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Workers Vanguard No. 894

8 June 2007

Again on Why China Is Not Capitalist


Dear Workers Vanguard

Responding to my letter arguing that China has become a capitalist state, you say that: “The 1949 Revolution smashed bourgeois rule in China, and that remains the case today. At some point, likely when bourgeois elements in and around the bureaucracy move to eliminate Communist Party (CCP) political power, the explosive social tensions of Chinese society will shatter the political structure of the ruling bureaucracy. And when that happens, the question will be starkly posed: either proletarian political revolution to open the road to socialism or a return to capitalist enslavement and imperialist subjugation”. (WV no. 890)

But why do you assume that “bourgeois elements” will need to “eliminate Communist Party political power”, rather than using the CCP to implement a policy of restoring capitalism? The CCP is the party of the bureaucracy: but the bureaucracy is not a reliable defender of the workers state.

Discussing the future of the Soviet Union, Trotsky wrote: “Let us assume—to take a third variant—that neither a revolutionary nor a counterrevolutionary party seizes power. The bureaucracy continues at the head of the state. Even under these conditions social relations will not jell.... [The bureaucracy] must inevitably in future stages seek supports for itself in property relations. One may argue that the big bureaucrat cares little what are the prevailing forms of property, provided only they guarantee him the necessary income. This argument ignores not only the instability of the bureaucrat’s own rights, but also the question of his descendants.... Privileges have only half their worth, if they cannot be transmitted to one’s children. But the right of testament is inseparable from the right of property. It is not enough to be the director of a trust; it is necessary to be a stockholder. The victory of the bureaucracy in this decisive sphere would mean its conversion into a new possessing class”. (“The Revolution Betrayed”, Pathfinder Press 1972, page 253-4)

In China the transformation of the bureaucracy into “a new possessing class” is proceeding apace, despite the continued rule of the CCP.

You point out that state-owned enterprises remain dominant in certain strategic industrial sectors and in the banking sector. But historically it has not been unusual for a capitalist state to have a strong state-owned sector of the economy. The British Labor Party nationalised the coal mines and railways in the 1940s. Iraq’s Baath Party nationalised the oil industry.

Today, with the dominance of neoliberal ideology, the privatisation of formerly state-owned industries is occurring in nearly all capitalist countries. China too has been privatising rapidly. But it has so far refrained from privatising certain key sectors. The imperialists are not satisfied: they want more rapid and complete privatisation, and unfettered access to all areas of China’s economy.

This conflict may indicate that the Chinese regime wishes to maintain a certain degree of independence from imperialism, like past bourgeois-nationalist regimes such as those of Nasser, Saddam Hussein, etc, or like Iran today.

You point out that “during the incipient proletarian political revolution in China in 1989, the People’s Liberation Army initially refused to move against the workers of Beijing and the military leadership itself began to split, before new units were brought in to crush the rebellion. Such splits are hardly characteristic of the armed forces of capitalist class rule. But they do reflect the contradictions inherent in a workers state under bureaucratic rule”.

I would argue that the crushing of the incipient political revolution in 1989 (and the ensuing purge of the state apparatus) prepared the way for the restoration of capitalism. By early 1992, less than three years after the Beijing massacre, Deng Xiaoping was urging the whole of China to imitate Guangdong province, where capitalist economic relations were the most highly developed.

You point out that the Chinese economy has been growing rapidly, unlike the former Soviet Union whose economy collapsed after the restoration of capitalism. This rapid growth is partly due to the huge influx of foreign capital which has selected China as a key location for production of commodities for the world market, and partly because China still retains a strong state sector, and has not so far implemented the neoliberal model in full.

(Incidentally, I should correct an error in my original letter. I said that China had become “the world’s biggest recipient of foreign investment”. This should read “third biggest”. In 2005, the flow of foreign direct investment into China was $US 72 billion, which was exceeded only by Britain and the United States, according to the OECD).

You argue that: “Should China succumb to counterrevolution, the results would be catastrophic”. The results have already been “catastrophic” for the millions of workers sacked from state-owned enterprises, and the millions being ruthlessly exploited in capitalist sweatshops. But it is true that things could get even worse if the neoliberal agenda is implemented in full.

Workers are fighting back against the attacks on their job security, living standards and working conditions. This is not only a deterrent to the full implementation of the neoliberal program; it indicates the potential for a new socialist revolution.

Chris Slee

WV replies: In replying to Chris Slee’s previous letter (WV No. 890, 13 April), we noted that he abuses revolutionary leader Leon Trotsky’s writings on the Stalinist bureaucracy in the former Soviet Union to prop up the anti-Marxist notion that capitalist rule has been restored in China through an accumulation of “market reforms” implemented by the Chinese Communist Party (CCP) regime. Now Slee cites a passage in The Revolution Betrayed in which Trotsky discussed the inherent tendency of the Stalinist bureaucracy to generate capitalist-restorationist elements from within its own ranks. This, Slee writes, supports his assertion that “in China the transformation of the bureaucracy into ‘a new possessing class’ is proceeding apace, despite the continued rule of the CCP.” Here, again, is a fundamental distortion.

We noted in our earlier reply that in The Revolution Betrayed and other works, “Trotsky explained that the Stalinist bureaucracy was a parasitic caste that simultaneously is dependent on the collectivized property forms of the workers state and acts as the transmitting mechanism for the pressures of imperialism in undermining the workers state.” Summing up the section from which Slee (selectively) quotes, Trotsky laid out what was historically posed in the Soviet Union: “on the road to capitalism the counterrevolution would have to break the resistance of the workers”; “on the road to socialism the workers would have to overthrow the bureaucracy. In the last analysis, the question will be decided by a struggle of living social forces, both on the national and the world arena.”

There is no question that elements in the bureaucracy and especially among their offspring have enriched themselves through China’s economic “reforms.” But as was true in the former Soviet Union and East Europe, for the “right of testament” and the “right of property” to become dominant in China would require a counterrevolution that destroys the (bureaucratically deformed) workers state. Trotsky categorically rejected the notion that the Stalinist bureaucracy could transform itself into a capitalist class through the gradual privatization of the collectivized economy. As he wrote in “The Class Nature of the Soviet State” (October 1933):

“The Marxist thesis relating to the catastrophic character of the transfer of power from the hands of one class into the hands of another applies not only to revolutionary periods, when history sweeps madly ahead, but also to the periods of counterrevolution, when society rolls backwards. He who asserts that the Soviet government has been gradually changed from proletarian to bourgeois is only, so to speak, running backwards the film of reformism.” (emphasis in original)

Trotsky projected that the “inevitable collapse of Stalinist bonapartism” would pose directly and immediately the historical alternatives of proletarian political revolution or capitalist counterrevolution. And that is what actually happened first in East Europe and then the Soviet Union between 1989 and 1992. In every case, the restoration of capitalism required ousting the Stalinist governments and replacing them with imperialist-backed, anti-Communist regimes. The militaries were reconstituted, their officer corps purged of pro-socialist individuals; Boris Yeltsin banned the Communist Party; anti-Communist witchhunts raged through those societies (and still do). Contrary to Slee’s assertions, nothing remotely similar transpired in China following the brutal suppression of the 1989 Tiananmen protests. While that incipient political revolution was crushed, the working class was not smashed. In fact, the power it has shown in massive defensive struggles indicates the potential “to overthrow the bureaucracy” through proletarian political revolution.

Here we would note that Slee does not deign to mention his longtime affiliation with the Australian Democratic Socialist Perspective (DSP), whose forerunners during Cold War II enthusiastically supported imperialist-backed counterrevolutionary forces in the former Soviet sphere, from Lech Walesa’s Solidarność in Poland to Boris Yeltsin’s “democrats” in Russia. It is simply cowardly for Slee to evade answering the polemics in our first reply against the DSP’s track record of support to capitalist counterrevolution.

These are not abstract historical disputes. The counterrevolutions that swept across the Soviet sphere following the collapse of Stalinist bonapartism were not historically inevitable. The fall of the “hardline” Stalinist regime of Erich Honecker in the German Democratic Republic (DDR) in October 1989 precipitated an incipient proletarian political revolution. At this critical moment in history, our international tendency mobilized all its available resources to intervene in the DDR in order to provide revolutionary leadership for the striving of East German workers for a genuinely socialist society.

Opposing the drive for reunification with the capitalist-imperialist West German state, we fought for the replacement of the disintegrating Stalinist regime in the DDR by a government based on democratically elected workers and soldiers councils. Such a workers government would have been a decisive step toward the revolutionary reunification of Germany, opening the road for proletarian revolutions to establish a Socialist United States of Europe. And when in August 1991 Boris Yeltsin and the pro-imperialist “democrats” seized power in Russia, our comrades in Moscow called upon the multinational Soviet working class to oppose and resist the ascendant forces of capitalist restoration.

The critical battles that will determine the fate of the People’s Republic of China remain to be fought out. As in East Europe and the former Soviet Union, the decisive arena in which a capitalist counterrevolution would have to triumph is at the political level—the conquest of state power—not simply through the quantitative extension of the private sector, whether domestic or foreign-owned. A few years ago there was an interesting article (“The Ownership Reform in China: What Direction and How Far?”) by Sujian Guo, an émigré anti-Communist Chinese academic in the U.S., challenging the widespread notion that China has already become or is fast becoming capitalist:

“How to privatize such a huge estate of state ownership within the framework of the existing political system and structure is really problematic and technically unworkable. The experience of other former communist countries has shown that there is no single case of making privatization successful with the communist party remaining in power and its political system intact.” (emphasis in original)

Journal of Contemporary China, August 2003

If, as Chris Slee contends, the Beijing bureaucracy has restored capitalism in China under the economic domination of Western and Japanese imperialism, one would expect the U.S. and Japanese rulers to be strongly supportive of the CCP regime, just as Washington backed Yeltsin. The reality is that the U.S. imperialists, their West European and Japanese allies and their Australian junior partners remain fundamentally hostile to the People’s Republic of China and its government, a hostility actively pursued at both the military and political levels.

Right after the destruction of the Soviet Union in 1991-92, the Bush Sr. administration announced plans to build an anti-missile “shield,” the main purpose of which is to achieve effective nuclear first-strike capability by intercepting a counterstrike by China’s small arsenal of long-range missiles. As Trotskyists, we stand for the unconditional military defense of China and also North Korea, recognizing their need to develop effective nuclear weaponry to counter the imperialist threat.

At the political level, the imperialists aim to replay in China the strategy used during Cold War II in East Europe and the former Soviet Union: promoting domestic anti-Communist oppositional forces. In fact, while a fledgling capitalist class exists on the mainland, it is not a politically conscious class with its own political party or the equivalent.

The counterrevolutionary machinations of U.S. imperialism are clearly in evidence in Hong Kong, the former British colony and capitalist enclave where (unlike the mainland) the CCP does not exercise a monopoly of political organization. Washington, abetted by London, has actively championed the Democratic Party and other right-wing oppositional groups there. On the mainland, the U.S. ruling class is encouraging such anti-Communist “dissidents” as Li Jianqiang, a lawyer and convert to Christianity who is involved in the self-styled “rights defense” movement. While visiting Washington last November to meet with the Bush administration’s China “specialists,” Li was interviewed by the CIA’s Radio Free Asia. Shortly after that, he described China as a “super jail” and its leaders as “ruthless dictators” (New York Times, 25 February).

And where do Chris Slee and the DSP stand in this battle? The DSP first publicly declared that China had become “a capitalist state” in 1999, backdating this historically momentous event (which they somehow failed to notice at the time) to 1992. “A qualitative turn was made in 1992 by the Chinese regime,” we are informed, “toward an orientation of replacing the statised, planned economy with a capitalist economy throughout the whole of China” (“The Class Nature of the Chinese State,” January 1999; emphasis in original). This position is a threadbare “theoretical” rationale by which Slee and his colleagues justify their longstanding support for counterrevolutionary forces directed at China in the name of “anti-Stalinism.”

As we previously noted, even before the DSP formally claimed that China had become capitalist, these anti-Communist social democrats were supporting all manner of counterrevolutionary forces directed against the Chinese deformed workers state. The DSP raised the call for self-determination (i.e., independence) for Taiwan, the island statelet ruled by the offshore Chinese bourgeoisie under the military protection of U.S. imperialism. It lauded the pro-imperialist “trade-union activist” Han Dongfang, director of the Hong Kong-based China Labour Bulletin and darling of anti-Communist circles in Washington.

Chinese workers are indeed being “ruthlessly exploited in capitalist sweatshops” set up under Beijing’s “market reforms.” But Slee’s complaints are but an echo of the anti-Communist protectionism of the pro-imperialist union bureaucracy and Australian Labor Party. The DSP is such a fervent advocate for “democratic” imperialism that it openly called for Australian troops to invade East Timor in 1999 and to this day refuses to call for their withdrawal!

The role of Solidarność in Poland demonstrates that the imperialists, utilizing the services of their labor lieutenants, are capable of cynically manipulating the discontents and legitimate grievances of the working class against a Stalinist regime for their own reactionary ends. When Stalinist bonapartist rule in China collapses—and it will—Trotskyists will have to continue, under changed circumstances, the political combat against elements fomenting anti-Communism and preaching the virtues of Western-style “democracy” in the reawakened Chinese workers movement.

Slee maintains that the significant socioeconomic development of China during the post-Mao “reform” era, which saw the highest rate of economic growth of any major country, has had “catastrophic” consequences for the Chinese working class. Contrary to his unsubstantiated assertions, China’s working class as a whole has not experienced absolute economic immiseration since the country was opened to large-scale industrial investment by the offshore Chinese bourgeoisie and Western and Japanese corporations. Quite the contrary.

What is true is that there has been an enormous widening of economic inequalities between a layer of capitalists and an increasingly affluent petty-bourgeois stratum made up of government functionaries and managerial/administrative/technocratic personnel on the one side and the working class and peasantry on the other. It is also true that the 20 to 30 million workers, disproportionately women, who were laid off from small and medium-sized state-owned enterprises when these were privatized, restructured or closed down in the mid-late 1990s have suffered real economic hardship. However, the large majority of China’s urban workers and also peasants have experienced a considerable improvement in their living standards since the end of the Mao era.

When Mao died in 1976, over three-quarters of the labor force was engaged in farming and over 80 percent of the population lived in the countryside. Today, over 50 percent of the labor force is employed in manufacturing, construction, transport and the service sector, and 40 percent of the population is urbanized. From a Marxist standpoint, this is a progressive development of historic import. So, too, is the corresponding quantitative and qualitative expansion of China’s industrial capacity. Over a hundred million peasants, especially young men and women, have escaped from the squalid poverty and cultural barrenness of rural life and become an integral part of an urban industrializing society. Even those working under sweatshop conditions in the Pearl River and Yangzi River deltas are materially much better off than their parents and siblings who have remained on the family farm.

All of these facts demolish Slee’s false equation of today’s China with Russia following the collapse of the Soviet Union, where capitalist counterrevolution has inflicted massive economic devastation and social degradation. At the same time, “market reforms” have bred ever-sharpening contradictions, setting the stage for a social explosion. A proletarian political revolution that ousts the Stalinist bureaucracy and establishes a government based on workers and peasants councils would radically restructure and reorganize China’s economy in the interests of the workers and rural toilers. It would reintroduce centralized planning on a rational basis and reinstitute a state monopoly of foreign trade while working toward an egalitarian redistribution of income and wealth.

Undoubtedly, such a regime would face bitter opposition from the imperialists, from economic blackmail to military belligerence. But no less certainly, proletarian political revolution in China would serve as a base for the struggle for workers revolution against the capitalist-imperialist system internationally, smashing through the lie of the “death of communism” fostered by the imperialists and their “leftist” tails following the destruction of the Soviet Union.

China remains a relatively poor country, a condition aggravated by hostile imperialist pressures. To raise China’s populace to the socioeconomic level of the First World and then above that level is possible only through proletarian socialist revolutions in the advanced capitalist countries (Australia being a junior member of the First World club). In order to build Leninist-Trotskyist vanguard parties capable of leading such revolutions, it is necessary to politically defeat the pro-capitalist labor bureaucracy, the agents of the bourgeoisie within the workers movement. The pernicious role of groups like the Australian DSP lies in providing a left cover for the anti-Communism and imperialist chauvinism of the labor lieutenants of capital in their respective countries.


Workers Vanguard No. 894

WV 894

8 June 2007


Germany: For Mass Working-Class Protest Against State Repression!

Down With Police Terror Against Anti-G8 Demonstrators!

Down With the Witchhunt Against the "Black Block"!


Public Services Strike Shakes South Africa

Workers Fight Neo-Apartheid Misery


Full Citizenship Rights for All Immigrants!

Democrats, Republicans Push Vicious Anti-Immigrant Bill


ILWU Longshore Workers Honor Antiwar Picket Line



Trotskyist Opposition to World War II

(Quote of the Week)


Death on the Tracks: Toronto




Defend Róisín McAliskey!

(Class-Struggle Defense Notes)


Again on Why China Is Not Capitalist



On Student Protests in Greece

Trotskyists Say: Down With Government Attacks on Higher Education!


SYC Campus Protests Demand: Free Mumia Now!

(Young Spartacus pages)


German Trotskyists on World War II

German Imperialism and the Lie of "Collective Guilt"

The Red Army Smashed the Nazi Regime!

Part Two




Speech at Berlin Rally

Mumia Abu-Jamal: The Frame-Up of an Innocent Man