Is China an Imperialist Country? Part 2: Is China Imperialist?

A new four-part series by Sam King published on Red Ant
Link to Introduction
Link to Part 1

To ensure the best possible discussion, each part will be published at a scheduled time to forewarn all those wishing to discuss each of the series’ parts. We have decided upon 7pm (Australian Eastern Standard Time) each Tuesday starting Tuesday April 27th and ending Tuesday May 18th, as this series was written with Australian readers in mind.

According to the mainstream definition, China perhaps is imperialist. For example, Beijing claims territory in the South China Sea that is closer to the Philippines, Malaysia and Vietnam than it is to China. It is also increasing military expenditure. On these facts alone, China might be “imperialist” in the dictionary sense.

However, to analyse the question in Marxist terms means examining China’s economic relationships with the rich countries. The most important single fact in this analysis, which manifests the underlying social dynamics of its relationships with the rich countries, is that China remains a poor country. Chinese per capita income is just a fraction of incomes in the rich countries, as can be seen in Figure 1 below. For this reason workers’ wages in China are similarly tiny compared to the rich, imperialist countries. Social conditions in general are worse.

Figure 1
GDP per capita for China, Mexico and India, and selected rich countries, 1978 – 2019 (US Dollars)

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=CN-US-GB-AU-MX-DE-IN-JP

The profound social consequences of this most basic economic fact are continually overlooked in analysis of China coming from within the rich countries. Low Chinese income is also crucial analytically for another reason: the huge difference in wealth and income between China and the rich countries has not developed by chance. It expresses the relative weakness of Chinese capitalism compared with the rich capitalist countries such as the United States, Australia, Japan and Western Europe. The whole purpose of capitalist development is to make money, so if Chinese capitalism were stronger, it would be able to command a higher share of world income. Figure one shows how economically strong it actually is — vastly weaker than the rich countries.

Chinese income is not even close to the rich countries. Rather, it sits among the large group of the world’s poor countries — the so called “Third World”. This group is home to 85% of the world population. China is not even the richest among Third World countries. Rather, it sits together with Mexico, Turkey, Brazil and Russia — one among a group of large, relatively developed and large Third World societies. If China really possessed world beating technology why would China’s capitalists not achieve the world beating profits of the rich country capitalists? And what would stop Chinese workers from demanding the wages as high as in Australia or the United States? The GDP figure above combines wages and profits and shows that, for China’s size, they are low.

EXPLOITATION

If we understand the word “exploitation” in the Marxist sense of capitalist appropriation of surplus value (i.e. labour time necessary to make things), China is likely to be the most exploited country on Earth. Class exploitation occurs when surplus value is created by workers and appropriated by capitalists. National exploitation occurs — and this is the essence of imperialism for Marxists — where surplus value is created by workers in one country and appropriated by capitalists in another. National exploitation can occur through foreign ownership of factories or other businesses, through payment of foreign debt or — the form that has become most important but remains the least understood — through unequal-exchange of value in international trade. Unequal-exchange occurs when the capitalists of one country are forced to sell their products below their value while the capitalists of another countries can sell their products at value or above it.

What this means is that when the capitalists of the poor country sell products (or services) that take, say, two hours to produce they get enough money to buy from the rich countries products that take, say, one hour to make. This unequal-exchange of labour time is the fundamental characteristic of world trade and the principal reason the imperialist countries made such enormous super-profits during the period of neo-liberal globalisation of production from around 1980 through 2008.

Because imperialism results in the hyper-development of the rich countries and under-development of the poor countries, the capitalists that come from each of these types of countries never meet as equal competitors. They confront each other as, on the one hand, groups of hugely powerful (monopoly) capitalists and on the other, groups of vastly weaker (non-monopoly) capitalists. The latter come mostly from the Third World, including China. The uneven social development of different societies means that, under the imperialist system, unequal-exchange in trade and national exploitation are inevitable facts. The reasons China and other poor countries can be continuously forced to accept this unequal-exchange are taken up more in part three of this series, How can we accurately characterise Chinese capitalism? (to be published next week).

With more than 800 million workers, China has the largest labour force in the world. One part works in more or less modern factories or production facilities with a relatively high rate of labour productivity. So gigantic is China’s contribution to global value that the opening up of China to the world market was the single biggest factor underpinning the worldwide expansion of capitalist profits in the neoliberal period up to 2008. The fact that Chinese capital (and therefore Chinese workers too), as shown in Figure 1, have only been able to secure for themselves a meagre share of the huge wealth created by Chinese labour in this period is the clearest evidence of why we can categorise China as a most exploited country. Other poor countries besides China also suffer the same phenomenon, even if China is the most important.

Of course some Chinese capital exploits foreign workers, including, in some cases, workers in the rich countries. This occurs, for example, when Chinese capital owns a factory in the US or a mine in Australia. Yet these are exceptional cases in contradiction to the general trend and should not be taken out of the general context and used to that the rich countries exploit Chinese labour – systematically.

Exploited countries suffer a net loss of value. The amount of value a capitalist or a country can capture for itself is expressed in its money income for all classes (GDP). Chinese workers in 2019 made up 23 percent of the world workforce (and also each Chinese worker, on average, works a lot more hours than in the rich countries). In that year China received only 16 percent of world income. By contrast the United States workforce was less than five percent of the world total, had average hours per worker below the world average, yet secured some 24 percent of world income. The same discrepancy — i.e. the same evidence of exploitation — can be shown for every significant rich and poor country on Earth.

CHINA’S MILITARY

It is true that Beijing is in many instances militarily and diplomatically aggressive in relation to other Third World states, such as in the South China Sea, where, besides Taiwan, all the other claimants are Third World countries. It could be argued that this military and diplomatic stance of the Chinese government manifests its conservative outlook. However, it is only in the mainstream sense of the term that it could be called “imperialist”.

What the capitalist media clamouring to condemn China in the South China Sea apparently find legitimate are the US and Australian naval flotillas that pass through that same sea on a regular basis supposedly to defend “freedom of navigation” (including freedom for US aircraft carriers). US vessels first have to cross the Pacific Ocean before they can carry out their “democratic” manoeuvres in the South China Sea. This makes their presence a fundamentally aggressive stance which is part of the long-term US policy of “containing China”. This policy has been implemented since the start of Communist power in China over seven decades ago.

Any fair-minded assessment must conclude that China is militarily surrounded by US imperialism and also that the US military policies are supported by all the other rich countries in the region: Japan, South Korea, Taiwan, Singapore and Australia. US presence also appears to be broadly supported in Hong Kong. The United States has military bases or cooperation agreements with Japan, South Korea, the Philippines, Taiwan, Singapore, Guam, India and many other locations that surround China. Much of this targets China, as Obama, the Pentagon, Trump and now Biden make perfectly clear. Hence, in relation to the alliance of imperialist countries – Chinese military and political moves in the South China Sea are fundamentally defensive. This remains the case even though some of the actual policies – such as claiming that Vietnamese waters are Chinese – also reflect the desire of Chinese capital to profit at the expense of weaker neighbours.

Meanwhile the Chinese military and diplomacy has spectacularly failed for 71 years to take back Taiwan. The island was historically Chinese before being colonised by Japan in 1895 following Japanese victory in the First Sino-Japanese war. After the Chinese revolution’s victory in 1949, the defeated “nationalist” forces retreated to Taiwan, where they forged a close dependency with the US as the bastion of counter-revolution in China. Taiwan (and South Korea) have long been the recipients of special US military, scientific and economic assistance aimed at bolstering them as bastions against Chinese and Russian Communism.

Chinese failure to re-take what Beijing considers sovereign territory just 130km from the mainland can be understood by the fact that — contrary to the sensational depictions of China’s expanding military power — the People’s Liberation Army, Navy and Airforce are fundamentally weak in relation to the imperialist states. One aspect of this is that Taiwan itself, thanks to tremendous US support, appears to have become one of just a handful of small countries to join the club of rich nations and has also developed an advanced military. The other aspect is the menacing presence in the region of the US military itself.

Military power in the modern world reflects a country’s general degree of economic (i.e. social) development and cannot stand far apart from that. China’s lack of economic development compared to the rich countries as manifested in its income is also expressed in the character of its military. The anti-China propaganda would have us believe that China’s military is in some way increasingly competitive with the USA. This common perception has no basis in reality. While large, the overwhelming majority of Chinese military equipment is completely obsolete in modern warfare against an advanced opponent. Even the newest Chinese equipment is often dependent on foreign technology – such as the most advanced Chinese fighter jets that need Russian engines to work properly as Chinese built engines have proven too unreliable.

The case of Taiwan appears to confirm what seems to be an iron law of capitalist imperialism: no Third World country has ever successfully invaded a rich country. China, no matter how powerful it has become in relation to the Philippines or even India, cannot and will not nullify that law. Rich countries invade poor countries. Poor countries sometimes invade other poor countries. But poor countries cannot not invade rich countries, even small ones, like Taiwan or Israel, if these are supported by the larger imperialist states.

China’s hyped and maligned military base building in the South China Sea is also taken as clear evidence of Chinese “imperialism”. It is not trumpeted in the imperialist media but a similar policy is being pursued by India too — one of the poorest Third World states. India has recently signed defence cooperation agreements With Seychelles, Mauritius and the Maldives, giving its Navy access across large parts of the Indian Ocean. It is building a military base on the Mauritian Island of Agalega. However, because India is an ally, not official enemy, of the United States, almost nobody beyond that region has even heard of these deals. We are told only to worry about China.

CAPITAL EXPORT

A common misunderstanding of the Marxist theory of imperialism comes from taking just one or two features characteristic of imperialist countries and elevating these to become the entire theory. Commonly, “capital export” (i.e. foreign direct investment, foreign loans, ownership of foreign shares and foreign aid) is taken to be the defining feature of imperialist countries. This leads to the false conclusion that because China “exports capital” – most famously at the moment via its flagship Belt and Road Initiative – it must be imperialist.

It is true that capital export and foreign aid that comes from the rich countries is part and parcel of the imperialist project of those countries. It does not follow, however, that foreign investment or aid from China means that it too is constructing a similar “imperialist” project. In the modern world all capitalist countries export some capital (this is true of Bolivia, Timor-Leste and all others). Chinese foreign investment is, of course, much larger than, say, Bolivia’s, but its actual extent is massively exaggerated in capitalist media reports. This creates the false impression that Chinese investments and aid approach or surpass that of the rich countries. It is not even close.

For example, if we look at total Foreign Domestic Investment, by 2019 there was a cumulative world total of US$34.6 trillion dollars of FDI from all countries in all other countries. Over $26 trillion of that was owned by companies based in what UNCTAD describes as “developed economies” – a category almost analogous with the imperialist camp. Close to $8 trillion of the total came from the United States. China by contrast held $2.1 trillion in foreign investments. Two trillion USD is a lot of money. It is higher than the United Kingdom’s foreign investments, though less than the Netherlands. However, China is the largest society on Earth with a population twenty times larger than the UK and 81 times the Netherlands.

Comparing the totals of big with small countries doesn’t reveal the true dynamic. Per person, Chinese FDI is a mere one-fifteenth of the United States. Statistically, the Chinese people held on average around $1,500 in foreign investment each (most of this is actually held by China’s capitalists). For each person in the US, the figure is over $23,000. For the UK the figure is $27,000 and the Netherlands $250,000.

Chinese FDI per person is consistent with other relatively developed Third World countries. To take one example, Mexican FDI stock that year was $230 billion, or nine times smaller than China. However with a population 11 times smaller, Mexican per capita holdings were slightly higher. That is a comparison of the totals invested.

In addition, the rich countries secure higher returns per dollar invested. Chinese capital has gained particularly bad returns on its overseas investments. Like the largest Chinese corporations more generally, Chinese foreign investment has a consistently lower rate of profitability than that of imperialist capital. The imperialist countries’ media hypocritically present the Chinese so called Belt and Road Initiative investments as the most sinister “imperialism” – sinister, that is, because it’s Chinese.

Yet the real question in terms of the appropriation of surplus value is, will these Chinese investments make or lose money? Or will they be able to achieve profit rates comparable to the imperialist average? This very pointy question is asked in exclusive capitalist financial publications were most commentators express extreme scepticism. Meanwhile, the New York Times and most of the Australian media falsely present the same investments as a plausible Chinese bid to take over the world.

Parts of the so called “Belt and Road Initiative” — which in reality has become a label attached to a large number of unrelated and generally non-strategic investments because it helps proposals to get state support — appear to attempt to extend the Chinese domestic model of accumulation to other even poorer countries. Much Chinese investment is concentrated in South Asia, with scattered investments also in Africa. These are regions — the poorest on earth — are less developed than most of China. It appears that increasing domestic over-investment and excess capacity in China, especially in infrastructure engineering, is pushing the Chinese government to try to open new overseas markets for its construction companies to ward off domestic crisis.

Such investments attempt to return a profit, if only a marginal one, by trying to replicate aspects of China’s own recent capitalist expansion — namely building the infrastructure necessary to intensify the exploitation of these regions’ still super-cheap labour (and environment) to produce basic products for export. It’s not that Chinese capital can hope to dominate the actual exploitation of labour in, say, India — the overwhelming majority of foreign investment there comes from the imperialist states, not China. However, Chinese capital is attempting to secure a larger part of the market to build infrastructure in some very poor countries.

It is not usually due to lack of available funds that imperialism has tended to neglect the infrastructure needs of the poorest countries in the world. It is because likely returns on most investments there are low and risky. That Chinese capital is forced to concentrate much of its foreign investments in such economically marginal regions of the globe indicates its weakness, not strength.

Chinese foreign investment is also often related to China’s domestic energy and raw materials requirements. This does indicate that the capitalist class has “a project” overseas — i.e. it attempts to defend strategic interests that extend beyond its borders. But these interests are essentially defensive. Without such investments China would remain completely at the mercy of the United States which, for example, through Singapore’s Changi Naval base, can control the Strait of Malacca through which oil is transported to China from the Middle East.

A DIFFERENT TYPE OF CAPITALISM

The Chinese pattern of domestic excess capacity followed by attempts at expansion into foreign markets does, at least in a superficial sense, mimic a key aspect of the classical development path of the imperialist countries. However, while there are superficial similarities, the fundamental difference is that maturing Chinese capitalism (and this is the same for Brazil and other relatively developed Third World states) is not capitalism of the same type as the imperialist countries.

The true imperialist states matured when they were already at the apex of the world division of labour and therefore dominated world trade and profits. Chinese capitalism is “maturing” in certain ways, in a context when that apex – the highest technology production – is still monopolised by others; by the same group of imperialist states that have dominated the world economy for over a century. In this context China’s role within the global division of labour is that of a second-tier economy. It is therefore “maturing” as a second tier economy.

The concrete economic relationship (principally the division of labour) between China and the rich countries is explored more in the next article of this series, How can we accurately characterise Chinese capitalism?

So, yes, there are certain superficial similarities between China and the imperialist states, however, to become fixated on these superficial parallels, or to point to them in order to characterise China as imperialist ignores the fundamental issue for Marxists – which capitalist classes (i.e. from which countries?) are able to secure for themselves the greatest part of the value produced by the world’s workers?

Through unequal-exchange of value in world trade, foreign debt repayments, foreign investment returns sent overseas and other channels, value, in 2021 still flows, from the poor to the rich countries.

Imperialism — defined as the exploitation of poor, capitalist societies by rich capitalist classes and states via the net transfer of value in the Marxist sense — is a system in which China is an exploited, not an exploiter nation. Exploitation, not this or that foreign policy, is the underlying essence of capitalist imperialism.

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