Capitalism Denied with Chinese Characteristics

By Timothy Kerswell and Jake Lin

Introduction

Is China capitalist or socialist? The debate never ceases to cause controversy. The Communist Party of China (CPC), especially, completely denies that China has anything at all to do with capitalism. Historically, China started to embark on its post-Maoist reform in the late 1970s. In rural China, it introduced the household contract responsibility system to replace the collective and cooperative People’s Commune system. In urban China, market reform and State-Owned Enterprise (SEO) reform from the mid-1980s led to marketization and privatization under close control by the Party elite. To justify this turn away from Mao’s Marxist and socialist principles, Deng famously stated in 1984 that ‘we didn’t pay enough attention to developing the productive forces. Socialism means eliminating poverty.’1 Eventually Deng’s ideas were distilled into the notion of ‘socialism with Chinese characteristics’, and used by the CPC to fend off any scepticism and criticism of its vision of post-reform China.

Doubtless, the CPC’s notion of ‘socialism with Chinese characteristics’ is seen by the West as discredited and hypocritical. It is also understandable that mainstream China bashing in the Western media, including some from the left, involves a collective ‘holding their breath’ in the expectation and hope that China will evolve into a Western style multi-party democracy, one that automatically respects human rights and ‘cures’ underdevelopment. Nonetheless, mainstream media in the West and English-language literature on Chinese studies struggles to pin down the nature of the Chinese state, using widely the term ‘state capitalism’ as a shorthand way to describe China’s reform model.2 This term in this context denotes that China politically is a ‘Leninist/socialist/communist’ regime and economically is state-dominant capitalism, i.e. a hybrid market economy with state ownership, such as state-owned land and the state-owned enterprises (SOE) system. Here, socialism or communism is used in a negative way, with the two terms used interchangeably to suggest the absence of a Western style multi-party political system or, more generally, an undemocratic regime.

The irony is that the West’s criticism of the CPC’s hypocrisy and the West’s assessment of the Chinese model support the CPC’s claim that China is not capitalist, at least not fully. In the West’s view, the lack of political reform of its Leninist/Socialist regime means that China does not ‘qualify’ just yet as a capitalist state. In addition, for these critics, excessive state control over the market and rampant party officials’ corruption demonstrate the existence of residual ‘socialism’, a residue perceived as a hurdle to overcome in the journey of China’s ongoing development. Consequently, the West eagerly hopes that the current post-reform China, with its residual ‘socialism’, will someday become a fully-fledged capitalist nation. Unintendedly, that perception from the West reaffirms the CPC state’s ‘non-capitalist’ claim.           

Adding complexity to this debate is that, recently, one of the prominent critical thinkers from the Marxist left has taken a somewhat unexpected stance. Asserting that the question ‘is China capitalist or socialist?’ is badly posed, Samir Amin argues that China is neither capitalist nor socialist. Moreover, he is very certain that China’s model has been a great achievement, one that could serve as both a countering force to global imperialist capitalism and a model for the South to emulate.3

Amin’s argument is certainly based on a grand scope of knowledge about China’s own history and his insightful and nuanced understanding of its current mixed model of development. However, we maintain that the complexity and nuanced nature of a country’s ‘original path’ does not prevent us from making a judgement about the nature of development model. In this article, we go back to the theoretical core of capitalism and socialism and use the analysis of production relations and class relations to discuss the nature of China’s development path in the post-reform era.

We do not dispute Amin’s claim that China is not socialist. But we disagree with his assertion that China is not capitalist. We argue that post-reform China has unequivocally transformed into a capitalist state, not despite but because of the CPC elite’s careful manipulation of the public discourse of the socialist past and its silencing today’s public discussion of class relations. The CPC has abandoned socialism as well as the workers and peasants, the founding social forces of the CPC and the People’s Republic of China (PRC). We particularly seek to engage with Amin’s argument on the issues of peasants and workers’ struggles in rural and urban China.

Mao as a justification for a capitalist path?

A large part of the current Chinese development path derived from the official verdict on Mao’s leadership within the CPC, particularly his ‘error’ in initiating the Great Leap Forward (GLF) and the Cultural Revolution (CR). Few would dispute that China endeavoured to build a socialist society in Mao’s era. And yet the evaluation of the success or failure in this period remains contested. There are pervasive distorted interpretations of some key Chinese social movements and their impact on the peasants by the post-Maoist elite and by English-language scholarship. The mainstream English literature sees the GLF and the CR as utter failure, representing an oriental communist peril posing a risk to the West.

The rightist reformists in the post-Mao era, such as Deng Xiaoping, took a similar stance, albeit more nuanced. When Deng took power in 1978, the verdict of Mao’s past life had been reached officially.4 They uphold ‘Mao Zedong Thought’ to maintain the absolute authority and legitimacy of CPC rule, yet argue that Mao made very serious mistakes in events such as the GLF and the CR, so as to justify their turn to market and capitalist reform.

It is important to separate Mao’s intentions and policies during the GLF and the CR from the hardships those periods ended up with. And it is important not to forget that Mao’s policy in both periods had produced some positive achievements and tremendous benefits to rural communities. Han Dongping’s study shows that the GLF laid a good foundation of steel production to supply local needs, completed numerous irrigation projects all over the country, resulting in impressive gains in crop yields in subsequent years. Han argues that it was not Mao’s policies that led to the failure of the experiment. Rather, it was the ‘severe management problems by the local party officials during the GLF, particularly how they managed the gigantic irrigation projects and the significant hardships created by grain shortages induced’ that contributed to the defeat of the GLF.5

It is also important to note that the official narrative of ‘ten years of anarchy’ for the CR mandatorily used by the CPC does not do justice for the complex history of that period. Jean Esmein documents the CR in detail, particularly its impact on the peasants and workers. Esmein contends that Mao brought the principle of open democracy to the people. In Shanghai, for example, workers increasingly took an interest in politics and in the governance of their factories to tackle problems such as wages, and inequality.6 In rural China, Esmein argues that the CR period saw the poor and lower-middle peasants had an increased right to speak. Peasants learned how to organize themselves, such as running schools for each brigade.7 Han rightly points out that one of the goals of the CR was to empower peasants to participate in village politics, redressing the widespread minor corruption among the village cadres during the GLF. During the CR, cadres were urged to work with the peasants on village governance; urban workers and educated youth were encouraged to live and work in the rural areas.8 Finally, in a landmark study, Mobo Gao has documented the history of the CR as well as Mao’s legacy as being subject to ongoing contestation in China.9

Although Amin did not thoroughly negate the GLF and CR, he omits Mao’s positive and revolutionary intentions aimed at benefiting the peasants and workers, and Mao’s emphasis on class struggle to keep the capitalist-oriented cadres in the party from seizing power. It is extremely important to acknowledge this distinction between Mao’s proposition and some of the unintended outcomes of the socialist experiment, which we argue Dengist reformers deliberately ignore to legitimize their capitalist transition. Deng and his successors’ policy toward peasants and workers is in stark contrast of Mao’s. In what follows we will discuss this contrast in detail.

Land reform, household contract responsibility system, and the Agrarian Questions

One key aspect to the capitalist/socialist debate is the land ownership issue in China. The current land regime is profoundly capitalist, despite its constitutional declaration of public/state ownership. While officially there is no private ownership of land, this does not prevent land from becoming a commodity in China. The land ownership system has been defined by a rural-urban dualism during most of modern times in China. In the post-socialist era, rural lands are ‘collectively-owned’ while urban lands are ‘state-owned’. However, in urban China citizens have had de facto rights to own property since the market reform began. After multiple failures between 2002 and 2006, the Property Law was finally passed at its 6th reading in 2007. It officially recognized that urban citizens can freely trade, circulate, mortgage or sublease real estate properties even as the system of land tenure remains intact by which the state owns all land. Many in the Chinese legal community feared that the controversial law would facilitate privatization and asset-stripping of state-owned enterprises. Legal study scholars, notably Gong Xiantian of Peking University, argued that it violated the constitutional characterization of the PRC as a socialist state. Irrespective of their formal legal status, we can conclude that urban properties are effectively privately owned.10

Rural land and property rights, however, remain much more problematic since the creation of PRC. The land regime evolved over three major stages: the land reform from 1949 to mid-1950s, when ‘peasant associations’ were established to ensure peasants’ full rights to their land; the collectivization period from mid-1950s to 1980s; and the ‘household contract responsibility system’ that came into force in 1980. The ‘contract’ between the ‘contracting household’ and the ‘collective economic organization’ served to privatize rural production without changing the constitutional definition of ownership. By 1984, 99 percent of production teams (of the communes) had dismantled and switched to the new system.11

The CPC claims that the household contract system is ‘socialism with Chinese characteristics’ because the land remains collectively owned, and is supposedly more efficiently utilized than under the people’s communes. A closer look proves this is not true. Historically speaking, the system is many steps backward and a complete negation of the socialist experiment, and actually resembles what existed in the 1950s. Under this system, work is contracted to families who produce on the collectively-owned land and then keep a portion of the profit, which is undisputedly market-oriented and based on a capitalist labour contract system.

After the 1990s, the process of rural land commodification accelerated. Urbanization turns more and more rural land into urban usage such as residential property or industrial production. And rural cadres effectively have the control of use and disposal of the rural land. Consequently, more and more rural collectively-owned lands become commodities and ‘circulate’ in the market. For example, 35 percent of rural land management rights administered through the ‘household contract system’ in Chongqing had been circulated through the market by 2010.12

Most recently, China is once again using Anhui province as a testing ground of ‘deepening reform’ to experiment with the recommodification of land. Whereas rural land was once collectively owned by the people, the experiment allowed land designated for construction purposes to be sold.13 The Third Plenum held in 2013 more broadly adopted the decision to marketize rural construction land.14 We can see therefore that the trade in land through an informal title system is slowly being complemented by the introduction of formal systems of title.

China’s ambiguous rural land property rights are severely at odds with market-oriented reform, as the CPC failed to clearly define who the rural ‘collective’ are and who ‘owns the land’ in rural China. This is illustrated by the ‘17 Provinces Land Rights Survey’ conducted by Renmin University in 2008. When they asked a relatively simple question to rural households about ‘rural housing land’, 22.8 percent of the respondents believed the land was ‘state land’, 4.2 percent the ‘rural town collective’, 18.6 percent the ‘rural collective’, and 52.4 percent believed it was their own land.15

Unclear rural land ownership leads to growing land-grab problems. In many respects, urbanization in China can be understood as the process of local government driving farmers into buildings while grabbing their land.16 The pseudo-collective-ownership of rural land has also increasingly become a front for rural cadres’ rampant corruption and cronyism in pursuit of personal interest in the process of transferring land use rights. From 2005, surveys have indicated a steady increase in the number of forced land requisitions, and about 4 million farmers were losing their land annually.17 Whereas the mean compensation to farmers for transfer of contractual rights to land was US$17,850 an acre, the mean selling price to commercial developers was US$740,000 an acre.18 An estimated 65 percent of the 180,000 annual ‘mass incidents’ in China in 2010 stemmed from grievances over forced land requisitions.19

The lack of funds coming from the central or provincial governments is another factor that drives party officials to create more revenue by transferring contractual land rights to developers.20 Zhun Xu’s study shows that the share of rural expenditure in the whole fiscal budget has been declining – even after adjusting for population loss due to rural-to-urban migration – from its highest level in the collective era (39.6 percent in the 1970s) to 25 percent in 2001-06.21

Amin asserts firmly that the ‘Chinese specificity (meaning the CPC’s alliance with the peasants) absolutely prevents us from characterizing contemporary China as capitalist, because the capitalist road is based on the transformation of land into a commodity’. The above discussion of the current state of the land system in China clearly rebuts Amin’s assertion.

The second central issue of rural China is about the efficiency of rural reform. Amin argues that Deng’s decision to dissolve the communes and give rural families land use rights was a success, and in doing so finds himself in the company of neoliberal economists in China and elsewhere. Justin Lin’s “comparative-advantage-following strategy” was a model that attempts to demonstrate the erroneous character of the socialist era, and it advocates for the efficiency of the market-oriented household responsibility system.22 However, Zhun Xu contends that peasants’ income increased greatly mainly due to increased procurement prices through the transition period (1979-1984).23 In a similar vein, Hinton dispels the idea of a Chinese agricultural miracle in the years following market reform, demonstrating that the harvests were simply ‘normal or near normal’.24

Another popular justification of the market reform in rural China is that it has preserved and strengthened its food sovereignty. In Amin’s words, ‘6 percent of the world’s arable land feeds 22 percent of the world’s population reasonably well’. However, a study by Zhun Xu questions the credibility of official statistics and suggests that China’s grain production has stagnated since the late 1990s. Xu et al. argue China’s actual grain production levels may be substantially lower than the official state statistics by as much as 100 million tons.25 Xu et al. suggest that China will find it harder to increase domestic grain production now and in the near future due to land, water, and environmental constraints. More than 40 percent of China’s arable land is suffering from degradation as of 2014, reducing its capacity to produce food.26 Pollutants in more than 16 percent of Chinese soil exceed national standards, and that figure rose to 20 percent for arable land in 2014.27 This has led China to push extensively overseas to develop food producing networks to service its anticipated deficits, for example by discussing deals with the Australian government to turn ecologically fragile Northern Australia into a food bowl to feed China’s population.28 

Governance crisis and peasants’ unrest in rural China

Amin also sees a rosy picture of villages in today’s China, where things are comfortable and well-equipped compared with other ‘capitalist South’ countries. We argue this has little to do with China’s market reform, but is rather the result of China’s 1950s land reform, which is the independent variable in comparison with other countries in the global South. Moreover, many Chinese scholars clearly disagree with Amin’s positive picture. In an open letter to Premier Zhu Rongji in early 2000, Li Changping, a rural cadre from central China’s Hubei Province, stated that ‘the peasants’ lot is really bitter, the countryside is really poor, and agriculture is in crisis.’29 This milestone event brought the so-called ‘three agrarian issues’ back to the political discussion. Wen Tiejun argues that attempting to employ market economic institutions within the small peasant society would lead to further impoverishment of peasants, as well as social and economic destruction.30 Yu Jianrong argues that ‘three agrarian issues’ are a political problem, and the solution lies in political representation and allowing those peasant organizations to become legal.31

In contrast, Lü takes the narratives of liberal and mainstream economists as the direct target of an ideological critique. In these narratives, the rural-to-urban migration tide was interpreted as ‘liberation of the peasantry’, implying that the rural population must be urbanized and that all hindrances to this must be removed. Lü maintains that this ideological narrative was founded upon an erasure of history, both Chinese and Western, as rural-to-urban migration was not new at all and had been going on since the late Qing dynasty. Lü argues that the recent rural-to-urban migration was tied to economic compulsion brought about by the marketization of agricultural products and by the labour market. Migration was not a positive sign of modernity, but a negative sign of unequal economic conditions, a sign of the hegemonic position that capital had over rural labour.32

The abandonment of Mao’s mass line toward the peasants by rural cadres, and the consequent growing distrust, further contributes to the governance crisis in rural China. Han’s study shows that since the rural reforms, the presence of the village governments in peasants’ lives has become minimal, and they no longer organize agricultural infrastructure building, such as large-scale irrigation projects. Peasants believe that township and village governments now do only two things: collect grain tax and enforce the family planning policies.33

Decollectivization from the rural people’s communes to the ‘household responsibility contract system’ is one of the first steps taken by the CPC in its transition into the capitalist path. Zhu Xu argues that the Dengist rural reform has disempowered peasants, broken the peasant-worker alliance, and successfully eliminated one big threat to the CPC’s plan of great capitalist transformation. One manifestation of peasants’ political disempowerment is their relative inactivity during the Tiananmen Square protests. Zhu Xu argues that this disempowering and decollectivizing rural reform paved the way for urban reform targeting the Chinese working class, to which we will now turn.34

The Working Class Question

If Dengist reform in rural China is capitalist with a thin veil of pseudo-collective land ownership, urban reform is wholesale neoliberal capitalism and has resulted in the re-proletarianization of the Chinese workers. Rural reform, coupled with the open policy to foreign capital, created a generation of rural-to-urban migration. A large pool of cheap surplus labour and the influx of capital means that the time became ripe for the CPC to target the difficult urban SOE reforms. The Chinese working class thus experienced several major transformations in the post-socialist period.

The first market reform in urban China after the household-based production contract system was the establishment of Special Economic Zones (SEZ) in 1984, where foreign direct investment (FDI) was favoured. FDI increased from US$1.3 billion in 1984 to US$33.9 billion in 1990. The fast growing Foreign-Invested Enterprises (FIE) immediately put the efficiency of SOEs into question. The CPC decided to keep a handful of central and strategic SOEs, which gradually fell into the control of CPC elite, and let go the large number of small SOEs, which by and large turned private owned by local officials.

For Amin, the ‘opening’ to private initiative (privatization of smaller enterprises) in China from 1990 was necessary to avoid the stagnation that was fatal to the USSR. If this logic applies, we might as well admit that a capitalist transition is necessary to improve China’s economic situation. And yet, this does not justify the brutal nature of privatization of the SOEs, which is a system based on cronyism. Lang characterised SOEs’ prioritization in China as ‘a slow-motion Russian style theft of state assets’ by a few. The process was inherently flawed because state assets were often sold to SOE managers at fire-sale prices set by themselves in under-the-table deals.35

Secondly, the labour regime is an important part of market reform. Privatization and marketization require a large amount of cheap labour, a ‘liberal’ labour regime, and a flexible labour market. In 1983, the Ministry of Labour and Protection called for the principle of ‘to each according to his labour’, and to end the ‘iron rice bowl’ in the SOEs.36 At the same time, contract workers were encouraged. In 1987 the number of contract workers reached 6 million, slightly more than 5 percent of the total industrial work force. The number of contract workers in SOEs in 1990 rose to 13.7 million, or 13.3 percent of the workforce. It reached 26.2 percent in 1994, and 52 percent in 1997.37 The transition from the ‘cradle to grave’ socialist danwei (state unit) welfare system to contract labour system may seem a gradual and slow process. We, however, argue that this process is the Chinese ‘shock therapy’ equivalent of labour reform, and one that has long-lasting and continuing repercussions for the future of the working class.

SOE reform in tandem with the rural household contract system pushes peasants toward the coastal industrial centres, where they become a massive pool of surplus cheap labour. After the Spring Festival of 1987, the annual ‘wave of migrant workers’ flooding into the train stations of coastal cities was captured by the media for the first time.38 Official data estimated that the number of migrant workers in Guangdong province alone was around 10 million by 1993. Migrant workers’ numbers soared from 84 million in 2001 to 274 million in early 2015. Most of them were employed by the private sector in labour-intensive industries, such as garment, manufacturing, and services.

Thirdly, the Chinese Government presided over a series of legal reforms to institutionalise the new labour regime. A new Bankruptcy Law was piloted only in the SOEs in 1986. It allowed for the dissolution of unprofitable SOEs, resulting in the employment percentage of SOEs dropping continuously. Between 1990 and 1999, SOEs shed 17.7 million jobs, and urban collective firms (mostly wholly owned subsidiaries of SOEs) shed another 18.4 million jobs.39 In other words, more than 36 million workers in total were laid off in 10 years. Before the Bankruptcy Law, the state had pre-emptively undertaken a constitutional amendment to tackle the challenge of labour dissatisfaction. ‘Freedom to strike’ was removed from the Constitution in 1982, and the All-China Federation of Trade Union (ACFTU) was kept on to manage labour unrest rather than its traditional role of workers’ representation.40

The totality of these legal changes was, in fact, radical enough not to be called ‘gradual and piecemeal reform’, and further contributed to the collapse of China’s traditional socialist labour relationship. Won notes that workers can only aspire to difficult (ku), dirty (zang), tiring (lei) and dangerous (xian) jobs.41 In a separate study of sex workers in China, it was noted that of those surveyed 74 percent were laid-off SOE workers and 92 percent became sex workers only after more than 50 months of unemployment.42 By the early 21st Century, the transition from a socialist system to a contract-based employment system had been largely completed.43

Finally, China had managed to go further from market reform to become the economic powerhouse of fully-fledged capitalism. The CPC and Chinese government set the tone for mainstream discourses of ‘jie gui’ (connecting the track with the West) and ‘ru shi’ (participation in the World Trade Organisation) as the rational and inevitable choice for modernization and development. During the marathon WTO negotiations from 1986 to 2001, the economic and political advantages were over-emphasised by the state, including: gaining a place in that important international organisation; engaging in international trade under more predictable rules; preventing the US and other Western powers from using trade disputes to punish China for political reasons; pushing China’s enterprises to improve their competitiveness; and promoting national pride. However, the adverse impacts on the domestic economy, the labour market, social protection, social inequality, and human welfare were vastly overlooked and downplayed.

As the Chinese government embraced global capitalism and global capitalists’ ongoing search for new markets and lower production costs, China had officially become the ‘paradise of capital’. FDI grew from US$33.9 billion in 1990 to US$98.6 billion in 2012. Since 2003, China has surpassed the US to become the number one FDI-inflow country in the world. China’s exports as a percentage of GDP jumped from 25 percent in 2002 to 39 percent in 2006, making it the so-called ‘Sweatshop of the World’.

China became the world’s largest trading nation, overtaking the US in what Beijing described as ‘a landmark milestone’ for the country. Its annual trade in goods passed the US$4 trillion mark for the first time in 2013. China also overtook the US in 2010 and become the largest capital market for Initial Public Offerings (IPO). It is evident that China became fully integrated into the global economy and championed in the labour-intensive manufacturing and export-oriented industries. One of the most dramatic impacts on the labour market was the rapid increase in the number of migrant workers. The number of the workforce employed by the SOEs has continued to drop since 2000.

By the early 21st Century, the transition from a socialist system to a contract-based employment system had been largely completed.44 Urban China had gone from a highly protected ‘iron rice bowl’ system that guaranteed state workers permanent jobs, cradle-to-grave benefits – and a relatively high degree of equality – to a market-determined contract-based employment system at its core, and massive informal and unprotected sectors at its periphery.

The marginalized working class in a “Workers’ State”

The political status of the working class is another fundamental issue when it comes to the question of whether China today is a capitalist state. In the official state language, industrial workers are the ruling class. After the market reform, however, the political status of Chinese industrial workers has been transformed and pushed toward the marginal periphery. Even Amin admits that ‘brutal forms of extreme exploitation of workers exist in China’, and the CPC has not begun the reorganization of labour from the perspective of socialization of economic management. The Chinese working class’s struggles in the past two decades demonstrate that they are no longer represented in political power, certainly not the leading class of the state, as both the state and party Constitutions stipulate.

The defining moment came when the CPC shifted its position to pro-capital, despite its supposed nature as a working-class party allied with the peasants. In 2001, then-President Jiang Zemin announced that the CPC would welcome entrepreneurs as members for the first time since the Party’s founding in 1921. The net worth of the 70 richest delegates in China’s National People’s Congress (NPC) rose to 565.8 billion yuan (US$89.8 billion) in 2011, according to figures from the Hurun Report. Moreover, the representative numbers of workers and peasants in the NPC continue to drop, from 51.1 percent in 1975, to less than 4 percent in 2003.45 Those so-called workers’ representatives are often revealed to be fake, and instead are entrepreneurs and professionals.46 This explains why workers’ voices are barely heard and workers’ rights issues can hardly make it onto the national legislature agenda.

The prominent Chinese New Left scholar Wang Hui is one the few who approach Chinese politics with class analysis in the post-socialist era. He is particularly frustrated by the fact that key concepts that formed the politics of dignity in 20th-century China – such as class and class-based political parties and related political categories – have been replaced by the concept of modernization centred on ‘development’. After the transformation of the 1989 Tiananmen protests, politics connected with the Chinese revolution and working-class state came to be seen as the backward forces of modernization and development. Wang argues that the CPC, as the ‘nationalized party’, and the de-politicization of discourse have led to: the leadership status of the working class stipulated in the Constitution becoming an irony; the peasantry and working class alliance becoming a fabrication. Regional inequality in socioeconomic development is manifested as ethnic conflicts; market logic has replaced international solidarity – as could be seen, for example, in China’s cynical support of the National Union for the Total Independence of Angola (UNITA), the Mujahedeen in Afghanistan, Pinochet in Chile amongst others. This is what Wang called ‘the failure of the modern worker state and the rupture of representativeness in domestic and international political relations’.47

Apart from the core issue of political status, Amin makes three problematic assertions about the Chinese working class that deserve closer scrutiny. Amin first asserts that, despite the strictly managed rural-to-urban migration in China, the urban population is adequately employed and housed. In reality, the combination of rural peasants and laid-off SOE workers has contributed to a massive reserve army of cheap labour. Despite extremely fast GDP growth, there is no way that China can accommodate all the supply of labour. Contrary to the rosy data portrayed by the state statistics, even the-then Premier Wen Jiabao estimated that the total unemployed population in 2010 was about 200 million.48 This is only exacerbated by today’s Chinese workers facing one of the most unaffordable commercial housing markets in the world, especially in the megacities.

Secondly, Amin maintains that despite skyrocketing inequality in China, the working class benefits too from economic development. Amin and the CPC might believe certain policies to be inevitable, but it seems increasingly clear that the Chinese New Left disagrees.49 The Chinese working class has also increasingly shown its disapproval by massive protests. Ness, for example, demonstrates the Chinse workers’ insurgency against state capitalism.50 The number of labour disputes jumped sharply from about 8,000 per year in 1993, to more than 850,000 in 2012 (NBS).51 One independent source estimated that there were about 1,378 strikes in 2014, double the number in 2013.52 The new working class in China’s ‘Sweatshop of the World’ has become increasingly willing to take radical direct action when official channels (ACFTU) fail to resolve their grievances. Some argue that it marks the potential awakening of working-class consciousness in China.53

Thirdly, Amin believes it is an achievement that China manages to retain most of the surplus value produced there, unlike other countries exploited by the imperialist triad (US, Europe and Japan) in the ‘capitalist South’. It is perhaps true that China prevented the multinational corporations (MNCs) from making maximum profits like they did in the capitalist South. But the profits partially retained within China have disproportionately gone to the SOEs, which in fact operate more like private firms and are controlled by a handful of wealthy businessmen and executives, who mostly are the CPC princelings and their families.54

Finally, Amin suggests that the expansion of the social security system (health, housing, pensions) in China would be envied not only by the global South, but also by the distressed areas of the West. In fact, most Chinese now pay for education and healthcare. China spends a scant portion of its fiscal revenue on its social security system, and the distribution is skewed in favour of the urban middle class, leaving the rural poor and the urban working class unprotected.55 The notion of an ‘illiberal middle-class’56 in China further suggests that the capitalist CPC elite has co-opted the middle class, and abandoned the workers and peasants.

Workers’ insurgency against state capitalism

It is no surprise at all that the Chinese workers’ struggles in the ‘Sweatshop of the World’ have been met with wider concerns from the public and media. Nothing better manifests the workers’ misery than the scandal of Apple and its supplier factories in China. Abusive working conditions, such as long work hours and an unsafe shop floor environment, were repeatedly reported. It was highlighted in 2010 when 14 workers committed suicide at Apple’s biggest supplier, Foxconn.57 Twenty-four-year-old Foxconn worker and popular labour poet Xu Lizhi killed himself by jumping off a 17-storey building in the Chinese city of Shenzhen in 2014.

While ubiquitous cases of labour rights abuse were widely disclosed by media and academics, the incidence of labour disputes and workers’ strikes continued to soar.58 A cover story in The Economist, ‘The Rising Power of the Chinese Worker’, featured the labour troubles in the automotive and electronic industries in South China in 2010 after the global financial crisis.59 New waves of labour unrest started from the mid-2000s and were primarily from the heart of ‘Sweatshop of the World’, i.e. the coastal economic centres. They were described as the ‘epicentre of world labour unrest’.60 Most of the disputes were concentrated in foreign and privately owned enterprises. Non-payment of wages, appalling working and living conditions, managerial abuse, workplace injuries, and low pay were the most common problems that incited outbursts of insurgency.61 One defining characteristic was insurgency among the new generation of rural migrant workers. These workers defied stereotypes of docility and passivity, and have been engaging in all manners of resistance, both covert and incredibly overt, since 2000.62

High profile strikes, albeit mostly in ‘rank-and-file’ style, were widely reported.63 For example, on 7 April 2007, approximately 300 workers at Shenzhen’s Yantian Port went on strike, crippling dock work and preventing 10,000 containers from being loaded or unloaded.64 The workers not only demanded better wages, but also asked for more fundamental rights, such as setting up their own union. The strike at Honda in May 2010 is widely considered the milestone event for labour activism in China. Workers from Honda Nanhai, Foshan city in South China, went on strike to demand higher wages and the right to form their own unions. More than 1,900 workers participated. They were not happy about receiving an initial pay rise of 10.2 percent while senior management got a 19.8 percent pay rise. After a one-day strike, a new deal was agreed that junior workers would get a pay rise of 14.4 percent, plus a housing subsidy of 50 yuan.65 While in general accepting the hegemonic discourse of ‘rule by law’, the new working class in China’s ‘Sweatshop of the World’ had become increasingly willing to take radical direct action if official channels fail to resolve their grievances. Some argue that it marks the potential awakening working-class consciousness in China.66

Conclusion

Our discussion leads us to conclude that the current Chinese development path after the Dengist reforms is fundamentally capitalist. While there have been some levels of achievement, as mostly shown by GDP growth, the distribution is vastly unequal, with profoundly capitalist characteristics. The benefits of GDP growth are heavily skewed toward the ruling CPC and capitalist elite, leaving the peasants and working class deprived and exploited. A class analysis of post-reform China shows that the workers and peasants, hallowed as the founding forces of the CPC and the ruling classes of the state enshrined in the constitution, have been politically marginalized and economically re-proletarianized. There are no grounds to say that China is a viable alternative to the global capitalism and a beacon of hope for the global South. The CPC state is part of global capitalism. Without the voices of Chinese peasants and workers, China does not even represent the South.

Today’s Chinese capitalist path originated in factional differences between the Maoist side and other key figures in the party attempting to orchestrate a revival of capitalism. This is largely the scenario predicted by Zhang Chunqiao in 1975.67 The current political state of the CPC has proved that Mao is right: the party is full of capitalist roaders. They have instigated a counter-revolution inspired by China’s poverty.68 Whatever the weaknesses in the theory sketched out by Mao and his theory of the CR, it asked the right questions. Mao identified the danger of downplaying or even forgetting that class struggle persists amidst socialist construction, and that the party, as the ruling party, was the best vehicle to infiltrate and deflect the project of social transformation.

One of the defining differences between Mao’s socialist construction experiment and Dengist reformers’ so-called ‘socialism with Chinese characteristics’ is the treatment of the peasants and working classes. Mao intended to uphold the proletarian dictatorship through an alliance of the peasant and working classes. His mass line policy remains a fundamental approach to addressing the issues of the masses in a progressive manner, and to engaging the peasants and workers with open democracy. In contrast, the Dengist reformers see the needs for an absolute authority of the party-state, which increasingly represents the rich and the powerful, with no place for the voice of the marginalized workers and peasants.

Behind the thin veil of the pseudo-state-owned land system is de-collectivization in both rural and urban China (household contract responsibility and SOE reform), serving as the political basis of capitalist transition. These reforms also sowed the seeds for unprecedented corruption with tales of brazen bribery, embezzlement, misuse of funds, smuggling, counterfeiting and profiteering, filling the pages of the press in China and the West throughout the post-reform era. What has not gained sufficient public attention within China are the widely whispered charges of nepotism, as the families of party cadres at every level grow rich and seize political power.

How does the mixture of market and elite control match Deng’s hazy notion of ‘socialism with Chinese characteristics’? Today’s China has all the basic pillars of a capitalist system: the promotion of the market system, the integration of the Chinese economy into the imperialist-dominated world economy, the privatization of land and property, and the commodification and casualization of labour. The advice to ‘integrate the universal truth of Marxism with the concrete realities of China, blaze a path of our own and build socialism with Chinese characteristics’, which the party made no attempt to define, has led to a Marxist’s worst nightmare.69 Instead of ‘socialism with Chinese characteristics’, the nature of China’s reform is ‘capitalism denied with Chinese characteristics’. China is developing using capitalist methods, inculcating the capitalist spirit and hypocrisies. This reform model owes nothing to Marxism, or to the policies and practices of socialism.

Notes

1. “Building a Socialism with a Specifically Chinese Character” (June 30, 1984), http://www.china.org.cn/english/features/dengxiaoping/103371.htm

2. The term ‘state capitalism’ has a very different meaning in the Marxist literature. Lenin, for example, argues that state capitalism means the development of capitalism controlled and regulated by the proletariat state. See detail: https://www.marxists.org/archive/lenin/works/1917/staterev/ch05.htm#s4

3. Samir Amin (2013). “China 2013,” Monthly Review 64 (10). http://monthlyreview.org/2013/03/01/china-2013/

4. “Summing up: Mao Zedong, the Cultural Revolution and 32 Years of New China,” China Reconstructs [in Chinese], October 1981, 33.

5. Dongping Han (2009). “Farmers, Mao, and Discontent in China: From the Great Leap Forward to the Present,” Monthly Review, 61 (7), http://monthlyreview.org/2009/12/01/farmers-mao-and-discontent-in-china/.

6. Jean Esmein (1975). The Chinese Cultural Revolution, trans. W.J.F. Jenner, London: Andre Deutsch, 196.

7. Ibid., 259.

8. Han (2009). “Farmers, Mao, and Discontent in China” (note 5).

9. Gao Mobo (2008). The Battle for China’s Past: Mao and the Cultural Revolution. London: Pluto Press.

10. Licheng Ma, Leading Schools of Thought in Contemporary China. Singapore: World Scientific, 2013, 47-48.

11. J.Y. Lin (1992). “Rural reforms and agricultural growth in China.” American Economic Review, 34-51.

12. Jason Young (2013), “Toward an Integrated System of Rural-Urban Residency and Land Use in China,” Modern China Studies, 20 (2), 252.

13. Zhou Tian (2013). “Anhui Experiments with Sales of Rural Land in 20 Counties,” http://english.caixin.com/2013-11-15/100605583.html

14. Samson Yuen (2014). “China’s New Rural Land Reform? Assessment and Prospects,” China Perspectives. No. 1, 61

15. Ye Jianping and Jin Xiaoyue (2009). Zhongguo Nongcun Tudi Guanli Zhidu de Goujian

16. James Pomfret (2013), “Freedom Fizzles in China’s Rebel Town,” Reuters, February 28, http://reuters.com.

17. Elizabeth C. Economy (2012), “A Land Grab Epidemic: China’s Wonderful World of Wukans,” Council on Foreign Relations, February 7.

18. Pomfret, “Freedom Fizzles” (note 16).

19. lan Taylor (2012), “Rising Protests in China,” http://www.theatlantic.com/photo/2012/02/rising-protests-in-china/100247/

20. Fred Magdoff (2013), “Twenty-First-Century Land Grabs: Accumulation by Agricultural Dispossession,” Monthly Review, 65 (6).

21. Zhun Xu (2013). “The Political Economy of Decollectivization in China,” Monthly Review, 65 (1), http://monthlyreview.org/2013/05/01/the-political-economy-of-decollectivization-in-china/

22. Lin, J.Y., Cai, F., and Li, Z. (2003). The China miracle: Development strategy and economic reform. Chinese University Press.

23. Zhun Xu. “The Political Economy of Decollectivization” (note 21).

24. William Hinton (1990). The Great Reversal: The Privatization of Chian 1978-1989. New York: Monthly Review Press, 22-23

25. Zhun Xu, Wei Zhang, and Minqi Li. (2014). “China’s Grain Production,” Monthly Review, 66 (1), http://monthlyreview.org/2014/05/01/chinas-grain-production/

26. Dominique Patton (2014). “More than 40 Percent of China’s Arable Land Degraded: Xinhua.” http://www.reuters.com/article/us-china-soil-idUSKBN0IO0Y720141104

27. Jennifer Duggan (2014). “One Fifth of China’s Farmland Polluted,” https://www.theguardian.com/environment/chinas-choice/2014/apr/18/china-one-fifth-farmland-soil-pollution

28. Josh Kerin (2015). “China backs Northern Australia Asia Food Bowl Push,” http://www.afr.com/news/politics/china-backs-pms-asia-foodbowl-push-20150618-ghr2gz

29. Southern Weekly. Aug. 24, 2000.

30. Wen, Jiegou Xiandaihua, 12.

31. “Why do I propose the reestablishment of peasant associations?” www.nongyou.org, Nov. 2, 2003.

32. Lü, “Minggong chao de wenti yishi, Dushu,” no.10, 2003, 52-61.

33. Dongping Han (2009). “Farmers, Mao, and Discontent in China: From the Great Leap Forward to the Present,” Monthly Review, 61 (7), http://monthlyreview.org/2009/12/01/farmers-mao-and-discontent-in-china/

34. Zhun Xu (2013). “The Political Economy of Decollectivization” (note 21).

35. Jin Zeng (2013). State-Led Privatization in China: The Politics of Economic Reform. Routledge Contemporary China Series, 1st Edition.

36. Hinton, The Great Reversal, 169-170

37. L. Tomba (2014). Paradoxes of labour reform: Chinese labour theory and practice from socialism to market. London: Routledge Curzon.

38. Chan, C. (2013). “Contesting class organization: Migrant workers’ strikes in China’s Pearl River Delta, 1978-2010,” International Labor and Working Class History, 83, 112-136, http://dx.doi.org/10.1017/S0147547913000082.

39. Huang, Y. (2003). Selling China: Foreign direct investment during the reform era. Cambridge: Cambridge University Press.

40. Chang, K., and Cooke, F.L. (2015). “Legislating the right to strike in China: Historical development and prospects,” Journal of Industrial Relations. Doi: 10.1177/0022185615573009.

41. Won, Jaeyoun. (2003). “The Making of Post-Socialist Individuals in China.” PhD dissertation, Department of Sociology, University of California at Berkeley.

42. Huang, Yinyin and Pan Wuanming (2003). “Female sex workers in the labor market of northeastern China.” Sociological Research [Shehuixue Yanjiu], No. 3.

43. Kuruvilla, S., Lee, C.K., and Gallagher, M.E. (2011). From iron rice bowl to informalization: Ithaca, NY: Cornell University Press.

44. Ibid.

45. Anonymous. (2015). Workers of the Communist Party of China and the Proportion of Workers in the NPC Deputies Continued to Decline [In Chinese]. http://www.wyzxwk.com/Article/shiping/2015/07/346930.html

46. Lucy Hornby (2016). “Inside China’s National People’s Congress.” https://www.ft.com/content/c4eddaf6-e108-11e5-9217-6ae3733a2cd1

47. Wang, H. (2014). Two Kinds of New Poor and Their Future: The Decline and Re-emergence of Class Politics and the Politics of Dignity for the New Poor [in Chinese]. The Open Era (Kaifang Shidai) (6). http://wen.org.cn/modules/article/view.article.php/4166

48. During a development forum on March 3, 2010, then-Premier Wen Jiabao commented on the issue of Sino-US trade and employment in China, and said ‘I know that 2 million people are unemployed in the US, and the government is worried. But in China, the unemployed population is 200 million. China is never solely in pursuit of trade surplus. On the contrary, China’s longer term goal is to achieve basic balance on international trade.’ See the Chinese news website: http://news.163.com/10/0322/19/62DDSEGV000146BD.html (“Wen Jiabao: the unemployment population is reaching 200 million,” March 22, 2010).

49. For detail, see: Wang, Chaohua. (2003). One China, Many Paths. London: Verso, 62; Cui Zhiyuan (2006). “How to Comprehend Today’s China,” Contemporary Chinese Thought, 37 (4), 41-47.

50. Immanuel Ness (2016). Southern Insurgency: The Coming of the Global Working Class. London: Pluto Press, 107-147.

51. National Bureau of Statistics of China (NBS). (2014). National Rural Migrant Workers Study Report 2014 [in Chinese]. Beijing: China Statistics Press.NBS. (1989-2014). China Labour Statistical Yearbook (zhongguo laodong tongji nianjian). Beijing: China Statistical Publishing House. NBS. (1981-2015). China Statistical Yearbook (zhongguo tongji nianjian). Beijing: China Statistical Publishing House.

52. For detail, see: http://www.scmp.com/comment/insight-opinion/article/1723213/chinas-new-collective-bargaining-rule-too-weak-ease-labour (Halegua, 2015, Feb 25)

53. Pun, N., and Chan, J. (2012). “Global Capital, the State, and Chinese Workers: The Foxconn Experience,” Modern China, 38 (4), 383-410. http://dx.doi.org/10.1177/0097700412447164.

54. See detail in: http://www.reuters.com/article/us-china-privateequity-special-report-idUSBREA3900D20140410

55. Shen, K., and Lee, S.H. (2014). “Benefit Incidence of Public Transfers: Evidence from the People’s Republic of China,” Asian Development Bank Economics Working Paper Series (413), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2558847.

56. For detail, see: Bell, D., Brown, D., Jayasuriya, K., and Jones, D. (1995). Towards Illiberal Democracy in Pacific Asia New York: St. Martin’s Press, and Chen, J. (2013). A middle class without democracy: Economic growth and the prospects for democratization in China. Oxford University Press.

57. For detail, see: http://www.bbc.com/news/business-30532463. There were further 6 suicides in 2011, 8 in 2012, 6 in 2013, 7 in 2014, including worker Xu Lizhi, who died on 30 September 2014 (“Apple ‘failing to protect Chinese factory workers’,” December 18, 2014).

58. There is a general distinction in this research between labour disputes and strikes. Labour dispute refers to general industrial conflicts, not necessarily escalating to industrial action, such as strikes and protests.

59. For detail, see: http://www.economist.com/node/16693333. The new wave of worker protests from the global sweatshops sparked sensational headlines in international media, such as ‘Chinese Workers Challenge Beijing’s Authority’ (Wall Street Journal, June 13 2010), and ‘An Independent Labor Movement Stirs in China’ (New York Times, June 10 2010).

60. Silver, B., and Zhang, L. (2009). “China as an emerging epicenter of world labor unrest,” China and the transformation of global capitalism, 174-187.

61. Friedman, E., and Lee, C. K. (2010). “Remaking the World of Chinese Labour: A 30-Year Retrospective,” British Journal of Industrial Relations, 48(3), 507-533.

62. Pun, N. (2005). “Global production, company codes of conduct, and labor conditions in China: A case study of two factories,” The China Journal 54, 101-113.

63. Ness, Southern Insurgency.

64. “No Pay Rise, Yantian Port on Strike [in Chinese]” (April 9, 2007).                http://news.sohu.com/20070409/n249299898.shtml.

65. “SCMP: Strike forces Honda to halt China factories,” (May 28, 2010), http://www.clb.org.hk/content/scmp-strike-forces-honda-halt-china-factories

66. Pun, N., and Chan, J. “Global Capital, the State, and Chinese Workers” (note 53).

67. Zhang Chunqiao (1975). “On Exercising All-Round Dictatorship over the Bourgeoisie,” https://www.marxists.org/reference/archive/zhang/1975/x01/x01.htm

68. Revolutionary Communist League of Britain (1996). “Looking Once More at China,” https://www.marxists.org/history/erol/uk.hightide/china-again.htm

69. Ibid.

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