The Emergence of Imperialism in China
Chinese Investment Abroad
How do we decide whether a capitalist country is an imperialist country? Many countries, including semi-colonies, invest abroad in factories and other means of production. It is not just some capital flow from a country to the so-called third world that makes a country an imperialist country. It is the massiveness of the outward Foreign Direct Investment (FDI) and its dynamic (both economically and politically) that decides if the country is imperialist or not. An imperialist country does not just invest outward FDI, but it invests large enough amounts of capital to the point that it needs to protect its investments. And eventually this brings the investor nation into conflict with other imperialist rivals. For example, countries like Israel, Greece, Portugal and Poland had a FDI between 1 and 9 Billion dollars in 2008. These countries’ outgoing FDI changes from year to year, but it fluctuates around the above figures. This amount is too small to consider these countries to be even small or medium imperialist countries (with the possible exception of Portugal, but we doubt this). But the Chinese story is very different.
The new capitalist class in China has accumulated a huge amount of capital. It reached a point around the year 2000 when it decided to “go global” with its outgoing FDI. Since then, Chinese investment has undergone quantitative leaps every year. According to the World Bank and the bourgeois “experts” at Columbia University’s Vale Columbia Center on Sustainable International Investment:
China’s FDI outflows took off in the 2000s as a result of the government’s adoption and promotion of a “go global” policy aimed at establishing the country’s biggest capitalists as international players. Having averaged only US$453 million a year in 1982-1989 and US$2.3 billion in 1990-1999, they rose to US$5.5 billion in 2004, US$12.3 billion in 2005, US$17.6 billion in 2006 and US$24.8 billion in 2007.1 Preliminary
figures for 2008 show a rise to US$40.7 billion. If financial FDI (not counted before 2006) is included,
the 2008 total was US$52.2 billion, nearly double the US$26.5 billion in 2007. (Columbia FDI Perspectives: No. 5, May 26, 2009: While global FDI falls, China’s outward FDI doubles [emphasis in original])
The figure of $52.2 billion is by now confirmed officially by the UN World Investment Report 2008, which predicts that Chinese outward FDI could reach $150-$180 billion next year. Observers of world finance capital in London agree more or less with these figures. “Standard Chartered, a London-based multinational bank, calculates that China’s direct overseas investment in 2009 may reach $140 billion, while direct investment in China from overseas investors in the same period is expected to be $80 billion to $100 billion. In 2009, it seems that China’s overseas investment will for the first time exceed domestic investment from other countries.” (China Stakes, May 4, 2009: “Capital Account Deficit Shows China's Investing Overseas Amid Financial Crisis” [emphasis ours])
These changes in economic power amount to a transformation from quantity to quality, and are one of the defining features of imperialism. In general, imperialist countries have more outward FDI than inward FDI (import of capital). The US total outward FDI in 2007 was $314 billion while its inward FDI was $232.8 billion, according to the World Bank report. France’s outgoing FDI in 2007 was $225 billion and incoming FDI was $158 billion. In 2006 the US outgoing FDI was only $222 billion and the incoming FDI was $236.7 billion! Thus, the biggest imperialist country had more incoming than outgoing FDI. This shows its declining status and that it depends on debt to dominate the world. The second string of the big imperialist players had the following outgoing FDI in the year 2006: France $115 billion, Germany only $79 billion, Spain $90 billion, UK $79 billion and Japan only $50 billion. This group’s FDI went up in 2007 because of the massive financial bubble which came to a head the year before the collapse of world capitalism in 2008. The bubble inflated the outgoing FDI in 2007 as follows: UK $266 billion, France $225 billions, Germany $167 billion and Spain $120 billion.
But the key to understanding FDI and how a country becomes imperialist is to study the small to medium imperialist countries that had between $10 to $50 billion outgoing FDI, that is, their outgoing FDI was smaller than China’s FDI! In 2008 countries that had outgoing FDI of less than $50 billion included Sweden, Austria, the Netherland and Denmark. In 2006 Italy was also part of the less than $50 billion group. (For details see UN World Investment Report 2008.)
While this World Bank data shows that China is not yet one of the top imperialist countries, it is definitely becoming one of the medium imperialist countries, as its outgoing FDI has been rising at an amazing rate. It is the dynamic process, not the statistics only, that defines the imperialist character of a country.
China’s increasingly aggressive investment in the semi-colonies
The state capitalist of China directs Chinese companies to invest in many African, Asian and Latin Americans semi-colonies. Standard Chartered estimates that the tally this February alone was $65 billion. The bank predicted that Chinese outward FDI in 2009 would hit $150-$180 billion—compared to inward FDI of $80-100 billion. According to the UN World Investment Report in 2008, only the US, UK, Germany, France and Spain invested more than $100 billion abroad in 2007.
Chinese investment in Latin America is rising rapidly:
Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) Alicia Barcena said here Wednesday that Chinese investment in Latin America is showing substantial increases. 'it is important in certain sectors like mining, hydrocarbons and the auto industry' … She cited China and Brazil's recent agreement for China to invest 10 billion U.S. dollars in Brazil's national energy company Petrobras over the next five years to support its exploration in the Atlantic. (China Peoples Daily, May 18, 2009)
These Chinese investments in Latin America are clearly visible in Peru where the Chinese own projects near the Amazon, where the Peruvian masses are engaged in a revolutionary uprising.
According to Aug. 28 2008 (Bloomberg) --
"China may increase exploration and refining investments in Peru, South America's fifth-largest gas producer, to boost fuel output as domestic demand rises. Peruvian government officials will meet with executives at China National Petroleum Corp., the nation's biggest oil company, later this week, Vice Energy Minister Pedro Gamio Aita said in an interview in China's southern city of Guangzhou yesterday. Peru will seek technical support from China on oil exploration, Gamio said, without elaborating.”
"The South American country is counting on $4 billion in investment in its oil and gas industry to spur an annual 7 percent economic growth over the next four years. . . China National Petroleum, based in Beijing, operates five oilfields in Peru, accounting for about 33 percent of the South American nation's total oil output, the minister said.”
"The Chinese company, the parent of Hong Kong-listed PetroChina Co., wholly owns Block VI and VII, which produce about 3,000 barrels of oil a day, he said. It has a 50 percent stake in Block 1AB in the northern Amazon jungle with a daily output of about 40,000 barrels and is exploring Block 113 and Block 111 in the Madre de Dios Basin for oil and gas deposits, said Gamio."
This means that part of Garcia's "Law of the Jungle" include protection of his contracts with Chinese companies that want to exploit oil and other resources in the Amazon. Hundreds of workers and peasants have died or spilled their blood as they fight Garcia, his Chinese and other imperialists bosses. Peru’s capitalists play the comprador bourgeoisie to the Chinese and other imperialist powers.
The situation is similar in Africa. The Chinese are involved in investments and imperialist kind of medaling in a number of countries. One example should suffice although others are available. A good example is Congo, where the Chinese are deeply involved in massive investment in the mines, and as one should expect they are also involved in the imperialist dirty divide-and-rule that has played a part in the death of millions from the imperialist triggered civil wars. The British Economist as usual is quite frank about it:
"In poorer countries such as Congo, China's hunt for resources has more complex effects. On the one hand, Congo's long-deprived citizens are in much more desperate need of trade, investment, economic growth and the rising living standards they might bring with them. On the other hand, its corrupt and underfunded government is much less able or inclined to manage China's engagement for the benefit of its people. Nonetheless, even from the pot-holed streets of Lubumbashi, China's new needs seem like a momentous opportunity.
"To top it all, the government is conducting a much-needed but opaque and long-winded review of all mining contracts signed during the civil war, adding to foreign investors' anxiety.
"None of this seems to deter China's state-owned firms, however. Last September Export-Import Bank, through which the Chinese government disburses all its foreign aid, signed an agreement with the Congolese government to finance $6.5 billion-worth of improvements to the country's infrastructure and $2 billion-worth of construction and refurbishment of mines, using mineral reserves as collateral. The following month a similar deal was signed with China Development Bank.”
"Victor Kasongo, the deputy minister of mines, says the total value of these deals could eventually reach $14 billion. . .”
"Chinese firms do, however, seem to move faster than their foreign rivals. Mr Lee says that his smelter went up in six months, a quarter of the time it has taken an Indian firm to build a similar facility on an adjacent plot. Mr Katumbi, the governor, says Chinese firms find it easier to finance investment in Congo because Chinese banks have steelier nerves than their Western counterparts. Chinese companies are also keen to upgrade their plants, he says, and to expand into other businesses—something other foreigners are reluctant to do.”( Mutual convenience, Mar 13th 2008 From The Economist print edition).
Despite the Chinese denial of their role in the affairs of Congo (the Chinese banks and corporations say they are just doing business), Marxists know that the Chinese have as much interests to make deals with different sides in the civil wars as the rest of the imperialist murderers. If you invest a vast amount of capital in a country like Congo, you are in the "game" of plundering, domination and killings. We see the same kind of Chinese involvement in countries like Sudan.
True imperialists do not only invest in the oppressed countries but everywhere including of course other imperialist countries. So, for example," China’s direct investments in Australia alone reportedly rose from US$1.4 billion in the first quarter of 2008 to US$13 billion in the same period this year."(Chapman Tripp, an imperialist think-tank).
The Political Meaning of the Transformation of China
We will not bore the comrades with many more examples. The data and information is readily available. So we should consider how and why China has become an imperialist country. We do not know if our economic theses were translated into Spanish. So we quote from the theses the section that explains the transformation of China into an imperialist country:
" What made this possible (the transformation of China into an imperialist country) was the law of combined and uneven development acting in concert with the principle that quantitative change (here, rapid industrial development in a semi colony) can be transformed at the speed of light into qualitative change (here, the change from a semi colony to an imperialist country). Thus, China took only a decade to accomplish a process that took 150 years in the US. Ironically, one of the main reasons China was able to accomplish this was the superiority of the productive forces of the workers’ state. As deformed as the planned economy was under the yoke of Stalinism, its mechanisms allowed China’s new industrial economy to develop better and faster than has been possible for other poor countries. Taking root in the ruins of the workers’ state, the new capitalist class (consisting, at first, of the very same people who had been Party bureaucrats) took firm control, using the iron fist when necessary, of the accelerated process of capitalist development in China. Once that process was under way, tens of thousands of additional, new factories were established by people not necessary directly connected to the former Stalinist bureaucracy.
"China has now the same contradictory character that Russia had before the 1917 revolution, combining features of an imperialist country with those of a semi colony. China remains a semi colony in that it is still one of the cheapest places for imperialist exploitation, and increasingly also for the exploitation by the rising Chinese bourgeoisie. At the same time, China is an imperialist country in that it exports massive amount of capital to the semi colonies (“Deals Help China Expand Sway in Latin America,” New York Times, April 15, 2009) – and even to Europe and the US. (Lenin identified the export of capital as a critical feature of imperialism.) Yet unlike Russia before the 1917 revolution, China plays a much more important role in the global capitalist economy and in world politics. A new capitalist class has arisen in China through the transformation of a vast number of state-owned factories into private enterprises owned and run by former Stalinist bureaucrats. As a result, the former Stalinist bureaucracy – transmogrified into a new capitalist class – remains in firm control of China’s economy. The scope of their control includes not only the factories, but also the banks. Thus, the state capitalist stage, while no longer in full force, still plays an important role in enabling China to become a major player in global politics.
"The 1980s and early 1990s were an extraordinary historical period, because the dominant imperialist countries moved their manufacturing into the third world. They were welcomed with open arms in China. At first the emerging capitalist class flashed a come-hither look to the players in the world market. The imperialists could not resist the temptation, and moved a massive amount of their productive forces into China. But China’s rising capitalist class had no intention of maintaining China solely as a playground for the major imperialist countries. The Chinese took full advantage of the weakness in the established imperialist economies caused by the massive movement of their productive forces into China. The US in particular was vulnerable after its capitalists stripped their own country of the bulk of its means of production. The Chinese soon turned the table on the imperialist fools, and took over control of most of the manufacturing. As manufacturing in the US shrank dramatically, it expanded exponentially in China. By the mid-1990s, Chinese capitalists had collectively outstripped the leading manufacturers in the developed world. As a result, China’s foreign reserves rose quickly, and the Chinese accumulated loads of capital with which to make massive investments in Africa and Latin America, with plenty still left to invest in US treasury notes. . .”(HRS Economic Theses)
The development of China into an imperialist country did not happen overnight. It is a process that it is still evolving. The Stalinist bureaucracy first had to restore capitalism, a process that started with the "capitalist roaders" and reached a decisive point in the early 1990's. The Stalinists who have become the new capitalist class did not "decide" to become an imperialist power. It is the contradictions of world capitalism that drove them into this direction. Using a state capitalist structure based on the advantages of the former workers' state, they came to a crossroad in the 1990's: They either had to capitulate to Western imperialism and become a subordinated weak bourgeoisie, or use the enormous resources from the exploitation of the lowest paid labor to establish their own powerful manufacturing base. They used the combination of Bonapartist dictatorship with calculated measures of state capitalism to establish their own powerful industrial base and become a major and most successful competitor in the world markets. By the beginning of the 21st century there was no turning back. They had the advantage of having one of the lowest paid and biggest proletariat in world with one of the biggest manufacturing centers in the world. They had to either take the next step and keep on expanding, that is, investing seriously overseas, or get crushed by Western imperialism and become a subordinated weak bourgeoisie. It is the massive and super exploited Chinese proletariat that enabled them to expand and become an imperialist country. Hesitating was not an option. Such is the ruthless competitive nature of world capitalism.
We believe that what we are witnessing now is new dialectic crossroads. The Chinese bourgeoisie has the biggest surplus of capital to become one of the major imperialist powers. But if they spend $200-300 billions of outgoing FDI a year it means a major confrontation with US imperialism. But again under competitive world capitalism the capitalist class does not make "rational" choices. To survive it must beat the competitors. Hence, the dramatic leaps in Chinese outgoing FDI.
When using the classic definition of imperialism as outlined by Lenin, China at the moment is only a moderate imperialist country (FDI outflows between $50 billion-$60 billion a year). It is not yet one of the top five imperialist predators. However, if we observe the financial, political and military relations between China and Western imperialism, we cannot simply define the importance of China as an imperialist country based on its outgoing FDI alone. This will be a mechanical interpretation of Lenin, one of the greatest dialecticians of all times. The US has a shrinking industrial base. China has the biggest industrial base with the lowest paid proletariat. This is why the Chinese capitalists have the biggest foreign reserve and surplus capital. The reality is that they have more capital to spend than the US's outgoing FDI. There are three reasons why they hesitate to spend this surplus at the present time:
1. The international crisis limits the amount of productive capital available to generate super-profit. This crisis was hidden under the surface for years. Hence the decision by the China to spend Trillions of dollars on US treasury notes instead of using this huge capital for outgoing FDI. China is in the process of replacing old Europe and America as most powerful industrial country that can generate super-profits just from the exploitation of its own proletariat. The fact that China has this enormous amount of capital to invest shows without a doubt their potential to become a great imperialist power, because neither European imperialists nor the US has this amount of surplus capital. On the other hand we agree that China cannot really replace the US as the major imperialist power without a process that ultimately can only be resolved by military conflicts and wars.
2. Politically and militarily China is not ready yet for an all-out confrontation with the US. As a new emerging imperialist power with the classic Chinese “long view” they prefer to take the slow cautious road. Their strategy is to win over allies slowly in the background. For example, their economic and political ties to Iran, a key country for oil and politics in the middle east. Their connections to the "Bolivarian" regimes and Peru in Latin America and even to a country like Australia where they have increasingly massive investments. China would rather play quite games for domination in the background until it ready to reveal its cards.
3. The co-dependency between the US and China. It is plain and simple. Hostile confrontation with the US would risk trillions of dollars that that the Chinese have stored in the US and Europe.
Yet, the international crisis is changing all that. The logic of the crisis is that the world does not have room for a new imperialist power. So, if China wants to prevail it must confront its rivals. This has started to happen. Since the crisis busted into the open in 2008, China and America started to exchange threats. The US told China to open its huge markets for American products. Each country like the rest of the imperialist thieves and murderers uses increasingly protectionist measures. China responded to the US threats by issuing its own threats, telling the US to "guard" its trillions of dollars in treasury notes and make sure that the dollar will stop sliding or it (China) will pull the rug under the US feet and stop financing the US debts and wars. Since the crisis has begun China started to "diversify" its investments with more money flowing to Europe and other areas. And now together with the so-called "alternative-to-the-West" countries, The Chinese call for a new international currency to replace the dollar as a standard for trade and labor.
When the so-called G7 met in London, they had to recognize China as a major player. They had to deal with China. Some of the European powers even courted China. All this took place as the major financial press of the world like the Economist and the Financial Times were running headlines like "Forget about the G7, this is about the G2", that is, the US and China are becoming the main imperialist competitors. The European imperialists shiver as they see that their power is under threat. And their tactic? Well they want to kiss the ass of China and be China's "friend" as the inter- imperialist conflicts heats up. The British foreign secretary Miliband gave an interview to the Guardian. Below is the Guardian comments as well the direct words of Miliband :
"The foreign secretary predicted that over the next few decades China would become one of the two 'powers that count', along with the US, and Europe could emerge as a third only if it learned to speak with one voice.
"The remarks (of Miliband), in a Guardian interview, represented the most direct acknowledgement to date from a senior minister, or arguably from any western leader, of China's ascendant position in the global pecking order.
'The G20 was a very significant coming of economic age in an international forum for China. If you looked around the 20 people sitting at the table … what was striking was that when China spoke everybody listened,' Miliband said.
"Miliband compared China's potential role in the coming years to the role the US claimed for itself in the 20th century, recalling a 1998 boast by Madeleine Albright, then US secretary of state.
'China is becoming an indispensable power in the 21st century in the way Madeleine Albright said the US was an indispensable power at the end of the last century,' Miliband said. 'It has become an indispensable power economically, and China will become an indispensable power across a wider range of issues.'(Miliband said)"(www.guardian.co.uk/politics/davidmiliband)
When the old experienced British imperialism acknowledges the huge significant of a rising new imperialist power Marxists cannot ignore such acknowledgement. We urge the comrades of the ILTF to study it seriously.
And finally, China is beginning to realize that to achieve a "respectful" imperialist status, it needs to build up its military, and potentially confront the US militarily. This is the only way to guard its financial and outgoing FDI. Delicate diplomacy and maneuvering will stop working at some point, and as we know, military conflicts and wars are just diplomacy backed by other means. China has increasingly "minor" confrontation with the US, such as the recent spying by the US navy on China, brazenly entering Chinese defined territory in the ocean and forcing China to intercept the American vessel. Here we quote directly from the beast's mouth: the 2009 American Homeland Security and the Pentagon assessment of the Chinese military:
" China's increased military ability stems from the nation's emergence as an economic superpower. With 8 percent per year economic growth, the Chinese have been able to invest significant sums in military modernization… The People's Liberation Army (PLA) budget has more than doubled since 2000-from $27.9 billion to $60.1 billion. Officials believe the Chinese are underreporting the amount they spend on security. The real budget in 2008 is probably between $105 billion and $150 billion, they said. Limited transparency can be dangerous and lead to instability."( American Homeland Security, http://www.hsdl.org/hslog/?q=node/4772)
And the Pentagon says plainly:
"The PLA is also developing longer range capabilities that have implications beyond Taiwan. Some of these capabilities have allowed it to contribute cooperatively to the international community’s responsibilities in areas such as peacekeeping, humanitarian assistance and disaster relief, and counter-piracy. However, some of these capabilities, as well as other, more disruptive ones, could allow China to project power to ensure access to resources or enforce claims to disputed territories.
"Beijing publicly asserts that China’s military modernization is 'purely defensive in nature,' and aimed solely at protecting China’s security and interests. Over the past several years, China has begun a new phase of military development by beginning to articulate roles and missions for the PLA that go beyond China’s immediate territorial interests, but has left unclear to the international community the purposes and objectives of the PLA’s evolving doctrine and capabilities."(The Pentagon, http://www.defenselink.mil/pubs/pdfs/China_Military_Power_Report_2009.pdf, our bold)
And if there is still any doubts about China preparations for military conflicts with its competitors, David Lai, one of the top US army advisers put the question to rest:
"…it (the PLA mission) takes note of China’s expanding national interests beyond its geographic borders. In the words of an important PLA Daily editorial, China’s national interests are spreading everywhere in the world, into the open seas, outer space, and even into cyberspace. Today, China not only has a territorial frontier, but also an 'interest frontier' that has no national boundaries.
"… Chinese leaders claim that the 20th century was one characterized by war and confrontation, whereas the 21st century will be one of competition and marginalization. All nations, especially world powers, must therefore seize strategic opportunities and make development their top national priority or face marginalization. Chinese leaders want the PLA to ensure that China’s pursuit of such opportunities not be compromised by internal or external interference.
"Finally, Chinese leaders accept that their country’s expanding global interests will
eventually come into conflict with those of other nations, and that the PLA must be prepared to defend these expanding national interests. To accomplish this objective, they believe that China’s military force must be commensurate with its rising international status, and the PLA’s mission will naturally follow China’s interests, wherever they lead." (Chinese Military Going Global , David Lai. David Lai is a research professor of Asian Security Studies at the Strategic Studies Institute of the United States Army War College).
This is pretty clear. The Chinese prepare to protect their imperialist expansions, and US imperialism fears the rise of China as a military power, and all this is expressed within the US military internal memos. The question of disputed territories could easily expand beyond Taiwan. As Chinese outgoing FDI expands over next decade or two, US imperialism is likely to decide that it endangers US's shrinking super-profits and areas of influence. That will be the point at which that cute little, Bugs Bunny (a Loony Tunes cartoon character) exclaims: “This means war!”
A war between China and the US is clearly not on the agenda yet. But the changes in the order of the imperialists' pack is becoming essential to the Marxist understanding of the international perspectives for the class struggle. There are many implications. But for now we want to deal with the most important implication.
We need to use dialectic thinking and enrich past understanding of world perspectives. China is a kind of imperialism that never existed before. Its main power rests on the super-exploitation of its own semi-colonial proletariat. Thus China has become a country that its capitalists' power rest primary on the exploitation of the people in their own colony which is their home: China. China is a main area for industrial production. The Chinese load the world with massive commodities made at home, and they accumulate super-profits and surplus values that it is becoming very difficult to compete against. Now China is expanding to external semi colonies through massive increase in outgoing FDI. It is inevitable that there will be growing conflicts between imperialist powers over the rights to exploit and extract super-profits from the working class in the colonies and semi colonies. As this is developing, American and European capitalists have no choice. If American and European capitalists want to survive the intensifying competition they must reduce the standard of living of their own proletariat toward the standard of living of the Chinese and other semi colonial proletariat. This is why we see today such vicious attacks on the American working class. This is the bottom line behind the attacks on GM workers, and California state workers, etc. Similar attacks must ultimately follow in Europe.
Ultimately the rise of Chinese imperialism will aid the international revolution, because it forces the working class in the imperialist countries to fight for socialism or let all its "privileges" in comparison to the working class in the third word to vanish. The changes in the fierce inter-imperialist competition will also provide the chance for cross-borders revolutionary struggles and uprisings in a way that did not exist in the past. For example, the American working class will have to fight together with its Mexican brothers and sisters, and defend them against imperialism. The alternative for the American workers is a reduced standard of living and conditions similar to Mexican workers. The bottom line is that the rise of Chinese imperialism has profound consequences for the world, which we believe the ILTF cannot ignore any longer.