China’s growth challenge

This week the 5th plenum of the Chinese Communist Party central committee is taking place.  The plenum is to discuss the progress of the Chinese economy and to decide on real GDP growth and other targets for the new 2021-25 five-year economic plan for China.  The plenum will also discuss a broad plan for the next 15 years, with goals that are likely to endure for at least the rest of 67-year-old President Xi Jinping’s rule. This year’s meeting comes as the deadline for meeting the previous overarching goal of achieving a “moderately prosperous society”, is due to expire in 2021, the centenary of the founding of the Chinese Communist party.

Beijing has hinted it would broaden out its focus on economic growth to include targets for environmental protection, innovation and self-sufficient development — such as in food, energy, and in chips.  This is all part of the strategy of developing a “dual circulation” economy in which China will develop domestic demand and self-sufficiency while the rest of the world remains stalled by coronavirus.

Beijing has set an average annual GDP growth-rate target in every Five-Year Plan since 1986. But this year, as the economy was pummelled by the Covid-19 pandemic, China for the first time did not define a target. The new GDP target is likely to be lowered from the 6.5% a year set in the current plan to 5% or so in the next.

There is much to discuss about China: how it dealt with the COVID-19 pandemic and how quickly it is recovering economically.  Then there is how the ‘cold war’ between China and the US will pan out and what it means for the world economy.  And perhaps most important of all: will China be able to continue to grow at a fast-enough pace to reduce poverty and raise living standards as it has done so successfully over the last 40 years.  I shall come back to these questions in future posts, but in this post, I want to discuss China’s growth, as measured by the mainstream economics measure, gross domestic product (GDP).

The reason for doing that is because the official statistics for China’s GDP and its annual growth since the 1949 revolution have been disputed by ‘Western’ economists and even Chinese ones.  The dispute ranges from just arguing that the Chinese authorities just blatantly lie and make their figures up to a more reasoned view that official calculations are faulty. That China just makes up its figures has been pretty conclusively rejected by those who have studied them closely. “The findings are that the supposed evidence for GDP data falsification is not compelling, that the National Bureau of Statistics has much institutional scope for falsifying GDP data, and that certain manipulations of nominal and real data would be virtually undetectable. Official GDP data, however, exhibit few statistical anomalies and the National Bureau of Statistics thus either makes no significant use of its scope to falsify data, or is aware of statistical data regularities when it falsifies data.”

However, there is a large body of analysis that argues that conceptual and statistical frailties in China’s statistical work has led to an exaggeration of China’s real GDP growth since the 1949 revolution and especially since the ‘market reform’ period initiated by Deng started after 1978.  The main source of this view comes the US Conference Board, a mine of statistical information on the GDP, GDP per head, productivity and employment for most countries of the world.  The Conference Board has adjusted China’s real GDP growth rate going back to the 1950s to produce a much lower rate of growth than the official data.

The CB finds that, while the official data reckon that real GDP growth in China from 1949 to 2019 was 8.5% a year, it was really only 5.9% a year, some 30% slower.  The gap is even greater in the post-Mao period up to 2000, with China’s official real GDP growing at 9.7% a year while the CB finds it grew at 6.3% a year or 35% slower.  After that, the gap between the two measures narrows somewhat.  With real GDP per capita growth (taking into account population growth), the gap between the official data and the CB data is even greater.

GDP growth 1953-19 1953-78 1979-2000 00-19 08-19
Official 8.5 6.7 9.7 9.5 8.5
CB 5.9 4.4 6.3 7.3 6.0
GDP per capita growth
1953-19 1953-78 1979-2000 00-19 08-19
Official 7.1 4.5 8.4 8.9 8.0
CB 4.5 2.3 5.0 6.8 5.5

How does the CB reach different results from the official data?  The CB bases its results on the work of Harry Wu from the Institute of Economic Research, Hitotsubashi University, Tokyo.  Wu has worked with the great world growth economist, Angus Maddison and is the adviser to the CB on China’s stats.  Wu finds conceptual and technical flaws in the official data which when adjusted produce much lower growth rates in productivity and thus in GDP and GDP per capita.

There are many faults that Wu claims to find in the official data, but there are two that deliver the largest reduction to the official growth rate.  One is conceptual and one is technical.  The first conceptual one is that the Chinese stats exclude any ‘non-material services’.  These are financial services, business consultancy, real estate agencies etc – in other words, non-productive services. This was done in China from the beginning so that GDP reflected more the productive sectors of the economy.  Of course, this is anathema to mainstream economics based on GDP conceived by Simon Kuznets to measure the progress of a capitalist economy.  When Wu adds in his own estimates of these sectors to China’s GDP, this raises the total value of GDP and leads to a different scale of growth.  It knocks off from China’s official growth rate 0.4% pts a year for the Mao period and 0.7% pts a year for the post-Mao period.

The second main adjustment is to the prices of produced goods. Many goods disappear over time and are replaced by new goods with different prices.  So the value of the basket of goods in GDP will change accordingly.  Wu adjusts GDP according to his own calculations for this, which knocks off another 1.7% pts a year in the post-Mao period.  These two adjustments account for most of the difference between the official growth figures and the CB ones.

I think there is much to dispute with Wu’s adjustments.  First, the official stats provide a better guide to the strength of the key productive sectors of the economy than the mainstream GDP data.  Second, the Wu commodity price adjustments seem arbitrary and open to dispute.  Wu’s adjustments lead not only to significantly different results for GDP growth but also to productivity growth, and to that neoclassical measure of ‘innovation’, total factor productivity (TFP).

As Wu concludes: “We have confined the present study to the well-known neoclassical growth accounting framework adopted in most of the existing studies, explicitly or implicitly. As stated at the beginning of the paper, the purpose of this study is to discover how and to what extent data problems may affect the estimated TFP growth, rather than building up a new theoretical framework to explain China’s TFP performance. For this purpose, I have maintained the same approach and the same theoretical framework. Nevertheless, it is perfectly reasonable to argue that the neoclassical framework used in this study is questionable.”

Nevertheless, Wu’s adjustments to the official GDP growth rates for China have become widely accepted.  The Penn World Tables, a major database for much world economy analysis, now uses the CB estimates for China’s real GDP.  So let us accept for now, the CB adjusted data for Chinese economic growth.  What does it mean in gauging the past success of the Chinese economy and the likely projection for GDP, productivity and investment growth ahead?

The New York Federal Reserve has published just this week a brand, new in-depth analysis of Chinese economics growth using the Penn World Tables (and thus the CB estimates). According to the NY Fed, Chinese real GDP growth has averaged 6.9% since 1978, more than 2 percentage points below the official figure.  The estimated overstatement of growth varies considerably over time, from more than 3 percentage points for much of the 1990s to less than 1 percentage point until recently.  So the Wu adjustment effect is disappearing.

But even if you accept the lower rate of growth, as the NY Fed says “China’s growth performance remains remarkable. For our sample of 124 economies, China has come in above the 90th percentile of the global growth distribution more than half the time since 1982, and above the 75th percentile until just last year. China’s growth over the past 20 years (7.5 percent) somewhat lags that of the high-income Pacific Rim during the periods in which they rose to China’s current per capita income level, but stands in the middle of the pack in per capita terms (6.9 percent).” And what the Fed does not mention is that China is a giant compared to the city states of Singapore and Hong Kong and is also immensely larger in GDP and population than Taiwan, Korea and even Japan. To achieve high annual growth in such a large economy in the last two decades to 2018 is truly historic.

One of the results of this huge growth in per capital income has been a staggering rise in life expectancy.  From life expectancy at birth in 1960 of just 44 years, China’s average life expectancy is now 77 years. It is catching up with the US, where there has been a fall since the end of the Great Recession.  And China has outstripped all the other so-called large emerging economies.

High life expectancy and falling birth rates have meant that China has an ageing population.  Indeed, the working-age (20-64) population began shrinking in 2017.

Up to now, the key to China’s economic growth has been the huge expansion of investment in machinery and technique as China moved from the labour-intensive economy of the Mao period to a hi-tech manufacturing export economy now. Of the 8.7% annual real GDP growth in the two decades before 2007, 4.7% pts came from investment (55%) – and over one-third from ‘innovation’ (TFP).  Labour inputs contributed less than 15%.

The NY Fed admits that if China keeps up this pace of expansion, it “is well on track to high-income status… After all, per capita income growth has averaged 6.2 percent over the last five years, implying a doubling roughly every eleven years, and per capita income is already close to 30 percent of the U.S. level.”

But NY Fed economists along with most Western economists reckon that this will not happen. China’s growth rate will slow down because it cannot expand capital investment any more than it has and its technical prowess will not rise sufficiently to compensate. Moreover, unless it drops state-led and directed investment and allows ‘the market’ and ‘the consumer’ to become king, it cannot achieve high income status and will be locked into the ‘middle -income trap’ as so many other ‘emerging’ capitalist economies have.

The NY Fed offers three growth scenarios for the next two decades. The ‘humdrum’ scenario projects that China will fail badly in reaching the living standards of the mature capitalist economies. Even under its ‘pretty good’ scenario it will fall short of the success of Japan and other East Asian states. Only the ‘golden’ scenario will do the trick.

But in the golden scenario, real per capita income growth must average a very rapid 4.9 percent from 2018 to 2028, slowing to a still strong 2.6 percent over 2028-38 (based on CB growth figures). This leaves real incomes up by 111 percent from their level in 2018, a performance comparable to what the Asian Tigers achieved over a similar period. China then achieves high-income status, with real incomes at slightly above 60 percent of the current US level, or exactly 50 percent of the assumed future US level.

The NY Fed reckons China’s growth rate will slow because investment growth will slow and productivity enhancement from innovation will not be enough to compensate for falling employment as China ages.“There is good reason to doubt that China could sustain rapid TFP growth with such a production mix, especially given already pressing concerns about the efficiency of new investment spending.”

The NY Fed reckons that it would be “pretty extraordinary – and historically unprecedented” for Chinese growth rates to be sustained at 5% a year for the next 20 years.  Beijing-based Keynesian economist Michael Pettis echoes the Fed’s view: “China’s working population is expected to be 7% lower in 15 years than it is today. In that case 4.7% GDP growth requires as great an increase in worker productivity as 5.2% GDP growth for an economy with a steady working population.

But is that growth target really so impossible?  Given that China has achieved 7% annual growth (CB figures) over the last 20 years with labour inputs contributing only 15%, it does not seem impossible that even with a zero contribution from labour (and that won’t be the case) and no change in the investment rate, that China could not manage around 5% a year economic growth by achieving a moderate 1-2% a year TFP increase . Much will depend on whether the technology upgrade that China is engaged in can deliver.  And even the NY Fed admits that “China can grow rapidly for a long time before it approaches the technological frontier. There is plenty of upside, just no guarantee that it will be exploited.”  Moreover, even if China does not sustain 5% annual growth over the next two decades, it will close the gap with the mature economies because growth rates there will be lucky to get above 1-2% a year (and that’s assuming no crises of capitalist production up to 2040!).

The reason that the NY Fed as well as many Keynesian and other critics of the Chinese ‘miracle’ are so sceptical is that they are seeped in a different economic model for growth.  They are convinced that China can only be ‘successful’ (like the economies of the G7!) if its economy depends on profitable investment by privately-owned companies in a ‘free market’ where consumption rules over investment.  And yet the evidence of the last 40 and even 70 years is that a state-led, planning economic model that is China’s has been way more successful than its ‘market economy’ peers such as India, Brazil or Russia.

The NY Fed admits that “China (could) prove a unique case, attaining high-income status while retaining governance features unlike those of all current high-income economies.”  However, the “Chinese authorities have been clear about their plans to proceed with market-oriented reforms. But authorities have been equally clear that the Communist Party will retain control over the commanding heights of the economy and over political life. And in this connection, policy is currently moving in the wrong direction, toward greater state and party control of the economy.”  According to the critics, this is the ‘wrong direction’; but what will the CP plenum conclude?

In future posts, I shall look at the challenges facing the Chinese economy, apart from growth, including: rising debt; climate change and the environment; inequality; the Belt and Road project; and the intensifying ‘cold war’ with the US.

52 thoughts on “China’s growth challenge

  1. In 1991, a man had to prepare for marriage with a fridge, video recorder, and microwave. Then it was a car. Today it is a house and a honeymoon.

      1. ”very good in parts” I thought so too, but felt his comments were tending towards The Yellow Peril. I mean climate change is a universal phenomenon with universal causes. Are the dying oceans only the fault of China? I became somewhat suspicious and looked Smith up. this is what I came across:”Xi is so bad he should be ”arrested and tried in the Hague for crimes against humanity” ( p192). Okay, so The Hague is a democratic court! How about Smith’s other views on democracy? Here he is on Hong Kong:I”f Xi is not stopped, he will invade Hong Kong, possibly massacre thousands of people and turn Hong Kong into a vast concentration camp. As democratic socialists and ecosocialists we call on Western democratic governments, Western trade unions, and all progressive organizations to come to the aid of Hong Kong’s desperate citizens.” Opium Wars, anyone?

    1. I did not read his book, but a lot of articles on this website Smith has a lot of very good ideas, but nothing about the environmental pollution of the gigantic us war expenditures. A bit suspicious, because war efforts make up about twenty percent of the pollution and America’s are gigantic! And if we look at his commentary on Chinese politics regarding Hong Kong, but the silence on Obama’s peril to Asia, we may be talking about the “imperialist left” as the Italian Marxist philosopher would say.

      1. Since Michael intends to address the inadequacies of the environmental issue, I would like to bring to others’ attention to some of the decidedly dubious political aspects of the book, which I originally approached positively well-disposed.After all, the basic points are hardly novel: the most outrageous assault on the environment accompanied by obscene pursuit of wealth and vulgar display of conspicuous consumption, and what Smith has to say in this regard no Marxist will dissent from. Now it may be true that It was the point of departure for Leninists that communism had to surpass capitalism economically: Trotsky ( ”the Revolution Betrayed” Pathfinder Press 1970 Pp45-50), Stalin, Krushchev and Mao all adhered to this standpoint; except that later Mao changed his mind, denouncing the productive forces theory of communism.The idea was for the the peasantry to stay on the communes, which were to combine industry and agriculture. But it is essential for Smith to see no dichotomy here. Both Mao and Deng seem to Smith to have the same purpose: to make China Number 1, so that at times I became suspicious of the odour of the Yellow Peril e.g P 195. Apparently, we in the West enjoy democracy and freedom of thought, while Xi should be ”arrested and tried in the Hague for crimes against humanity” ( P192). Now by whom should Xi be arrested? By the CIA controlled court? Why the glaring absence of Blair, Bush, Sisi, Netanyahu? Taiwan and South Korea have ‘transitioned ‘ to capitalist democracy. Now note here the absence of the agents of such transition. In fact the ruling class of Taiwan and Korea have merely allowed their citizens to exercise a vote every few years. Socialist ideas are banned in both ‘democracies.’ Still for Smith the CIA organised protesters in Hong Kong. are struggling for ”democracy”, but Smith does not explain in what this democracy consists. However the ‘democratic’ States of the ‘West’ should come to the rescue, for the Communist Party has held China back for seven decades! It is time, says Smith, for the Chinese people to ‘stand up again’ otherwise there will be ecological apocalypse. Indeed, but for an ecological civilisation the whole world needs to stand up, starting with the citizens of that plutocratic despotism the US! ” we may be talking about the “imperialist left” as the Italian Marxist philosopher would say.” Agreed!

      2. ””The Undercover Policing Inquiry will examine the monitoring of more than a thousand groups stretching back to 1968.
        It will hear from women who were deceived into relationships with undercover officers including Mark Kennedy, who targeted ENVIRONMENTAL movements.”

      3. Donald Trump as of Wednesday has withdrawn the US from the Paris climate agreement, an international pact to try to avert dangerous temperature increases that are already leading to more extreme weather and threaten to shrink world food supplies, force millions to flee their homes and deprive many of basic human rights. Trump’s administration set the US exit in motion a year ago, but it didn’t automatically take effect until 4 November.”

      4. Honestly Smith book being based on Yellow Peril is already apparent from the start. Any honest intellectual would have to look up what China did recently in regards to environmentalism and what they does is almost everything. Subsidizing electric vehicle on both producer and consumer level; planting literally billions of trees to point of reverting desertification in Northwestern China; Replacing public buses with electric one; aggressively pursuing safe nuclear technology and building tons of power plants: encourage people to install solar panels and allows them to sell surplus power from the said panel; building tons of renewables power plants across the country. All of this under the tenure of Xi, who since 2005 have pressed the issue of enviromentalism, who in his every speech has speaking for sustainable growth, and he who termed ‘ecological civilization’ as part of the China’s constitution. If anything China’s downfall would surely doom the human race, not the other way around.

  2. Surely the exclusion by Chinese official stats of ‘non-productive’ services (I think from the old Soviet model) reduces rather than exaggerates official growth figures. My reading of Wu was that he ideologically makes all the negative assumptions he can and then feeds them into compound growth projections. As you say, why assume Chinese investment will come to technological barriers, especially since in emergent sectors (AI, e-commerce, e-vehicles, and some life-sciences) they already have technology leadership)? Of course, if the US could diminish inward-FDI and international trade links this would be cross-cutting. The key parameters for escaping the middle-income trap seem to be in place (education, venture capital, rising R&D). To me, the 2049 high-income goal remains achievable; parity with the US will depend on whether their projection pick up. Thanks for the post, it helps clarify a lot of conflicting evidence. However much the projection estimates are disputed, figures on longevity and poverty reduction are evidence of historic achievement.

    1. The way Wu works it is to add in non-material services to productive GDP and this results in a larger GDP so that any increase from the productive sector has a lower percentage increase.

  3. The most definitive proof China’s GDP numbers aren’t a farce is the behavior of its enemy: the USA elected Trump on an anti-China agenda. The American people gave up electing their first woman and a woman from the political elite (Hilary Clinton) just to prepare themselves to fight the greatest war of their generation: a WWIII against China. That’s how serious the American people is taking China.

    As Sun Tzu once said: know your enemy in order to know yourself. China’s numbers are definitely genuine – if not from an economist’s, at least from a historian’s viewpoint.

    On a side note: not considering the services sector in the GDP calculus is an inheritance the Chinese received from the Soviets, who also didn’t take into account their services sector. It was probably a mix of necessity (the need to focus on industrialization) and ossification (the creation of a communist tradition/culture).


    Mao’s era was only “extensive” if you compare it with his successor, but it was pretty intensive by global standards. That’s why Nixon’s rapprochement with China worked out: American capital flocked willingly to China in order to use the immense – and highly qualified – labor force there. Otherwise, they would’ve flocked to India or Africa, which had cheaper workforce.

    You have to take into account that, in 1945, China was one of the poorest nations in the world. It went from a very low base. Hence the illusion Mao essentially extended the already-existing economy. The Great Leap Forward also feeds that illusion in the West – but there are two problems with this thesis: 1) it wasn’t Mao’s idea in the first place, it was Deng Xiaoping’s!; and 2) the purpose of the Great Leap Forward was precisely the opposite: to rise technological advancement through higher surpluses in agriculture, a la Soviet Union in the 1920s-1930s. Li Minqi debunks the myth of the Great Leap Forward in his book; indeed, one could argue that it was the failure of the Great Leap Forward that triggered Mao’s return and the tragedy of the Cultural Revolution five years later (which included the prison and almost execution of Deng Xiaoping himself).

    When Deng Xiaoping took over, he found the base already ready for the Reform and Opening Up. It is a myth he represented a rupture with Mao Zedong.

    Another impressive data: in the year of 1975, Brazil and China had the same GDP. Look where they are now, and look which paths they followed. Then do the same between India and China. It’s clear the big difference here is socialism: China had a successful communist revolution, while India and Brazil didn’t. This vindicates Mao’s theory, which stated that, in the historical phase of Late Capitalism, it is up to Socialism to do the development tasks of Early and High Capitalism in the periphery of the capitalist world (Third World). He was 100% correct.

    1. I think you are right in every respect, but you leave hanging the question of China’s development (or possibilty of development) along the same lines.The US is already preparing for war if it does. Will it be forced by US sanctions to delink? Roberts, while assuming continued development along the same lines, calls attention to China’s move toward (socialist-side) internal development. Would an intensification of such a move increase or decrease the US treat of war? These are very hypothetical questions, but important ones.

      1. Good question. My opinion is this: the USA certainly knows – as the British Empire also knew in 1914 – that it needs a world war against its closest competitor in order to try to stay at #1. Decoupling is the preparation for war itself, not a cause of, a full-fledged war against China: Trump is preparing the American people for war.

        The problem for the Americans is only one: nukes.

        Nuclear weapons are the greatest deterrent ever created by humanity. It ensures the euthanasia of humankind, with an 100% certainty rate. Even ICBMs are already a great deterrent in the conventional warfare front, as they essentially nullify naval power projection and geographic distances or topography.

        If WWIII happens, it will be completely different from WWI and WWII.

    2. Li Minqi was touting peak oil catastrophe not so long ago and Immanuel Wallerstein is well worth reading for a synthesis of political and economic history…but Wallerstein is not an economic analyst. Economists who ignore economic history aren’t worth much but that doesn’t mean they can be replaced by economic historians in my opinion. Li is eclectic in an impressionistic way I fear.

      Regardless of who originated the Great Leap Forward, as an economic strategy it was a radical repudiation of central planning. I suspect the decentralization was severe enough that local famines were left unaddressed by the rest of the country. (This implies the higher death tolls imagined come from assuming the worst conditions were universal, which is physically unlikely I think.) Most economists, including avowed Marxists, oppose extensive planning, except in war time, when necessity brooks no more nonsense about the market being the most efficient.

      The Cultural Revolution was not an economic disaster. It even did some very good things (see Han Dongping for one,) And the Reform and Opening Up were not immediate giant successes either, Deng effectively took power by 1979 at the latest. In that sense, “Deng” was continuous with “Mao” in that sense. But the idea that Deng, who marked his ascension to power by invading Vietnam was not a sharp break with Mao, with the left, with workers, with internationalism, is nonsense. And given the absolutely unforgivable pointlessness of Deng’s war of choice, it is just wrong to exalt Deng as some improvement. He was worse.

      1. I don’t know about Li Minqi’s reputation in the academia, but the part where he talks about the Great Leap Forward he builds his argument with objective data from reliable sources.

        Yeah, there are many Western Marxists that are very skeptical about Chinese socialism. Michael Roberts’ book itself has an article from a very traditional Marxist in the West, Mylene Gaulard, who states plainly that China is full-fledged capitalist, its SOEs being just skeleton formations from the Mao Era. This is, I believe, the most predominant position among Western Marxists on China. Others go to the “State Capitalism” route, which is more politically correct. Trotskyists not only classify China as capitalist, but also neoliberal.

        My opinion is that Western Marxism refuses to accept China mainly for two reasons:

        1) It would transfer the vanguard of Marxist thought to the East;

        2) Accepting (1) as true, it would inject a foreign academic tradition to the Marxist departments of universities the Western Marxists are employed into (as professors), opening a flank for their eventual firing or failure to put a direct successor the post. Eventually, this would mean the death of Western Marxism, as that’s the only place Marxism still lives in the West: in the academia.

        In my opinion, Western Marxists should embrace Chinese Marxism and begin an avid process of translating their books and inviting them to seminars and congresses. It’s not like Western Marxism was winning either way, so at least they should get some help.

        But back to the more important issue discussed here:

        The first thing we should observe from the Great Leap Forward (from Li’s data and sources) is that there was no famine. Life standards declined a lot, to the 1940s levels – but only in comparison with the immense success of the 1950s. Yes, the first half of the 1940s were of war, but not all of those years are considered “famine years” by Western historians and economists. If life quality dropped to the best years of the Nationalist Government, then why talk about famine? Why talk about 55 million dead? That’s weird.

        Western economists only characterize a famine when there is mass migration by the peasant class and, obviously, mass graves – all of that combined with abysmal crops. None of that happened during the Great Leap Forward.

        So, it seems the true story is this: the euphoria caused by the socialist reforms of the 1950s caused the new generation of the CCP – with overwhelming support from the peasantry – to “accelerate the schedule” with the GLF. It was an amazing failure – the gains from the revolution being almost all completely wiped out. Mao was against the GLF, and it seems the circumstances of its birth forced him to come back from retirement (after the death of Stalin and the bloody battle for succession that culminated with the rise of Krushchev, who spitted on Stalin’s tomb in order to save his own life, according to Italian communist Lucio Magri) and take back the reins of the CCP and start the Cultural Revolution (which almost killed Deng Xiaoping and Xi Jinping’s father).

        Either way, happily for the Chinese, the disaster of the GLF was just a one-of: after it was suddenly abandoned, China started an almost immediate V-shaped recovery from the pre-GLF levels, i.e. it wasn’t an economic depression/permanent loss to the Chinese economic structure.

      2. Absolutely! Western ‘Marxists’ are, by-and-large, the problem, or professional lefties as I call them who have built a career out of Marx’s writings, eg Tariq Ali comes to mind but there are plenty of others. What was it Lenin called them? Social Imperialists.

      3. When I blandly commented above that vk was “right in every respect” I really meant that I agreed with him in general, overlooking his treatment of Deng. It’s important to understand China’s recent evolution into what it is now. VK does a pretty good job, in a short space, describing and defending its socialist potential.

        But you are right to call attention to the sharp difference between Mao and Deng, exemplified by Deng’s war on Vietnam–not a “pointless” war, but very pointed and cringeingly pathological cold war signal to the US, which, I agree, Mao (who correctly had Deng jailed) would have strongly opposed. This acknowledgement, of course, opens up a can of old and new worms better argued off this site.

      4. Forgot to mention the China-Vietnam War.

        Both countries claim victory, and both countries refuse to open their files on the war until today.

        As long as those archives are closed, we can’t make any specific conclusions.

        What it seems is that it wasn’t an invasion: the root of the imbroglio was Vietnam’s invasion and toppling of a Chinese-backed government. China then decided to retaliate by attacking its northern borders (couldn’t have been different, as they border Vietnam from the north). This campaign couldn’t have been Mao’s, as Vietnam invaded Cambodia in 1979 (Mao was already dead).

        If you look at the map (Cambodia is that the south of Vietnam, far away from China), you can come to two broad conclusions:

        1) either China really planned to occupy the entire Vietnam and hugely miscalculated the situation – even more so because the Vietnamese had just come from a victory against the USA; or;

        2) the Chinese really just wanted a punitive campaign to the gates of Hanoi (as they officially claim).

        But, as I said, we’ll never know for sure as long as both countries’ archives remain closed (classified).

      5. @vk of October 29, 2020 at 4:11 pm, on China-Vietnam war

        Don’t forget, this war was incited by the USA, it was a proxy war, a revenge for overturning the bloody rule of the Pol-Pot gang.

        Remember that the US and other imperialists for many years kept the Pol-Pot clique as the representative of Cambodia in the UN, until they managed to force on the liberators a “government of national unity” with the inclusion of the “Red Khmer”.

      1. Because all of the historical events around those numbers point to the direction they are genuine. China is indeed growing at an accelerated pace. Otherwise, why would the USA be so worried? Trump would be a non-issue if it wasn’t for the rise of China – he probably would’ve never been a candidate to begin with. Obama would’ve never started the “Pivot to Asia” in 2016. The rise of China presupposes the country’s GDP data are scientifically precise, given the tools of the time.

        Of course, scale also matters – the USA isn’t worried about Vietnam (which is growing as much as China, if not more), for example. It also seems to be toying with Cuba and seems to be happy to see North Korea where it is right now.

        During two decades, the Western media outlets claimed the Tiananmen Square Massacre killed some 3,000 protesters (who, by the way, were torturing and burning alive unarmed soldiers of the PLA who tried to solve the issue peacefully). China’s government always claimed only a few dozens were killed. Only recently, when some American intelligence documents were declassified, it was found out the Chinese were telling the truth. I think the same is the case here: secretly, the American elite knows China really is growing what it claims to be growing, to the margin of error of the tools available. They are just propagandizing China is growing less to keep their people’s morale up and prepare them for a hot war (i.e. serve as cannon fodder).

      2. Data is supposed to be data. Usable by, relevant to, historians and economists alike. If you’re saying the numbers may be exaggerated but the trend is still the trend, that’s different.

        In answer to your question “why is the US worried?” Because some of the ruling class is worried, and the system as a whole maintains itself by stampeding the little, wannabe, bourgeoisie with visions of the “yellow horde,” or “international Zionists” or African-Americans moving in next door, or any number of conspiracy theories, and conspiracy targets; like Covid19 was developed in China, or that the vulnerability to the virus is a hoax, etc. etc.– because the capitalists are like hostile brothers, as a famous Westerner put it, fighting each other for a profits in world markets.

        Why is the US worried? For the same reason that “immigrants” the “undocumented” are targeted.
        Do they represent a real threat? Of course not, but they deflect for the real problems caused by capital. That’s why. Xenophobia has a material basis all right, but that doesn’t, ipso facto, validate economic, or historical data.

        What I think you really mean, and correct me if I’m wrong, is that China has found a way to actualize “socialism” in one country, although over a trillion dollars in foreign direct investment makes the one country claim dubious. Or at least that China has hacked out a course to “socialist development.” Right?

        As for “the problem being Western Marxists”–really? Here all this time I thought capitalism was the problem; the bourgeoisie were the problem; those who pre-empt revolutions, like say the MAS, or Syriza, or worse behead revolutions, as took place in Iran, are the problem.

        What Western Marxists? Marx? Luxemburg? Kautsky? Togliatti? Mandel? Mariategui? Soboul? Sweezy? Lukacs? And what problem? Is the problem that some don’t think China is the vanguard of a dawning socialist order? Sounds familiar, doesn’t it? Like the campaign against those “cosmopolitans” who didn’t think Stalin wasn’t the messiah of world revolution, and the Soviet Union wasn’t’ heaven right here on earth?

        What you, and others, call a “problem” might be something near and dear to that westerner, Marx’s, heart, Criticism.

      3. ‘’ Although over a trillion dollars in foreign direct investment makes the one country claim dubious ’’
        True, and even radically doubtful, I would say, if to that figure we add the data for Investment and state GDP, which have decreased year by year for 30 years, and the data that have been growing at the same time for Investment and private capitalist GDP. If one also remembers the fact that all socialist countries without exception have reverted their model to capitalism, I see little or nothing credible the opinion that China is heading towards a ‘’ socialist development ’’. To support this idea is to go against the empirical evidence and, in my opinion, this quasi-religious belief is given by not having an explanatory theory of the construction of the modes of production. A theory that explains the proven and historical advances and setbacks of all modes of production, such as the current socialist setback in China

      4. @Anti-capital
        “….In answer to your question “why is the US worried?”….because the capitalists are like hostile brothers, as a famous Westerner put it, fighting each other for a profits in world markets. ”

        Your “marxist” viewpoint needs an urgent update and a more careful view of what is happening. US is now slowly plunging the world economy, with severe harm to a large group of its own capitalists in order to harm China. If everything was done for “profit”, then why mess with a relationship where most capitalists in the US benefit at the moment? Profit might be a factor, but it is not everything. The US doesn’t have a problem if there are more chinese billionaires than americans, they just want them to answer to the US security state. There is a component in international relations that is beyond profit, because it existed before capitalism – and that is the control of land, labor and resources(in whatever form). The US ruling class does not think of themselves as “capitalists” and it is up to us to judge when using that term is adequate and helpful and when not.

        “As for “the problem being Western Marxists”–really? Here all this time I thought capitalism was the problem; the bourgeoisie were the problem; those who pre-empt revolutions, like say the MAS, or Syriza, or worse behead revolutions, as took place in Iran, are the problem.”

        Syriza was an opportunistic party, claiming that it would overturn the EU big capitalists (that was impossible) and greeks put their hopes on them. Syriza is the natural result of that marxism (the western one) that considers tactics, strategy and therefore organized class struggle as “fossils” and instead valorizes sentimentality, “ethics” and “values”. That’s why they didn’t feel the need to be honest to come with a plan B and properly warn the greek people that what they were promising was likely impossible and instead did the opposite of what they promised. Syrizas and Podemos are the killers of revolutions, not the pre-emptors.

        “What Western Marxists? Marx? Luxemburg? Kautsky? Togliatti? Mandel? Mariategui? Soboul? Sweezy? Lukacs? And what problem? Is the problem that some don’t think China is the vanguard of a dawning socialist order?”

        Western marxism is a rotting corpse and reality has been showing that 70 years now at least(where were the western marxists in other countries when syriza was being defeated? Lecturing). What people call western marxism largely refers to the cold war instituted controlled opposition “Neither Washington not Moscow” in the west that peddles soft marxism in the future western intelligentsia in universities. Marx was in the west, as was Luxemburg and Lukacs, but they are not regarded as “western marxists”. Maybe some will claim Lukacs was a father to western marxism mainly due to his influence on the Frankfurt School (which are the godfathers of western marxism and worthy of studying), but even that is far fetched. When we talk about “western marxists”, Harvey(who doesn’t even think LTV is a thing), Saikh(who doesn’t even believe in the opposition between labor and capital), Fisher, Jameson, Postone, Zizek etc come to mind. I am not saying all these individuals are not worth studying, but their constituents are not the working class, it is university students, and they are dependent on bourgeois institutions. Marx was banned from 4 countries and died a stateless person. Luxemburg was murdered, Gramsci died in prison. Why is it that so many marxists are in spirit keynesians when it comes to actual policies (MMT etc)? Because the constituency they SAY they represent is mostly in southeast asia and not in the west and this is something, like VK said, that is being repressed in their consciousness. Not only there is no internationalism in western marxism, but most of them seem particularly alarmed with China. Perhaps the characteristic of western marxism that stands out the most is the renunciation of the category of imperialism, and that says a lot.

      5. @ Anti-Capital – October 29, 2020 at 9:53 pm;

        The difference here is that both Stephen Bannon – Trump’s mentor – and Mike Pompeo (Trump’s de facto second-in-command) clearly make a separation between China the people/culture/country and the CCP. The openly and clearly state the problem is the CCP, not China per se. In some occasions, both even appear to make an appeal for the Chinese people to rise up and topple-destroy the CCP themselves (color revolution; regime change).

        When they don’t explicitly talk in anti-CCP terms, they implicitly state competition with China is “unfair” because China is socialist (“anti-democratic”; “authoritarian”, “totalitarian”, “closed” etc. etc.).

        Both Bannon and Pompeo have already stated – more than once – that they’re against the CCP, not the Chinese people. You couldn’t make it more clear.

        Usually, when one capitalist power decides to destroy another capitalist power (e.g. WWI), they adopt another kind of rhetoric – usually, of racial/dehumanising tone. But modern liberals (liberalism the ideology of capitalism, not in the sense of American leftists) in countries like modern Germany (expanded West Germany) also use environmental arguments when they want to sanction another capitalist nation’s economy (e.g. blocking Nordstream II against Russia).


        @ all

        Karl Marx, for obvious reasons, cannot be classified as a Marxist – let alone a Western Marxist. We usually use the term “Western Marxism” to designate the post-war current.

        Marx is the first truly universal philosopher – he seats both in the Western and Eastern schools of thought. He’s literally the greatest philosopher of all time.

        All I’m calling for is for translations of Chinese Marxists (not the ones from Taiwan and Hong Kong, who graduated in the West). Maybe I’m wrong, maybe Chinese Marxism is not that great – I don’t know. Maybe the uneven development of capitalism will catapult the moribund Western Marxism to the vanguard someday; maybe it will just die. We’ll only find out if we dialogue with the Chinese Marxists.

      6. Antonio: Agree

        Saigon: Re the US “disrupting” a profitable relationship with China; Answer: Capitalism is not a rational system. When capital reproduction is impaired by declining profitability, forces are unleashed by the “competitive impulse” that are neither rational nor easily controlled. “Hostile brothers” really does capture it.

        Thanks for the update on what is meant by Western Marxists, except…if their natural constituency is academics and students, I find it hard to classify them as a major problem. Really. What influence does Postone have on the prospects for proletarian revolution? Next to zero, if not zero. Any critical evaluation of class struggle will show that the established official Communist Parties, and not just those of the “west” functioned time after time as gravediggers of the possibility for working class social revolution.

        But this all takes us far afield from issues of China’s growth. If China has somehow found the way to absorb capitalist relations of production, and surely know one denies that those relations came packaged with the FDI taking advantage of Deng’s 4 Reforms, while neutralizing the conflicts inherent in those relations that bring economic development to the abyss, then we need to know how that’s been accomplished. I don’t think China can dis-integrate itself from the world markets or resist the strengthening impulse to complete capitalist implementation (although with specific “Chinese” characteristics).

        If the issue is “Can China replace the United States as the leading economy in the capitalist network”– the answer is “not right now.” Can it happen in the future? Sure thing, but it will take a global depression and a world war to shift that balance.

        Thanks for your answer

      7. @Anti-Capital

        Regarding China: I don’t know what you mean by saying that China has found a way to absorb capitalist relations. To say that China is at the moment socialist is wishful thinking at least, and this is where I disagree with vk. To be clear and honest, I don’t think this is necessarily bad either. “Concrete analysis of concrete situation”. I think sovereignty trumps the form of relations of production domestically and certainly it is not in my position to complain if the chinese leadership opted for something that is not according to my expectations of socialism. Are the existence of SOE’s in China at the moment an expression of the (partial) socialist character of this mode of production or is it an expression of its slow, controlled transition to capitalism? Russia also has major industrial companies state owned. Is it socialist or quasi-socialist? With USSR/Russia, this transition happened in “shock” terms and forcibly. The chinese drew a lot of conclusions from 1989 and I think most people in the west, and certainly leftists, have severely underestimated the chinese leadership. To me, whether it is socialism or something else is completely secondary so long as you are surrounded by a dozen US bases around you and a Japan that hasn’t renounced its past actions.

        Regarding western marxism etc: that is the issue with “western” marxism. The issue is that it is not a problem at all (for the ruling class). It is a western-oriented, academic trend, completely integrated into the current institutions of power. There are even “Zizek Studies” for crying out loud. There is a whole trend maintaining that Marx was not about class struggle, that capital is the “subject” and that we should blame Engels for bad existing socialist bad stuff. Harvey recently claimed that Marx actually had no theory of value and now he warns against China. Michael Roberts has devoted space on these issues here. You claim that communist parties acted as “gravediggers for the revolution” in the west. Are you talking about the french CP in 1968? The conditions in western europe (let alone america) were not revolutionary and you misinterpret it as CPs being anti-revolutionary. Any serious engagement with cold war in western europe will reveal the tremendous efforts of the US to essentially buyout and corrupt the “left” in europe (and in the US) and isolate communists. Ironically, if a class assumed the role of a gravedigger, that was the intelligentsia in USSR (and now China it seems). In order to develop and maintain a modern, industrial infrastructure and maintain parity in terms of weapons, you need to develop an intelligentsia for that (engineers, scientists, bureaucrats etc), and this class is entrepreneurial more than it is “communistic”.You need huge surpluses to sustain it. Both SU and China underwent their “primitive accumulation” in order to develop this base, and did that consciously. And it was much more peaceful than what France, England or the US did (genocide, colonialism etc), but it was violent. But once this intelligentsia was accepted into key party positions and saw that there are more benefits with the “free market economy”, they started the “reforms”. In some eastern european countries this happened under the form of “nationalism” and extreme corruption and loss of sovereignty for loans and western consumer habits. Russia managed to maintain its sovereignty, as did China, but they are no longer socialist…

  4. Do non-material services not grow or do they only grow less rapidly than the productive sector?

    For as long as I can remember these western experts have at regular intervals predicted that in the absence of the adoption of liberal capitalist plutocracy China will quickly confront crisis and collapse. Why should we continue to pat attention to people who have been consistently wrong?

  5. If anything China’s GDP growth rate was understated because of the transfer of value from China to the imperial world. In terms of manufacturing it was only after 2010 that less than half the value produced in China was realised in China. Otherwise how does one account for the fact that China’s industrial output measured by volume is as big as that of the US Japan and most of the EU. China consumes 50% of global materials.

    As for the US data the less said the better especially their measurement of personal consumption expenditures including owner occupied rents. So putting all this aside, before Covid the US was nominally 30% bigger in Dollar terms. By the end of 2021 it will be only 15% bigger and by 2026 they should be neck and neck as long as it is not the neck of the working class on the line.

  6. Errata. Should read ….it was only after 2010 that more than half the value produced in China….not less. I should also mention, as I have presented many times over the years the rate of profit and turnover, in common with the USA has fallen for 8 years. This is thecstressor breaking apart globalisation.

  7. As long as China maintains its productive capacity, food self-sufficiency, and transition to (near zero marginal-cost) green electricity, and avoids accumulating debt in foreign currencies, debt will not be a problem as the PBC can create unlimited renminbi (….MMT).

  8. IMO, the serious risk in China is that the government by committee, which has been so effective for the last 30 years, because the committee is fundamentally interested in general prosperity… has been replaced by single-man rule by a rather stupid dictator who is actually losing control of the regional governments, which are also becoming corrupt. The lack of democracy is creating a government which no longer has interest in socialism, but rather in the personal cult of Xi. This is inherently destructive, in much the same way that North Korea’s cult was destructive. I don’t think China will go that far because Xi will be tossed out before that, but it’s the major risk.

    1. A true one-man rule never existed in History. Even Roman Emperors had councils (consilium, hence the name we have today) and high officers who made the bulk of the policy for him.

      Even during the ancien regime, absolutists monarchs were highly susceptible to the pressures of the feudal lords. They didn’t simply do whatever came out to their heads.

      Besides, there’s the obvious fact that no office is guaranteed: there’s always the method of assassination to remove an absolute monarch or emperor from his office. The absolute ruler is still human at the end of the day, his power being purely social in every case.

      Also, the lack of a one-man rule doesn’t seem to stop the USA to have an astonishing stable foreign policy over more than two and a half centuries. It also doesn’t seem to stop the major systemic, macroeconomic trends. Well, if democracy equals individual sovereignty, then we should expect wild swings in, e.g. real wages, profit rates, growth rates, sector growth rates, in the USA and other Western Democracies – which obviously isn’t the case.

      The old Marxist formula base→superstructure seems to explain better how stable forms of societies develop; the Marxists concept of History as the saga of class struggle also explains better how societies transition between themselves and between them than the liberal Statecraft Theory (which states History is the saga of the free individual against the tyranny of the State).

      I think the CCP is aware of the dangers of a one-man rule. Before Xi Jinping, there was an effort to try to cap the mandate of each president to 10 years (two five-year plans). There’s no problem with that “rule” when the president is forgettable (like Hu Jintao), but when you have an exceptionally great president (like Xi Jinping) you’ll naturally want him/her to be there for the longest possible. This is human nature: FDR was reelected three times in the USA (albeit with dwindling vote) and nobody complained, and I bet that most Americans would like to have him back today if they could revive his corpse.

      But yes, whatever China’s actual system is, it is certain it is just transitory: it will fall and cease to exist someday. The Chinese are aware of that, as they call their system “Market Socialism with Chinese Characteristics” – a clearly historically specific term, made by someone who’s aware of his own death (memento mori), and very different from the idealist, quasi-religious, definition the liberals talk about themselves (natural law, Providence, the biological and racial aspect of freedom, etc. etc.).

      1. China despite having massive presence in this world, is so woefully misunderstood and understudied. The PRC isn’t just a tinpot banana/oil republic dictatorship. The CPC won their hard earned unification and revolution with the effort of literal millions of common people and thousands of intelligentsia. How does one keep that legitimacy without a working system? Just to note, single person dictatorship isn’t a system. That’s why they often collapse after a sudden death of the person in power.

        China is big. It is the third largest by landmass, the first by population. It takes months if not years to travel throughout the whole country. While the populations size alone already makes me shudder the kind of massive bureaucratic legal files it could produced and have to be managed. With such it is impossible to managed a country by itself. Even Mao tends to be surprised when certain policies of his working way better or way worse than he expected because the massive size of it makes it impossible to wholly predict the outcome

        The Western narrative would have wanted you to believe that China’s governmental is a monolithic. It is not, and we know it is bullshit because no entity is monolithic especially one that is as big as China. The CPC has a complex and even rather byzantine structure of system with overlapping authorities and duties. They know what happened with Stalin and they wanted to make sure that no single person could hold so much monopoly of power over the party (which is why the Cultural Revolution is a very traumatic ordeal for the CPC).

        Then how about Xi who just removed the term and age limit for president (note, only president)? Contrary to the image that Western media wanted you to believe, he isn’t that powerful (or stupid, as per Nathanael said) and he knows that. It is just Xi know his limit, and instead making flimsy consensus like his predecessor Hu Jintao did that resulted in weak government, he gained power where he could and established his dominance. This dominance is used by him to make sure every rival cliques to do their fair share of the work instead of just being busy body like in Hu Jintao era. In all honesty Xi’s ascendance is impossible if the CPC didn’t see the weak leadership of Jiang Zemin and Hu Jintao as a problem.

        Now yes, Xi Jinping is very dominant but he still isn’t all powerful. He still limited by what his prerogative rights and duty as a president of China could do, despite what most media tried to portray the position as uncontested executive power. The thing is, you just only need to see the executive branch of the PRC and you’ll know that the President do not sit alone at the top. An existence of a premier, or prime minister as some people called it, should have indicate you that the position of the president is of a head of government. It is not Xi who make day-to-day policy and implementation of his directive as it is the job of his premier (currently Li Keqian). This is even more apparent if you read his speeches where mostly, if not always, he speaks of ideas and directive in the most general term. He rarely ever mentioned a policy in a detail (the food waste campaign is a great example of this)

        This is why a limitless presidential Xi wouldn’t matter. The premier position is still limited by term and age and this is the position he would give to the next generation CPC after the current premiership out of the office. While himself will stay as the president, the head of the government that will give general directive without any capacity to enact it in detail and has to rely himself on the premiership. So Xi is basically Deng Xiaoping, only that he take that position within an office while Deng worked in an unofficial manner.

        So no, Xi Jinping removing presidential term limit doesn’t mean he is that powerful. He don’t have the mental capacity of managing a China by himself without risking his own health. He has to rely to his premiership. What he has done by making himself a president until an unforeseeable future is to make sure that the premiership would take the path of development and policy that could have undone his work.

  9. As a civil engineer, I am fascinated to see the discussions on economic indices, while reading data provided by the American Society of Civil Engineers (ASCE) I see the complete deterioration of the North American infrastructure ( -the-grade / report-card-history /) and I imagine that soon the Americans, instead of improving their infrastructure, increasingly increase the liability of works that are not carried out, that is, I hope they drink water from Google or walk the roads built by Apple, as deficits are increasing every 4 years ($ 1.3T $ 1.6T $ 2.2T $ 3.6T $ 4.59T)

  10. I think little of growth rates. In general, growth rates only say: General wealth has increased. The growth rates say nothing about the nature of this increased wealth (means of production, means of destruction / weapons, luxury means or means of subsistence) and the increased wealth says nothing about who can enjoy this increased wealth. The GNP per capita lies because it is a number that does not represent real life. The only thing that matters is the poverty rate, the part of the people who have less than 60% or even 50% of the average income.
    In Marx’s time (1850 to 1860) the official poverty rate in England was around 5 percent of the population. Marx commented: “There must be something rotten at the core of a social system that increases its wealth without reducing its misery …” (K. Marx, MEW 13, 492).
    In Germany we currently have around 8 percent poor (welfare recipients). This judgment of Marx still applies today.
    The only thing that really matters in China’s economic development is the relative and absolute decline in poverty. Everything else is not really of interest.
    Wal Buchenberg, Hannover

  11. Asia Times thinks:

    China’s economy set for quantum leap forward (behind paywall)

    Communist Party meeting opens door to high-tech self-sufficiency and shift toward domestic market

    “China’s edge over the West, though, doesn’t come from superior technology. China’s economic takeoff stems from what Nobel Laureate economist Edmund Phelps calls “mass flourishing” – the willingness of the whole population to embrace innovation. China’s plan will push disruptive new technologies into the grassroots of the economy, transforming daily life in several ways.”

    We’ll see…

  12. “Beijing has set an average annual GDP growth-rate target in every Five-Year Plan since 1986.” China no longer has a plan, only guidelines masquerading as a plan. There is no overall allocation of investment to meet specific social goals and balanced with what the West calls an input-output table. *** From Deng’s takeover in the late 1970s, capitalist industrialization replaced socialist development. Now China has admirable industrial capacity, high technological capabilities, and the first or second most extreme Gini coefficient of inequality of any major country. Approximately 600 million Chinese live the nightmare of capitalist prosperity — wandering construction workers, sweated factory workers, precarious delivery workers, small farmers, and more.

    1. And these 600 million supply us in the west with cheap or over-priced products. Bring production back then? What are you suggesting exactly? Should we support the two carrier strike groups in South China Sea? What are you saying exactly?

  13. There’s no point in controverting vk further, but on reflection it seems there are several issues that arise even in a semi-technical discussion of Chinese economic statistics.

    First, a general background of Chinese economic history seems to me to highlight the importance of the productive forces. If I understand it correctly, there was a huge population increase under the Ching dynasty, probably attributable (ultimately) to the introduction of New World food crops. Similarly, the introduction of new technologies via the colonial concessions were essential to the painful beginnings of modernization of China. Thus it seems highly likely that the neo-colonial concessions, the SEZs, have been highly important to the rapid modernization finally, finally achieved by Deng’s heirs (though not Deng himself.) I think the lessons are two-fold, that sufficient increase in the magnitude of the productive forces can compensate many failings of the state (as with the Ching) but in the end, the changes in the productive base engender irreversible changes in the superstructure. The colonial concessions undermined the national state (the dynasty,) leading directly to the warlordism of the Twenties. It may seem some verbal cheating, i.e., the invocation of the hated dialectical materialism, to say that history turns the growth of productive forces into the destruction of the past, but it is so. History is a material force.

    I suggest the neo-colonial concessions are leading to the effective decentralization of the state, the development of a new kind of warlordism where the SEZs turn into the nuclei of new hostile powers. Already the Hong Kongers appear to day dream about bombing Shenzhen, metaphorically if not literally. The slogan is not, not any more at any rate, “one country, two systems,” but “one system, two (or more) countries.” Projections of the current set of statistics into the future that ignore such fundamental developments are naive at best, grossly ideological at worst. It is dismaying to see that the Chinese leadership seems to think that turning mainland China (or the SEZs) into new Taiwans is a good idea. The days when Taiwan was an Asian tiger have disappeared for a reason. The capitalist road is the road to barbarism.

    The second issue is that Xi is devising a personal dictatorship not just because of his personal wish to be everything. But that the whole point of people with power accepting Xi as personal dictator, is their need for a strong man to resolve their dilemma. The defense of private property in the means of production requires the restriction of production to what is profitable (always difficult when commitment to bourgeois ideology means you don’t even understand what determines the general rate of profit!) Thus, a strong man like Xi is necessary to reject commitments to decreasing poverty. The dilemma is not how to ensure private capital will grow Chinese prosperity for everyone, the dilemma is how to do away with the last of the socialist state, to acquire a safe title to property in means of production, to free private capital (whether it’s called civil society or some other euphemism, that’s what’s meant,) from the burden of meeting the people’s needs. That the analysis of China’s growth problem is about a pretend, propaganda problem.

    A third, related issue is that the defense of capital requires the destruction of workers’ states, not just by the Chinese bourgeoisie in Taiwan and Hong Kong and Singapore and the SEZs and the provinces but elsewhere. This often requires violence. Chinese growth will be severely retarded by war, not just war by the US but by war against North Korea. Given that Xi is actively engaged in economic blockade of North Korea, it is just as possible that China will attack North Korea as the US. That China has not pursued the blockade as militantly as the US wishes is irrelevant, a matter of tactics. The siege of the north expresses I think the fundamental appetites of the Xi government. There is no Chinese wall between foreign and domestic policy, forgive the expression. They are of a piece.

    This may seem like a carping on irrelevant political issues, but obviously I can only disagree.

    1. How did Xi manage to devise a personal dictatorship? We are back in the mid-century anti-stalinism again, but now as a farce it seems. For all the talk about materialism, some marxists do indeed pay homage to certain *ideological* forms that we are used to in the west (like parliamentary democracy?). How exactly do you define this “dictatorship”? Did Xi manage to subordinate a 90million strong party and a rising chinese bourgeoisie? How did he do that? You also insinuated that partly he does it because of his wish to “be everything”. Where did you get that from? Are you making the accusation of bonapartism? Or is it that what we (think we) are witnessing in China is simply preparations for war, which is then presented in the naive western mindset as out-of-the-blue cartoonish authoritarianism (duh, it’s the chinese!)?

      1. Xi removed Bo Xilai despite the fact that the primary witness against him had defected to the English!

        These kind of shenanigans are the methods of personal dictatorship.

        When I explicitly say Xi is not just becoming the dictator because he wants to be but because others need him to be a strong man to crush resistance to restricting production to what is profitable, I am not insinuating the opposite.

        Your supposed questions are just more incompetent rhetoric.

    2. “These kind of shenanigans are the methods of personal dictatorship. ”

      So the removal of Corbyn from the UK labor party is, in a similar fashion, Keir Starmer’s attempts to establish “personal dictatorship”? Can you answer this question please and, since I suspect you will say no, can you elaborate on why?

      “When I explicitly say Xi is not just becoming the dictator because he wants to be but because others need him to be a strong man to crush resistance to restricting production to what is profitable, I am not insinuating the opposite. ”

      The removal of Bo indeed reflects a class struggle within the party and it seems the bourgeois elements are winning but centralization and consolidation cannot be explained solely from the “profitability” argument. Geopolitics trumps profitability when we are dealing with sovereign states and at this moment what (we think) we are witnessing is rather preparation for war – not that it will necessarily happen, but still. Even your insufficient and highly idealistic explanation is contradictory, given its marxist presuppositions. If Xi wants to establish a PERSONAL dictatorship, allegedly to keep profitability going, then who is profiting from this? Just him? Or is it a class that is consolidating its power within the party and you feel the need you express your dismissal from the standpoint of your superior democratic, western values? Why would he do that if he is not representing, in the final day, class interests fundamentally opposite to that? If it is true that the consolidation of power is a reflection of the domination of capitalist relations of production, then this is not a “personal dictatorship”, but a bourgeois CLASS dictatorship, probably not unlike in whatever country you are writing your comments at the moment. But I get the sentiment that, at least having appealing “democratic forms”, helps people feel good.

      1. Sir (!) Keir Starmer does indeed want to exercise his personal control over the Labor Party and he most certainly wishes to use the purge to do this. He also wishes to excise all left tendencies from the Labor Party because he abhors the left personally and he has a constituency in ruling class that supports him in this task, just as Xi has a constituency supporting him in his efforts for capitalist restoration. Starmer is upholding the class dictatorship of the bourgeoisie.

        I have no idea why you think my primary objection to Xi is his consolidation of his personal power, rather than his apparent determination to finish traveling the capitalist road. But then, at this point, I have no idea why you think Xi is doing this or why he has so much support for doing this. The observation that “geopolitics” trumps mere class interests is not helpful, suggesting a very idiosyncratic version of “Marxism.” I’m inclined to suspect you support Xi personally because you abhor Mao and Maoism and support capitalist restoration in the guise (for now) of social democracy.

  14. Steven Johnson writes: ….”resisting production to what is profitable….”

    Profitable to the entrepreneur?

    There is more to life than private consumption. Chinese socialism recognizes this. That’s why China has built the world’s most extensive high-speed rail system, while US infrastructure is deteriorating badly.

  15. When the US government issued mass land grants to support the building of intercontinental railroads, or began construction of the US interstate highway system, it was still a capitalist country. Today, as its infrastructure decays, it is still a capitalist country. It’s capitalism that isn’t what it used to be.

    The Chinese leadership seems to believe that capitalism has a future, superior to socialism of the old kind, where public banking and infrastructure development guided by the Neo-Confucian wisdom of the sages will avoid the silly mistakes of mere white men who are bungling up the US. That they have solved the problems of capitalism, that they have figured out the right policies, that they are beyond the false enlightenment of Marxism.

    I still think they are foolish, even if you agree that capitalism works if the rulers are smart and patriotic enough.

    1. “Neo-Confucian wisdom of the sages will avoid the silly mistakes of mere white men who are bungling up the US.”

      It is always funny to see people who lacked understanding over Chinese philosophy are just using ‘confucian’, sometimes with prefix ‘neo’, as a shorthand to Chinese thinking.

  16. These are thoughts that have been bubbling away in my mind for some time now:

    Did the CCP decide that with a world dominated by neoliberal imperialism, pursuing a socialist road was simply not possible given the power the imperialist states have (had?) over the world’s economy? Did they base this analysis (at least in part) on the Soviet Union’s experience of trying to build ‘socialism in one country’?

    If this is the case, does it adequately explain why China has moved away from a totally socialist economy to one that might best be described as a mixed one, assuming (naively?) that the US would leave them alone to develop independent of the West? In other words, the ‘change of direction’ was motivated by a nationalist desire to preserve their independence from imperialism, not realising that it wasn’t so much socialism as the enemy of capitalism but economic and national autonomy that the US feared (denied access to markets, cheap labour and raw materials, let alone competition), much like the Reagan govt’s attack on Nicaragua in the 1980s under the guise of attacking socialism (with fully 80% of Nicaragua’s economy in private hands at the time, Nicaragua could hardly be described as socialist!).

    That in a neoliberal world dominated by the Anglo-American empire, trying to build socialism would be impossible (Venezuela comes to mind as a contemporary example, as it tries to preserve its independence, never mind build socialism!).

    Did the CCP not realise that harnessing the power of (total) state control over even capitalist enterprises would make them far superior (economically) to their imperialist counterparts in the West? That at some point, this advantage would trigger a reaction from imperialism that now regarded China as a competitor, which is precisely what has happened!

  17. Re the Chinese Ghost Towns

    Let us assume that 30 million tons of steel,was used in the so called ghost towns,15 years ago.After 30 year. when these buildings are replaced,this will be steel scrap,and its price will be double the price.of prime steel today.The cement is a dead loss.

    But let us dig deeper.Bao Steel may bill steel to a builder,at say,200 usd/ton,but the Marginal cost of that steel,might be 100 usd/ton.This is not enough.The Marginal COST To the steel cluster,in a communist nation would be 15-20 usd per ton,as the coal mines and steel factory,ports,rails,roads etc.,are already in place.The difference between the coal tarriff and the marginal cost of coal is a TRANSFER PAYMENT FROM Bao steel to the coal mine (if Bao is buying Coal)

    If Coal is selling at 50 usd/ton,the Marginal Cost would be 4-5 USD (being cost of power,diesel and cost of variable labour).

    So the MARGINAL COST of the Ghost towns,would be 10-15% of the contracted value of the towns.

    At that time,it was the RIGHT decision to set up these “ghost towns”,as the price of steel,coal,cement,paints,labour etc., was much lower,and so was their marginal cost.It made sense to lower the ENTIRE PRODUCTION cost of these plants, by MAXIMISING production,and then using the production,in so called GHOST TOWNS.The benefit of lowering the ENTIRE PRODUCTION cost of the steel,coal,cement plants,would be in the billions of USD.IF THE SAME INFRASTRUCTURE WERE TO BE SET UP AT TODAY’s PRICES OF steel,coal,cement,the cost WOULD BE MUCH HIGHER (far beyond the accrued Chinese Inter bank interest rates over the years)

    As far as the banks who lent to the builders of these so called ghost towns – it is important to understand that the Banks have NOT funded the towns.The Banks have funded the input suppliers of these towns,id.est., the steel,cement,paints, furniture and appliances etc factories. In particular,the banks have implicitly funded,the profits of these input suppliers.

    Then we calculate the employment provided to a mass of labour in these ghost town projects,and its attendant benefits and the management and technical expertise,developed by the builders,in these ghost town projects.

    It must also be noted that the INCREMENTAL PROFITS earned by the steel,cement,paints,furniture and appliances etc. factories,as suppliers to the builders of the ghost towns – would have in the last 15 years,based on a ROCE of 20-30 % ,yielded an aggregate return of 1000-1500% to date (with the attendant revenue streams to the PRC,in the form of direct and indirect taxes,besides other incidental gains)

    Hence,for a Communist nation,the Marginal Cost for the Cluster of the “Ghost Towns” (which includes the downstream supply chain benefits and the benefits to the state) is very low and MIGHT even be NEGATIVE,based on the Marginal Cost of the CLUSTER.

    If the PRC calculates the incremental gains to the steel,cement,paints,furniture and appliances etc. factories,and their staff,over the past 15 years and the revenue earned by the state from this chain,over the last 15 years,the gains per se, could more than bail out the bank loans,to the so called ghost towns

    IT MUST BE NOTED THAT THE LABOUR USED IN THE GHOST TOWNS,AND THE LABOUR USED (IN PART),IN THE INPUT SUPPLIERS,TO THESE GHOST TOWNS – would have had NO OTHER employment,were it NOT for the Ghost town projects. These millions of labour were introduced into the labour pool,ONLY due to these Ghost Towns.Of course,they would have inevitably entered into the labour pool – but only after 5-10 years (on such a large scale).

    Hence,there is no loss to the PRC,on account of these so called “ghost towns”.

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