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	Spartacist English edition No. 60	Autumn 2007

Excerpts from the ICL Fifth Conference Main Document:

China and the Russian Question

The unconditional military defense of China against imperialist attack and internal counterrevolution is central to a Marxist perspective in this period. China is the most populous and the most economically and militarily powerful of the remaining bureaucratically deformed workers states. Moreover, it is today a major commodity producer on the world market, with a growing and vibrant industrial proletariat. The following edited excerpts from the ICL’s Fifth Conference document, “Maintaining a Revolutionary Program in the Post-Soviet Period,” outline recent discussions in the ICL aimed at deepening our understanding of the contradictory developments in China in the years since the counterrevolutionary destruction of the Soviet Union in 1991-92.

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The fact that it took repeated party fights in the late 1990s and early 2000s against agnosticism on the question of defending the Chinese workers state and/or third-campist formulations in our propaganda on China (“moribund workers state,” “attenuated gains of the 1949 Revolution,” “the Stalinist bureaucracy is leading the counterrevolution in China”) reveals that the critical importance of this question was not assimilated by the previous party leadership. A contributing factor to this disorientation was that every aspect of the market reforms was seen as negative; this only began to be corrected in late 2003 in an article in WV that represented a major step forward in analyzing the impact of the market reforms on the Chinese economy and society as a whole (“China—Defeat Imperialist Drive for Counterrevolution!” WV Nos. 814 and 815, 21 November and 5 December 2003).

The market reforms and growing inequality in China have led to a vast escalation of struggle by workers and peasants. According to Chinese government statistics there were 87,000 “mass incidents” of unrest in 2005—an average of some 240 per day—against corruption, social inequality, loss of benefits, seizure of peasants’ land by officials without equitable compensation. Alarmed by these struggles, the regime of Hu Jintao and Wen Jiabao has declared a project of building a “harmonious socialist society.” The regime has sought, in a modest way, to ameliorate social conditions by substantially cutting taxes on farmers and reducing tuition fees, while giving more priority to building up the poorer inland provinces. It has also increased the organizing rights and authority of the state-controlled union federation, including in the private sector. Should the workers seek to test this seriously in practice, it would pose more sharply our call for trade unions independent of bureaucratic control that defend the collectivized property relations. Social unrest in China has spurred renewed debate, including inside the CCP, among elements who want the economic “opening up” to continue unabated, Maoist “conservatives” who want a return to a bureaucratically planned economy, and neo-Maoists and “New Leftists” who accept the framework of the market reforms but favor increased government intervention to protect the interests of workers and peasants.

Since the Fourth Conference our propaganda has done a better job in intersecting social reality in China and addressing problems in our earlier approach. In response to the bureaucracy’s call for more privatizations, our “sterile orthodox” knee-jerk response had been to simply demand the abolition of the market. The draft of the article “Resurgent Japanese Imperialism Sparks Protests in China” (WV No. 847, 29 April 2005) contained an argument for expropriating “without compensation the factories and other enterprises owned by Japanese and Western imperialists.” This formulation, which had appeared in earlier articles, is a call for Stalinist autarky and does not take into account the relative economic backwardness of that society. Our thinking was counterposed to the way in which Lenin’s Bolshevik government dealt with foreign concessions. An I.S. motion of 5 May 2005 asserted: “Workers soviets in China would deal with the presence of foreign capital in a way that is appropriate to the interests of the workers. A promise to expropriate foreign capital without compensation is a promise to withdraw from the world market, a promise to lose a political revolution.” A motion at the 2006 IEC meeting criticized a formulation in our press asserting “It is the ‘socialist’ (i.e., collectivist) aspects that are responsible for the positive economic developments in China in recent years. And it is the market aspects of China’s economy that are responsible for the negative developments.” The IEC motion pointed out that this formulation

“tends to obliterate the qualitative difference between our program for a centralized planned economy with workers democracy and the Chinese bureaucracy’s command-centralized planned economy (which included the autarkic policy of ‘self-reliance’) under Mao. While the significant industrialization under Mao’s command-planned economy laid the basis for continued industrial growth under the ‘socialist market economy,’ it was the ineffectiveness and contradictions of the command-planned economy in the first place that drove the bureaucracy to employ the whip of market reforms to increase productivity….

“What fundamentally distinguishes the Trotskyist program from that of the Stalinist bureaucrats whether of the Mao or Deng/Hu variety is our struggle for international proletarian revolution as counterposed to ‘socialism in one country’.”

Internal discussion and debate helped give us a more precise and dialectical understanding of the contradictions of “market reforms” in China. The two-part article cited above as well as the article “China’s ‘Market Reforms’—A Trotskyist Analysis” (WV Nos. 874 and 875, 4 August and 1 September 2006) note that the core elements of the Chinese economy, established following the overthrow of the capitalist system in the 1949 Revolution, remain collectivized. State-owned enterprises are dominant in the strategic industrial sectors, while the nationalization of land has prevented the emergence of a class of large-scale agrarian capitalists socially dominating the countryside. Effective control of the financial system has to date enabled the Beijing regime to insulate China from the volatile movements of speculative money-capital that periodically wreak havoc with neocolonial capitalist countries. Over the last quarter-century there has been significant economic growth and in particular the development of a substantial industrial proletariat, which from a Marxist standpoint is a progressive development of historic import. Moreover, this is not simply a “screwdriver economy.” For example, China has become a major manufacturer of the giant cranes that load and unload containers. At the same time, the policies of the Beijing Stalinists have victimized and immiserated significant sections of the working class and rural toilers, widened the gulf between rural and urban China, spawned a class of capitalist entrepreneurs with familial and financial ties to CCP officialdom as well as offshore Chinese capitalists, and generated a managerial-professional-technocratic stratum enjoying Westernized lifestyles.

As revolutionary Marxists, we do not oppose, as such, China’s extensive economic relations with the capitalist world through trade and joint ventures with Western and Japanese corporations. The Bolsheviks under Lenin and Trotsky maintained economic as well as diplomatic relations with imperialist powers and more than once, in taking into account the actual relationship of forces, were compelled to make unpleasant compromises, such as the Brest-Litovsk Treaty of 1918 with the Germans. The New Economic Policy (NEP) introduced in 1921 made significant concessions to small traders and better-off peasantry. Lenin, however, insisted on a strict application of the state monopoly of foreign trade to protect the new workers state. Moreover, for Lenin’s Bolsheviks the NEP was a temporary retreat, designed to buy them breathing space until the relationship of forces could be changed to their advantage on an international scale, through the spread of proletarian revolution. The real crime of the Chinese Stalinist bureaucracy—past and present—is that it has helped to perpetuate and indeed strengthen the capitalist-imperialist system on a global scale. In pursuit of “building socialism in one country,” the Chinese Stalinists have betrayed revolutionary opportunities abroad, most notably in Indonesia in 1965, where the Maoist-derived policies in support of the “progressive” national bourgeoisie led to the obliteration of the largest Communist party in the capitalist world. China under both Mao and Deng was a strategically important component in the U.S.-led alliance against the Soviet Union during the last two decades of the Cold War.

Increasing capital investment in Asia has made it an important component of the world economy, as well as a notable concentration of the industrial proletariat (particularly in Northeast Asia). The three major shipbuilding countries in the world are China, Japan and South Korea. Northeast Asia is a significant nexus in international commerce, while the expansion of the Chinese economy props up both the U.S. economy and that of Japan (where the recession decade of the 1990s has been succeeded by a “jobless recovery”). China serves as a market for industrial exports from Germany, and is important as well for raw material exporters like Australia, Latin America and Africa, as well as oil from the Near East. At the same time, foreign direct investment in China has been substantial. In 2005, 58 percent of China’s exports were made by foreign-funded companies. In effect, the Chinese bureaucracy serves as labor contractors (but not owners) for the imperialists.

The Pacific region contains three of the four deformed workers states. This fact, combined with the growing economic weight of the region, has not been lost on the U.S. imperialists. By the last years of the Clinton administration, the Pentagon had begun to shift significant resources to the Pacific region. In 2002 the U.S. government’s “Nuclear Posture Review” targeted China and North Korea, among several countries, for a potential nuclear first strike. The waters between Japan and the Asian continent have been divided between the U.S. and Japanese navies, with the U.S. Navy patrolling the Sea of Japan and the Japanese carrying out provocations against Chinese shipping to the south in the East China Sea. In February 2005 Japan and the U.S. issued a joint policy statement avowing that Taiwan is a “mutual security concern.” As we noted in the course of revisiting a discussion on the Diaoyu/Senkaku islands, Taiwan is the key political and military question of significance for the defense of China in the East China Sea. A joint statement of the American and Japanese sections of the ICL declared that “Taiwan has been since ancient times a part of China, and we Trotskyists will stand with China in the event of any military conflict with imperialism over Taiwan.” Our program for the revolutionary reunification of Taiwan with China is counterposed both to the CCP’s “one country, two systems” unification perspective that includes accommodating the Guomindang and to the Taiwanese independence movement. Meanwhile, the U.S. war in Afghanistan and American assistance to nuclear-armed India have contributed to tightening a dangerous military vise around China. In this context, Indonesia’s significance is growing. This large land barrier skirted by strategic waterways such as the deep sea water trough of the Ombei Wetar Straits, and the narrow Strait of Malacca through which much of China’s energy imports flow, could be a crucial choke point in any future conflict between the U.S. and China. It is no accident then, that while the Chinese deformed workers state seeks further trade and diplomatic successes in the Asia-Pacific region, the U.S. lifted its arms embargo on Indonesia in November 2005 and is planning two new bases in Australia. A neocolony of the American imperialists in the area is the Philippines, where the U.S. military has been a key factor backing up the death squad terror of the Arroyo regime which has seen hundreds of leftist and other oppositional elements killed.

While China has become more of a workshop of the world, wealth creation in the U.S. in recent years has had a largely fictitious quality. The nominal increase in household wealth represented by higher corporate stock prices is largely illusory and that represented by higher housing prices is entirely illusory. As government deficits blossom, the stagnation in real wages has led to a shrinking of household savings. Such savings had been an important component of the internal economic surplus available for corporate investment in new plant and equipment. One consequence has been a steady and massive increase in U.S. foreign indebtedness. Over the past ten years, foreign purchases of U.S. government and corporate securities have risen from less than 10 to over 30 percent of domestic investment. China has displaced Japan as the holder of the world’s largest foreign-exchange reserves, about 70 percent of which consist of dollar-denominated debt instruments, much of it in U.S. Treasury bonds. The financial stability of the U.S. economy has become critically dependent on the willingness of China and Japan to accumulate more U.S. debt. In effect the Chinese are lending the U.S. money to buy goods produced in China.

The Chinese bureaucracy’s accommodation to imperialism has proceeded from the false postulate that if it can “neutralize” the chances of military intervention through “peaceful coexistence,” then China can become a global superpower and indeed build “socialism in one country.” Despite impressive gains in industrialization, however, the capital stock per person is still 30 times greater in the U.S. and Japan than in China. The difficulties of the Bush administration in Iraq and its fixation on “Islamic terrorism” have temporarily deflected it from its pursuit of the bourgeoisie’s goal of toppling the Chinese deformed workers state. But only an impressionist would believe that the current conjuncture will continue indefinitely. Moreover, the imperialists have weapons other than military ones. Economic pressure on the deformed workers states presents equal if not greater dangers. A central objective of the imperialists is to undermine the Chinese government’s control over banking and currency movements. The huge balance-of-trade surpluses run up by China have created substantial pressures within American and some European ruling circles for anti-Chinese protectionism, a policy favored by the Democrats. A major economic downturn in the U.S. and/or anti-import protectionist measures would be a severe blow to China’s economy and could ignite serious social struggle there. It should be noted that in the 1990s and extending into the early 2000s we put forward a catastrophist analysis and projections regarding China. We must guard against an over-correction: that is, an implicit assumption that China will continue to experience a high rate of economic growth and industrial development under a stable CCP regime for the foreseeable future. The market reforms have sharpened the contradictions in China, on the one hand fostering the potential forces for capitalist counterrevolution, and on the other hand increasing the social weight of the working class that potentially can carry out proletarian political revolution.