Socialism 2007: China

Entitled 'Can China Save World Capitalism?', Lynn Walsh began his lead off by noting how one cannot treat China as a discrete unit of analysis, Its development must be placed in the context of a global economy, which at the moment revolves around the axis of US-China trade and capital flows. The relationship between the two states is so intimate that it has become a structural feature of both economies, but it is increasingly a structure prone to instability and decomposition.

What is the character of this relationship? China has become the workshop of the world, producing commodities from textiles to high value technical goods. Their low global market prices is sustained by Chinese industry sucking in vast amounts of cheap labour power as peasants and the "old" working class are displaced from the land and closures of state enterprises. Unsurprisingly, the US trade deficit with China stands to the tune of $300bn/year. The burden of this debt, strangely enough, is sustained by Chinese banks. As the USA remains industry's primary export market (despite the growing importance of the EU), , Beijing has a strategic interest in effectively subsidising the US consumer market to keep its economic growth on the road. However, the debt cannot be financed indefinitely and has only really been possible for so long with the proliferation of cheap credit. With the contraction of the US housing market and rising oil prices, conditions are changing, and over a period of time the relationship will prove to be unsustainable.

The development within China itself has been extremely uneven. The coastal Special Economic Zones combine some of the most advanced industry with the more backward interior, a backwardness not helped by the flow of peasants and workers to the more prosperous cities. The sharp contradiction between (coastal) town and (landlocked) country is but one aspect of the inequalities development has thrown up. Quoting estimates from the boss's rag, Forbes Magazine, 200 of the worlds billionaires are Chinese citizens. This sits side by side with peasant and worker struggles over land seizure, closures, environmental despoliation, and rapid rusting away of the iron rice bowl. However, the state has ridden out these struggles so far thanks to their localisation and economic growth. If a downturn comes, it wouldn't be surprising if the instruments of repression are ratcheted up.

Turning to the class character of the Chinese state, Lynn argued this was no academic question because it has programmatic implications for any revolutionary movement that may arise. At the moment, the Beijing Stalinists pretend to socialism, but all that really remains is the repressive command and control apparatus of the bureaucracy. What planning exists is geared toward the managed reintroduction of the law of value, and with it the transformation of the bureaucratic elite into a fully fledged bourgeoisie. Therefore China is a state in transition - what exists is a messy hybridised mix of private, semi-private, and state capitalism speedily moving away from the bureaucratically planned economy of old.

Summing up, the comrade outlined two scenarios. The first is premised on continued stable global economic growth, and is therefore in his opinion, least likely. But if it comes to pass, the whip hand of the market would be strengthened in China and with it continued (uneven) development. With this, the spectre of an increasingly coherent and articulate working class with its own set of democratic and economic demands, appears. But in the more likely event of a downturn, the state could move to reassert more control over the economy and concentrate on a more rounded internal development. However, a return to planning of the "classical" Stalinist variety is not on the cards.

Responses to the lead off came in two varieties, reflecting his remarks on political economy and characterisation of the state. Comrade Neil opened by noting how already Chinese capital is keeping away from Wall Street thanks to the sub-prime debt crisis. Pete offered the observation that in the event of a downturn, possessing a non-exchangeable currency, the absence of capital markets, and the role of the state puts China in a good position to insulate itself from crisis. On the other hand, the export sectors are heavily integrated into the world economy and cannot escape any global recession. Another comrade looked at the contradictory position it occupies in international relations. On the one hand, the Chinese working class needs defending from imperialist capital flowing in and hammering their living standards, while on the other Beijing's investment projects in the semi-colonial are similarly exploitative.

On state characterisation, Robert of the IBT made a typically dogmatic contribution. He claimed the Chinese state remained a deformed workers' state and not some transitional half-way house as its fundamental property relations remained "proletarian" (an aside, surely proletarian property *relations* can only ever pertain under conditions of workers' control, where political and economic relations become fused and any distinction between them is rendered meaningless. Surely the comrade meant proletarian property *forms*, but in China as in other Stalinist regimes these were as much a legal fiction as equality before the law is in developed bourgeois states). He then went on to point to tensions within the Chinese bureaucracy, and an unease among peasants and workers over the restoration of capitalism. He concluded with an attempt to score sect points over the CWI's intervention in Russia in 1991. Pete replied that the complexity of the transition can only now be adequately grasped by assigning China a transitional status, and then filling the category with data and analysis. To regard it as a deformed workers' state under present conditions is divorced from reality. Ben from the Sparts provided some entertainment by attacking the IBT's position on Yeltsin, and ranting about the crimes of their guru, Bill Logan. But like their mini-me, he believed the gains of the 1949 revolution remain, and now it is being encircled by imperialism, and therefore requires defending from counterrevolution from within and without. Cloud-cuckoo-land stuff. Dan argued neither of these arguments look at the content of the remains of the plan, which is a plan for restoration, and is of a different character to that in Cuba, for example. Ross also took the ultra-lefts to task for lining up with the bureaucracy - the precondition for revolution, under capitalism or Stalinism, is the political independence of the working class. This is what the CWI sought to achieve in Russia in 1991. As for tensions in the bureaucracy, he challenged the IBT and Sparts to identify who exactly in it was defending planning? The task for revolutionaries is not to cheer lead a section of the bureaucracy, but to connect with the working class and peasantry.

Responding to the discussion, Lynn agreed that state-led investment is the core driver of development, but exports remain crucial because this is how it acquires the foreign currency to purchase the capital intensive goods and plant essential to its plans. On China's class character, he agreed the deformed workers' state category was far too doctrinaire. The ultra-lefts pointed toward state planning, but in the USSR itself the plan became a political fiction as it broke down in the 70s and 80s, and state firms were forced to barter with one another. China experienced similar problems, and the bureaucracy was faced with the decision to either move towards capitalism or be consigned to history. It's therefore nonsensical to defend Stalinism with reference to "the plan". As for the state, one must remember that as different forms of capital operate in bourgeois states, the same is true in China. State vs private capital, national vs international capital, manufacturing vs service and knowledge-based capital - these are increasingly the social bases of the state, and the plan is there to facilitate their contradictory interests. The transformation of the state into a "committee for managing the common affairs of the whole bourgeoisie" becomes ever more likely ... unless the Chinese masses march onto the stage of history and inflict a mortal blow on capital everywhere.