Daily Times

In the last few years the Chinese ruling elite has desperately been trying to salvage a declining growth rate, unravelling economic decay, exacerbating poverty and the sharpening class struggle. The Chinese economy in 2014 experienced its lowest economic growth since 1990. The IMF downgraded its 2015 growth projection from 7.1 percent to 6.8 percent. According to the Financial Times, “Thirty out of China’s 31 provinces had missed their growth targets for 2014 — the only one that did not was Tibet, by far the country’s smallest regional economy. Such figures illustrate the beginning of the end for China’s ‘miraculous’ boom, as the reality of capitalist crisis is seeping through to the world’s largest exporting economy.” After an immediate drop in the rate of GDP increase to 9.6 percent in 2008 from the previous year’s 14.2 percent, with a sharp fall in its exports, the Chinese government embarked on a gigantic economic stimulus package equivalent to $ 586 billion in infrastructure, especially in construction and heavy industry.
Despite the build-up of massive overcapacity and speculative bubbles, the state kept the process going. The announced investments in Pakistan are part of this Keynesian policy to keep the bubble inflated. All this simply means that the crisis had only been delayed in fear of a mass revolt. Chinese economic policymakers have taken drastic measures to bolster growth such as quantitative easing by printing an extraordinary 500 billion yuan ($ 81 billion) in September last year. But the longer it is put off, the harder it will crash when it occurs. China’s debt has now reached 287 percent of its GDP. No market economy can avoid the laws of capitalism.
As slow and weak growth continues to haunt the US and Europe, even with the danger of a slump looming, the Chinese industry will lack a market for its goods. The Chinese economy is moving inexorably towards a sharp slowdown. It is plagued with overproduction. This downward pressure is mainly due to lack of demand. Productive capacity has fallen below 70 percent. Combined with the immense mountain of debt due to the regime’s gigantic and unnecessary Keynesian projects, the further destabilisation of the economy is inevitable. As much as the government has attempted to overcome this organic economic problem with even bigger stimulus packages, brutal contradictions are coming to the surface.
Chinese state policies have exacerbated the acute contradictions between wage labour and capital. Relative wages are now falling. The majority have not benefitted from massive speculative investment. Real unemployment is actually closer to 20 percent despite false official figures. Some 274 million rural migrant workers are almost entirely ignored by job statistics. In spite of the hue and cry of the bourgeois media about a capitalist counterrevolution “lifting millions out of poverty”, the reality is far starker. According to World Bank statistics, 67.8 percent of the population (902 million) lives on less than five dollars a day. China accounts for a record one-fifth (370) of all billionaires in the world, rising from 17.6 percent in 2014, the China Rich List 2015, compiled by the US business magazine Forbes, said. “The legislature of the world’s last major communist country is almost certainly the wealthiest in the world, the top rich list names 83 dollar billionaires among Chinese Communist Party’s, National People’s Congress. Ironically, in the US there is not a single billionaire in the House of Representatives or the Senate,” reported the Financial Times.
After South Africa, China has the largest gap between the rich and the poor in the world. The growing income inequality is illustrated most clearly by differences in living standards between the urban, coastal areas and the rural, inland regions. There have also been increases in the inequality of health and education outcomes. The bosses and the state are discovering the real consequences of depriving increasingly emboldened industrial workers of their livelihoods. There were 1,380 major strikes of workers in China in 2014, most of them victorious. Much more loom across the horizon. It is not a coincidence that China is perhaps the only state in the world with its internal security expenditure ($ 464 billion) higher than external defence ($ 435 billion).
The recent fall in oil prices was also closely related to the world crisis and its reflection in the slowdown of the Chinese economy. The ailing capitalist system is being propped up artificially by a central bank life support machine, which has poured trillions of dollars into the financial system. However, the more these unprecedented measures are used to prop up the system, the less impact they have, like a drug addict who needs a bigger and bigger hit in order to get the same high. Five years ago, it took just over one dollar of debt to generate one dollar of growth in China. In 2013, it took nearly four dollars of debt to generate one dollar of growth and one third of the new debt now goes to pay off old debt. China’s growth rate has fallen to the lowest in over 25 years. The Chinese capitalist miracle stands exposed and is being exhausted.
The chances of its robust recovery have been ruled out. The regime of new President Xi Jinping can boomerang on the Chinese elite. To expect such a ruling clique to alleviate poverty in Pakistan through investment is absurd to say the least. This friendship gimmickry is there to mock and deceive the ordinary people. The Pakistani ruling class is no less mean and reactionary. Power is only traded and bought for more loot and plunder. The slavish foreign policy of the Pakistani ruling classes was described in a recent issue of The Economist: “A scathing synopsis of Pakistan’s foreign policy might boil it down to four principles: provoke India, but not too much, say what America wants to hear, do what China wants done and provide what rich Arab donors in the Gulf think they have bought. To the surprise of many, that maxim has just been flouted.” Such is the crisis of the Pakistani capitalist state that now they cannot even execute these meek policy principles. This grandiose visit of Mr Xi has only laid bare the new lows to which the Pakistani rulers can stoop.
Lenin wrote, in his epic work, Imperialism: the Highest Stage of Capitalism, “A capitalist country acquires an imperialist role when it begins to export capital.” China is the largest exporter of capital in the world. It is the biggest investor in Asia, Africa and Latin-America. Its designs on Balochistan and Pakistan are the same as those of the US and other world and regional imperialist states. Napoleon once said: “When China awakes, the world shall tremble.” That China is the proletarian and the toiling masses of that land. That China is now beginning to turn. It is only the working class of China with whom the ordinary people of Pakistan can form a bond of genuine friendship, which can unite them in revolutionary transformation of the whole region and beyond.

(Concluded)

The writer is the editor of Asian Marxist Review and international secretary of Pakistan Trade Union Defence Campaign. He can be reached at ptudc@hotmail.com