A valuable analysis of China’s turn to neoliberalism since the late 1970s needs to be put in the longer context of Chinese state capitalism, argues Sean Ledwith

The seemingly relentless rise of the Chinese state and economy is never far from the headlines in the West. Trump’s on-off trade war with Beijing has put the spotlight on the rivalry between the two economic titans of the twenty-first century. The disagreements within Western states on their attitudes to Huawei, the Chinese tech giant, highlights how the country represents a paradox for the established capitalist powers: embrace China as a much-needed source of investment, or keep it at arm’s length for fear it will ultimately supplant the global hegemony of the West.

The unpredictable nature of the China-US relationship was brought to the fore by a keynote speech last year by President Xi Jinping in which he announced, incongruously, that the officially communist state, not its explicitly capitalist rival, is the true champion of free trade and globalisation. The dark side of China’s re-emergence as a great power has also been exposed with grim reports over recent months of the plight of the Uighur people in the far west of the country, with up to one million incarcerated in ‘re-education camps’. This year has marked the thirtieth anniversary of the Tiananmen Square massacre, the last significant attempt to challenge the iron grip of the Chinese Communist Party. We have also witnessed gigantic demonstrations on the streets of Hong Kong by citizens who are less enthusiastic about the prospects of closer relations with Beijing.

Apologists for the regime in Beijing point to its astonishing transformation since the 1980s from a backwater of the global economy to its status as the pulsating core of the system. Headline-grabbing figures about the number of people in the country pulled out of poverty in this period are impressive by anyone’s standards (600 million according to a 2017 World Bank report). The much-vaunted Belt and Roads Initiative linking China with Eurasia is likely to be the biggest-and most important-infrastructure development of this century. Zhun Xu, in From Commune to Capitalism, sets out to explain how much of the aforementioned is rooted in the processes and contradictions associated with a fundamental re-orientation of policy in the Chinese countryside at the end of the twentieth century. From the 1980s onwards, he explains, the locus of agricultural production shifted away from the rural collectives rolled out under the aegis of Mao Zedong, to a more marketised approach that has now become the dominant model.

Chinese neoliberalism

The most valuable aspect of Xu’s study is the critical stance he adopts towards the ideological context of this gear-change and an understanding that it was actually part of a global trend with which we are now wearily familiar. Deng Xiaoping, the Chinese leader most associated with this policy shift, should therefore take his ignominious place alongside Thatcher and Reagan as one of the architects of the economic paradigm that has dominated economic thinking over the last three decades. The last quarter of the twentieth century, the author notes, was:

‘characterised by worldwide waves of privatisation and deregulation, sometimes referred to as neoliberalism. This dramatic cycle shaped many crucial aspects of social relations in the contemporary world, in particular the trajectories of agrarian change’ (p.19).

Xu traces the origins of neoliberalism in modern China to the aftermath of the death of Mao Zedong in 1976. The tumultuous era of the Cultural Revolution that had upended the political system on multiple levels in the previous decade was still a source of contention within the ruling clique of the CCP. The Gang of Four, spearheaded by Mao’s wife, sought to propagate his legacy by intensifying the state-led industrialisation of the country with minimal collaboration with the outside world. Deng’s faction, which ultimately prevailed, in contrast wished to open up the economy to overseas investment, albeit still under the aegis of the CCP.

Neither section, it should be noted, was interested in compromising the totalitarian nature of the political system or making concessions to cultural diversity such as a free press or artistic pluralism. The latter faction won the power struggle at the end of the 1970s as the massed ranks of the CCP believed that the Gang of Four would condemn the country to a calamitous re-run of the Cultural Revolution. Deng and his supporters shrewdly pointed to the success of nearby Asian Tiger economies such as Hong Kong, Singapore and Taiwan as suitable role models for China.

What Xu refers to as de-collectivisation was implemented following the fall of the Gang of Four. Deng’s triumph was perfectly encapsulated in his memorable phrase that ‘it doesn’t matter whether a cat is black or white as long as it catches mice’ (quoted on p.29). In other words, China’s economy can be either state-driven or market-driven as long as the status of the CCP is not jeopardised and the means of production are developed. The rural communes were broken up and replaced by the house responsibility system (HRS) in which families of peasants were authorised to develop smaller  plots in which they could grow whatever they wanted and sell a portion of the crop on the open market, in return for paying a fixed sum in taxes and selling a separate portion to the state. Predictably, neoliberals both within and outside China have hailed this privatisation of agricultural production as an unambiguous success and one of the bedrocks of China’s ascent to the global top table.

Xu targets Justin Lin, former Chief Economist at the World Bank, as one of the principal propagators of this rose-tinted view and critiques the methodology employed to justify the reforms. Xu accuses Lin and other pro-privatisation economists of overstating the extent of de-collectivisation that preceded the undoubted increase in productivity that occurred alongside HRS, and underestimating the impact of variables such as fertilisers and hybrid crops that were introduced at about the same time. In the author’s words:

‘it is more than clear that the dramatic input changes in the transition period were indeed an endogenous result of the pre-existing institutions: the remarkable development of the socialist economy in the former period built the conditions for the dramatic output growth’ (p. 55).

Maoist catastrophes

Xu rightly alerts us here to the simplistic notion that China’s rural privatisation was unproblematic. However, his allusion to ‘the socialist economy’ of the Mao era highlights the fundamental weakness of his account. Xu is as guilty of downplaying the catastrophic nature of the original collectivisation programme as Lin is of overplaying its replacement. Xu does not totally ignore the horrendous famine triggered by Mao’s Great Leap Forward at the end of the 1950s (which killed up to forty million according to some estimates) but euphemistically he discusses how ‘this structural distortion was later corrected as production teams largely regained their autonomy in 1961’ (p.90).

The ‘socialist economy’ of the post-1949 era was premised on Mao’s explicit intention to copy Stalinist Russia and subject the newly established state to accelerated industrialisation in order to compete economically and militarily with the West. This entailed extracting the maximum surplus out of the peasantry with compulsory purchase orders and artificially keeping prices low. The absurd outcome of this prioritising of industrial development over agriculture was the backyard furnaces of the Great Leap Forward, which diverted much-needed resources away from the countryside, leading to mass starvation on an unimaginable scale. To label this horrific top-down race for accumulation of capital as some form of socialism is the real ‘distortion’ that Xu should be concerned about. He does acknowledge that:

‘there was an absence of a socialist political process which led to widespread social and political stratification (and work avoidance) within the collectives and the relatively low quality of life in the collectives’ (p.90).

The author, however, perceives this as an oversight on the part of the Maoist project, when in reality, the suppression of popular participation was hard-wired into it at the moment of inception. Mao had risen to prominence within the CCP following the crushing of left-led insurrections in the big Chinese cities at the hands of the nationalist Kuomintang in the 1920s. The tragic defeat of ‘the first Chinese Revolution’ caused Mao and the other surviving cadres of the party to transfer their aspirations from the urban proletariat to the peasantry in the countryside. Mao and his acolytes, however, represented a predominantly middle-class elite that were interested in leading the peasantry but emphatically not empowering them or encouraging self-emancipation.

Two forms of state capitalism

In spite of the socialist rhetoric, Mao’s conquest of power in 1949 put the country on the path to a state-capitalist economy in which the means of production would be overhauled but not on terms controlled by workers or peasants. One element that Mao’s self-declared brand of Marxism never included, for either workers or peasants, was the ingredient of democracy. The indispensability of the self-emancipation of the oppressed that shaped the thinking of Marx and Engels, Lenin and Trotsky, never figured in Maoism and underpinned the calamitous decisions associated with that era.

Xu’s rather crude explanation for the disparity between the promise of Maoism and its reality is a ‘conflict between the socialist economic base and nonsocialist superstructure’ (p.94). This implies a mechanistic and stagist model of revolution in which transforming the means of production can occur without a similar process in the relations of production. This is compatible with a version of Stalinism but is a million miles away from the spirit of socialism. Regrettably, Xu’s valuable criticisms of Deng and his successors are compromised throughout by his glorification of the Mao regime.

Despite this crucial flaw, there are other insights in Xu’s analysis that repay reading. He provides often heart-breaking descriptions of the human cost of the transformations in the Chinese countryside during this era. The rollout of de-collectivisation in the 1980s often involved a significant degree of intimidation and violence being inflicted on the peasantry by cadres dispatched by the CCP to supervise the process. Xu recounts the story of Yang Chuanrong, a peasant woman whose drowned body was found in a pond in Songzi County. Three separate police investigations concluded that her death was accidental. Her family and friends refused to accept the verdicts, however, and eventually their suspicious were confirmed as the fourth investigation revealed her own husband who had been having an affair with another party worker had murdered her(p.96). This and similar stories reflect the corruption and sexual oppression that frequently accompanied privatisation in the countryside.

Xu’s study is heavy on statistical analysis, but he also includes interesting passages that allude to contemporary Chinese cinema and literature that add to his case that neoliberals have misrepresented the country’s recent history. He explains how a 1975 film, ‘Breaking with Old Ideas’, portrayed a power struggle within a village about the introduction of the HRS. The film shows the Maoist forces as victorious following a personal intervention by the Chairman himself. However, Mao’s death the following year meant that the film’s pro-commune subtext was not welcome in the new political milieu and it was denounced as ‘poisonous weeds and promptly banned!’ (p.32). A novel written by proletarian writer Jiang Zilong explored the regressive effects of Deng’s ‘modernisation’ in a typical factory:

‘Instead of increasing worker participation and political power, leaders became commanders and workers were merely disciplined to serve production…that goal could easily change to profits for the leaders in the future because workers would have no power at all’ (p.71).

In his optimistic conclusion, Xu notes that in recent years there has been a ‘revival of Marxism in both academic and activist circles in China’ (p.110). This development is certainly to be welcomed but it will be an arduous task for a new left in China to shake off decades of Maoist distortion and to retrieve the legacy of the authentic revolutionary tradition that was brutally terminated in the 1920s and briefly revived in 1989. The decisive political moment of the twenty-first century may come when the world’s biggest working class rediscovers the history of the early CCP that came tantalisingly close to power in the cities ten years after the October Revolution. The reforms described by Xu were designed to consolidate the power of the Chinese ruling class, but the consequence has been, hopefully, to bring their gravedigger onto the stage of history.