China’s place in the world

Issue: 123

Charlie Hore

Shaun Breslin, China and the Global Political Economy (Macmillan, 2009), £19.99

Jenny Clegg, China’s Global Strategy (Pluto, 2009) £19.99

Nobody knows how long or how deep the world economic recession is likely to be. For China the stakes are especially high. Will the world’s fastest economic growth rate turn into the worst decline? Or will the innate dynamism of the Chinese economy allow the country to survive relatively unscathed?

This isn’t the first recession to hit China since its turn to the world economy in the late 1970s. From mid-1988 until late 1991 the economy shrank or stagnated, giving rise to the “Tiananmen Square movement” of May and June 1989, the consequences of which further deepened the recession. That recession was particular to China, however, produced by the over-heating of a newly marketised economy and the excessive austerity measures of the government’s anti-inflation strategy. Since then China has grown almost uninterruptedly through both the East Asian currency crisis of the late 1990s and the bursting of the dot-com bubble in the early years of this decade.

What’s different now is that China’s economy is much more integrated into the world economy in general, and in particular that exports of consumer goods and business electronics have been the major source of economic growth for most of the past 20 years. The immediate signs are that parts of China have been devastated by the impact of the recession, with some reports speaking of one third of toy factories closing and possibly up to 20 million migrant workers losing their jobs.

One of the subsidiary themes of Shaun Breslin’s book is the unreliability of statistics about China. But where most authors simply note this, he explains some of the reasons and tries to provide some more accurate figures, particularly for understanding foreign investment in and trade with China.

His main concern, however, is to understand the disjunction between the external image of China as the world’s most dynamic economy and the internal realities of growing protests, deepening inequalities and continuing rural poverty. In doing this, he provides a useful counter to the dominant view of China as the “world’s next superpower”.

Part of this involves understanding the extent to which the export industries that provided most of China’s growth are separate from the rest of the Chinese economy. He shows in particular how dependent those industries are on imported components and raw materials, and how this ties in to a wider division of labour across eastern Asia. He also shows how dependent those industries have been on foreign investment, and how little control the central state has over their development.

This is highlighted by the fact that a significant part of this “foreign” investment is actually capital from China, recycled through Hong Kong or offshore tax havens. Necessarily there are no authoritative figures for this, but Breslin gives a sense both of its extent, and of why it matters.

One crucial part of the post-Mao economic strategy is the deliberate devolution of power from central government to different layers of local government, from provinces to villages. The idea was to allow for greater flexibility in order to stimulate innovation, and in that it has undoubtedly succeeded. But it has also necessarily led to the central state losing much of its control over what local authorities actually do. Breslin argues, “If China is becoming a regulatory state, it is becoming a voluntary regulatory state, with local authorities still able to decide whether to adhere to central regulation or not” (p72).

That lack of control has led to corruption becoming endemic at most levels of government, and a wasteful duplication of investments as each group of officials seeks to develop its own particular patch. Towards the end of the book he quotes one official in north eastern China as saying that their biggest competitor is “the export processing zone down the street” (p188). And in his very useful account of the impact of China’s entry into the WTO, he suggests that the central government was keen on joining the WTO in part because it offered a way of disciplining local officials.

Breslin also gives a critical account of the growth and influence of private capital within China. While private capital has undoubtedly flourished over the past ten years, this does not necessarily weaken either the state or the Communist Party. He shows how private capital has become entwined with state enterprises and individual bureaucrats, and how entrepreneurs have been welcomed into the Communist Party. Connections with the various levels of the state bureaucracy remain as important as ever for both small and big businesses. In passing he also knocks down the fashionable theory that the “new middle classes” will force an end to Communist Party rule, pointing out just how many of them are part of, or reliant on, the state bureaucracy.

His final chapter looks at the growth of inequality and the consequent rise in protests that have accompanied China’s rapid economic growth. This is one of the most useful books on China’s economic development before the world recession that I have read for some time. It is very detailed and at times over-academic, but the detail doesn’t get in the way of his central argument.

China’s global strategy takes a quite different approach, welcoming the emergence of China as a world power, both because it provides a counter-weight to US imperialism, but also because China offers the prospect of a new post-imperialist world order.

The idea that China is challenging American domination of the world is a very popular one on the left, and of course it is not entirely wrong. More than a decade of rapid economic growth has led to China pulling in imports from across Africa and Latin America, and in the process offering an alternative means of support to governments which are out of favour with the US. Left-leaning governments, in particular Hugo Chavez’s in Venezuela, are better placed to stand up to the US because of their trade with China.

As I write this, the Chinese government are suggesting a new world currency to replace the dollar as part of their plans to end the recession. It is unlikely ever to happen but the fact that they have the capital to make it feasible shows the extent to which China has become both a political and economic competitor for American imperialism—arguably the only major power that challenges American hegemony.

China’s challenge to the US has gone furthest in Asia, and Clegg documents well the various political and economic structures that link China with other Asian governments, such as the Shanghai Cooperation Organisation (SCO). This alliance of most major central and south Asian governments began as a political and military alliance, and is now also becoming a forum for economic cooperation—all without any US involvement.

Yet the SCO also shows the limits of her argument. In one rare critical sentence she writes, “The weakness of the democratic systems within individual SCO member-states is problematic” (p109). This is an understatement of the highest order—the central Asian states in the SCO include some of the world’s worst dictatorships. It is also the case that the SCO was originally built on Asian governments’ own “war on terror”. She rightly attacks George Bush’s concept of the “war on terror” as an excuse for both US military intervention in Asia and greater repression in the US itself but sees no contradiction in then accepting it as a reality for China, Russia and Uzbekistan.

There is nothing necessarily progressive about the governments that China supports—Chinese support is conditional on trading or political links, rather than any “progressive” credentials. This is particularly obvious in Africa, where China is involved in supporting some of the most repressive regimes on the continent. However, there is almost nothing about Africa in this book. Other awkward areas are similarly glossed over—there is just one mention of strikes, for instance, and almost nothing about the mass protests by workers and peasants which have marked the past 15 years. Tibet gets less than one page, with the suggestion that Chinese repression is the fault of the Dalai Lama!

This is primarily a study of Chinese policy, rather than the actual history, and its main value is in giving a clear account of how China presents itself to Third World governments. The author does gloss over the contradictory positions this involves and does not offer any more than the mildest of criticisms. She does, however, acknowledge left critiques of China, quoting in particular from a number of regular contributors to this journal, but she doesn’t actually engage with the detail of their arguments.

What is also missing is any real account of the transition from the essentially closed economy under Mao, to the open and dynamic world power that China is today. This is essentially a nationalist defence of China, rather than an attempt to paint the current regime as socialist.

Clegg is absolutely right to point to the long historical account of US aggression against and pressure on China, which helps explain why much of the left wants to line up behind China. But that is only half the story. The other side of the Chinese-American relationship is that both economies are deeply intertwined, and both ruling classes are jostling for position while at the same time propping each other up. For a more rounded sense of the complexities and contradictions of that relationship, Shaun Breslin’s book is the better bet.