Part 1 of a series [Photo above: US Secretary of State Anthony Blinken with Chinese President Xi Jinping]
By Jeff Mackler
Editor’s note: This article begins a series by Socialist Action aimed at socialists, revolutionary activists and social justice fighters, intended to explain our views on today’s major issues and win supporters of these views to help organize broad, united mass actions aimed at opposing US imperialist policies. This first article in the series is our assessment of the nature of the relations between the world’s leading capitalist nations—China and the US—with the objective of negating the myth that China is a socialist nation that the left should support. In the next article, we will assess the related myth that a “bipolar” world order of competing capitalist nations is preferable to the “unipolar” world of today. It will focus on the so-called progressive BRICS nations (Brazil, Russia, India, China and South Africa) as a false alternative bloc to the US-allied countries. In the third article, we will discuss the nature of the “pink revolutions” in Latin America and elsewhere—particularly in Nicaragua and Venezuela —stressing that while socialists should support poor and oppressed nations against US imperialist attack and intervention, [Syria, Libya, Bolivia, etc.] this support should not deter socialists from seeking to build socialist alternatives to these presently capitalist regimes. And finally, we will discuss the present US-orchestrated war in Ukraine and why socialists should organize to demand “US/NATO Out Now!” Readers’ comments are always welcome and appreciated. You can reach us at socialistaction@lmi.net.
Henry Kissinger, former US National Security Advisor under President Richard Nixon, was hosted by China’s President Xi Jinping last month. Kissinger’s visit followed a few weeks after US Secretary of State Anthony Blinken and Treasury Secretary Janet Yellen met with China’s top leaders to discuss major issues in dispute between the world’s two most powerful capitalist-imperialist nations.
We will proceed to evaluate these talks shortly, but first, a few words on Kissinger himself, a notorious US imperialist war hawk of the first order. Now 100 years old, Kissinger has visited China over 100 times over the past half century. He was touted by Xi as a “friend of China” and given the royal treatment, including a meeting with Xi himself. Kissinger is no newcomer to official and unofficial US-China relations. His secret visit to China during the height of the US saturation bombing of Vietnam in 1971 prepared the infamous 1972 China visit of President Richard Nixon.
This was during the Sino-Soviet dispute that saw China declaring the USSR “soviet social imperialist” and “an enemy of world revolution” that functioned under the “dictatorship of the big bourgeoisie” akin to the “dictatorship of fascist Germany under Hitler.” Such was the rhetoric of the Chinese Stalinist leadership at that time, matched by heinous deeds around the world.
Kissinger effectively negotiated a rapprochement with China that included China’s limiting aid to beleaguered Vietnam. This was followed a year later with China’s 1973 formal recognition – among the first in the world – of the US-backed Chilean coup government of the neo-fascist Augusto Pinochet, whose troops slaughtered some 60,000 leftists, trade unionists, socialists and communists. China’s Stalinists, who were then declaring a “tripolar world” (US-China and the USSR), saw few limits to their new orientation to US imperialism, including China’s ignominious invasion of Vietnam immediately following the US withdrawal in 1975 and China’s backing of Jonas Savimbi’s war against newly-independent Angola as well as apartheid South Africa’s invasion of Angola.
We need only mention here that, during the same period, the Stalinist bureaucracy in the USSR pursued its own rapprochement with US imperialism in the name of “peaceful co-existence,” that is, subordinating support to national liberation struggles around the world to deals with US imperialism that advanced the narrow interests of the Stalinist bureaucracy.
Russia and China Before Capitalist Restoration
In the tradition of the world Trotskyist movement at that time, that is, before capitalist restoration, we characterized the USSR and China, respectively, as degenerated and deformed workers’ states. “Degenerated” in the case of the USSR because in the mid-twenties, with the Stalinist regime’s consolidation of power with the brutal suppression of central leaders of the 1917 Revolution, the basic revolutionary institutions of workers’ democratic rule, the soviets (workers’ councils), were smashed. But the key achievements of the 1917 Russian Revolution remained significantly intact. These included the abolition of capitalist private property; the establishment of a planned economy aimed at meeting social needs, not capitalist profits; an historically unprecedented land reform; a monopoly of foreign trade; and the introduction of historic advances in free health care, education and culture that rivaled the most advanced in the world. The latter accomplishments paved the way for poor and backward semi-feudal Russia emerging in a few decades as among the most powerful and socially advanced nations on earth, capable of defeating the invasion of Nazi Germany, 90 percent of whose military forces were engaged in the USSR during WWII.
The “deformed” workers’ states, including China and the post-WWII countries in Eastern Europe, similarly abolished capitalist property relations via massive mobilizations of the working populations and poor peasants and instituted massive social and economic changes akin to the USSR. But unlike the USSR, China never established soviet forms of workers’ democracy akin to the 1917 Russian Revolution.
The original victories of the Russian and Chinese Revolutions were the product of sustained and unprecedented massive mobilizations of workers and peasants. They wrested power from reactionary capitalist states and inspired the world’s oppressed and exploited to do the same, that is, to create new societies free from endless imperialist wars and the exploitation of the many by the few.
But these states had a contradictory nature. They came to be politically and exclusively led by a heinous Stalinist bureaucracy on the one hand, but maintained and even expanded the critical social gains of the revolutions that were achieved via the abolition of capitalism and the establishment of a planned economy aimed at meeting social needs, on the other. This duel character led revolutionaries in our tradition to organize and fight for political revolution in Russia and China but not for social revolution. In this critical sense we clearly distinguished between the workers’ states of Russia and China and the capitalist states of the world. We were not neutral during the Cold War. We saw a qualitative differences between the policies of the imperialist states that sought to maintain their domination of world markets and their conquered colonies everywhere and Russia and China, which, following their revolutions, championed of national liberation struggles everywhere.
Capitalist Restoration
Today, under the leadership of the Stalinist bureaucracies capitalism has been tragically restored. In China, beginning with the Deng Xiaoping regime in 1979. And in the USSR a decade or so later, with the Mikhail Gorbachev and Boris Yeltsin regimes, in 1991. This restoration process will be discussed in great detail in subsequent articles, including publication in multiple parts of Socialist Action’s 2018 national convention resolution designating China as a capitalist-imperialist state. Here it is sufficient to briefly explain that US imperialism, in collaboration with the Stalinist bureaucracies, played a central role in the process in both countries, with major US and European corporations moving from near-zero ownership and control of pre-restoration China and Russia to today, as we shall see, exercising major ownership and control of Russian and Chinese corporations and factories.
Top US Officials Visit China
Kissinger’s recent unofficial visit followed well-publicized trips to China a few weeks earlier by Biden Administration cabinet members, Blinken and Yellen. US climate envoy and former Secretary of State John Kerry also joined the US’s full court diplomatic initiative. Kerry was assigned to seek a resumption of stalled fossil fuel climate-related talks that had been put on hold for the past year. China and the US are the world’s greatest polluters. “Yellen’s Trip Opens A Dialogue” was the July 10, 2023, New York Times headline. “After 10 hours of meetings over two days in Beijing, Yellen told the news media, ‘We believe that the world is big enough for both of our countries to thrive.’” Yellen announced “more frequent communication at the highest levels” aimed at “improved dialogue as a way to prevent mistrust from building and fraying a relationship that she called ‘one of the most consequential of our time.’”
Among the key issues under discussion were trade relations, including US imposition of tariffs on hundreds Chinese imports that Biden continued from the Trump administration, as well as US restrictions of exporting new technologies to China. Yellen’s early July trip was preceded by a series of remarks pre-figuring US goals to be achieved in China. Addressing a House Financial Services Committee hearing on June 12, she stated, “I think we gain and China gains from trade and investment that is as open as possible, and it would be disastrous for us to attempt to decouple from China… The United States intended only to de-risk the relationship and that it had no intention of inflicting economic harm on China.” Further, Yellen told the House committee, “I certainly do not think it is in our interest to stifle the economic progress of the Chinese people. China has succeeded in lifting hundreds of millions of people out of poverty, and I think that’s something that we should applaud.” [Editor: We will return to this half-truth assertion concerning poverty reduction in China in future articles.]
No Return to the Old Cold War
We quote here extensively from Yellen’s remarks to emphasize a single point that is a pre-requisite to any serious understanding of world politics today. That is, in sharp contrast to decades past during the post-WWII Cold War period and the Chinese Revolution in 1949-53, when China abolished capitalist rule, capitalism in China today has been thoroughly restored, albeit under the leadership of the former Stalinist rulers, whose Chinese Communist Party presides over every aspect of social, political and economic life. During that Cold War period, economic relations between China and the US were essentially non-existent. Wherever possible, the US excluded China and Russia from all world markets. Indeed, the 1950 US invasion of China during the Korean War slaughtered millions of Chinese and Koreans. Similarly, US policy in every continent aimed at thwarting Russian and Chinese influence. US investments were near zero! China’s internal productive capacity was undermined at every turn and its investments abroad were near zero! China’s financial weight in the world economy was negligible.
China today
In sharp contrast to the Cold War period of yesteryear, a July 7, 2023 New York Times article by Ana Swanson, entitled “Rivalry Between U.S. and China, by the Numbers” shows how different the story is today. Swanson is based in The Times’s Washington bureau and covers trade and international economics. She writes, “Despite their increasingly intense rivalry, the world’s two largest economies remain integral partners in many ways.” Here we quote Swanson directly and at length.
• The U.S. economy continues to outstrip China’s by dollar value: In 2022, Chinese gross domestic product was $18 trillion, compared with $25.5 trillion for the United States.
• But China’s population is more than four times America’s. And the economic picture looks different when adjusted for local prices: Based on purchasing power parity, China’s share of world G.D.P. is 18.9 percent, according to the International Monetary Fund, surpassing the United States at 15.4percent.
• China has provided more than a trillion dollars for global infrastructure through its Belt and Road Initiative, which analysts see as an effort to project power around the world.
• Despite the rising tensions, trade between the countries remains extremely strong. China is America’s third-largest trading partner, after Canada and Mexico. • U.S. imports of goods and services from China hit a record $563.6 billion last year.
• China is a major export market, with half of all soybeans that the United States sends abroad going to China.
• The U.S.-China Business Council estimated that U.S. exports to China supported nearly 1.1 million jobs in the United States in 2021.
• China dominates supply chains for both critical and everyday goods. It is the world’s largest producer of steel, solar panels, electronics, coal, plastics, buttons and car batteries, and it has quadrupled its car exports in just two years, becoming the world’s largest auto exporter through its growing clout in electric vehicles.
• China is one of America’s largest lenders and holds nearly $1 trillion of U.S. debt.• Members of the S&P 500 index, which tracks the largest public companies in the United States, generate 7.6 percent of their revenue in mainland China, the biggest source of international sales by far, according to FactSet. The revenue that large U.S. firms derive from China is more than their revenue from the next three countries — Japan, Britain and Germany — combined
• The United States is home to nearly 2.4 million Chinese immigrants, making it the top destination for Chinese immigrants worldwide. Chinese immigrants in the United States are more than twice as likely as U.S.-born adults to have a graduate or professional degree.
• In the 2021-22 school year, 296,000 students from China attended U.S. institutions of higher learning, nearly a third of all international students in the United States. [All emphasis in bold above in the original.] Our conclusion here is obvious. Capitalist China today has been thoroughly integrated into the world capitalist economy. China’s class structure, according to the Gini index that measures social inequality, exceeds the US, where a tiny few own and control the nation’s vast wealth. In China, according to a 2015 report from Peking University, “The richest 1 percent of households [own] a third of the country’s wealth while the poorest 25 percent of Chinese households own just 1 per cent of the country’s total wealth.” China leads the world in billionaires, with 1,000 as opposed to some 768 in the US. How then can we explain China’s evolution from the Deng Xiaoping era, when the restoration process began, to the present?
US Integrates China Into the WTO
Here we review the results of the past 24 years since the US and the Chinese governments negotiated China’s entry into the World Trade Organization (WTO). China’s entry was an integral part of the US “de-industrialization” process wherein the US corporate rulers, in the face of ever-intensifying competition from Europe and Japan, aimed to counter declining profit rates at the expense of the US working class. This included not only the massive off-shoring of jobs to low-wage nations, but a generalized assault on the conditions of all US workers, marked by massive cutbacks in education, health care, pensions and social services, speed up and intensification of the labor process, as well as unprecedented tax cuts to the nation’s corporate elite.
This “de-industrialization” process played a critical role. In the US, UK and Europe, it aimed at offshoring jobs to low wage countries, in the early period especially to China. China’s 2001 acceptance into the WTO was predicated on its ruling class “Communist Party’s” agreement to essentially open its economy to naked imperialist exploitation and penetration on a massive scale. The process began under the George W. Bush administration and was accelerated under the Barack Obama administrations and all others that followed.
It included the systematic Chinese government-supported exploitation of China’s labor force, the largest in the world, and the associated massive establishment of US and EU-owned plants in China, where Chinese workers were paid, if they were paid at all, wage rates that matched the lowest on earth while China guaranteed foreign corporations near zero tax rates, freedom from all environmental regulation, and other “concessions.” Rural teenage Chinese women living in dormitory factories working 12-plus hour shifts seven days a week at six cents per hour was far from the exception at the foreign and Chinese-owned sweat shops. Trade unions were non-existent.
With China’s mass privatization of the land, hundreds of millions of rural workers were sent to live as “internal migrants” with limited rights in hovels on the outskirts of China’s major cities, where they labored in Chinese and foreign-owned factories for wages a tiny fraction of the pay of US workers. In consequence, in the US thousands of union wage jobs were off-shored to China and other low wage countries, from Vietnam to Bangladesh, Indonesia, Mexico and beyond.
The process included major corporations like Apple employing some one million Chinese workers at near slave wages and hours and selling Apple iPhones for $1,000, only a few dollars of which went to Chinese and other Asian workers at the low end of the value chain.
The process was repeated worldwide as the major capitalist nations of the North transferred plants to the South and East, with the consequent rise in unemployment in the North and an inevitable downward pressure on wages everywhere. This fundamental neo-liberal capitalist globalization process opened the door wider than ever to every form of anti-immigrant racist prejudice based on the inevitable racist claims that the Chinese and others had stolen their jobs and that immigrants from nations where imperialism had reduced their countries to ruin were doing the same.
China enters the world stage
Since China’s 2001 WTO entry, however, we have seen some critical changes in the world’s capitalist system of production, marked especially and inevitably by Chinese capitalists’ inexorable drive to compete with, if not exceed, the US on a world scale. The Chinese capitalist elite had no intention of permanently subordinating their economy to US or European capital. Hence, in time, the world witnessed China’s strategic shift to building its own plants replete with the most modern technology. Chinese plants today rival and increasingly exceed the quality and productive capacity of those owned and operated by US and European corporations. The result was inevitable. US and foreign corporate profit rates lagged; today an estimated 43 percent of US corporations operating in China report no profits at all.
The Trump and Biden administrations’ charge that China had stolen US technology and “intellectual property” essentially fell on deaf ears and is rarely repeated today with serious economists fully understanding that China’s gains reflect its generalized implementation of superior technology coupled with its government’s preferencing its own corporations. No doubt this included a more tolerant stance toward unionization efforts at foreign-owned plants and qualitatively less so with regard to the same efforts at Chinese capitalist-owned industries!
Here we will only add that operatives of the US national security state, with its unmatched worldwide surveillance apparatus, are routinely deployed to spy on everyone—including and especially its world market corporate competitors. Aside from Treasury Secretary Yellen and Secretary of State Blinken’s recent expressions of concern that China might use US technology for military purposes, the absurd notion that China was incapable of developing its own technology was dropped.
Indeed, nearly all such claims registered by the US in the WTO in years past of China “stealing” US industrial technology, or of Chinese corporations receiving state aid for their operations, as is the case worldwide, came to naught, not to mention the fact that the WTO itself, with its built-in arbitration panels, was essentially relegated to a slow death, if not irrelevance. The world’s leading corporations had no intention of allowing a panel of WTO arbitrators to decide how they would run their business or otherwise regulate worldwide competition.
With the world’s leading competitors, now including China, vying for markets, “dog eat dog” became the operative principle. The WTO regulators of decades past had the capacity, through threats of sanctions and bullying, to limit their world market competitors, but not today. Thus, the US ruling elite increasingly resort to US-imposed economic sanctions to punish superior competitors, along with punishing tariffs to prevent opponents’ increasingly high-quality—and even superior—commodities from infringing on US corporations’ profitability. With China’s rise as a major player, utilizing state-of-the-art technology in the spheres of production and distribution, and its worldwide Silk Road value chain extracting billions of dollars in surplus value from poor nations and its own workforce, the previous US and allied competitive advantage is rapidly disappearing.
Today, world capitalism’s neo-liberal globalization is best characterized as a new form of organization where global value chains have become the dominant form of production, employing workers for one out of every five jobs on the planet. From low to high-tech commodities, basic consumer goods to heavy capital equipment, food to services, goods for the world market are now produced across many countries, integrated through global value chains. Led by the dominant capitalist-imperialist nations, especially the US and China, the system involves the capture and transfer of surplus value from workers in poorer countries to leading corporations in the advanced countries.
Today, global value chain corporations that represent only 15 percent of all trading firms worldwide, capture some 80 percent of total trade! China is today a leading player. Commenting on Blinken’s China visit in a June 20 New York Times article entitled, “Blinken and Xi Begin a Thaw, If Just a Little,” Jessica Chen Weiss, a political scientist at Cornell University who recently advised the State Department on China policy, observed, “The hope is that the talks in Beijing spur the two governments to shape a principled framework for managing U.S.-China relations, in order to bound the competition within acceptable limits and create more space for coordinated efforts where American and Chinese interests overlap.”
The same article noted that “The U.S.-China relationship is enormously consequential. Their economies, the world’s two largest, together represent 40 percent of global output and remain integral partners in many ways. They sell and buy critical products from each other, finance each other’s businesses, and create apps and movies for audiences in both countries.”
During Yellen’s China visit she indirectly acknowledged that the central issues that divide China and the US focused on the inherent contradictions of the capitalist system itself—that is, the inexorable drive to protect, maintain, and expand the profit system and dominate internal and world markets against all competitors. Yellen stated that she understood “Chinese concerns about threatened US restrictions on investment in China.” She posited that future measures would be “narrowly targeted at certain sectors and would not be intended to have broad effects on China’s economy.” Reporting on her China visit, she subsequently told CBS’s “Face the Nation,” “I explained that President Biden is examining potential controls on outbound investment in certain very narrow high technology areas,” adding that such restrictions “should not be something that will have a significant impact on the investment climate between our two countries.” But Yellen’s conciliatory words cannot be otherwise but contradicted by US deeds—deeds wherein both capitalist imperialist powers in the final analysis have no alternative other than to defend by any means necessary their exploitative profit-first-and-foremost system against all comers.
Indeed, a few weeks after the Biden administration’s top officials retuned from China, the New York Times featured headlines to the effect that Biden had hosted at his Camp David retreat, unprecedented top level meetings with the heads of state of Japan and South Korea aimed at “Keeping China in check.”
