China a new superpower?

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08/02/2022 by socialistfight

Viriato

03/02/2022

On the question about China imperialist or not, I have found a good article in the French Lutte Ouvrière Magazine.
Here is an extract:

China a new superpower?

Since China’s reintegration into the world market, which began in the 1980s at the initiative of the United States and mainly for the benefit of its capitalists, China has experienced spectacular development. Chinese workers now produce 25% of the world’s value added, compared to 5% in the 1990s. This industrial development has transformed China. There are now 22 cities with more than 5 million inhabitants. They are linked by some 30,000 kilometres of new high-speed rail lines. China’s ability to send satellites and people into space fuels its image as a technological superpower.

At the same time, it retains many features of an underdeveloped country. While there are a thousand Chinese billionaires in dollars and three hundred million petty bourgeois with a standard of living close to their Western counterparts, 600 million proletarians and peasants have a monthly income of less than 125 euros.

Although China’s development remains profoundly unequal, it has led to the emergence of very large companies. In 2021, according to the Forbes ranking, 13 of the world’s top 50 companies were Chinese, three in the digital economy, including Alibaba and Tencent, one in oil, Sinopec, and all the others being banks. These figures fuel the image of China as the alter ego of the United States. But this is an optical illusion.

The position of Chinese banks does not reflect their dominance of the global economy, but the fact that they finance the economy of a country of 1.4 billion people. Unlike the big Western investment banks, Chinese banks make most of their investments within the country. In 2016, the country’s largest bank, ICBC, made over 90% of its profits in China. These banks are directly linked to the Chinese state. Their colossal size reflects another feature of China’s economic development: its massive indebtedness, which accelerated after the 2008 crisis.

The Chinese currency, the renminbi, or yuan is not an international currency like the dollar or the euro. Even though the IMF included it in 2015 in the basket of currencies with which it makes its special drawing rights, i.e., the loans it grants to various poor countries, the yuan is very little used outside China. Its exchange rate with other currencies is not set on the currency market, but by the Chinese government, which seeks to limit the value of the yuan against the dollar to favour Chinese exports. Less than 2.5% of rich countries’ central bank reserves are in yuan, compared to 60% in dollars and 20% in euros.

Since January 2020, the Chinese government has reduced the legal obstacles that prevented Western capital from investing in Chinese companies. In the automotive, railway and banking sectors, Western companies no longer need to enter into joint ventures with Chinese companies. In these sectors, Chinese groups have technology that is competitive enough to compete with Western companies.

The Chinese government has encouraged Chinese companies to list on foreign stock exchanges to raise capital. According to “Le Monde Diplomatique”,

“American inflows into China totalled $620 billion during Donald Trump’s presidency, to which must be added dozens of IPOs of Chinese companies on American exchanges. At the end of 2019, US investors held at least $813 billion in Chinese stocks and bonds, up from $368 billion in 2016.” [1]

These figures show that, despite Trump’s protectionist rhetoric, US capitalists have increased their holdings in Chinese companies. The coupling between the Chinese and US economies has increased and this interdependence continues to be to the primary benefit of US capitalists.

Unequal relations

China is still the workshop of the world. Because of the relative rise in workers’ wages in China (13 to 15% per year since 2008, compared to 1 to 2% in France), some manufacturers, such as Samsung, have relocated their production to Vietnam or India, where they impose even lower wages. But this movement remains marginal because, as an employer representative says, “China is still the best market for multinationals. It is the only country that offers such a skilled workforce along with a complete production chain. In other words, for a high level of qualification and productivity, wages remain low.

At the same time, China is an unavoidable market. The construction of important infrastructures and the existence of a petty bourgeoisie with a good standard of living make Western capitalists dream. Of course, the competition is tough, and they are now facing powerful Chinese industrialists in several sectors. This is the case in railway construction with CRRC, which produces 200 TGVs per year against 35 for Siemens and Alstom combined. This is true for the automobile sector, for which China is the world’s largest market, but where Chinese manufacturers, such as Geely or Saïc, are now overtaking the Westerners. Despite this, Volkswagen now sells half of its production in China and the rich Chinese continue to drive BMWs, Teslas and Mercedes.

China remains a major market for Boeing and Airbus, which sell 20% of their production there. In the words of a brochure designed to promote French investment in China, entire sectors remain “open” or “under development” due to the lack of Chinese competitors of the same level. In addition to aeronautics, these include automotive equipment manufacturers, certain sectors of the food industry and of course the luxury goods industry. Valeo, Danone, LVMH or Hermès make a significant part of their profits there and will not leave the Chinese market any time soon.

In most fields, Western capitalists dominate their Chinese competitors. This is the case with semiconductors, whose current shortage, caused above all by the existence of monopolies and the lack of economic planning, is used by politicians to denounce Europe’s dependence on Asia. The main manufacturer is not Chinese, but Taiwanese. It is the TSMC company, which has acquired a virtual monopoly over the past twenty years, along with the Korean company Samsung, in producing the most powerful chips.

TSMC was founded in 1987 by Morris Chang, a Chinese man who emigrated to the United States after Mao’s victory in 1949 and worked for Texas Instruments for a long time as an engineer before being hired by the Taiwanese government. TSMC sells its semiconductors to the whole world. China buys 11 billion euros worth of them every year, because Chinese semiconductor manufacturers cannot produce chips of the same quality. Chinese manufacturers are at the mercy of an embargo like the one imposed on Huawei since 2019.

But TSMC, despite its immense size and its investments of tens of billions of euros, remains a subcontractor whose products are entirely designed in California by Apple, Qualcomm or Nvidia. As for the machines used to engrave the latest semiconductors, with a precision of five nanometres, they are produced by the Dutch company ASML, founded by Philips. These technological gems are sold for 120 million euros each. ASML has a monopoly position and has seen its market capitalization soar over the past two years, even surpassing that of Volkswagen. To date, the Dutch government has prohibited ASML from selling its machines to Chinese semiconductor manufacturers.

This example illustrates several aspects of globalization. First, that productivity improvements and technical progress are inseparable from the international division of labour. The relocation of production touted by so many politicians is absurd and would be catastrophic. Secondly, this globalization continues to benefit first and foremost the capitalists of the old imperialist countries, who remain technologically ahead of the game and capture the lion’s share of surplus value.

A new imperialism?

This does not prevent large Chinese groups, Huawei, Cosco, Alibaba, Geely, Sinopec and a few others, linked to the state, from emerging in various fields.

The press regularly reports on Chinese groups taking stakes in Western companies. Political leaders point to these groups as predators that threaten Western industry and therefore jobs. Thus, the failure of the merger between Alstom and Siemens in 2019 was presented by Bruno Le Maire as a boulevard for the Chinese railway manufacturer CRRC. However, to date, no Chinese TGV has been purchased by European operators.

This propaganda aims to close the ranks of the workers behind their exploiters. As if the French, German, or American capitalists were not the ones primarily responsible for job cuts, factory closures and attacks on workers’ living conditions!

Beyond the propaganda, however, there is a reality. Like all capitalists in the world, those in China are seeking to take market share from their competitors, and if possible, to take control of them. Among the Chinese groups seeking to conquer the wider world is Huawei, founded in 1987 by a former Chinese army colonel to produce hardware and networks for telephone operators. Huawei once became the world’s second largest mobile phone manufacturer, behind Samsung but ahead of Apple. It is its lead in networks and 5G technology that makes Huawei a threatening competitor.

In 2010, Geely bought Volvo’s car business and then, in 2013, London’s taxis. Since 2018, it has held almost 10% of Daimler’s shares. Cosco Shipping, China’s largest shipowner and the world’s third largest, made a name for itself by buying the port of Piraeus, near Athens, in 2016. It has port facilities in Africa. Until last December, Cosco was mentioned among the candidates for the purchase of Bolloré’s port facilities in Africa. Some concluded that China would replace France in its former African colonies, until Bolloré announced that it was selling its logistics subsidiary to the Italian-Swiss group MSC.

China’s economic presence in Africa fuels the idea that it has become an imperialist power. China is buying up copper and cobalt mines in the Republic of Congo that were long exploited by Americans and Canadians; Sinopec is exploiting oil in Sudan, Gabon, and Angola; it is buying up farmland and forests from Mozambique to Cameroon; and it is carrying out construction projects in various countries. According to the Senegalese newspaper Le Soleil, from January to September 2021 China-Africa trade reached 164 billion euros, making China Africa’s leading trading partner.

Holding 62% of direct state-to-state loans in 2020, China is financing roads, hospitals, etc. Kenya borrowed $3.5 billion from China to build the new Nairobi-Mombasa railway line, built, and operated by the Chinese company CRBC. As these loans are often indexed to commodity prices, fluctuations in commodity prices make it impossible for many states to repay their debts, even by squeezing their populations. They then have to ask China for a moratorium, as Angola and Kenya have done.

From this point of view, despite all the talk about cooperation between countries, despite its anti-imperialist stance, China behaves in Africa like the old colonial powers. It maintains the same unequal exchanges. This observation gave Jean-Yves Le Drian, Macron’s Minister of Foreign Affairs, the opportunity to condemn China for “putting countries under tutelage after having made investments and pushed them into debt” [2]. This is truly the tribute of vice to virtue! Because when it comes to trusteeship and unequal development, China is not playing in the same league as the United States, Britain or France. China holds only 7.5% of the total African debt. The sectors that Chinese companies are investing in are those that imperialism has neglected.

These powers defend their prerogatives tooth and nail, the mines, oil installations and mineral reserves that they hold dear. To defend them, France or the United States overthrow regimes and wage wars all the time, like the dirty war in the Sahel. China is only the fifth largest supplier of arms to Africa, far behind France.

Imperialism is the mobilization of armed forces, diplomacy, and secret services to defend the economic interests of large national groups. In Africa, France has four permanent military bases and troops in five other countries. The United States has 14 permanent bases and 20 temporary camps. China has only one military base, in Djibouti. According to the Wall Street Journal, “China is in talks with Equatorial Guinea to open a second base, a move that is being resisted and vetoed by the US. The comparison is eloquent.”

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