In Chinese schools great emphasis is placed on the opium wars, the prostration of China before British and French colonialism and the terrible suffering of the Chinese people that resulted. The bureaucracy in China has no intention of becoming prey to imperialist domination. However, this goal is achievable only if a strong Chinese capitalist sector is created, and this is being done by building up and strengthening key companies, such as Sinopec (oil and gas), China Mobile (telecommunications), China State Construction Engineering (construction) and SAIC (automobiles). These companies have access to huge amounts of capital from the government’s trade surpluses with the US and the rest of the world, which the bureaucracy is ready to pump into these corporations.
According to Nicholas Lardy,[40] of the Fortune 500 list of the world’s biggest firms, 95 are Chinese companies, giant corporations and conglomerates that are competing successfully in the international market. These huge companies have achieved this success by laying off millions of employees to cut costs and streamline their businesses. They compete with the Americans, Japanese, and other imperialists on a capitalist basis. Without doubt, a strong bourgeoisie has been created in China, but as yet it lacks the experience of its competitors.
Property relations have changed qualitatively and much has already been done to bring the legal structure into line. However, there is never perfect matching and the development of new property relations will always lead and, at times, conflict with the old legal forms. That said, sooner or later, the “superstructure” must come into line with the economic base. As Karl Marx pointed out in 1859 in his preface to A Contribution to the Critique of Political Economy: “The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.”
In China we are not dealing with a social revolution, but rather a counter-revolution. Nonetheless the point Marx made remains valid. If one looks at the legal structure in China it is readily apparent that changes have been made to bring the legal framework into line with the new property relations. Initially, the new employment laws were introduced in a piecemeal fashion, but the 1994/95 Labour Law attempted to consolidate the scattered workplace regulations and adapt them for a market economy.[41] To obtain worker support the government attempted to curb the excesses existing in many industries where it had become (and still is) routine for workers (especially on construction sites) to have to wait until the end of the year for their pay, with the inevitable result that many workers received no pay whatsoever.
In 2004 important changes were made to the Constitution, stressing the role of the non-state sector in supporting economic activity in the country and protecting private property from arbitrary seizure. A year later (2005), the laws which regulated or prevented private companies from entering such sectors as the public utilities and the finance services were abolished.
On 1 January 2008, the Labour Contract Law of the People’s Republic of China (LCL) was implemented. Previously in China managers would, as a matter of course, call on the CCP to resolve industrial disputes. But with the moves towards a capitalist economy the government has determined that, using Western capitalism as the model, courts are to be the final arbiters and companies must rely on the legal system not the state. Such a move will take a considerable time to implement not only because of the conservatism of the bureaucracy and the close family and political ties between local Party tops and the new companies but also because such a system requires a legal agreement between employer and employee, the written contract.
The LCL had the goal of bringing all workers within this contract system, that is to say, within a capitalist relationship, and offers sweeteners to get them to accept the contract system. All workers are supposed to have a written contract and any employer that does not sign a contract with an employee is supposed to pay that employee double his or her wages for every month worked without a contract; any employee who has worked for an employer more than ten years or who has already signed two successive fixed-term contracts should be being taken on the permanent staff (a non-fixed-term contract).
Today the percentage of workers with a contract can be as high as 95% in some local government offices and the average nationally is nearly 60%. However, for migrant workers, in their majority women, only about a third have signed contracts.[42] Despite the right to strike being outlawed it is precisely these female migrant workers who are leading the fight for better pay and conditions in the huge factories owned by or servicing foreign companies.
15.7.1 Entry into the WTO
Before 1978, the combined value of Chinese imports and exports had seldom exceeded 10% of GDP, in 1986 it reached 35%, in 2007 it was 40%, and today it is nearly 50%.[43] The present Chinese economy can exist only if it is tightly linked to the world economy. It depends heavily on exports and must have international agreements on trade and participate fully in the world economy. On 11 December 2001 it joined the World Trade Organisation (WTO) as its 143rd member.
Marx and Engels wrote in the Communist Manifesto: “The cheap prices of commodities are the heavy artillery with which it (the bourgeoisie) batters down all Chinese walls … ” now the Chinese themselves describe joining the WTO as “opening the door to the world”, no doubt in the hope it will be their cheap products that batter down the walls of the older imperialist countries.[44]
By joining the WTO China formally committed itself to abandoning state control over foreign trade by 2007. As would be expected, despite the permissive legal framework the bureaucracy has proceeded cautiously and has placed severe practical limits on, for example, foreign banks wishing to become established in China. Thus the approval process is made painfully slow, the banks must provide large capital sums to ensure ongoing solvency, there are restrictions on how much and to whom monies can be lent, there are constraints on where the banks can be located, and so on. The People’s Bank of China (PBOC) is still promising to relax restrictions in preparation for enhanced integration into the world’s financial markets, but is slowing the process until the new generation of Chinese banks have a head start.[45]
The PBOC recognises that bad debts render the Big Four banks unprivatisable and has approached bank privatisation from another angle. From the commencement of the so-called reforms the PBOC encouraged provincial and city governments to set up local banks and, since around 2000, the PBOC has encouraged these banks to increase their services to the private sector and now is proposing that the route to bank privatisation is for these local banks, e.g. Bank of Shanghai, to be sold off as private companies. This has the added advantages of ensuring that the finance industry servicing China is largely in Chinese hands and puts local governments in control of the privatisation process.
It has also determined that the Bank of Shanghai will be the focus for the free, international movement of capital, the capacity to settle payments and trade freely in China’s currency on world financial markets. This financial free-trade zone will be a significant move in China’s march to a fully neo-liberal capitalist economy and further confirms the plans the CCP has for China as a whole.
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Lardy, The Rise … Op. cit.
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Pringle, T, Trade Unions in China, Routledge, 2013.
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Becker, J and Elfstrom, M, The Impact of China’s Labour Contract Law on Workers, International Labour Rights Forum May 12, 2010.
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The World Bank, http://data.worldbank.org.
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www.wto.org.
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Price Waterhouse Coopers, Annual Survey of Foreign Banks in China, January 2014.