China 'must reduce rich-poor gap' - Premier Wen

[Jia]

China source: http://chinadaily.cn/china/2010npc/2010-03/05/content_9543327.htm

BBC source: http://news.bbc.co.uk/1/hi/world/asia-pacific/8550930.stm
BEIJING - Chinese Premier Wen Jiabao vowed Friday to enhance rational income distribution system as it is an "important manifestation of social fairness and justice" and a major way out for boosting domestic demand and narrowing income gap. "We will not only make the 'pie' of social wealth bigger by developing the economy, but also distribute it well on the basis of a rational income distribution system," Wen told the annual parliament session in his government work report. The government will promptly formulate policies and measures to adjust the distribution of national income, and gradually increase the proportion of income individuals receive from the distribution of national income and the proportion of the primary distribution of income that goes to wages and salaries, Wen said. The role of fiscal and taxation policies in adjusting the primary and secondary distribution of income should be strengthened "to create conditions for more people to earn income from property," Wen said. There are growing complaints in China that residents' income growth lag behind the rise of state fiscal revenue. Low income has also been blamed for dragging down consumer spending. People also grudge about hefty income of monopoly industries, which widens income gap and worsened social equality. Wen said the government will deepen the reform of income distribution system of monopoly industries, set strict standards for the income of executives, especially senior ones, of state-owned enterprises and financial institutions. It also vowed to crack down on and ban illegal income, regulate off-the-books income, gradually form a transparent, fair and rational pattern of income distribution, and resolutely reverse the widening income gap.

[red cat]

China 'must reduce rich-poor gap' - Premier Wen

He realizes it now ?

[RedStarOverChina]

The new ruling faction is populist, so we'll only see more similar rhetoric (and hopefully more action on it).

[red cat]

The new ruling faction is popularist, so we'll only see more similar rhetoric (and hopefully more action on it).

Is it possible for capital in a growing country to make way for concessions until it has found colonies of its own ?

[RedStarOverChina]

Is it possible for capital in a growing country to make way for concessions until it has found colonies of its own ?
That's what happened in every developed capitalist country, isn't it?

[red cat]

That's what happened in every developed capitalist country, isn't it?

Such reforms would mean that China is already an established imperialist power. Is that the case ?

[RedStarOverChina]

I think it's too early to make that call.

China is still way more dominated by foreign capital than it's capital dominanting others---though the recession has certainly worked in Chinese Bourgeoisie's favor in this aspect, the level of dominance foreign capital has on China is difficult for foreigners to comprehende.

I, too, am interested in knowing when should China be considered a imperial power.

The clear sign of that, I think, would be when China becomes among the dominant decision-makers in global financial matters, and overhauls the international financial and economic order, which inherently favours the Western bourgeoisie (more specifically, that of the US).

But as of now, it remains the "factory of the world".

[RadioRaheem84]

They're probably only doing this to increase their domestic consumption and go Keynesian. They see the folly of relying on the US and EU so much. It's mostly out of economic necessity. It will help the workers, no doubt, I am all for it but let's not get our hopes up that the CPC will relinquish its cozy position with transnationals.

[Nolan]

What's the chance that they could make reforms to put China back on the path to socialism? I think if the global economy would collapse it would be inevitable. China could easily be a socialist consumer society and outgrow the collapsed west.

[RadioRaheem84]

If that were true, that would be great, but I doubt it.

[Democrat]

The premier is doing what all leaders do; follow Napoleans advice of 'promise everything, do nothing.' What the Chinese need is a second, but hopefully bloodless [however far-fetched, I do not know] change to a more anarchistic society. I still like China though because they seem to genuinly care for the people.

[RadioRaheem84]

I still like China though because they seem to genuinly care for the people.

How do you figure that when it's a sweatshop haven?

[The Vegan Marxist]

How do you figure that when it's a sweatshop haven?

Well, China has this odd thing towards the care of people. They care about OTHER people, & this is shown when they sent doctors & whatnot to areas like Haiti & Chile, but when it comes to their own people, they're quite authoritative over them.

[RadioRaheem84]

Well, China has this odd thing towards the care of people. They care about OTHER people, & this is shown when they sent doctors & whatnot to areas like Haiti & Chile, but when it comes to their own people, they're quite authoritative over them.

Sounds like the States. Or any other imperial power.

[The Vegan Marxist]

Sounds like the States. Or any other imperial power.

Except the States only care for people when it profits them & their motives. This is why I think around 1/3 of the funded-aid that is put in by those living here in the States is used to help fund the military.

[red cat]

Except the States only care for people when it profits them & their motives. This is why I think around 1/3 of the funded-aid that is put in by those living here in the States is used to help fund the military.

Imperialist states always pretend to be caring for third world nations. Sending doctors precedes sending capital. :)

[Sendo]

How do you figure that when it's a sweatshop haven?

That only applies to a minority of the economy, that centered in areas like Shanghai and is for export. But the rest of the economy is not a sweatshop haven and when many TNC chains come in like Wal-Mart they have to allow unionization.

[Dermezel]

China must begin a round of expropriations. It has been far, far too long and the bourgeoisie are getting cocky. Time to make examples.

Keep in mind, the first round of expropriations did not include even a fraction of the capital that could now be expropriated and China grew by leaps and bounds, second in modernization only to the Soviet Union.

[RED DAVE]

I love the fact that many of you still can't get it. Why shouldn't China have a huge and growing gap between rich and poor? China is capitalist.

China is completing the process begun by the Maoists: from state capitalism to private capitalism. The working class never had control of the means of production in China and doesn't have control now.

China will have to go through a full-scale proletarian revolution, just like the US, Germany, Chile or any other capitalist nation.

RED DAVE

[Dermezel]

I love the fact that many of you still can't get it. Why shouldn't China have a huge and growing gap between rich and poor? China is capitalist.

China is completing the process begun by the Maoists: from state capitalism to private capitalism. The working class never had control of the means of production in China and doesn't have control now.

China will have to go through a full-scale proletarian revolution, just like the US, Germany, Chile or any other capitalist nation.


I disagree. If it was capitalist it would look like India. And if counter-revolutionary forces really dominated in China I have no doubt you would see exactly what happened in the Soviet Union happen to China:


By the time of the rouble crisis of August 1998, output had fallen by almost half and poverty had increased from 2% of the population to over 40%.

Russia's performance since then has been impressive, yet its gross domestic product remains almost 30% below what it was in 1990. At 4% growth per annum, it will take Russia's economy another decade to get back to where it was when communism collapsed.http://www.guardian.co.uk/world/2003/apr/09/russia.artsandhumanities

When a Workers' State falls, you'll know it. You won't be seeing record breaking growth rates, you see the entire economy collapse in a radical manner. Russia lost literally half its wealth and poverty increased 20 fold. They don't go down cleanly or quietly, you basically get to see the entire civilization collapse.

China is not there yet, but there are tendencies in that direction. As of now the State still controls all major centers of capital- the Big Banks and the majority of votes in the executive seats of all large industries, regardless of share ownership.

However, if the culture keeps going right, it may not last. Then you will see a humanitarian crisis take place the likes of which we have not seen for nearly two decades.

[RED DAVE]

China is not there yet, but there are tendencies in that direction. As of now the State still controls all major centers of capital- the Big Banks and the majority of votes in the executive seats of all large industries, regardless of share ownership.China still retains large elements of state capitalism.

And it is clear that: (1) the essentially social relationship of work, the control of surplus value, is not and has never been, in control of the working class; (2) this did not change in China with the Maoist revolution; (3) the state still controls much of the nation's capital; (4) more and more, capital will pass into private hands.

It's capitalism, comrades, in all its disgustingness. I have no idea why anyone would think it is anything else.

RED DAVE

[Dermezel]

China still retains large elements of state capitalism.

And it is clear that: (1) the essentially social relationship of work, the control of surplus value, is not and has never been, in control of the working class; (2) this did not change in China with the Maoist revolution; (3) the state still controls much of the nation's capital; (4) more and more, capital will pass into private hands.

It's capitalism, comrades, in all its disgustingness. I have no idea why anyone would think it is anything else.


China does not have a free association of workers, (you'd need democratic ownership of the means of production for that) but it is not state capitalist because the means of production are not privately inherited by a ruling class.

That is why studies in the Soviet Union and China show that civil disorder tends to split among ranks in a vertical as opposed to horizontal manner. In capitalist societies they split much more horizontally between rich and poor classes because property is at stake, whereas in Deformed Workers' States (http://en.wikipedia.org/wiki/Deformed_workers%27_state) they split more evenly among the upper and lower ranks.

Also I'm not sure what State Capitalism (the term is constantly debated) is exactly, but trust me, capitalism is not very efficient. If China went capitalist that whole economy would be facing a major collapse.

[SocialismOrBarbarism]

I disagree. If it was capitalist it would look like India. And if counter-revolutionary forces really dominated in China I have no doubt you would see exactly what happened in the Soviet Union happen to China:

http://www.guardian.co.uk/world/2003/apr/09/russia.artsandhumanities

Interestingly India had a highly planned economy until the early 90s and even has more state owned enterprises now than ever. What happened in the Soviet Union was the result of a nationally shut in economy introduced to foreign competiton. The same thing happened to Detroit.


When a Workers' State falls, you'll know it. You won't be seeing record breaking growth rates, you see the entire economy collapse in a radical manner. Russia lost literally half its wealth and poverty increased 20 fold. They don't go down cleanly or quietly, you basically get to see the entire civilization collapse.

Did this happen to every former "workers state" or just those that adopted the shock therapy of Russia?


it is not state capitalist because the means of production are not privately inherited by a ruling class.

To say that state ownership regardless of the social relations of production means that there is no capitalism is to throw Marxism out the window.

[chegitz guevara]

Is it possible for capital in a growing country to make way for concessions until it has found colonies of its own ?

Yes.

[Dermezel]

Interestingly India had a highly planned economy until the early 90s and even has more state owned enterprises now than ever. What happened in the Soviet Union was the result of a nationally shut in economy introduced to foreign competiton. The same thing happened to Detroit.

According to Nobel Prize winner Joseph Stiglitz it was the corruption of privatization coupled with a hot money supply: http://www.ratical.com/co-globalize/Stiglitz.html


Step One is privatisation. Stiglitz said that rather than objecting to the sell-offs of state industries, some politicians -- using the World Bank's demands to silence local critics -- happily flogged their electricity and water companies. `You could see their eyes widen' at the possibility of commissions for shaving a few billion off the sale price.

And the US government knew it, charges Stiglitz, at least in the case of the biggest privatisation of all, the 1995 Russian sell-off. `The US Treasury view was: "This was great, as we wanted Yeltsin re-elected. We DON'T CARE if it's a corrupt election."'

Stiglitz cannot simply be dismissed as a conspiracy nutter. The man was inside the game -- a member of Bill Clinton's cabinet, chairman of the President's council of economic advisers.

Most sick-making for Stiglitz is that the US-backed oligarchs stripped Russia's industrial assets, with the effect that national output was cut nearly in half.

After privatisation, Step Two is capital market liberalisation. In theory this allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money often simply flows out.

Stiglitz calls this the `hot money' cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days.

And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.

`The result was predictable,' said Stiglitz. Higher interest rates demolish property values, savage industrial production and drain national treasuries.

At this point, according to Stiglitz, the IMF drags the gasping nation to Step Three: market-based pricing -- a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls `the IMF riot'.

The IMF riot is painfully predictable. When a nation is, `down and out, [the IMF] squeezes the last drop of blood out of them. They turn up the heat until, finally, the whole cauldron blows up,' -- as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots.

There are other examples -- the Bolivian riots over water prices last year and, this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You'd almost believe the riot was expected.

And it is. What Stiglitz did not know is that Newsnight obtained several documents from inside the World Bank. In one, last year's Interim Country Assistance Strategy for Ecuador, the Bank several times suggests -- with cold accuracy -- that the plans could be expected to spark `social unrest'.

That's not surprising. The secret report notes that the plan to make the US dollar Ecuador's currency has pushed 51% of the population below the poverty line.

The IMF riots (and by riots I mean peaceful demonstrations dispersed by bullets, tanks and tear gas) cause new flights of capital and government bankruptcies. This economic arson has its bright side -- for foreigners, who can then pick off remaining assets at fire sale prices.

A pattern emerges. There are lots of losers but the clear winners seem to be the western banks and US Treasury.

Now we arrive at Step Four: free trade. This is free trade by the rules of the World Trade Organisation and the World Bank, which Stiglitz likens to the Opium Wars. `That too was about "opening markets",' he said. As in the nineteenth century, Europeans and Americans today are kicking down barriers to sales in Asia, Latin American and Africa while barricading our own markets against the Third World's agriculture.

In the Opium Wars, the West used military blockades. Today, the World Bank can order a financial blockade, which is just as effective and sometimes just as deadly.

Stiglitz has two concerns about the IMF/World Bank plans. First, he says, because the plans are devised in secrecy and driven by an absolutist ideology, never open for discourse or dissent, they `undermine democracy'.

Second, they don't work. Under the guiding hand of IMF structural `assistance' Africa's income dropped by 23%.

Saying the USSR was ruined by foreign competition is a lot like saying China was ruined by "opening up" to foreign markets during the Opium Wars.

Even the US has experienced its largest periods of economic growth during protectionist eras: http://economyincrisis.org/content/lessons-our-past-should-guide-our-future




Manufacturing Core To Early American Independence

In colonial America, England prevented American manufacturing by using tactics that included arresting and jailing anyone with manufacturing talent who would move from England to the colonies. In response to the English demand that we ship to them our timber, iron ore, rice, cotton, indigo, and natural resources, and import from them the manufactured finished articles thereby remaining a banana republic, Alexander Hamilton in his famous treatise “Report on Manufacturers” called for steps instead to build up our own manufacturing and to build our country. The first bill that passed in Congress on July 4, 1789, was a tariff bill, protectionism, a 50-percent tariff on 60 different articles.


Policy Of Protecting Key Strategic Industries Like Steel, Agriculture

Later, Abraham Lincoln decided against importing steel from England to build a transcontinental railroad. Instead, he decided to encourage development of our own steel plants. He put import restrictions on British steel thereby giving birth to one of the key industrial engines of growth in this country.
Franklin Roosevelt, in the darkest days of the Great Depression, developed a system of import quotas and subsidies for America’s agriculture. This system has remained to this day and that same group of farmers now receives annually over $180 billion worth of subsidies. This specific program is the subject of much free-trade discontent. However, few can imagine an America where we would put at risk the national security for the sake of ivory-tower free-trade ideology applied to agriculture and food production.


Protecting Industry Was A Common Practice

President Eisenhower, in the mid-1950s, applied oil import quotas. John F. Kennedy produced the seven-point Kennedy textile program of restrictions on textile imports in 1961. Ronald Reagan put import quotas on steel, machine tools, semiconductors, and a 50-percent import tariff on motorcycles.


Protecting US Industry Critical To Success Of First 100 Years

For the first 100 years of American independence, America was financed through protectionism. US net worth after that first century was twenty-five billion dollars more than the next wealthiest country, namely Great Britain. U.S. gross national product was more than twice that of Germany and Russia. The U.S. was so rich in goods and services that it was more self-sustaining than any industrial power in history. The U.S. had no federal income tax provision until 1913. Until that time, the government was supported almost entirely through tariffs and protectionism. Protecting the nascent U.S. chemical industry was a key in helping to defeat Germany.
In those days, more than half of the world’s cotton, corn, copper, and oil flowed from America, and at least one-third of all steel, iron, silver, and gold.



Even if the U.S. was not flush with raw materials, excellent manufacturing guaranteed dominance of world markets. Wall Street was awash with foreign capital. It was calculated that America could afford to buy the entire United Kingdom including their national debt. Even the world-leading Bank of England began to borrow money on Wall Street. In short order, New York City seemed destined to replace London as the world’s financial center.


Even most of our most powerful technology now is from government programs- Nuclear power, batteries, microwaves, the internet, automobiles were all created by the government, or induced into wide scale development by government intervention.


This seems to hold true world wide:


http://economyincrisis.org/content/understanding-value-protectionism



It is no accident that the U.S. was historically a protectionist economy. The Founding Fathers understood the value of protectionism, so they explicitly granted Congress the power “to regulate commerce with foreign nations” in Article I, Section 8 of the Constitution. If protectionism is such a bad idea, why did the U.S. go from being an agricultural backwater to the world’s industrial superpower under this policy? Why did Japan go from bombed-out rubble to the second-richest nation in the world this way? Why is China growing nearly ten percent a year this way?


Dan’s claim that global poverty has declined due to free trade is bizarre given that, according to the World Bank, the entire net reduction in global poverty since 1981 has been in protectionist China.


If lack of free trade and an inability to "compete" was what caused the USSR to fail, why did it wait until it lowered its protectionist barriers? Why hasn't China fallen? Why hasn't India exploded into a first world country?


No, I think it was the opposite, lowering the protectionist barriers and ending the state-planned economy is what made Russia less competitive then the USSR in economics.