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China: “socialism” with capitalist characteristics

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On present trends China could be the biggest economy in the world by the year 2010. But will it be capitalist? Peter Main explores the contradictory dynamic of the present phase of economic development.

China’s first big step towards the restoration of capitalism began fifteen years ago with Deng Xiaoping’s privatisation of agriculture. In 1989 the Tiananmen crisis led to a temporary slowing down of this process. But from August 1991 the influence of the more conservative bureaucrats around Li Peng began to wane and, after Deng’s visit to Canton in early 1992, the tempo of restoration picked up once again.

Many western commentators now see the “Chinese road to capitalism”, with its combination of political authoritarianism and economic free-wheeling, as a far superior model to the celebrated “Big Bang” of Eastern Europe. Nonetheless, the fundamental problems associated with breaking up the bureaucratically planned economy in China are not so very different from those already seen elsewhere. The most obvious of these is the problem of how to subject the heavy industrial core of that economy to market forces without plunging the country into economic and, therefore, political crisis.

This problem has created deep factional divisions within the ruling bureaucracy. The old bureaucratic conservative faction centred in the repressive apparatus regained some influence in the immediate aftermath of Tiananmen. Predictably enough, this faction is the least dynamic and independent and, having gained a 15% increase in the budget for the armed forces, has been content to take a back seat in the last year. Within the bureaucracy the “market socialist” tendency, whose official slogans are “socialism with Chinese characteristics” and “two systems; one country”, is predominant. Their aim, like Gorbachev before them, is to utilise massive concessions to market forces and even to allow large scale capital penetration of China to revitilise the moribund planned economy and thus preserve the rule of the bureaucratic caste.

But within this faction tensions and differences have developed. One trend, identified with Li Peng, seeks to maintain overall control by a system of state trusts. It tends to see state capitalism as the predominant form that should be allowed to operate. The more powerful trend around the “paramount leader” Deng, is enthusiastic about encouraging foreign capital from Hong Kong, Taiwan, Japan and the USA via joint ventures and an expansion of the Special Economic Zones. These groupings are not necessarily hermetically sealed off one from another but they do express, in however distorted a form, the pressure of the major social forces within China.

It is developments within the Chinese economy which form the essential background to the manoeuvres of the different factions, and which reveal the prospects for the restoration process in the medium term. When Premier Li Peng opened the National People’s Congress on 15 March, he said that China’s growth rate in the coming year would be approximately 8%. Despite the fact that this is at least 4% less than the average growth rate of recent years, western commentators immediately concluded that the most pro-market wing of the Chinese bureaucracy, led by Deng Xiaoping, had consolidated its hold on power.

They were probably right. A year ago, Li Peng only grudgingly accepted the possibility of a 5% growth and reality has clearly proved him wrong. The political significance of this argument over the figures lay in the fact that Deng’s forecast was based on the prospects for the province of Guangdong in which both foreign and domestic capital had been given the freest rein. Li’s attempt to establish a less rapid growth rate reflected his concern to retain a greater degree of central control over economic development as a whole. That he now has to accept a much higher figure for the coming year suggests that the faction favouring giving market forces their head have become even more dominant over the last year.1

The strength of Deng’s faction reflects the confidence of different elements of a proto-bourgeoisie whose existence and growth sets China apart from the other degenerate workers’ states. In Eastern Europe, for example, the lack of a reliable stratum of domestic entrepreneurs and managers has not only held back internal capitalist development but also deterred foreign capital from commiting major investments. The greater progress made by the restorationists within the Chinese bureaucracy flows from their greater success in stimulating the growth of a domestic capitalist class and in opening China to overseas capital, predominantly overseas Chinese, capital.

Part of this development is the growth of rural capitalism (see box). Although rural enterprises have notched up important gains recently, there cannot be any doubt that the main contributors to the growth of China’s national economy as measured for example in GNP and the value of exports, have been the Special Economic Zones (SEZ’s). There are now reckoned to be more than 8,000 of these across China and what this indicates is that the term is now being used by virtually every important city or township authority to describe any concessionary tax-break deal with which capital is being enticed into making some degree of investment. The really important ones are centred in Guangdong and Fujian provinces which, respectively, neighbour Hong Kong and Taiwan.

It is here that the difference between China and Eastern Europe is most obvious. By the 1980’s, Chinese capital in both Taiwan and Hong Kong had already left behind its origins in low wage sweat shops and even its more high tech production was beginning to relocate to other parts of South East Asia. Hong Kong, in particular, needed to find a new role more suited to the structure of its capital. The opening of Guangdong to investment from Hong Kong was, therefore, as much a saviour for its capitalists as it was a road to economic regeneration on the mainland. What the bourgeois analysts refer to as the “servicing sector”—banking, insurance, financing, marketing and so on—together with massively expanded infrastructural and cargo-handling facilities, have, for the moment, maintained the social stability and effectively ensured the allegiance of the Hong Kong bourgeoisie.

Between 1978 and 1990, Guangdong’s GDP grew by an average of 12.4% p.a., the fastest anywhere in the world over such a period. Last year it rose by 19%. Since 1978, its foreign trade has grown by 22% and the province has received 40% of all the foreign capital actually invested in China. The greater part of Guangdong’s, and 60% of China’s greatly increased foreign trade, goes via Hong Kong and this explains the continued vitality of the colony despite the fact that much of its productive capacity has now been transferred to the mainland. 2

Within the coastal provinces, and especially within the SEZ’s, capitalist investment and production have been growing at a frenetic rate. In 1992, agreements were reached for $58 billion of investment. The trade surplus with the USA reached $18 billion in the same year. The rapid increase in economic activity is straining the infrastructure, especially rail transport and power generation, to their limits and oil production is stagnating at 140 million tonnes per year despite demand increasing at 7% per year. Contracts worth $500 million were reported in April for two power stations but many foreign contractors are still wary of such long term deals which could be at the mercy of government instability or fluctuating exchange rates.

Fears such as these were given substance by the experience of the French whose firms had been hoping for a big slice of the $1 billion worth of contracts for the construction of the Guangzhou (Canton) underground railway but found themselves barred from even tendering for the work in retaliation for sales of French Mirage jets to Taiwan. Thus, whilst firms like Alcatel, Ericsson and Siemens are jockeying for position to grab the Chinese market for modern telecommunications, reckoned to be worth up to $75 billion, much of the investment actually made in the last two years has been in real estate and, while this fuels economic activity, it also stokes up inflationary pressures.

The continued centrality of statified property can immediately be seen by comparing the 105,000 state owned firms with the 18 million Township and Village Enterprises (TVE’s). The state firms employ 106 million workers, 70% of the urban, and 18% of the total, workforce, whilst the TVE’s employ 96 million rural workers, 25% of the rural workforce. Because of their greater use of machinery, state firms, which account for 65% of all fixed assets, are far more productive than the TVE’s and, “produced 55% of the gross value of industrial output, accounted for over 80% of total transportation volume (railways and large shipping firms are state owned) and contributed more than 60% of state revenues”3 in 1990.

The figures are complicated by the subsidies that are paid to keep open loss-making state firms. Estimates vary between one third and two-thirds of all state firms as loss-makers. As in Eastern Europe and the former Soviet Union, the principal mechanism for these subsidies appears to be “soft loans” from the state banks which still hold 85% of all financial assets. Inasmuch as these subsidies take the form of workers’ wages or maintenance of cheap prices for raw materials etc, they actually contribute, in part, to the accumulation of the private sector. Such systematic printing of money that is not matched by increased output must add to inflationary pressures.

Despite its great weight within the economy, however, the state sector has decreased steadily since 1978 and less and less of it is directly controlled by central planning directives. Even in 1978 China had a much less centralised planning system than the European degenerate workers’ states, (leaving aside Yugoslavia). The State Planning Commission had repeated difficulties in framing or enforcing more than annual plans. Longer term plans were often disrupted by the nearly decennial factional struggles within the bureaucracy which frequently burst into open social struggles.

Effective planning often took place at the level of the industrial ministries and regional governments with local party bosses controlling local economies. The economic reforms have cut away or greatly reduced the central levels of planning. In its survey of China, The Economist revealed that 700 kinds of producer goods were directly allocated by planning in 1978. That number has now fallen to 20.4 Similarly, in September 1992, state price controls were removed from 571 types of produce, leaving only 89 still controlled where, two years before, there had been 737.5

The decline in central allocation results from a very large measure of decentralisation of economic policy and regulation from Beijing to the provinces. This response to the inefficiency of bureaucratic planning was also seen in the other degenerate workers’ states and, as has been argued in these pages before, does not of itself alter the class character of the property relations involved. The economy continues to function on the basis of the proportions established in the earlier period. What must eventually happen, however, is that the greater initiative devolved to the provinces will lead to the disintegration of the established lines of supply and, therefore, disrupt those proportions. This is particularly true in China where provincial authorities are increasingly accommodating their production to the market forces originating in the TVE’s and the SEZ’s. Consequently, while the State Planning Commission can still be a prime mover within the economy, as with its planned $11 billion Three Gorges Dam on the Yangzi River, or its supervision of the Pudong Development Area near Shanghai, these will not necessarily be undertaken as integral components of an overall planned economy. They could, as well, become state capitalist trusts or joint ventures with foreign capital.

Elsewhere in the state sector, important reforms aimed at similar rationalisations and reductions in state spending have been initiated. The subsidising of the price of grain and edible oils, which reportedly took 11% of the state budget in 1990, is being phased out. This is not as dramatic as it might appear because increased production has lowered market prices recently anyway and these items are no longer as large a part of the urban population’s diet as they were when the system was introduced in the 1950s. Of greater long term impact will be the decision to implement the Bankruptcy Laws and to end job security (the so-called “iron rice bowl” which guaranteed workers’ jobs and pensions). Officially, unemployment is said to be around 3% but the state run trade union federation has suggested 20 million which is more like 18%. Even this figure is regarded as low by commentators because it ignores all those made redundant via “early retirement”.

In the industrial sphere prices of coal and oil are being raised nearer to market prices, a first step towards bringing all of China in line with the free market in these goods which operates already in Guangdong. According to figures reported in The Economist (28.11.92) the subsidy for coal and oil currently accounts for some 40% of financial losses in the entire state sector. Finally, in what looks likely to be the first of many such moves, one million state bureaucrats in Beijing alone are due to be made redundant this year, reflecting the declining role of the state in the overall economy.

We should take note also of the crystalisation of a state capitalist sector out of the planned sector’s industrial and commcercial associations. This includes institutions, such as the Bank of Communications, which have been floated off from the central bank and are supposed to be run on strictly commercial lines. Whilst this means that the bank is not obliged to make “policy” loans to ailing state enterprises it also cannot rely on central funds if it makes losses itself. Within its sphere, the bank has been successful, opening branches in Hong Kong and New York and, in 1992, its profits rose by 40% on the previous year. However, this is not the stuff of which a turn round in the economic fortunes of the Chinese state sector is going to be made. In order to make its money the bank concentrates on very short term loans, almost all of them for less than a year, and on foreign currency dealings. On this basis it cannot be seen as a source of the longer term loan capital required for large scale industrial investment.

At the other end of the scale is the China International Trust Investment Corporation (CITIC). This is a conglomerate which has close connections to the party leadership and is also intermeshed with Hong Kong companies in a series of joint ventures. One of these, Citic HK, is controlled by Wang Jun who happens also to be in charge of Polytechnologies, a leading Beijing arms dealer. Coincidentally, he is also the son of Wang Zhen, China’s Deputy State President. It has been through Citic and its related companies, that China has been investing overseas, in Australia, Latin America and the USA, primarily to secure access to raw materials. The corporation is also seen as a conduit for investment funds on a huge scale, for example, $3.5 billion in the next decade, into Pudong, the new development area near Shanghai. Pudong is the native city of Rong Yiren, head of Citic and, prior to the Cultural Revolution, a big wheel in the Shanghai party leadership.

In addition to its investment operations CITIC has also to take responsibility for a number of loss-making state firms. Out of its profits it has to finance the retention of “surplus” employees and state regulated low prices. The expectation has to be that, in time, it will begin to rationalise these “assets”, either transforming them into genuine state capitalist trusts or preparing them for some form of privatisation.

More than a hundred years ago, a senior Mandarin advised the Imperial Court that the strategy of the western barbarians for taking control of China could be likened to the peeling of an onion. First they had annexed the tributary states of the empire, Korea, Vietnam, Burma etc, then they had established the Treaty Ports along the coasts, next they had demanded, and gained, extra-territoriality in their “spheres of influence” and soon they would begin to demand access to the interior provinces.

It is not difficult to see the parallel with the present strategy for the restoration of capitalism within China. Hong Kong, Taiwan and Macao have acted as the bridgeheads for capital penetration of the coastal provinces and both Chinese and foreign capitalists are now eager to link up to the domestic capitalist class developing in the interior.

But the obstacles in their way are both political and economic. Capital in China is, as yet, a very disparate set of forces. Township and village capital, as we have seen, is still at a very low level of development and benefits largely from the inadequacies of the state sector, from corruption and the exploitation of sweated labour. In effect, its immediate future prospects are tied up with the continued disintegration of central controls which allow it to make the most of its often crude and lawless ways.

The top bureaucrats and the provincial government and party cadres who are running, and often profiting, from the influx of foreign capital into the SEZ’s equally have no love for any restoration of central controls or too close a supervision of their sweat shops. But, impressive as their growth rates are, a great deal of their production is destined for export so that, although their production is included within the Chinese GDP, they are, to a large extent, insulated from the internal economic system. Consequently, the chances of them thrusting aside the main elements of the internal industrial sector by economic means alone are slim indeed.

Meanwhile, the really big capitalist operators, be they Chinese in Hong Kong and Taiwan, or “foreigners” from further afield, are increasingly demanding that the Beijing government commit itself to the “Rule of Law” and the eradication of “unfair competition”, both of which would seriously undermine the position of the less well-developed capitalists within China.

Similarly, the major imperialist powers are talking openly in terms of retaliation against China’s ever growing trade surpluses. The European Community has imposed restrictions on 200 product lines from China and, internationally, China faces more than 200 “dumping” charges. Although China hoped to re-enter GATT this year, the USA is blocking this because China has an $18 billion trade surplus at the same time as maintaining a 42.5% import tariff on 6,000 products.

Matters are made worse, from the foreign capitalists’ point of view, by the consequences of decentralisation within China. Whilst welcoming the break up of the statified economy, they do not like the arbitrary controls introduced by provincial authorities in order to protect their fledgling capitalist enterprises.

In addition to this, Western investors are angered by the steady devaluation of the official exchange rate of the Chinese currency (Renminbi, but usually known by the traditional name, Yuan) from 1.7 to the $US in 1978 to nearly 6 at the present time.

This has the effect of further stimulating exports, reducing imports and diminishing repatriated profits for those firms which already have production facilities within China, especially those who are allowed to sell into the Chinese domestic markets.

These contradictory interests6 among the capitalists limit the potential for the development of a coherent political leadership able to wrest control of the economy, and the state, from the existing authorities, at least on the national scale. At the same time, the possibility of major political advances at a provincial level, above all in Guangdong, cannot be so easily discounted.

Taken separately from the rest of China, the economy of this region might already be said to be dominated by the law of value and a serious economic and political crisis could precipitate a qualitative decline in its links to the national economy.

Nor can such a crisis be ruled out. Quite apart from the destabilising effects of the eventual death of Deng, whose bonapartist role has become more and more important to resolving the crisis within the bureaucracy, the most likely trigger would be a return of the inflationary pressures which preceeded the Democracy Movement uprising of 1989. According to Baring Securities, a Hong Kong stockbroker, consumer inflation in the cities is already running at 20%. 7

Many factors are fuelling such a development and preparing for future social explosions. Government deregulation of food prices and a decline of 1.5%, or 1 million hectares, in land devoted to grain productionwill feed through, in time, into further increases in the cost of living in the cities.

Just as the plans of the old imperialists to penetrate China did not proceed smoothly so also it is highly unlikely that the capitalist elements within China will simply be able to push aside the remnants of the planned economy.

The working class remains a big obstacle, far greater than when China was ruled by the Imperial Court. The same Mandarin remarked that those who peeled onions were likely to end up in tears.

1 Recent reports state that Li Peng is suffering from ill-health and has been temporarily replaced by Zhu Rongji a close protegé of Deng, closely involved with the development of the special economic Zones (SEZs).
2 In the last ten years, manufacturing employment in Hong Kong has declined from 900,000 to 600,000. Figures from, Zeng Ming, “The Plight of Workers in Hong Kong and South China”, in WAFC Newsletter, April 1993
3 Far Eastern Economic Review, 28 January 1993
4 These figures underestimate the specific weight of statified property in the Chinese economy because much of their pricing is held below market rates. For example, coal is priced at approximately one-third of the price on the open market. In addition, power generation and transport both operate as a subsidy to the non-state sector.
5 TR Gottschang, (Current History, September 1992, p.271) estimates the scale of the subsidy required as 13% of state spending, according to The Economist it is 14%.
6 A further illustration of this clash of interests can be seen in the different demands on Chinese wages in the SEZs coming from Hong Kong and US capitalists. The latter demand that they are raised in order to make it more difficult foar Chinese exports to compete with US goods; but Hong Kong capital resists this since they employ most of the workers in the SEZs.
7 The Economist, 23 January 1993, p61 . We have already mentioned the consequences of the large scale subsidising of inefficient industries which goes a long way to explaining the 40% increase in circulating currency in the last year and the effects of the investment boom in the SEZ’s.

Class differentiation in the countryside

Productivity in agriculture had stagnated since the mid 1960’s as state control imposed arbitrary and often inappropriate decisions on the communes created in the 1950s.

Freed from bureaucratic diktat with the restoration of private agriculture in 1978, Chinese peasants rapidly reintroduced mixed farming and, limited only by the need to deliver fixed quotas of some crops—primarily grain—to the state, took quick advantage of the many gaps and shortages in the urban and industrial economy to grow those crops which produced the highest return.

The results were impressive; “grain output grew by a third in six years, cotton almost trebled, oil-bearing crops more than doubled, fruit production went up by half. Real incomes, per capita, in the countryside grew even more spectacularly, three-fold in eight years.”1

Of course, this rise in incomes has not been uniform within the rural population. A considerable degree of social differentiation has taken place. At one end of the scale, a class of rural capitalist entrepreneurs has come into existence and these have begun to branch out, investing in small scale industrial production, albeit often disguised as co-operatives or joint ventures with “foreign” capital from Hong Kong. In other words, through a process of initial capital accumulation from agriculture, a rural bourgeoisie is emerging.

The clearest expression of this is the growth of the “Township and Village Enterprises” (TVE’s) which have absorbed 100 million peasants during the 1980s. This category includes the former collective property of the communes (many of which operated sizeable industrial installations ranging from food processing to coal mining) as well as cooperative ventures run by village communities. The TVE’s achieved a staggering 22% growth in 1991 and then 36% in the first quarter of 1992.2 They now account for 32% of coal production, 25% of cement, 42% of paper, 36 % of all nylon and 80% of all clothing produced in China. Although not privately owned, these are, essentially, capitalist formations which operate in a market economy. They have expanded operations to the world market where they sold $11 billion worth of goods in 1991 and accounted for 15% of China’s total exports.

Such an explosive rate of growth suggests that the TVE’s must be approaching a stage where they will have to pass beyond the framework of community ownership within which they have developed so far, into fully fledged private capital.

Already there are reports of conflicts between party cadres at local level and figures such as clan leaders whose social role was never entirely eradicated by Maoism. Up to the present, whether they were making their money by plugging the gaps left by bureaucratic planning, by pilfering state-owned goods or by illegal trade and currency dealing, the methods by which the TVE’s have accumulated capital generally pre-supposed the existence of the state sector.

There must come a time, and it has probably been reached, when the most efficient of them find it necessary to centralise and concentrate capital. This will bring the nascent capitalist class up against the existing property relations and their legal framework which do not make provision for their needs; “Resorting to court adjudication, however, is no guarantee of justice, nor have demands from Beijing that cadres treat contracts as binding alleviated the problem.

Cadres operating within the fluid boundaries of the political and legal systems have routinely overridden or ignored contract provisions in order to confiscate land, businesses or other assets. Courts simply refuse to hear some cases on the grounds that there is no law on which to base a ruling”. 3 Capital in China comes up against this barrier as an insufferable limitation on its development.

At the other end of the social scale, peasant net income per person is around $135 a year. This is about half the level of the urban worker. Having been the pride and joy of the Chinese bureaucrats in the first half of the 1980s peasant agriculture is now heading for a serious crisis. The growth figures have tailed off. Output grew only 3% in 1992 and the official China Daily commented recently, that grain production is likley to fall in the next years due to “shrinking able land and deflated enthusiasm among farmers.” Most investment funds have been channeled into industry and agriculture has suffered. The land cannot support the 900 million farmers and their families any longer.

The “household registration system”, which legally inhibited the rural unemployed from moving to the cities to find work has been relaxed. Officially, 15 million peasants have moved to the cities in the last five years, the start of one of the greatest population transfers from country to town in history.

Official statistics now suggest that of 400 million rural labourers 160 million are surplus to requirments.4 This is the pool of cheap labour whose exploitation has already allowed capital to accumulate in the countryside and which is increasingly being used as sweated labour in the Special Economic Zones. Those that cannot be absorbed will drift to Beijing and other cities without prospect of job or home, reserve army of labour in the making.

1 Quoted in The Economist, 28 November, 1992.
2 Figures from T R Gottschang, Current History, September 1992.
3 T. White, “Reforming the Countryside” in Current History, ibid, p275.
4 Financial Times, 10 May 1993, p14

Workers: suffering and resisting

The rapid development of capitalism within the workers’ state has had a drastic impact upon the workers. In the rural interior the TVE’s, operating at a primitive level of technological development, are already notorious for their disregard of the health and safety of their workers.

In 1991, there were 10,000 deaths in the quarrying industry, 70% of these were within the TVE sector.1 Life has always been very tough and dangerous in China’s rural industries, but the more the TVE’s take on an unambiguously capitalist character, and the more the stratification of society becomes apparent, the more this will undermine the stability of the rural sector which will have important ramifications for the national political arena.

In the SEZs the situation confronting the workers is, if anything, worse. Hong Kong capital now employs over 3 million workers in Guangdong in conditions which recall the most primitive period of capitalist development in early nineteenth century Britain.

The most widely reported example concerns a textile plant in Shipai which employed 135 women workers, working an average 15 hour day with one day off per month. In their barracks-like accommodation, directly above the factory, there were two bathrooms for the entire workforce.

At night this dormitory was locked and barred. On 30 May 1990, the entire building, including the dormitory, went up in flames. Only fifty people survived the fire, most with serious injuries sustained when they jumped from the fourth floor dormitory which had no fire escape and remained locked. Nor is this an isolated case, according to the Guangdong government’s own statistics, there were 1700 factory fires in 1990, 26 of these were characterised as “disasters” which, “cost hundreds of lives.”2

Not surprisingly, none of the factions of the Chinese bureaucracy allows the workers the slightest form of self-orgainsation in which to fight back against this kind of super-exploitation. But tensions exist within the the official trade union confederation (ACFTU) as can be seen in the latter’s willingness to produce figures for unemployment which challenge the government’s statistics, suggests that it is finding it necessary to distance itself from the state.

Working from official figures, the “pro-democracy” and pro-restorationist “Workers’ Autonomous Federation of China” has calculated that there have been 1,400 strikes in the last two years alone. Beyond that, it is known that trade unions were effective in raising wages in the Shen Zhen SEZ, near Hong Kong, to the extent that employers began transfering production further along the Pearl River Delta to Zhu Hai. In early April a strike of 3,000 workers at the Canon plant in Zhu Hai broke out over a demand for protection of wages against inflation. This was joined by a similar number in two shoe factories. This is the biggest union dispute yet seen in Guangdong SEZ. The official daily paper, Renmin Ribao, acknowledged the strike but insisted that “in the present historic period, their sacred duty is to ensure that the enterprise reforms and the turn to the market are successful.”

All this tends to suggest that the alienation of the working class, which organised general strikes in many cities throughout China in the aftermath of Tiananmen, has not been assuaged by repression or continued job security. However, it is most unlikely that more than local independent organisation has yet been achieved.

Worse, as in Eastern Europe and in Russia the results of Stalinist repression have strengthened illusions that capitalism and the market are the only foundation for trade union and general democratic liberties.

Other factors as well as the enforced atomisation of the bureaucracy divide China’s proletariat. It has to be remembered that the working class, although huge, 106 million in the urban state sector alone, is also divided between town and country and between state, cooperative, joint venture and foreign owned enterprises.

Large numbers of workers, especially in the SEZ sector, are recent arrivals from the countryside. The heavy industrial state sector is located in north-east and inland central China, far from three new centres of semi-private industrialisation.

In all probability their fights will appear to be spontaneous, elemental and confused but that has always been the case with working classes either emerging from decades of repression or just coming into existence; in China both conditions apply.

As in Eastern Europe the crucial questions will be those of organisation and leadership. Will the movement of China’s workers and their natural allies the rural poor fall into the hands of agents of the imperialist and Chinese bourgeoisie? If it does then mass unemployment and economic breakdown face them. But the restoration process generates the need to defend elementary past gains as well as to make new ones. In those coming fights, the most advanced elements can and must be won to a working class programme independent of all wings of the bureaucracy and of the different fractions of capital.

By uniting with the rural poor the proletariat can create a social force which will be able to defend the territorial integrity of China, which can develop its vast potential in their own interests.

Under their own democratic planning they can open up the road to real socialism; they can even rekindle the flames of social revolution for the oppressed and exploited of all Asia.

1 Quoted in “Chinese Workers”, Newsletter of the Workers’ Autonomous Federation of China, April 1993
2 ibid