A paper by Nigel Green presented at the Communist University of South London, Ruskin House, Croydon on 1 April 2014


I wish to thank the following people whose material I found on the internet or who advised me in person: David Ayton, Keith Bennett, Heiko Khoo, Morning Star, Communist Review, Workers World USA, Wikipedia, Ezra Vogel and Chinese state and trade union websites. Apologies for not giving detailed citations.

In my view China is a socialist country.

Formerly oppressed China achieved liberation from British, European, U.S. and Japanese imperialism in 1949 by making one of the greatest revolutions in history. At that time, one quarter of the human race was torn from the clutches of imperialism.

Democracy in China
The transfer from one social system to another occurs when one social class with its allies, overthrows another. So under socialism the working class have state power. As Lenin said socialism is “state power plus electricity”.

Various Marxists define ‘working class’ and especially what constitutes its industrial core, somewhat differently. Nevertheless, the concept of working people taking state power in a social revolution should in principle be intelligible to grasp, and that is what happened in China.
Article 1 of the constitution of the People’s Republic of China (PRC), defines China as “a socialist state under the people’s democratic dictatorship led by the working class and based on the alliance of workers and peasants. The socialist system is the basic system of the People’s Republic of China. Sabotage of the socialist system by any organization or individual is prohibited”.

The constitution goes on to state that all urban land is owned by the state. There is no private ownership of land in urban areas. In other words, the concept of ‘Freehold’ as we know it in Britain, does not exist in the People’s Republic of China. Moreover, the Chinese government, while liberalizing its property laws, has still preserved its right to reclaim any property from an individual, as long as there is what might be called in English ‘a public policy consideration’.

The Communist Party of China, the leading force in the country has 82 million members. According to the Party Constitution, “The realization of communism is the highest ideal and ultimate goal of the Party”, and part of the application oath says an applicant must “fight for communism all my life.”

I have not had the opportunity to go into detailed social backgrounds of members of the National People’s Congress, the highest organ of state power in the People’s Republic, or of the Standing committee of the People’s Congress, and provincial, village and local People’s Congresses. However, the social background appears very mixed and clearly there is a high degree of popular participation in civic affairs. Some participants will be CCP members, but not all. Some may be members of other parties – contrary to western myths eight other parties exist although they agree to accept the hegemony of the Communist Party – but large numbers will not be in any party at all.
Elections in China tend to be indirect – basically lower organs elect higher organs. Certainly at lower levels there are a lot more candidates than places. The Chinese say they are improving and extending their democracy all the time.

Broadly, the composition of these bodies is reflective of society as a whole. A situation in marked contrast to the leading western countries where those serving in national and local legislatures tend to come much more from the most affluent strata of the population. This is markedly so when looking at the social background of ministers in conservative/ centre right governments. It is true in China that about 70 very rich people are also members of the National People’s Congress, but considering there are nearly 3,000 delegates at the NPC they are only a small number.

Chinese Trade Unions are big. At the end of 2010 there were 239 million workers in the All-China Federation of Trade Unions (ACFTU), the largest trade union centre in the world. It is growing all the time. Membership of trade unions is voluntary and the size of the industrial working class in China is over 500 million.

The ACFTU formally has authority to negotiate on a whole range of issues. For us in the west it is not easy to judge how well this works out on the ground. However, on the ACFTU’s English language web site for example, the model collective contract produced by the Beijing Municipal Federation of Trade Unions dating from 2007 looks impressive. No trade union in the UK under present conditions is likely to achieve such a contract.

There is a legal right to union recognition. However, the right to strike as such does not exist in Chinese law, but strikes are not illegal and many strikes do occur.

State power is with the workers
So in China, it can be argued with justification that the people run the country. Basically, they do this indirectly through their representatives, and there is nothing unusual about this. All ruling classes and strata rule indirectly, through representatives whether the working class in China or the core ruling capitalist class in western capitalist societies. Only is a highly advanced socialist world approaching the transition to full communism, would you expect the mass of the whole people to actually be ‘governing’ directly, and by then the whole meaning of ‘ governance’ would be radically transformed anyway.

But back to today’s China. In 2013 a US businessman Chip Starnes, claimed to have been held captive by about 100 of his employees in Beijing in a dispute over severance pay. The authorities apparently did not intervene claiming the dispute to be a civil matter. When eventually he was released Mr Starnes is quoted as saying “In China, the government lets the people run the country. The government does not interfere if it can help it”. (Morning Star 22/7/2013). The exact opposite of what we hear in the west.

As in Tsarist Russia but even more so, and notwithstanding China’s impressive legacy of past civilisations, the Chinese revolution took place in an underdeveloped country, one ransacked by imperialism, whose barbaric and cruel practices were responsible for the deaths, of hundreds of millions of Chinese.

So just like in the Soviet Union the Chinese had to build the country up industrially from an extremely low level. They had to undertake the tasks previously performed in the capitalist era in the west. Capitalism could never have taken off in the first place without the extensive plunder, of China, India Africa and Latin America involving the enslavement of millions of people and robbery of vast resources.
The PRC has not colonised or occupied any other country, and its own development remains the domain of its people and government. But development does mean hard and demanding work including heavy manual labour. However, this does not mean the country isn’t socialist.
The best way to describe China is as a socialist state but in a very early stage of socialism, a primary stage, and this in fact is what the Chinese leaders themselves claim. Nothing more. China is socialist, but nowhere near even a moderately developed socialism.
Moreover, there is no such thing as a ‘pure’ mode of production, at least until we get much further along the road of highly developed socialism. All societies hitherto have been a hybrid of different modes of production, but with one of them usually dominant. A good example of a hybrid mode was the 19th century USA before the civil war, combining the most advanced capitalism with formal slavery.

Similarly, it cannot be argued that because there are army and police in China, China is not socialist. The army and police in any society are far from class neutral. In capitalist states they serve the interests of the ruling class but in China, the interests of working people. The People’s Liberation Army was the force of the revolution, against the feudal landlords, and Japanese, and in the civil war against Chiang kai –shek. The PLA can elect delegates to the National People’s Congress. It is the armed wing of the Communist Party, with the vast majority of officers Party members. Formally, it is not the armed force of the Chinese state.

Xi Jinping shortly before he became President in a speech in December 2012 supposed to be for internal party circulation only, spoke about the crucial importance of the PLA being the armed wing of the party:
“Why did the Soviet Union disintegrate? Why did the Soviet Communist Party collapse? An important reason was that their ideals and beliefs had been shaken. In the end, ‘the ruler’s flag over the city tower’ changed overnight. It’s a profound lesson for us! To dismiss the history of the Soviet Union and the Soviet Communist Party, to dismiss Lenin and Stalin, and to dismiss everything else is to engage in historic nihilism, and it confuses our thoughts and undermines the Party’s organizations on all levels.”

“Why must we stand firm on the Party’s leadership over the military?” Xi continued, “because that’s the lesson from the collapse of the Soviet Union. In the Soviet Union where the military was depoliticized, separated from the Party and nationalized, the party was disarmed. A few people tried to save the Soviet Union; they seized Gorbachev, but within days it was turned around again, because they didn’t have the instruments to exert power. Yeltsin gave a speech standing on a tank, but the military made no response, keeping so-called ‘neutrality.’ Finally, Gorbachev announced the disbandment of the Soviet Communist Party in a blithe statement. A big Party was gone just like that. Proportionally, the Soviet Communist Party had more members than we do, but nobody was man enough to stand up and resist.” (my emphasis NG)
The implication of Comrade Xi’s remarks obviously is that if the soviet military had formally been the armed wing of the soviet party instead of being the armed forces of the soviet state, the disintegration and counter-revolution there would not have occurred, with the corollary being Neo-Liberalism not gaining the ascendency it has.

Is the Chinese economy socialist?

As is well known, from the early 1980’s, actually starting in 1978, under Deng Xiaoping, the PRC developed in its own words a ‘socialist market economy’ and in echoes of Lenin’s New Economic Policy (NEP) uses substantial amounts of private capital, foreign and domestic, with private enterprises everywhere.

The economy grew by astonishing leaps and bounds, but is it socialist?
In all societies, the decisive importance of ownership and control over the commanding heights of the economy is the primary determinant of the dominant form of ownership of the means of production.

In China, the government and its organs of power and influence, control leading publicly owned financial institutions and a comprehensive range of state enterprises. This enables the state to mobilise these resources to implement its plans

As of 2014, large state owned enterprises (SOEs) are the backbone of China’s economy, producing over 50% of the nation’s goods and services, and employing over half of China’s workers. I shall stick with this figure even though the exact proportion of publicly owned enterprises is in dispute with some commentators putting the state sector at rather less than half. Nevertheless, sixty-five of the Chinese companies in the 2012 Fortune Global 500 list were state-owned, including the State Grid Corporation of China which operates the country’s power grid, and oil companies China National Petroleum Corporation and Sinopec. Profits of the largest state-owned enterprises can be huge. Conversely, the private sector, in Chinese terms are largely small- and medium-sized businesses.

Undoubtedly, the state sector controls the commanding heights of the economy. In 2006, the Chinese government published a list of ‘strategic’ industries that it considers vital to national or economic security which will remain permanently in state hands. They are defence, power generation and distribution, oil and petrochemicals, telecommunications, coal, aviation and shipping. In 2007, the list was extended to include shipbuilding, metalwork and construction. Fifty non-financial enterprises are deemed strategic and act as the commanding heights of the state sector.

The state will also retain significant or absolute control over those sectors defined as ‘pillar’ and ‘basic’. These are machinery, automotive, IT, construction, steel, base metals, chemicals, land surveying, and R&D. Other sectors in which significant ownership stakes and control are to be maintained include, trading, investment, medicine, construction materials, agriculture, and geological exploration.

In 2004, the state was the largest shareholder in 70 percent of listed non-financial firms, which are commonly defined as private companies. State ownership is masked in shareholding companies resulting in a general underestimation of the extent of public ownership. It is also common to ignore the role of the state in joint ventures with foreign invested enterprises.

No western country even at the height of post WW2 social democracy ever had proportionally anything the size of the current public sector in China. Moreover unlike in western social democratic countries, the Chinese work to a five year plan. The current one is the 12th, (2011 to 2015), which lists 7 strategic emerging industries which should produce 30% of China’s GDP by 2020. (Jenny Clegg, Morning Star 2nd May 2014).
Nevertheless, there are obvious dangers for the PRC in permitting the penetration of such a high degree of foreign and domestic capital which grows rapidly.

The socialist market economy or ‘socialism with Chinese characteristics’ as the Chinese say, is a complex and contradictory phenomenon. Fundamental socialist structures exist alongside capitalist development. Workers in Chinese private industry are subjected to capitalist exploitation and the workers in the state industries have lost much of the economic support that once attached to their workplaces. Horrendous industrial accidents take place and environmental problems are severe.
So the economic foundation of China is not homogeneous. This goes back to the argument earlier about there being no such thing as a ‘pure mode of production’. China is partly socialist and partly capitalist. But which is dominant?

World economic crisis of 2008-9

The world economic capitalist crisis of 2008 -09 was a critical test in determining which mode is dominant. When the crisis hit in 2008 to 2009, many tens of millions of workers in the U.S., Europe, and Japan were plunged into unemployment.

China, which had allowed itself to become heavily dependent on exports to the capitalist west, suddenly was faced with the shutdown of thousands of factories, primarily in the eastern coastal provinces and the special economic zones. More than 20 million Chinese workers lost their jobs in a very short time.So what did the Chinese government do?

Nicholas Lardy, a China expert from the prestigious Peterson Institute for International Economics in America, described how consumption in China actually grew during the crisis of 2008-09, wages went up, and the government created enough jobs to compensate for the layoffs caused by the global crisis. Said Lardy: “In a year in which GDP expansion [in China] was the slowest in almost a decade, how could consumption growth in 2009 have been so strong in relative terms? How could this happen at a time when employment in export-oriented industries was collapsing, with a survey conducted by the Ministry of Agriculture reporting the loss of 20 million jobs in export manufacturing centres along the southeast coast, notably in Guangdong Province? The relatively strong growth of consumption in 2009 is explained by several factors. First, the boom in investment, particularly in construction activities, appears to have generated additional employment sufficient to offset a very large portion of the job losses in the export sector. For the year as a whole the Chinese economy created 11.02 million jobs in urban areas, very nearly matching the 11.13 million urban jobs created in 2008.
“Second, while the growth of employment slowed slightly, wages continued to rise. In nominal terms wages in the formal sector rose 12 percent, a few percentage points below the average of the previous five years (National Bureau of Statistics of China 2010). In real terms the increase was almost 13 percent. Third, the government continued its programs of increasing payments to those drawing pensions and raising transfer payments to China’s lowest-income residents. Monthly pension payments for enterprise retirees increased by RMB120, or 10 percent, in January 2009, substantially more than the 5.9 percent increase in consumer prices in 2008. This raised the total payments to retirees by about RMB75 billion. The Ministry of Civil Affairs raised transfer payments to about 70 million of China’s lowest-income citizens by a third, for an increase of RMB20 billion in 2009. (Ministry of Civil Affairs 2010).”

Lardy further explained that the Ministry of Railroads introduced eight specific plans, to be completed in 2020, to be implemented in the crisis. The World Bank called it “perhaps the biggest single planned program of passenger rail investment there has ever been in one country.” In addition, ultra high-voltage grid projects were undertaken, among other advances.

So income went up, consumption went up and unemployment was overcome in China — all while the capitalist world was still mired in mass unemployment and austerity.

Conclusion – China is socialist
The reversal of the effects of the crisis in China was the direct result of national planning, and quasi-Keynesian style state intervention – the result of conscious policy decisions of the Chinese Communist Party leadership.

So from the way the Chinese leadership handled the crisis, the socialist side of the economy is still undoubtedly dominant in China.

China succeeded in its economic development because the socialist sector has so far controlled and led domestic capitalism and foreign investment within the framework of planned national economic goals.

Nevertheless, there is a struggle going on. Private capital grows and with it the economic strength and political influence of the capitalist class, and bourgeois intelligentsia. This – could- carry serious long-term dangers for China. The struggle is reflected in various informal currents within the Communist Party – including healthy ones hopefully around the leadership. These currents were outlined in an article by comrade Cheng Enfu in the autumn 2013 (No 69) edition of Communist Review, journal of the Communist Party of Britain.

But the reality right now is that China’s development within a mode of production where a socialist economic sector remains dominant, where real wages, pensions, nutritional standards, and poverty alleviation go rapidly upwards – is unprecedented in history. Very shortly the socialist PRC will overtake the United States as the world’s dominant economic power

Meanwhile, socialists and communists should defend China unconditionally from imperialism and counter the barrage of western propaganda claiming China’s success is down to capitalism. It isn’t. It is precisely because China achieved such a fundamental revolution in 1949 and started along the socialist road – that it is so successful.


One comment

  1. […] is a very interesting article on China which I came across recently. Asking the question Is China […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: