of the primary industries (raw materials) and of household appliances. For example: -1.1% in the Oil industry, 16.3% for iron mining, with clear indicators of super-production in the sector) cement (4.8%), steel (2.2%), metallurgic (4.6%), washing machines (-5.7%) , refrigerators (-2.9%) and air conditioners (-4.8%)Further more we can see that the rates of production of farming machines and tools as well as electronic products for export (computers, cell phones)There are data showing drastic reduction of state investments (primary industries) which may trigger off a chain reaction in the future if the proneness is maintained.
With increasingly clear evidence of deceleration of economy – which could not be avoided by merely fiscal measures undertaken by the government (fall of the rate of interest, fall of compulsory credit of the banks, currency exchange control, greater control over bank loans), Chinese dictatorship admits minor previsions of economic growth in the nearest future. At the opening event of annual session of National Congress of the People (Chinese Parliament, totally controlled by the CPC) Prime Minister Wen Jiabao foresaw 7.7% growth of GDP for 2012 and a target of 7% average until 2015. This is the so-called soft landing of the economy, which would give time to carry out the transition from an exporting model to another model, based on home consumption.
This transition is what the World Bank demands and it is also included in the five-year plans but there has been not much luck so far. The problem is that a new producing model affects the very heart of exporting economy and the interests of a major sector of Chinese bourgeoisie based on Hong Kong, owner of factories producing cheep goods for export and employer of an enormous contingent of migrant workers. Wang Yang, governor of the state of Guangdong asserted that regions such as Dongguan, one of the exporting centres could become the “Greece of Guangdong”. For Dongguan represents a traditional model of development, but due to the valuation of the currency and the increase of raw materials, it will be hard for many of the businesses to continue.”
But he omitted the problem of the problems: the increase of the wages conquered by the ascent of the struggles of the working class (in 2010 alone there have been 180 000 conflicts) compelling the government to grant some minimum readjustments of wages in the regions, which were well over the rate of inflation. This erodes the rate of the surplus value of this sector of the bourgeoisie and consequently affects the rate of profit of the entire economy. This reduction of the rate of profit causes the bourgeoisie to shift in three directions: move their factories inland where the regional minimum salaries are lower; move their factories to neighbouring countries, where wages are even lower than that (for example: Vietnam) or, as in the case of some American multinational, such as Caterpillar, go back home and produce in the USA as soon as costs are competitive.
This may create reduction of employment level in the exporting regions in the East and cause a “proletarian tsunami”, spawning a situation that the dictatorship wishes to avoid no matter what: the likelihood of transforming the thousands of economic and democratic struggles (like in Tibet) of nationalities as in Uigur or the rebellion of the inhabitants of Wukan, who occupied the premises of the municipality , forcing the authorities to negotiate) turning them into a joint movement against the government and the bourgeoisie which would spell the beginning of a revolution in the country.
That is why, while adopting cautious economic measures to avoid outbursts of rebellion, the dictatorship boosts the budget for the army and proposes a reform of the penal code legalising the frequent kidnapping of people “suspected of subversion” with arrest of up to 6 months for “inquest” in order to boost selective repression against the leaders of the struggles.
Consequently, even a very smooth landing may spawn unforeseeable political consequences within the scope of class struggle approaching a higher stage of mobilisations.
So far there has been no internal rubs in the dictatorship as to the application of their policy. However, a dispute between two wings of the bourgeoisie represented at the summit of the CPC burst out during a session of the National Congress of People. On the 14th March, the last day of the NCP, the Prime Minister attacked severely, “the current Municipal Committee and the government of the Chongking must meditate seriously on the Wang Lijun incident and learn the pertinent lessons”. Wen Jiabao was talking about the flight – without any known reasons – of the vice-mayor who eloped to the American consulate last month. Wang spent the night at the consulate and then was handed over to the Chinese authorities and was separated from all his positions “due to medical treatment”. Several hours after the statement emitted by Wen, Bo Xilai, the boss of the party in Chongking was dismissed from office in the city even though he is still a member of the Central Committee of the party. This decision caused preventive security measures to be taken in Peking and Chongking apart from the usual censorship in the press and in the internet.
Bo Xilai was on his way up the CPC ladder and was regarded as a sure nominee for the Permanent Executive Committee of the powerful organ of nine members of the party. His fame accrued since the application of the so-called “Chongking model”, which was to boost the morale by singing old revolutionary songs dating from the Mao days at public squares and plans of housing were executed for the population of lower income. Apart from that, a campaign called da wei was put into practice, persecuting the mafias of the city, which obviously affected many entrepreneurs including the Judge of Chongking, Wen Kiang was convicted to death, accused of having buried 3 million corruption dollars in a garden.
His policy attracted a “neo Moist” sector, which are for maintaining state property in economy but without attacking “market socialism” preached by the leadership. That is why Bo is regarded by foreign analysts as a left-winger, defender of state property and social equality.
But his social origin and his political practice belie this picture. Bo is a “prince” in the party – a name given to the children of the leaders of the 1949 revolution, who climbed up the ladder due to privileges acquired by inheritance. His authoritative populist style is more like a Chinese version of Hugo Chavez or, to use a more European comparison, to Vladimir Putin rather than a left-wing leader. In 2007, Chongking, a city with 30 million inhabitants, saw the share of private capital increase from 25% to 60%. Furthermore, the popular housing programme proved to be just building dormitories for migrant workers meant to favour the installation of private industries in the region. Even the neo-Maoists could feel the taste of the “Bo style” when they organised a conference in the city and were arrested obeying orders from their idol.
Bo’s punishment was supported by president Hu Jintao, prime minister Wen Jiabao, vice president Xi Jinping, another “prince” and even such allies as Zhou Yongkan, chief of internal security, thus they displayed a united summit façade all for show.
Another apparently disconnected event helps to clear the dispute. A few weeks before the installation of the NCP, a comprehensive World Bank report defended the implementation of “structural reforms to reinforce the base for market economy for the redefinition of the government, reforming and restructuring state-owned banks, developing the private sector, boosting competition and deepening the reforms on land, jobs and financial market”.
The 470-page long report foresees the reduction of the participation of the state ownership in the Chinese economy by 10% by 2030 and immediate opening of the financial market.
These neoliberal recipes has been defended by the World Bank (meaning: imperialism) for years now. What is so new about is that this time the co-author is the Centre for Research and Development, an organ of the State Council of China.
Displaying total affinity with the report, prime minister’s speech during the opening of the NCP promised to “break the monopolies” and “attract private investments for the railways and public utilities (water and sewers) finances, energy, telecommunications, education and medical service” They are now all state-owned sectors so far. Bo never made a statement to the contrary.
This head-on attack on the state property, financial system and the opening on the private sector for property of land is necessary to give a solution to the speculative capital, thirsting for lucrative investments. But it spells a tremendous risk due to the important workers’ ascent that we can see in China and this may be strengthened by the return of struggles of the traditional sector of Chinese working class: the workers of factories nationalised since the 1919 revolution.
The 18th Congress of the CPC and the course under discussion
Against this complex background, two wings of the bourgeoisie confront each other at the summit of CPC for it is there that that reigns of power are wielded. The majority, aware of the social problems spawned by the course taken by economy seeks a more negotiated with mass movement but without giving up the economic plan dictated by imperialism. Bo’s minority pretends to carry out the same economic plan dictated by imperialism, but by means of a more populist policy and more repressive. In order to do so, it is necessary, in the face of the forthcoming struggles, to erect a great Bonaparte, Bo himself, who should be able to mediate in the clashes between the proletariat and the bourgeoisie and maintain the state apparatus intact.
This is the precise sense of the message delivered by Wen Jiabao when he announced the punishment for the Chongking leaders, “without the success of a structural political reform…a historic tragedy like the Cultural Revolution could occur once more”. And it also explains the motion that the Wang Yang CEP, governor of the state of Guangdong, who negotiated with the rebelled inhabitants of Wukan, that local CPC leaders were to be dismissed and a new Municipal Council should be elected, avoiding a bloodbath in the town.
This inter-bourgeois dispute will have an end at the backstage of the 18th Congress, in October, but the flight of Wang Lijun to the American Consulate rushed things and led to the ousting of Bo Xilai.
If the announced elections of the current vice-president XiJinping, a neoliberal, to the position of President and Li Kepiang, a man trusted by Hu Jintao, to the post of Prime Minister, the majority wing will have overcome. And the probable election of LiangWengen, president of Sany Heavy Industries, regarded as the riches man in the country, with $11 000 million will be a symbolic gesture of the participation o the great capital in the State apparatus.
However, the proclamation of the unity and the unanimous election of the new leading organs of the party and of the country, that is sure to take place, will not be able to conceal the crisis. The dispute for power between a wing that is in quest of achieving controlled openings that will allow the application of imperialist plans and the other one that insists on maintaining repression by means of a “Bonaparte” in order to keep on applying the same plans, will continue under the pressure of the ascent of mass movement that does not feel represented by either option.