China’s Rise in the Context of Global Capitalism

The world-system is slowly changing. For the first time in capitalism’s history, the global economy’s centre of gravity is shifting away from the west – a process which is a result of Uneven and Combined Development (UCD). On the one hand, dominant states utilize imperialism to preserve existing uneven configurations of capitalist development which favour them. On the other, contender states accelerate development to contest imperial projects of dominant states. Such hot-house development is called combined development because it compresses multiple stages into shorter and more intense bursts.

Combined Development

Today, China is leading a process of combined development as part of a long transition to socialism. This consists of the two tasks of “catching up” and “doing something else”. While the former relates to the development of productive forces, the latter denotes its conscious subordination to socialist goals.

Consolidation of productive forces is necessary insofar that imperialism creates relations of dependency and structurally distorts an economy. Imperialism in the neoliberal era manifests itself in the form of globalization; i.e., the ever-tightening inter-locking of Third World nations in the predatory workings of global capital accumulation. Passive embeddedness into the global system of capital deforms domestic techno-economic structures and thereby limits the economic independence of developing countries.

Foreign companies are enclaves with no meaningful developmental effect on their host countries, while the enforcement of the export-oriented policies leads to the expansion of low wage, labor-intensive sectors. All these processes contribute to the creation of a disarticulated economy.  Disarticulated economies refer to underdeveloped nations where economic sectors are not closely interrelated. Hence, development in one sector is unable to stimulate development in the other sector. There exists a structural disarticulation between the structures of production and the structures of consumption. What is produced is not consumed and what is consumed is not produced. Rather, the economies are orientated outwards in a fashion that guarantees dependency and underdevelopment.

Development of productive forces is amalgamated with a number of statist-socialist tendencies to ensure that a careful and continuous advance toward socialism is always maintained. Nationalization of big industries and trade, modernization of agriculture, land reforms etc. contradictorily fuse the reproductive elements of capitalism with popular content. A strategy of active interventions is established to interdict the free appropriation of surplus or the free flow of goods in the economy, thereby rendering groups and individuals dependent on the state for the conduct of their economic activity. To sum up, “doing something else” comprises of the nonlinear disintegration and integration of discrete dimensions of capitalism wherein different economic logics interpenetrate to generate a tense totality of transitional states.

Transition Logic

In China, the Communist revolution gave rise to a form of transition logic where the task of developing capitalism was given to the proletariat instead of the bourgeoisie. As Mao Zedong explained:

Any revolution in a colony or semi-colony that is directed against imperialism, i.e., against the international bourgeoisie or international capitalism, no longer comes within the old category of the bourgeois-democratic world revolution, but within the new category…although its objective mission is to clear the path for the development of capitalism, it is no longer a revolution of the old type led by the bourgeoisie with the aim of establishing a capitalist society and a state under bourgeois dictatorship. It belongs to the new type of revolution led by the proletariat with the aim, in the first stage, of establishing a new-democratic society and a state under the joint dictatorship of all the revolutionary classes. Thus this revolution actually serves the purpose of clearing a still wider path for the development of socialism.

Corresponding more precisely to a vision of “state capitalism under the dictatorship of the proletariat”, Mao’s statement implied the traditional nature of capitalism was eliminated when the proletariat assumed control over the economy at the top level. At the Communist Party’s 11th Congress in 1922, Lenin said:

The state in this society is not ruled by the bourgeoisie, but by the proletariat…When we say “state” we mean ourselves, the proletariat, the vanguard of the working class. State capitalism is capitalism which we shall be able to restrain, and the limits of which we shall be able to fix. This state capitalism is connected with the state, and the state is the workers, the advanced section of the workers, the vanguard. We are the state.

Through the consistent circumscription of state capitalism, China has overcome dependency, all the while maintaining the possibilities of socialism. Through a controlled integration with the global system, China has succeeded in constructing a nationally unified modern industrial system. While manufacture exports have benefitted the centre, they have not been driven by cheap labor. This has been proved by the fact that export expansion has been achieved amid currency appreciation and wage rise, both of which necessitate sufficiently fast growth in labor productivity. Fast productivity growth, in turn, has been associated with the rapid growth in productive investment which runs counter to the stagnant, financialized economies of capitalist countries.

Between 2000 and 2018, China accounted for almost a quarter of the increase in world economic output, and almost half of the increase in all low- and middle-income economies. In the meantime, China accounted for 35% of the increase in industrial value added of the world and 56% in all developing economies.

China has made significant progress in some of the technologies that will lead the next industrial revolution. These technologies include robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, the Internet of Things, 3D printing and autonomous vehicles. A consequence is that US corporations may not control some of the leading sectors of a new industrial age, starting with 5G wireless telecommunications.

Rise in productive strength and technological sophistication has been made possible by the over-arching dominance of the Chinese state. State-owned enterprises and banks are central components of the country’s economy and constitute the foundational base of the Chinese Communist Party (CCP). As Xi Jinping has stated, “The Party’s leadership in state-owned enterprises is a major political principle, and that principle must be insisted on”. In opposition to the disinvestment of state sector equity and privatization of state sector assets at throwaway prices, China, in fact, experienced a recapitalization and strengthening of strategically important State Owned Enterprises (SOEs) in the 2000s.

USA’s Cold War against China

Alarmed by the fact that a non-capitalist country ruled by a Communist party-state will lead world growth, USA has unleashed a new cold war against China, attempting to impede its development. In November 2011 the US announced a strategic-economic pivot to Asia, and in 2018 the US national security strategy identified China (with Russia, Iran and North Korea) as the main threats to US “influence, interests, power and values”.

Power competition in an increasingly multipolar world became the primary focus of US national security, reflected in a strategy to contain China on multiple fronts: a trade war; restrictions on Chinese companies, especially in high technology sectors – examples include US restrictions on Huawei, the call by the US Congress for an embargo to wreck COMAC’s C919 and the hostility to Made in China 2025; US interference in Tibet, the East China Sea, the South China Sea, Xin Jiang, Hong Kong and, increasingly, Taiwan, with US-supported demands for international recognition.

Other aspects of the new cold war include US attempts to build exclusive relationships with Australia, New Zealand, Japan, South Korea, India and Indonesia; moves in the direction of a new World Trade Organization to set restrictions for supply-chain trade that protect the interests of oligopolies of Global North; and attempts to encircle and militarily threaten China. Tactics of subversion and implicit interventionism will keep increasing as cracks appear in USA’s imperialist clout and China emerges unscathed from pandemic-induced contradictions.

Yanis Iqbal is a student and freelance writer based in Aligarh, India. Read other articles by Yanis.