The Challenges Facing China

Published: 26/11/2020
Draft Topic for our ‘Transformation, a Manifesto for Democratic Socialism
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Here we examine the situation in China today and evaluate its prospects; look at whether China is really capitalist; answer the charges levelled against China by the capitalist media and politicians; & propose to replace the current top-down, bureaucratic model with a new system of Democratic Public Power.

China’s economic growth in the last 40 years has shattered all historical records. So too has its success in reducing poverty. Never have we seen so many people – 850 million – lifted out of poverty and deprivation in so short a time. If there were no other justification for China’s version of a socialist economy then this would be it.

Naturally, many people ask how China has achieved such an astounding outcome. Earlier in our Manifesto we answer this key question. In particular, we examine China’s great ‘reform and opening up’ policy. A policy that slowly emerged in the late 1970s after the death of Chairman Mao. We show how it directly traced its origins to Lenin and Bukharin’s New Economic Policy in the 1920s in the Soviet Union. A policy which was based on an alliance between the workers and the peasants. That sensibly sought to combine socialist planning and state ownership of the commanding heights, with private cultivation of the land, and the importation of foreign capital and technology. A policy that in the Soviet Union was tragically abandoned by Stalin in 1928 in his ultraleft war against the peasants and the cadres of his own communist party. But was then wisely picked up fifty years later by the centrist wing of the Chinese Communist Party led by Deng Xaioping. And shown to be a winning formula for successful socialist economic construction in a largely agricultural country.

To give some idea of the spectacular growth that China’s New Economic Policy has achieved in the last forty years we only have to compare it to the United States, still the world’s largest economy. In the years 1979-2019 China’s national output grew by an incredible 5000%. In the same period, the United States grew by only 750%. And at the current rate of growth, China will overtake the US as the biggest economy in the coming decade.

At one time, America was the foremost nation for construction. The speed and scale of its output of ships, planes and tanks during the Second World War was unprecedented. Then, in the post-war era when we thought of the United States we used to think of skyscrapers, bridges and motorways. Now that baton has been passed to China. Indeed, in just two years, 2011-12, China used more concrete than the US in the whole of the 20th Century! Today, it produces more steel than the next 20 countries combined.

The story of China’s meteoric economic rise is also a story of the phenomenal growth of the Chinese working class and its migration from the countryside to the city.  According to 2013 figures there are about 600 million workers in China compared to 300 million farmers. This is a dramatic turnaround for a country that was largely rural forty years ago. Within the overall total, there is an industrial workforce of 260 million. This compares to 131 million industrial workers in all the OECD countries combined. In China we are talking about the largest working class and the largest industrial proletariat on the planet. The gigantic size of the Chinese proletariat is reflected in the massive 302 million membership of the official All-China Federation of Trade Unions (ACFTU), the largest trade union in the world. 

The migration of Chinese people from the countryside to the city has been the fastest and biggest movement of people anywhere on earth. China’s urban population rose from 18% in 1978 to 61% in 2020. About 848 million people now live in the urban regions of China. That still leaves 552 million in the rural areas. This gigantic migration is continuing apace. By 2025, it is estimated that the urban population will reach nearly 1 billion. 

This inevitably poses a huge need for new housing. Living space has hugely expanded from three square metres per person in 1978 to about 30 square metres per person today. In the urban areas more than 80% own their own home with an even higher proportion in the rural areas. However, workers who migrate from the countryside to the towns face major housing problems. To address this, in the 2011-15 Five Year Plan 100 million were provided with low cost housing by the state. Although things are getting better, many migrant workers still have housing problems. But to compensate they often have a home and land back in their villages

The migrant workers are usually forced into working in the private sector or on the margins of economic life and suffer significantly lower living standards as a result. Through the Hukou residence control system they are often excluded from the educational and social services available to the original city residents. Local governments often lack the resources to handle the massive demand arising from large scale rural-urban migration. Improvements to this system are being made but they have a long way to go. This must be a top priority for China’s authorities.

As a consumer market, China is becoming the largest in the world. It sells the most cars. It is the only country with over 1 billion mobile phone users. And with more than twice as many internet users as the United States. Perhaps the most dramatic statistic can be found when we look at international tourism. As the chart below shows, not only are there more Chinese tourists travelling around the world than any other country, but they are spending far more abroad than any other national group.

Of course, a major factor in these incredible statistics is China’s massive 1.39 billion population, nearly a fifth of the world’s total. But large populations are no guarantee of economic preeminence. India has almost the same number of people, 1.38 billion, yet is only one fifth of the size of the Chinese economy.

Coronavirus Response
The advantage of China’s collective approach to its economic and social life has been dramatically demonstrated during this Coronavirus crisis. Unlike those neighbours – Japan, South Korea, Taiwan and New Zealand – whose response to Covid has been widely hailed, China was the first to face Covid-19. Nothing was known of the virus. What it was. How different it was from influenza. How infectious it was. Or how lethal.

As a result, mistakes by local Chinese authorities were made in the first month of discovery.And thus it was able to spread through Wuhan city, Hubei Province and then across China. Luckily for China’s neighbours, China was very prompt in reporting the new virus to international authorities, taking only three days to inform the World Health Organisation. This allowed the nearby countries to quickly suspend flights from China and prevent most cases crossing their borders. And to introduce test and tracing to identify and quarantine the relatively small number of cases that did arrive.

China, however, confronted a much bigger challenge. It was the first to face a mass outbreak of the virus. Once it realised how infectious and deadly the virus was, Instead of hesitating, or trying to prioritise business interests over the health of its people, China’s response was overwhelming and effective. In contrast to the slow and disastrous reaction to the virus in most of the world, China rapidly instituted a complete quarantine across the whole country. Rather than adopting the half-strategy of ‘flattening the curve’ as it became popularly known in most parts of the capitalist world where it was tried, China sought to completely defeat the virus. China did not try to slow down the transmission of the virus, but to stop it altogether. To achieve this, China organised a two-month complete lockdown to ensure that the virus could not continue to spread. To support this, it mobilised all of its resources including its community-level organisations to ensure that human-to-human contact outside the home was suspended. And that food and other services were delivered to households.

The excuse was made in the capitalist countries that China could only mount such a decisive, full quarantine because it was a dictatorship and its citizens were used to being ordered around. Yet, the real reason why a full Chinese-style quarantine was not implemented in the capitalist world was the desire of governments to keep sections of the economy going and through this to protect the profits of their backers. Thus, the virus was allowed to arrive in most countries because the governments there did not want to stop business travel and tourism. Then in the lockdowns measures, public transport was kept running and roads remained open so workers could keep going to offices, factories and construction sites. In this way, while the reproduction of the virus was significantly reduced, it was still allowed to continue circulating in the community. Only to resurge when the lockdown measures were lifted.

In fact, the response of most populations to the initial half-lockdowns was much better than expected by the politicians and the elites they represent. The public accepted staying at home for months. Millions volunteered to help deliver groceries, help neighbours etc. Yet, the option of a full quarantine was excluded from debate in the media and never tried. The alternative half-quarantines produced most of the pain with too little of the gain. Inevitably, the failure of the half-lockdowns has discredited quarantines and stoked widespread opposition and scepticism. And helped the virus spread once again. Thus, the attempt to limit the lockdowns in most of the capitalist world in order to protect the economy dragged out the crisis and caused even more economic damage.
The same indecision and incompetence affected the treatment given to Covid cases. Contrary to the irrational practices adopted elsewhere, China did not send sick people to shelter at home where they could get even sicker and spread the virus to other family members. Rather, they immediately isolated them at medical test centres where they could confirm the virus and immediately treat them for falling oxygen levels and other complications. This helped them minimise the fatalities.

In contrast to the results in Europe, the US, Latin America and India, China was able to bring the virus under complete control. With the largest population of any country, China suffered less than 5000 casualties compared to over 1 million in the rest of the world.

Of course, China continues to be vulnerable from infection from travellers returning home from abroad. To contain this risk, China has also instituted the biggest and most rapid test and trace programme anywhere. In a recent case, an outbreak of 12 cases caused the city involved to test all ten million of its citizens in just five days. In this way, the virus has no chance to revive in a second wave.

Despite the mistakes made at the beginning of the outbreak in China, and the sacrifices that the population had to undergo for two months at the outset of the epidemic, Chinese people are very satisfied with the decisive and comprehensive way that their government has dealt with the virus. Dahlia, a German research agency, found that 95% of Chinese think their government did a great job in handling the pandemic. Compare this to the high levels of dissatisfaction among most European countries and the US on the same issue.

Ironically, China’s decisive health strategy has also helped its economy. By eradicating the virus quickly rather than allowing it to continue to circulate and later resurge, economic losses were greatly reduced. China is now the only economy to show growth while most of the capitalist economies are suffering massive falls in output. This is likely to accelerate China’s rise to the number one spot globally.

Even when it comes to a vaccine for the coronavirus, China is showing the way forward. It’s vaccine research and testing is well advanced. And its willingness to supply it at cost to the world rather than trying to profit out of it, could be a model for vaccines for the future. China should pledge to put big resources into vaccine research from now on. Before this outbreak, too little vaccine research was being undertaken because it was not viewed as profitable by the drug companies. Thus virtually no resources have been allocated to producing a permanent influenza vaccine that could prevent the half million deaths it causes globally. In many cases, research is not even regarded as a priority because infectious diseases are mainly found in the poorer countries. Thus, one million die from malaria each year. Vaccine research for the world could be a way for China to turn this negative Coronavirus experience to a positive. And for China to become a global super health centre.

Can China Maintain its Future Growth?
There is continuous speculation in the media about China’s high growth rate. There is an assumption that China’s growth forecasts are just guesstimates that may or may not turn out to be accurate. Certainly in the capitalist economies growth forecasts are more often wrong than right. This is understandable given the unplanned nature of these economies and the ups and downs of their business cycles – the booms and slumps that have been an integral part of capitalism throughout its 250 year history. But China has a planned economy and does not suffer from an internal business cycle. Therefore, China’s high rate of growth is not a result of some kind of magic or trickery with statistics. It is a direct result of its extraordinary high rate of investment.

For example, between 1982 and 2011 China’s level of investment averaged 36.9% of GDP. This actually increased to 40% in the period from 2004 until today. China’s growth rates are directly linked to this level of investment, and the efficiency of the investment. Given that the Chinese government sets the level of investment in its plan, and controls this public investment through government bodies, it is able to determine and foresee much of the rate of growth in the economy. Indeed, it builds a considerable safety margin into its forecasts. Thus, its projections tend to be relatively accurate compared to the chaotic capitalist economies.

Little of this is understood or accepted in the West. Again and again they have been predicting that the Chinese economy is about to fail only to be embarrassingly proved wrong. As the socialist economist John Ross put it: “One leading capitalist economist or economic agency after another have made fools of themselves predicting a coming collapse. This is because they are applying capitalist yardsticks and substituting wish fulfilment for sober analysis.1

Access to finance is a key component for investment. In the past, control of private capital lay in the capitalist centres of New York, London, Paris and Frankfurt. However, this is fast changing. China’s state banks have now become the biggest in the world. In 2000 the top four banks were Citigroup, Bank of America, HSBC Holdings and JP Morgan-Chase – three US and 1 UK bank. By 2020 this had become transformed with China holding all top four slots: Industrial Commercial Bank of China, China Construction Bank, Agricultural Bank of China and the Bank of China.

The same process is happening in the stock markets. Just this year, Chinese finance and insurance giant Ant Finance held the largest Initial Public Offering in history. It was launched on the Shanghai and Hong Kong Stock Exchanges rather than the New York stock market. Something that was highly unlikely only three years ago. Moreover, China now accounts for 27 percent of global venture capital, vital for the commercialisation of emerging technologies.

Chinese Debt
Another area for regular capitalist media criticism concerns China’s debt levels. We are constantly told that China’s debt is out of hand and will inevitably bring its economy down. But such predictions have been made for the last two decades without outcome.

Absurdly, these comments on China’s financial arrears are coming from capitalist countries awash with debt. For example, the United States with only one quarter of China’s population has four times its level of debt. It is only the fact that the dollar is the world’s reserve currency that is allowing the US to carry this level of debt without going into crisis. But for how long will the dollar continue to play this role?

Furthermore, the advanced capitalist countries have allowed their central banks to continue to keep on buying up debt through the policy of Quantitative Easing, and thereby pump in trillions of dollars into their economies. The unbelievable level of world debt has now reached $277 trillion dollars which amounts to 365% of world GDP. An unprecedented and dangerous level has only dramatically increased during the Coronavirus crisis.

China on the other hand is in a much better situation. For one thing, it has a massive foreign exchange reserve surplus of $3 trillion. In addition, its debts are mainly internal with only 16% owed internationally. This compares with the United Kingdom with 287% of its debt owed externally. Or the United States with 122% of its debt owed to foreign institutions. Ironically, China is America’s largest creditor with Washington owing Beijing between $1.5-2 trillion!

China also has an exceptional high rate of domestic savings which provides stability for its loans. Moreover, it can handle its debts because they mainly arise from real investment that help increase the economy rather than spent on speculation such as propping up the stock markets. And China’s rate of profit is relatively high which allows for a greater level of borrowing.

Most importantly, the Chinese government owns and controls its banks. This gives the government the ability to step in when needed and reorganise the financial sector and clear out its debts. In the capitalist economies it is the other way round. The banks control the governments. The difference was graphically demonstrated during the Great Economic Recession that broke out in 2008-9. The major capitalist banks around the world faced collapse and forced their governments to save them. But did they repay them in kind? No chance. After the banks were rescued they were given massive support in the hope and expectation that they would pass on their good fortune to the small and medium-sized businesses that were suffering in the crisis. Instead of doing so they just used these generous public funds to restore their balance sheets and reward their shareholders and directors. Even now, the US economy has not recovered back to the 2007 pre-crisis level. The opposite has happened in China. To avoid being dragged down by the capitalist crisis, Beijing launched a major public investment programme which built much-needed infrastructure, advanced the country and boosted the economy which is now dramatically bigger than in 2007.

Importance of Innovation
As we explained in our earlier Manifesto Topic on ‘Socialism and the Soviet Union’, the failure of the USSR to successfully prioritise civilian innovation and integrate it into its economy was a major factor in its failure to compete on the world market. China is determined not to make the same mistake.

In 2017, President Xi declared that innovation was the strategic force needed to promote China’s development, as well as the strategic underpinning to build a more modern economy: “We will promote basic research in applied sciences, to increase our achievements in science and technology projects, prioritizing innovation that generates key technologies, that break technological boundaries and modernize technological engineering; in short, that breaks technological paradigms”. 2

China has grown its research and development spending rapidly since 2000, at an average of 18 percent annually compared to the US where R & D spending has grown by only 4 percent.

This has only been accelerated by the ‘Made in China 2025’ strategy that is now in full force. This aims to raise investment in technology to 2.5% of annual GDP and to establish China as the world leader in the production of technological goods and services. In particular, to focus on new technologies in the fields of; numerical and robotic control tools; aerospace equipment; ocean engineering equipment and high-tech chips; railway equipment; energy savings and new sources of energy; electrical equipment; new materials; biomedicine and medical equipment; and agricultural machinery.

To this end, China has installed the highest number of high speed trains in the world; entered the passenger aircraft industry; encouraged the production of over 50% of global solar panels and electric cars; and installed 400,000 robots, far more than any other country. Likewise, China is the biggest investor in artificial intelligence.

A central part of China’s plan is to increase local content in technological products to 40% by 2020 and 70% by 2025, while still remaining within the World Trade Organisation’s guidelines – not to substitute Chinese for foreign technology by means of import bans or other trade restrictions, but by sheer force of superior technical excellence. To back up this drive for innovation, China has massively ramped up its investment in further education in science and engineering. It now has 4.6 million graduates in science and technology while the United States has only one-eighth that amount.

China could do even better if it was to open up its innovation process to its citizens along the lines we outline in our earlier topic ‘Democratic Public Innovation’.

Is China Stealing Technology?
A common accusation levelled against China is that it is advancing its economy by ‘industrial scale’ theft of technology from foreign companies. No doubt this was a feature of China’s past development, just as it was for all developing countries including the United States in its development phase. But copying or theft of technology is fast becoming a thing of the past. As the example of Huawei shows, Chinese companies are now often the ones with the leading technologies. This is backed up by statistics on the filing of patent applications. According to the World Intellectual Property Organization, of approximately 12 million patent applications made in 2018, 5.7 million were Chinese. Indeed, China now applies for more patents than the US, the European Union and Japan put together!

The same applies to legal protection for patents in China. Contrary to the impression conveyed by the international media, legal patent protection in China is now well catered for and the process is much quicker than it is anywhere else. Appeals being held in specialised intellectual property courts with the record of success by foreign companies being close to 100%.

The Five Year Plan
China has been drawing up five-year policy plans since 1953. It has been described as “China’s secret weapon to ensure stable development.” 3

The next Five Year Plan, China’s 14th, is currently being discussed for commencement in 2021. The Five Year Plan provides an overall direction for China’s development, sets overall targets and mobilises economic and social resources to achieve them. As such it provides a reliable guide for enterprises and individuals both in the state and private sectors. It is the main driver of China’s forward development and central to its success over its capitalist competitors: “The five-year plan is also one of the great achievements and characteristics of CPC governance as it maintains the consistency of policymaking and combines the superiority of socialist society with the market economy”. 4

Comparing China’s planned economy to the USA’s chaotic and short-termist approach, one western economist remarked that while China is making five-year plans for the next generation, Americans are planning only for the next election.

In the 13th Five Year Plan that is just finishing more than 60 million new jobs were created in urban areas, and 55 million lifted out of poverty in rural areas. Major expansion was also made in welfare provision so that China now has the world’s largest social security system, including basic medical insurance for the whole population and basic old-age insurance for nearly 1 billion citizens.

For the new Plan, the Chinese leaders have acknowledged that the drive for maximum increases in output should no longer be the central target. That the aim should be for qualitative rather than quantitative growth. A significant factor in this is that the pressure on Party leaders to continuously create tens of millions of jobs per year is lessening in line with the falling working age population. Thus, there has been no official growth target so far included in this Plan. However, unofficially the expectation is for the growth rate to be around 5% per year. This will allow China to double its economy by 2035, if not earlier.

The new Five Year Plan will also be released under the shadow of the Cold War that has been launched against China by the United States. The US is clearly trying to slow down or even halt China’s technological progress. To this end, sanctions and other measures are being taken to prevent China purchasing various technological resources on the world market such as microchips. To overcome this, the Chinese leadership are taking steps to reduce China’s dependency on foreign technology and increase its self-sufficiency. And to balance its economy more towards domestic capacity and homegrown innovation. Such steps will form an important part of the new Plan.

Another core element of the next Five Year Plan is action on the environment. The last Plan saw major success in reducing the problem of atmospheric pollution that has plagued many Chinese cities. According to PollutionWatch, air pollution in Chinese cities has fallen by 50% since 2013. Images of smogs in Beijing and elsewhere have all but disappeared. Likewise with China’s waterways – industrial water pollution has fallen which has significantly helped increase tourism. But much more progress has still to be achieved especially in regard to the use of coal and soil pollution.

Recent Five Year Plans have succeeded in establishing China as the leading country for producing solar panels and electric vehicles. In some cities all buses and taxis are now electric. Moreover, China has committed itself to becoming carbon neutral by 2060 and the new Five Year Plan will include steps in this direction.

A new aspect in the new Plan is that for the first time it has been opened up to public input – over one million suggestions have been received. Additionally, symposiums on the Plan have been held all over the country for specialist groups to allow them to comment and contribute.

Looking further ahead, this new Five Year Plan is being put forward as part of a 2035 Vision. This is a recognition that while five year planning is greatly superior to the short-termism of the capitalist countries, the technological, social and environmental challenges facing China demand even longer term planning efforts.

Is China Capitalist?
It is all too easy with all the market and consumer trappings that are on view in modern day China to assume that it is capitalist. But to really understand the nature of China’s economy and society we have to see it in its historical context. How it has evolved from the Soviet model. Where it is going now. What are the behind-the-scenes mechanisms that are directing its forward movement. In other words, we have to understand China’s political economy.

Unlike many commentators on the Left we do not view China as a capitalist country. Rather we see it as a hybrid society in which the socialistic forms – the Communist Party-controlled state; the planned economy; the state-owned banks, land and enterprises – dominate the commanding heights of the economy and policy making. The smaller private capitalist sector operates within these boundaries and must follow the guidelines and regulations laid down for it.

As a result of this dominant role played by the socialistic economic forms, China does not experience the usual contradictions of capitalism such as the endemic problem of a falling rate of profit which eventually causes declining investment and cyclical upturns and recessions. The preponderance of public investment in China combined with its planning process has allowed it to bypass capitalism’s booms and slumps. For this reason, China does not suffer from capitalism’s chaotic and unplanned development which results in massive inefficiency and dislocation. It is this which explains why China has been able to have steady and continuous growth over the last forty years.

China has a stock of public sector assets worth 150% of annual GDP. This compares with most major capitalist economies which have less than 50% of GDP in public assets. Moreover, reflecting the dominant role of state-owned enterprises in China there is nearly three times as much stock of public productive assets to private capitalist sector assets. Compare this to the US and the UK where public assets are less than 50% of private assets. The same public sector dominant role is shown in investment with China’s public investment to GDP at around 16% compared to 3-4% in the US and the UK.

On the other side, there is no doubt that the private sector is playing an increasing role in the Chinese economy in recent years. But this can be easily overestimated especially if one is mainly looking at the highly visible retail sector, China’s stock exchanges and so on. As Michael Roberts, the well-known Marxist economist and online blogger explains with regard to China: “There has been a significant expansion of privately-owned companies, both foreign and domestic over the last 30 years, with the establishment of a stock market and other financial institutions. But the vast majority of employment and investment is undertaken by publicly-owned companies or by institutions that are under the direction and control of the Communist party. The biggest part of China’s world-beating industry is not foreign-owned multinationals, but Chinese state-owned enterprises.5

Clearly, China is far from the form of socialist society we would want. But the undoubted faults and limitations of China’s system do not mean therefore that it is a capitalist society. A more realistic understanding of these economic labels must first begin by recognising that there are different kinds of ‘capitalism’ – primitive capitalism, developmental capitalism, advanced capitalism, dictatorial capitalism, democratic capitalism, and so on. All of which reflect the particular level of economic development, history and subsequent events in each country in which capitalism exists.

In the same way, why would we expect ‘socialism’ not to appear in various guises that also reflect the particular societies in which it arose, and the level of production it has reached? The Chinese accept this and still describe themselves as being in the ‘Primary Stage of Socialism’.

As we have explained earlier in this Manifesto, democratic socialism will only really emerge in an automated economy of abundance. A society where all the basic needs of humanity have been met and people can choose what activities to spend their time on. This is not a utopian vision but a realisable outcome given the current developments in material science, renewable energy, robots and artificial intelligence. But such a future society will take a long time and many struggles worldwide to achieve. It will not suddenly appear ready-made.

Capitalism had to develop side by side with feudalism, and even slavery, before it was able to replace them. It cohabited with these rival systems over many centuries. Sometimes peacefully, but more often not.

The same with democratic socialism. Any country embarking on the socialist road will need to deal with the existing capitalist world and to make compromises with it along the way. And to face inevitable conflicts until such time as the democratic socialist model becomes the dominant format globally.

Underlying the Left view that China is capitalist is a conception of socialism as some kind of utopian system which China obviously does not match up to. Socialism here is seen as a semi-perfect society. And anything short of this must be a form of capitalism.But just as capitalism went through various phases of development, China will take many generations to reach a level where it has the potential to abolish inequality, exploitation and alienation. And thus to proudly call itself a democratic socialist society.

How To Escape Backwardness?
The dilemma of how to move towards socialism in a poor and backward society presented itself starkly in China after the 1949 Revolution. In a society which had only recently abolished feudalism and landlordism, how could China be expected to bypass completely the economic processes that had made capitalism so successful? To somehow ignore and leap over the use of markets, private ownership of land, and the growth of small private and medium-sized enterprises. The steps that had been so essential in helping capitalism to increase the productive forces and leave its feudalist roots behind. How could a poor, populous society like China become an advanced socialist society in a few quick steps? Yet this is what Mao called for in his Great Leap Forward and then in his Cultural Revolution. Both campaigns failed miserably and in doing so dramatically set back the course of China’s development.

This was the lesson that the Chinese leadership learned and implemented once Mao had died and the ultra-left wing of the party was defeated. They realised that they had no choice but to unleash the forces of the market in the countryside if they were to give the peasants the necessary incentive to increase agricultural production and feed Chinese society. And then to lay the basis for the growth of light industry.

Likewise with the problem of technical backwardness. In a China with very limited financial resources, incentives or technological knowhow, how would it be possible to develop successfully without interacting with the far more advanced capitalist forces abroad? Without opening up to competition from international companies, importing their technology, integrating with them in joint venture companies, and utilising their capital. How else could China possibly catch up? Or to compete and in time defeat its capitalist rivals in the world market?

‘Keeping to the Socialist Road’
But such interaction doesn’t require a reversion to a capitalist system in China. Or the abandonment of the process of building a socialist society. As Deng Xiaoping, the Communist Party leader who steered the reform process after Mao explained: “Our general principles are that we should keep to the socialist road… An invigorated domestic economy will help promote socialism without affecting its essence. As for the practice of absorbing foreign funds, it is a supplementary means of developing the productive forces, and we need not worry that it will undermine the socialist system… our socialist state apparatus can safeguard the socialist system. And from the economic point of view, our socialist economy already has a solid basis in industry, agriculture, commerce and other sectors.
No matter to what degree we open up to the outside world and admit foreign capital, its relative magnitude will be small and it can’t affect our system of socialist public ownership of the means of production… Of course, this will bring some decadent capitalist influences into China. We are aware of this possibility; it’s nothing to be afraid of… We intend to acquire advanced technology, science and management skills to serve our socialist production.6

As Deng correctly anticipated, the hybrid mix of socialist and capitalist economic forms that developed in the Chinese experiment was bound to cause significant contradictions and conflicts.

On one side, the growth of a significant layer of wealthy capitalists in China began to create a faction in society that wanted to take the reforms much further in the direction of a restoration of capitalism. Even gaining support within a section of the ruling Communist Party. This tendency was greatly assisted by the rise of globalisation and neo-liberal ideology in the 1975-2008 period. And further strengthened in the wake of China’s entry into the World Trade Organisation in 2000. The signs of such a process became especially apparent in the period 2000-2007. This was the time when the Chinese constitution was amended to incorporate the principle of the protection of private property.

On the other side, a large section of Chinese society had a direct interest in defending the dominant socialist elements of the Chinese system. These included a majority within the Communist Party; the state and local government; the publicly-owned industries; the public sector agencies and public services. In practical terms many sections of the officials depended on these institutions for their continued existence. Such forces were very aware of the dangers of a capitalist restoration. They had seen the disastrous outcome of the reintroduction of capitalism in the Soviet Union and the dramatic collapse of the Soviet economy and society that it had caused. Reflecting this, from 2007 onwards we began to see a shift back towards the socialist side within Chinese Communist Party and government circles.

This shift was dramatically accelerated by the Great Economic Recession in the capitalist economies in 2008. Chinese authorities responded with a massive state stimulus package which successfully cushioned China from the effects of the global crisis. And in the process strengthened the public sector. The contrast between the deep downturn in the capitalist world with the continuing high growth of the Chinese economy decisively tipped the balance in China back to the Left. It gave the socialist elements much greater confidence in their policies and future. And this was reflected in the emergence of a more left-wing leader in the shape of President Xi Jinping.

Accordingly, in his first speech as General Secretary in November 2012, Xi Jinping insisted that: “Only socialism can save China, and only Chinese socialism can lead our country to development.” 7

Xi laid out his thinking thus: “For a fairly long time yet, socialism in its primary stage will exist alongside a more productive and developed capitalist system. In this long period of cooperation and conflict, socialism must learn from the boons that capitalism has brought to civilization. We must face the reality that people will use the strengths of developed, Western countries to denounce our country’s socialist development. Here we must have a great strategic determination, resolutely rejecting all false arguments that we should abandon socialism. We must consciously correct the various ideas that do not accord with our current stage. Most importantly, we must concentrate our efforts on bettering our own affairs, continually broadening our comprehensive national power, improving the lives of our people, building a socialism that is superior to capitalism, and laying the foundation for a future where we will win the initiative and have the dominant position.8

How the World Sees China
While many on the Left believe that China’s system is a form of capitalism this is not a view shared by the majority of people around the world. To them this appears to be a very strange characterisation of a country which describes itself as ‘socialist’ and is dominated by a Communist Party of nearly a hundred million members. Where students have to join the appropriate communist youth movement, wear communist clothing, learn revolutionary songs, chant communist slogans and study communist ideas. Thus in China, 130 million 6-13 year-olds join the Young Pioneers whose motto is “To fight for the cause of communism: Be ready! Always Ready!” Or the 110 million 14-28 year olds who move up into the Communist Youth League and march to the anthem: “Glorious! Communist Youth League of China. Mother named us with communism.” Or for those who go on to university and are required there to undertake serious study of marxism-leninism in order to graduate. This is all very strange behaviour for a so-called capitalist country!

Can China really be capitalist when its very Constitution* boldly declares “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.” A Constitution which clearly asserts that: “The State-owned economy, namely, the socialist economy under ownership by the whole people, is the leading force in the national economy.”? A society that glorifies its revolutionary socialist history and celebrates Marx, Engels and Lenin as its theoretical guides. And proclaims marxism-leninism as the official doctrine of the state.

In this debate over whether China is a form of capitalism or a form of socialism it is obvious to the vast majority of people across the world that China represents a very different system to capitalism. There is no need to dream up some artificial theoretical evaluation that flies in the face of the facts that everyone can see. As the popular expression goes: ‘If it walks like a duck, and quacks like a duck, then maybe it’s a duck!’

Nor do we have to go by how China describes itself. Let’s look at how its foremost critics define it.

Mike Pompeo, the US Secretary of State, addressed the question in July 2020: “We have to keep in mind that the CCP regime is a Marxist-Leninist regime. General Secretary Xi Jinping is a true believer in a bankrupt totalitarian ideology. It’s this ideology that informs his decades-long desire for global hegemony of Chinese communism. America can no longer ignore the fundamental political and ideological differences between our countries, just as the CCP has never ignored them.” 9

In this way, the neo-conservative wing of the US capitalists and their allies around the world correctly see the struggle against China as the continuation of an ideological conflict between capitalism and socialism.

A month earlier Robert C. O’Brien, US National Security Advisor, gave an equally clear outline of how US imperialism now views the Chinese system: “For decades, conventional wisdom in both U.S. political parties, the business community, academia, and media, has held that it was only a matter of time before China would become more liberal, first economically and, then, politically. The more we opened our markets to China, the thinking went, the more we invested capital in China, the more we trained PRC bureaucrats, scientists, engineers, and even military officers, the more China would become like us… As China grew richer and stronger, we believed, the Chinese Communist Party would liberalize to meet the rising democratic aspirations of its people. This was a bold, quintessentially American idea, born of our innate optimism and by the experience of our triumph over Soviet Communism. Unfortunately, it turned out to be very naïve. We could not have been more wrong—and this miscalculation is the greatest failure of American foreign policy since the 1930s. How did we make such a mistake? How did we fail to understand the nature of the Chinese Communist Party? The answer is simple: because we did not pay heed to the CCP’s ideology. Instead of listening to what CCP leaders were saying and reading what they wrote in their key documents, we closed our ears and our eyes. We believed what we wanted to believe – that the Party members were communist in name only. Let us be clear, the Chinese Communist Party is a Marxist-Leninist organization.10

Here we see how seriously the neo-conservative capitalists take the issue of China. They see it as an existential question. One that is even more of a threat to their system than that posed by the Soviet Bloc which while being a military superpower never threatened to defeat capitalism in the world market.

It is true that there is a section of capitalists internationally that take a softer line and favour cooperation with China, often for business reasons. Or in the persisting hope of persuading the Chinese leadership to move in a more capitalist direction. But these are increasingly in a minority both economically and politically. Post-Trump America may turn out to be less crude in its methods and propaganda against China, but the core direction of policy continues – China must be contained!

Despite this growing movement of capitalist political forces against China and the ideological terms in which it is being increasingly viewed, a section of the Left continue to pose the conflict as just another struggle between conflicting capitalist classes. Some on the Left even argue that the Communist leaders in China are capitalists who are maintaining all of this communist and socialist propaganda as some kind of “left mask”. But are we really supposed to believe that capitalists need to pretend to be socialists and communists, praise marxism-leninism and espouse the dictatorship of the proletariat? To pose the question is to show how absurd this idea is.

Missing a Great Opportunity
One of the downsides of this negative attitude of many on the Left towards China is their acceptance of much of the capitalist propaganda against it. Especially the means by which the capitalist media try to explain away China’s incredible economic success in terms of unfair competition, theft of technology and so on. Anything to avoid admitting the real reasons for China’s rise: its improved planning process, use of public investment, embrace of the importance of innovation, and state ownership of the commanding heights. All of these ensure that China’s ambitious plans are effective and implemented on time. Socialist economic forms that are proving greatly superior to the unplanned, chaotic and ineffective performance of the capitalist economies.

The Left could and should be trumpeting China’s unprecedented success in expanding the productive forces and raising living standards. And highlighting the socialist methods through which it has achieved these outcomes. Indeed, the Left should be celebrating a world where the leading capitalist countries are fast declining and being replaced by a system using socialist economic methods to expand and prosper.

Certainly, this was the past hopes of the Chinese Communist Party leadership. In an interview between Deng Xiaoping and Tanzanian leader Julius Nyere in 1985, Deng outlined his hopes for China’s new course:
Our reform is an experiment not only for China but also for the rest of the world. We believe the experiment will succeed. If it does, our experience may be useful to the cause of world socialism and to other developing countries… and will place China in the front rank of nations. When we reach that goal, we shall not only have blazed a new path for the peoples of the Third World, who represent three quarters of the world population, but also – and this is even more important – shall have demonstrated to mankind that socialism is the only path and that it is superior to capitalism.11

Certainly, China’s success is beginning to undermine the assumptions of capitalist economics and capitalist propaganda. It shows that an alternative path for development exists. Not surprisingly, significant sections of society, especially in the poorer countries, are now beginning to look to China for answers to their growing problems. They naturally ask the question: how is China achieving this fantastic success? And how can their own countries reproduce it? This process can only accelerate as China’s rise continues and it becomes the dominant economy in the world. This opens up the great potential for socialist economic policies to become highly popular and credible in the coming decades.

On the other side of the coin, if those sections of the Left who see China as a new form of capitalism are correct then a depressing and dystopian future opens up for humanity. If a new form of capitalism has really arisen that is willing to fully embrace planning, massive public investment and state intervention, then it has the prospect of overcoming many of capitalism’s contradictions. If a new form of capitalism has truly arrived that is willing to raise living standards and abolish poverty, while transforming people’s lives through advanced technology, why would most people be interested in a socialist alternative? To pose such strange questions is only to show how bizarre the idea is that China is some new form of capitalism.

That doesn’t mean that China represents the form of socialism that we want to end up with. In reality, China is a form of bureaucratic state socialism where decisions are taken at the top by the leading bodies of the Party and the state and the people are expected to then accept them. Clearly, China can develop a far better system for running its society. We will look at some ideas on this later in this paper.

The Campaign Against China
US President Donald Trump’s trade war against China did not come out of the blue. Nor was it dreamed up in his empty head. In fact, it was the previous President Barak Obama and his Secretary of State, Hillary Clinton, who began this campaign against China’s rising influence. In 2012 they launched a China containment policy entitled ‘Pivot to Asia’.

Although this containment policy is often dressed up in terms of defending democracy and human rights. Or for preserving the security of the US and its allies. The real reasons for the policy is to defend the hegemonic power of the United States and the dominance of capitalism globally. To this end, it looks like the US and its allies are too late. The undermining by China of the economic position of the US in the world economy has already taken place. This shift is dramatically portrayed in the following image:

This chart shows how China has reversed the balance of international trading power and is now the main trading partner of most countries globally. China is now the first or second trading partner of more than 120 countries. The US and its allies well understand that if this process is allowed to continue China will come to dominate the world economically and then politically.

This explains Trump’s trade war. But this economic war will not succeed as trade with the US only represents 2% of Chinese GDP. Indeed, contrary to what many think, the importance of exports to the Chinese economy is declining, having fallen from 25% to 17% in recent years. Thus, over 80% of the Chinese economy revolves around its internal market. So trade wars wont stop China.

Ironically, despite Trump’s tariffs and restrictions against Chinese exports, the trade deficit between the US and China has actually grown in the last two years, not fallen. And looking ahead, American financial services, which is the one area where the US has a big surplus with China, is likely to see a rapid fall as China’s financial institutions continue their inexorable rise.

The same is true with many of the measures that Trump’s administration has been taking against China on new technology, such as banning the sale of microchips and so on. All made in the spurious name of protecting national security. These restrictions have turned out to be very ill-judged as the US government began to realise how much damage this was going to do to the sales and profits of its own technology companies. And how they were only forcing China to develop a rival chip producing industry which would in due course further strengthen Chinese technology. Now, Trump’s administration has been forced to lift some of these restrictions with Huawei now allowed to buy American semi-conductors again. Even the banning of the highly popular Chinese online video site TikTok has now been delayed and put on the back burner.

Looking more broadly, China, as the world’s largest manufacturing and trading nation, lies at the heart of the highly integrated supply chains that tie global production together. As such it is proving well-nigh impossible to exclude it without inflicting serious damage on the profits of the multinational capitalist companies.

Yes, some companies have shifted production in recent years from China to other Asian countries such as Vietnam, Thailand etc. But these have tended to be for low value products where cheap labour is a necessity for profitable manufacture. China has long anticipated such developments and its main focus is on switching over to higher quality and higher value production. Such production is staying in China in order to maintain access to the rapid and sophisticated technical infrastructure and logistics that the producers can only find there. And to take advantage of the Chinese market which in one sector after another is becoming the largest in the world.

China’s Belt and Road Initiative
In 2013 President Xi Jinping announced the Belt and Road Initiative, China’s ambitious programme to help build infrastructure and industrial capacity across Asia and beyond. And through this to link China to Europe, the Middle East, Africa and now Latin America. To help build this new ‘Silk Road’ investments of $2.5 trillion have been made available. So far more than 100 counties have signed up to the BRI with 40 countries and international organizations entering into Cooperation Agreements to take advantage of it.

For China, the Belt and Road Initiative achieves a number of goals. For one it will greatly expand Chinese trade with its BRI partners which already stands at 3 trillion dollars. Plus, it uses up China’s spare construction capacity and utilises their extensive expertise in road, train, tunnel, bridge and airport building.

For China’s BRI partners it opens up the starting point for a new international economic and political order. “The BRI… is an exploration of a new model of global cooperation and governance, which not only seeks the development and prosperity of the world economy but also proposes a more just and reasonable system of global governance.12 This is clearly understood by the US and its allies and is yet one more reason for their growing determination to contain China before it is too late.

An accusation made against China is that its Belt and Road initiative is a form of imperialism. But this accusation doesn’t stand up to investigation. The traditional western model of colonialism and imperialism was for companies to seize land and resources backed up national military forces which imposed their claims. And to then use local peoples as cheap labour to extract the maximum profit. Where infrastructure was built, it was usually designed to develop each colony separately and connect them to the colonial centres. This is why there is virtually no transport across Africa which could have helped develop trade within each region and the continent as a whole.

Even the latest versions of neo-imperialism are usually based on multinational companies buying land and concessions cheaply and operating them with minimum benefit to the local countries they are based in. Taxes are regularly evaded and little invested in developing services for the native populations. Even where locals own their own land the multinationals pay them a pittance for their produce, and reap big profits from the high prices they charge to consumers in the richer countries.

In contrast, China’s approach is based on contracts that bring concrete benefits to the countries that are working with it. Thus, in exchange for minerals and other resources, China is helping its partner countries build railways, roads and airports. In Africa, for example, where 70% of roads are unpaved and many become impassable in bad weather, China has helped build ports and railway lines in East Africa which is making an East African regional economic zone a reality. Similarly, it is helping to build both a cross-Africa highway and a West coast motorway which will ensure continuous transportation for the first time between many of Africa’s main population centres. And take weeks off the time currently needed to move products around the continent.

China is also encouraging its BRI partners to form special economic zones where local industrial bases can begin to develop. Ethiopia, China’s closest partner in Africa is reaping the benefit with growth rates in excess of 10% a year, the best in the continent. China is also assisting developing countries to build facilities that process their raw materials locally into finished products rather than allowing the lion’s share of added value be enjoyed elsewhere. This is hardly the actions of an imperialist nation seeking to suck the lifeblood out of poor societies.

In fact, China is simply attempting to export its own successful model of infrastructure building and independent economic development to countries across the world that need it. And expecting that the increased economic activity thus generated in these countries will lead to rising trade between them and China.

Debt-Traps?
A major charge made against China’s Belt and Road Initiative by the United States and its allies is over the finances involved. They accuse China of lending large sums to its BRI partners for all these projects in order to create debt traps and turn them into dependent semi-colonies. These charges are rich coming from the advanced countries that deliberately sold the developing world high interest loans in the 1980s and 90s. And when they couldn’t repay them, they impoverished these countries by imposing privatisation and severe cuts in public services as part of ‘Structural Adjustment Programmes’.

Today, most of the poorer developing countries are seen as too high risk to attract capitalist investment. Only China is willing to lend them money for development. And does so on long term schedules and at relatively low rates. This is why these governments are happy to work with China and ignore the hostile propaganda being levelled against it.

Where countries have not been able to repay their loans on schedule to China, in almost every case China has shown a willingness to reschedule and renegotiate them on reasonable terms. The reason – it is not driven by commercial short-term concerns or by impatient private lenders. But is looking to build a long-term relationship based on continuously expanding trade and cooperation.

Much has been made of one particular case – China’s supposed swapping of debt in Sri Lanka for a long term lease on Hambantota, a new port that China had helped to build. The accusation is that China is now able to use it as a military port which is part of their aim to use its BRI partners to dominate the world. In fact, this whole story is a myth made up by the capitalist media. The port is not now owned by China but still owned by Sri Lanka and the security of the port is in the hands of the Sri Lankan government and navy. A long-term lease of 70% of the port was sold to a Chinese company but not as a ‘swap for debt’ deal. It was a commercial deal, with the $1.12 billion purchase price used by Sri Lanka to help make short term debt repayments on high interest dollar loans it had earlier taken out on the international money market. Thus far from selling part of its port to help pay off a loan to China it was to pay off loans to European and North American banks!

Ironically, China has been mocked for building the Hambantota port as a white elephant in the middle of nowhere with no prospect of viability. Yet China is building for the long term. Already contracts are beginning to arrive which are making the future of the port more viable.

More generally, debts to China in its partner developing countries make up only a fraction of their borrowings. For example, only 17% of the debts of its African partners are to China. The big majority of debts in the developing world are still with the West and at relatively high interest rates which continue to suck their resources away from desperately needed development. Yet nothing of this said by the capitalist media in their campaign against China.

Of course, not everything is perfect in China’s relationship with the developing world. One issue revolves around local employment. Complaints have been made that Chinese companies mainly employ their own people for their projects and therefore the people are not benefiting from these projects or skills being transferred. While there are some projects where local people have been fully involved, there are undoubtedly examples where they have not. Naturally, the Chinese state companies building these infrastructure projects will want to bring with them their construction expertise which is now the best in the world. In this way they can guarantee that the projects will be of the necessary quality and completed on budget and on time.

Similarly, local governments don’t want to see shoddy projects which are unfinished or fail. They have had too many such experiences in the past. Their main priority is with the long-term economic growth and benefits that this new infrastructure will open up for their economies rather than the short-term employment the actual construction will deliver. But there is a balance to be reached here. And there is no reason why China can’t insist that Chinese companies include a greater level of local employment in their deals abroad.

Likewise, China depends very much on its local partner governments. If they choose to use China’s loans corruptly or to continue to oppress their people then the original purpose of the loans for raising capacity and living standards will fail.

Another concern is with the behaviour of private Chinese companies. There are a number of reports of these companies riding roughshod over the interests of local people in developing countries. Being so far from Beijing, no doubt they feel that they can get away with all kinds of anti-social and exploitative activity.

China can’t wash its hands of its responsibility in such cases. It needs to develop a code of conduct for its companies operating abroad and enforce it rigorously. Or it will alienate the local populations and ruin its efforts to build strong and fruitful relationships there.

Foreign policy & Internationalism
Capitalism is based on competition between and exploitation of individuals and nations. If it is to mean anything, Socialism must be based on co-operation and sharing between people and nations. On a true policy of internationalism.

Given that Socialism is the official guiding principle of the People’s Republic of China, internationalism must be a key focus of Chinese government policy. To this end, China follows an official policy of peaceful coexistence and non-interference in the affairs of foreign governments. This is good because the people of each country have the right to determine their own future free from foreign domination and direction. It also contrasts with the approach of the rich capitalist countries who regularly try to overthrow the governments of countries they disapprove of or feel are threatening their interests. Usually they do so in the name of human rights and/or preserving democracy although all too often they end up installing corrupt oppressive dictators.

To overcome the capitalist approach to foreign policy, China argues for a new international economic and political order based on the ‘Five Principles of Peaceful Coexistence’. These principles agreed in negotiations with India back in the mid 1950s, are as follows: “1) mutual respect for each other’s territorial integrity and sovereignty; 2) mutual non-aggression; 3) mutual non-interference in each other’s internal affairs; 4) equality and cooperation for mutual benefit; 5) peaceful coexistence.” 13

This is a fine approach in theory but it doesn’t take into account the undeniable fact that capitalism is not willing to allow progressive governments to thrive, never mind socialistic ones. Capitalism and socialism may coexist side by side for a period but inevitably capitalism will seek to destroy socialism as we have seen in the past. And now see in the emerging cold war by the US and its allies against China.

After Mao died, China adopted a policy of keeping its ideological “light under a bushel”. Thus, China followed Deng Xaioping’s advice about being modest: “‘To observe and analyze calmly, to secure our position, to deal with issues with confidence, to hide our capabilities and wait for the right moment, to be good at keeping a low profile, never lead a claim, to carry out operations of modest nature.” 14

But times and the balance of power in the world has changed. President Xi Jinping now correctly talks of the Chinese model and offers it as a possible example for other nations to follow. As such, a policy of non-interference should not stop China from clearly explaining the basis of its success and offering to help other countries learn from its experience. As China becomes even more successful, it is inevitable that its economic model will become more popular in the poorer countries and even in some of the more advanced ones too. Towards this end, China is now training officials from many developing countries in a very different model of economic development through state-led growth. China is also inviting representatives from the main political parties in many countries to visit China and attend international conferences and events where they can share ideas. And learn from the Chinese experience.

However, many other Chinese officials including on CGTV, China’s important 24-hour English television channel, are still reluctant to properly explain or promote China’s economic model of planning, public investment and public ownership. As a result most people around the world have no understanding of China’s economic model or why China is succeeding. They are being left to the mercies of the capitalist media with all their outdated and false stories of Chinese cheap labour, theft of technology and unfair government support.

To make matters worse, these fainthearted Chinese officials and commentators incorrectly argue that China’s experience is unique and won’t necessarily work elsewhere. But this line is not fooling anyone. Certainly not China’s enemies who fully understand that China’s system is a threat to theirs. That the more China gets stronger and richer the more other countries will want to emulate it. And the more it will fatally undermine the capitalist model. After all, if China is already being attacked by capitalist politicians for wanting to export its socialistic model around the world, it might as well do it and gain the benefits.

In the battle for public relations, China regularly fails to match the efforts of the United States and its allies. Chinese official statements come across in a very wooden and stilted form. Often adopting a high-handed tone. For example, the reply of Hua Chunying, Chinese Foreign Ministry Spokesperson and Director-General of the Department of Information, to the important speech made against China by US Secretary of State, Mike Pompeo, in July 2020 took entirely the wrong tone: “Pompeo’s speech at the Richard Nixon Presidential Library suggests that he wants to present himself as the John Foster Dulles of the 21st century, launching a new crusade against China in a globalized world. What he is doing is as futile as an ant trying to shake a tree.15

The arrogant implication here is that China is the “tree” and the US is the “ant”. Not the response that was needed. Nor did it answer any of America’s charges.

Sometimes the official Chinese reaction to criticism verges into threats. In an exchange over Hong Kong in November 2020, Chinese Foreign Ministry spokesperson, Zhao Lijian, challenged the ‘Five Eyes’ intelligence alliance of the US, Canada, UK, Australia and New Zealand: “No matter if they have five eyes or 10 eyes, if they dare to harm China’s sovereignty, security and development interests, they should beware of their eyes being poked and blinded.16

Clearly, there is an important battle over China’s record taking place in international public opinion. In this propaganda war, China needs to come out with an effective public relations strategy based on real internationalism if it really wants to defeat this wave of hostile capitalist propaganda. Nor can this information battle be left up to Chinese government officials. It needs progressive people across the world to join the fray to ensure that the lies and slanders against China are exposed. And the good things that China is achieving are highlighted and better understood.

Arms & Reactionary Regimes
A significant contradiction in China’s policy of non-interference is its willingness to supply arms to reactionary regimes. These weapons are inevitably going to be used in internal or external conflicts. And often end up in the hands of combatants in other countries.

How can this be compatible with China’s policy of peaceful coexistence and non-interference? Certainly, anyone on the other end of such weapons will not consider their sale to their enemies as “peaceful” or “non-interference”. If China really wants to achieve peace and co-existence then it must cease supplying arms abroad while leading a massive international campaign against the arms trade. In this context, China should demand that the US scale back its military for matching reductions on the Chinese side. Among other benefits, this will clearly expose the massive imbalance in arms between the US and China, along with all this overblown propaganda against so-called Chinese aggression.

China’s Relationship with its Neighbours
Another subject on which the capitalist media is constantly attacking China is over its relationships with its surrounding countries. However, it is not generally known that since the Revolution of 1949, China has settled 17 out of the 23 outstanding centuries-old territorial disputes with its neighbouring nations. In these settlements it made generous concessions which resulted in its neighbours receiving more than 50% of the land in question.

However, China still faces a number of unresolved land and sea border disputes. Contrary to the existing international rules on land and sea borders which are based on rival nations asserting their interests, China should openly champion a new world order based on the socialist international values of cooperation, sharing, assistance, and partnership. Within this frame of reference, China needs to publicly reach out to the peoples of its border countries where it has outstanding disputes and show a willingness to make concessions, share resources, and cooperate in joint development. This is fully in line with its Belt and Road Initiative. And is the best way to move towards resolution of these disputes and to undermine the ongoing capitalist propaganda that China has adopted an aggressive foreigh policy stance in the region.

India & Bhutan
Unlike many of China’s other neighbours, India (and Bhutan, India’s small satellite state) have not sought to settle their border disputes with Beijing. This has led to conflict including the 1962 China-india border war.

More recently, a violent skirmish in the Himalayas led to the loss of life on both sides. On the Indian side 20 soldiers died, the majority caused by the collapse of a road. The Indian authorities made great publicity out of the fatalities and the funerals in order to stir up public animosity to China. This is part of Modi’s racist approach to politics. In contrast, China did not give any information about its own casualties in an effort to minimise public outrage and racist reaction at home. In fact, the Chinese government pursues a strong policy against racial conflict and division in society which is one of the main reasons it banned Facebook for being unwilling to remove anti-islamic sites put up after the many Uygur terrorist attacks in China in the 2013-2016 period.

On the other hand, China has approached the conflict in the Galwan Valley in a too aggressive and militaristic fashion, just as India has. This area high in the mountains is uninhabited and of little economic or strategic value. However, the conflict between the Chinese and Indian forces over it has caused a major rift between the two countries and a massive shift in Indian public opinion against China. This has provided the excuse the Indian government wanted to take economic sanctions against China, withdrawing from joint projects and stopping the sales of various products, use of computer apps etc. This has all played into Modi and the US strategy of isolating China. Such conflict with India is not at all in China’s interests.

Since the conflict a Disengagement Plan has been agreed. It includes the dismantling of new construction made since April and the withdrawal of military equipment in the disputed areas. No patrolling activity will take place along the Line of Actual Control. China will pull back from a disputed observation post. This agreement is designed to cool down the conflict. But the damage to China’s image among the Indian population will take much longer to repair.

Instead, China needs to be willing to go further in its approach towards India and offer major concessions as part of a well-publicised campaign offering cooperation and sharing of resources in the disputed areas. It needs to go well beyond the usual cautious diplomatic language and appeal directly to the Indian public so that they know that China greatly regrets what happened and genuinely wants to take steps to resolve the issues involved.

India may rebut such an approach as it now suits Modi to look for reasons for conflict with China, which it sees as a serious competitor. That is why it now seeks an alliance with the United States. But it is important that the offer is clearly made by China in order to lay down a marker for a future change of government in India.

Of course, there is no reason why India should not also see the United States as an equally formidable competitor. Recent trade actions by America bear this out. Indeed, the US has no interest in seeing India become a major economic power and the Indian masses brought out of poverty. This would just create another competitor for US goods and services and further accelerate America’s decline. On the contrary, India would gain far more by joining forces with China and fully participating in the Belt and Road Initiative. The latter would help unite India with its surrounding countries through the building of various road, rail, power and telecommunications links.

In the short-term, in order to reduce the constant danger of further clashes on the borders between China and India, China should suggest the formation of a demilitarized zone in the same form that exists between North and South Korea. This would prevent Chinese and Indian forces from coming into physical contact with all the potential conflict this implies.

South China Sea
In recent years, China has strongly asserted its historical right to sovereignty over the South China Sea. In doing so it has come up against conflicting claims from the bordering countries: Vietnam, Malaysia and the Philippines. Using its superior naval forces, China has prevented the operation of traditional fishing boats from its neighbours and started to create and expand atolls into islands on which it is building airfields, docks and other facilities. Irrespective of the historical justifications involved, China should not be approaching these questions in a national way or enforcing its claims by means of military strength. Instead, China should be proposing ways for it to share sovereignty and resources with its neighbours and offering its massive infrastructure resources and expertise in order to help develop the maritime region. Such partnership would undercut the efforts of the United States and European navies to use this issue against China and remove their justification for regular provocative naval patrols through the area.

China’s Internal Disputes

Taiwan
After the 1949 Revolution the right-wing nationalist forces under Chiang Kai-shek retreated to the island of Taiwan which they continue to laughingly call the ‘Republic of China’. Since then, the island has greatly developed economically and now has a population of 24 million. There still remains a small native population but 95% are Han Chinese and Mandarin is the main language. So the potential for reintegration with the mainland remains not only the ideal course but a highly viable option. Ironically, the governments on both sides favour integration between the island and the mainland but only on the basis that the other side adopt their system. However, in recent times there is a movement in Taiwan for independence from China. This has been unofficially encouraged by the United States, who have been increasingly supplying Taiwan with sophisticated military equipment. The US regularly patrols the island by sea and air which China naturally regards as provocative moves against it.

China is naturally very unhappy about this militarisation of the island and possible moves towards independence. Its response has been to threaten military action. To fire warning missiles over the island and mount military exercises based on a possible invasion. On the other hand, President Xi Jinping has called for the “peaceful reunification” 17 of the island into China. This is clearly sending contradictory signals to the Taiwanese people and internationally. After all, peaceful reunification is hardly likely to come about in an atmosphere of military threats.

Indeed, this is a counterproductive strategy which just plays into the hands of China’s enemies and provides further propaganda for the opponents of integration with the mainland. Logically, China should stop issuing military threats and make clear to the people of Taiwan that it is their right to decide on integration without fear from any side. In the meantime, China should rely on future advances in economic and social conditions on the mainland to convince the Taiwanese of the benefits of reunification.

Hong Kong
The relationship between Hong Kong and mainland China is another area of conflict which the capitalist media is amplifying in order to discredit China. We have examined the history and issues involved in the Hong Kong dispute in some detail in our article ‘Hong Kong – the Real Story Behind the Protests’.
Among our conclusions we recognised that foreign intervention designed to damage China has become a major factor in the conflict. Accordingly, we demanded that the US, UK etc. stop interfering in Hong Kong and stop trying to use its citizens as pawns in their rivalry with China.

On the other hand, China needs to operate with full transparency. The way that they rushed their new Security Law for Hong Kong through the Chinese People’s Congress without prior consultation was not the right approach. China should be using its powerful position to expose the past colonial role and racism of the British in Hong Kong and the elite they have left behind. To argue against HK independence from China and for greater economic integration with the mainland. For the improvement of living standards in Hong Kong that would result from joint development with Macau and Shenzen in the Guangdong regional Bay Area project. A project that would bring well paid manufacturing jobs to a Hong Kong suffering from rising unemployment, poverty and an increasing housing crisis.

China should launch a major public inquiry into the links between the US and UK intelligence agencies with the Hong Kong protest leaders. Likewise, they should ban large donations to political parties and take other measures to cut the HK tycoons down to size and remove their influence in local politics.

China urgently needs to end private ownership of the media and social media in Hong Kong and replace it with democratic and accountable alternatives. Above all, Hong Kong needs a real participatory democracy not a billionaires democracy version of it. A real democracy from which China can learn lessons and apply them to the rest of the country.

Xinjiang & the Uyghur Muslims
One of the current avalanche of accusations against China is over its treatment of ethnic minorities. In particular, China is accused of oppressing the Uyghur Muslims in its western region of Xinjiang. Among the many charges, China is supposed to be imprisoning millions of Uyghurs; sterilising the women; suppressing their language and religion; and forcing them into slave labour.

We will be forgiven for questioning these reports in the capitalist media which are very much like past western-based propaganda campaigns. Campaigns aimed at demonising political enemies as part of ‘regime change’ operations. After all these lies by politicians and their echoes in the media justifying sanctions, coups and wars in the Middle East, in Africa and Latin America, we just don’t believe them anymore. All their deceitful talk about protecting human rights and upholding democracy should no longer be taken seriously by left-wing minded people or even liberals. And the facts they report about abuse of human rights should be treated with the greatest suspicion and distrust.

 It is all too easy for the neo-conservatives in America and its allies to orchestrate this propaganda war against China by focusing on a far-off and little known area in the middle of the Asian landmass. Levelling lurid accusations against China in an area that few have visited or really know anything about.

In this case, one’s sceptical antennae immediately rise when all the reports conveniently remain silent on the underlying issue that began this story. As any objective account would acknowledge, the problem in the Xinjiang region revolves around a long-running secessionist movement which seeks to break the region away from China. And to create a new country called East Turkestan. In time, this movement, calling itself the East Turkestan Islamic Party (ETIM), became greatly affected by the development of political islam in neighbouring Afghanistan, with Uygur militants later being encouraged and trained by Al-Qaeda in terroristic methods. Now their aim is to create a new nation based on Sharia (fundamental Islam).

These ETIM militants have been launching terror attacks against local Chinese government targets as far back as 1992. But in 2013 the attacks reached a higher level of intensity and took the form of horrific attacks on individual Han Chinese civilians across China. Yet the current media criticisms of China’s treatment of the Uygurs repeatedly fail to mention this key background to the situation.

The response of Chinese authorities to these terror attacks has been a combination of security measures – clampdowns, arrests and surveillance – with attempts to re-educate local people away from islamic fundamentalism. Accompanied with steps to economically develop the region which is China’s poorest.

Inevitably, some actions taken by the Chinese government to deal with the situation will have been heavy-handed and overreaching. Just as they have been in Western responses to terrorist attacks. More importantly, the local Uygur muslim community, the overwhelming majority of which oppose the terrorist attacks, should have been fully involved in deciding on the measures taken to deal with the terrorism problem. Indeed, there is no reason why China can’t begin to do this now. It would certainly be a welcome contrast to the failure of the West to involve its muslim communities in designing and implementing its efforts to combat terrorism.

On the other hand, we should not be lending credence to these wildly exaggerated US-funded reports about millions in camps, mass forced sterilisation and genocide. If this was really the situation in Xinjiang we would be recording a falling Uygur population instead of a rising one. We would be seeing masses of refugees streaming out of the region. We would be hearing many reports of this oppression from the many foreign visitors and delegations who are regularly visiting the region. Instead, Uyghurs are regularly travelling in and out of Xinjiang, along with tourists, business people and so on. Hardly behaviour that matches these extreme reports.

All these disturbing narratives in the capitalist media are specifically designed to make China appear racist towards its 55 ethnic minorities. And to muslims in particular. In fact, China has a better record than the West in dealing with its ethnic minorities: encouraging and supporting their languages and cultures; providing political representation; supplying economic support; and arranging affirmative action in education etc. Its treatment of muslims is no different. It is ironic that the United States and the rest of the West should be shedding false tears about China’s treatment of muslims when it has so clearly implemented racist measures against muslims and allowed Islamophobia to flourish.

On the re-education camps, the thinking of the Chinese authorities is not to lock up the Uygur population which would be neither practical or effective. Rather, it is to educate local people away from religious extremism and encourage them into long-term employment and prosperity. But, to be effective and acceptable this policy of reducation should be done jointly with the local muslim community. This would reassure everyone that there is no suppression of religion, language or rights.

The Chinese authorities are using these camps to provide young people in Xinjiang with occupational training so that they can move out of poverty. To complement this, they are investing heavily in the region’s infrastructure and redirecting factories to the area so that jobs are available to local people. This contrasts favourably with the inaction of western countries who continue to leave the majority of their ethnic minority populations in conditions of high unemployment and relative poverty.

One of the most potentially damaging aspects of the false propaganda campaign being organised by Western governments over the Uygur Muslims is its latest campaign to persuade foreign companies to pull out of Xinjiang over the non-existent issue of “slave labour”. If this campaign is successful it will lead to unemployment among the very Uygur people they claim to care for.

Human rights in China
China is often portrayed as denying human rights by critics in the richer countries. But this concept of human rights in the advanced countries has a very narrow definition. It tends to focus entirely on higher level political, ethnic and religious rights, and misses out on the human rights to a basic level of existence. For example, what about the human right to have enough to eat? Or to have employment so that one has sufficient income? Or to have shelter for oneself and one’s family. Or clothing, education, health services, transportation and so on. If we were to create a scale of human rights surely these must be at the very top. And political rights etc. would be much lower down. After all, you can hardly exercise political rights if you are starving, or cold, or isolated, or sick. Of course, if you already have such basic human rights – the situation in the richer countries where the majority of people enjoy such conditions – then you can easily come to take them for granted.

It is on these basic human rights for living that China has achieved so much. Lifting 850 million out of extreme poverty is not something that can be dismissed lightly or set aside in any consideration of human rights in China. It is an incredible achievement by the Chinese Communist Party-led regime which has greatly uplifted the human rights of the people. As we can see in speech after speech by Chinese leaders, and in their policies, the Chinese government makes the prosperity of its people the main priority.

We can see this priority reflected back in the attitudes of Chinese people to their government and its achievements. Most Chinese people are very happy with the way that their country is developing. This contrasts greatly with the widespread discontent in the leading capitalist countries. In a 2019 survey of Chinese people, UK Polling company Ipsos found that 91% thought that “China was on the right track”. When the same question was asked of the American population only 41% thought that “America was on the right track” (and this was artificially boosted by a large Trump minority). When the same question was asked in the UK only 21% thought that “Britain was on the right track”.

How China can be Improved

So far, we have refuted many of the charges being made against China. Albeit with some recommendations for China to take a new course on some issues. But life in China is not all sweetness and light. While things are definitely getting better for most citizens, and at a very rapid pace, there are problems in the country that left unresolved could cause future disruption and discontent.

Inequality
Inequality in China is a major and growing problem. China has gone from being one of the most equal countries in the Mao era, to one of great inequalities today. Credit Suisse’s annual wealth survey in 2019 reported that “there were 100 million Chinese people among the world’s top 10% of richest people, compared with 99 million in the US”. 18 Apparently, out of the world’s billionaires China now has a third, even more than the 626 billionaires in the US.

The first qualification about this growth of wealth for the rich in China is that it has not been accompanied by a fall of living standards for the rest. Despite the spectacular growth in wealth for a small minority, China has also seen a massive increase in living standards for the rest of the population. The reason for this lies in the actions of the Chinese government which has made poverty reduction, full employment and rising living standards its primary goal: “making China a prosperous country” as they put it. This contrasts with the capitalist governments which in recent decades have presided over a stagnation in living standards and a rise in poverty. A process that has rapidly accelerated since the Great Economic Recession when the Western governments transferred the costs of the mistakes and fraud of the ‘banksters’ onto the shoulders of working people through a long and continuing policy of austerity.

That said, inequality in China definitely has its major downsides. The incredible wealth held at the top has to have come at the expense of the rest of the population – the top 1 percent in China own more than one third of national net personal wealth while the poorest 25 percent own less than 2 percent of total household wealth. While the rest of society has made progress it could have been even more if the trillions held by the rich in China had had not been sucked out of the economy and society deprived of these resources. For example, living standards for the majority could now be higher. While health and social security could be much more generous.

This accumulation of great wealth has other major disadvantages for society. Money usually translates into power. This is certainly the case in the capitalist countries. There the billionaires run society from behind the scenes, funding the politicians and the media that promotes them. In China things run differently. The rich in China today are unhappy with their lack of political power. Even the richest in China can find themselves behind bars and their fortunes confiscated if they step out of line.

But for how long? The ownership of great wealth in China is an ever present threat to good governance for the many. The super-rich can utilise their wealth and staff to secretly influence opinion, Party and government decisions. And even without this, the super wealthy have their own power over the millions among their workforces, consumers, suppliers and so on.

Great wealth also invites corruption. The big majority of corruption cases that have been revealed in the anti-corruption drives in China have involved rich people giving bribes to state officials.

Great wealth inevitably undermines fairness in society. The wealthy will almost always seek to buy advantages for their children and family relations. Advantages in education, in employment, in government positions and so on. Advancement of individuals then becomes less based on merit and more on “who you know, not what you know”.

Last but not least, great wealth held in the hands of a few depresses economic demand as the wealthy tend not to spend their wealth unlike the ordinary people who have no choice but to do so.

Unlike in the USA where the rich are often celebrated, in China they are not popular. Most Chinese correctly believe that the billionaires have only become super-rich by means of tax avoidance, corruption or exploitation of labour and consumers. Certainly most of them couldn’t have inherited their money given the ‘equality in poverty’ that existed under Mao. And no-one is capable of earning a billion through simple hard work.

But even in the USA there is a growing reaction to the rise of the billionaires. Questions are being asked: who needs 1000 million dollars? Who could spend such excess in their lifetimes? Should we allow billionaires in the first place?

And if these questions arise in capitalist America how much more relevant are they in socialist China?

The answer in China is simple: use its tax structure, inheritance rules and legal system to introduce strict limits on wealth. China needs to end the possibility of becoming a billionaire and to redistribute the excess wealth of the existing billionaires to the rest of society. This will generate a huge amount of economic growth and help China reach its goals of a prosperous society even faster than 2049.

No doubt, there will be scepticism about the feasibility of such a change. But there was such scepticism about China’s drive to end extreme poverty which was achieved ahead of schedule. Now let’s shift the campaign from ending extreme poverty to ending extreme wealth. Just as China cracked down on corruption in the last decade, let’s launch a major campaign against extreme wealth and the causes of extreme wealth. A campaign that emphasises the socialist principles of sharing, of fairness, of service.

To begin such a campaign, the existing rules governing movement of money will need tightening so that the wealthy cannot hide their wealth, move it outside of China or into tax havens. Alongside this is the need to ensure that wealth is much more transparent in Chinese society. Such transparency to include an open register of property, public transparency of ownership of companies, a requirement to make all wealth holdings open to inspection by government officials, journalists etc. Once the population understands the scale of the problem and the excesses indulged in by the super-rich, there will be no problem in gaining full support for the measures needed to reduce inequality in society. Among such measures will be the introduction and enforcement of stiff inheritance taxes for the wealthy. With no loopholes. China needs to adopt the socialist principle that the gains made by an individual should not unduly privilege their offspring.

Of course, the soon to be ex-billionaires in China will not like the new rules. But they can be posed not in terms of punishment or envy. Rather in positive terms of voluntarily ‘giving back to society’, helping the poor and disadvantaged. After all, the rich give large sums to private charities. Why not to society as a whole?

Media & Censorship
The image is presented in the West that Chinese people are living in some kind of prison, forced to conform like robots under an oppressive level of surveillance. The reality is very different. With Facebook, Whatsapp and Youtube excluded from China, Chinese people are mercifully free from the fake news which floods social media elsewhere and is confusing and dividing people from each other.

That is not to say that censorship from above is a great system. What is needed is for a democratic media system that involves viewers and listeners, writers and readers in deciding on its output. With accountability governed by democratic criteria drawn up by the wider population. Details of how such a system could function effectively are included in our Manifesto.

On the other hand, the volume of anti-China propaganda that floods the capitalist media is reaching new heights. It even gives credence to crazy stories of how the Chinese government is encouraging forced organ harvesting. So bad is this propaganda that a growing number of foreigners living in China have become video bloggers and self-taught journalists in order to counter all the lies and hostile reports from the capitalist media.

Surveillance & Privacy
Another common attack on China concerns its video surveillance of its population. Yet, surveillance capitalism is a common feature in the West. As ex-government security consultant Edward Snowden revealed, the United States and its four allied countries in the Five Eyes network are snooping on everyone in the world. Every email, phone call and internet click on the planet is monitored and recorded by this network. Indeed, the plan to ban Tiktok in America was not to prevent the Chinese getting its hands on the personal data held by this online video service. Rather it was to allow the United States National Security Agency to get hold of this data and merge it with all of the material it already gathers up from Instagram, Youtube, Facebook, Google and so on. No doubt the US is working on technology to be able to scan and record every public video camera of which there are rapidly increasing numbers in every country.

So the problem of surveillance is not at all restricted to China. It is a common and growing problem across the world. Surveillance itself can be used for good or bad purposes. It need not be a threat but just an aide to stopping crime, reducing traffic and so on. The key question is who is viewing and recording this data and what are they using it for. In the capitalist countries the answer to these questions is unknown as these operations are highly classified. China should respond to these charges of threatening surveillance of its people by opening up its surveillance processes to full public scrutiny and accountability. And challenge the West to respond in kind.

The Private Sector
Many of the problems in China must be laid at the door of the private sector. It is mostly the private and not the public sector that has caused economic inequality, corruption, exploitation and the degradation of the environment.

Further, the emergence of a super-rich layer in China enriching themselves at the expense of the rest of society is a direct outcome of the private sector – almost all examples of public corruption have involved the bribing of officials by private companies or private individuals.

Likewise, the exploitation of workers with long hours and poor wages is almost entirely found in the private sector. This is especially true for the migrant workers from the countryside who have no choice but to take up work in the private sector when they arrive in the cities.

Last but not least, there is a danger that the rising wealth and power of the capitalists and the private sector in China will come to undermine the public sector and the state. For some time, billionaires have been allowed to sit in leading bodies of the Communist Party. The idea being that in this way the Party can control them. But participation in this way can work both ways. How long before the tail starts to wag the dog? And why are the rich being given privileges not open to the rest? It is our view that the rich should not be in the leading bodies of the Communist Party. That people should be in the leadership by virtue of their ability and the leading role they play in society not by their wealth.

Another means by which the Communist Party tries to control the private companies is by creating Party cells and units within them. This attempt at establishing dual power in the larger public companies won’t work if the company owners continue to have the main power and wealth in the company. Indeed, such a system risks corrupting the leaders of the CCP cells. Also, even if the communist units in the companies have some influence, what about input from the rest of the workforce, the consumers, suppliers etc? The existence of Party units inside the private companies offers no guarantee of social responsibility.

Despite the many problems posed by the private sector in China, it performs a necessary role at this stage of development. Certainly, the existence of small and medium-sized companies play a key part in providing employment and delivering services. A part that the larger publicly-owned enterprises are often not best suited to perform. Although co-operatives could certainly take on more of such a role in China. And stronger regulations and common standards could help to cut back on the negative results of private sector operations.

The bigger problem exists with the larger private companies in China. Once they reach such a size that they become essential to the public good they logically need to be incorporated into the public sector. But how to do this without losing their current levels of efficiency and innovation? Is it possible to introduce a new model of governance to the public sector and society as a whole?

Capitalist Democracy or Bureaucratic Rule
The main charge laid against China by the advanced capitalist countries is its lack of democracy. The fact that it does not operate a western-style system of competitive parties and competitive elections. Yet, western style democracy is rapidly descending into a farce. A century or more ago the wealthy elite in the capitalist countries opposed giving everyone the vote. They feared that the majority would understandably use their voting power to support the transfer of wealth from the few to the many. Yet in most countries this didn’t happen. The elite found that through their wealth they could bribe or compel the politicians, and greatly influence the public via the capitalist media.

Nevertheless, through this limited democracy the elite lost ground, both in terms of share of the national income and in services to working people. That is until the rise of neo-liberalism and a new array of public relations techniques. Now the elite have found themselves able to more and more manipulate the agenda, and effectively undermine the limited democratic rights of working people. As a result the past gains of the majority are increasingly being taken away. And almost all new wealth flows upwards to the super-rich.

It is becoming more and more apparent that the capitalist form of democracy is working against the interests of the vast majority who vote in them. Elections in the capitalist countries are becoming more and more of a circus with those elected tending to be the most effective in marketing themselves and their parties. Promises are scattered around before election day, and abandoned immediately afterwards. The election of Donald Trump was only the most extreme example of this phenomena. The same thing happened in France with Macon abandoning his promises within weeks of the election. So too with Boris Johnson in the UK, Modi in India and Bolsonaro in Brazil.

Although China’s government is not elected by the public, the Communist Party is far more responsive to public pressure than in the West. Ten years ago there were a series of strikes in China. In response the Party took steps to raise living standards which are continuing to go up by around 10% a year. As a result, strikes in China have greatly declined. Indeed, one of the main criteria for promotion to higher positions for all Communist Party cadres is whether they have been able to avoid public discontent in their area of responsibility.

Contrast this with the advanced capitalist countries. In the wake of the 2008-9 banking crisis working people suffered from the imposition of a programme of unpopular austerity measures. These resulted in deep cuts in living standards and public services. Naturally, there were waves of protest and public opposition to these measures. Yet the politicians have just ignored the distress and anger. And used their control over the media to shift the blame for the crisis onto immigrants and ethnic minorities; the unemployed and the poor; the old and disabled. The result: deep anger and toxic divisions among the population of the West.

But China’s top-down, bureaucratic governing system is far from the best structure for running society. The argument often advanced for China’s governing system is that it is based on a meritocracy where the top leaders have only achieved their position by proving themselves at the lower levels. Yet this assumes that promotion is always made on performance, and not influenced by favours, friendships or ideological faction. The modern history of China demonstrates that the latter is as important as the former. In fact, the meritocratic elements of China’s government system are reported to be in decline. According to a recent study of the survival of local party secretaries and their promotion during the current campaign against corruption, it has become apparent that meritocracy is giving way to patronage. In some ways this is an inevitable consequence of President Xi Jinping’s growing power.

Likewise, Xi Jinping’s increasing supremacy is now replacing the earlier concept of collective government. This concept arose as a reaction to the damage caused by Mao Zedong’s dominance of the Party and the state. The recent elevation of Xi Jinping’s ideas to one of ‘Xi Jinping Thought’ and their incorporation in the Constitution, as was done before with Mao, is another worrying indicator of Xi’s increasing dominance. Xi is clearly a very intelligent, tough and progressive leader. And maybe this is what is needed for this developing struggle with the capitalist powers. But undisputed lifelong power inevitably encourages fawning and flattery. It creates an echo chamber around the ‘all-knowing leader’ who can easily become overconfident and make major mistakes. Thus, what is a strength now, could turn into a weakness later.

At the lower levels, the Chinese system of ‘rule from above’ inescapably leads to corruption. With so many licences and permissions to grant, often without effective transparency, rule by the officials is bound to encourage the giving and taking of bribes. As evidence, we just have to see the scale of corruption exposed by the current anti-corruption campaign – 1.5 million officials so far have faced charges and discipline. But how far up does the corruption go? There are reports of some top Party leaders being billionaires. If true, such wealth can only have been secured through payoffs or insider trading. Yet, they have retained their positions despite the anti-corruption campaign. No doubt because they are seen as loyal to the leader.

China’s ‘rule from above’ system leads to many other abuses of power. Where decisions are taken that damage the interests of the citizens either for the convenience of the official or to benefit someone that official favours. There have been untold cases of such abuses in China. The result is passive discontent among the citizens; or active protests, strikes and so on.

The main response of the system to these problems is to discipline officials for abuse of office or corruption. But this only deals with the extreme cases and leaves the others in place. Besides, it relies on higher officials to know what is really happening underneath them which is often not the case. Or to be willing to take action against officials guilty of misconduct, rather than covering up for them because of family, friendship or past favours. Where officials are disciplined this is usually done after some time, often years later when the damage has been done and can’t be easily reversed or compensated for.

The bureaucratic system in China also leads to inefficiency and major distortions. Without input from the ordinary citizens who are affected by decisions, officials regularly make mistakes, sometimes big mistakes. The latest move to hold consultations with specialist groups of citizens on the new Five Year Plan is a welcome recognition that top-down planning and decision-making is not the best way to prepare and implement policy. This points the way to a new way of governing China.

Democratic Public Power
So far we have looked at the deep problems of competitive capitalist democracy in the West and the top-down bureaucratic system in China. If neither are the way forward, what is? In our view, China needs a system of Democratic Public Power. It needs a system of participatory democracy where all the people affected by decisions are involved in making those decisions. Where the running of each public service begins to involve accountable representatives of the service users, the staff, and other stakeholders currently only on the receiving end of decisions and regulations. Where state-owned enterprises incorporate their workforce, customers and suppliers as key partners in decisions on the price, quality and design of products; production methods, forward investment and so on. Where every layer of state gives the people a key say in the design and implementation of policy.

Not only would such an extension of democratic participation drastically reduce the alienation and exploitation of citizens who currently just have to passively accept most of the decisions that affect their lives. It would also greatly increase efficiency in governance and in economic management. The knowledge and potential ingenuity of workforces would no longer be excluded but brought directly into the running of services and public enterprises. The needs of customers would no longer be ignored in the existing ‘take it or leave it’ approach, but directly represented to ensure fair pricing, high quality and innovative design. The interests of citizens would no longer be left out in behind-closed-door agreements made by government officials. Instead of trying to discipline officials for bad decisions after the fact, let’s involve the people so that these bad decisions are not made in the first place.

There continue to be strikes and protests in China. Each one of these are an indication that the current system is not working properly. That decisions are being taken without the participation of the people affected by them and against their wishes and interests. The economic decisions being taken in state and private businesses, and by public authorities continuously pose questions of who benefits and who loses, or at least who is left behind. Unless we involve the people affected by these decisions, inevitably many bad decisions will be made either through lack of knowledge, incompetence or by the deliberate favouring of powerful individuals or sections of the elite.

Moving China towards a system based on democratic public power offers a new alternative beyond the old choices of top-down rule by public officials, or private control by capitalists. It offers the chance to unlock the creativity of the people and utilise their potential through mass participation via online technology.

For the state-owned enterprises, democratic public power offers a way to dramatically improve their efficiency, innovation and customer service.

The idea of giving citizens a voice is not entirely new to the People’s Republic of China. Elected Village Committees exist in the countryside. But too often they are burdened with the tasks of government and end up being seen as agents of the higher bodies and divorced from the interests of the local people they are supposed to represent.

As we will explain in detail in our forthcoming Manifesto, a system of Democratic Public Power combines the best of traditional representative democracy with the potential benefits of modern direct democracy. In this way it delivers the most practical way of incorporating the views of all those affected by decision-making.

Of course, it would not make sense to try to introduce this new form of governance overnight across the board. Like other major changes in China made since the great ‘reform and opening up’ process began at the end of the 1970s, careful and extensive experimentation and fine-tuning would be needed. First in a couple of national public services, in a few state-owned enterprises, and in some local government areas. If successful, it could then be spread across into more and more areas of Chinese life.

A key area that will need to be democratised is the ruling Communist Party itself. Among other aspects that demand review is the operation of Democratic Centralism which requires silence on internal Party discussions. Given the leading role of the Party in Chinese society, this approach does not make sense. The Chinese people need to hear the internal debates of the party in order to be able to evaluate, comment on and judge the value of the various views expressed, and decisions taken. Transparency is crucial if the Party is to be truly accountable to society.

Another key area is in the official trade unions. There are many complaints by workers groups that the official trade unions are often too close to the employers. And too slow to take up the issues facing the workers. As the largest social organisation in the country, and crucial for the well-being of the Chinese working people, it is vital that the trade unions be democratically run and accountable to their members. Then trade union representatives can play a valuable role throughout the economy in genuinely representing their members interests.

Naturally, there will be reluctance and resistance in many levels of Chinese government. It is hard to share power with the people when you have been used to exercising it alone. But the Chinese Communist Party has to trust its citizens and take this next step if it is to overcome today’s challenges and establish a genuinely democratic socialist future. Such a major step is not only relevant to China but to the whole of the socialist project worldwide. As such, this experiment in real democracy addresses the powerlessness that exists everywhere. And its outcome will be of great relevance to the future of humanity as a whole.

Conclusions
These will arise from the forthcoming online discussions in The Socialist Network.

Facebook discussion page:
We have set up a special facebook page where comrades can read this particular text in PDF format and discuss and suggest amendments, additions etc. Please bear in mind that we are trying to keep down the length of the Manifesto so try not to extend the existing length too much.
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Footnotes
1. Learning From China, by John Ross, https://www.learningfromchina.net/

2. Xi Jinping’s report at 19th CPC National Congress, 11-04-2017, China Daily

3. ’14th Five-Year Plan: Institutional advantages herald promising future for China’s centennial goal’, by Kou Jie, 26 October 26 2020, http://en.people.cn/n3/2020/1026/c90000-9772931.html

4. ‘Upcoming 14th Five-Year Plan policy package attracts wide attention; by Liu Xin, Global Times, 7/8/2020, https://www.globaltimes.cn/content/1197065.shtml

5. ‘Which way for China – part two’ by Michael Roberts, 23 March 2012, https://thenextrecession.wordpress.com/2012/03/23/which-way-for-china-part-two/

6. ‘Answers to the Italian Journalist Oriana Fallaci’, August 21 and 23, 1980, http://cpcchina.chinadaily.com.cn/fastfacts/2010-10/18/content_11425373.htm

7. ‘How Xi Jinping’s “New Era” Should Have Ended U.S. Debate on Beijing’s Ambitions’, by Daniel Tobin, May 8, 2020, https://www.csis.org/analysis/how-xi-jinpings-new-era-should-have-ended-us-debate-beijings-ambitions

8. Ibid

9. ‘Communist China and the Free World’s Future’, speech by Michael R. Pompeo  US Secretary of State, July 23, 2020, https://www.state.gov/communist-china-and-the-free-worlds-future/

10. ‘The Chinese Communist Party’s Ideology and Global Ambitions’, speech by US National Security Advisor Robert C. O’Brien, June 24 2020, https://www.whitehouse.gov/briefings-statements/chinese-communist-partys-ideology-global-ambitions/

11. ‘Two kinds of comments about China’s reform’, Deng Xaioping talking with President Julius Nyerere of the United Republic of Tanzania, August 21 1985,  http://www.chinadaily.com.cn/china/19thcpcnationalcongress/2010-10/21/content_29714523.htm

12. ‘The Belt and Road Initiative and Global Governance in Transition’ by Zhang Chun, 2017, https://www.worldscientific.com/doi/pdf/10.1142/S2377740017500166

13. ‘The Five Principles of Peaceful Coexistence’, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zwjg_665342/zwbd_665378/t1179045.shtml#:~:text=They%20include%3A%20mutual%20respect%20for,mutual%20benefit%2C%20and%20peaceful%20coexistence.

14. ‘String of Pearls’, Meeting the Challenge of China’s rising Power’, by Christopher J. Pehrson, July 2006, file:///C:/_%20Politics/_%201)%20Manifesto%20for%20Democratic%20Socialism/_%201)%20Topics/6%20%20China%20-%20what%20needs%20to%20be%20changed%20+%20-%205%20pages/468970.pdf

15. Comments by China’s Foreign Ministry spokeswoman Hua Chunying, 24/7/20202, https://www.teletrader.com/pompeo-is-like-ant-trying-to-shake-tree-china/news/details/52766819?internal=1&ts=1607271114321&culture=en-GB

16. ‘China says ‘Five Eyes’ should face reality on Hong Kong’, November 19 2020, https://apnews.com/article/hong-kong-china-4763a4a95103d3bf47ea2b894ced5f3c

17. ‘China’s Xi Jinping calls for ‘peaceful reunification’ with Taiwan’, 02.01.2019, https://www.dw.com/en/chinas-xi-jinping-calls-for-peaceful-reunification-with-taiwan/a-4692186118. ‘China overtakes US in rankings of world’s richest people’, by Rupert Neate, 21 Oct 2019, https://www.theguardian.com/business/2019/oct/21/china-overtakes-us-in-rankings-of-worlds-richest-people#:~:text=The%20number%20of%20wealthy%20Chinese,99%20million%20in%20the%20US.

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* Relevant Articles from the Chinese 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 6: The basis of the socialist economic system of the People’s Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of “from each according to his ability, to each according to his work”.
In the primary stage of socialism, the State upholds the basic economic system in which the public ownership is dominant and diverse forms of ownership develop side by side and keeps to the distribution system in which distribution according to work is dominant and diverse modes of distribution coexist.

Article 7: The State-owned economy, namely, the socialist economy under ownership by the whole people, is the leading force in the national economy. The State ensures the consolidation and growth of the State-owned economy.

Article 24: The State advocates the civic virtues of love of the motherland, of the people, of labour, of science and of socialism. It conducts education among the people in patriotism and collectivism, in internationalism and communism and in dialectical and historical materialism, to combat capitalist, feudal and other decadent ideas.”

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