China as a superpower

Got into a discussion last night with a non political friend about China and why it cant become a major capital to compete with America. Tried to explain the organic composition of capital and failed miserably as she argued “But China has got huge resources, manpower, and a growing skill base.....” Is my notion of decadence as a trajectory that precludes new capitals that could compete with the US just another symptom of a befuddled brain? Comments would be welcome.


  • China *

China is wholly dependent upon the US to purchase its exports. China's fortunes as an imperialist power are tied to the US bourgeoisie's own fortunes. China can only survive as the world's sweatshop. As the costs associated with the variable element of capital becomes too costly for capitalists to maintain adequate rates of profit they will move their labor elsewhere, to countries like Vietnam for example. China only has power because of its exports. International capital made China the sweatshop of the world and this is exactly how China will have to stay in order to succeed on the world capitalist stage. I would urge checking out some of the articles on our webpage on China, particularly China - A boom with feet of clay.


Does not the article point to China having the option of becoming a major part of an anti-US bloc?

would that open the path for China to become a much more powerful imperialist player?

It seems that already China is challenging the US in Africa and Latin America.

To quote

China is destined to play a role in the foreground of inter-imperialist relations for the near future, not just by the fact that it represents the principal reservoir of labour-power for world capitalism, but also by its enormous territorial and demographic dimensions. In this phase of international politics in which the US is disposed to play all its cards to the fullest extent, not least that of permanent war, merely to maintain its imperialist domination over the world, China, by its dimensions and its strategic geographical position, is destined to be at the centre of the world scene. Its growth of the last decade has caused it to reacquire a foreground role in the East Asian region and the whole Pacific. Its opposition to the Second Gulf War, the ever more tense relations with the US, the threat of shifting its currency reserves towards the euro, the rapprochement with Russia and the ex-Soviet republics of Central Asia and the ever closer political and commercial links with European countries allow us to glimpse China making a choice of its strategic camp in the imperialist conflict which is emerging on the horizon between the US and the axis constituted by France, Germany and Russia. In the present state of affairs, everything is subject to precipitous change, not just the axis of Paris, Berlin and Moscow, but, seeing the preconditions on which its present economic growth is based, China can pass in very little time from boom to an economic recession with catastrophic social consequences.

Perhaps the latest events involving Russia/Georgia/USA will clearly show whether or not China is moving away from the US.

Article from Sunday Times - love the comment that America is urging China to become a more balanced economy. Lehman, Bear Sterns,AIG, Merrill Lynch - yup America sure understands what makes a balanced economy.

:From The Sunday Times

September 14, 2008

Is it all over for cut-price China?

Michael Sheridan in Hong Kong

THE huge container ships are still a fine sight as they weave through a maze of islands and head out to the South China Sea, but their cargoes are no longer made in the world’s bargain basement.

The fabled “China price” of cheap consumer goods has kept global inflation low, undercut workers in every industrialised nation and brought millions of Chinese peasants into a raw capitalist economy.

That phase of globalisation may now be coming to an end, economists say. The export machine that powered China’s spectacular growth is slowing as the cost of manufacturing in China and shipping goods to Britain goes up daily.

“We are starting to look elsewhere,” said a UK supermarket buyer, “to Israel, eastern Europe, Thailand, Vietnam and in many cases we are getting better prices than from China.”

It costs about £3,000 to ship a 40ft container stuffed with toys or shoes from Shanghai to Manchester, shipping firms said last week. That is more than double the amount charged in the early years when China was a paradise for outsourcing and oil traded at just over $20 a barrel.

Freight costs have pushed some American firms into “reverse globalisation”, moving their manufacturing operations in steel, furniture, electronics and textiles back to America and Mexico.

The harsh arithmetic of shipping is only part of the explanation. But it illustrates the pitfalls for any business model dependent on going halfway around the world in search of the cheapest labour. Even sweatshops, it turns out, have their bottom line.

The energy shock hit Chinese firms hard. Oil at more than $100 a barrel not only pushed up the cost of shipping, but fed through into raw-materials costs for plastics and led to higher electricity rates.

All of that, in turn, pushed up Chinese domestic inflation to nearly 10% and food prices for staples such as pork by 45%. Workers demanded wage increases. A labour law, enacted this year, gave them rights and made unions stronger.

As the labour market evolved and internet usage rose, literate young migrant workers learnt of opportunities elsewhere and voted with their feet against the worst-managed factories in southern China – often those owned and operated by companies from Hong Kong, Taiwan and South Korea. Last year there were labour shortages in the southern provinces for the first time.

Two more factors raised costs for Chinese firms. Determined to drive out bottom-end manufacturers and move production up the value chain, the Chinese government cut tax rebates that had amounted to a 13% export subsidy. It worked so well that some local authorities are having to step in to bail out big employers.

The biggest blow to exporters was the rise of the Chinese yuan against the US dollar and currencies of other trading partners. Not long ago, £1 bought more than 15 yuan. Today sterling trades at about 12 yuan and the differentials are widening.

“Now the pound is weakening against the dollar I’m in the same situation the Chinese have been crying to me about all year – currency,” said the British buyer, who asked not to be named.

“When they had this problem we helped them out. But now it’s reversed, will they help us? No chance. If this attitude prevails, at the low end at any rate, China may start to price itself out of our market.”

The Chinese have their own tale of woe to tell. “The situation here is very severe,” said Zhang Handong, director of Zhejiang province’s foreign trade research centre. “Last year was disastrous. I estimate Zhejiang exporting companies lost 36 billion yuan (£3 billion) in profits.”

Zhejiang’s provincial government stepped in to save its “big dragon” exporter, Feiyue Group, a company with 5,000 employees and reputed to make almost half the world’s specialised stitching machines.

Zhang said Feiyue’s exports fell 44% when tax rebates were cut, the yuan rose and energy prices soared. It owed more than £80m to its bankers. “Local government intervened by ordering the bank not to call in the loan and to continue to extend credit,” said Zhang.

For Qing Yuan, general manager of the Haoxing textile mill, the story is one of profit margins in remorseless decline. “A couple of years ago I could make money with my eyes closed,” he lamented.

Some small firms, like the Buruoyi garment maker in the port of Ningbo, are offering a preferential exchange rate to keep their customers. “If we don’t, foreigners won’t buy our products,” said Xu Zhaolong, a sales manager.

In the first seven months of this year, 3,600 toymakers shut up shop in Guangdong, the export industry hub. Official figures show 67,000 small and medium firms reported losses in the first half of this year.

Planners in Beijing believe that although exporters may be suffering, China needs to become a more balanced economy in which domestic demand drives growth – something that America and other trade partners have urged for years.

The government has also cut corporate income tax to 25% from 31% this year in a sign of its friendliness to business.

While the macroeconomic theory sounds fine, few Chinese exporters and perhaps even fewer foreign customers comprehended how painful the adjustment process would be.

Competitors in southeast Asia have been quick to step in. Vietnam is emerging as China’s main rival for budget manufacturing, although its own growth pains this year include a currency crisis, a property crash and 20% inflation.

Thailand, the Philippines, Malaysia and Indonesia have all seen their competitive edge improve.

Uncertainty has ruined investor sentiment and led the Chinese stock markets to their lowest levels in 21 months. The Shanghai Composite Index has lost 46% of its value since its record high last year.

China’s state media spoke last week of “renewed fears over slower economic growth”. Yet before gloom turns into a real depression it is worth recalling that China achieved growth of more than 10% in the second quarter of this year.

Export growth slowed last month even though the country achieved yet another monthly record trade surplus of more than £16 billion.

“Exports growth decelerated but imports posted a much bigger slowdown as commodities prices and shipping rates slumped,” a Ministry of Commerce official told Xinhua, the state news agency.

The unnamed official gave a hint of how the Chinese government intended to manage the volatility by holding the currency steady. “This can help exports while giving no further incentives to imports,” he said.

But the authorities in Beijing are likely to discover it is easier to navigate a giant container ship round the channels off Hong Kong than to turn round a giant economy at full steam.

China and Decadence Shug first raised the question of China in relation to the notion that under capitalist decadence (or as we would put it in the imperialist epoch of capital) there can be now new independent development of capital. This is a mechanical reading of imperialism (which has already shown that it can take on many guises from colonialism to informal domination) but in any case it poses the question of what you mean by "independent". In a sense China is not an independent development since it required all the big capitals of the West to invest (£50 billion a year in the 1990s according to the FT a few months back) in it to start the process. And the whole globalisation business means that the interlinking of the world economy is such that the US has been essential to China's export market until now. Indeed the connection of the US debt and the rise of super-exploitation in China are deeply linked and this is the reason for the global crisis deepening over the last few months as the article above hints. Another article worth looking at is Martin Walker's on UPI called China and the Dollar" which goes into the fomer virtuous circle of US debt being covered by China buying US bonds etc. What it means is that there is a shift in the imperialist pecking order where the relative demise of US domination is actually more significant than the rise of China but China's new type of imperilaism ("coolie capitalism") is a new and significant factor in global instability (see the latest Revolutionary Perspectives 47 for article on Chinese imperialism in Africa (£3 from CWO address).

Check this report to understand why China can compete with the USA . What I like about this video is that these are not just words but the conclusions were made concerning figures. The only thing that prevents China from being number one in the worlds arena is its communistic regime.

This is not a report but a piece of opinion by the typical US-centric isolationist (and religio-maniac) that the US seems to breed. Premise one is wrong. China has never had nor has not got a communist economy. The 1949 victory which brought Mao to power ushered in a Stalinist state capitalist regime. Here workers were exploited as in the West (although their surplus value went primarliy to the state rather than private companies as in the West). The video is also naive in hoping thinking that "military intervention" around the world is done for the good of humanity. At the moment the US is causing military mayhem around the planet as it seeks to bolster its declining economic power. And do you think the Pentagon is looking on calmly as Chinese imperialism uses soft power to establish toeholds all around Africa , Asia and Latin America?

More evidence that China with others can become a dominant superpower.

Russia and China have been working together on some serious agreements. As the dollar dies countries that have a better situation will move ahead.

  1. Trade and Currency wars. Perhaps, will help start a real huge war.
  2. The BRIC nations now have the clout to push for a new trading currency probably based in gold. China and Russia have already agreed to dumping the dollar in bilateral trade, Russia will pump all the gas and oil China wants.

Russia would be elated if the Saudi's were next on the crisis list. Oil and gas would go up even more. The King has already promised 35 billion dollars in aid packages to the people.

See also the discussion we had in the ICT IB at

  • China will increase military budget by 12,7% en 2011.*Li Zhaoxing said this will take it to US$91.500 millones.The 2010 increase was 7.5%. For the first time it is preparing aircraft carriers and isdevelopping advanced combat aircraft and missiles.According to BBC mundo, many observers think it will be much higher.Japanese say it is worrying.Tense relations between Japan and China over large petrol and gas reserves in China sea.(Brief version of original spanish

Again from the original spanish

China is creating ever closer ties with Venezuela, described as dependency in the BBC article, keeping the Chavez regime viable in return for ever more oil, economic projects etc.

Interesting that beleaguered Spain has refused to folow France in recognising the rebel Libyan council as govt of the country. And China and Russia are holding back military intervention from the West.

Maybe all these economically struggling European countries will look to china....

Point is that china cannot stand against the USA alone, but by weaving a grand alliance over time, maybe it could.

And again China did not go with the US flow on Libya.

Obviously this is not at the level of hard opposition, but that could change.

the "EXBLOCK" ex USSR, China, the Latin American "socialists" et al seems to have crystalised all the clearer against the Libyan attacks.

And recent evidence pointing towards imperialist instigation of Libyan revolts adds to the picture of inter imperialist struggle.

Dagong the Chinese equivalent/rival of Moodys, Standard and Poor, Fitch has reduced the USA's rating from AA to A.

Here is an interactive map of Chinese foreign investment:

So, how does this foreign investment work, is it Chinese capital or international capital?

If it is Chinese, it adds weight to the alternative superpower concept,

Following up on some of the earlier contribution to this thread about the degree of China's dependency on the world market via exports that drive its economy, and its buying up of US debt. A recent article in the Washington Post makes some interesting points.

China has recorded a trade deficit instead of a surplus. As Shug mentioned previously there is pressure to get them to shift from their dependency on exports to create greater internal demand, but then it may also be that a hike in the currency with rising wages and commodity prices maybe behind this. Or as the article notes this could be just a seaonal trend or that combined with a combination of the aforementioned currency hike.

What do others think, I have not really followed this at all.

Android (R.)

I don't think we can read too much into one quarter's figures but if China was to create a bigger internal market (or in other words) raise wages for the working class (which various contributors note is happening already largely due to labour resistance in China that we have documented in RP) the dependence on the export trade would, of necessity, fall. As I understand it the Chinese state which controls its banks (and has the biggest sovereign wealth fund in the world) would then have to use Chinese capital to invest overseas to get back the revenue from financial deals (this is already happening to small extent) thus covering any trade deficit with what used to be called "invisible earnings". Where it is all leading is anyone's guess as we are in new territory with some features seeming to repeat the past and some being distorted by the fact that a state capitalist regime sits on top of such enormous wealth generated from the original investments of Western capital (both speculative and long term).

Looks like an important variable is the class struggle.

Any country/bloc that can mute the working class response is going to get ahead.

It stinks, but maybe chinese/venezuelan/cuban/iranian/ somewhat leftist ideological garbage puts them in a stronger position to motivate/indoctrinate/supress the class than the North Western powers, but that could be utter bull and reality will prove otherwise.

What emerges is a pretty complex set of variables and I think J does well to abstain from any absolute declaration of what is going to happen.

However, we can definitely say what we want and do not want to happen, whch is not the same as the predictions of say, the ICC, with their years of truth, the turning point of 1968 and their magnification of the proletarian's power to hold back war etc.

Let's hope the Mayan predictions of 21 12 2012 translate into a catastrophe for capitalism, I'd like to see them vindicated.

A mass of data on China here.

Perhaps this is part of the process that we have talked about, the nightmare of the USA, the alliance between Europe and Russia.

Obviously China and Russia and other have been developping a bloc and the penetration of the Eurozone would be a severe blow to the USA.

On a news channel last night it said that workers wages were now too high in China and that Bangladesh and Indonesia, with incredibly low-priced labour power, are next in line to benefit from China's diminution as the world's great commodity producer.

BBC news reports that there will be a vote in October to allow the richest man in China to be a member of the 300 strong Central Committee of the CCP.

Liang, de 55 años, es considerado el hombre más rico de China, con una fortuna de US$9.300 millones, según la famosa Lista Forbes publicada por la revista estadounidense del mismo nombre, o de US$11.000 millones, de acuerdo con su equivalente chino, el Reporte Hurun.

Liang, aged 55, is considered the richest man in China, with afortune of $ 9 300 million, according to the Famous Forbes list published by the US magazine of the same name, or $11 900 million, according to its Chinese equivalent, the Hurun Report.

Mounting instabilities in the Chinese economy have provoked fears among international analysts that world capitalism is about to be hit by another shock.A clear indicator of global concern over a crash in China is the rising net value of outstanding credit default swaps (CDS) on Chinese sovereign debt—a type of insurance against a Chinese government default. This now stands at $US8.3 billion—the world’s 10thlargest total, ahead of Portugal and the Bank of America. Just two years ago, the CDS total for China was $1.6 billion and ranked 227thin the world.An editorial by Bloomberg Newson October 3 entitled, “China’s fall, not its rise, is the real global threat,” summed up the sentiment. It warned that China’s expansion, based on “cheap labour, undervalued currency, heavy investment in manufacturing and focus on exports,” had reached its limit, with “far-reaching consequences for the US and Europe, both of which are increasingly dependent on China.”

China may well be 'rescuing' Europe to the tune of a 100 billion euros, if the FEEF has its way.

Does this represent a distancing from the USA and a step nearer to an imperialist formation that would dwarf the US bloc?

Second post in the thread says

''China is wholly dependent upon the US to purchase its exports. China’s fortunes as an imperialist power are tied to the US bourgeoisie’s own fortunes. China can only survive as the world’s sweatshop''

according to BBC MUNDO, Europe is its main market

Sin embargo, las razones que tendrían los chinos para aumentar su posición en el fondo no son pocas. En lo puramente económico, están las más obvias: ayudar al principal mercado de sus exportaciones, evitar que la crisis se haga global y ralentice su alto ritmo de crecimiento.

Excellent addition to the facts here. And this comes from yesterday's FT

From the FT on ChinaDecember 12, 2011 9:05 am*Chinese villagers protest at custody death*By Rahul Jacob and Zhou Ping in Hong KongVillagers and police are engaged in a standoff in a small Chinese town as the death of a man in police custody has inflamed tensions in a long-running dispute over the acquisition of communal land by local government officials. The 20,000 strong town of Wukan in eastern Guangdong – China’s most industrialised province – has been blockaded by police and food supplies, including rice, are running low, people there told the Financial Times.About six thousand people on Monday attended mourning rites for the 43-year-old man in Wukan, a town seen as a microcosm of the country’s battle to rein in public anger at wage cuts and land acquisition by corrupt officials and developers.The family of Mr Xue Jinbo – who represented villagers in the dispute with the government over the acquisition of communal village land by party officials – claim his body showed signs of injuries received after his arrest last week, villagers told the Financial Times. “His family, who have seen his body, found several bones had been broken. They were not allowed to take photos or take away the medical records. He didn’t have a history of heart disease before,” a villager told the FT.The government said Mr Xue died of a heart attack. “The cause of death was cardiac failure, and other causes of death have been provisionally ruled out,” the city government of Lufeng said on Sunday on its website. The long-running dispute stepped up a notch at the weekend. Six hundred police tried to enter the village in the early hours of Sunday morning to arrest a different village representative, one of several involved in the campaign against the government. The police alleged the man was guilty of sparking a riot in the village in September. Villagers armed with sticks refused to give up the man and the police used tear gas before eventually withdrawing. The escalation is an embarrassment for Wang Yang, Communist party secretary for Guangdong and the province’s most powerful official, as he has tried to loosen controls in the province. His task has been made more difficult by the fact Guangdong’s local population – known for its feisty nature – are seen as more likely to speak out than people in other provinces. In addition, the more than 30m migrants who live in the heavily industrialised province have been increasingly willing to protest against wage cuts in large numbers. Two weeks ago, 4,000 villagers were allowed to demonstrate against what they said was the lack of action by the local government in resolving the land dispute. Over the past week, however, the government has reverted to its more traditional response when dealing with such protests – it has detained half a dozen village representatives, alleging they organised a riot in September and were acting in concert with foreign elements. Land disputes have prompted similar riots by villagers in other parts of China. Wukan continues to be festooned with large banners that denounce the local government. One reads: “Does all land belong to corrupt officials?” while another called on the central government in Beijing to “Save Wukan, save the country”.