China: After the death of Deng

The death of Deng Xiaoping opens up a new chapter for China. Over the last 20 years since the death of Mao, the shift towards opening up the economy to capitalist interests has intensified the contradictions of Chinese society.

The victorious Chinese Revolution of 1944-49 was the second greatest event in history, bringing to its feet a nation of a billion people formerly humiliated and subjugated by foreign imperialist powers. However, the victory of Mao's Red Army introduced, not a socialist regime, but a mirror image of Stalin's Russia. There were no Soviets or independent movement of the workers. Basing himself on the peasants and manoeuvring between the classes, Mao established himself as a Bonapartist dictator at the head of a monstrously deformed workers' state.

Despite the monstrous bureaucratic deformations arising from Chinese Stalinism, the elimination of landlordism and capitalism was a giant step forward, and released the potential of the Chinese economy. Within a relatively short period, China emerged as a great industrial power. This was in complete contrast to the previous years of national subjugation and enslavement by foreign rule.

Despite the advances, the rule of the Chinese Stalinist bureaucracy came into increasing conflict with the needs of a modern economy. Without democratic workers' control and management - of workers' democracy - then bureaucratic control would inevitably end in greater and greater contradictions. The mad theory of autarchy ( "socialism in one country") did terrible damage. The "Great Leap Forward", which ended in catastrophe, was a bureaucratic attempt to force China's industrialisation through small-scale cottage industry.

The death of Mao in 1976 opened up a power struggle amongst the various wings of the ruling bureaucracy. Mao's widow and the so-called "Gang of Four" were purged, and prepared the way for the rise of Deng Xiaoping, and those bureaucrats that wanted to put an end to the upheavals of the Mao years. Consequently, Deng abandoned the old policy of autarchy and promoted China's participation on the world market.

The opening up of the Chinese economy to world trade in 1978 was a turning point. Under the pressure of imperialism and the growing contradictions facing the regime, the bureaucracy under Deng moved towards capitalism. It was dressed up, in the words of Deng, as "socialism with Chinese characteristics".

With the news of Deng Xiaoping's death, the Western capitalist media is full of eulogies praising his actions to move China to a "market economy." For them, Deng opened the road to the restoration of capitalism and a potential market of over one billion people. They toned down their criticisms of Deng's massacre of the student protesters at Tianamen Square. In any case, these hypocritical gentlemen, who shed plenty of "crocodile tears", are quite prepared to back repressive dictatorships as long as they stand in defence of private property.

Unlike in Russia, the Chinese bureaucracy want a controlled movement to capitalism, with themselves firmly in the saddle. Throughout the 1980s, Deng's slogan - "to get rich is glorious" - was trumpeted endlessly. His programme was similar to Bukharin's in Russia in the 1920s, who urged the peasants (the kulaks) to "Get rich quick!" If this had been carried through to a conclusion, it would have resulted in the restoration of capitalism in Russia at that time.

Opening the door to Western investment has led to booming growth rates of over 10%. However, this has led to growing inflation and put colossal strain upon the country's infrastructure. As long as China remains a field for super profits, the West will continue to pour in its money. US imperialism has been quite prepared to ignore China's human rights record - and brush aside the Tianamen Square massacre - as long as it gets greater access to its markets. Net foreign direct investment into China has rocketed from $3.5 billion in 1990, to $27.5b in 1993, $33.8b in 1994 and $38b in 1995. But things could go into reverse at the first sign of putting the blocks on this capitalist development.

Although there have been big concessions to capitalism, particularly with the creation of the "special economic zones", the bulk of industry remains in state hands. State factories still employ the bulk of China's 170 million strong urban workforce. As much as 80-90% of all loans by state banks are made to the state-owned industries, amounting to $120 billion (one trillion yuan) at present. Estimates put the increase in the debts of state industries each year at 50-60 billion yuan. Much of the borrowing from the banks are to cover the wages of state workers. According to the 'Economist', "were the music ever to stop, it would be disastrous. More than one-third of China's state enterprises, at an optimistic reckoning, have liabilities that exceed their assets." (14-20 December 1996).

Huge numbers have left the land for jobs in the cities, giving rise to increased social tensions. The regime is on the horns of a dilemma. To proceed down the road of capitalism, even in a controlled way, will lead to explosions.

As the 'Economist' continues: "Recently, reports have grown that workers are being sacked in droves from state enterprises, particularly in China's industrial north-east. Certainly, hundreds of thousands of state workers, if not millions, have gone unpaid for months: a growing source of conflict. According to some economists, state firms have cut their payrolls by 10m people, to 90m, in the last year alone. But state figures show that the number of workers employed by state-owned enterprises has risen, not fallen, over the past five years. As a result, there is a huge problem: if state firms keep redundant workers on, they lose more money; if they sack them, the jobless join a surly crowd who lack both training programmes and the dole. The government can do nothing for them."

It is the fear of social unrest, that hold back the bureaucracy. They are split over how to proceed. Many bureaucrats have done well out of the "reform", but others - the present heads of the state firms - are looking enviously at the wealth made by the nascent capitalists. Terrified of the workers, they are prepared to hand out billions in subsidies to keep the state sector going. "So sweeping reform of the state sector, which was on the cards three years ago, has given way to piecemeal fiddling... state control is never to be surrendered.." (Economist).

The big question being asked is whether Deng's death will continue the process of "reform" or lead to a bitter power struggle within the Chinese bureaucracy. The 'Financial Times' was forced to comment that "Deng's manifest achievements during the period 1978 - the year the 'open door' policy was proclaimed - to his death, did not come easily, and his legacy is far from secure." (20th February 1997).

Deng played the role of supreme arbiter over the different wings of the Chinese bureaucracy. With his death, these factions can engage in bitter struggle over the direction the country should take. The old guard went along grudgingly with Deng's reforms, but looked ever more suspicious at the growing power of the nascent capitalist elements. On the other hand, the nascent bourgeois, who have achieved increasing power, do not want to share this growing influence with the old bureaucracy. However, the younger layers of the bureaucracy are more open to pro-capitalist tendencies. The 'younger' group around the President Jiang Zemin are in the ascendancy, but Deng's departure will inevitably sharpen the divisions in the bureaucratic elite.

This struggle at the top, given the build up of social discontent below, could trigger a movement of the working class in China. The Chinese working class is one of the strongest in the world. The movement of the students around Tianamen Square was a harbinger of what is to come. The movement towards capitalism is far from complete. Discontent amongst the workers in increasing. However, it is not certain which direction China will move in. That will depend on many things, including the movement of the working class in Russia and the West.

A genuine socialist regime in China would transform the world. As we said in an article commemorating the Tianamen Square massacre: "The monstrously deformed regime that emerged after the 1949 revolution could have no appeal to the workers of Europe, Japan and the United States. But the experience of the last 45 years has utterly transformed the situation. The powerful Chinese proletariat, once it took power, would never tolerate the reestablishment of a corrupt, bureaucratic totalitarian regime. A modern, democratic healthy workers' state in China, which would make an appeal to the workers of the world, as the students of Tiananmen attempted to do in a confused way, would transform the entire situation internationally." Only this road can satisfy the aspirations of the Chinese working class and offer a new glorious chapter in the history of China.