Empire: China, the U.S. and the shape of global capitalism to come

A brief look into the future:

23 January 2019: After seven years of solid economic growth in the Republic of New Zealand fuelled by rising demand amongst the Asian middle classes for organic south Pacific meat, dairy and wool products and the expansion of off shore oil drilling in the Great South Basin, the New Zealand economy appeared strong and vibrant. Yet in 2018 a virulent and previously unencountered form of mad cow disease spread through waterborne bacteria in polluted low land waterways had decimated the country’s cattle stocks and caused a complete collapse in demand for New Zealand agricultural products. The Government at the time, a minority coalition composed of the National Party, Green Party and New Citizen’s Party moved quickly to restore economic stability as the Kiwi dollar collapsed and the Government’s debts to Persian Gulf banks were called in. The New Zealand President announced a package of economic reforms including a proposal to levy a tax on the previously untaxed off shore oil drilling operations. The Chinese oil companies operating in the Exclusive Economic Zone responded swiftly by announcing that the tax would bankrupt the industry and they would withdraw support for any political party that supported what they called a “super tax”. With the Government bankrupt and unable to raise revenues through traditional means the President met with Chinese Embassy officials to negotiate a bailout. Facilitated by the South Pacific Development Bank (SPDB), Chinese capital had been flowing south into the Pacific ever since Taiwan was annexed in 2014 and a wave of island economies dependent on Taiwanese aid had collapsed.

28 June 2019: After terms of the Government bailout were hammered out in secret between the Prime Minister and the Chinese lenders the economy began to sluggishly revive. Yet once the full terms of the structural adjustment loan from the SPDB became public after insiders leaked the text on wikileaks the mood in New Zealand turned to outrage. For what the Government had negotiated with the SPDB officials was the promise of the full privatisation and deregulation of the country’s public health system. As the Government promised a more efficient accident compensation scheme under corporate management, better health services under expensive health insurance schemes to replace universal care and the sale of the rights to childhood dental provision to multinational conglomerates, representatives from a dozen various competing Chinese-based healthcare corporates flew into Auckland to carve up the public health service between themselves.

7 July 2019: Public health unions begin an illegal 24hour strike in protest against the structural adjustment program. The President gives a press conference to declare that “there is no alternative if the country wants to return to prosperity” and calls for restraint.

8 July 2019: A massive march against health privatisation is attacked by police in Manukau City and sparks rioting. Angry workers and students led by anarchists cause extensive damage to the shopping district. Local unemployed youth join the rioting in the early evening, looting big box retailers and supermarkets. By midnight the Mayor of the Auckland SuperCity has telephoned the President calling for the army to be deployed to support an increasingly overwhelmed police force.

9 July 2019: In the morning, as the army deploys into suburban south Auckland using rubber bullets and armoured cars to enforce a 24 hour curfew and state of emergency two Green Party ministers resign from Cabinet citing the now revealed sale of two national parks to a Chinese gold and coal mining company a move too far, and the Government loses a vote of confidence in Parliament. Rioting in economically depressed towns and suburbs breaks out in the early evening and private security companies are forced to retreat in the face of crowds attacking Government property and emptying dozens of supermarkets across the country.

10 July 2019: Faced with an unprecedented political crisis in the streets and Parliament the President seeks to re-negotiate terms of the bailout with the SPDB. The Chinese officials refuse to budge and the CTU holds an emergency affiliates meeting where unionists vote for a one day general strike to call on the Government to reject the bailout and nationalise the 70% of farmland that is owned by foreign corporations and raise a hefty tax on offshore drilling. Opposition left parties announce their support for the CTU alternative economic programme and the Green Party announces a formal end to its participation in President Joyce’s coalition arrangement.

11 July 2019: At 1am a fleet of Chinese air super-transports take off from the Chinese military base in Samoa carrying nearly two thousand People’s Liberation Army rapid reaction force Marines. The super-transports land at international airports before dawn around New Zealand and immediately set up defensive cordons around the airports. Chinese nuclear powered submarines surface in the middle of five of the major harbours just after dawn. Three Chinese destroyers that were patrolling Antarctic sea lanes and guarding Beijing bound oil tankers change course to head to Wellington harbour.

As the country awakes to the Chinese military awkwardly occupying all significant ports and airports, two Chinese colonels, SAS commander William Apiata and the parliamentary leader of the New Citizen’s Party hold a joint press conference to declare the Republic of New Zealand’s constitution suspended and a caretaker administration headed by Lieutenant General Apiata in charge until the economic crisis has been resolved and fresh elections held.

By midmorning Chinese soldiers and NZ Police are conducting joint patrols in riot affected areas and four dozen union organisers and left opposition leaders are rounded up under Summary Examination Orders for allegedly co-ordinating illegal strikes.

Midday news report that New Zealand’s business leaders including the Iwi Leadership Group have met with the new administration and believe the increased security and stability the Chinese supported regime has will provide the business environment that is needed in order for the economy to recover.

As night falls Chinese helicopter gunships patrol the airspace over the Albany Export Processing Zone as striking sub-minimum wage workers are dispersed with teargas. The evening news announces the first decisions of the new administration – a suspension of all social welfare payments indefinitely, the privatisation of all ports, airports and national parks, and a cut in the corporate tax rate from 30% to 15%.

Just before midnight a group of intellectuals huddled around a laptop in the staff room at the Auckland University economics department are completely surprised when SIS agents and PLA soldiers burst into the room and arrest everyone. The SIS agent gathers the laptop in his arms. It has a pdf document open. He reads the title of the document– “Empire: China, the U.S. and the shape of global capitalism to come”- before following the cuffed dissidents down the stairs to the waiting police wagons.

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Empire: China, the U.S. and the shape of global capitalism to come

“Yet behind the veneer of mutual friendship, a multitude of tensions lurked not just in the area of human rights but also economic competition, arsenal-building and international diplomacy.” NZ Herald, 21.01.11

“When will China become the world’s largest economy? Goldman Sachs estimates that it will happen by 2027. But, using a forecast based on purchasing power parity, the Conference Board, a research group, predicts it could happen as early as next year.” NZ Herald, 20.01.11

In case you haven’t noticed China is emerging as a global superpower in the wake of the global financial crisis faster than anyone predicted. With President Obama hosting Chinese President Hu Jianto and pledging a “new era of co-operation between their countries” it is as appropriate a time as ever to analyse trends within global capitalism that are radically transforming the economic and geo-political world in which we live.

This article seeks to give an analysis of global capitalism and Chinese imperialism in the Pacific from a radical, socialist working class perspective.

China: a wildcat capitalism

China’s internal economic miracle has been widely chronicled in all its magnitude and contradiction. Indeed it is best described as “a wildcat capitalism without restraint”, the exploitation of a vast labour resource unencumbered by autonomous unions, democratic oversight or judicial fairness that are the banes of Western capitalism.

The class composition of Chinese society is rapidly changing as working class incomes and safety nets are eroded while a new layer of Chinese billionaires emerges rapidly increasing social and economic inequalities. Meanwhile a prosperous urban and mainly coastal middle class that is the Communist Party’s main base of support has cemented its social and economic clout in recent years as a loyal, skilled and increasingly Western educated stratum of technocrats settles itself in as the country’s aspirational and motivated co-ordinator class.

In the future, when we look back at the political turbulence between 1994 and 2006, the long decade of anti-globalisation riots and rebellions, it will be clearer to see the emergence of a new brand of capitalism centred on China. The restructuring of the global economy and the rolling back of political sovereignty that saw massive protests over factory closures in the West and riots against free trade agreements in the global South has caused the emergence of a much more dynamic form of capitalist accumulation. This new global form of neo-liberal capitalism is centred on the coupling together of four different modes of production. These are; Chinese barrack capitalism – sweatshop production in undemocratic nations with little protections for the environment or workers rights; American finance capitalism – a highly deregulated finance-based economy that rewards corporate shareholders by allowing risky speculation and providing massive corporate welfare; Arabian mineral-despotism- the installation of extremely undemocratic despotic regimes in mineral rich nations that rely on almost feudal production practices and repression of indigenous populations; and Democratic consumerism- in the West corporations are shifting resources away from production into new parts of the service economy and creating an economy based on falling real incomes and increasingly inequitable distribution of wealth whilst attempting to increase consumer spending and indebtedness.

In nearly every country and certainly on every continent we find examples and variations of these four capitalist accumulation strategies being deployed by an increasingly global ruling class. These accumulation strategies are not just the most dynamic forms of capitalist accumulation but it is surprising how well they integrate with each other. Each form of wealth generation is reliant on the others. If war or social unrest in the Persian Gulf threatens oil prices then the costs of sweatshop production can spike, swiftly causing a drop in consumer confidence in Europe and leading to Wall Street stock prices to dip. This new global capitalism is highly integrated and interdependent yet increasingly vulnerable to a myriad of class conflicts that threaten to destabilise its regime.

As David Harvey has said, “At the moment as I see it there are certain power blocks emerging but they are heavily dependent upon each other. For example the US is very nervous about China and would like to really push China around but frankly it can’t because China owns a good deal of the American debt. And at the same time the Chinese can’t stop funding the American debt because this is their main market. So actually the interdependence between these potential powerblocks is really very, very strong and it would be very difficult to break that.”

“I think what we are headed towards is a slow degradation of relations across different geo-economic configurations in the world. Between for example China, India, Brazil, that kind of configuration on the one hand and on the other hand the whole kind of general category of capitalist powers that would include Japan but again there is some fragility there for instance between the United States and Europe, between Europeans and Japanese, there is a lot of breaking up going on.”

The dual nature of the geo-political crisis is clear. At the same time as China and the United States seek to flex the political independence they find themselves economically more and more interdependent. On top of this China’s internal economic and political class struggles are destabilising the Chinese regime: “China wants a quiet life on the international stage as much as it can in order that it can deal with the potential turmoil that deals inside of China.”

Noam Chomsky has little time for the argument that China is quickly becoming a country of comparable wealth to the United States and looks more to place it within the context of a dynamic global economy which is still dominated by US Capital. “In fact, China has become a factory in the Northeast Asian production system. If you look at the whole region, you will find it very dynamic. China's export volume is enormous. But there is something we have overlooked. China's export relies heavily on the exports of Japan, Korea and the US. These countries provide China with high-tech components and technologies. China is just doing the assembly, and labelling the final products as 'Made in China.'”

When we hear the word China we hear the thunderous din of the sound of a myriad of class conflicts colliding. As Antonio Negri commented, “In China there is a situation that is revolutionary in many senses, but it could be blocked and directed in a different manner if the political; elite of the country would take a different tack. At the moment in China, social development could be compared to our 1968: it’s with that tonality and strength that the question of the relation between modernization and the development of freedom is being posed, between demands to meet needs and the anxiety of the common.”

China and the United States – A tale of two empires

Chinese corporations are incredibly profitable and are able to maintain their profitability through the direct intervention of the state to maintain the monopoly of state owned companies. For example the state owned oil-company dictates petrol prices, housing market statistics are not released and cost saving tele-communications technology outlawed. In effect Chinese capitalism is capitalism without a free market.

Bill Clinton’s secretary of labour, Robert Reich, has recently written that much of the reason that China is outpacing the United States is because, “It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders.” Critically the Chinese state is bolstering funding for universities and for research and development at the same time as the United States is implementing harsh austerity measures on its R&D and education sector.

Thus if trends continue, China won’t just be the sweatshop capital of the world but also the research lab capital too. This perhaps is the reason for much of the current commotion in the mainstream media. Although the loss of United States blue collar jobs to China is decades old, middle class white collar jobs are now at risk. Thus much of the American emanating angst over the rise of China is the worries of the squeezed American middle class (educated, home owning, job secure workers with savings or small businesspeople) that fear the loss of their jobs and incomes to an Asian middle class who will accept lower wages and less democracy from their elite.

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.

This is what Karl Marx talked about when he described the middle classes being rolled into the proletariat, “The lower middle class, the small manufacturer, the shopkeeper, the artisan, the peasant, all these fight against the bourgeoisie, to save from extinction their existence as fractions of the middle class. They are therefore not revolutionary, but conservative. Nay, more, they are reactionary, for they try to roll back the wheel of history. If, by chance, they are revolutionary, they are only so in view of their impending transfer into the proletariat; they thus defend not their present, but their future interests; they desert their own standpoint to place themselves at that of the proletariat.”

When David Simon, the genius behind HBO’s series The Wire, said that “in this Postmodern world of ours, human beings—all of us—are worth less. We're worth less every day, despite the fact that some of us are achieving more and more. It's the triumph of capitalism.” He was just enunciating a statistical trend. All but 4% of the top 500 US companies are making profits but US unemployment remains at around 10%.

The American capitalists remain as loaded as ever. Now however they don’t need so many of their subjects. For American capitalists it is cheaper to keep a large proportion of the American working-class jobless, hungry and penned in prisons and decaying ghettos than it is to employ them.

As the global economy is restructured with the Chinese state bureaucracy negotiating with foreign multinationals the conditions of the exploitation of the Chinese people, a new class of billionaires is rising in China. These billionaires are creating wealth and generating capital out of the misery of their own people – “State media in China pointed out that 10 percent of the 400 richest Chinese in Forbes Asia's latest list get all or part of their fortunes from China's healthcare sector - evidence of how capitalists and profiteers are squeezing the population to pay for inflated medical bills and costly drugs. Private funding occupies a greater share of China's total healthcare budget than it does in the US.”

In a recent book on China and democratic reform, James Mann, a former LA Times reporter in Beijing has written, “The elites need to keep Chinese wage levels low, so that the foreign investors keep on flooding into China. They have an interest in repressing political dissent so that the country looks quiet and stable to prospective investors. Needless to say, the Chinese business elites strongly support perpetuating the existing state of affairs for as long as possible. Similarly, American elites are content with the status quo. It enables American firms to shift manufacturing operations to China, where labour costs are low and corporate leaders don’t have to worry about independent trade unions.”

Thus as foreign investment and jobs continues to flow into China we can expect more and not less repression of trade unionism and worker activism. The American middle class can slowly expect to wither away as US capitalism requires less and less Americans. Statistics are against the Americans. Already, China’s middle class is about 150 million, or half the population of America.

In New Zealand the process is occurring but has been obscured to a certain extent. In the 1980s to the 2000s manufacturing has almost been wiped out in New Zealand as car manufacturers, clothing and textile plants and iconic production companies like Fisher and Paykel have all moved operations to Asia. Manufacturing continues to head offshore, primarily to Asia, and the latest round of redundancies at local forestry mills. 1500 wood processing jobs have been lost recently mostly because of the economic crisis and partially because NZ wood processing companies cannot compete with the cheap costs of processing logs overseas.

In New Zealand manufacturing jobs have been replaced by service industry jobs or more likely by a benefit. Fisher and Paykel saved $10 to $15 million per annum by offshoring 350 Auckland manufacturing jobs in 2007. For each job lost this represents a saving of between $30k-$40k per annum for the company, making any form of competition between the workforces ludicrous.

For many New Zealand workers a jobless future is a certainty. As Phil Goff pointed out, Unemployment is up by 50,000 since the National Government took office.” Yet no political party apart from the Greens and few left activists apart from Matt McCarten in his Mana campaign have articulated a coherent set of policies to end unemployment. Although political commentators complain of a lost generation, until the political will can be mustered to end unemployment and give every New Zealander a job, it’ll continue to be bailouts for the rich and jailhouses for the poor.

Right in front of our eyes capitalism is restructuring itself as a global system that is forcing the New Zealand working class into competition with our brothers and sisters in sweatshop nations who have no ability to fight for higher wages, vote or campaign for social and economic welfare. The American and New Zealand middle class and working class are being squeezed by a drive for corporate profits. For much of this century state regulation of the economy through tariffs, macroeconomic policy planning and wage and price setting had sheltered the New Zealand workforce from the global race to the bottom. With these protections removed and corporate globalisation steaming ahead, the reality that the workers of the planet face is that local economic control is disintegrating as the Chinese sweatshop economy rises to dominance.

The future of the south Pacific

As China seeks to grow it will no doubt look into the south Pacific. Just as the European powers of the 19th century carved out Pacific realms of influence and America and France in the 20th century dominated the south Pacific, we can expect China to exert a growing influence in the 21st century. China is quickly militarising and the production of Chinese aircraft carriers and anti-ship missiles while the US navy continues to shrink will in time redraw the geo-political shape of the world’s biggest ocean. Taiwan will eventually be reintegrated into the mainland and China will seek growing control over sea lanes to Africa and Europe.

If oil prices continue current trends China will in future want to control a passage to Antarctica and may very well want a military base in the south Pacific to prevent the kind of looting which last decade erupted in the Solomon Islands and Tonga and threatened Chinese businesses and citizens. It will be Chinese soldiers and not the boys and girls from Waiouru that in coming decades will be patrolling downtown Nuku’Alofa or Honiara.

In the recent Australian film Tomorrow, When the War Began based on John Marsden’s series of novels depicting an imperialist invasion of Australia by an unnamed but obviously Asian nation, the invaders are played by Chinese actors. While Marsden may have dedicated one of his books to the people of Tibet, East Timor and West Papua and the film and books have enjoyed huge popularity throughout Australasia, they have yet to spark any real debate amongst audiences about the likelihood of invasion from the Asian north.

It is disappointing that there has been no imaginative debate about the ethics of armed resistance to imperialist invasion and neo-colonialism and the need for people to stand in solidarity with those who in Timor or Papua or Bougainville are fighting for their freedom. Without this debate the films and books merely recuperate the experiences of the youthful Timorese who waged guerrilla war against the Indonesian military for the Australian film studios and global cinema corporations.

Not a decade goes by in which a Pacific Island people isn’t having to decide the very same question that Ellie and the band of Australian teenagers in TWTWB face. The question of colonisation in the Pacific is not an academic one for the peoples of Tahiti, Kanaky, Samoa, Bougainville, Papua, Aotearoa, Rapanui or a myriad of other islands.

Maori have witnessed the colonisation of their country twice over. First by British imperialism and then by trans-national corporations. As the Chinese elite eye up new markets, new natural resources and the control of more of the globes commerce it is conceivable that China will bring Aotearoa into its orbit to control our economy for its own benefit. The question is not if but when.

Already a Chinese mining billionaire called Chen Faschu is preparing to buy his way into politics with the creation of a Beijing based New Citizen’s Party to firstly contest the Botany by-election but then manipulate Asian migrants to vote for them on a conservative and reactionary law and order programme in order to secure the ability to buy up dairy farms and strategic public assets. It’s no coincidence that as the Nats ponder asset sales, cash flush Chinese capitalists are making moves downunder to get a slice of the action.

The Chinese Embassy to New Zealand recently posted on their website an interesting article, “Mutual trust is the key words of politicians of both China and the US, though they are also busy figuring out how to gain the upper hand in a military conflict should it arise.” For China military conflict will remain on the table in how it seeks to expand its economic base yet it mostly prefers to influence south-east Asian politics by buying up the support of corrupt juntas like in Burma for oil and port access or bribing south Pacific politicians in return for UN votes. Once the balance of power shifts to China in the south Pacific, military conflict could become the de facto means by which a violent domestic regime enforces its foreign policy objectives. Regime change in Australia over the resource profits super tax that brought the downfall of Rudd came in part because of anxiety from Chinese mining corporations. Increasingly the Pacific will see Chinese capitalists take a greater interest in the domestic political and economic framework of countries.

Some sections of the business community, like the NZ China Trade Association, are working hard to convince the public that Chinese ownership of agricultural land is a desirable goal. In their propaganda pieces they set up a false dichotomy between Chinese owned dairy farm and NZ owned but ultimately foreign bank mortgaged farms. The global capitalist elite is seeking to make people forget about the real question which is who should profit from agriculture in Aotearoa? This is not a national question but a class question. The question is not whether mum and dad will run the farm for the Chinese but whether global agribusiness or the people of Aotearoa will profit from the fertile earth. In China the debate over land ownership is similar in terms but a thousand times more violent and dramatic as the CCP leadership institute a policy of land seizure, privatisation and peasant dispossession to benefit global farming corporations.

The reality is that as Chinese capitalism grows it will undoubtedly turn neo-colonialist in the south Pacific. As a prominent American military think tank has said, “As the U.S. military’s “balanced” strategy foresees mostly small wars, it must also maintain high-end capabilities to deter potential Chinese aggression and maintain freedom of action in the Asia-Pacific region.” As American elites prepare to deter Chinese aggression and domination in the new century, so should the international working class.

Alternative futures

What we are witnessing in the Middle East right now as a wave of anti-capitalist, working class revolt and revolution blossoms is the formation of international class consciousness and a serious attempt by workers in the various Arab states to leverage on the revolts of their comrades in other countries. Just as it isn’t hard to imagine the Chinese imperial invasion of Aotearoa we can also imagine alternative futures. Socialism and freedom are more than just slogans – for millions of workers they are the words and ideas that will provide them with the ability to put food on the table, have a secure job, or be able to organise to protect their community from a corrupt and brutal dictatorship. The question to be posed about the shape of global politics to come is not whether Washington or Beijing will rule, but whether we want socialism or barbarism in the 21st century. The Chinese working class are fighting for their freedom and also for ours. Their struggle is our struggle and only a global socialist revolution can liberate us and them from the exploitation and degradation of global capitalism.

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Ten years from now perhaps. A small strike in a Chinese sweatshop, turns into a larger revolt against wages in the Chinese megalopolis cities. Millions of workers strike, marching and chanting “We want freedom”. In America riots break out in the rust belt. The grandsons and daughters of factory workers spraypaint slogans on walls “We want jobs”. In New Zealand workers hear of the uprisings and stage strikes and march on the Beehive, “We want homes, land and dignity”. All across the world workers begin to strike and protest and to get organised into a global union of workers to start taking on the global capitalist class. The union has no demands of the rulers. It merely asks the entire working class of the world one simple question- who should own the means of production and who should control the wealth of the world? The working class across the planet begins a general strike, “Everything for everyone” goes the chant. The capitalists are kicked out of their mansions, their executive suites and factories. A new global workers democracy is born. Some call it socialism. Some call it anarchism. Everyone calls it a revolution.

Commentary: Omar Hamed, Socialist Aotearoa.