In this text we pay tribute to the effort and merit of comrade "Cuate" who has placed his finger on a crucial issue that is the role of China and its location in the world class struggle. In chapter 9 of his book "China, state capital, private sector and insurgent workers" Cuauhtémoc makes an extraordinary contribution that becomes more important considering the intense debate in all economic and political circles, the imperialist circles and bourgeois analysts who talk about the "commercial war" between the US and China. China and the US are enemies? Are they going to war? And also considering this work of Cuauthemoc we can ask ourselves: Are we in the presence of a dispute between the largest imperialist state, against a workers state?

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It is true that, as "Cuate" says in his work, China has registered high growth rates for several decades. But that growth, after the outbreak of the sharp peak of the global crisis of capitalism in 2007, stopped. Since 2012, the Chinese GDP began its fall and the crisis has placed China for three years in recession. In this way, the Chinese economy is driving a strong recessionary trend in the global capitalist economy as a whole, and this element acting as a factor that worsens the global crisis of capitalism.

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In his analysis of China, Cuauhtemoc gives particular importance to what proportions of China's economy is in the hands of the state, and how much in private hands. We can summarize Cuauhtémoc's analysis as follows: Most of the land in China is in hands of the state, most of the industry is also in the hands of the state, banking is majority in hands of state, small and medium enterprises also, the private part in China it’s small, therefore, China is still a workers 'state, degenerate, because it is governed by a bureaucratic dictatorship, but it’s at least a worker`s state. Moreover, says Cuauhtemoc, the economic advance of China in recent decades was not financed by imperialist investment, but by the investment of peasants, and domestic savings. But the question that immediately arises from the reading of this work is: Is it correct to define the character of a state by the quantity of state and quantity of private the economy contains?

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The method to define the class character of a state

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The method used by Cuauhtémoc to define the class character of the Chinese state can lead to erroneous conclusions. If we use that method to analyze other states throughout history, we can arrive to wrong definitions. For example, if with this method we analyze the USSR in its first 11 years between 1917 and 1928, it is not clear if we can qualify it like a workers state. Lenin and Trotsky did not expropriate the bourgeoisie immediately after taking power in the Russian Revolution. Then during the civil war if they do, but later, under the economic plan called the NEP in 1921, they encourage private investment. That is to say, the proportion of state economy and private economy of the USSR during those eleven years changes all the time, and the state economy in that historical period is not always predominant. With this criterion, the USSR can only be defined clearly as a worker’s state when it takes the reins of the Stalin country to impose forced collectivization, starting in 1928, just when the worker`s state begins to degenerate.

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Let's take another example. With the method of observing how much of the state, and how much of private there is in the economy, we can confuse the fascist states with workers states. The regimes of Mussolini and Hitler, has tended to nationalize vital branches of production so that the fascist state had absolute economic control of the country's infrastructure. However, despite the fact that the economy was a state majority, the fascist states were capitalist states, and the USSR of the first 11 years was a workers state. There are many examples of other states to which we can define them erroneously, if we adopt the method of observing how much of the state and how much of private there is in its economy. And the question is how to define a state. How do we define it?

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To correctly define a state we must answer the following question: For what social class does the state govern? If the state rules for multinationals and monopolies, for capitalist profit, it’s a bourgeois state, even if it has its nationalized economy, as happened with the fascist states. If it’s a state that governs for the working class, its center is the development of the proletarian revolution on a national and international level, it is a workers' state, although a large part of its economy is private.

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That is, the method of observing how much of the state and how much of private there is in the economy, can lead us to completely erroneous conclusions. Lenin and Trotsky to build the first workers' state in the history of humanity, had as their center the impulse the world revolution, and in that framework, they considered the expropriation and the nationalization of the economy as a tactical problem. At the beginning of the construction of the USSR they made enormous economic concessions to the bourgeoisie and world imperialism, but at the same time they developed the III International and put all the strength of the state and its resources, the Army and the state machinery in defending the workers state and develop the world workers revolution.

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We do not define the USSR of Lenin and Trotsky as a worker’s state because most of its economy is state-owned, but because the state apparatus is at the service of defending the working class and extending its revolution to the other capitalist countries. If we apply this criterion for China we must ask ourselves: For what social class does the state of China govern? And the answer is categorical: It is a state whose machinery, resources and army are at the service of the profit of multinationals and imperialist monopolies. It is a fundamental pillar of world capitalism, because the violent force of the machinery of the Chinese state is at the service of achieving the highest labor exploitation rates in the world.

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The Chinese state's method is the violent repression of the working class, the illegalization of their organizations, and the persecution, kidnapping and killing of all those who face the Chinese PC dictatorship. Thus, with a brutal dictatorship, it’s like China achieved the most important rates of exploitation of workers. And that's how he managed to become a true "paradise" of the monopolies that did not achieve in their countries where they have their central office of the companies, the exploitation rates that they did in China.

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The Chinese state is bourgeois and capitalist, because it works to achieve the greatest exploitation of human labor at the service of the profits of the Global Conglomerates that dominate the world capitalist economy. And this is true even if China carries out this work with a red flag, although it is said to be a socialist, although it builds many statues of Marx and Engels, and although the party that leads the state is called the Communist Party. And even, although part of its economy remains nationalized. All the "worker and socialist" fetishism of China is at the service of covering and hiding a horrendous dictatorship of the monopolies, which have a very important part of their investments in China.

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The Chinese economy is in the hands of the imperialist monopolies

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The "workers' and socialist fetishism" of the Chinese state causes a tremendous confusion in sectors of the world vanguard. The entire location and presentation of the Chinese state, like the Cuban one, tries to make the masses of the country and the world believe that they live in a different state from the bourgeois states. The "worker’s and socialist fetishism" of the Chinese state with its red flags, the name socialism in its constitution, the statues of homage to Marx and Engels, the election of the Central Committee and its "Communist Congresses" seek to deceive the true meaning of the state, and the interests it defends. But the "worker’s and socialist fetishism" of the Chinese state is not only political, it is also economic. And a fundamental part of that "fetishism" is the existence of huge Chinese state-owned companies, their banks and corporations that pretend to believe that China is independent, worker, and controls its own economy.

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The reality is very different. Just as the political "fetishism" of the Chinese state seeks to hide its exploitative and bourgeois character, China's huge "state enterprises" cause confusion about the penetration of private capital and the domination of imperialism in China's economy. It even leads to Marxist sectors to argue that China is a "new imperialism". The reality is that these huge "state enterprises" are not such, and are penetrated up to the hilt of imperialist capital. All Chinese companies and brands are associated with imperialist capital. In China Google is not the most important computer company, the computer company that dominates the economy is called Alibaba. And his owner, Jack Ma, is associated with Donald Trump's son-in-law, Jared Kushner in a fund of investment called Cadre. This company is backed by the financier George Soros and BlackRock, a gigantic investment fund that is the facade of the Bank of America. Is the "commercial war" that Trump declares to China to be to the failure of the business of his daughter's husband? It is unlikely, because Jared Kushner, Jack Ma and Donald Trump share partnerships and businesses.

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That is to say, the Chinese "fetishism" is also to hide the deep relations existing between the maximum oligarchs of the Chinese CP, with the officials and owners of the Global Conglomerates that dominate the world economy. How does imperialist capital get to China's economy? Foreign Direct Investments (FDI) comes to Chinese territory from Hong Kong, an island that was a British colony, and is an enormous "tax haven". From 1980 the government of Deng Xiaoping used Hong Kong as a platform for the creation of "special economic zones" where capital enjoys all the benefits, from which the FDI and the imperialist capital had all the political facilities to appropriating the Chinese economy. Cuauthemoc has a completely wrong analysis of Hong Kong and its role in China's economy.

 

For Cuauthemoc, Hong Kong is not part of China, its stock market is not part of the Chinese economy. In his point of view the Chinese stock exchange is small, and its profits go to the state. So he puts this quote in his paper: "If we add the stock market capitalization totals of the two Chinese Stock Exchanges we have a total of $ 265.82 billion dollars (2008), while the total of the Hong Kong Stock Exchange is of 212.88 billion and Tokyo, much higher, of 392.5 billion ... oddly, the combined value of both Stock Exchanges is much smaller than that of Tokyo (and that without considering the other five smaller Japanese exchanges).This fact by itself indicates that, among the huge profits of Chinese companies, only a relatively small part is put up for sale on the Stock Exchanges and, consequently, is subject to the laws of the financial market. Most of the huge profits of Chinese companies go to the state coffers and, eventually, are reinvested through public spending”.

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That is to say for Cuauhtémoc the two Chinese stock exchanges are "smaller than Hong Kong" and the huge profits of Chinese companies go "to the state". The problem is that Hong Kong is part of China. And therefore China has three stock markets not two. One is the Shanghai Stock Exchange, the other is the Shenzhen Stock Exchange and the third is the Hong Kong Stock Exchange. The Hong Kong stock exchange works as a team with the Shanghai and Shenzhen stock exchanges and the imperialist capital, the FDI, flow quietly and legally out there. After the defeat of the 1989 masses in Tiananmen Square, the whole process of FDI penetration accelerated, and with them, the benefit of the imperialist Global Conglomerates became so important, that British imperialism returned Hong Kong to China in 1997

 

No empire delivers an island to a country, unless it considers that its profits are protected and in good hands. With the transfer of Hong Kong to China more than 20 years ago, the British Empire facilitated at the oligarchy of Chinese PC magnates, business creation and enrichment. In other words, to know how much capital enters to China, we must add the two stock exchanges of Shenzhen and Shanghai with the stock exchanges of Hong Kong, with which the mass of capital that goes to China, far exceeds the values ​​of the stock exchange of the 3rd world economy that is Tokyo in Japan.

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All this without mentioning a fact missing in the work of Cuauhtémoc: The existence of "Shadow Banking" of China, which was built from Hong Kong. The union of Hong Kong with the economy of China was constituted from the conversion of the Chinese PC oligarchy into magnates. An example is Jiang Zemin, General Secretary of the Chinese CP and leader of the country during the decade of the '90s, who carried out money laundering operations from Jiangsu Province through projects financed by the central government. In this way, Zemin designed the privatization plan of the state enterprises through state loans for the association of the Chinese state corporations with the imperialist global conglomerates.

 

This association reached such a magnitude that the son Jiang Zemin, Jiang Mianheng, created in 2002 the Grace Semiconductor Manufacturing Corporation, in which he placed as an advisor to Neil Bush, brother of George Bush, the then president of the United States. The privatization of state-owned enterprises paved the way for the transfer of the PC hierarchies from their private assets to Hong Kong, which contributed to a greater money laundering that allowed, for example, the son of the Chinese leader, Jiang Mianheng, take over the companies China Netcom Telecommunications Limited, the Shanghai Automobile Industry, the Shanghai Information Network, and the Shanghai Airport Corporation, just to mention some examples.

 

This was how the oligarchy of the Chinese Communist Party appropriated and privatized all state enterprises in association with the Global Conglomerates. The grandson of China's leader, Alvin Jiang, graduated from Harvard and was a Goldman Sachs official, from where he created the Hong Kong-based Boyu Capital, which attracted high- profile investors such as the wealthiest man in Asia, Li Ka- Shing, and the sovereign fund of Singapore, Temasek Holdings Private Lted.

 

China's entry into the World Trade Organization in 2001 facilitated the flow of FDI, which is verified in the cold figures of foreign investment in China and the structure of its Corporations. All this process caused the largest Chinese state companies to become companies deeply associated with imperial capital and extremely dependent on it. Only by analyzing the first five state companies that dominate China's economy do we observe how imperialist capital penetrates into them.

 

The 1st company in China, the oil company SINOPEC, is associated with Exxon and the JP Morgan Chase Multinational Corporation. Exxon and JP Morgan Chase carried out investments in the SINOPEC oil company of more than 3 billion dollars since 2005 to triple the capacity of the Fujian refinery from 80,000 barrels per day to 240,000. The oil company SINOPEC is shown to the world as a "Chinese state company" but in reality the entry of Exxon into SINOPEC allows it to dominate the US oil company over vast regions of the country. Exxon seeks to build a petrochemical complex, and the fuel commercialization that will manage 750 service stations and a network of terminals in Fujian, one of the provinces that first went to capitalism, and where a "special zone" for private enterprises was established in Xiamen, vital port for export.

 

FDI stocks to China by country and flows by activity sector

Main investor countries 2016, in%

 

Hong Kong             69,0

 

Singapur                   5,0

 

Corea del Sur           4,0

 

Estados Unidos        3,0

 

Macao                      3,0

 

Taiwán                      3,0

 

Japón                       3,0

 

Alemania                  2,0

 

Reino Unido             2,0

 

Luxemburgo             1,0

 

The table shows the composition of the imperialist investments in China. The largest amount comes from Hong Kong. Source: UNCTAD, 2015

 

The 2nd largest state-owned company in China is the energy company StateGrid, a monstrous industrial conglomerate that controls China's gigantic electricity grid. This network is very backward and in several of its parts is about to collapse, which is why StateGrid entered into an agreement in 2011 with the North American Corporation General Electric (GE) through the company Wuhan Nari, which belongs to the StateGrid group. GE's strategic agreement with StateGrid seeks to modernize China's electricity network with an investment of more than 100,000 million dollars, which is earmarked for smart networks in the first place, and then for all networks. In this way the 2nd company of China will have financing of the company founded by Thomas Alva Edison, who associated with Banca Morgan will finally rename the company as General Electric.

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The 3rd largest company in the country is the National Petroleum Corporation of China (CNPC). CNPC created in the year 2000 the company Petrochina Company Limited established as a private company with the legal status of Limited Liability Company. This legal figure allowed Petrochina to trade on the stock exchange, but at first it was not listed on any of the two Chinese exchanges, but it was listed directly on the New York and Hong Kong Stock Exchanges. Under the Public Limited Companies Act, promulgated by the Chinese PC to privatize state companies, CNPC controls 86% of Petrochina, and 14% of the remaining shareholding consists of H shares for foreign investors that were used to be bought and to obtain parts of the company, by millionaires like the american Warren Buffet and the corporations like Berkshire Hathaway and Wells Fargo, which he controls.

But the rest of the type A shares, which make up 86% of the share package for Chinese citizens only, tripled their value after Petrochina started trading on the Shenzhen and Shanghai Stock Exchanges in 2007. Clearly the "Chinese citizens" hierarchies of the PC or linked to the oligarchy of officials and new rich of China, commercialized those actions, obtaining the corporations of the world enormous profits at the expense of Chinese companies and workers.

 

In 2015 CNPC President Zhou Jiping was awarded by the Association of Engineers of Texas, for his "contributions" to the development of the industry, while the profits provided were so great that PetroChina gained wide recognition in the international capital market by the American Petroleum Intelligence Weekly; Business Week and received the award as "the most profitable company in Asia in the year 2006".

 

The 4th company in China is the one of telephone and telecommunications called China Mobile Hong Kong that supposedly is a "state" company. The detail is that the company is domiciled in ... Tortola, British Virgin Islands, an island that is under the rule of British Empire. The emergence of China Mobile Hong Kong marked the milestone of being the first major privatization of state companies in 1997, the beginning of the restructuring and the inclusion abroad of large state-owned companies directly under the State Council of China. The privatization and emergence of China Mobile Hong Kong was the largest privatization operation in Asia in 1997, and was carried out by a Chinese investment bank founded 2 years earlier, in 1995, called China International Capital Corporation Limited (CICC). CICC is one of China's leading investment banking companies that was founded on an agreement between the China Construction Bank and the US Morgan Stanley Multinational Corporation. The first Chinese-foreign mixed investment bank emerged in 1995, with China Construction Bank and Morgan Stanley as its largest shareholders, with a share of 42.5% and 35%, respectively.

 

The 5th company in China is the Industrial and Commercial Bank of China (ICBC). The ICBC became the largest bank in the world thanks to the support that 3 "strategic investors" in 2006 injected 3,700 million dollars. Those 3 "strategic investors" of the ICBC are, first Goldman Sachs the North American Global Conglomerate that made its biggest global investment, then the Dresdner Bank the 2nd bank of Germany and then and then American Express from the USA We can continue doing the analysis of the rest of the Chinese companies, which show a similar capital composition. That is to say, Cuauthemoc's scheme that the majority of China's economy is state-owned collapses as soon as it scratches a bit inside those Chinese state enterprises.

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Chinese state enterprises are strongly associated with imperialist capital, and the interests of the oligarchy of Chinese PC magnates are deeply linked to the interests of the officials of the imperialist Global Conglomerates. The grandson of the leader of "Communist China" is an official of Goldman Sachs, the oligarchs of the Chinese CP create private companies with legal domicile in tax havens such as Hong Kong or the British Virgin Islands, the state companies create private companies that are quoted on the Stock Exchange of New York or Hong Kong. And through all these mechanisms, imperialist capital is penetrating state enterprises.

 

China and the US associated by the "twin deficits"

 

The "twin deficits" of the US, the fiscal deficit and the trade deficit are the support of the entire capitalist imperialist world economy since the end of the II World War. China has played a key role in financing these twin deficits for 30 years. In "The End of the Corporations" we explained that the "twin deficits" of the US allowed the world imperialist capitalist system to emerge from the grave post-war crisis, and to form a new global regime of capitalist accumulation known as the "welfare state" or “Keynesian regime” of capitalist accumulation based on the contribution of the US state to the capitalist reconstruction of Europe, known as the "Marshall Plan".

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The "Marshall Plan" allowed the US monopolies to dominate the world economy. It was a gigantic investment of the North American state that triggered the US fiscal deficit, thus constituting the "first deficit". On the basis of the US- Europe axis of accumulation, and once the United States monopolies were established globally, multinationals began to produce goods for the world market, and especially for the United States market. The massive entrance of products to the North American market exported by the North American companies in the postwar period, created the "second deficit", the commercial one. Both deficits, known as "twin deficits", sought to secure the profits of multinationals and are the support of the entire capitalist world economy for 70 years.

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When the process of exhaustion of the Keynesian accumulation regime and the capitalist multinationals began, around the decade of the '70s, world imperialism sought to create a new regime of accumulation, which we now know as "Globalization". Global Conglomerates emerged and around their growing dominance of the economy, the international division of labor was also modified with an axis of accumulation based on the US- Japan tandem and Southeast Asian Tigers (Thailand, Malaysia, Korea, Singapore, etc). In those countries and in that region of the world, world imperialism found exploitation rates higher than those of the European working class.

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The crisis of Japan in the 90's changed the configuration of the accumulation regime of Globalization. During the decade of the 90's, due to the high rate of exploitation located in China, the accumulation axis became the US-China, and the US and G7 multinationals, installed in China, made large profits thanks to the high rates of exploitation of cheap labor. In China, slave and semi-slave labor, the "sweat shops", the long and exhausting working hours that allow a huge rate of workers' superexploitation were consolidated.

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Thus, for the imperialist multinationals to settle in China was an invitation to manufacture very cheap with which, the goods "made in China" flooded the world market as an expression of the conversion of a predominantly peasant country, in a huge factory, where multinationals enjoy all the privileges. China became a world pillar of capitalism and multinationals through a brutal repression 0of the state and the dictatorship of the CP that prevents the workers and the people the most minimal democratic rights to assembly, claim, mobilization or unionization, while their leaders become millionaires and bourgeois oligarchs.

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The multinationals settled in China and then secured their profits by placing their products in the US market. In this way, the US trade deficit that used to be mainly with Europe, was now largely made up of China. But the US imposed an agreement whereby in exchange for the installation of the North American multinationals, the Chinese state undertook to buy United States Treasury bonds. As a result of that China agreement, it became the main holder of US Treasury bonds with 1.15 trillion dollars, surpassing Japan that has 1.09 trillion. In this way the Chinese state became the most important financier of the US state.

 

At the base of this financial collaboration is the association of the US Corporations with the Chinese PC oligarchy. The society of both ruling classes transformed China into a "junior partner" of the United States. That is to say, the US state issues bonds that China buys, with which, China finances part of the US fiscal deficit. A large part of the capital that "leaves" the US to invest in China, and "returns" to grant funds to the US Treasury, which allows financing a part of the state deficit and feeds the capital flow circuit between both countries by concentrating an extraordinary amount of capital for direct investment, as well as the development of a huge fiscal surplus due to its privileged nature as a "minor partner" of the US. China became a "sub-metropoli", that is, it acts as a seat of imperialist capital that is redistributed with global investments.

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China exports capital globally from Chinese companies, under the protection of the Chinese state. It acts by "outsourcing" the flow of imperialist capital and expands it, with which the PC oligarchy extends its business, a fact that has led many analysts and commentators to define China as "imperialism". Nothing is further from reality. The Chinese PC oligarchy expands its investments worldwide as part of its status as junior partners of the imperialist Global Conglomerates. The category of "Sub-Metropoli" is when a capitalist country that is under the domination of imperialist capital, concentrates a size of investment and capital of such magnitude that it becomes an exporter of capital and products.

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This differentiates it from a semi-colony, which is also under the domination of an imperialist power, but in a still lower situation because it does not possess the magnitude of capital and investment that gives it the capacity to export capital in large quantities. China is a sub-metropolis, as Brazil, India, Russia and South Africa, the so-called "BRICS" countries, tend to be too. China exports products and capital all the time, its state-owned companies and banks set up and finance projects globally, but under the domination of the imperialist Global Conglomerates.

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The development of Chinese capitalism and its contradictions

 

One of the reasons that leads Cuauthemoc to define China as a workers state is the size of the bourgeoisie, which he considers small, as he puts it in the following quote: "... there are 11 million millionaires in the world (people who have more than one million dollars, apart from their residence), of which 3,104 million are in the US and in China there are 562 thousand. Brazil has 165 thousand. In Mexico, according to WealthInsight, there are 145 thousand millionaires. Another source argues that in 2009 in the US there were 7.8 million. The Chinese bourgeoisie, in a country with an economy that has a volume almost as large as the US, is six or twelve times smaller than the Yankee. Its social weight is still much smaller, if we consider the population. To take the weight of the American, the Chinese business would have to reach a number between 13-27 million. But, remember, it's barely half a million. "

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That is, for Cuauthemoc China it should have between 13 and 27 million millionaires to be considered capitalist, but since it has only half a million, this figure places it outside that category. However according to the study of the Boston Consulting Group there are 1,240,000 millionaires in China. Since the beginning of the global crisis of capitalism in 2008, the bourgeoisie grew by 65%, with which China became the second country with more millionaires on the planet with a wealth calculated at 152 billion dollars. The Chinese bourgeoisie is now 1% of the population, which is no longer different from the rest of the capitalist nations.

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The US remains the richest nation with 7,135,000, but China can never have a similar figure for a very simple reason: China is a capitalist country, but it is not an imperialist country. United States yes it is. Therefore, China cannot have the same proportion of bourgeois as the United States. But even taking into account that China is a sub-metropolis, and it is not an imperialist country, it has a huge number of bourgeois who place it among the most important capitalist countries in the world.

That is, and to finish defining what is China, we speak of a country that has a Central Bank that buys and treasures US Treasury bonds. Their Corporations are associated with the Imperialist Global Conglomerates, domiciled in tax havens under the control of the United States or Great Britain.

 

The ruling class is composed of almost one million 250 thousand bourgeois and oligarchs, 1% of the population, composed largely by the hierarchy of the PC, become millionaires in partnership with the imperialist corporations. The members of that oligarchy and its circles are linked to officials of imperialist corporations such as Goldman Sachs, JP Morgan Chase or others. It is an oligarchy that has as its central objective the association with imperialist capital, with Wall Street, and its Global Conglomerates, for which China is a "sub-metropolis", that is, it concentrates and exports capital in its capacity as a lesser member of the imperialist capital.

 

Nothing indicates that China is a workers state. We have already seen that the state is not defined by the amount of state or private property that exists, but by the social class serving the state machinery. And from the point of view of the Marxist definition of the state, the state machinery of China is at the service of the capitalist Global Conglomerates. But even observing also how much of private and state capital there is in the economy, of the enormous masses of capital invested from Hong Kong, or Taiwan, of the number of bourgeois that grows incessantly. China is a capitalist state, a capitalist sub-metropolis with a strong development that was carried out under the impulse of the imperialist Corporations, with the consent of the imperialist Corporations and for the benefit of the imperialist Corporations. The characterization that China is a deformed workers state does not correspond to any fact of reality, and must be corrected to understand the reality of China and its role in the world imperialist capitalist system.

 

The serious crisis that is occurring in China

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But it must be corrected not only because of that. It is necessary to correct and place in its proper place the character of the Chinese state and its role in the world capitalist economy to understand the implications that the serious crisis facing the Chinese economy has now. Because if China became for 30 years a pillar of the world capitalist system now can becomes a factor of its collapse. Since the sharp peak of the global crisis of capitalism in 2007, the Central Banks of the most important capitalist countries have injected around 30 and 35 trillion dollars as bailouts to rescue the Global Conglomerates that broke down massively. The maneuver saved the Global Conglomerates but aggravate all the contradictions of the world imperialist capitalist system.

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In China, exactly the same has happened. China has made bailouts for about 6 billion dollars, and in this way the Central Bank of the People of China has carried out the largest injection of masses of capital as salvage, from all over the world, surpassing the bailouts made by the European Central Bank, or the US Federal Reserve, for example. From these events, China's economy has begun to plunge into a deep crisis, which can severely hit the whole capitalist world imperialist system.

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For almost 20 years, China's economy grew, achieving a GDP with a rate of between 10% and 12% per year. During that time, imperialist investments settled in China, taking advantage of the high rate of exploitation and surplus value provided by the PC dictatorship that violently repressed the young emerging working class. China produced monumental quantities of merchandise ready to be exported to the whole world and became the world's largest exporter, which developed a colossal port pole composed of more than 200 ports along the coasts of China's seas contiguous to the Pacific Ocean. At the time when China's GDP grew at a rate of between 10% and 12%, the world economy grew with a GDP at a rate that ranged between 4% and 5%.

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Fulfilling the laws of capitalist accumulation, while accumulating a gigantic mass of capital, China simultaneously developed a powerful working class constituted by hundreds of millions of workers, a young emerging working class that was violently repressed by the PC dictatorship. The same phenomenon was reproduced in India, and in all the countries of South-East Asia, regions where 50 years ago, there were no powerful proletarians that exist today.

 

But after the outbreak of the sharp peak of the crisis of world capitalism between 2007 and 2008 the world economy collapsed at -2% per year. The negative rates of the global GDP could have been worse, if not for the monstrous bailouts injected by the Central Banks of the main capitalist countries. World trade collapsed. After the fall of Lehman Brothers the volume of world trade collapsed in free fall of 12,500 points of Baltic Dry to 700. This meant a brutal blow to the Chinese economy, whose column is world trade and export.

After the monumental bailouts, the global GDP came out of the negative indexes, but suffered a reduction of between 25% and 30% bordering the recession.

 

Global GDP indexes today oscillate between 2% and 3%, a weak and mediocre growth, baptized by the head of the IMF Christine Lagarde as "the new mediocrity", that is, a perspective of low economic growth for a long period. With this panorama, China's situation changed completely. Enormous portions of its economy remained in idle state, the accumulated capital began to undergo decapitalization and losses, began the closure of businesses, bankruptcy, and poverty and misery extended to sectors of the urban population gathered next to the cities.

 

It did not take long to spread a wave of strikes. Accompanying the process of strikes that broke out around the world against cuts in wages, pensions and jobs, poorly paid workers, in China the young working class went on strike directly to face exploitation, achieving double-digit wage increases. Only in Shenzhen in 2014 the Foxconn company, Taiwanese property and largest supplier of electronic material in the world, faced a strike of almost half a million workers, which produce millions of Apple iPods and iPhones, as well as computers and mobile phones for brands such as Nokia, Dell and Sony. The death by suicides in Foxconn unleashed a national scandal, led to an immediate 30% increase in wages of less than 100 pounds sterling a month, and helped to generate job abandonment in factories and suppliers of Honda, Hyundai and Toyota, in addition from other production centers throughout China.

 

The strikes were organized by telephone and on network forums outside the official structures, and the impact on the globalized chain at the heart of China's high-tech export sector was very strong. From there began an unstoppable escalation of minimum wage increases, and the strikes put sectors of the Chinese PC oligarchy on the defensive, granting strong increases in the minimum wage to calm the masses and prevent an insurrection. The uprising in the Guangdong of the Chinese working class, put red-hot all the contradictions of the capitalist economy, and led the oligarchy of the PC to deepen a political and economic course that can exploit the world capitalist economy

 

The largest real estate bubble in history

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The bailouts implemented by the People's Bank of China not only did not resolve the crisis, but aggravated it. After injecting trillions of dollars, China's economy fell into recession, which is calculated at a rate below 7% due to the size of the Chinese economy. China currently registers a rate of 6.5%, despite the fabulous injection of money that was used to fund the banks, which used it to do business granting loans for homes. All provinces and local governments opened offices to grant these loans. Millions of Chinese came to access real estate loans, taking advantage of the very low interest rates, the cheap price of the national currency, the yuan, which triggered the construction fever throughout the country.

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But construction fever ignited inflation, housing prices, construction materials, cements, bricks, cables, all prices were pushed upwards and due to the high demand started houses began to suffer an upward trend, despite government policies to curb the price boom. The most scandalous figures are recorded in the southern island of Hainan, with increases of 64.8% for new housing in Haikou, the capital. And with increases of 50.4% for second-hand houses, after in December the local government decided to turn the island into an international tourist center.

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With the increase of prices, in a country of very low wages, the population could not pay the loans. The Financial Times began to denounce since 2010 that the Chinese housing bubble was worse than the one that exploded in the US in 2007. The empty apartments, of families that cannot afford them, were increasing day by day, accumulating a huge mass of uncollectible. The price of Chinese homes soared to 27 times that of average incomes, five times more than the global average. The local governments had great benefits for the sales commissions, to which was added the development of a huge capital market, called "shadow banking"

 

In order to face its growing debts, a sector of the Chinese population sought help in the illegal finances, which the PC hierarchies encouraged in their provinces to give loans. Millions borrowed money at a very high interest rate from these shadow banks, which began to transform into 50% of the total bank loans issued. In turn, the Chinese bank in partnership with shadow banking issued financial instruments called WMP (Wealth Management Product in English), which contained those millions of mortgages that were sold throughout the country. The Chinese bank did the same as the Global Conglomerates that issued the CDO (Collateralized Bebt Obligation), the CDS (Credit Default Swap), or the MBS (Mortgage Backed Securities), which exploded the US economy in 2008 .

 

The WMP attracted capital from all over the world, and in this way, the Chinese government established a partnership between "official" banking and "shadow banking", based on the real estate sector that began to administer huge masses of capital. By July 2015 the Chinese stock markets collapsed, forcing the People's Bank of China (PBoC,

central bank) to implement bailouts via China Securities Finance Corp. equivalent to 160,963 million dollars, a monstrous amount of money, so that bankers do not break. The calculations of Global Conglomerates such as BlackRock, Credit Suisse and Bank of America warn that there is a monstrous bubble in China of around 15 trillion dollars, the largest in the world. Also in relation to China's GDP, it is a speculative bubble whose GDP / size ratio exceeds all existing ones, as it is higher than China's GDP of US $ 12 trillion.

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The monstrous China bubble is probably the largest over-accumulation of capital that is recorded on a product in history, in absolute and relative terms. It is equivalent to half of the bailouts that have been made since 2008 until now in the whole world by all the Central Banks, and it is one of the greatest dangers faced by the world imperialist capitalist economy. The bailouts initiated in 2008 have created dozens of real estate bubbles in Paris, London, Toronto, and some of the most important cities in the world have made global conglomerates such as Goldman Sachs and JP Morgan Chase deeper and more dangerous, the global inequalities between rich and poor, and have caused an unprecedented crisis of credit and money, the instruments on which all capitalism relies. But along with it, they have created a monstrous amount of debt in China, an over-accumulation of capital, based on the speculative bubble mounted on the country's real estate industry.

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One of the most grotesque expressions of the Chinese real estate crisis, and the irrationality of capitalism, are the development of the so-called "ghost cities", built across hundreds of kilometers away, which are found throughout the country, from Chenggong, in the eastern province of Yunnan, to the most famous Kangbashi District, in the city of Ordos, in the northern province of Inner Mongolia. They are megacities that are completely or partially empty, like the New City of Jingjin that imitates Paris, or Yujiapu, which imitates New York. They have monuments, walks, shoppings, sidewalks, squares, etc. They have the replica of the triumphal arch or the Eiffel Tower. But nobody lives in them.

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Next to thousands of square kilometers of buildings or empty houses, people live crowded in precarious houses that can barely afford the rent. Capitalism shows with the "ghost cities" of China all the horror and irrationality of a system that only lives at the service of profits. So that the real estate bubble does not explode, the Chinese state must guarantee that the construction of thousands of kilometers of houses and apartments continues, even if no one inhabits them. There are all sorts of crazy opinions about China's "ghost cities" from arguments that say they are a message to aliens, until they are a "flaw" of economic planning. But the only coherent explanation is that the Chinese capitalist bankers and entrepreneurs, associated with the capitalists of the US and the world, have set up a bubble from which they do not know how to get out.

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All the speculative bubbles in history have exploded, and above all, real estate. If the Chinese bubble burst, it can cause the collapse of the Chinese economy, and because of the importance of China and its link with the Global Conglomerates, it can blow Goldman Sachs, JP Morgan Chase, Bank of America, several economies of Southeast Asia and several Central Banks. There will be no bailout, nor enough money available to rescue the capitalist world if that bubble explodes. And the authorities of world capitalism, they know about this. All the leaders of the capitalist powers, of the main capitalist economies of the whole world, the capitalist economists, the heads of the central banks, all know that the bubbles explode, sooner or later. And they are desperately trying to make this bubble not explode, or at best, when it does, its effects are not devastating.

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The "Commercial War": The adjustment plan for China

 

When Donald Trump raises tariffs for Chinese products, the message of global imperialism for China is clear: "Export less." Exporting less means converting the whole economy, because China does not have an internal market with the capacity to absorb all the goods it produces for the 5 continents, and the United States. Furthermore, if China must adjust its production to the current reality of the world capitalist economy, it must close at least 70 ports, and with it, liquidate cities, entire branches of production linked to large-scale exports, which would affect cities, regions, whole, and generate a wave of bankruptcies and millions of unemployed.

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The only way to value such an accumulated capital that means the monstrous Chinese bubble is burning capital. But eliminating ports, cities, sectors of capitalist class, ports and machinery cannot be carried out peacefully. The only way to carry out such measures is through a civil war. The leaders of the capitalist powers are perfectly aware of what is happening and are clear about the course of the crisis in China. That is why they are pushing the Chinese PC oligarchy harder and harder, to dismantle the bubble they have set up.

 

Trade negotiations become endless, but the conclusion is clear: For imperialism, China's economy must adjust. But the economy of a sub-metropolis of 1300 million inhabitants that produces 30% of the merchandise of the world trade does not adjust as it fits any other economy. It is not enough to reduce health and education plans, or raises the retirement age. Nor do these measures solve the crisis of the imperialist countries, in any case, what Donald Trump, and the chorus of governments and managers of capitalism are raising for China, is what they have not dared to do in their economies. Donald Trump, Theresa May or Macron should have dropped their Global Conglomerates, they should have allowed them to go bankrupt, and that way General Motors, for example, had disappeared, and thousands of businesses, cities, ports, ships, and machinery too.

 

But that would have produced a huge social crisis in United States. The one that the scribes of capitalism, analysts, economists that defend capitalism and charlatans call “Commercial War" is not really such. The so-called "Commercial War" is the imposition of an adjustment plan, very complex and complicated, for an economy over which the Global Conglomerates have made a real disaster.

 

Not only a disaster by the capitalist speculation, also a disaster by the environmental damage and climate change. Those who want to see the prospect of Chinese and American ships launching missiles at each other, can expect sitting down something that will never happen. And those who want to see the crisis of China's economy, separated from the crisis of the American economy, will only see a fantasy. Given the unity and deep imbrication of the ruling classes of both nations, and the teamwork that both countries have been carrying out for 20 years as pillars and supporters of the world capitalist economy, one as an imperialism that dominates the world economy, and the other as a sub-metropolis, the crisis of the Chinese economy is only a constituent part of the capitalist crisis of the US economy.

 

The "threats" and tariff measures of the US to China are not those of a capitalist state to a workers state, they are not from a dominant state to an independent state. They are the claims of the owner to his junior partner, from the manager to the foreman, from the master to his captive. And it is the despair of both who have been taking measures like bailouts, and rescues, completely adventurous, critical and defensive measures of world imperialism, between the collapse of the capitalist economy, and the pressure of the mass movement.

 

The images of Paris in flames, taken by thousands of self-appointed demonstrators, would be only the prologue of what is coming in the world political situation. But the images of Paris in flames will be a film for children, next to what we will see when the China bubble explodes. The bailouts only managed to lengthen the time before these events happen, but they cannot prevent them from finally happening. And the task of the Marxists is to explain with the truth what is happening, to remove the lies and charlatanism of the capitalist politicians and economists and to remove the veil of falsehoods in order to clearly observe the truth of the present circumstances, and prepare ourselves for what it's coming.

 

With this work we want to contribute to this knowledge. Correct the definitions of Cuauthemoc, to understand more fully the situation of China and its role in the world economy. Also give an explanation to the crazy explanations that the US and China are going to war, when we are facing a serious crisis that is dragging both countries, that with their negotiations, and diplomatic returns, they only express their impotence in front of the disaster that they themselves have generated. Marxists must be prepared for the revolutionary tendencies that the crisis of capitalism is firing in the whole world, and even more so for those that are triggered as the crisis of capitalist China worsens, dragging the whole world.