China in turmoil

Fight Racism! Fight Imperialism! No 87 June 1989

China and the world have been shaken by the massive demonstrations in China. The death on 15 April of veteran Communist leader Hu Yaobang came close on the heels of the anniversary of the Tiananmen Incident of April 1976, a rally against the hated ‘Gang of Four’ which was suppressed with much bloodshed. It was closely followed by the 70th anniversary of the great anti-imperialist May 4 Movement of 1919, as well as 1 May, Labour Day, and the historic visit to China of Soviet leader Mikhail Gorbachev. The coming together of these important events allowed the memorial rallies for Hu Yaobang to develop quickly into massive demonstrations, as hundreds of thousands of people poured onto the streets of Beijing and other cities calling for democracy, a proper legal system and press freedom, denouncing corruption and demanding the resignation of China’s top leaders. As we prepare for publication, columns of troops have been turned back by the millions of demonstrators occupying Beijing, leaving the streets out of government control. With the loyalty of the police, army and much of the Party and state apparatus in doubt, China’s leaders face a severe crisis. Deep splits in the Party, Government and armed forces seem to be on the cards. The developing events in China are of enormous importance for the communist movement internationally. FRFI opens a discussion and debate with this article by JONATHAN COHEN

China is a socialist country  ̶  but it is one which remains very backward in its development of democracy and legality.

It is a feature of our imperialist era that socialist revolutions are occurring not in the advanced capitalist countries where the proletariat  ̶  the working class   ̶  is most numerous, but in oppressed countries where capitalism is relatively undeveloped and the working class, the guarantor of socialist democracy, is relatively small in number.

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China: no Shangri-la for capitalism

china communist party

The 19th Congress of the Chinese Communist Party, held from 19-24 October 2017, presented China as confident in its future and cast the country as playing a leading role in shaping the world ahead. China’s economic achievements since the 1949 revolution are considerable; it has lifted over 500 million of its people out of poverty and it has grown to having the world’s second biggest economy after that of the US; giant multinational corporations and banks now queue up to do business in China. However, just as China has embraced the world capitalist system, so it has rendered itself vulnerable to the crisis gripping this system, and shows of confidence belie creeping anxiety that the Chinese success story cannot last. Trevor Rayne reports.

President Xi Jinping told the Congress: ‘We must be confident in our path, in our theory and in our system as well as our culture.’ He proceeded, saying: ‘Socialism with Chinese characteristics has crossed the threshold into a new era. It offers a new option for other countries and nations who want to speed up their development while preserving their independence.’ This alternative model is intended as a contrast to the US and neo-liberalism. The confidence indicates a willingness to engage more closely with imperialist finance, to open China up to international banks and more foreign investment and to expand China’s own investments and reach abroad. The term ‘socialism with Chinese characteristics’ was introduced by the Party in 1982. The state consciously used capitalist methods of development and this has inevitably taken China down the capitalist road to development.

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Imperialist encirclement and the South China Sea dispute

On 21 November, US President Barack Obama said at an ASEAN (Association of Southeast Asian Nations) conference that countries in the region should cease the ‘reclamation, construction and militarisation of disputed areas’ in the South China Sea for the sake of ‘regional stability’. The dispute, which relates to the ownership of several island archipelagos in the area, has its roots in the aftermath of the Second World War but has intensified in recent years as a result oil exploration in the area and the crucial shipping lanes that run through the sea. Obama’s words were primarily directed at China’s building of military and civilian facilities in the Spratly Archipelago, a development which was challenged only the week before his speech by the over-flight of two armed B-52 bomber planes. China has laid claim to a large portion of the area as far south as the Malaysian coast, denoted by the ‘nine-dash line’ and based on its historical claims to many of the islands. However, these claims overlap with those made by other countries in the region, including Malaysia, the Philippines, Indonesia, Vietnam and Brunei.

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China stumbles

By the end of the first week of September 2015 the Shanghai stock market had fallen 40% since June, wiping $5 trillion off share prices. This is a sum greater than the entire German economy; what happens in China reverberates around the world. There is hardly a multinational corporation that is not tied up with China. On 24 August, named as Black Monday, as Shanghai’s shares dropped, $44bn was lost in two hours of London’s FTSE100 trading and New York’s Dow suffered its largest ever fall in a single day. Imperialism is seeking to deepen its penetration of China and the City of London is keen to embrace China into imperialist financial circles. Sections of the US ruling class are more wary and fear its weight as a potential rival. However, the integration of China into international capitalism is subjecting it to capitalism’s tendency towards crisis. Will the Chinese government enforce political controls to defend the state and try to stabilise the economy or will it yield to market liberalisation and imperialism? The Financial Times remarked: ‘The next stage for China’s economy is a conundrum. Its resolution will shape the world’ (2 September 2015). Trevor Rayne reports.

In November 2013 the Chinese Communist Party (CCP) pledged to ‘let the market play the decisive role in allocating resources’ while also saying that it would maintain ‘the leading role of the state-owned sector’. These are contradictory commitments. China’s four biggest banks are state-owned, and state-owned enterprises (SOEs) constitute 40% of China’s gross domestic product. Foreign capital wants more access to China’s financial markets and privatisation of the SOEs. The Chinese government is seeking World Trade Organisation market economy status; such status would make it more difficult for other countries to impose protectionist import restrictions on Chinese-made goods. The Chinese government’s interventions to stop the Shanghai stock market falling and reservations about privatising SOEs are presented by those who fear it as evidence that China should not be given market economy status.

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China rides the tiger

China stocks

US$3 trillion was wiped off the Shanghai and Shenzhen stock exchanges in June and first week of July 2015. The Shanghai exchange had risen 135% in a year and fell 30%. The Shenzhen exchange rose 150% and fell 37%. 11% of China’s 443 million households are reckoned to hold shares. The Chinese government encouraged people to gamble their savings on the stock markets: ‘4,000 [points on the Shanghai Corporate index] was just the beginning’, said the Chinese Communist Party newspaper People’s Daily in April. Dreams of quick and effortless money crashed into bitter recriminations: ‘I have lost two-thirds of my money…I really want it back and when I get it, I will never invest in the stock market again.’ A pensions expert at the Shanghai Institute of Finance and Law explained, ‘Old people often don’t understand economics. They are easily duped.’ The stock market crash demonstrates that China is not immune from the crisis of international capitalism and the credibility of the Communist Party and the Chinese state is now threatened.  

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