Workers Solidarity Movement

Today, China is the driving engine of global economic growth. A major crisis of the Chinese economy will almost certainly drag the global economy into the next recession in the 2020s. This may turn out to be far more damaging than the Great Recession of 2008.

Minqi Li is a political economist at the University of Utah and an advocate of China’s Maoist New Left [1]. His most recent book, ‘China and the 21^st Century Crisis’, outlines capitalism’s next looming crisis. Regardless of the proximate cause, this coming crisis will be economic, political, and ecological. It will also be global.

China’s economic boom from the 1990s onwards was based on three primary conditions: the rapid growth of exports to western capitalist economies, the intense exploitation of a large, cheap workforce, and ruthless environmental degradation. Following the 2008 global financial crisis, however, all three conditions for growth continue to be undermined. As Chinese exports to the West slowed, China depended more and more on investment - generally fuelled by massive fiscal stimulus programmes and government borrowing - to drive economic growth. As China’s Debt-GDP ratio surges, the risk of a sudden, sharp drop in business investment and borrowing mounts (Li, 97). More fundamentally for Li, the high level of investment is driving down China’s capital productivity, leading to falling rates of profit for capital (Li, 3). Under the current trend, China’s profit rate – the rate of return on invested capital - will fall to a level that is likely to precipitate a major crisis in the 2020s if not sooner (Li, 171).

Workers against Boss Communism in China

The industrial working class in China is the world’s largest.  Moreover, at a time when large parts of the world are suffering under the tyranny of neoliberal austerity, the working class in China is, somewhat exceptionally, making significant gains in their struggle against capitalist exploitation (Li, 29). Workers’ claiming of economic and political rights takes the form of ‘mass incidents’, a term used by the Chinese censor to describe large sit-ins, mass strikes, rallies, and riots. Some 8,700 ‘mass incidents’ occurred in 1993, 60,000 in 2003, and 120,000 in 2008. [The image below from the China Labour Bulletin indicates the number of strikes in China between July 2018 and January 2019]. Li estimates that the annual number of such incidents has remained above 100,000 in recent years. Some 10 million Chinese people are currently involved (Li, 182). He claims that ‘the spectre of a working-class revolution which haunted the European capitalist classes for almost a century after 1848 is resurfacing in China in the twenty-first century’ (p.7).

Workers’ struggles have grown in both size and militancy. Despite state repression, workers have been able to win concessions from capital. In 2007, crane drivers at Shenzhen port terminals went on strike, winning pay raises as well as compensation for overtime and housing subsidies. In 2010, strike waves swept China’s automobile, textile, and electronics industries. Local governments increased minimum wages soon after. From 2010 to 2014, Shenzhen’s local minimum wage jumped from 900 to 1808 Yuan per month; in Shanghai, from 960 to 1820 Yuan (Li, 29). Specifically, and perhaps most importantly for Li, wages have grown more rapidly than labour productivity – with important economic and political implications (Li, 7).                                            

Chinese capitalist prosperity is founded on the intense exploitation of semi-proletarian rural wage workers (Li, 28). In these circumstances, the Chinese Communist Party relies on rapid economic growth and rising living standards to retain its authority. Li estimates that the Chinese capitalist class needs to secure economic growth rates of about 5 per cent per annum to sustain overall political and economic stability (Li, 161). Capitalism’s ‘grow or die’ imperative, however, confronts two quite fundamental barriers.

Firstly, state concessions to rising popular demands will increase the cost of capital accumulation. This contradiction is not a new phenomenon. In the 1970s and 1980s, countries transitioning to neoliberal capitalism such as South Korea, Brazil or Poland encountered similar tensions between capital accumulation strategies and securing political legitimacy by raising living standards. State elites resolved these contradictions by relocating their low value-added activities to another part of the globe; by availing of abundant natural resources; or by promising its workforce access to the labour market of a core capitalist country (Li, 77-8). China, however, is not in a position to adopt any of these options. This is largely due to the way China’s emergence has reshaped the wider capitalist world-system. For the first time in the history of capitalism, the gap between core capitalist countries and peripheral regions has begun to narrow (Li, 176). As China develops further, global labour and resource costs will tend to rise (Li, 13).

This is politically significant. In the late 1970s, China’s reintegration into the global capitalist economy provided a large, cheap labour force for exploitation and arguably tilted the global balance of power in favour of the capitalist classes (Li, 3). Today, however, conditions have changed. It is highly unlikely that another large geographical area, such as India for example, could be mobilised to contain the rising labour costs evident now in China and the wider capitalist world. For one thing, an industrialisation on the required scale would immediately run into ecological barriers, such as the availability of fossil fuel resources and of environmental space. This brings us to the second fundamental barrier facing state capitalism in China as well as capitalism generally: nature.

The Spectre of Ecological Catastrophe

Capitalism is fundamentally incompatible with ecological sustainability. Today, various global ecological systems edge towards collapse (Li, 11). Even if the world commits to zero economic growth today, for all practical purposes, it is already too late to avoid dangerous climate breakdown (Li, 175). The question rather is whether humanity can manage to avoid the very worst climate catastrophes that would destroy the material foundation of human civilisation. The current global economy is built upon capital infrastructure that is heavily dependent on fossil fuels. Given this fact, Li highlights that attempts to replace or adapt capital infrastructure are slow, typically taking place at a rate of 4-5 per cent a year in a capitalist economy (Li, 111). Li further claims that world production of oil, natural gas and coal is likely to peak before 2050 while nuclear and renewable energies will be insufficient to offset fossil fuel decline (Li, 141) [2]. Declines in world energy consumption after the 2030s will likely precipitate a prolonged, major crisis of global capitalism (Li, 13).

Within this general picture of the ecological limits to global capitalism, Chinese capitalism plays a central role. Today, China is the world’s largest energy consumer and greenhouse gas emitter (Li, 12). In a very immediate sense, China faces particularly acute problems when it comes to the availability of clean air and clean water. In particular, China’s fresh water resources are highly unevenly distributed: Northern China has 47 per cent of the national population but less than 20 per cent of water resources. About 300 million people in rural China rely on unsafe drinking water; some 100,000 people die annually due to water pollution-related disease (Li, 159). Environmental degradation plays a part in undermining state legitimacy.

The basic requirements of climate stabilisation are fundamentally incompatible with the operation of a capitalist economy in China. The required reduction in carbon dioxide emissions implies drastic reductions in China’s economic growth rates by the 2020s. The only scenario where humanity enters the 2040s on a ‘sustainable’ path is one where the Chinese economy approaches zero – or possibly negative - growth (Li, 148). In other words, a sustainable path equates with a non-capitalist economy. Now recall Li’s analysis that the Chinese capitalist class needs to secure economic growth rates of about 5 per cent per annum to sustain overall political and economic stability (Li, 161). If the Chinese economy grows at this rate, apart from carbon emissions, China’s demand for oil, natural gas, and coal is likely to impose unbearable burdens on world energy markets in the 2020s and 2030s (Li, 171). This will occasion peak oil scares and geopolitical tensions [3]. In short, workers struggles combine with environmental limits to present the Chinese state and its neoliberal mode of capital accumulation with a serious crisis of legitimacy.

China’s Boss Communism versus Humanity

Ideologically, the Chinese dictatorship is not helped by its single-minded faith in the efficiency and rationality of the capitalist market (Li, 186). Alternative strategies for crisis resolution, for example, are emphatically discarded. Bo Xilai – who advanced state-owned enterprises and income redistribution in Chongqing - represented the last significant faction within the Chinese Communist Party politburo opposed to neoliberal capitalism. (Li glosses over authoritarianism in Chongqing, including Bo Xilai’s suppression of factory workers’ protests in the early 2000s). In 2012, Xilai was arrested and sentenced to life imprisonment, ostensibly on corruption charges. The eclipse of the opposition faction enabled Xi Jinping to emerge as President and the CCP to embark on further rounds of neoliberal reforms, including more financial liberalisation and further privatisation of remaining state-owned enterprises.

Needless to say, China’s ruling class has not trusted their own personal fortunes to the invisible hand of the market. Political corruption and theft of state assets are rife. In 2012, for example, a New York Times investigation found that former Prime Minister Wen Jiabao’s family had accumulated assets worth some 2.7 billion US dollars. Pervasive corruption not only undermines the legitimacy of Chinese capitalism, it further undermines the ability of the ruling class to safeguard its own class interest (Li, 35). From the early 2000s onwards, corruption, rising inequality, insecurity, environmental degradation and political repression have all steadily undermined the popular legitimacy of state capitalism in China. The country’s ruling class are wedded to international capital and, like the ruling class globally, are living on borrowed time.

Capitalism’s social and ecologically damaging crises, however, present opportunities for authoritarian solutions – ‘fake revolutions’ – to present themselves. Predictably, Li quickly claims that the putative leadership of popular struggles may lie with China’s ‘Maoist’ New Left – a synthesis of newly radicalised worker-activists, college students, and intellectuals as well as veteran Communist Party cadres (Li, 12, 34). There is a strong hint of wishful thinking here. There is also a deliberate amnesia around actually-existing Maoism’s historical record, particularly the hardship, famine, and absence of control experienced by peasants and workers in mid-20^th century China. Self-emancipation of the working class was not on Mao’s agenda. This narrows Li’s perspective of possible socialist transformations towards state socialism and the vanguard party.

The emergence of contemporary struggles in a globalised China suggests more complex possibilities and more democratic aspirations. Despite considerable authoritarian pressures and risks, workers in China continue to walk off the job every day [4]. Those of us outside of China would do well to take inspiration from the most restive elements of the world’s working class. The question for us all is whether a democratic movement for a liberated humanity - internationalist in spirit, ecological in sensibility, and opposed to exploitation and oppression - can organise, fight, and win. And can it do so before environmental collapse? The clock is ticking.

NOTES

[1] Li participated in ‘student dissident activities’ in Beijing at the end of the 1980s and spent two years in prison for giving a political speech at the campus of Beijing University in the early 1990s. In prison, Li switched from being a “neoliberal” to a “Marxist-Leninist-Maoist”, before emigrating to the United States in 1994 where he has continued to research political, economic, and social development in China. The author discusses his research in an interview here: https://www.e-ir.info/2015/04/07/interview-minqi-li/

[2] Li counters the possibility of ‘green capitalism’ in China – heralded by establishment commentators who highlight the state’s increased investment in solar and wind energy – as a wonderland, “limited by the availability of land and precious metals” (p. 130).

[3] Li does not dwell on the possibility of military confrontation between China and the US and its allies in East Asia. The US military-industrial complex has certainly considered this possibility. From 2011 onwards, two-thirds of US naval forces have been transferred to Asia and the Pacific while 400 American bases surround China with ships, missiles, and troops, in an arc that extends from Australia through the Pacific to Japan, Korea and across Eurasia to Afghanistan and India. See http://johnpilger.com/videos/the-coming-war-on-china

[4] Edited by Hao Ren; English edition edited by Zhongjin Li and Eli Friedman (2016) ‘China on Strike: Narratives of Workers' Resistance’ provides much insight into the lives and struggles of workers organizing in China’s factories. It draws on dozens of interviews with Chinese workers and is available at https://libcom.org/library/china-strike-narratives-workers-resistance