Is China socialist or capitalist? 1.

Market reforms - at first it was uncertain whether China was going to revert to capitalism - reforms pursued in 1978 under Deng were likened to the Bolshevik Revolution of 1920 - main characteristic: market mechanisms shall develop the economy but with state sector remaining predominant in large scale industry - first step: peasants are to sell produce to free market under the responsibility system - responsibility system each family had to produce certain amounts of agricultural products (eg. rice, wheat) on the free market and any excess they can keep for themselves. - Factory level responsible for their own profit and loss; but if it operates on loss it may be forced to close. - Foreign owned companies are allowed to establish joint ventures with Chinese state and collective enterprises. - Special economic zones where foreign capitalists were offered cheap labor and land, low taxes, and easy repatriation of profits - Corruption spread as bureaucrats strove to accumulate wealth for themselves - Tiananmen Square massacre aftermath of upsurge for demands for freedom and democracy (April 1989, initially by students, then by workers) 2. Capitalist Restoration - 1989 upsurge helped prepare the ground for capitalist restoration - What if democracy was actually allowed to flourish? - Early 1992: Deng policy for all-out privatization. Communist Party responded with socialist market economy policy (which is actually a capitalist economy). - 1997: policy was reaffirmed; aim was the privatization of small and most medium state owned enterprises. - Privatization: The state sector's share of industrial production fell from 100% in 1978 to 37.5% in 1999 and 31.6% in 2004. The private sector's share was 62.1% in 2004, while the share of collectively owned enterprises was 4.6%. - Effects: Chinese workers are ruthlessly exploited by local and foreign capital. Extremely long hours, physical punishment, fines and non-payment of wages are amongst the abuses suffered by many Chinese workers. - 2005: China had become worlds third biggest recipient of foreign investment. Some reasons: low wages, low unionization, weak union if they existed. - Effect on social welfare: (a) A range of services such as health, housing and others used to be availed through the workplace. The loss of state- and collectivesector jobs meant the loss of these services. (b) economic inequality (compare for instance, Chinas gini coefficient in 2007 of 47 with 48 in 2009. 3. Strong state sector - state-owned enterprises remain dominant in certain strategic industrial sectors, such as iron and steel, electricity and telecommunications, and in the banking sector.

3. -

The Chinese Communist Party resists pressure for full privatization since strong state sector helps China maintain a degree of independence from the imperialist powers and helped China to recover from the effects of the global financial crisis. The initial impact of financial crisis was severe. Tens of millions of workers lost their jobs, particularly in the export-oriented manufacturing industries. But the Chinese government was able to stimulate the economy by ordering state-owned enterprises to spend money, and state-owned banks to lend money. This caused the resumption of rapid economic growth in 2009. Effects: government spending was wasteful and environmentally destructive. Many of the export-oriented industries remain in a depressed state. Is China still Socialist? continued existence of a strong state sector does not make China socialist. Reversion to nationalization during global financial crisis. Nothing extraordinary; state ownership of key industries can sometimes be beneficial for the functioning of the capitalist system as a whole (e.g. British government nationalized the coal mines after the World War II)

4. Popular resistance - workers resisting uncertainty of job security, low living standards, and working conditions - protests by workers, and peasants resisting land seizures by local governments and property developers. - Protests against environmental destruction and ethnic discrimination - Intellectual debate: Disillusioned Maoists versus New Left - Discussion of oppression can be risk (e.g. oppression of national minorities such as the Tibetans and the Uighurs) 5. Foreign policy - China today can be described as a bourgeois nationalist regime. Its economy is capitalist, but the government is relatively independent of the imperialist powers (but maintains close economic links with US). - China remains a highly unequal society, the world's biggest producer of greenhouse gases, and where freedom of speech continues to be restricted.