Is China Still Socialist?

NB. This is extracted (and updated) from a much longer article – Will the People’s Republic of China go the way of the USSR? – published on 31 May 2018.

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So long as socialism does not collapse in China, it will always hold its ground in the world. (Deng Xiaoping)¹

The first of October marks the China’s National Day, the 69th anniversary of the founding of the People’s Republic of China. With China’s rise and its increasing importance to the global economy, China is a ‘hot topic’ in the world of politics and economics. And, after four decades of market-oriented economic reforms, many on the left are asking: to what extent can China reasonably be considered a socialist country?

After all, China today has nearly 500 billionaires and is the world’s top destination for foreign direct investment, attracting over $100 billion each year. There are branches of McDonalds and Starbucks in all major Chinese cities; and there is startling inequality between the coastal cities and the inland countryside, and between rich and poor more generally. There are stock exchanges in Shanghai and Shenzhen; there is finance capital; there is privately-owned capital. Is this really what Marx and Engels had in mind?

On the other hand, the People’s Republic of China has some interesting characteristics that make it rather different from the average capitalist country. Most importantly, although inequality has increased over the past 40 years, the standard of living for ordinary workers and peasants has risen dramatically along with it. Wealth under capitalism generally has its counterpart in poverty and exploitation (at home and/or abroad), but in China practically everyone enjoys a far better standard of life than they used to. Extreme poverty is on the cusp of being completely eliminated – an extraordinary achievement for a country of China’s size.

Secondly, China is run by a communist party that continues to adhere to Marxism-Leninism. While it no doubt suffers from corruption, and although its ideological purity has been diluted, its history and traditions mean that it derives its legitimacy and support from the masses of workers and peasants. As such, the Chinese state operates primarily in the interests of the working classes, unlike any capitalist state.

Thirdly, as much private capital as there is in China, the economy is still very much dominated and directed by the state.

So while China has introduced elements of capitalism in the 40 years since the start of ‘reform and opening up’, these do not constitute a negation of socialism, any more than they did in the New Democracy period in the 1950s, or under the New Economic Policy in the Soviet Union in the 1920s. The point of the reforms is to to lay the ground for a more advanced socialism: ”In order to realise communism, we have to accomplish the tasks set in the socialist stage. They are legion, but the fundamental one is to develop the productive forces so as to demonstrate the superiority of socialism over capitalism and provide the material basis for communism.”²

A workers’ state

The class nature of the state is one of the core themes of Marxism. Marx and Engels were the first to conclusively demonstrate that the state is not an impartial body sitting above society and operating for the common good; rather, its responsibility is to represent the interests of a given social class and the system of production relations that benefit it. In the case of capitalism, ”the executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie”.³

In a socialist society, the state must serve the interests of the working class and its allies; it must protect working class power, defend it from the inevitable attacks from capital, and build a better life for people. Such a state can certainly incorporate market mechanisms, as long as these operate under the guidance of the state and introduce some benefit for working people, and as long as capital is not allowed to become politically dominant.

The Communist Party of China (CPC) conceptualises the capitalist elements of its economy as being at the service of socialist development. ‘Socialism with Chinese characteristics’ leverages the market to stimulate production, attract investment, encourage technical development, support peaceful coexistence with the capitalist world, and thereby raise the living standards of the Chinese people and pave the road for a higher stage of socialism, built on advanced technology. Market socialism can reasonably be considered a pragmatic and entirely Marxist answer to the exceedingly difficult problem of building socialism in a large, underdeveloped country under constant threat from a hegemonic US imperialism.

The Chinese government is extraordinarily popular among the Chinese people⁴, the reason being that it focuses precisely on the wellbeing of the masses rather than the profits of billionaires. “Meeting people’s needs, ranging from those in education, employment, social security, medical services, housing, environment, to intellectual and cultural life, is the top priority of the government.”⁵ This is constantly stressed by the leadership.

A government’s priorities can provide a useful indicator as to its ideology and the social forces it represents. The top priorities of the Chinese government in the present era are very much consistent with the demands of the Chinese people, in particular: protecting China’s unity and territorial integrity; improving living standards; clamping down on corruption; protecting the environment; eradicating poverty; maintaining peace and stability; and re-establishing China’s national prestige, all but wiped out in the ‘century of humiliation’ preceding the establishment of the PRC in 1949. The average citizen of the US or Britain would surely be pleased if their government embraced an equivalent set of priorities, meeting the needs of the masses, and yet this doesn’t happen, because of the resistance of the (capitalist) ruling classes of those countries.

The question of environmental conservation is instructive. A capitalist state has very limited freedom of action on this issue, due to the short-termist needs of expanding capital (for example, oil companies wield significant influence within US policy circles). A comprehensive strategy of environmental protection requires a huge investment: a production of use values that may not have corresponding exchange values; that is, production for people, not profit. In China, the government has a clear mandate to lead just such a strategy (even though there is a tension between development and conservation, both of which are essential for the Chinese people).

Over the last few years, China has quickly become the global leader in environmental protection, planning to “spend at least $360 billion on clean energy projects and create 13 million new renewable energy jobs by 2020”.⁶ At the same time as investing heavily in alternative energy sources such as solar, wind, and hydropower, it is divesting from coal, cancelling the construction of 104 new coal plants last year.⁷ The government has even set up an environmental police force to ensure compliance with green policy.⁸ China’s forest coverage has increased from around 18 percent in 2007 to 21.7 percent, with targets of 23 percent by 2020 and 26 percent by 2035.⁹ On clean energy, “the United States is actually playing catch-up to China… China has taken an undisputed leadership”.¹⁰ On pollution, “the results suggest that China’s fight against pollution has already laid the foundation for extraordinary gains in life expectancy.”¹¹ These ambitious plans can be devised and carried out precisely because of the location of political power in the Chinese working class.

Public ownership still dominates, and the state is in charge of the economy

Although the number of employees of private enterprises has overtaken the number of employees of state- and collectively-owned companies, the basic economic agenda is set by the state. Private production is encouraged by the state only because it contributes to modernisation, technological development and employment. While some Marxists may insist that markets can have no place under socialism, it’s difficult to reconcile such a view with Marx’s own view of socialism as a transitional stage on the road to communism. China has proven in reality that it can use (heavily regulated) market mechanisms in order to more rapidly develop the productive forces and improve the living standards of its people.

It will come as a surprise to many readers to know that public ownership continues to dominate in China. There has been very little in the way of actual privatisation, in terms of transferring ownership of state enterprises into the hands of private capital; indeed, the state sector is several times bigger than it was in 1978, when the reforms were launched. Rather, private enterprise was allowed to develop alongside the state sector, and has grown at an even faster rate than the state sector (bear in mind that it started from a very low base).

The state maintains tight control over the most important parts of the economy, often referred to as the ‘commanding heights’: heavy industry, energy, finance, transport, communications, and foreign trade.¹² Finance – which has a key influence over the entire economy – is dominated by the ‘big four’ state-owned banks.¹³ These banks’ primary responsibility is to the Chinese people, not private shareholders. China’s land was never privatised, although collectivisation was mainly rolled back. It remains owned and managed at the village level.

Tran Dac Loi, of the Communist Party of Vietnam, gives a very clear explanation of the relationship between state and market in a market socialist economy (note that Vietnam follows a very similar economic model to China): ”The market is managed and regulated by the socialist state in order to utilise the positive sides, minimise the negative ones, and direct market activities into implementation of given comprehensive development goals… The state economic sector should play the dominating role in key areas essential to macro economy such as energy, finance, telecommunications, aviation, railways, maritime, public transportation, etc… The land and natural resources remain within all-people ownership under the state management.”¹⁴

Tran continues: “We are aware that in the market economy in particular and in the transition period in general, it is impossible to avoid the gap between the rich and the poor; but the state and the whole society should focus on upholding the poor, supporting the disadvantaged, reducing poverty, increasing access to education, healthcare, social welfare as well as the improving and enhancing living standard of the people accordingly on every step of economic development… These are persistent and obligatory targets to be achieved in the development process towards socialism.”

Such an arrangement is fundamentally different to the organisation of production in a capitalist society.

Opening up has led to development

China’s opening up to foreign investment and its integration into global markets – particularly its 2001 accession to the World Trade Organisation – is often presented by leftists as prima facie evidence of its having become a capitalist country. British academic Jenny Clegg explains that WTO membership had nothing to do with capitalist restoration, and everything to do with developing China’s productive forces, strengthening its geopolitical position, and thereby building a better life for its people. China joined the WTO in order to able to “insert itself into the global production chains linking East Asia to the US and other markets, thus making itself indispensable as a production base for the world economy. This would make it far more difficult for the United States to impose a new Cold War isolation.” Further, China’s integration in the world economy has allowed it to be a part of “the unprecedented global technological revolution, offering a short cut for the country to accelerate its industrial transformation and upgrade its economic structure.”¹⁵

The opportunity to rapidly learn from the advanced capitalist countries’ developments in science and technology was the principal reason for ‘opening up’. Blockaded by the western countries after the revolution, and then cut off from Soviet support as a result of the Sino-Soviet split, China in 1978 was still relatively backward from a technological point of view, in spite of having made some great advances and having developed a standard of living for its people that was far ahead of other countries at a similar level of development. Deals with foreign investors were drawn up such that foreign companies trying to expand their capital in China were compelled to share skills and technology, and operate under Chinese regulation.¹⁶

Much as foreign investors might like to keep their technological secrets, they’ve had limited choice. Martin Jacques notes that, “as China has grown more powerful, the demand for technology transfer has become ever more insistent, with foreign companies, complain though they may, generally conceding.”¹⁷ The result is that China is now one of the world’s leading innovators in science and technology.

Commitment to Marxism

Only socialism can save China, and only Chinese socialism can lead our country to development – a fact that has been fully proved through the long-term practice of the Party and the state. (Xi Jinping)¹⁸

Through four decades of reform and opening up, the CPC has retained its commitment to Marxism. Deng Xiaoping was clear from the very beginning of the reform process that China “must keep to the socialist road. Some people are now openly saying that socialism in inferior to capitalism. We must demolish this contention… Deviate from socialism and China will inevitably revert to semi-feudalism and semi-colonialism. The overwhelming majority of the Chinese people will never allow such a reverse.”¹⁹

This is echoed today by the current leadership. As Xi Jinping puts it, “socialism with Chinese characteristics is socialism and nothing else. The basic principles of scientific socialism must not be abandoned; otherwise it is not socialism.”²⁰

In no country in the world is Marxism studied as widely as it is in China. President Xi Jinping has a doctorate in Marxist philosophy. Marxism is part of the core curriculum at every level of the education system. Ninety million members of the Communist Party of China are required to engage in Marxist study. ”The whole party should remember: what we are building is socialism with Chinese characteristics, not some other ism”, says Xi.²¹ Indeed, the Communist Party of China considers itself “a loyal inheritor of the spirit of The Communist Manifesto”.²² Marx is considered “the greatest thinker of modern times”.²³

It’s difficult to understand why China’s political leadership would go to such lengths to promote Marxism if they are intent on doing away with it. A far more likely explanation is that they’re genuine in their devotion to socialism and their resolve to strengthen it. Naysayers and purists will highlight flaws and inconsistencies, but this is nothing new or interesting. “Actually existing socialism will always fall short of the socialist ideal because it is precisely that ideal implemented within the confines of reality.”²⁴

The evidence indicates that China continues to be a socialist country.

If the first century of human experience building socialism teaches us anything, it’s that the road from capitalism to socialism is a long and complicated one, and that ‘actually existing socialism’ varies enormously according to time, place and circumstances. China is building a form of socialism that suits its conditions, using the means it has at its disposal, in the extraordinarily challenging circumstances of global imperialist hegemony. No socialist experiment thus far – be it the Paris Commune, the Soviet Union, China, Cuba, Mozambique, or indeed Bolivarian Venezuela – can claim to have discovered a magic wand that can be waved such that peace, prosperity, equality and comprehensive human development are achieved overnight. China is forging its own path, and this is worthy of study and support.

In assessing the political nature of China, perhaps it’s best to give the final word to Fidel Castro:

If you want to talk about socialism, let us not forget what socialism achieved in China. At one time it was the land of hunger, poverty, disasters. Today there is none of that. Today China can feed, dress, educate, and care for the health of 1.2 billion people. I think China is a socialist country, and Vietnam is a socialist nation as well. And they insist that they have introduced all the necessary reforms in order to motivate national development and to continue seeking the objectives of socialism. There are no fully pure regimes or systems. In Cuba, for instance, we have many forms of private property… Practically all Cubans own their own home and, what is more, we welcome foreign investment. But that does not mean that Cuba has stopped being socialist.²⁵

Happy birthday to the People’s Republic of China. Long may it continue along the road of socialism and internationalism.