CWI Summer School: China on the verge of social explosion

Inner-party struggles as repression tightened

CWI supporters from over 30 countries were attending a CWI Summer School in Belgium. As well as comrades from across western and eastern Europe and Russia, visitors were attending from the US and Latin America, Nigeria, Malaysia, Hong Kong and the Middle East.

Below, is a summary of a commission on China.

Introducing the commission on China, Vincent Kolo from Hong Kong drew attention to the crucial significance of developments in China for the world and for the CWI. What happens there is of vital importance to the economic growth of Brazil, Germany and Australia as well as much of Asia. Yet the country is teetering on an economic precipice. A recent IMF report has described China’s increasing ability to originate world shocks.

Most speakers in the commission who dealt with the question of the Chinese economy agreed that it is heading for a crash. Vincent described how the Chinese economic growth model is “inherently unstable” based as it is on the “most unprecedented over-capacity and over-investment that has ever been seen.”

This was starkly illustrated by a video shown at the start of the commission. A documentary crew visited one of the many sprawling and virtually empty new cities that have popped up all over China, with its equally empty shopping mall dubbed the ‘Not-so-great Mall of China’. Vincent described how there were 65 million empty apartments in China, enough to house 200 million people. Although empty, most have been purchased. However the owners in the vast majority of cases are speculators waiting to cash in on future property price rises by re-selling the properties. Different levels of the state have thrown fuel on this fire.

Much of the huge stimulus package injected into the economy in the wake of the 2008 world economic crisis and money borrowed by state-owned companies has been invested in property in a speculative manner, increasing the contradictions of the Chinese economy. It could delay the crisis but not postpone it.

Another aspect of this property bubble is the development of infrastructure for the purposes of speculation. Vincent said much local government revenue is derived from land sales. Loans from the central government are ploughed into infrastructure such as roads, high-speed railway projects, airports and so on to push up the price of the land improved by such projects. This land is then sold for a much higher price further inflating the bubble. The Railway Ministry alone has a debt equivalent to 4% of GDP which they already admit will never be repayable from the revenue generated by selling train tickets too expensive for all but the wealthy to buy.

Massive polarisation in society has gone hand in hand with China’s runaway growth. Vincent described how the past twenty years have seen a massive shift in the proportion of wages to capital as a component of GDP. He described these policies as neo-liberal because, despite the massive GDP growth, the working class had gained nothing. There are now 960,000 millionaires with a disposable income of more than ¥10 million ($1.3 million). Comrade Sally from Socialist Action in Hong Kong reported how, in spite of great wealth for some, even in Hong Kong 100,000 people live in spaces the size of half a bunk bed and 320,000 languish on waiting lists for public housing.

The dictatorship in China is barely able to keep a lid on unrest. In fear of the masses they have significantly beefed up the state security apparatus in recent years. The revolutionary example of the Middle East terrifies them. The Communist Party’s 80 million members give a certain base but it is not a homogenous organisation. Many recent recruits include students and businessmen, and at every level of the party, members are engaged in private business. Even at the highest level of the leadership there are divisions on which road China should travel down.

Train crash and mass protest

A revolutionary or pre-revolutionary situation could develop in a very rapid period of time. “China is on the edge of an explosion”, said Clare Doyle from the International Secretariat (IS). The potential for revolt against the regime was illustrated by mass outrage at the high speed train crash at Wenzhou, killing 40 and injuring 191. There were press reports of Chinese people angrily refusing to accept government lies – about lightning being the cause of the accident, for example. Twitter was buzzing with challenges to the official version of events. The masses clearly do not trust the government.

Officials in Zhejiang province have taken the unprecedented step of allowing a candle-lit procession to commemorate the victims, Vincent reported. They have done so to try and avoid themselves taking any of the blame and to deflect people’s anger towards Beijing. The alternative was this kind of protest developing from below anyway.

In Hong Kong, CWI members had taken part in a demonstration following the train crash. We raised the slogans “Solidarity with the victims”, “No to tofu construction” (a common description of the shoddy infrastructure projects undertaken in recent years) and “The people’s railway has been hijacked by the authorities and the capitalists”.

Protests about this crash have come on top of a continued growth in protests. There were 180,000 ‘mass incidents’ last year – double the amount seen in 2006 and a nine fold increase on 1994. The idea put forward by some commentators that China was more stable than other countries due to its rapid growth was “misleading”. The increased repression by the state to try and contain social unrest was noted as well as the increased impact on the left activists including CWI sympathisers. Hong Kong is the only part of China where we can campaign openly but what we have achieved so far is encouraging. The CWI comrades have to prepare for pre-revolutionary shocks that could hit Chinese society in the very near future.

The question of China’s relations abroad – imperialist or not – was raised by Meurig from Germany who also spoke of the way the Japanese state historically had managed to ‘soften’ inequalities in income between the classes. Pete Dickenson from England touched on the possibility of the regime administratively wiping out debts and letting the empty housing at affordable rents. “China is not governed by the rules of a capitalist system” he said. A comrade from the ex-USSR pointed to differences with how things developed when the Soviet Union collapsed. The Communist Party was wiped out in an instant and capitalism restored very rapidly, but with huge damage to the economy and the population.

Where is China going?

Peter Taaffe from the IS replied to the discussion. He described how the regime’s bungled handling of the train disaster at Wenzhou had exposed the fissures and divisions in the Communist Party. Open criticism by a government newspaper was a unique development indicating a break in the façade of the government. Already there is a ferocious struggle inside the party and the ruling ‘communist’ party could split as crises develop.

‘How far has China gone towards a stable capitalism?’ and ‘How long can the regime survive?’ These are two of the most important questions Peter addressed. Everything depends on events and, in particular, economic developments. Correctly estimating these processes depends on a correct assessment of the character of the Chinese regime. “The extent of state control determines the room for manoeuvre of the Chinese regime…if we don’t have a clear theoretical understanding we can make mistakes”.

Peter argued that China should be characterised as a state capitalist regime with unique characteristics. This should not be confused with the late Tony Cliff’s use of the term ‘state capitalism’ to describe the former USSR and Eastern Europe. The CWI described them differently – as ‘deformed workers’ states’. Because of his mistake, Cliff was unable to explain the restoration of capitalism that took place in 1991, let alone the major new features this gave to the world situation.

Developments will not go in a straight line. There can, under pressure, be a movement backwards, though not all the way to a state-owned planned economy. Referring to figures given by one of the Chinese comrades, Peter cited a Heritage Foundation report for the third quarter of 2010 which indicated an increase in the state sector to 57% compared with 44% earlier.

The prospects for the establishment of a ‘normal’ bourgeois regime in China have to be examined. In such a charged situation it would be hard to usher in a period of democracy, but, faced with mass movements, the regime could undoubtedly bend. There was no way that the general question of democracy would not come onto the agenda. It is not excluded that a period of unstable democracy could develop – unstable because such a concession would be fraught with difficulties for the regime.

The masses would be able to utilise democratic rights – freedom of organisation, a free press etc – to pursue their own class interests. The struggle of workers and poor peasants would develop onto a new level in such a situation. Concessions on these issues can open up cracks in the regime and in the state itself. Even the question of the break-up of China would be put on the agenda in view of the many unresolved regional and national questions. A strengthening of the present dictatorship cannot safeguard the survival of the present regime nor is there a prospect of a long-lasting stable capitalist democracy.

The present GDP per head in China is $5,000 – roughly equivalent to that of Angola. The potential for growth is still enormous. But the only way that the huge inequalities and conflicts in Chinese society today can be overcome is on the basis of genuine workers’ democracy, involving control over the state and a publicly-owned economy by elected representatives of the powerful working class and the rural poor in the world’s most populated country.

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