17/10/2018 by socialistfight
Discussion article by Dov Winter.
Comments are welcome
It is hard to let go of defending a country that Trotskyists deem progressive after it transformed and become reactionary. This is true in particular in regard to the degenerated/deformed workers state. After the successful capitalist restoration in Russia and the Eastern European countries, it took most of those who called themselves Trotskyists years to concede that capitalism has been restored in these countries. A similar process is taking place in regard to China. Some Trotskyists still consider China to be at best a semi-colony, while in reality, China has been imperialist for some time. The transformation of China into an imperialist country is illustrated by China spending 83.9 percent or $734 billion on construction across the globe: “From 2005 to 2017, low and middle-income economies received 83.9 percent of the $734 billion spent by China on construction projects across the globe.” 
What kind of a semi-colony can spend $734 billion on construction alone? There is no doubt that the ENTIRE capitalist class in the US considers China to be its main imperialist competitor. It is reflected in the politicians’ speeches and every single article on China in the main capitalist press. Are they all wrong or lying, and China is just a semi-colony suffering under the weight of the mighty imperialist US?
If we consider Lenin’s criteria of imperialism, we can see, after analyzing the data on China, that China belongs to the imperialist camp. Here is Lenin’s criteria for what is an imperialist country:
“As long as capitalism remains what it is, surplus capital will be utilized not for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists, but for the purpose of increasing profits by exporting capital abroad to the backward countries. In these backward country’s profits are usually high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap. The export of capital is made possible by a number of backward countries having already been drawn into world capitalist intercourse.
“the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital”, of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; IN WHICH THE EXPORT OF CAPITAL HAS ACQUIRED PRONOUNCED IMPORTANCE; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.” my emphasis) 
The key criteria to be an imperialist country, according to Lenin, is to have a large surplus of capital; and to be able to export it to the colonies and semi-colonies; and to use the surplus capital to generate maximum profit via the super-exploitation of the masses in these countries. Few countries fit these criteria as well as the US and China.
Another fixture of imperialism is its ability to extract minerals and other precious materials from the semi-colonies that imperialism needs for its industries.
China fits all the above criteria for imperialism. To begin with, China ability to export a large amount of capital exists because the ruling class in China was able to 1. Amass massive amount of capital after the capitalist restoration in China, by using state capitalist measures such as the concentration of Chinese capital in central banks controlled by the ex-Stalinist bureaucracy that has become the new capitalist class in China. 2. The new ruling class could super-exploit the Chinese working class. This ability to exploit the masses in China, and use China as an “internal” colony, has become critical for the ability of the new capitalist class to amass a huge amount of surplus capital that could be used to invest abroad. This, of course, could not take place, without the defeat of the masses in 1989.
Capital export has been rising steadily from China, as China experienced the fastest economic growth in the last 20 years; an economic growth that is greater than any other country in the world. China’s capital export grew from $22 Billion in 2007 to $65 Billion in 2011 (UNCTAD: World Investment Report 2012, pp. 169-172.). China global output rose from 4.1% in 1991. to 14.3% by 2011.  By this time China became the world second largest economy, while the US’s share of global output declined from 24.1% to 19.1%. This is expressed by China expansion of its foreign exchange reserves. These reserves rose from $165 billion in 2000 to the staggering number of $3305 billion in March 2012, an unprecedented rise. 
China’s Annual outgoing FDI rose from $2.7 Billion in 2002 to $67.6 Billion in 2011.  It is interesting to compare China export of capital with the old imperialist countries. In 2007 France exported $2198 billion. But in 2011 its capital export fell to $1694 billion. Germany exported $164 billion in 2007. But its export of capital fell to $90 billion. Britain export of capital fell from $272 to $107 billion. US capital export rose from $393 billion to $396 billion, a very meager rise for the biggest imperialist country. On the other hand, China export of Capital rose from $2.7 Billion in 2002 to $67.6 billion in 2011. China export of capital rose dramatically while European capital clearly declined. The rise of China’s capital export is also clearly reflected in the rise of the Chinese super-rich. China is still behind the US in its share of the fortune 500 companies. The US has 132 companies, China 73, Japan 68, France and Germany 32 and Britain 26 (Fortune Magazine top 500 companies list in 2012). The fact that China has a bigger share of the fortune 500 companies than the European imperialist countries is not a minor point. It shows the clear transformation of China into an imperialist country.
China also has become the second most powerful military power after the US. But China has a more sophisticated approach to military subjection of semi-colonies than the obvious blatant approach of US imperialism. China builds roads and helps the semi-colonies with big loans, thus creating the best conditions for China to make the semi-colonies depended on Chinese imperialism.
Chinese imperialism in Africa
Chinese imperialism uses a smarter method to dominate the semi-colonies than the US. It employs a delicate approach that is more beneficial for it in the long run, than the outright vile method of the US, that give loans with a high-interest rate that forced countries to be depended on the US (IMF and the World Bank are US’s tools). But like any other imperialist country, one of China main objectives in Africa is to steal the precious resources of a given country:
“Chinese development finance, combined with the aid, aims at not only benefiting the local recipient countries but also China itself. For example, China’s ‘tied aid’ for infrastructure usually favors Chinese companies (especially state-owned enterprises), while its loans are in many cases backed by African natural resources, my emphasis. 
Here are a few examples to illustrate what Chinese imperialism does in Africa:
“In Angola in 2006, USD 4 billion in such loans probably helped Chinese oil companies win the exploitation rights to multiple oil blocks. In 2010, Sinopec’s acquisition of a 50 percent stake in Block 18 coincided with the disbursement of the first tranche of Eximbank funding, and in 2005, Sinopec’s acquisition of rights to Block 3/80 coincided with the announcement of a new USD 2 billion loan from China Eximbank to the Angolan government. In 2008, the China Railway Group used the same model to secure the mining rights to the Democratic Republic of Congo’s copper and cobalt mines.
“According to Debra Brautigam, a top expert on China-Africa relations, between 2004 and 2011, China reached similar unprecedented deals with at least seven resource-rich African countries, with a total volume of nearly USD 14 billion.
“the inclination is to allocate the aid budget to countries that offer China the greatest number of commercial opportunities and benefits. Since China’s top economic interest is Africa’s natural resources, aid decisions are inevitably skewed toward resource-rich countries while others receive less favorable consideration.” 
The picture that emerges is classic imperialist plundering of the semi-colonies’ natural resources, with a “soft” Chinese style. But ultimately, building roads and better infrastructure is a good strategy for effectively extracting the natural resources needed for Chinese factories. Good infrastructure is indeed very important for imperialism. It is a necessary tool for the exploitation of the semi-colonies.
The Graph above illustrated that China investment in Africa has been steadily rising (with the exception of the 2008 recession) while US investment has been fluctuating wildly. The data confirm without a doubt that the amount of Chinese investment in Africa has grown significantly, and it only can only take place because China is major imperialist power:
“Chinese FDI annual flows to Africa, also known as OFDI (‘Overseas Foreign Direct Investment’) in Chinese official reports, have fluctuated throughout the past decade. The most recent white paper on China-Africa Trade and Economic Cooperation  noted that between 2009 and 2012, China’s direct investment in Africa grew at an annual rate of 20.5%. Flows peaked in 2008 at US$5.5 billion (although this was a function of the purchase of 20% of the shares of Standard Bank in South Africa). As noted in the chart above, 2008 was also the only year in the past decade where Chinese FDI flows to Africa exceeded those from the U.S”, my emphasis). 
“Over the 2003-2014 period, flows of Chinese FDI into Africa increased significantly, peaking in 2008 and stabilizing over the 2011-2014 period (Figure 1). During this time, China’s FDI stock in Africa rose from $491 million to $32.4 billion[!]. 
An astonishing rise! China is in the process of overtaking the US as the main imperialist country in Africa. Figures about it do not lie. Those comrades who cannot stomach the reality in which a former workers’ state can become an imperialist country, need to seriously study the objective data. Marxism is not a rigid system. Changes and twists in the world dominated by imperialism are constant, and they do not always follow scripts written by the great Marxists of the 19th and the 20th centuries. No Marxist could understand or predict, right after the 1917 revolution, that the USSR would become a degenerated workers state, followed by China and Eastern Europe. But the complex objective reality always evolves in contradictory ways in which subjective wishes and nostalgia (for the time in which the workers’ states occupied a good chunk of the world) distort comrades’ comprehension of it. Trotsky wrote a number of times that the objective reality is always ahead of the subjective understanding of it. This is why it took most Trotskyists a long time to concede that China evolved (or more accurately devolved) from a workers’ state into a capitalist state, and now it takes them a long time to concede that China became an imperialist country.
Chinese imperialism entry into Latin America and the Caribbean
The story of Chinese FDI in Africa repeats in the rest of the Semi-colonies. Latin America has become a big hub for Chinese investment. So, Chinese investment in Latin American jump from $.8 billion in 2004 to $13.5 in 2016. It peaked 2014 when it was $24 billion! 
And according to China Daily:
“China’s foreign direct investment in Latin America has not only grown fast, but diversified dramatically in the past years, according to the latest research report released on Monday.
“Cumulative Chinese FDI in Latin America since 2003 has reached over $110 billion, mostly made in the last five years [2012-2017], according to the report Chinese FDI in Latin America, which was jointly produced by the Atlantic Council and OECD Development Center. 
This over $110 Billion level of investment, which is only a fraction of Chinese investment worldwide cannot be made by an oppressed semi-colony. Only a major imperialist power can make this kind of investment. But China does not just invest money in Latin America, it is increasingly controlling Latin American industries. Imperialism needs energy, and Chinese imperialism gets it from Latin America and Brazil in particular. It already has total control on Brazilian electricity and increasing control of transport, information, and communication technology:
“China’s involvement in Latin America has been rapidly increasing in the past two decades with Chinese companies investing over $110 billion since 2003, but primarily in the last five years. The nature of these investments has been changing as well. In the past, extraction was the main focus of Chinese investment. In recent years, there has been has been a shift towards the service sector including transport, finance, electricity, information and communication technology, and alternative energy. These areas now make up half of all Chinese investment in the region.
“One area of Chinese increase control is in Latin American electricity generation and distribution. Not only are an increasing number of business transactions going through Chinese banks, but electric power is increasingly being produced through renewable energy sources built by the Chinese. The state-owned China State Grid Corp. which is the world’s largest power company has invested more than $7 billion in Brazilian electricity market since 2012. China is seeking energy security and independence. From 2000 to 2013, Chinese generating stations have increased from 20 to 529.” 
Here are some more interesting figures on China investment in Latin America:
“Annual Chinese FDI into Latin America and the Caribbean (LAC) was valued at less than $5 billion prior to 2010, when it jumped to $25.3 billion. Over the past seven years, investment outflows have totaled $72.5 billion. While the United States and other European countries have historically been the main sources of FDI, China leads in the world in mergers and acquisitions in region.
“According to the Economic Commission for LAC (ECLAC), the US and European countries together accounted  for more than 65 percent of total inflows in 2017, with the US responsible for 28.1 percent of the investments [in Latin America]. In terms of mergers and acquisitions completed in 2017, however, China was the biggest investor in LAC with deals totaling $18 billion (42 percent of the total).
“Abundant natural resources make LAC a highly desirable investment destination  for China, with around 57.6 percent ($62.7 billion) of China’s FDI into LAC since 2005 flowing into the energy sector. While totaling just $1.85 billion between 2005 and 2009, Chinese energy investment into South America surged to $18.97 billion in 2010, with 57 percent of the increase flowing into Brazil. Major acquisitions, such as Sinopec’s $7.1 billion stake purchase  of Repsol’s Brazilian arm, constitute a significant portion of this inflow.
|China FDI Top Destinations in Latin America and the Caribbean (2005 – 2017)|
|Country||Volume in $ billions||Global Ranking||Economic Development Level|
So, China invested over $200 Billion in Latin America and the Caribbean. Only a very major imperialist country can make this kind of investments.
China Investment in Asia vs. the Decline of US Investment
China spent about a trillion dollars in Asia. On the other hand, the US combined investments reach only $173 Billion. One should not be surprised to learn that China have huge investments in Asia. But one may be surprised to learn that China investments in Asia are much bigger than the US’ investments. This worries the US:
“In terms of size, Washington still remains unable to match Beijing’s war chest. Even combined, the IDFC’s proposed $60 billion portfolio and the $113 million fund announced in July pale in comparison to the trillion-dollar Belt and Road [China investment in Asia]” 
“The effort is part of Washington’s strategy to counter rising Chinese influence abroad, especially within Asia. In July, the White House announced $113 million in infrastructure spending for the Indo-Pacific region amid widespread worries of Beijing using investments as a way to achieve geopolitical objectives.” 
China investment in Asia is indeed much bigger than the US investment in Asia, the biggest and most populous part of the semi-colonies:
“. . .as it stands, the $113 million American fund pales in comparison to China’s trillion-dollar Belt and Road [meaning, China invests a trillion Dollars in Asia]. In Pakistan alone, the world’s second-largest economy [China] has $62 billion worth of infrastructure projects.” my emphasis ) 
So, China invests a trillion dollars in Asia. I would think that with such figures the idea that China is still a semi-colony is a joke. The fact that China invest more than the US in Asia, the continent with the biggest semi-colonies in the world, speaks volumes about the rise of Chinese imperialism.
China Investment Abroad Compared to European Imperialism
China clearly joined the big imperialists’ club when it comes to direct foreign investment abroad. As we recall the key criteria for imperialism is its ability to have massive investment abroad. In 2017, only the US and Japan invested more abroad than China. China invested more than the UK, Germany, and France, the biggest European countries. So how can China still be a semi-colony?
If we combine China and Hong Kong outgoing investments, it is clear that only the US invests more abroad than China. China invests abroad more than Germany, the UK, France, and Canada. Although the graph and statistic are behind a paywall it is clear that the order in the graph is; USA, Japan, China, UK, Germany, and France. Here are the figures for 2017 outgoing investments abroad:
Leading countries worldwide in 201, by Foreign Direct Investment (FDI) outflows (in billion U.S. dollars) DESCRIPTION, The statistic shows the leading countries worldwide in 2017, by Foreign Direct Investment (FDI) outflows. The direct investments from Japan amounted to approximately 160.45 billion U.S. dollars in 2017 (paywall!).
The political Questions about Chinese imperialism
The obvious question arises: Only the US invest abroad more than China in most areas, while China invests more than the US in Asia. So, how can China be a semi-colony if it invests abroad more than any European imperialist country? The notion that a semi-colony invest abroad more than the European imperialist countries stands in total contradiction to Lenin definition of what is imperialism. China not only invests abroad more than European imperialist countries. It also behaves politically and militarily as the second strongest imperialist country. That is why, when the US thinks about beating its main competition, only China comes to its mind. Trump singled out China in his tariff war because China is the main competitor of the US. Here is what The New York Time, the mouthpiece of US imperialism has to say about it:
“President Trump says he wants American companies to have a level playing field with their Chinese counterparts, which he has long said have an unfair advantage. China wants to build its industries into sophisticated global competitors. Both sides have shown a willingness to escalate tensions to get what they want — and a capacity to diffuse situations to win over the other side.
“President Trump approves a 30 percent tariff [against China] on solar panels and a 20 percent tariff on washing machines. The move has a heavy impact on China, where most of the world’s solar panels are made, and South Korea, a major exporter of appliances.
“The United States approves 25 percent tariffs [against China] on steel and 10 percent on aluminum. Mexico and Canada are granted initial exemptions.
“President suggests broader tariffs on China may come. Mr. Trump announces a plan to impose annual tariffs on $50 billion worth in Chinese imports.
“China issues threat of its own. The Chinese government says it will impose tariffs on $3 billion worth of goods from the United States. The move is a response to the Trump administration’s earlier decision to impose steel and aluminum tariffs, but the announcement comes just hours after Mr.
Trump discloses his $50 billion tariff plan.
“U.S. targets electronics. The United States formally proposes tariffs on $50 billion worth of Chinese products, including flat-screen televisions, medical devices, aircraft parts and batteries.
“China puts squeeze on soybeans, cars and chemicals. China proposes $50 billion in tariffs
on additional American products
The question is why does the US impose steep tariffs against China, unheard of, since the Second World War? And why does China impose steep tariffs against the US? This could not take place unless the US considers China to be the main competitor; nor would this be possible unless China also considers the US to be its main competitor for world hegemony. In fact, this by itself stand in total contradiction to the idea that China is still a semi-colony. The US will not put so much energy into tariff wars against a poor semi-colony that it can beat at ease by other means. Nor would China threaten the US with a major tariff war if it was a subordinated semi-colony.
The Increasing Military Tension Between the US and China
There is a growing military tension between China and the US. China is indeed challenging the US domination of the Pacific Ocean in Asia. Such challenges are totally out of the question for a semi-colony (India, for example). As the tension has risen, there were close encounters between American warships and Chinese warships:
“’China’s first homegrown aircraft carrier just moved a bit, and the United States, Japan and India squirmed,’ a military news website crowed, referring to the three nations China views as its main rivals.
“Not long ago, such boasts would have been dismissed as the bravado of a second-string military. No longer.
“A modernization program [by China] focused on naval and missile forces has shifted the balance of power in the Pacific in ways the United States and its allies are only beginning to digest.
“While China lags in projecting firepower on a global scale, it can now challenge American military supremacy in the places that matter most to it: the waters around Taiwan and in the disputed South China Sea.
“That means a growing section of the Pacific Ocean — where the United States has operated unchallenged since the naval battles of World War II — is once again contested territory, with Chinese warships and aircraft regularly bumping up against those of the United States and its allies.
“To prevail in these waters, according to officials and analysts who scrutinize Chinese military developments, China does not need a military that can defeat the United States outright but merely one that can make intervention in the region too costly for Washington to contemplate. Many analysts say Beijing has already achieved that goal.
“To do so, it has developed ‘anti-access’ capabilities that use radar, satellites and missiles to neutralize the decisive edge that America’s powerful aircraft carrier strike groups have enjoyed. It is also rapidly expanding its naval forces with the goal of deploying a ‘blue water’ navy that would allow it to defend its growing interests beyond its coastal waters.
“‘China is now capable of controlling the South China Sea in all scenarios short of war with the United States,’” the new commander of the United States Indo-Pacific Command, Adm. Philip S. Davidson, acknowledged in written remarks submitted during his Senate confirmation process in March.
“He described China as a ‘peer competitor’ gaining on the United States not by matching its forces weapon by weapon but by building critical ‘asymmetrical capabilities,’ including with anti-ship missiles and in submarine warfare. ‘There is no guarantee that the United States would win a future conflict with China,’ he concluded.
“Last year, the Chinese Navy became the world’s largest, with more warships and submarines than the United States, and it continues to build new ships at a stunning rate. Though the American fleet remains superior qualitatively, it is spread much thinner.” 
I do not have a lot of technical details to add to this. Let me just repeat that “Chinese Navy became the world’s largest”. Again, the question cries out for an answer: how can a semi-colony have the largest Navy in the world? An oppressed semi-colony cannot have the largest Navy in the world. China is so occupied with having the upper hand in the Pacific, that it has built artificial Islands in the Pacific for its warships that cost it billions of dollars! But none of this could be even remotely possible if China was a subordinated semi-colony.
I am beginning to think that instead of debating whether China is an imperialist country, the Trotskyist movement should start to warn the masses about a possible war between China and US in the future. This is so, because of the mighty military’s rise of Chinese imperialism contradicts the need of US imperialism to maintain its undisputed dominance, both economically and militarily. There are no open hostile military actions between the two countries yet. But this could change as world capitalism will certainly be engulphed with new world economic crisis, aggravated by an inevitable dramatic Climate Change.
It is understandable that comrades want to defend what is progressive, and thus, it is difficult for them to concede that what was progressive in the past, is no longer progressive at the present. It took Socialist Fight a long time to admit that China was no longer a workers’ state. After studying the data about China, Socialist Fight and the LRCI should consider seriously whether China is an imperialist country. The objective world operates dialectically; not in stages, but in leaps and zigzags, forward and backward. That is why a degenerated or deformed workers’ state can leap backward and become capitalist. In fact, Trotsky clearly suggested in the book The Revolution Betrayed, that capitalism could be restored in the USSR because the Stalinist bureaucracy could become the capitalist class after capitalism was restored. This was confirmed by the counterrevolutions of 1989-1991 in Eastern Europe and the USSR.
Under favorable conditions, which are the exception, not the rule, China became imperialist. China is a huge country with huge industries. This allowed the new bourgeoisie to amass a very large capital for investment. In an ironic way, the Chinese bourgeoisie was able to use the cheap and oppressed labor in China to amass billions of dollars, steal a lot of trade secrets and technical secrets from the Western imperialists in China, and ultimately build a mighty imperialist country of its own. Only the Chinese working class can stop the process by overthrowing Chinese capitalism and triggering the Socialist Revolution worldwide.
 China Power, US, 2017, (ChinaPower is made possible by a generous contribution from Carnegie Corporation of New York), https://chinapower.csis.org/china-foreign-direct-investment/
 Lenin, Imperialism, the Highest Stage of capitalism, 1916, https://www.marxists.org/archive/lenin/works/1916/imp-hsc/ch07.htm
 China’s Economic Conditions, Wayne M. Morrison, Specialist in Asian Trade and Finance, June 26, 2012, https://www.everycrsreport.com/files/20120626_RL33534_4ef748bc9d2c2d8e04439017f6eb8e22523facf0.pdf
 OP-ED, China’s Aid to Africa: Monster or Messiah?, Yun SunFriday, February 7, 2014, https://www.brookings.edu/opinions/chinas-aid-to-africa-monster-or-messiah/
 China in Africa: The Real Story, September 23, 2013, China Africa Ec. and Trade Coop. White Paper 2013, www.chinaafricarealstory.com/2013/09/china-africa-economic-and-trade.html
 Foreign Direct Investment in Latin America and the Caribbean Falls for the Third Straight Year in 2017, Totaling $161.673 Billion Dollars, https://www.cepal.org/en/pressreleases/foreign-direct-investment-latin-america-and-caribbean-falls-third-straight-year-2017 5 JULY 2018|PRESS RELEASE
 BUSINESS NEWS OCTOBER 1, 2010, China’s Sinopec buys Repsol Brazil stake for $7.1 billion, Sonya Dowsett, Chen Aizhu, https://www.reuters.com/article/us-repsol-sinopec/chinas-sinopec-buys-repsol-brazil-stake-for-7-1-billion-idUSTRE6900YZ20101001
 $62 billion worth of infrastructure projects, https://www.cnbc.com/2018/07/31/new-us-spending-in-asia-wont-match-china-but-its-significant.html
 Leading countries worldwide in 2017, by Foreign Direct Investment (FDI) outflows (in billion U.S. dollars), https://www.statista.com/statistics/273931/largest-direct-investors-worldwide/