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From The Socialist newspaper, 22 November 2002

Capitalism With Chinese Characteristics

THE SIXTEENTH Congress of the Chinese 'Communist' Party has reinforced the country's transition to capitalism. Party chief Jiang Zemin has stepped aside for Vice-President Hu Jintao, although Jiang, as military commander, retains a large degree of political power. Other 'younger' pro-market reformers were elevated to leading positions.

John Reid

The Congress opened the doors to party membership to capitalist billionaires. Jiang stated: "We must make sure market forces play an essential role in the allocation of resources... we must free our minds from a dogmatic interpretation of Marxism". In fact Jiang stands Marxism on its head by proclaiming the Communist Party's duty to represent not only workers and peasants but also the capitalist class!

Economic transformation

ON THE face of it China's economic success seems amazing; the economy has tripled in size since 1989. Gross Domestic Product is expected to grow by 8% this year, on top of 7.3% growth last year. The national economy will exceed 10 trillion Rmb, up 8% on the previous year following China's entry into the World Trade Organisation (WTO). China is now the world's major exporter of many electrical goods.

However, the transition to capitalism may not be as smooth as the new Party clique hope. The banking system is creaking under the weight of bad debts (37% of GDP) as well as huge government debts (100% of GDP).

There's also the acute problem of soaring unemployment. The closure of state industries, which under the planned economy used to guarantee the jobs for life scheme (the "iron rice bowl"), has caused massive unemployment. Unemployed workers do not receive benefits.

Officially there is 4% urban unemployment, but the figure is probably nearer 8%. These figures do not include the 150-200 million unemployed and underemployed rural workers.

There have been massive workers' demonstrations over factory closures. These have been viciously dealt with by the authorities, jailing the leaders of independent trade unions.

An unemployed construction worker, Zhang Ke, says: "Chinese workers are struggling for money to feed their families while these leaders talk about welcoming capitalists into the Communist party - they might as well call it the Chinese capitalist party."

According to former tile factory worker, Huang Weibao: "We are worked like dogs and then are discarded when the factories close... Tensions are rising... It is only a matter of time before it explodes."

Since joining the WTO foreign investment is flowing into China at a rate of more than 30 billion a year. In Shanghai, more than 100 limited companies are set up every 24 hours. China is now the world's fourth largest industrial producer. It is the biggest exporter to the USA, knocking Japan into second place.

Many multinationals have moved large parts of their operations to China to produce goods for export (the home market is limited, with the workers on such low wages). National Presto, an American company, has closed two factories in the US states of New Mexico and Mississippi costing the loss of many jobs and has moved to China. China's vast pool of cheap labour is the attraction. Wages average 40 US cents an hour, six times cheaper than Mexican labour costs and just a fraction of US wages.

Wealth gap

THE NUMBER of private businesses has increased from 90,000 in 1989 to 2.3 million last year. State-owned industries are down from 102,300 in 1989 to 42,900 in July this year. The private sector is expected to overtake the state sector to control more than half the economy next year.

However, the ruling clique is still trying to manage the rapid transition to capitalism, for fear of provoking widespread social unrest. Chinese private companies are still restricted by the state. Of the Rmb30 billion (2.3 billion) in corporate bonds issued so far this year, none was launched by private companies.

Homegrown private companies are also less favoured than foreign companies. In China's five special economic zones, foreign investors pay 15% corporation tax, but domestic companies pay 33%.

China is on the road to complete capitalist restoration, but the ruling clique are attempting to do this gradually and by maintaining their repressive authoritarian grip. The effects on the working class and peasants have been devastating; the gap between rich and poor exceeds the wealth gap in the USA.

There is the potential for huge movements of the Chinese workers and peasants. A revolutionary party based on a clear socialist programme needs to be built to enable the Chinese people to sweep aside the rotten ruling caste and establish a genuine, democratic socialist society.

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In The Socialist 22 November 2002:


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