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This post was edited by HardTruth at 2013-1-8 12:42|
More from an essay by Vince Sherman, putting to rest the myth that China is capitalist
Western commentators have predicted that China’s market reforms would lead to the downfall of the CCP since Deng announced market socialism in the late 1970s. These same commentators have repeated this claim for the last 30 years and are constantly proven wrong as China lifts itself out of poverty with the CCP at the helm. Market reforms have not altered the fundamental socialist underpinnings of Chinese society because the masses and their party continue to rule China.
The so-called ‘privatization’ of small and medium-sized state industries in the mid-1990s and early 2000′s provoked an outcry from Western ‘leftists’, claiming that this represented the final victory of capitalism in China. But since ‘left’ groups are so often subject to bickering over obscure definitions and irrelevant (but no less verbose!) debates about distant historical questions, let’s see what the capitalists themselves have to say about ‘privatization’ in China. In a May 2009, Derrick Scissors of the Heritage Foundation lays the issue to rest in an article called “Liberalization in Reverse.” He writes:
Examining what companies are truly private is important because privatization is often confused with the spreading out of shareholding and the sale of minority stakes. In China, 100 percent state ownership is often diluted by the division of ownership into shares, some of which are made available to nonstate actors, such as foreign companies or other private investors. Nearly two-thirds of the state-owned enterprises and subsidiaries in China have undertaken such changes, leading some foreign observers to relabel these firms as “nonstate” or even “private.” But this reclassification is incorrect. The sale of stock does nothing by itself to alter state control: dozens of enterprises are no less state controlled simply because they are listed on foreign stock exchanges. As a practical matter, three-quarters of the roughly 1,500 companies listed as domestic stocks are still state owned. (8)While the so-called ‘privatization’ process of allows some private ownership, whether domestic or foreign, Scissors makes clear that this is a far cry from real privatization, as occurs in the United States and other capitalist countries. The state, headed by the CCP, retains a majority stake in the company and guides the company’s path.
More striking are the industries that remain firmly under state control, which are those industries most essential to the welfare of the Chinese masses. Scissors continues:
No matter their shareholding structure, all national corporations in the sectors that make up the core of the Chinese economy are required by law to be owned or controlled by the state. These sectors include power generation and distribution; oil, coal, petrochemicals, and natural gas; telecommunications; armaments; Aviation and shipping; machinery and automobile production; information technologies; construction; and the production of iron, steel, and nonferrous metals. The railroads, grain distribution, and insurance are also dominated by the state, even if no official edict says so. (8)No capitalist country in the history of the world has ever had state control over all of these industries. In countries like the United States or France, certain industries like railroads and health insurance may have state ownership, but it falls drastically short of dominating the industry. The importance of this widespread state ownership is that the essential aspects of the Chinese economy are run by the state headed by a party whose orientation is towards the working class and peasantry.
Particularly damaging to the China-as-state-capitalist argument is the status of banks and the Chinese financial system. Scissors elaborates:
the state exercises control over most of the rest of the economy through the financial system, especially the banks. By the end of 2008, outstanding loans amounted to almost $5 trillion, and annual loan growth was almost 19 percent and accelerating; lending, in other words, is probably China’s principal economic force. The Chinese state owns all the large financial institutions, the People’s Bank of China assigns them loan quotas every year, and lending is directed according to the state’s priorities. (8)The People’s Bank of China (PBC) highlights one of the most important ways in which the CCP uses the market system to control private capital and subordinate it to socialism. Far from functioning as a capitalist national bank, which prioritizes facilitating the accumulation of capital by the bourgeoisie, “this system frustrates private borrowers.” (8) The CCP floods the market with public bonds, which has a crowding-out effect on private corporate bonds that firms use to raise independent capital. By harnessing supply and demand in the bond market, the PBC prevents private firms, domestic or foreign, from accumulating capital independently of socialist management.
Although modern China has an expansive market system, the CCP uses the market to both secure and advance socialism. Rather than privatizing major industries, as is often alleged by detractors, the state maintains a vibrant system of socialist public ownership that prevents the rise of an independent bourgeoisie. Deng talked specifically about this very deliberate system in the same interview with Fallaci:
No matter to what degree we open up to the outside world and admit foreign capital, its relative magnitude will be small and it can’t affect our system of socialist public ownership of the means of production. Absorbing foreign capital and technology and even allowing foreigners to construct plants in China can only play a complementary role to our effort to develop the productive forces in a socialist society. (6)Western analysts seem to believe that the CCP has accomplished this goal. The capitalist Australia-based Center for Independent Studies (CIS) published a July 2008 article that says that those who think that China is becoming a capitalist country “misunderstand the structure of the Chinese economy, which largely remains a state-dominated system rather than a free-market one.” (9) The article elaborates:
By strategically controlling economic resources and remaining the primary dispenser of economic opportunity and success in Chinese society, the Chinese Communist Party (CCP) is building institutions and supporters that seem to be entrenching the Party’s monopoly on power. Indeed, in many ways, reforms and the country’s economic growth have actually enhanced the CCP’s ability to remain in power. Rather than being swept away by change, the CCP is in many ways its agent and beneficiary. (9)While the CIS goes on to cry crocodile tears about the lack of economic and political freedoms in China, Marxist-Leninists read between the lines and know the truth: China isn’t capitalist, the CCP isn’t pursuing capitalist development, and market socialism has succeeded in laying the material foundation for ‘higher socialism’.