‘Socialist’ China Questioned

Our new pamphlet Questions of the Day is, we think, a good 50p worth.

But it does contain an error. On page 86 in the chapter on the Chinese Revolution, we quote from Mao’s July 1949 statement On People’s Democratic Dictatorship.    .

. . and we must unite with the national bourgeoisie in common struggle. Our present policy is to regulate capitalism not to destroy it.

Unfortunately, we omitted the word “present.” You may be excused for asking ‘So what?’ However a blunder is a blunder. Besides, some members of a maoist sect were particularly annoyed and accused us of being liars and distorters.

The omission of the word “present” is important to the maoists. They believe that the policy of regulating capitalism no longer applies because China is now Socialist.

Let’s examine that claim. The People’s Republic inherited from the Nationalists a sizeable state-owned sector in industry, banking and transport. About one third of industrial output was produced by enterprises confiscated by the Nationalists as Japanese assets at the end of World War II. It gave Mao and the Chinese Communist Party a base for increasing state ownership.

At first, private enterprise was allowed to continue. After all hadn’t Mao urged the workers to “unite with the national bourgeoisie in common struggle”? (Whatever happened to the class struggle? You may well ask) This meant that those hundreds of thousands of capitalists got their reward for backing the winning side in the civil war.

Between 1952 and 1955, economic and ideological pressures coupled with financial inducements helped enlarge the state control at the expense of private ownership. Government policy was still to regulate capitalism, and the system was officially referred to as “state capitalism”.

Then in 1955 a large scale nationalisation drive was launched to convert the rest of the private enterprises in modern industry to joint public and private ownership.

By the following year 67.5 per cent of industrial enterprises excluding handicrafts was government owned. The remainder were joint public and private enterprises. (State Statistical Bureau. Ten Great Years, Peking 1960.) The Government apparatus was still busy regulating capitalism

But wait! Here’s Mao claiming to have established socialism. In his speech ‘On the Correct Handling of Contradictions Among the People.’ Feb. 1957. (Selected Works Peking 1977 vol. 5, p. 394) he says:

   But our socialist system has only just been set up; it is not yet fully established or fully consolidated. In joint state-private industrial and commercial enterprises, captalists still get a fixed rate of interest on their capital, that is to say exploitation still exists.

And How. In these public-private enterprises, the capitalists, in return for relinquishing full ownership received 5 per cent annual interest on the value of their investment regardless of profit or loss. This remuneration was promised to private stockholders for a period of six years. It should therefore have come to a halt in 1962.

However in 1966, Dr. Barry Richman, a Canadian consultant in management and economic development, went to China on a two month tour. He visited eleven cities and in the course of his research project conducted interviews in some 38 industries with over 200 Chinese people including managers, Communist Party and Trade Union Officials, specialists, engineers and other workers.

The results are in a bulky 968 page tome entitled Industrial Society in Communist China (1969). The chapter entitled Communist China’s Red Capitalists is most illuminating. It opens as follows:

       On my visit to Shanghai in May 1966 it was indeed disconcerting for me to be picked up by a native Chinese capitalist in a new Jaguar, taken to his large factory for a day of discussions, and later to his sumptious home where he still lives as a wealthy industrialist does in a capitalist nation. Mr. Wu Tsung-i, my Chinese Communist capitalist acquaintance not only lives like a capitalist but also looks like a capitalist and at times, still thinks and acts like a capitalist . . .

No wonder. His investment was assessed at $640,000 from which he was paid the equivalent in yuan of $32,000 per year. He also picked up a salary of 380 yuan per month. But Mr. Wu was small time.

Comrade Liu Tsing Kee was a real Chinese fat cat. A member of both the Shanghai Congress and the National People Congress, he received a whacking $400,000 annually from his five major cotton mills. His family assets were estimated at $16m and according to Richman he employed four servants in a palatial home which was stuffed with antiques.

Richman reckoned that there were about 300,000 capitalists in the People’s Republic. Ninety thousand of them, he said, were in Shanghai alone. And this was supposed to be Socialism.

As recently as 1972 Professor Ishwar C. Ojha of Boston University attended the funeral of the late minister of Foreign Affairs, Chen Yi. The professor told our companion journal The Western Socialist (No. 3 1972) that the national capitalists were represented by one of their number. In his opinion however, they were at that time somewhat subdued and not advertised as extensively as they had been in the past.

At the present time the Chinese ‘socialists’ are not very forthcoming about the status of the national capitalists. Perhaps they’re just too much of an embarrassment.

But regardless of their current standing one thing is obvious. The Chinese Communist Party equates socialism with nationalization. Mao himself said so in 1949.

   When the time comes to realize socialism, that is to nationalize private enterprise, we shall carry the work of educating and remoulding them (the national capitalists) a step further.
(On the People’s Democratic Dictatorship)

In the opinion of Professor Alexander Eckstein (China’s Economic Revolution, Cambridge Press 1977)

      . . .  a country embarking on the process of deliberate industrialization in the mid-twentieth century will necessarily develop a different industrial structure than a country that may have experienced its industrial revolution amidst laissez-faire conditions in the nineteenth century.

State ownership in China is nothing more than a move towards modernisation in an attempt to enable China to compete effectively with other nations in 20th century capitalism.

Apologists for the Chinese regime sometimes maintain that criticism is irrelevant because they are building an egalitarian society.
Professor Eckstein found little evidence of this when he visited China in 1972.

         “On the contrary,’ he writes on p. 281, “as one travels around China and meets peasants, workers, cadres, and high ranking government officials, status differences are clearly apparent in many subtle ways such as dress, bearing, deference by others, and many other privileges that surround power positions in all societies.”

He also points out that wages of top people can be as much as twenty times that of the lowest paid.

The Chinese Communist Party, being supposedly Marxist, would presumably be aware of Marx’s pronouncement on the possibility of egalitarianism within the wages system.

    Upon the basis of the wages system the value of labouring power is settled like that of every other commodity: and as different kinds of labouring power have different values, or require a different quantity of labour for their production, they must fetch different prices in the labour market. To clamour for equal or even equitable retribution on the basis of the wages system is the same as to clamour for freedom on the basis of the slavery system. (Wages Price and Profit)

Modern China has commodity production, buying and selling, wages and prices, money and markets—all the paraphernalia of capitalism.

Speaking about the modern state Engels pointed out:

The more it proceeds to the taking over of the productive forces the more does it actually become the national capitalist, the more citizens does it exploit. The wages workers remain wages workers—proletarians. (Anti-Duhring)

Anyone who still doubts that China is capitalist has only to consider Chairman Hua’s newest master plan —the introduction of bonuses, work quotas and piece work (Guardian 28th April 1978)

As any British factory worker knows, piece work is an attempt to increase productivity and therefore profits. It causes a speed-up in work rate which can lead to tiredness and a relaxation in safety standards.

Marx’s view of piecework was straightforward. It was, he said “the form of wages most in harmony with the capitalist mode of production.” (Capital Vol. 1)

After the great leaps and the five year plans the Chinese Communist Party’s policy is still to regulate capitalism—only conscious political action by a majority of the world’s working class can destroy it.

Eddie Toal


Our attention has been drawn to an error on Page 86 of this pamphlet. The word ‘present’ was inadvertently left out of the last sentence of the passage quoted from a speech by the late Chairman Mao. It should read ‘Our present policy is to regulate capitalism, not to destroy it’.

The same quotation was used in its correct form in the Socialist Standard October 1974.