Rise of China and World Order

Arup Baisya

China possessed what Trotsky called the “Privilege of historical backwardness” when it opened up its economy in 1978. In the initial phase of neoliberalism, China dragged the labour force from the countryside into the big cities to work as cheap labour in export processing zones. China made nearly 300 million rural migrants work like slaves in sweatshops. Au Loong Au, an activist and author, in his book ‘China’s Rise: Strength and Fragility’ stated that the creation of two-tiered labour system was facilitated by the hukousystem, a fairly ancient residency system which predates the 1949 revolution. In the early years of the Maoist regime the new working class in urban centres received certain job, housing and educational protections. In the post-Tiananmen era centres on the continuing role of the hukou system in dividing the working class. He rightly summarised that China has two dimension of capitalist development accumulation. Advanced foreign capital has invested enormous sum of money over the last thirty years initially in labour-intensive industries and more recently in capital-intensive ones. But China simultaneously treaded a path of autonomous accumulation.

From the very beginning, Chinese state enormously funded research and development, maintained indirect control over the private sector and systematically conducted reverse engineering to copy western technology to develop its own industries. But China’s backwardness and colonial legacy also made it possible to adopt a method of development with advanced capitalist ones. China reoriented its production within global capitalism in the 1980s and found a way to benefit from its colonial legacy. Britain controlled Hong Kong up until 1997, Portugal controlled Macau up to 1999 and the US continues to use Taiwan as a protectorate. China used Hong Kong for foreign currency and high technology to take advantage of its skilled labour force, Macau for smuggling goods to mainland China and Taiwan for capital investment and technology transfer, especially in the semiconductor industry. This ensured rapid growth of the Chinese provinces of Jiangsu, Fujian and Guangdong.

During the three decades of neoliberal phase, China became the second largest in terms of GDP, but in terms of GDP per capita, it was still middle-income countries. China’s dependent development nature was markedly visible in corporate functioning. During the first term of Trump in office of the US presidency, China was lagging far behind in technological front despite its policy drive of catching up to advanced capitalist power. For instance, Huawei mobile phone, a world brand, was developed not just by its own Chinese scientists, but more importantly by hiring four hundred Japanese scientists. When Trump imposed trade ban on China’s telecom company ZTE denying access to American-designed software and high-tech component with an accusation of violating trade sanction on Iran and North Korea, the company was on the verge of collapse overnight and China had to work-out a deal with Trump to save the company. These facts revealed the vulnerability of China’s technological dependence. In this backdrop, the left in the rest of the world had to recognise that China’s capitalism has a colonial legacy though China was overcoming this colonial burden to be a rising global power.

China’s economic modernisation and premodern political culture must give rise to cliques within the regime. In 2005, ICAC (Independent Commission Against Corruption) prosecuted Liu Jinbao, the head of the Bank of China in Hongkong. Beijing was trying hard to take control of ICAC which can be used by western imperialism to advance its agenda and on the other hand, Beijing’s move to take control will not serve the interest of the working class. Xi who belongs to a generation from old bureaucracy is a reactionary blue blood. Xi Jinping’s family had 23-million-pound worth real estate property in Hong Kong and Xi’s brother once owned two shell companies based in British virgin island and this is also called round “trip investment” to be recycled back to China.

Minqi Li, in an article in 2021, made an assessment on China’s position in capitalist world system based on data up to the period of 2018. His assessment was based on the data pertaining to return on China’s foreign investment for the period from 2012 to 2018, labour transfer and labour term of trade for the period from 1990 to 2017, comparative data between per capita GDP of world hierarchy for the period from 1870 to 1970 and 1990 to 2017, data on transfer of values etc and the position of China was evaluated based on World system theory.

“According to world system theory, the capitalist world system is divided into three structural positions: Core, Semi-periphery and Periphery. The core countries specialise in highly quasi-monopolistic and high profit production process, and the peripheral countries specialise in highly competitive and low-profit production process. Surplus labour is transferred from the peripheral producers to the core producers, resulting in unequal exchange and concentration of world wealth in the core. By comparison, semi-peripheral countries have a “relatively even mix” of core-like and periphery-like production process.”

Though he has drawn a general conclusion that, given the development of the globalised capitalist division of labour and complex interaction of trade and capital flow, it is difficult (if not impossible) in today’s world to be either a “100 percent” exploiter in its economic relations with the rest of the capitalist world system or “100 percent exploited, he described China as a semi-peripheral country as China transfers more surplus value to the core (historical imperialist countries) than it receives from the periphery. From this position, China can move up in the global income hierarchy to join the western core imperialist countries with divers’ consequences. The recent data of Harvard Business Review indicates the China’s rise towards this direction.

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Frontier
Vol 57, No. 26, Dec 22 - 28, 2024