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Social character of China and working class


<Index>

. From the 1949 Revolution to the 1978 “Reform and Opening-up”

China's birth as a workers’ state/ “New Democracy”: Chinese Class Cooperation/ Class collaboration of Bureaucracy and “socialism in one country”/ Stalin's Check on China: Seeds of Sino-Soviet Conflict/ Fantasy of “Class Coexistence”/ Political consciousness of the United States and the Kuomintang/ Realization of ‘Permanent revolution’/ Outcome of the Revolution/ Three Ways to Improve Productivity/ 1) The First Way to Promote Productivity: Helping Developed Countries by Revolution/ Productive force and Permanent Revolution/ Failing of Follow-up Revolution in Advanced Capitalist Countries/ Sino-Soviet Conflict and Breakdown of Economic Cooperation/ Mao’s Evaluation of the Sino-Soviet Conflict/ Isolated China/ 2) The Second Way to Promote Productivity: ‘Great Leap Forward Movement’/ Catastrophe, Mao's downfall and Right Turn/ Policies of Liu Shaoqi and Deng Xiaoping Leadership/ The Cultural Revolution of Mao Zedong Faction/ Deified Authority/ China in a state of panic: Background of the ‘Cultural Revolution’/ Changes in the ‘Three Kingdoms’ relationship/ China Helping the U.S.-made Blockade of the Soviet Union/ Mao's Death and the Power of the Pragmatic Faction/ Road to ‘Reform and Openness’

II. Changes in Chinese society as a result of 'reform and opening up': China's social character as a deformed worker state has not changed

1. Significant growth in productivity

1) Gross Domestic Product (GDP): Comparison with Korea and India/ Economic Crisis and China/ 2008 Great Depression/ Passing on to the working class/ China's Crisis Response/GDP per capita

2) The world's top 500 companies

3) Dollar and gold reserves: China's dollar holdings/ The tyranny of the hegemonic currency of dollars/ China's gold reserves

4) absolute poverty reduction


Ⅲ. China and the Left

IV. The duties of the Chinese and global working classes

 


II. Changes in Chinese society as a result of "reform and opening-up"

 

About 40 years have passed since the Deng Xiaoping leadership came to power in 1978 and implemented the so-called ‘market opening-up’. The country which Deng Xiaoping leads was facing great challenges. Most of the means of production were nationalized, but the level of productivity was almost the level of pre-capitalism.

The struggle against imperialism in colonial China was led by the Communist Party. By the defeat of the Kuomintang, which was a local imperialist puppet, the claws of imperialism embedded in China was pulled out. The victory of the Chinese working people in the struggle against imperialism combined with the former victory of the Russian Revolution. Thus, the victory of the struggle for national liberation developed into a social revolution, called the abolition of private ownership, in connection with world history.

The problem was productivity of the level of pre-capitalism. Figuratively speaking, a family earned a huge cauldron through a desperate struggle. But there was just a bowl of rice to cook. The improvement of productivity was desperately required. Without developed productivity, the achievements of victory of the anti-imperialism struggle and the abolishment of private ownership would soon face challenges, thereafter face crisis of counterrevolution.

“This development of productive forces ... is an absolutely necessary practical premise because without it want is merely made general, and with destitution the struggle for necessities and all the old filthy business would necessarily be reproduced." -Marx, German Ideology, [5. Development of the Productive Forces as a Material Permise of Communism]

The challenges that China, a deformed worker's state, had to solve were difficult. The conditions were very narrow, since the subsequent revolutions of advanced capitalist countries have been delayed indefinitely, and to make matters worse, the relationship with the Soviet Union was cut off. 

Under these conditions, China's leadership adopted ‘market opening-up’, which was capitalistic concessions. Just like NEP(New economic policy) of Soviet Union which was a desperate measure to revive the economy torn by cilvil war, it was forced rather than selected. 40 years have passed since then, and China has changed dramatically during that process.

* * *

Specific economic history is not we focus on. The theme of this article is to examine the social characteristics of China. Thus now, 40 years passed after ‘market opening-up’, the points of this article are: how china changed; is China a completely capitalism state as many people say or does it still have charaterstics of working class; thus what are the charateristics of clash which will be in the future; what attitude should working class take in that clash.

After the 1st chapter of <From the 1949 Revolution to the 1978 “Reform and Opening-up”>, the 2nd chapter is <Changes in Chinese society as a result of "reform and opening-up">. We examine those changes in order of 1. Growth of productivity 2. Growth of capitalistic forces 3. Dominant form of ownership.

 

1. Significant growth in productivity

For 40 years, China's productivity development was remarkable because of ‘market opening-up’, which was partial capitalistic concession. This development appears through figures such as ‘Gross Domestic Product(GDP), world 500 conglomerate, gold·dollar reserves, poverty rate’.

 

1) Gross Domestic Product (GDP)

From 1978 to 2017, China's real GDP grew by 9.5% annually. Meantime, nominal GDP per capita increased by about 155 times from 385 yuan(in 1978) to 59660 yuan(in 2017).(Bank of Korea, China economy opening-up 40 years: Results and Prospects.

 

This has greatly changed China's position in the global economy. As shown in the table below, In 1978, when the share of global economic GDP in the U.S. and Japan, which were first and second at the time, was 27.7% and 11.8%, respectively, China was only 1.8%. However, in 2017, when the U.S. and Japan were 24% and 6%, respectively, China became 15.2%, dragging Japan down to become the world's second-largest in terms of GDP.

  Global GDP share by country

Country

1978

2017

USA

27.6 [1]

24.0 [1]

China

1.8 [-]

15.2 [2]

Japan

11.8 [2]

6.0 [3]

Germany

8.6 [3]

4.6 [4]

United Kingdom

3.9 [5]

3.3 [5]

France

5.9 [4]

3.2 [6]

* [ ] is rank

* From: World Bank

  In terms of GDP, China overtook Japan in 2010. In 2020, it nearly caught up with the United States. In 2008, GDP of China was only 31% of that of United States, but in 2020, it was 71% of that of US.

  시스템 생성 대체 텍스트:
list
자료: CNBC. 국제g회기귀YF) 2020년 국내§생산(GDP) 순위 
209 
20 
15- 
10- 
미국 
14.7 
출국 
3.8 
폐구:矍•휹 
1.9 1.6 
일본 독일 영국 인도 프랑스 이탈리아 ,따다 
1.6조 
달러 
한국

2020 GDP순위


Comparison with Korea and India

It is also interesting to compare China with Korea, which recorded remarkable economic growth to the point of being called the 'miracle of the Han River,' and India, a country with a vast territory and population comparable to that of China.

China's average annual growth rate for 40 years between 1978 and 2017 was 9.5% annually. Meanwhile, Korea's economic growth rate averaged 8.94% annually over the 40-year period from 1963 to 2003, when the five-year economic development plan was implemented. Between 1978 and 2017, which is the same comparative section as China, it was 6.48%. In this regard, China's economic growth rate was faster than that of Korea, and during 1978-2017, China's growth rate was about 1.5 times that of Korea.

Until the 1980s, there was no significant difference in income levels between China and India (June 2018 issue of the Economic Information Center). However, as of 2020, India's per capita GDP is $1,883 and China's is $10,160. India's per capita GDP is less than one-fifth of China's (Gross National Income per Country, KOSIS).

The difference between China and India may also be that unlike China, India has not been able to cut off the over-exploitation of imperialism that has continued for the past two centuries. The Minister of Foreign Affairs of India says that as follows.

“India had two centuries of humiliation by the West in its predatory form it came to India in the mid-18th century. An economic study tried to estimate how much British took out of India, it ended up at a number of $45 trillion in today’s value,”S Jaishankar in US, British take close to $45 trillion from India today's value

 

Economic Crisis and China

It is also meaningful to look at China's growth rate during the major economic crisis when the economy fell sharply.

As shown in the table, during the “IMF foreign exchange crisis, global financial crisis, and COVID-19 pandemic crisis”, the global economy fell sharply downward, recording 2.61%, 0.07%, and 4.40%, respectively.

* 1997 Drop: Asian financial crisis

* 2008 Drop: Global financial crisis

* 2020 Drop: COVID-19 financial crisis

However, during the same period, China recorded growth rates of 7.6% (1998), 9.4% (2009), and 2.3% (2020). Among them, the comparison in 2009 is significant. Immediately after the 2008 financial crisis, which was considered more serious than the Great Depression in the 1930s, when most countries, including the U.S., grew negatively, China alone grew nearly 10% (9.7% in 2008 and 9.4% in 2009) (KOTRA 2021).

 

2008 Great Depression

The 2008 financial crisis resulted in a bubble in U.S. real estate mortgage loans, also known as the "Subprime mortgage crisis." Overproduction that exceeds profitable demand and over-loans that employ clever private techniques called "advanced financial techniques" eventually collapsed beyond the limit. Several financial dinosaurs, including Lehman Brothers, went bankrupt, and the economy stopped. In two years, 73 million jobs were lost, and unemployment soared.

The panic has hit the United States and European 'PIGS' countries (particularly Portugal, Italy, Greece, and Spain). There were frequent riots that raised fundamental questions about the system, including the ‘Occupy Wall Street’ in U.S. The "apocalypse of capitalism" was casually raised and raised in the mouths of mainstream economists.

"The current crisis will be bigger and longer than the Great Depression ...Since the Lehman Brothers crisis in 2008, all governments have done is to turn private debt into government debt. We are in structural trouble at the moment. Some say, 'Capitalism is over.'Kang Man-soo, Kyunghyang Newspaper, June 15, 2012

 

Passing on to the working class

The U.S. government released $700 billion to save the bank on the brink of bankruptcy and printed $4.5 trillion over the next six years. Most of the money labeled "rescue" was used to revive financial asset owners by buying bad loans on Wall Street. At the peak of the financial food chain, $182 billion (approximately KRW 218 trillion when calculating the dollar as 1,200 won) was invested in the American International Group (AIG), which oversees financial fraud. An investigation was carried out to blame for the financial meltdown. However, not a single Wall Street CEO, who was the main culprit, was arrested (BBC, September 15, 2018). The investigation was only a cover to cool off the indignation of the working class.

Meanwhile, the money printed in bulk by the Federal Bank does not have value in itself. Value is produced only through labor. That's why the gap between the "nominal" value and the actual value represented by the huge currency printed by the U.S. Federal Bank had to be filled by the global labor class, including the U.S. labor class. In order to fill the vacuum of the value created by the capitalist government's reckless printing of money, the working class had to bear double the pain of unemployment, increased working hours, inflation, and reduced social welfare. The capitalist class "rescued" capitalism again by peeling off the leather of the working class.

 

China's Crisis Response

Meanwhile, the 2008 economic crisis also shocked China. China was called the factory of the world. China's exports fell sharply as economic panic hit the U.S. and Europe, its main consumers. Then China also expanded its finances. It announced a $585 billion stimulus package. However, most of the money donated by the Chinese government was given to the real economy, including social infrastructure construction. China's stimulus package was different from the U.S. method of mass-spreading printed currency to get the capitalist class first and to fill the vacuum in value created by it to the working class. As if the surplus grain accumulated in the warehouse was released in a drought, the Chinese government released the actual value accumulated by state-owned companies and state-owned banks.

As a result, in 2009, when the United States recorded growth of -4% and the world as a whole recorded growth of -0.1%, China recorded positive growth of 9.4% in 2009.  China was also affected by the global panic, but the Chinese economy showed a very different movement from the profit-based economy for a small number of private capitalists.

 

GDP per capita

GDP per capita divided by population is also meaningful. Through this, a new story comes out.

GDP rank

Country

GDP

(Million $)

Population
(Approx.)

GDP
per capita

1

USA

25,346,805

335M

76,027

2

China

19,911,593

1B 450M

14,096

3

Japan

4,912,147

125M

39,243

 

In terms of per capita GDP, China is 1/5.4 of the United States and 1/2.8 of Japan. Therefore, in terms of gross national product, China can be seen as chasing the United States to the chin, but it can be seen that the per capita GDP "related to productivity" is only one-fifth of that of the United States.

 

2) The world's top 500 companies

Fortune, the longest-running international economic magazine established in the United States in 1929, announces the world's top 500 companies every year. In 2021, 135 companies in China were among the top 500 companies. As shown in the table below, only 10 were on the list in 2000. However, in 2020, 20 years later, 124 companies rose and in 2021, a year later, 135 companies rose.

Fortune Global 500 by Year

 

 

Meanwhile, at the same time, the number of US companies decreased from 179 in 2000 to 122 in 2021. With the number of companies in the top 500 companies, China overtook the U.S. by three in 2020, and the gap widened to 13 in 2021.

Of course, the U.S. still leads in total sales. In terms of sales by country, the U.S. is ahead of China. The total sales of the listed companies is $9.65 trillion, higher than that of China (8.92 trillion) in the United States (Edaily, August 3, 2021).”

In this case, it should also be considered that China's population is about 4.4 times larger than that of the United States. Then, China's per capita sales, limited to the top 500 companies, are only about one-fifth of that of the United States, similar to GDP.

 

3) Dollar and gold reserves

Money and currency are different. Money, such as gold, is a means of exchange for goods and at the same time a product of its own value. However, the currency, which is a coin or bill issued by each country because of the convenience of distribution, does not have its own value. It is a certificate of exchange for goods of the same value, which is distributed under state guarantees. So, if more currency is issued than the actual value, inflation, the depreciation of the currency, appears.

The same is true of the dollar, which stopped gold exchange in 1971. The U.S. dollar is a key currency used in most of the world's commodity trading. The Federal Reserve Bank (FRB), a den of U.S. financial capital, uses the right to issue dollars to put the world's real assets in its hands at a lower price than the actual value. In other words, if they increase the issuance of dollars to lower the value of the dollar and purchase overseas real assets with dollars that have fallen in value, they will purchase the target cheaper than it actually is. This unfair trade continues because the U.S. is a superpower that won World War I and II and still forces dollar circulation with its powerful economic, political and military power. Therefore, each country always has a certain amount of dollars for the purchase of essential goods such as oil.