Keynote Message to the Study Conference:
Defending Sovereignty by ILPS Commission 6
By Jose Maria Sison, Chairperson Emeritus
Dear Colleagues and Friends,
First, let me thank Ka Paeng (Rafael Mariano) and the ILPS Commission 6 for inviting me to deliver this keynote message.
I convey warmest greetings of solidarity to all participants in this study conference titled, “Defending Sovereignty” and focusing on China as a rising imperialist power. We are all united in the anti-imperialist and democratic struggles of the peoples of the world.
I am aware that your conference includes representatives of nongovernmental groups and peoples from countries like Pakistan, India, Malaysia, Sri Lanka, Laos, Myanmar, Cambodia, Indonesia and the Philippines. You are all concerned with the growing tentacles of Chinese monopoly capitalism.
China Takes the Road of Capitalism and Imperialism
Soon after the death of the great Mao in 1976, the capitalist-roaders headed by Deng Xiaoping were able to stage a coup to overthrow the proletariat in China. The proletarian revolutionaries in the Central Committee and lower organs of the Communist Party of China were arrested and imprisoned. The revolutionary committees created by the Great Proletarian Cultural Revolution (GPCR) were dissolved.
In quick succession, the GPCR was proclaimed a complete disaster, the capitalist roaders took over the state enterprises, dismantled the commune system, privatized the rural industries and allowed the old big bourgeoisie and new private entrepreneurs to access funds from state banks. On the basis of socialist construction that it had previously attained, the Chinese economy became monopoly capitalist, with the state sector leading the private sector.
Deng’s policy of capitalist reforms and opening up to the world capitalist system was adopted and enforced in 1978. The US conceded consumer manufacturing to China and provided low-end technology for the sweat shops. In the 1980s, China exported a huge amount of consumer manufactures mainly to the US and relied on foreign investments and trade surpluses as key factor for the development of China’s capitalist economic and financial system.
China promoted a boom in public and private construction. This ultimately resulted in corruption in the private acquisition of public land and grants of state loans and other business privileges and inflation of food prices as the amount of food needed by the construction boom and manufacturing soared. Thus corruption and inflation were raised as main economic issues in the mass uprisings of the youth and workers at Tienanmen Square in Beijing and in many cities of China in 1989.
By the end of the 1980s, China had built up both state and private capitalism by extracting enormous profits from Chinese cheap labor. The state sector assured itself of resources for achieving economic and strategic goals and the private sector developed rapidly with loans and cheap raw materials from the state sector. China’s GDP grew at a rapid rate but the per capita income of the Chinese people remained low in comparison to other industrial capitalist countries.
From being the world’s biggest creditor at the beginning of the 1980s, the US dropped to being the biggest debtor at the end of the decade. It undermined its own economy by outsourcing consumer manufacturing. Though China increased its own public debt, it became a major creditor of the US by using a part of its export income to buy US securities.
The ratio of China’s population to agricultural land is quite high and remains problematic. China must feed 20 per cent of the world’s population on 7 per cent of the world’s agricultural land. To aggravate the dismantling of the commune system, rapid industrialization and real estate development have also chewed up agricultural land. But China has been able to use its income from manufactured exports to make food imports and to lease or purchase land abroad in order to cover its food deficit.
China as Main US Partner in Neoliberal Globalization
Since the 1980s, China had become a major partner of the US in neoliberal globalization. But in the 1990s and thereafter, it would become the main US partner. It became a far more willing partner of the US and host of foreign investments after the 1989 mass uprising. The US was also encouraged to promote capitalism in former socialist countries after the collapse of the Soviet Union in 1991.
It coaxed China to join the World Trade Organization (WTO) and further privatize state-owned enterprises in exchange for increased US investments, technology transfer and further trade accommodations. China complied with the US demands to a satisfactory extent. It reduced the number of state corporations in relation to private corporations but the former continued to dominate the economic sectors vital to strategic economic and security goals.
The US allowed China to have its way in its economic development inasmuch as the US was confidently concentrating on the production of big items, financializing its economy and riding high on its high-tech boom in the entire decade of 1990s. Concerned with the expansionism of the NATO, China and Russia set up the Shanghai Cooperation Organization in 2001 as an economic, political and security alliance.
However, they consented to the wars of aggression by the coalition forces headed by the US against Iraq in 1991 as well as in March 2003 to December 2011 even as the US boasted of its neoconservative policy of full-spectrum dominance in the 21st century. Nevertheless, they set up the BRICS in 2010 as an economic bloc to counter the most adverse policies of the US-controlled multilateral agencies and take advantage of the US preoccupation with wars in the Middle East.
Even as it enjoyed the position of being the winner of the Cold War and sole superpower, the US continued its strategic decline by spending trillions of dollars on wars of aggression (Afghanistan, Iraq, Yugoslavia and elsewhere) and suffering a series of economic setbacks, including the crisis of overproduction in high-tech goods in 2000 and the mortgage meltdown of 2006 which led to the global financial crisis of 2008.
Since 2008, the US strategic decline has accelerated in the prolonged stagnation of the US and global economy. Although the US remains the strongest imperialist power, it has slid down to a multipolar world. By being able to manipulate its two-tier economy, China continued its economic rise despite the 2008 financial crisis, as in the aftermath of the Asian financial crisis in 1997, when China benefited from the decline of the so-called Asian tigers.
By 2013, China launched the Belt and Road Initiative (BRI) to serve as the outlet for its surplus capital and for its own overproduction of steel and construction equipment. The BRI has been touted as a trillion dollar project which aims to put at least half of global trade within its ambit. In fact, the Asian Infrastructure Investment Bank (AIIB) started with a capitalization of USD 100 billion.
But soon in 2015 the prolonged global depression began to adversely affect the Chinese economy. The Chinese stock market crashed, wiping out more than 30 percent of assets. Japanese and other foreign investments were leaving China in significant amounts. And the Chinese economic growth rate slowed down. According to the International Finance Institute (IFI), China’s total debt (including state, corporate and household debts) has leaped to the level of 303 per cent of GDP as of July 17, 2019 amid the trade war with the US and the economic slowdown.
Growing US-China Contention
As early as during the time of Obama, the US became openly wary of the economic and military rise of China. Thus it undertook the policy of strategic pivot to East Asia in order to increase its air and naval assets in the region. But the pivot has been slowed down by the US failure to extricate itself from the “ceaseless wars” in the Middle East.
However, Trump has preferred to make a futile side show in East Asia by repeatedly threatening the Democratic People’s Republic of Korea. Eventually, he has confronted China with maintaining a two-tier economy, manipulating its currency and stealing technology and has proceeded to raise tariffs on Chinese exports to the US, impose restrictions on technology transfers to China and increase US air and naval patrols in the South China Sea.
By raising tariffs on Chinese exports, the US is trying to cut down China’s trade surplus, its foreign exchange reserves and surplus capital for self-development and for taking advantage of other countries (especially those within the BRI ambit) with high-interest loans and overpriced infrastructure projects, which are difficult or impossible to repay and put debtor countries in danger of becoming debt colonies.
The loan and infrastructure contracts outrightly violate national sovereignty with provisions requiring that disputes are subject to arbitration by Chinese courts, that the supplies come exclusively from China, that the labor force be 40 to 60 percent Chinese and that upon failure to repay the loans these are convertible to equity or 99-year Chinese control over project, land and the natural resources.
The negotiations with China of loans and infrastructure projects are usually done under the cover of confidentiality, thus allowing corrupt deals between the bureaucrats of the borrowing country and the multiplicity of Chinese state and private corporations responsible for the delivery of construction materials, equipment and all sorts of services.
In the current trade war between the US and China, the former is putting up tariff barriers against the manufactured exports of the latter which in turn has retaliated by drastically reducing its import of US food products. We can therefore expect China to strive for increasing its access to agricultural lands in underdeveloped countries by leasing them, acquiring them by outright purchases or through loan defaults by borrower countries and deploying corporations to exploit land and natural resources abroad. Your panel discussions can deal in detail with particular projects in several countries.
To counter China’s export of capital through bilateral loans and loans by China-controlled AIIB, the US is putting up the US International Development Finance Corporation (USIDFC) with USD 60 billion capitalization to augment the loan capabilities of the Asian Development Bank (ADB) and the World Bank. It is creating space for those overburdened by Chinese loans to engage in debtors’ revolt someday.
By imposing restrictions on technology transfers to China, the US is trying to stop the scientific and technological advance of China. But China has already gained so much from the technology transfers and the exchange of science and technology experts and students for a long period of time and has even improved on the previous technology for purposes of civil and military production. China’s military production has increased tremendously, although the US still has the upper hand in higher volume and quality of its own weapons for the purpose of aggression.
The US and China are now generally at par in being able to use science and technology to raise the social character and efficiency of the means of production. This leads to worse crises of overproduction due to the private monopoly character of the system of appropriation, especially under the neoliberal policy regime. Higher levels of abusing finance capital can be used. But the global debt has already become a big bubble of more than USD 247 trillion which is equivalent to 320 per cent of Global GDP as of 2019, according to the IFI.
By asserting the right of free navigation in the South China Sea, the US is protecting its own imperialist interests as well as exposing China’s imperialist interests in building and militarizing artificial islands within the exclusive economic zone (EEC) of the Philippines. Through its puppet assets in the Philippine reactionary armed forces, it has also successfully pressured the Duterte regime to allow it to establish a military base in Palawan in order to confront the militarized artificial islands illegally built by China in the West Philippine Sea.
In violation of the UN Convention of the Law of the Sea and the pertinent final judgment of the Permanent Arbitration Court in favor of the Philippines in 2016, China is claiming 90 per cent of the South China Sea as its own property and using it as the area for displaying its growing military power. It has also established an overseas military base in Djibouti and is using the BRI gradually to acquire bases for its ground, air and naval forces and access the markets and natural resources of client-countries.
China has more than enough weapons to defend itself and maintain a peaceful economic rise. But it is increasingly driven by ultra-nationalist sentiments and inter-imperialist contradictions to increase military production and to gear itself up for the struggle to redivide the world. The building and militarization of of the artificial islands in the Philippine EEC and the overseas military base in Djibouti are signal events manifesting the belligerent imperialist character of China and challenging US military power directly.
After more than 40 years of cooperation with China, the US strategists consider it timely to undermine and stop China’s economic and military rise. In an already multipolar world, where other imperialist powers are also at play for their own interests, the US objective may not succeed on a straight line. But insofar as they can collide directly, the US and China can become involved in a process of mutual debilitation under conditions of ever worsening global economic crises.
The contradictions between the US and China as well as among all imperialist powers are intensifying. They are resulting in in crisis and wars to the detriment of the peoples of the world. But the people are at the same time driven to carry out anti-imperialist and democratic struggles in order to achieve national and social liberation. We can expect the resurgence of national liberation and socialist movements and revolutions in the forthcoming years and decades. Thank you.###