China in World Capitalism

It will take more than a few racist remarks by the Duke of Edinburgh to put a damper on the Queen’s visit to China. A spokesman for the Chinese ruling class tactfully claimed to know nothing of the Duke’s clanger, signalling that the real purpose of the visit was not a journalists’ jamboree but talks about sales and business. British trade with China shows a sizeable surplus in Britain’s favour, but is still only a small proportion of China’s trade with the United States or West Germany. Just as the British capitalist class see a potentially massive market in a billion Chinese consumers. so their Chinese counterparts rely on exports to finance their high-technology imports. As the Chinese economy becomes more industrialised, so it becomes more integrated into, and dependent on, the world capitalist economy.

It is generally known that there are many “joint ventures” in China, jointly owned by overseas companies and the Chinese government. With its low rents, cheap labour power and lack of independent trade unions, China is an attractive manufacturing base for multi-national companies. Chinese-owned industry is pretty competitive in its own right in some areas and is winning ship building orders against tight competition, for instance. Already Chinese electronic goods are undercutting other low-cost producers; as was noted in the financial pages of the Guardian (16 October 1986):

    “Go into a Tottenham Court Road computer dealer and ask for the cheapest cassette loader. Chances are it will be made not in Taiwan or Hong Kong, but in China.”

Recent regulations have given joint ventures more autonomy and freedom to hire and fire workers, though they have not gone as far as many of the bosses of the companies wanted.

What is not so well-known is that China has set up over a hundred ventures of its own in other countries. For instance, there are joint fishing companies in Senegal and Sierra Leone. One Chinese corporation has purchased an area of woodland in the United States, the timber from which is exported to China. A joint venture to mine iron ore in Australia is under discussion.

China never has been fully isolated from world capitalism, and certainly is not nowadays. Any “bamboo curtain” which insulated China from the outside world has long since rotted away. So when China massively increases its exports of cotton (as has happened over the last year), the result is that the world market price for cotton falls by fifty percent – disrupting small third-world economies which rely on cotton exports. When China plans a new nuclear power station at Daya Bay, it inevitably affects the inhabitants of Hong Kong, who live a mere thirty miles away. When the world price of oil drops and Western oil companies find that the wells they drill in the South China Sea are dry, they begin to turn their attention to other potential oilfields and China has to hold its oil exports steady rather than increase them. When China s fourth largest export earner (behind textiles, oil and clothing) is armaments. ordinary people elsewhere in the world are butchered by them.

The Chinese rulers depend on overseas equipment and expertise to modernise their own industry and agriculture. The Daya Bay nuclear plant is being built by a French company. and its “conventional” section by GEC. Pilkington’s are helping to set up a new glass factory in Shanghai, while even a duck farm in Guangzhou Province (producing over a million ducks a year) was established and stocked by a company from Lincolnshire. The export drive is intended to pay for all this. Hong Kong is a convenient captive market for exports, especially of food, hence the Chinese government’s treaty with Britain over the future of Hong Kong, designed to ensure that it remains stable and able to continue importing from China.

As a major competitor on the international trading scene, China has applied to join the General Agreement on Tariffs and Trade This may involve having to reduce some of its more severe import restrictions but will give it a voice in the inner councils of the body that attempts to regulate world trade. Already China has objected to a proposed textile protocol which is seen as too constraining and likely to limit China’s flax exports. At the same time, the Chinese government is discussing with the Chicago Board of Trade the possibility of participating in the futures market (that is. speculating on the future prices of grain, textiles and so on in order to make money).

Capitalism, with its imperative demand for profits, causes those who own the world to search ceaselessly for the cheapest and most reliable sources of raw materials and labour power and for the largest and most profitable markets. Divided into economic units called sometimes companies and sometimes countries, the owning class compete against each other for the right to exploit the working class. Decisions as to where to locate a particular factory or where to buy a particular material are made from the view point of economic gain, just as are decisions to close factories or to wage wars. As the Chinese rulers flex their muscles and play an ever more active role in this power game, the global nature of capitalism becomes ever clearer and so does the need for the global solution of socialism.

Paul Bennett

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