I doubt it. China saw what happened to the USSR. They’re unlikely to make the same mistakes. China is already integrated into the global market, some would say it’s indispensable. Regions inside China can’t be turned against each other in the same way as SSRs. And while Russia’s middle classes yearned for the living standards of the west, China’s middle classes have an equal or better quality of life than those in the west; it’s middle classes have no material reason to be disgruntled and ask for reforms.
The thing China has to watch out for is its banks, whose power is increasing. We’ll see if it fixes that problem. Still, as China’s imminent collapse is unlikely, it’s something the US will have to work towards in the long term. But every year that passes, China becomes stronger and more resilient while the US becomes weaker.
Maybe there’s some room for it but the US is also racing against climate change. We’re talking about a state that can’t organise its own domestic infrastructural preservation. Every year, the effects of climate change will be getting worse. But while China is preparing for it, the US is not. In ten years time, when Texas is snowed under, California in drought, Florida under water, and Arizona grid-less because the lines melted, too few people will have the attention to do Machiavellian politics with China. At the same time, the more the Chinese see what’s happening, the less likely they are to call for reforms.
One option is internal sabotage. But China has been keen on teaching Marxism and in setting up its institutions to make them harder to undermine than were the USSR’s central organs. Chinese liberals are allowed relatively free rein. Which means they aren’t hiding, making them easier to keep an eye on. I’ll be upset if I’m wrong but I don’t think Khrushchev or Gorbachov would be able to get near power in China.
Deng masterminded one of its greatest tricks: convincing the west that China was already turning capitalist for long enough to become a superpower. It’s a gift that keeps on giving, too, as many western liberals refuse to accept that China is still Marxist. This can only lead to a confused analysis, which will never be the basis of a sound counter-strategy.
Good question. It was something Michael Hudson wrote. Essentially, it’s to do with the way that China is financing local projects. IIRC provincial or regional authorities [The state government] could [print] money [and loan it to local governments] but China won’t allow it [doesn’t do that]. So [local governments] have to [raise finances, which ultimately come from] borrow[ing] from banks. This gives a certain leeway to a sector that is, let’s say, known to get up to shenanigans. Hudson warns that China could be taking a mis-step. It’s likely a subtler argument than I can explain [it was—see below]. I’ll try to find the piece [linked, below].
Edit: I got this slightly wrong but as I note that in the comment below with the link and a quote, I didn’t want to correct this comment and later readers to read the corrected version and think it was wrong. So I’ve amended it with strikethroughs and square brackets to show the changes. Old school editing, like.
So I got it slightly wrong. I think Michael Hudson is very good but his more informal talks aren’t always the clearest. That comes across in the following extract from an interview but it made sense after a couple of read throughs for me (maybe you’ll have more luck the first time):
Who has benefited the most from China’s boom?
[Interviewer]: Let’s talk about China’s debt problem again. Unlike the United States, China has been very cautious, some might say conservative, about expanding its debt. Although China may need more aggressive fiscal and monetary policies to boost the economy, especially now; and the central government’s debt is quite low (some local governments are facing debt risks). China once debated whether China should also engage in fiscal monetization, especially during the 2020 epidemic. But considering the risks, the government ultimately rejected the proposal. What do you think of China’s trade-off between risk prevention and economic stimulus?
Michael Hudson: There are two ways for governments to create money, printing paper money or creating digital money. The use of digital currency, the Chinese government is already doing.
In the West, the state allows private banks to create credit, and the wealthy create credit and lend it to the government. But China does not want to have an independent financial class, so the central government can start printing money; however, local governments in local cities and towns cannot.
So the question is, how do local governments finance spending? This is exactly the problem you mentioned that local governments are really facing. Since local governments at the provincial, municipal, and district levels cannot print money and issue bonds, they either go to the bank to borrow money or collect taxes, but the taxes are not enough, so local governments have adopted a financing model of selling land to real estate developers. This is one aspect of the housing and real estate issues facing China today.
I think there is a simpler solution, the central government is eligible to issue currency that it can loan to local governments for government-sanctioned social spending. In this way, there is no need to rely on land sales for financing.
In fact, local governments can use propaganda to say that we should do what the 19th-century Western classical economists wanted to do, so as to drive down land prices and house prices. Economists such as Adam Smith, John Stuart Mill, and Karl Marx argued that the government could tax the gains from land rents. You don’t want to tax laborers, industrial companies, but you can tax gains on land instead of the price increase of buildings on land.
In this way, people cannot go to the bank to borrow money to speculate on housing prices, because housing prices only reflect the cost of housing construction, and housing construction will not increase land rents.
The only thing that doesn’t want China doing this right now is the banking system. The bank told the government that instead of taxing the land, it would be better to sell it. Banks will lend to developers, and local governments will purchase land from local governments, so that local governments will be able to carry out construction.
However, more and more debts in China are accumulated in banks. In addition to developers, when residents invest more and more funds in purchasing houses, they must also borrow from banks and pay interest.
At this time we found that the banks will be stronger than the government, which is what the banks want. This is basically the core of the current conflict in China. Who profited from China’s prosperity and got richer and richer? Is it the Chinese people and the government, or the bankers and real estate developers? This is the biggest political issue in China this year.
I’m unsure what he means by ‘at this time’, whether this was a study done before the interview or just ‘today’ as in the era that we’re living in.
Edit: for an example of what I mean by unclear, take this quote:
Banks will lend to developers, and local governments will purchase land from local governments, so that local governments will be able to carry out construction.
I’m unsure if this is a misstatement and whether:
it should read that “Banks will lend to developers, and local [developers] will purchase land from local governments, so that local governments will be able to carry out construction”, or
local governments are buying and selling land to themselves, treating themselves as developers in order to make borrowing from the bank legal, perhaps, or
this is a complicated way of saying local governments are mortgaging their property, or
this is a complicated process whereby one local government borrows money from a bank as a ‘developer’ and purchases land from another local government, and vice versa, again perhaps as a legal loophole.
I’m genuinely ignorant on this: What makes China Marxist today? From my uneducated standpoint, they do seem to have a lot of the trappings of capitalism. What is their long term plan to advance communism (I’m assuming the current state of affairs is temporary and strategic)
Good question. First thing to note is that I’m no expert. I’ve just become increasingly curious and begun to try to understand the place. Second note: I’ll speak as if you have limited knowledge of Marxism for the benefit of other readers rather than assuming that of you personally.
This may seem pedantic but the answer depends what you mean by Marxism, communism, and capitalism. What counts as a capitalist state? What counts as a communist state? What does it mean to be governed by Marxists?
We call communism the real movement which abolishes the present state of things.
The present state is a class society of global capitalism. The only way to avoid that while it exists is by (extreme) isolationism. (Even then, does one really ‘avoid’ it? Western imperialists won’t leave you alone if you close the borders to them, so….) The only way to abolish global capitalism is world revolution, which takes time.
A revolution is a transformation in the mode of production. Given the interconnectedness of human society, I’d argue it’s impossible to have that revolution for as long as capitalism is the dominant political economy. Is it possible to share the world between socialism and a weaker capitalism? Time will tell. For now: capitalist social relations cannot be avoided.
The early stage of moving away from capitalism towards communism is called socialism. This socialism can be broken into several stages of ‘socialist construction’. Until Deng, China wasn’t quite isolationist but it went through two processes that made external relations difficult:
conducting a revolution and
starting the task of socialist construction.
The first was achieved. The landlords and imperialists were kicked out. The second process is well underway. China is in a stage of ‘primitive’ socialism. The CPC seems reluctant to claim too much.
–
Inviting capital inside China
The question is: where is China now i.e. where has it been since Deng’s reforms or the ‘opening up’? These reforms saw China open its borders to foreign capital and letting domestic capital develop. This is the point at which China began to gain, as you say, the ‘trappings of capitalism’.
Why did they do this? During the revolution and the early days of afterwards, China rapidly developed the relations of production (bye bye exploitative relations between foreign imperialists / local landlords and super exploited peasants). But its forces of production only developed so far.
Deng, realising something must be done, applied dialectical and historical materialism to the situation. There’s no such thing as poor socialism but when producing the means of subsistence (food, shelter, clothing, medicine, etc) requires lots of labour-hours because you don’t have machines, computers, reliable energy sources, etc, you simply cannot lift people’s standard of living very far.
The solution was ‘market’ reforms. Foreign capital would be given favourable conditions to invest and build factories, infrastructure, etc, in return for sharing intellectual property with China (the designs and knowledge for building everything).
–
Staying in charge
Since then, China has come to rival the ‘most advanced’ capitalist states in terms of research and development and has surpassed them in terms of productive capacity. This makes China well defended against sanctions. So much so that the US can cut Huawei off from chips and China will brush it off by catching up and making its own chips in a matter of months (if writing for a Chinese paper / a ~couple of~ years, if writing for a western paper).
Which is to say, Deng was right: with ‘capitalist’ development, China could advance more rapidly than without. Does this mean China ‘became’ capitalist?
–
What is a capitalist state?
A capitalist state is one in which ‘capital’ is at the top, as it is in liberal democracies (and fascist attempts at ethno-states). Marx and Engels:
the bourgeoisie has at last, since the establishment of Modern Industry and of the world market, conquered for itself, in the modern representative State, exclusive political sway. The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.
In e.g. France or Japan, it goes: capitalist class > state > working class.
Since opening up (after Xi’s anti-corruption drive, at least), the CPC has remained in charge of the country. In China, the executive—the government—is a ‘committee for managing the affairs of the whole…’ proletariat. According to its constitution:
Article 1 The People’s Republic of China is a socialist state under the people’s democratic dictatorship led by the working class and based on the alliance of workers and peasants.
The socialist system is the basic system of the People’s Republic of China. Disruption of the socialist system by any organization or individual is prohibited.
Article 2 All power in the People’s Republic of China belongs to the people.
The National People’s Congress and the local people’s congresses at various levels are the organs through which the people exercise state power.
The people administer State affairs and manage economic and cultural undertakings and social affairs through various channels and in various ways in accordance with the provisions of law.
It goes, working class > state > capitalist class. The workers control the party, the party controls the state, and the state controls the capitalists.
For evidence of this, we might look at high speed rail (HSR). As you might know if you live in any other capitalist country, affordable, efficient, well-maintained, wide-spreading public transport is not profitable enough for capitalists. They want us all to buy a personal vehicle. They want to tarmac and concrete over everything to build inefficient roads and car parks.
China can avoid the profit-motive trap because it’s run by Marxists who don’t much care for the profit motive, except as a tool for developing the country to prepare it for a higher, wealthier stage of socialism. Which does mean that capitalists aren’t allowed to sell cars and (I assume) lobby for building roads, etc. But their power is limited. They don’t have the power to shut down and torpedo public infrastructure projects as they do in capitalist states.
In Marxist theory, there are concepts of an economic base and a superstructure. These are connected but separate. The base ‘overdetermines’ the superstructure, meaning that although the superstructure is influential, it cannot, of itself, fundamentally change the base.
Law is often said to belong to the ‘superstructure’. China appears to have built and is continuing to build a socialist legal system. It is on the path and/or road to socialist ‘rule of law’ construction.
Roland Boer has explained this partly means abolishing the public/private distinction in law and governance, which is distinction is characteristic of capitalist law and governance. This is related to and part of China’s ‘democratic centralism’. Both are based on a dialectical materialist (read: Marxist) logic of ‘both this—and that’ rather than a bourgeois logic of ‘either-or or zero-sum’ (Boer, page 59 citing Engels, Dialectics of Nature).
The fact that these moves are possible and coherent suggests that China’s political economy is not capitalist even if it contains elements of capitalism. It would not be possible to achieve the above superstructural changes within a bourgeois, i.e. capitalist state because these changes fundamentally contradict the logic of capital, private property, liberal individualism, etc.
In addition, China has opened Schools of Marxism in its universities. As communists well know: the only thing it really takes to make revolutionaries is to teach them Marxism. That’s why it’s so difficult to achieve in the west. The bourgeois prevent and propagandise against it at every turn. In China they embrace it, encourage specialists to develop Chinese Marxism, and require students to study it.
…Marxism has an incomparable influence on contemporary Chinese politics, culture, and social life that no other humanities or social science disciplines can match.
–
Conclusion
In conclusion, your intuition is correct. There are capitalists in China, which is seen as a necessary step in developing socialism. It does not contradict core Marxist theory. The CPC keeps control of its capitalists by ensuring Marxist knowledge is widespread and maintaining a dictatorship of the proletariat. A higher stage of socialism will appear in time if China continues along its present trajectory and bourgeois social relations whither away.
I doubt it. China saw what happened to the USSR. They’re unlikely to make the same mistakes. China is already integrated into the global market, some would say it’s indispensable. Regions inside China can’t be turned against each other in the same way as SSRs. And while Russia’s middle classes yearned for the living standards of the west, China’s middle classes have an equal or better quality of life than those in the west; it’s middle classes have no material reason to be disgruntled and ask for reforms.
The thing China has to watch out for is its banks, whose power is increasing. We’ll see if it fixes that problem. Still, as China’s imminent collapse is unlikely, it’s something the US will have to work towards in the long term. But every year that passes, China becomes stronger and more resilient while the US becomes weaker.
Maybe there’s some room for it but the US is also racing against climate change. We’re talking about a state that can’t organise its own domestic infrastructural preservation. Every year, the effects of climate change will be getting worse. But while China is preparing for it, the US is not. In ten years time, when Texas is snowed under, California in drought, Florida under water, and Arizona grid-less because the lines melted, too few people will have the attention to do Machiavellian politics with China. At the same time, the more the Chinese see what’s happening, the less likely they are to call for reforms.
One option is internal sabotage. But China has been keen on teaching Marxism and in setting up its institutions to make them harder to undermine than were the USSR’s central organs. Chinese liberals are allowed relatively free rein. Which means they aren’t hiding, making them easier to keep an eye on. I’ll be upset if I’m wrong but I don’t think Khrushchev or Gorbachov would be able to get near power in China.
Deng masterminded one of its greatest tricks: convincing the west that China was already turning capitalist for long enough to become a superpower. It’s a gift that keeps on giving, too, as many western liberals refuse to accept that China is still Marxist. This can only lead to a confused analysis, which will never be the basis of a sound counter-strategy.
EDIT: This may be of interest: Carlos Martinez, Will China suffer the same fate as the Soviet Union?.
What do you mean? The biggest banks in China—indeed, among the world—are state-owned banks, including the PRC’s central bank, the Bank of China.
Good question. It was something Michael Hudson wrote. Essentially, it’s to do with the way that China is financing local projects.
IIRC provincial or regional authorities[The state government] could [print] money [and loan it to local governments] but Chinawon’t allow it[doesn’t do that]. So [local governments] have to [raise finances, which ultimately come from] borrow[ing] from banks. This gives a certain leeway to a sector that is, let’s say, known to get up to shenanigans. Hudson warns that China could be taking a mis-step. It’s likely a subtler argument than I can explain [it was—see below]. I’ll try to find the piece [linked, below].Edit: I got this slightly wrong but as I note that in the comment below with the link and a quote, I didn’t want to correct this comment and later readers to read the corrected version and think it was wrong. So I’ve amended it with strikethroughs and square brackets to show the changes. Old school editing, like.
I think I can understand now. Thanks for the clarification. If you find the piece, please notify me.
So I got it slightly wrong. I think Michael Hudson is very good but his more informal talks aren’t always the clearest. That comes across in the following extract from an interview but it made sense after a couple of read throughs for me (maybe you’ll have more luck the first time):
I’m unsure what he means by ‘at this time’, whether this was a study done before the interview or just ‘today’ as in the era that we’re living in.
Edit: for an example of what I mean by unclear, take this quote:
I’m unsure if this is a misstatement and whether:
Let me know if you have any thoughts on this!
I’m genuinely ignorant on this: What makes China Marxist today? From my uneducated standpoint, they do seem to have a lot of the trappings of capitalism. What is their long term plan to advance communism (I’m assuming the current state of affairs is temporary and strategic)
Good question. First thing to note is that I’m no expert. I’ve just become increasingly curious and begun to try to understand the place. Second note: I’ll speak as if you have limited knowledge of Marxism for the benefit of other readers rather than assuming that of you personally.
This may seem pedantic but the answer depends what you mean by Marxism, communism, and capitalism. What counts as a capitalist state? What counts as a communist state? What does it mean to be governed by Marxists?
What does it mean to be Marxist revolutionary?
Marx and Engels:
The present state is a class society of global capitalism. The only way to avoid that while it exists is by (extreme) isolationism. (Even then, does one really ‘avoid’ it? Western imperialists won’t leave you alone if you close the borders to them, so….) The only way to abolish global capitalism is world revolution, which takes time.
A revolution is a transformation in the mode of production. Given the interconnectedness of human society, I’d argue it’s impossible to have that revolution for as long as capitalism is the dominant political economy. Is it possible to share the world between socialism and a weaker capitalism? Time will tell. For now: capitalist social relations cannot be avoided.
The early stage of moving away from capitalism towards communism is called socialism. This socialism can be broken into several stages of ‘socialist construction’. Until Deng, China wasn’t quite isolationist but it went through two processes that made external relations difficult:
The first was achieved. The landlords and imperialists were kicked out. The second process is well underway. China is in a stage of ‘primitive’ socialism. The CPC seems reluctant to claim too much.
–
Inviting capital inside China
The question is: where is China now i.e. where has it been since Deng’s reforms or the ‘opening up’? These reforms saw China open its borders to foreign capital and letting domestic capital develop. This is the point at which China began to gain, as you say, the ‘trappings of capitalism’.
Why did they do this? During the revolution and the early days of afterwards, China rapidly developed the relations of production (bye bye exploitative relations between foreign imperialists / local landlords and super exploited peasants). But its forces of production only developed so far.
Deng, realising something must be done, applied dialectical and historical materialism to the situation. There’s no such thing as poor socialism but when producing the means of subsistence (food, shelter, clothing, medicine, etc) requires lots of labour-hours because you don’t have machines, computers, reliable energy sources, etc, you simply cannot lift people’s standard of living very far.
The solution was ‘market’ reforms. Foreign capital would be given favourable conditions to invest and build factories, infrastructure, etc, in return for sharing intellectual property with China (the designs and knowledge for building everything).
–
Staying in charge
Since then, China has come to rival the ‘most advanced’ capitalist states in terms of research and development and has surpassed them in terms of productive capacity. This makes China well defended against sanctions. So much so that the US can cut Huawei off from chips and China will brush it off by catching up and making its own chips in a matter of months (if writing for a Chinese paper / a ~couple of~ years, if writing for a western paper).
Which is to say, Deng was right: with ‘capitalist’ development, China could advance more rapidly than without. Does this mean China ‘became’ capitalist?
–
What is a capitalist state?
A capitalist state is one in which ‘capital’ is at the top, as it is in liberal democracies (and fascist attempts at ethno-states). Marx and Engels:
In e.g. France or Japan, it goes: capitalist class > state > working class.
Since opening up (after Xi’s anti-corruption drive, at least), the CPC has remained in charge of the country. In China, the executive—the government—is a ‘committee for managing the affairs of the whole…’ proletariat. According to its constitution:
It goes, working class > state > capitalist class. The workers control the party, the party controls the state, and the state controls the capitalists.
For evidence of this, we might look at high speed rail (HSR). As you might know if you live in any other capitalist country, affordable, efficient, well-maintained, wide-spreading public transport is not profitable enough for capitalists. They want us all to buy a personal vehicle. They want to tarmac and concrete over everything to build inefficient roads and car parks.
China can avoid the profit-motive trap because it’s run by Marxists who don’t much care for the profit motive, except as a tool for developing the country to prepare it for a higher, wealthier stage of socialism. Which does mean that capitalists aren’t allowed to sell cars and (I assume) lobby for building roads, etc. But their power is limited. They don’t have the power to shut down and torpedo public infrastructure projects as they do in capitalist states.
While the west gets ‘trickle down’ economics, China gets ‘[common prosperity]’(https://www.tandfonline.com/doi/full/10.1080/21598282.2022.2025561)'.
–
Superstructure
In Marxist theory, there are concepts of an economic base and a superstructure. These are connected but separate. The base ‘overdetermines’ the superstructure, meaning that although the superstructure is influential, it cannot, of itself, fundamentally change the base.
Law is often said to belong to the ‘superstructure’. China appears to have built and is continuing to build a socialist legal system. It is on the path and/or road to socialist ‘rule of law’ construction.
Roland Boer has explained this partly means abolishing the public/private distinction in law and governance, which is distinction is characteristic of capitalist law and governance. This is related to and part of China’s ‘democratic centralism’. Both are based on a dialectical materialist (read: Marxist) logic of ‘both this—and that’ rather than a bourgeois logic of ‘either-or or zero-sum’ (Boer, page 59 citing Engels, Dialectics of Nature).
The fact that these moves are possible and coherent suggests that China’s political economy is not capitalist even if it contains elements of capitalism. It would not be possible to achieve the above superstructural changes within a bourgeois, i.e. capitalist state because these changes fundamentally contradict the logic of capital, private property, liberal individualism, etc.
In addition, China has opened Schools of Marxism in its universities. As communists well know: the only thing it really takes to make revolutionaries is to teach them Marxism. That’s why it’s so difficult to achieve in the west. The bourgeois prevent and propagandise against it at every turn. In China they embrace it, encourage specialists to develop Chinese Marxism, and require students to study it.
The BBC isn’t a fan But it has been said that
–
Conclusion
In conclusion, your intuition is correct. There are capitalists in China, which is seen as a necessary step in developing socialism. It does not contradict core Marxist theory. The CPC keeps control of its capitalists by ensuring Marxist knowledge is widespread and maintaining a dictatorship of the proletariat. A higher stage of socialism will appear in time if China continues along its present trajectory and bourgeois social relations whither away.
–
Hopefully this answers your question.
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