Of China and Capitalism-I

B Sivaraman

The debate on whether China is a socialist country or not is now passe. Though the Chinese leadership doesn't explicitly say that in so many words, they themselves have officially declared, as far back as in their 14th Party Congress in 1992 itself, that they were building a socialist market economy. Though they scrupulously avoid using the expression capitalism, it is nothing but state-capitalism only. And though they call it primary stage of socialism or socialism with Chinese characteristics, they make it clear that they would be building this state-capitalism for a long period, perhaps for the next 50 years.

The estimated GDP of China in nominal terms in 2019 is $14.2 trillion, second only to estimated US GDP of $21.3 trillion. Though it witnessed record high growth rates of 8-9% for quite too long, the annual GDP growth rate of China has slowed down in recent years, and last year it grew by 6.6% and the estimated growth rate for 2019 is 6.9%. Still, that means China would be adding $980 billion a year to its national wealth. The annual GDP of Sweden was $568 billion and that of Norway was $415 billion in 2018. This means China is adding the entire GDP of Norway and Sweden put together every year; i.e., equivalent to the GDP of two imperialist countries in Europe.

So, even as a form of capitalism, China has emerged as the second largest economy in the world and is expected to overtake the US to become the largest economy in the world by 2035 in nominal terms, though it has already just overtaken the US in 2019 in purchasing power parity terms. The destiny of Chinese capitalism demands addressing the following questions: 1) Where it stands in contrast to the major traditional imperialistic capitalist powers?; 2) How China fares in terms of traditional and fundamental parameters of imperialism?; 3) What are the new facets of imperialism and neo-colonialism, and where China stands vis-a-vis these new forms, and 4) In the course of its capitalist expansion whether China too would inevitably acquire the traditional imperialistic characteristics' and neo-colonial features to justify the tag of a new imperialist power and so on?

Capital would remain capital when it ascends onto the global stage/scale no matter whether the country of its origin is United States or China, or Russia for that matter. Does it logically imply that capitalism with Chinese characteristic is bound to mean an inevitable "neo-colonialism with Chinese characteristics" too? Some might argue that just as there cannot be a peaceful/civilised and developmental imperialism, there cannot be a non-"neo-colonialist" global expansion of capital from any origin in this age. Would that be true? But many middle-level capitalist regimes also acquire some neo-colonial features. Many overseas economic activities of not only China's but even those of India and South Africa in Africa and Brazil in Latin America have such features. Can they all already qualify as neo-imperialistic and neo-colonising powers?

But then there are lots of variations in neo-colonialisms; so what is new about this global expansionism of Chinese capital? Can any quest for overseas markets, any form of export of capital technology and import of raw materials automatically make a country neo-colonising, by itself? Or, is 'neo-colonialism' primarily a political characterisation based on several other features, including the nature of the economic base on which neo-colonising forms arise and the position of the neo-colonising power in the overall balance of geopolitical power?

Classical colonialism of capitalist powers was basically for expansion of markets for their commodities and for the loot of raw materials. After Marx's insightful analysis of colonialism in his time, where he had tracked the nascent monopoly stage of capital in some select developed capitalist countries of Europe and even anticipated emergence of finance capital and its imperialistic outward expansion, it was Lenin who first systematically analysed the then nascent phenomenon of imperialism, .drawing heavily upon the analysis of British liberal economist Hobson and summarised its basic features in his seminal work Imperialism, the Highest Stage of Capitalism.

In that work, he listed five characteristics as basic features of imperialism about which he says: "...we must give a definition of imperialism that will include the following five of its basic features: 1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; 2) the merging of bank capital with Industrial capital, and the creation, on the basis of this "finance capital", of a financial oligarchy; 3) the export of capital as distinguished from the export of commodities acquires exceptional importance; 4) the formation of international monopolist capitalist combines which share the world among themselves, and 5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism in that stage of development in which the dominance of monopolies and finance capital has established itself; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun; in which the division of all territories of the global among the biggest capitalist powers has been completed".

So imperialism was a stage of capitalism where export of capital was more pronounced compared to the earlier predominance of export of commodities. But both continued through the 20th century. So also continued an intensified imperial political policy of re-division of the world that resulted in two world wars, anti-imperialist nationalism and national liberation struggles in the colonies and semi-colonies, some of which even retained a measure of political independence due to various reasons, and then decolonisation followed.

But imperialism did not end with decolonisation. The world witnessed new forms of imperialist economic expansion without formal colonisation, which came to be known as neo-colonialism. Emergence of Multinational Corporations (MNCs) and their growing importance in not only imperialist economic expansion and but also in political dominance over the developing world, and its political subjugation of the apparently independent post-colonial states became the main feature in the post-WWII era. Besides conventional export of capital in transport infrastructure, mining, extraction and other raw materials industries and semi-processing units, capital also flowed into technologically more developed areas in some select former colonies. And to exploit the cheap labour in them, production itself was relocated from developed capitalist/imperialist countries and very high royalties were extracted for transfer of technology.

Besides export of capital in the form of FDI, and investment in stock markets, in commodities markets or markets for futures and options, bond markets and in other securities, and outright debt associated with all sorts of conditions, the role of finance capital itself assumed numerous new forms. While promoting multidimensional capitalist development in some of the newly independent countries, it also exercised its total sway over all spheres of economic activity, not only in underdeveloped former colonies but also in those semi-capitalist countries which has reached immediate stage of capitalist development and continued the drain of surplus in both the old and new forms.

On the political terrain too, intervention in the internal affairs of former colonies and buying up a section of local rulers, regime changes, and even military interventions, sanctions, promoting proxy wars and arms race, and cutting down to size strong regional powers to prevent the emergence of multi-polarity and containment of major rival powers as well as imposition of unequal treaties and structural adjustment programmes to restructure the economies of developing countries conducive to the exploitation by finance capital etc., continued.

Imperialism thus was a stage in the evolution of capital, the stage of monopoly capital with the predominance of finance capital, and neocolonialism was nothing but a mode of evolution of this imperialistic capital in the post-WWII era.

However, in this changed scenario, imperialism did not evolve in linear fashion but there were many ups and downs among old imperial powers. Some witnessed decline and almost ceased to be imperialistic in their external economic and political role and turned into primarily inward capitalist powers, while some reached new imperial heights and became global superpowers, both economically and politically/militarily. Thanks to big power syndrome and global hegemonic ambitions of some post-revolutionary regimes like Russia, big power rivalry got mixed up with inter-imperialist rivalry. The experience of Second World War and subsequently the policy of containment of communism gave rise to Atlantic alliance between the US and the European powers and its military consolidation in the institution of NATO and triggered what is known as Cold War. The US even allied with China against the Soviet Union. The Soviet collapse gave an appearance of a unipolar world but the world had become multipolar. Such a scenario gave China an opportunity for massive capitalist expansion in a relatively peaceful manner.

For one thing acquiring certain imperialistic features by itself cannot make a country a full-fledged imperialist power in all respects. Political and military expansionism need not be fully commensurate with economic expansion. The economic base could also be vastly different. Of course, it cannot be the case for Marxists that only private monopoly capitalism can give rise to imperialism and not state-monopoly capital under a bureaucratised regime. Moreover, the term imperialism existed before monopoly capitalism and even before capitalism, like Roman imperialism or Spanish conquests. In the Marxist tradition, imperialism however used to signify monopoly stage of capitalism and the era of dominance of finance capital.

However, many countries had reached the stage of dominance of monopoly capitalism and finance capital. Not all of them necessarily assumed imperialistic role and could be described as imperialist powers. Or, even if they were imperialistic in a purely economic sense, they were not necessarily militaristic powers.

For instance, the total stock of direct investment by Switzerland totalled CHF 1228 billion by 2017 (or equal to US$1236 billion) (CHF=Swiss francs). Of this amount, CHF 1,097 billion was equity capital (89%) and CHF 131 billion (11%) was intra-group loans. At CHF 478 billion (39%), finance and holding companies reported by far the highest capital stocks abroad, followed by chemicals and plastics at CHF 164 billion (13%). This means that more than a trillion dollar worth of capital has been exported from Switzerland. But Switzerland had declared neutrality even at the time of Cold War, it has not taken part in any military operations abroad and it is not part of the NATO or European Union even. Switzerland is one of the most globalised economies in Europe but the Swiss Army has only 300 soldiers abroad, and that too, part of the UN peacekeeping mission! This of course is a post-World War II development and the overall imperialist-dominated global order shaped by the US-NATO has made this possible. That's why despite being one of the biggest centres of global finance capital, Swiss foreign policy has never posed any threat to any country. In the backdrop of such new global realities, it would be absurd to argue that Swiss capitalism is not imperialistic as it doesn't fulfill some of the classical criteria of imperialism as laid down by Lenin.

By the same token, one can see another paradoxical development in Europe. According to CIA World Factbook data reproduced in Wikipedia in terms of total stock of FDI abroad, i.e., cumulative value of all investments made abroad (excluding investment in share market) measured in US dollars in 2017, EU stood first at $16.666 trillion out of which the stock of FDI abroad from Netherlands alone stood at $5.809 trillion, which was above the stock of total FDI from the USA, at $5.644 trillion, and even within Europe, the Dutch FDI investment abroad was more than the combined overseas investment stock of $5.259 trillion of Germany ($2.074 trillion), United Kingdom ($1.634 trillion) and Japan ($1.548 trillion). Will that make Netherlands a bigger imperial power than the US, or combined imperial power of UK, Germany and Japan?

In some scenarios of multi-polarity and polycentrism and shifting nature of inter-imperialist contention, it might still be possible for some countries to emerge as global powers without commensurate development of all, or even key, imperialistic features. Germany as a latecomer could have assumed a very aggressive imperialistic character in the first half of 20th century. But China as a latecomer could have emerged into an economic power several fold stronger than early 20th century Germany without a history of even a fraction of its imperialistic adventures, obviously because the changed global scenario permits that. Likewise, the imperialistic expansion of Japanese capital was many times more during its peaceful evolution in the post-WWII period than during its earlier militaristic phase.

Expansion for markets (through trade), capital exports, the overseas role of finance capital like overseas lending, takeovers and speculative investments etc., besides political aggression for colonization were considered as the basic features of imperialism in the classical Leninist view. Before addressing the question of whether China can be described as a major imperialist power or not, let us get a factual picture of how China has fared in respect of these basic features.

[To be continued]

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Frontier
Vol. 52, No. 30, Jan 26 - Feb 1, 2020