Of China and Capitalism-IV

B Sivaraman

China's backwardness in communication with the outside world is legendary and its intellectual backwardness is widely being acknowledged. Like Korea, China too faces the danger of getting reduced to a country of glorified mechanics. It is difficult to come across one intelligent article on any subject originating from the Chinese academia. China can only steal intellectual property but they can't steal intellectualism. Chinese or Russian bureaucracy can challenge the American military might and can match the financial muscle power and can invade their markets or come up with superior frontier technologies but can never come anywhere near the artfulness of the old British and even post-war American imperialist intellectual hegemony. Even at the time of colonialism, the imperialists created an impression among many that colonial rule was only a civilising mission.

Even a vast majority of the diehard anti-capitalists in the West, if given a chance to choose between China and Europe to live, would only choose Europe. Despite the chaotic character and corporate control of the bourgeois media and public life in imperialist countries, capital is somehow reconciled to an "open society" as unavoidable but the bureaucracy will not reconcile to having even an alternative version of open society. Despite the presence of hundreds of newspapers magazines and TV channels which are not exactly state-controlled, and despite the functional elective democracy of local people's committees as administrative units, China doesn't have the kind of attraction that even the corporate-controlled democracy in the West has. This is not just a problem of Chinese capitalism but a general crisis of socialism. China can afford to turn into a full-fledged capitalist economy but can't have even a paler version of Western-style democracy. Does it mean, at the social level, as a society China is more vulnerable than the imperialist democracies?

The 2008 US financial meltdown gave rise to a bizarre irony of history. The world witnessed the spectacle of China, which claims to be the last remaining major socialist country, came to the rescue of the biggest imperialist power on earth from total collapse. By the end of 2008, China's holdings of US treasury securities was about $700 million. China purchased $200 billion worth of more US treasury bills and bonds to prevent a sovereign financial collapse and to create enough liquidity to enable the US government to bailout banks and financial institutions with rescue packages. More importantly, when the whole global economy was reeling with a few exceptions like India, China rolled out a rescue package of $570 billion to come out of the impact of the global crisis. That helped revive not only China's economy, but China's recovery also paved the way for global recovery.

This whole episode sealed China's position not only as a "responsible global power" but it also underlined mutual dependence of US and China on each other. Their oncoming rivalry too would be played out within the broad contours of such mutual dependence only, and there can hardly be a showdown leading to a breaking point and irreconcilable hostility between the two.

The current US-China tension and "trade war" could at best be a temporary aberration, any major military conflict is also highly unlikely despite a low-intensity tension over South China Sea. It is highly likely that the class interests of the American bourgeoisie can ultimately prevail over the idiosyncrasies of a megalomaniac like Trump.

China's sole agenda now is to further advance its economic growth and expansion and hence its geo-political strategy revolves around sustaining a stable political climate for that. Even its massive military modernisation and consolidation is intended to be a defensive strategy to serve this objective only. Accordingly Beijing has set its own priorities in foreign policy: 1) China would never seek hegemonism; 2) China would achieve full national unification including Taiwan, Hong Kong and Macao; 3) China would resist all external attempts at interference in its internal nationality and ethnic problems, especially in Tibet and Xinjiang etc.; and 4) And China would be fully prepared militarily to defend its national interests and would not compromise its territorial integrity and settle all its border disputes upholding Chinese national interests.

With such a foreign policy doctrine, China is also guided in practical geopolitical politics by the theory of balance of power. China, Russia, Central Asian powers and Iran have come together to form the Shanghai Cooperation Organisation (SCO) and India and Pakistan have been invited as guest participants. Though in terms of very composition of participants, SCO is strategically a significant development, but SCO too so far has maintained a non-aggressive defensive posture only.

Coinciding with the emergence of SCO and China's rolling out of the BRI, there is a shift in the American foreign policy discourse, and US now talks of safeguarding its interests in Indo-Pacific region which includes South East Asia, South Asia, Central Asia, and West Asia. US sees China essentially as a challenge to its supremacy in Indo-Pacific and, without spelling it out in so many words, it wants to contain China within this region.

Militarily China is no match for the US but its armed might is sufficient enough to provide it security and deterrence against any military adventure by any power including US-NATO. However, there is now under Trump an open split between the US and EU on China and Iran strategies.

The threat to American security is not militaristic but it is mainly economic security threat from China, at least until now. China's military modernisation is mind-blowing but on the whole it is still economic expansion of Chinese capitalism which is a dominant feature rather than imperial politics or militaristic expansion—which is nowhere comparable even to that of the earlier USSR.

The reality of Western imperialist powers today is that many imperialistic countries have lost the capacity for long-term ground warfare and for military occupation. Politically, it is very difficult for them to incur casualties in tens of thousands. But this is not so yet with powers like China, India, Pakistan, Indonesia, Bangladesh and even perhaps Turkey. If China can integrate with the imperialist powers on an economic plane citing common interests, it can well also find a modus vivendi for a military cooperation in select cases. It is also heading in this direction. With joining non-proliferation regime and restraining North Korea and not vetoing the US on Iran and so on. Similar to the West allowing, and even demanding, a military role from Russia in the Syrian conflict they might have to reconcile to some future role for China as well in some other context.

The point in this discussion is not to minimise the danger of imperialism or to interpret the current world situation and balance of forces as promoting peaceful evolution of imperialism. Imperialism has not changed colours as some Left theoreticians argue.

More than precise labelling of China, the emphasis here is to assess its actual evolution with its contradictory features—some resembling imperialistic ones and other not. The conventional Leninist understanding of imperialism remains basically valid. But going beyond that, the Latin American school said imperialism means "development of underdevelopment" and emergence of only "lumpen bourgeoisie" or crony capitalism and "periphery" can never undergo capitalist transformation. In India too, different shades of the Left took the position that "semi-feudalism" and imperialism/neo-colonialism would never let capitalism develop and India can never become a capitalist country without a "democratic revolution" first. India emerging as the third largest capitalist economy in the world in PPP terms and about to become the fifth largest in nominal terms itself has settled these wrong notions.

With the given pace of capitalist expansion, China can potentially turn into a new imperialist force. But right now it is still evolving and in history there has been no occasion of its imperialistic military intervention except on a lone occasion of military offensive against Vietnam.

Lenin said imperialism means war. But in the nuclear era, with imperialist and big powers fully armed with nuclear arsenal based on nuclear doctrines of MAD (mutually assured destruction) a war between big powers is ruled out, thanks to this nuclear deterrence. Even otherwise, a war between two developed imperialist democracies is inconceivable in the foreseeable future.

Though an imperialist statesman like Bismarck began his German unification with the doctrine of 'blood and iron' by waging war against Austrian empire in 1866 and France in 1870-71, his subsequent real politik based on a doctrine of balance of power saw a long reign of peace and absence of war between otherwise belligerent Germany, Austria, Russia, France, UK and Italy. But this unimaginable protracted peace for four and a half decades was not permanent but gave rise to two subsequent world wars.

After experiencing the devastation of two world wars, nuclear deterrence and the end of Cold War might have prevented another major global conflagration for a longer period of seven decades. But more than that, growing transnationalist integration between national capitalism of imperialist powers has played a greater role. Further, in the wake of decolonisation, the cost of war for annexation and capturing of markets and raw materials perhaps far outweighed the gains.

True, like the US had- and still has its Monroe Doctrine of 'sphere of influence', every major power has its own version of 'Monroe Doctrines' and arms race is still on, but this contention for spheres of influence and balance of power was not predominantly based on the conventional contention for markets and raw materials, though the later, especially the calculations on oil and mineral wealth, still play a major role in global geopolitics. But transition to neo-colonialism and multinational corporations, greater capitalist integration at the global level through multilateral trade treaties, FTAs, and integrated capital markets and financial flows have made militarism and global imperialistic power politics as well as hegemo-nism somewhat autonomous of immediate market or raw material concerns of capitalism of individual countries. This new facet of 21st century imperialism needs to be grasped.

Well, some critics can describe China as an imperialist power. But then they will have to take pains to distinguish it from traditional imperialist powers like the US, UK, Germany and Japan etc. it would not be correct to put China at par with the US. The contention between them cannot be considered entirely as conventional inter-imperialist contradiction. There is no question of progressives all over the world remaining neutral in this conflict and not taking sides.

A self-contradiction can often be noticed in the approach of these critics. On the one hand, they acknowledge China to be a capitalist power and say that it has already become a major imperialist power. But, on the other hand, they still foresee only an alignment of US-Europe-Japan-India against China-Russia as if it is a contention between imperialist and ex-socialist powers. Even if conventional factors of inter-imperialist conflict of interests were involved, once they recognise China to be a major world power, can it not possibly bring about a different polarisation? China has already distanced Europe from the US on BRI. It has also somewhat distanced East Asia/ASEAN from the American sabre-rattling on South China Sea. Philippines, which raised a big diplomatic hue and cry over fishing rights in South China Sea worth a few millions fell silent at the lure of billions worth opportunity in China, and happily joined the ASEAN bandwagon for a FTA with China! China with its power of trillions is also trying hard to distance Japan and India from the US with early indications of marginal success. Such political-diplomatic contention would go on. Neither ASEAN or Korea nor Japan wants a major conflagration over South China Sea. All these go to show that China's global economic expansion is pregnant with both the possibilities of a sudden imperialistic turn or continued peaceful capitalist expansion, which has not been fully blocked. Chinese capitalism is of very high value for global capitalism as a whole, as 2008 demonstrated.

India is also a regional hegemon but one can't put it at par with the US. Since India is a regional hegemon, some call India also imperialistic or sub-imperialistic. There are others with longer lists.

China might have refrained from military adventure abroad so far. But stationing troops abroad is unavoidable if Chinese investment assets in BRI cross even $300-400 billion. Arms race with the US-Japan could also intensify for different geopolitical/strategic reasons.

The debate about whether China is socialist is almost over; but that about whether China would emerge into an imperialist power is not. China might be moving in that direction and can potentially turn into one but it still has a long way to go for that.

The mind-blowing expansion of Chinese capitalism also poses several theoretical questions internally about its claim of socialist market economy as well. The conventional post-1917 theory of socialism was based on primacy of state ownership combined with what Lenin called New Economic Policy of allowing a marginal role for market forces for a short transition period, which was extended for a protracted period under Mao's New Democracy and which was dramatically enhanced for an entire historical course by Deng's theory of indifference to cat's colours.

Of course, for a tiny academic fringe of theoretical fundamentalists, any economy not based on collectives of self-organising and self-managed cooperative producers has nothing to do with socialism. Like the Trotskyite 'original sin' theory of socialism in one country which paralyses revolutionary advance of socialism or post-capitalism in individual countries, this version of 'original sin' also results in a theoretical straitjacket and deprives the proponents of this view from having any concrete vision of post-revolutionary transition. So naturally, all revolutions would appear to be premature leaps for them. So any meaningful discussion with them ends there. But history can never stop at some beautiful theoretical passages of Marx. Others in praxis cannot afford to wait until simultaneous revolution in all countries or till some ideal revolution at a very advanced stage of capitalism ushering in an ideal model of socialist production of self-managed cooperatives comes up as set out in Marx's texts. The question of optimal post-revolutionary transitional strategy towards socialism still remains an unsettled issue today despite the world witnessing many revolutions and many attempts at socialist transition.

So, while getting back to the real history models, in a scenario where private capital freely flows into state-owned enterprises (SOEs) and state capital freely flows into privately owned enterprises (POEs) as in China, it is difficult to draw a clear demarcation without conceptual blurring. Many of the POEs which are non-state enterprises are also collectively owned. Now SOEs account for only 30% of the GDP in China.

There is also a question of the class character of the state in a bureaucratised regime, and class nature of China's constitution and legal regime and there is also seen 'mixed economy' under purely capitalist regimes. If China is a socialist market economy, the Chinese leadership has not bothered to clarify what is socialist about it. The record miners' deaths and Foxconn suicides belie the image of not only socialism but even that of a civilised capitalism.

Is the market mechanism under socialist market economy the same as the market in the USA, and if not, what are the variations? Capitalism is capitalism no matter what the adjective is and hence cannot escape its periodical crises. What is the dynamic of periodical crisis in China's state-capitalism? What is the role of money and credit and exchange, especially in a trade regime compatible with WTO framework? Is there a version of "socialist monetarism" or "socialist globalization" at work too? The list of such questions is longer. Foreign policy can in the ultimate analysis only be an extension of domestic realities. But then as it was pointed out at the beginning of this note, a detailed scrutiny of all these internal and fundamental dimensions of Chinese capitalism could be taken up only on some future occasion and this note is restricted to features of outward expansion alone.

And moreover, as this note is more to initiate a discussion, the author is  refraining from giving China any label here.

But all these above issues call for in-depth discussion and close tracking.

[B Sivaraman, a reputed Indian journalist and political analyst]
[Concluded]

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Frontier
Vol. 52, No. 33, Feb 16 - 22, 2020