Collection of Articles on China's Socialist Market Economy

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Some Basics on China

By D. Raja and He Yong (http://www.politicalaffairs.net/article/author/view/140)


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From New Age, August 2004 edition.
Know China Before Comparing

The People's Republic of China is one of the major political and economic powers in the world today. It has reached sixth place in the world in terms of economic aggregate. For a country which was utterly backward, feudal and semi-colonial till the People's Revolution in 1949 and for a country which is the most populous in the world whose population (including Hong Kong, Macao and Taiwan) totals around 1.4 billion, it is not a mean achievement. The tremendous progress that is taking place in China has become a focus of attention and analysis in the world. Obviously, the developing countries including India look up to China for experience and for emulation.

At the same time there are differing views on Chinese development. It is a puzzle to some. It is a model to some who think that it can be copied or replicated. Some think that there is lack of democracy and there are violations of human rights in China. Some consider that China is no more a socialist country.

But the leadership of Communist of China (CPC) and the government seem to be clear in what they do. It is appropriate here to quote from the document of the 16th Congress of CPC, 2002.

"We must be aware that China is in the primary stage of socialism and will remain so, for a long time to come. The well-off life we are leading is still at a low level; it is not all-inclusive and is very uneven. The principle contradiction in our society is still one between the ever-growing material and cultural needs of the people and the backwardness of social production. Our productive forces, science, technology and education are still relatively backward, so there is till a long way to go before we achieve industrialisation and modernisation."

Hence, there is a thrust to release and develop the productive forces at all levels, in industry, in agriculture, in services and all other sectors.

Economy Maintains a Steady Growth rate

Chinese economy has been registering a steady growth rate. By 2002, the growth registered in industrial production was 10.2 per cent over the previous year. The total output of grain in 2002 was 457.11 million tonne, up one per cent over the previous year. It is reported that steady progress was there in animal husbandry and fishery. China is a major consumer of steel, cement, coal and crude oil, which according to estimates account for 21 per cent, 50 per cent, 31 per cent and 17 per cent respectively of the global aggregate. It shows the huge demand for the economic construction and domestic consumption. This is a reflection of the tremendous growth. The Gross Domestic Product (GDP) increased by 8 per cent in 2002 compared to the previous.

Unemployment and Poverty

However, the Chinese do not hide the fact that they have the problems of poverty and unemployment. But due to various measures of the Chinese government there is steady decline in poverty and unemployment. China's Prime Minister Wen Jiabao admitted in March 2003 that around 30 million people in China lived under the poverty line of per capita annual income of RMB 625 (one US dollar is equal to approximately 8.5 Chinese RMB). But the World Bank figures based on the income of US one dollar per day showed that China had 490 million people under the poverty line by 1981, 98 million by 1999 and 88 million by 2002. One can see the decline.

The urban unemployment was 4 per cent at the end of 2002. The number of people employed in rural enterprises totaled 133 million. A quarter of China's rural population had moved out of farming, transferring from agriculture to non-agricultural sectors. There are problems of migrant labour added to the problems of paid-off labour.

The urban-rural divide in terms of per capita income, healthcare and education etc is visible. The per capita income of urban residents is almost three times higher than the rural residents. The divide is visible in terms of modernisation and industrialisation also.

But the Party and government are quite aware of these problems. Emancipating the minds, seeking truth from fact, keeping pace with times and making innovations in a pioneering spirit are the virtues of this vibrant intervention in the situation. Reforms and opening up are to be seen in this context.

Agriculture and Industrial Growth

Then, there is shortage of foodgrains. There is shortage of water for irrigation and also in urban centres. The reforms in agriculture are quit significant, particularly the rural tax reforms. The Chinese government decided in 2003 to abolish, exempt or lower 15 charges on the country's 900 million farmers in a bid to reduce their excessive financial burdens. According to the government plan, the agricultural tax will be reduced by more than one per cent per year on an average and they will be rescinded in five years. Prime Minister Wen Jiabao promised to scrap agricultural taxes in five years.

In order to boost its industrial growth and infrastructural developments Chinese government has created free economic and technological zones. Then, there are special efforts to upgrade the skills of laid-off workers and migrant labourers and place them in employment suitably. This includes loans for laid-off workers.

FDI in Economy

China is inviting Foreign Direct Investments (FDI). In 2002, the Contracted Foreign Capital through FDI stood at 82.8 billion US dollar, up 19.6 per cent and the Foreign Capital actually utilised was 52.7 US dollar, up 12.5 per cent. By the end of 2002, China had approved 4,24,196 foreign-funded enterprises, with Foreign Contracted Investment reaching 828.06 billion and Foreign Capital actually utilised totaling 447.97 billion US dollar. The FDI is used primarily in manufacturing sector.

Foreign Capital is utilised in different forms namely, Foreign Direct Investment, Chinese Foreign Equity Joint Venture, Chinese Foreign Contractual Joint Venture, Foreign Capital Joint Enterprise, Joint Stock Foreign Investment, International Leasing, Compensation Trade and Processing and Assembly. In the first half of 2004, the foreign exchange reserves reached 470.6 billion US dollar.

These FDI will have to operate under Chinese Law. No FDI can take over any sector in China. State sector continues to be the dominant sector. Non-state sector, private sector and other joint-sectors can coexist, but state sector will continue to be the main component of the economy. Even, the FDI is overwhelmingly from overseas Chinese.

There is a misconception of the utilisation of FDI in China. In India there are people who argue in favour of hiking the FDI cap in Telecom, Insurance and Civil Aviation. In China, the state holds a major share in all the telecom operators. In the three listed operators China Mobile, China Unicom and China Telecom, more than 70 per cent of the shares are non-private.

China has a huge domestic market. By the end of 2002, the total fixed-line and mobile telephone users numbered 421.04 million in China. There were 33.7 telephones per 100 persons in China. Now the figures will be more.

China is not willing to allow FDI more than 25 per cent in Civil Aviation (that too not in key security areas) and not prepared to hand-over Insurance sector to FDI. The state sector will have its predominance in insurance sector.

Having set the task of building the economy and creating wealth and prosperity as the central task, the Party and the government are in full command in directing and carrying forward the process.

Adherence to the socialist road, the people's democratic dictatorship, the leadership of the Communist Party and Marxism-Leninism and Mao Zedong thoughts are considered to be the cardinal principles on which the entire paradigm of development is supposed to operate. Now the Communist Party of China upholding Deng Xiaoping Theory, it has declared to act on the important thought of the "Three Represents".

What are the social contradictions in China today? How China addresses the new problems caused by reforms process? What is the present theory of socialism and its practice? How to connect the progress on material front and the progress on ethnical front? Need to be studied.


--D. Raja is the general secretary of the Communist Party of India. He Yong is a member of the Central Committee of the Communist Party of China.


New Age is a publication of the Communist Party of India.

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Japanese Communist Party Central Committee Chair FUWA Tetsuzo visited China from Aug. 26-30 at the invitation of the Communist Party of China. In Beijing, he held a summit meeting with CPC General Secretary Jiang Zemin (president of China) to discuss a wide-range of international issues and gave a lecture on "Lenin and the Market Economy" at the Chinese Academy of Social Sciences.
LENIN AND THE MARKET ECONOMY

Lecture by FUWA Tetsuzo
Japanese Communist Party Central Committee Chair

August 27, 2002
At the Chinese Academy of Social Sciences, Beijing

Fuwa Tetsuzo, Japanese Communist Party chair, gave a lecture on "Lenin and the Market Economy" at the Chinese Academy of Social Sciences in Beijing on August 27. The translation of the lecture is as follows:


Good morning, everyone. I am Fuwa Tetsuzo. This is my first lecture outside Japan.

It is a great honor for me to visit the Chinese Academy of Social Sciences and speak to researchers from various fields.

I am going to speak about "Lenin and the Market Economy." I have chosen this subject because it has something to do with both China and Japan in a broader sense.

The Communist Party of China adopted a policy of developing a "socialist market economy" at its Congress 10 years ago. But even before that, China had addressed the subject in practical terms.

And you are now pursuing the road towards "socialism through a market economy."

Japan is in the middle of the capitalist economy. The JCP envisages achieving socialism in Japan through stages. The course we will follow will be "socialism through a market economy" or a "combination of the planned economy and the market economy. "

We will see new historical developments and also face new problems for the theory and practice of scientific socialism.

Lenin was the first communist to address the question of the market economy and socialism.


From 1998 to 2001, I was engaged in research on "Lenin and Capital" and wrote about 40 articles which were published in a magazine in serial form over a period of three years. This was in an attempt to examine Lenin's theoretical activity from his younger years.

One of the major theoretical questions he tackled in his last three years until he fell ill in 1923 was the question of the market economy and socialism.

Marx and Engels are founders of scientific socialism and our great predecessors, but they never had a chance to work on the question of building socialism as a practical issue. I don't think they ever carried out theoretical research on the question of the relations of the market economy and socialism, not even from the theoretical viewpoint.

So Lenin was the first communist to take up the challenge. He had to face many difficult problems arising in the course of his study and even underwent a 180-degree shift in his views. A review of such painstaking efforts by a predecessor, I think, will teach us an important lesson that will help us study present-day problems.

Lenin rejected the market economy in the early stage of the revolution


Looking back on Lenin's activities, you will find that nothing entered Lenin's mind concerning the use of the market economy following the victorious October Revolution, Russia's socialist revolution.

While he was engaged in economic construction following the victorious revolution, he firmly believed in the principle that socialism and the market economy were incompatible with each other. This attitude grew even stronger during the war against foreign intervention and counter-revolution.

Lenin's concept of the communist economy was about industrial production at the state-run factories and grain harvest by peasants, with all grain surpluses being collected by the Soviet central authority state for distribution to the people. This way was believed to help achieve the country's industrial development and enable the Soviet authority to provide peasants with tractors, fertilizer and other necessary supplies, although the country was experiencing hardships due to the war. This being the policy at the time, the "market economy" or "free trade" was regarded as a symbol of the enemies of socialist construction, a counter-revolutionary slogan. The biggest task of the Communist party was to have the people, in particular the peasants who had been used to the market economy, abandon their inclination to favor the market economy.

This policy, later called "war communism," lasted until early 1921.

Adoption of 'New Economic Policy' to pave the way for better relations with farmers


However, this policy caused antagonisms that were difficult to solve on the ground. Farmers were ready to endure hardships to some degree during the war against the counterrevolution and outside intervention, but once Soviet Russia defeated these enemies and achieved peace, the farmers' discontent erupted causing riots in some localities. In Kuronshtadt, a naval port near Leningrad (the capital at the time and known as a stronghold of the revolution) even the revolutionary sailors rose in revolt. In those revolts they called for "free trade" or "freedom to trade."

Lenin took this dangerous situation more seriously than any other political leaders of Soviet Russia at the time.

The major question was how to improve the socialist government's relations with the farmers. How is it possible to establish a worker-farmer alliance, essential for making progress towards a new society? Lenin's statements and articles during this period show clearly that he took pains to find the answer.

Remember that even Lenin believed that the "market economy" was a counterrevolutionary slogan, and you will understand that he needed to exert courage to make the difficult decision to accept a market economy.

The New Economic Policy, NEP, began in March 1921. It is often referred to as being synonymous with the acceptance of a market economy. This is not correct. Although he put forward a drastic change, Lenin initially could not go so far as to recognize the market economy; he looked for a reform without adopting a market economy and adopted an "exchange of products" policy under which peasants bartered corn for industrial goods and other products of the cities. It did not achieve good results.

After six months of soul-searching, in October 1921, he arrived at the conclusion that the adoption of a market economy is necessary.

The announcement of this conclusion, which Lenin worked out after taking great pains, had great repercussions in the party.

Documents from a Russian Communist Party conference at the time (Lenin's report and closing speech), which are available in Lenin's Collected Works show clearly how extensive the turmoil was. A member in the discussion said, "They didn't teach us to trade in prison." Another complained that communists cannot be involved in the very unpleasant job of trade. In the concluding speech, Lenin criticized these views, saying that it is inexcusable for revolutionaries to give way to dejection and despondency.

Toward 'socialism through a market economy'


That was how Soviet Russia began to study the market economy. In short, the discussion on the market economy was prompted by the policy of improving the government's relations with peasants after the victorious revolution.

Once Lenin made a decision to take this course, however, he immediately began to work on this issue in more detail and developed it into a major policy that would have an important bearing on the destiny of the Russian Revolution and socialism, namely, a path toward "socialism through a market economy."

Documents at the time show that it marked a very impressive development. I think that the new policy consisted of a number of pillars.

First, it concerned the establishment and development of a socialistic structure that would not lose in competition with capitalism in a market economy. Lenin used the Russian word "uklad" for what I describe as structure. I'm afraid there is no Japanese or Chinese equivalent for "uklad."

Secondly, the market economy under certain conditions would allow private capitalism to emerge and develop as well as foreign capital to make inroads. This also marked a very important development.

Up till then, the market economy was regarded as the "enemy," the reason being that it would give rise to capitalism even from among small commodity producers. That's something the Russian Revolution could not tolerate.

Thirdly, the new policy called for the key elements of the economy to be preserved as part of the socialist structure. Lenin called these core elements the "commanding heights," a military term used at the time to mean that in an era when cannons were the main arms in war, occupying heights overlooking the battlefield was vital to winning the war.

Two years ago, we had the IT minister of Sri Lanka among the foreign guests attending the JCP Congress. I was a little bit surprised when he said that they are trying to take control of the "economic commanding heights." I said, "I haven't heard that phrase for many years." Then he told me that he had studied in Moscow when he was young.

Fourth, the new policy called for Russia to learn everything advanced capitalism could offer so that the socialist structure could gain economic power.

Fifth, the new policy also referred to peasants. It said that the future organization of peasants in cooperative unions must not be carried out by order from above or by coercion; cooperative unions should be organized based on the voluntary will of the peasants.

The Soviet Union broke it off five years after Lenin's death


In March 1923, 17 months after completing this plan, Lenin fell ill and died in January 1924. Stalin rose to power after Lenin's death. As the leader of the Soviet government and the Communist Party, Stalin from 1929 to 1930 carried out the so-called "agricultural collectivization" as a means of forcibly collecting grain from peasants.

To begin with, the NEP was intended to improve the government's relations with the peasants. So the top-down "agricultural collectivization" policy meant an end of the NEP. Since then, the policy of achieving "socialism through a market economy" never made a comeback in the Soviet Union.

Several decades later, when the Soviet Union was under the leadership of Mikhail Gorbachev, the "introduction of a market economy" was much discussed. But during the preceding 60 years the Soviet Union completely changed itself. Substantial changes took place in the socio-economic system of the Soviet Union during and after Stalin's era. In effect, Soviet society had already become a system in which socialism or even a direction toward socialism was non-existent.

No country has run through this course


So I think that " socialism through a market economy," which China and Vietnam are attempting, is a strategy that no country has ever experienced.

In my speech at the meeting to mark the 80th anniversary of the JCP this past July, I talked about motive power that gets the world to move forward in the 21st century. In that speech I cited what China is attempting to do. I said as follows:

"Although the Soviet Union is gone, projects of socialism associated with Lenin are not. There are countries tackling new projects of socialism, including China, Vietnam, and Cuba. 'Socialism through a market economy' pursued by these countries is precisely what Lenin proposed but which was thrown away by Stalin. This is a path no one has ever traveled through, so there will be many unpredictable difficulties down the road. I have no doubt, however, that results of this trial will have a great impact on the course the world will go through in the 21st century."

What is to be done to set this path toward socialism?


This being such an important issue, there will be a variety of theoretical questions that need to be studied.

Let me just comment on two points.

One is the question of what is to be done to make the path of a market economy successful as a way to achieve socialism.

In analyzing what the path of "socialism through a market economy" would be like, Lenin stated in detail that the economy would involve cooperation and competition between various sectors: socialism, state capitalism, private capitalism, and small commodity production. He also made many original suggestions concerning necessary steps for taking this course to achieve socialism without having to return to capitalism. I think that in the present-day world we can learn many things from what Lenin suggested.

Lenin first and foremost stressed the importance of strengthening the socialist sector through competition in the market so that it can be strong enough to be competitive with capitalism in the market. From this point of view, he also attached importance to learning from capitalist at home and abroad as much as possible.

One of the slogans Lenin put forward was, "to be a good trader one must trade in the European manner."

This apparently was a tough slogan for those who complained, "They didn't teach us to trade in prison." Lenin meant to say, 'To be able to trade is not enough; you must be more skillful businessmen than European businessmen.'

Another slogan Lenin put up was, "test through competition between state and capitalist enterprises."

We should note here that the call for the socialist sector to "beat capitalism" is not confined to economic advantages such as the question of productivity and economic efficiency.

Lenin wrote an article that called for workplace safety to be as good as the best of capitalism. In other words, Lenin's slogan, "Beat capitalism," involves such issues as the environment and pollution. The idea is that socialism should exert superiority in all areas.

Secondly, regarding the "commanding heights" that holds the key to the country's economy. The state must have firm control of the socialist structure so that it will be set as the direction of economic development. When Lenin discussed the importance of the "commanding heights," he was referring to the socialist state taking control of the greater part of the means of production in the industries and transportation. I think that this was an opinion Lenin had under the particular circumstances of Russia at the particular time. What the role of the "commanding heights" is a question that should be explored in accordance with the historical conditions of the country in question.

Thirdly, regarding the defense of society and the economy against negative phenomena the market economy will produce.

The market economy, anarchical and competitive, is like the law of the jungle, which is the source of greater job insecurity, unemployment, and social income gaps. The market does not have power to control such contradictions. Such contradictions can only be controlled through social welfare services and other social security measures.
Although Lenin made no significant remarks on this issue after the adoption of the NEP, I just want to touch on an interesting historical episode. The world's first principles of social security were stated in a declaration issued following the October Revolution by the revolutionary Soviet government. These principles later had a great influence on the capitalist world in that they laid the foundations of social control of negative effects of the market economy under capitalism.

I must point out that the negative side of the market economy is that it gives rise to greed and corruption. Public bodies are required to firmly maintain the principles of socialism, but if they are contaminated by various kinds of corruption, bureaucratism and autocracy will prevail. Aware of this problem, Lenin repeatedly emphasized the importance of popular supervision and inspection along with the self-discipline of public bodies. Thus, Lenin in his later years particularly stressed the need to raise the people's cultural levels and enable each individual to fulfill their responsibilities.

I would like to say one more word. In the present-day world, capitalism's major issue is a choice between accepting the market economy as panacea or placing the market economy under social or democratic control. By and large, the tendency to view the market economy as almighty is clearly represented by the U.S. Bush administration, and the call for democratic control over the market economy is manifest in many European countries. This issue involves a number of global economic issues such as environmental destruction, social disparity and the economic independence of each country.

I am convinced that the important subject of future research from the historical context will be to prove that countries and their economic systems striving for socialism through a market economy will demonstrate their superiority to promote social progress.

What will the future market economy be like?


The other point I want to raise as a subject of study is something more theoretical and concerns the future. It's about the destiny of the market economy. When the combination of the planned economy and the market economy successfully achieves the goal of socialism, will the market economy perish or survive?

I touched upon the negative aspects of the market economy, but a study of the market economy from the perspective I have just mentioned will make it clear that it has some important economic effects that cannot be replaced by other methods or mechanisms.

Take the function of the market economy in adjusting demand and supply.

You may be able to estimate the demand of shoes in a country without having to use market mechanisms. But, when it comes to demand for particular types and colors of shoes, you will have to count on market mechanisms for a long time to come in areas like this, even if you use a computer with high performance.

Likewise, the market's judgment is useful in assessing or comparing labor productivity or corporate performance.

In dealing with the question, "how much more value does skilled labor create than unskilled labor?", Marx said that it is measured by the market mechanism. In Marx's words, such value is determined by a "social process" behind the producers. What he meant was that there is this aspect of market mechanisms.

It is very suggestive that the Soviet-style planned economy turned into a complete fiasco in this regard, as shown clearly by reports delivered by Khrushchev during the 1950s and 1960s at the CPSU Central Committee meetings.

At one point, he stated that in the Soviet Union achievements of productive activities are measured by the weight of products; producing heavier chandeliers is evaluated as better job performance; heavier chandelier may increase the enterprise's earnings, but for whom?"

On another occasion he said: "Why is furniture made in the Soviet Union so unpopular? It is because factories are producing heavy products. Foreign-made furniture is lighter and easier to use. In our country, achievement of production of most machineries is measured by the weight of products. Twice as much iron as that needed for machinery platforms is used; that way may enable the factories to achieve their goals, but they are only making products that can't be of any use. We need to establish new standards to measure achievements of factories."

Such was the Soviet Union's level of study on standards for evaluating economic results 30 years after it abandoned the market economy.

We have an interesting experience in relations to this issue.

After the U.S. war of aggression against Vietnam ended and peace was restored there, we sent a delegation to Vietnam to study the Vietnamese economy and give them advice on economic reconstruction.

The delegation visited farming districts. As you know, they grow rice in paddies. To assist in the mechanization of Vietnam's agriculture, the Soviet Union had sent in rice transplanting machines to Vietnam. Being a product of the Soviet-style planned economy, they were very heavy machines, so heavy that they sank into the mud of the paddies. The Vietnamese felt obliged to use the gift, and decided to use them by attaching two boats on both sides of the machine to prevent the planting machines from sinking. They could plant rice seedlings all right, but the attached two boats pressed down the rice seedling just planted. They finally decided to stop using those machines.

This example shows how difficult it is to find a substitute for the market economy as a system to improve labor productivity and efficiency of economic activities.

This question was not on Marx's mind. In Capital Marx stated that the concept of value remains in communist society. However, we cannot use this remark to speculate that he thought that the market economy would continue to be valid too. If the concept of value will remain valid, it is necessary to think if it is possible for the concept of value to survive without a market economy.

For the concept of value to be valid in the communist society, there must be some kind of mechanism to measure the "value" of labor in place of the "social process" that operated behind the producers, namely the "market economy."

I believe that this involves major unsolved theoretical questions in this area. These are questions that can only be solved as time passes and practical experiences are accumulated worldwide.
Marx based his theory of socialism and communism on scientific criticism of capitalist society and showed that capitalist society will be replaced with a higher form of society as a historical necessity. In so doing, he rejected any attempt to draw up a detailed blueprint for a future new society and instead confined his project to establishing a generality concerning how society makes progress. This is what his theory on socialism and communism is about. Marx maintained a general view that this question should be elaborated by future generations as they carry out practical activities in which they will accumulate and learn from various experiences.

Lenin liked this way of thinking by Marx and said, "Marx did not commit himself, or the future leaders of the socialist revolution, to matters of form, or ways and means of bringing about the revolution."

I think we must bear in mind that we are the protagonists in the effort to create a new society.

This course has a universal nature.


Before concluding my lecture, I would like to stress that nothing about "socialism through a market economy" came to Marx's mind; it was born out of needs on the ground. I said earlier that this is a "new historical challenge." It is also a new theoretical challenge.

Broadly speaking, it shows that has universality. No one would doubt that highly developed capitalist countries like Japan will face similar issues in future. When governments striving toward achieving socialism are established in these countries and start making progress toward that goal, they will create a socialist sector within the market economy. The rationality and superiority of the socialist sector will be tested in the market economy and will increase its importance and effectiveness. The process and form of progress in that process will differ from one country to another. Nevertheless, the basic course "through a market economy to socialism" will be common among many countries.

I will carefully follow your present efforts and experiences. There can be zigzags, success, and failures. I will continue to study what you are pursuing in conjunction with a future Japanese society we are envisaging. Thank you for your attention.
- FUWA Tetsuzo in China-
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Why anti-China campaign hurts movement


By Richard Becker

Is China the main problem for the workers of the United States and the rest of the world? Or is it U.S. imperialism, which has extended it tentacles into most of the world's countries?

The answer seems so clear that it should hardly need discussion. But it has become the issue around which a major struggle has broken out in the important upcoming mobilization to Washington.

Thousands of students, workers, environmentalists, church and political activists will gather in Washington on April 16-17 in an attempt to shut down the semi-annual meetings of the International Monetary Fund and World Bank. The IMF and World Bank are U.S.-dominated instruments of the giant banks and corporations. Together the IMF and World Bank have played a major role in making the rich much richer while spreading poverty and environmental destruction, especially in Asia, Africa and Latin America. They are an integral part of capitalist globalization

The many activists and organizations involved in what is being called "A16" hope for a repeat of the successful demonstrations in Seattle four months ago, when the meeting of the World Trade Organization was severely disrupted, leading to a collapse of the talks. The Seattle protests gave great impetus to the movement against corporate globalization and the April demonstrations promise to be the largest ever held in the U.S. against the IMF/World Bank.

Now a serious struggle over direction and demands that could potentially derail this incipient movement has broken out.

AFL-CIO targets China

The leadership of the AFL-CIO labor federation, along with some other sectors of the movement mobilizing for A16 and the activities leading up to it, have chosen to make the People's Republic of China their main target. The AFL-CIO's major activity is a "mass lobbying day" on April 12, under the banner of "No blank check for China."

Before and after Seattle, AFL-CIO President John Sweeney announced that stopping China's admission to the WTO and blocking the granting of permanent Normal Trade Relations to the world's most populous country was a top priority.

NTR is also known as Most Favored Nation status. Having NTR or MFN status merely means that a country is not subject to any special tariffs or sanctions in its commercial relations with the United States. The U.S. presently grants MFN status to China on a year-by-year basis, a process to which other countries are not subjected. Hearings are held in Congress annually to determine if the PRC "deserves" another year of MFN. This process causes deep anger and resentment in the PRC.

Several groups mobilizing for A16, like the Economic Policy Institute, Global Exchange and Public Citizen's Global Trade Watch, have joined in the AFL-CIO-led campaign.

Mike Dolan of Public Citizen's Global Trade Watch was quoted in the Dec. 6, 1999, Wall St. Journal as saying, "China, we're coming atcha. There is no question about it. The next issue is China." A spokesperson for the Economic Policy Institute, a liberal group, has opposed China's admission to the WTO because it is involved in "market distorting government policies, including requirements for technology transfer to domestic firms, local content and offset requirements."

The AFL-CIO leaders, their mainly Democratic Party allies in Congress and the other groups mentioned above oppose MFN status and admission to the WTO for China because, they claim, China does not have adequate labor standards, uses prison and child labor, violates human rights, and does not allow workers to organize "independent unions."

Leaving aside for a moment the very dubious accuracy of the charges against China, couldn't the same be said about the U.S., and even more so about its neocolonies like south Korea, Indonesia, Guatemala, Saudi Arabia, Azerbaijan, Panama, and so on? There is no campaign to exclude these countries from the WTO.

Protectionism doesn't
protect workers

The key issue, the real issue, for the AFL-CIO leaders is protectionism. Because Chinese workers are paid lower wages than U.S. workers, they argue, normalizing trade between the two countries will undercut U.S. workers, especially in manufacturing.

The threat of job loss is far from hypothetical. Tens of millions of manufacturing and other jobs have been lost over the past three decades due to plants closing in the U.S. and relocating in lower-wage areas, primarily in Asia and Latin America. Countries with right-wing military dictatorships installed and supported by the U.S. government have been particular favorites for relocation. This is a process that will continue, trade agreements or not, as long as capitalism exists.

The protectionist stance of the AFL-CIO leaders will not stop capital flight.

But protectionism does accomplish something: It pits workers in the advanced capitalist countries against their sisters and brothers in the oppressed, trying-to-develop countries. The anti-China campaign misleads workers here to believe that another country and its people is the main enemy, rather than our "own" capitalist ruling class. By doing so, it undercuts and diverts the struggle into "safe" channels--safe for the ruling class. The capitalist owners, the ones who shut down and relocate the factories, are let off the hook.

In addition, the anti-China campaign is overlaid with overt anti-communism and covert racism. The latest issue of the Teamsters union magazine features a back cover attacking "Communist China." And it is impossible to forget that anti-Chinese racism has a long and inglorious history in the U.S. with which any anti-China campaign inevitably connects.

More than a century ago, the U.S. Congress and many Western state governments, including California, passed racist anti-Chinese legislation, barring property-owning, immigration, voting rights and more for Chinese people. In 1882, the federal government passed the Chinese Exclusion Act, outlawing Chinese immigration to the U.S.

It cannot be forgotten that the labor movement of that era, including many unions and the Workingmen's Party, then a major power in California, spearheaded the anti-Chinese hysteria, which frequently took the form of lynch mobs in the streets of San Francisco and other cities and towns.

This history is not unknown to those who are joining in the "China Exclusion Campaign" of 2000. Global Exchange has written: "We hesitate to become involved in the AFL-CIO campaign to keep China out of the WTO because we fear that it may promote protectionism, racism and anti-Communism." But then it goes on to support the campaign, arguing that "we should oppose granting China permanent NTR because permanent NTR will harm Chinese workers' interests."

The argument that China should be kept out of the WTO and denied NTR to "protect the interests of China's workers and peasants" has become suddenly fashionable among the left-liberal supporters of the China exclusion campaign. It has the advantage of providing a left-sounding cover for a reactionary campaign.

It also disregards the PRC's right to self-determination, and treats the Chinese government as lacking in legitimacy. This view is shared, of course, by large sections of the U.S. ruling class.

U.S. imperialism's aims
toward China

A half-century ago the Chinese Revolution broke imperialism's grip, united the country and shocked the imperialist ruling class here. "Who lost China"--they really did think it was theirs--was the question posed by the corporate media and politicians, and this set off a new wave of anti-communist repression in the U.S.

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Since then, the U.S. has employed different tactics at different times in its campaign to regain China: nuclear encirclement, war, sanctions, economic, political, military and diplomatic isolation or engagement, and so on.

But there is no real division over the aims. These are to contain the PRC, limit its development and power, destroy its socialist industrial core, oust the Communist Party from power and ultimately reduce the country to its former status as a colony, open without restriction to U.S. capitalist exploitation of its labor, resources and market.

Since the revolution, China has made enormous strides forward in economic development, to the point that some imperialist strategists believe it could become the major rival of the U.S. within several decades. At the same time, China is still a developing country, struggling to modernize and acquire technology of all kinds. And it is still encircled militarily by the U.S., which maintains large, nuclear-equipped forces based in Japan, south Korea, Taiwan, the Philippines and on a huge off-shore fleet. China is targeted by more than 6,000 U.S. nuclear missiles.

China's interest in joining the WTO is based on development and acquiring technology. The U.S. ruling class wants to bring China in with the hope of subjugating it. This is a continuation of the same struggle that has been going on for 50 years.

China is not above criticism from the left. Many supporters of China have been deeply concerned about the direction of the country's development strategy. The current strategy began with the defeat of the Maoist left wing by the Deng Xiaoping faction in 1976. Under Mao, development was also the priority, but the left in the Chinese Communist Party wanted to avoid bourgeois methods and imperialist penetration.

China has not had a revolutionary foreign policy for many years. One example of this was China's vote, under U.S. pressure, for the original sanctions against Iraq in the UN Security Council in 1990.

Nevertheless, the PRC today retains a socialist industrial core and the Chinese Communist Party still holds state power. It is not a capitalist, much less an imperialist, state.

The WTO, the IMF and World Bank are all imperialist-dominated institutions, as is the United Nations and its myriad agencies. But as long as they exist, all countries in the world should have the right to join as well as to quit them. For activists inside the imperialist U.S. to demand the exclusion of certain developing countries from international bodies reveals to what degree the consciousness of the movement has been infected with the arrogance of its "own" ruling class.

The struggle over China's trade status is not just, or even primarily, a foreign policy issue. Opposing permanent NTR for China is a back-handed way of expressing confidence in the U.S. ruling class. Tying the annual renewal of normal trade relations to China's "human-rights performance" implies that the U.S. ruling class and government are "democratic" and have the right to judge and discipline other countries, to pressure them to become similarly "democratic." But the U.S. system is really a dictatorship of the capitalist class, with a democratic facade

The U.S. ruling class, with its highly militarized and repressive state apparatus, is the number one enemy of the working class and oppressed peoples here and around the world. To make China--rather than U.S. imperialism--the main target is to lead the movement down a dead-end street.

The IMF, World Bank and WTO have served the interests of capital to the detriment of the world's working people. But if they all disappeared tomorrow, the fundamental problem of capitalism--a system that inevitably enriches the few at the expense of the many--would remain.

Our most basic problem is the existence of the profit system based upon the private ownership of the world's wealth, wealth created by the workers of the globe. This system cannot be reformed or made more fair and just. "Fair trade" will only be possible when the rule of profit is overthrown and replaced by a system based on meeting people's needs. That is socialism.

Building the revolutionary movement to achieve that goal must start with the understanding that our main enemy is at home.
This article is copyright under a Creative Commons License (http://creativecommons.org/licenses/by-nc-sa/2.0/).
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