by Brian Hioe
The Path Up To “Black Monday”
AMONG A CERTAIN camp of China experts and Chinese themselves, it would seem that there is a certain camp of those who would seem to genuinely believe that China represents something new to history, something heretofore never seen before seen in history. What China would seem to have mastered are cycles, and boom and bust of capitalism, and the alchemy of producing endlessly rising value in the marketplace. This would be the through the subordination of economics through centralized state control of the economy—and not that politics under capitalism was subordinate to and ultimately determinant by market forces, as Marx among others argued was true of capitalism.
This would be China’s claim to “socialism”—or at least to have a socioeconomic system which transcends capitalism. And if it is true that China represents something different from capitalism in the European or American sense, a litany of descriptors appeared to try and describe China: “state capitalism,” “authoritarian capitalism,” “socialism from afar,” “market Leninism,” and others. But while experts fought over what exactly to call China, it was generally agreed that the significant difference of the Chinese socioeconomic system was centralized state control combined with a “free” market.
China’s economic slowdown has been known for some time. It seemed that China would be unable to maintain its pace of growth, possibly because of having caught up to the rest of the world in terms of development. And while the Chinese government began to talk of a controlled slowdown, some were willing to accept that China had tamed the uncontrollable forces of the free market—again, that China had achieved through state control of the economy mastery of the vast productive forces of capitalism. However, still others pointed to that some form of a crash was imminent and that the Chinese government was just trying to cover up until then.
For all the talk of an economic “slowdown”, it was quite absurd that a drop of a few percentages of growth in GDP was thought of as a “slowdown”; and as though it were shattering of all talk whatsoever about China’s economic rise. But what this only indicates is the extreme extent to which contemporary capitalism is irrationally fixated on growth—that for any economy, yearly increasing GDP is the only sign of economic health.
Yet it would be the recent series of economic crashes in the stock market, shortly followed by recoveries, which have prompted much worry in the world’s financial markets. While the attitude of the Chinese government has been reassuring for those who continue to be convinced that the Chinese government is in ultimate mastery of the forces of the economy, there were others who felt the contrary. The so-called uniqueness of the Chinese model is a lie in face of that China is apparently not exempt from the fluctuations of the market.
Again, that recovery had quite quick for the Chinese market had been reassuring for some, who were assured that Chinese growth will continue, and that this is just a hiccup of the market—with which periodic fluctuations of the economy are inevitable. In this sense, it might be stock traders who are among those most aware of Marx’s insight that crisis is endemic to capitalism, given that the rise and fall of the stock market gives rise to systemic, periodic crisis. But what would seem to be at hand is that China has been gaming the capitalist system by artificially inflating stocks and that China would now seem to be willing to step in with government bailouts in order to rescue the stock market. The devaluation of the yuan would seem to be the latest of the Chinese government’s attempts to intervene into the economy in order to maintain economic stability.
Yet if global financial markets have begun panicking, with “Black Monday” on Wall Street largely attributed to fears about China’s faltering economy, it seems likely this will mark an end to permanent confidence about China’s ability to continually grow economically as though the sky were the limit. If China claimed to have introduced certain elements of capitalism without wholly becoming capitalist in itself, this would seem to be the proof to the opposite. If China has been artificially inflating stock values, it would seem that China’s claim to have achieved something heretofore unseen in the world, to be able to win at the rules of the game of capitalism while not being capitalist itself.
After all, even if it may be true that only selective sectors of the Chinese economy are open for foreign investment, it would be that the integration of China into the global capitalist market is sufficient to provoke global financial panic. The Chinese government would seem to be playing the system in order to prop up the capitalist illusion of continued growth without end. And its ability to continue to do so may be limited in the present.
Prior Historical Precedents
ALL THIS HAS far prior precedent. To begin with, some have pointed towards the precedent of Japan, which also once seemed like it presented something new in the world with its economic miracle and apparently unprecedented capacity towards growth. But if the Japanese economy ultimately was unable to sustain itself, this was because of the bubble which resulted from the Japanese government’s attempt to prop up growth on the basis of cheap credit.
And if this was the so-called “East Asian developmental model” pursued by Japan, Taiwan, Singapore, and South Korea, this was what led to the economic miracle of these countries, followed by a later bursting of the economic bubble. But these are the countries that China has attempted to learn from when it was pursuing its own process of capitalization, in which the development of capitalism was largely state sponsored—except that China’s control over the economy was just that much more absolute. China also had the model of Vietnam, in which the economic adaptation of the free market was successfully achieved without a loss of power on the part of the Vietnamese Communist Party. However, it may be that China will just suffer the same fate as these countries in terms of an economic miracle followed by economic slump.
Postcard distributed by the Soviet Union in order to highlight growth during the Five Year Plans. Photo credit: Wolfsonian-Fiu Library
Jumping to a less referenced point of discussion, China’s claim to be a socialist superpower, has prior precedent in the Soviet Union. Long before the collapse of the Soviet Union and the subsequent opening up of the former Soviet Union to outside academic inquiry, it was not realized the Soviet Union was as weak economically as it was.
Rather for decades, the Soviet Union was quite successful in maintaining the facade of an economic superpower which was outside of the parameters of capitalism but still able to exceed capitalist powers in its productive capacities. Before the collapse of the Soviet Union revealed the ultimate flaws of the Five Year Plans, for example, in which managers would just try to meet production benchmarks in as haphazard ways as possible, it was quite often thought that the Soviet Union was genuinely able to outproduce capitalist powers. If the fixation of an entire generation of the Left on the fantastical utopia of the Soviet Union now seems to be nonsensical, then we should remember that the Soviet Union was rife with internal contradictions in the decades leading up to its collapse; and this was not widely known until after 1989.
China would apparently stand at the intersection of the “East Asian developmental model” and the precedent of the Soviet Union. Too willing have been China experts and others been willing to grant China the status of something beyond capitalism on the basis of its claim to “Communism”, which masks that China inflects developmental tendencies not dissimilar to those of the East Asian capitalist nations which pursued the “East Asian developmental model.”
Will China Collapse? Or Will We See Increased Domestic Repression Within China?
APART FROM that China’s recent economic collapse is not exactly without precedent, this should be proof that China does not represent anything qualitatively different from capitalism, but merely offers a variation on the “East Asian developmental model” in which the state sponsors the development of capitalism. China is hardly “socialism”, however some would like to call it such. If China just bails out its failing stock markets, how is that different from the US when it bailed out the banks in 2008? That should be proof enough that China is capitalist, through and through.
One proposed map of what a collapsed China would apparently look like. Numerous such maps circulate, usually on the Internet. Photo credit: Collapse China
However, if China has precedent in the Soviet Union, does that mean that a future economic collapse from which there will be no recovery will precipitate territorial collapse? That is often a form of wishful thinking among those for whom it may be in the interests of China to collapse, i.e., territories and countries facing possible Chinese territorial aggression. Actually, the Soviet Union is a quintessentially modern construct, given that it was formed out of countries and territories which had never been unified in the past.
Modern China, on the other hand, is largely formed out of the former borders of the Qing empire. But in comparison of the territories which constituted the former Soviet Union and present day China, in regards to Xinjiang and Tibet, it seems like a critical slippage to assume that territorial collapse in China along the lines of the Soviet Union would be the same. But modern China, that is, the PRC, was not constituted out of preexistent territories in the same way as the Soviet Union and the countries of the Eastern Bloc. Gordon Chang-esque fantasy aside, China will probably not collapse and then evaporate into thin air tomorrow, as it was with the Soviet Union.
Yet whether unfounded or not, China itself fears that it may suffer the same fate of the Soviet Union, with the perception that economic collapse may precede territorial disintegration. After all, we might note the keen interest that China took in the Soviet Union during the process of its disintegration, sending observers to investigate the means as to prevent China from suffering the same fate. It may be that we will see increasing attempts to crack down on perceived dissidence or perceived separatism within China’s borders as a response to China’s recent economic woes.
Increasingly Aggressive Foreign Policy as a Response to Market Woes?
HOWEVER IS IT that China’s recurrent cycles of collapse followed by recovery should instead prompt worry in regards to China’s foreign policy. While much analysis of China’s economy occurs entirely separately from foreign policy, particularly given the fact that government decision-making in China happens implicitly under the centralization of all government authority, this is actually a mistake. Namely, if China’s markets are reaching limits in their capacity to grow—even requiring artificial inflation for their stocks or government bailouts—in order to maintain the expansion of markets, it may be such that territorial expansionism becomes ever more important.
Map of disputes which have taken place over disputed territory in the South China Seas. Photo credit: Sam Pepple/Foreign Affairs
Seeing as that we are close to the one hundredth anniversary of World War I, there has been some talk of similarities in conditions between the present and the conditions before World War I. We might do well here resurrecting the category of “imperialism” in the early 20th. If spoken largely as an insult more than anything these days, much of what is criticized by the political Left as “imperialism” often actually is not truly imperialism, when it involves the imposition of military force for the purposes of economic resource extraction. The direct imposition of military force does not always actually aim at economic resource extraction and hence, a first world country attacking a third world country is not actually always “imperialism” in the sense of military imperialism, but such distinctions become occluded.
But as spoken of by Vladimir Lenin, Rosa Luxemburg, Rudolf Hilferding, or others at the turn of the twentieth century, it is as a product of “state monopoly capitalism” that imperialism occurs. That is to say, imperialism occurs as a product of conditions when the state has begun to interfere in the laissez faire free market in order to maintain the conditions which allow for the free market. To be sure, we may understand much of the global policies of neoliberalism in that light. Yet although it is not a perfect fit, can we understand the actions of contemporary China in that light? Certainly, we should point to the actions of China in Africa and South America, in which Chinese investment takes place under questionably exploitative conditions, even if the discourse of South-South cooperation is used as justification. It would seem that the discourse of South-South cooperation has become in itself imperial ideology.
But closer to home, the actions of China in the South China Seas do not always make very much sense in regards to the framework of economic imperialism. Little is actually to be gained from annexing some of the southeast seas islands that China comes into conflict with Japan or the Philippines, rather, nationalistic pride seems to be what is at stake here. China’s attempt to annex Taiwan also does not actually make very much sense in terms of economic rationale, given that the military absorption of Taiwan would be rather disruptive economically. Hence why China has adopted a strategy of economic encroachment upon Taiwan without the use of direct force even if the threat of force also becomes a part of that strategy of economic encroachment. This is certainly a form of economic imperialism. But will it be that flagging markets at home lead to the possibility of military force being put on the table when it comes to territories of the southeast China seas?
Chinese troops at a parade marking the 70th anniversary of the end of World War II in Russia. Photo credit: Xinhua/Jia Yuchen
Obviously, the possibility of China attempting to annex Japan the way that during the Japanese empire, Japan attempted to colonize China, is quite low. But China has a rather expansive definition of what counts as “China.” It is more largely a question whether or it is true that territorial annexations would actually benefit the Chinese economy rather than actually proving severely disruptive to it. But it is possible that the notion of China needing to secure its borders not only for the sake of nationalism or perceived threats to border security, but also for economic incentive, will see circulation.
Regardless of whether the Chinese economy returns to a period of growth or continues to have precipitous periods of fall followed by recovery, the influence of China is here to stay. So, then, will it be that economic decline on the part of China would lead to increased aggression in terms of foreign policy? That may be the question that countries on the borders of China may need to find themselves asking in the near future.