論現階段的帝國主義與中國(英文稿全文)(金寶瑜)

今年三月英文的左翼網站Red Path立足於堅持列寧的帝國主義論,刊登文章 針對左翼理論界的所謂“新考茨基主義”提出了批評,其中也涉及中國帝國主義論的問題,金寶瑜教授不同意其中的若干論點,撰述六十餘頁的長文與之商榷。因文長,該網站只登了金教授的四頁濃縮稿,無法完整呈現金教授的論證,我們登載全文,俾便有興趣的讀者得見全貌。──編者

On the Current Phase of Imperialism and China

 Pao-yu Ching

This paper proposes that capitalism (imperialism) in its last stage has reached a new phase.[1] In this new phase the relationship between and among nations has changed and so have the class relations within nations. This paper attempts to explain how these changes have taken place and what role China has played in them.

This paper consists of three parts. Part One: the Basic Characteristics of the Current Phase of Capitalism (Imperialism), which I call a new phase. Part Two: the Supranational Institutions (Organizations) and the Less Developed Countries. And Part Three: China’s role in the Current Phase of Capitalism (Imperialism). At the end of each of the three parts there will be a summary and a discussion and then an overall conclusion at the end of the paper.

Part One: The Basic Characteristics of the Current Phase of Imperialism 

Today Lenin’s important contribution in the analysis of imperialism as the highest stage of capitalism remains unchanged. Lenin, and later Mao, developed the theory and strategy for liberating exploited people in their countries that were the weakest links of imperialism. The 1917 revolution in Russia and the 1949 revolution in China have proven that enslaved people in oppressed countries can indeed liberate themselves to embark upon socialist development to achieve economic and political independence. These two major socialist revolutions have also proven the importance of the theory of revolution and the correct strategy derived from the theory.

Almost a century has passed since Lenin’s important analysis of imperialism. In the past almost 100 years, two World Wars were waged and two major socialist revolutions won. Many former colonies fought and gained their independence only to discover that they did not gain any real political or economic sovereignty. The old colonialism faded away but the suffering and depravation that people in former colonies had known so well not only has continued, and in many ways has intensified.

Lenin wrote that when capitalism reached its highest stage of development, it was in fact imperialism. It was with the premise that capitalism reached its most advanced (mature) stage. Has capitalism after reaching its highest stage continued to mature and also decay in the past 100 years? Can we say that in this highest stage of capitalism we have experienced a new phase (or several new phases) that is (are) different from the earlier phase in the early 20th century?[2] In what ways this current phase of capitalism is different from earlier ones? These questions do not in any way negate Lenin’s important analysis. I believe that since 1917 we have experienced several phases of capitalism in which the system has continued to mature and also decay. How many new phases of capitalism have there been since the early 20th century? This question requires more careful study. However, it seems clear that in the 1930s capitalism went through the most serious crisis the world had never seen before, a period that I believe should be considered as a new phase. After capitalism was rescued and energized by the destruction wrought by the Second World War, it reached a new height in the two decades that followed. I believe that the two decades of post war prosperity was yet another phase.

Then in the 1970s, capitalism fell into its worst crisis since the Great Depression.  The 1970s was a transitional period where another new phase of capitalism began in the 1960s, gradually took shape in the 1970s, and then settled (or stabilized) in the 1980s. The globalized monopoly capital with the help of governments in advanced capitalist countries pushed to implement a whole set of sweeping neoliberal economic and political policies which include globalization, liberalization (also known as de-regulation), and privatization as the new strategy of capital accumulation with the intention to mitigate the recurring and deepening crisis of capitalism. This new strategy has proven to be most advantageous to global monopoly capital and extremely detrimental to working people around the world. The development of capitalism over the past several decades and especially since the 1980s indicates that capitalism may have been able, in the short-run, to moderate its crises and prolong its life. However, these neoliberal policies are now under serious strain from the continuing and deepening economic crisis and the strong peoples’ resistance from below. During the years and decades to come we expect to see how these neoliberal policies could further aggravate the ongoing and reoccurring crises and intensify more suffering and devastation worldwide. The major changes in global capital accumulation, in class relations within the advanced capitalist countries as well as within the less developed countries, and in the relations between and among nations, I believe, constitute a new phase of imperialism in the highest stage.

Pointing out capitalism has reached a new phase is not to be confused with some on the Left who criticize only neoliberalism but not capitalism itself. The problem of focusing their criticism only on neoliberalism seems to indicate that only unregulated capitalism is the problem, and thus regulation (or re-regulation) is the solution. This point of view falsely believes that capitalism can be regulated and it ignores the history that capitalism had been regulated at some point but it was necessary for it to go though a whole process of deregulation. This point of view also fails to see that neoliberalism has been a way for monopoly capital to dig itself out of the deep economic crisis. Increasingly the survival of capitalism depends on how monopoly capital can break down all regulatory restrictions and speed up its expansion to occupy all spaces in all parts of the world.

Beginning in the 1980s this new phase of capitalism (if we can agree to call it a new phase) has shown certain characteristics that are distinctively different from the earlier phases, and they are:

 

  1. Through the process of globalization, liberalization and privatization global monopoly capital has been able to cross national borders freely and in this new phase of imperialism and it has successfully penetrated deeper into every aspect of human life in more parts of the world further than ever before. Monopoly capital in the form of large agribusiness has expanded its control over agricultural production from advanced capitalist countries to countries where capitalism is still in early stages of development. Today monopoly capital not only controls the inputs of agricultural production including seeds (often genetically modified), fertilizer, pesticides, herbicides, animal feeds, and agricultural machinery.[3] Large agribusinesses and grain trading corporations also control trading and marketing of agricultural products (within and across countries). Due to the high prices of inputs and cheap agricultural imports, small family farms in most less developed countries, which in the past had been self-sufficient in food supply can no longer produce enough food to feed their families even if they posses a small plot of land. Displaced peasants have no other way to support themselves but to eke out a living among hundreds of millions in the so-called informal sector of the economies in many countries, living in deplorable conditions in urban slums. Other displaced peasants risk their lives to migrate to other parts of the world to earn a meager income in order to send money home to support their families.
  2. Global monopoly capital has taken whatever belonged to the public and privatized it, turning the products of the seized assets into commodities to make profit. Using patent protection laws which have been written into World Trade Organization and bilateral and multilateral trade agreements, capital has increasingly taken control of the knowledge and skills accumulated by peasants and workers over thousands of years. Moreover, global monopoly capital has been able to use biotechnology to alter genes in natural biology and claim ownership over the gene altered products. This process of privatizing and monopolizing knowledge and skills developed in recent decades have reached a scale that were not previously possible, and this process has given global monopoly capital the potential of owning our future. At the same time when monopoly capital has been privatizing what used to be public, it has also been freely disposing the waste, the pollutants that have been privately created, onto and into the lands, rivers, oceans, and air that belong to the public. Capital’s increasing focus on short-run profit has rendered many places in the world virtually uninhabitable.
  3. Through the process of financialization that began in the early 1970s, finance capital has become even more dominant compared to the early 20th The liberalization and de-regulation of financial institutions and transactions in this new phase further enhance the power of finance capital. Through manipulation via new technology in communications, finance capital has gained more capacity to shift various crises from one part of the world to another. For the sake of larger financial gains finance capital has created increasingly bigger financial bubbles and then popped them, as we witnessed in the crisis of Latin American countries in the 1980s and again in the 1990s, the prolong economic depression in Japan since the bubble burst in the early 1990s, the crisis of Southeast and East Asian countries (including Russia) in the late 1990s, the most recent and lingering global crisis in 2007-2009 (and beyond), and the crisis of sovereignty debt in Southern European countries that has continued until this day. Moreover, bubbles created by finance capital have fueled speculations in residential and commercial construction – the building of resorts, golf courses, fancy hotels and other tourist facilities at a dizzying pace all over the world. Such construction took over farmland, forests, pastures, and seashores, and destroyed the livelihoods of farmers, fisher-folks, herdsmen and others who had lived productive and self-sustaining lives.
  4. Global monopoly capital has been able to dictate the new international division of labor, i.e., where a product is produced, how it is produced and where it is sold. Following the “rational” rules of the market, labor-intensive, high energy consuming, and highly polluting production, such as textiles and clothing, footwear, crude steel, making and assembling electronic products – were shifted from advanced capitalist countries to less developed countries. The moving of the highly polluting production from the United States to Taiwan and other less developed countries began in the 1970s when the environmentalists in the United States stepped up their pressure and forced the US Congress to pass laws and regulations against pollution. Taiwan and the other so-called Asian tigers, which chose to use exporting products of assembled parts and other labor-intensive products to boost their GDP, became the dumping ground of pollutants and waste generated by this kind of production. When more countries emulated Taiwan in building factories of those highly polluting industries (especially the most toxic electronic production), workers have been poisoned and pollution has been spreading around the world. Profit maximization of global capital has dictated that clothing be produced in Bangladesh where workers earn about $40 a month laboring in factories that endanger their lives, as shown by the horrific fire in November 2012 and the building collapse in April 2013 which killed more than 1,100 workers. Yet the country’s 4 million workers continue to labor under the same harsh and dangerous conditions. Following the tyranny of market discipline the new international division of labor also dictates the making and assembling of electronic parts be done in China. Although wages are higher in China, the government has provided more advanced infrastructure that facilitates the production and transportation of such products, as well the necessary education for workers to do such work. The Chinese government has made very little effort to enforce its lax environmental laws. Working conditions in electronic companies, such as Foxconn were so oppressive that 18 workers jumped from company buildings (14 of them died). Large automobile companies moved their parts and assembly operations to Mexico even before North American Free Trade Agreement (NAFTA) and sell the finished cars back in the United States. Then in the 1990’s the US, European and Japanese automobile companies formed joint ventures with Chinese companies to assemble cars in China and vastly expanded the world automobile market. Today global monopoly capital not only picks and chooses where certain type of production is to take place large global corporations also use a complex integrated strategy that involves splitting the production process into specific activities or functions by dispersing them in the lowest cost locations. This new international division of labor facilitates shifting the excess capacity, as well as the high-energy consuming and highly polluting production from advanced capitalist countries to developing countries. Governments in host countries that receive foreign investment compete with one another to make their countries more attractive to these giant global corporations. In order to gain a competitive edge these countries keep wages low and offer education and training to increase workers’ productivity. They also upgrade their infrastructure, offer many tax incentives, and allow these corporations to pollute their environment. Above all they use oppressive methods to keep workers from organizing. All governmental policies in this new phase of imperialism are justified on the basis of increasing a country’s global competitiveness.

The international division of labor is not limited to manufacturing. In recent decades it has expanded to agricultural production as well. On the one hand developing countries are importing more and more food grains from large grain producing countries – and on the other, they are using more and more of their own land, other natural resources such as water, and labor to produce beef, chicken, fish, shrimp, animal feed, pet food, fruits, honey, vegetables and flowers for export. In the past when people were ruled by colonial powers they could not use their own resources for development or for satisfying their own people’s needs. Resources were mined and exported. Land was used to produce coffee, cocoa, exotic fruits and then shipped out to faraway lands. That kind of exploitation continued in the post-colonial era, and in the current phase of imperialism the scale of exploitation has expanded and has also gone deeper depriving people the very basic necessities they need to exist. The consequences of globalization, liberalization, and privatization have displaced many millions of people who had been active producers.  With no cash income they cannot even buy the food they produce let alone other necessities of life. On a large scale rich resources in poor countries have been converted from producing food people need to commodities sold in the global market.

In addition to manufacturing and agricultural production, the production of services (to the extent possible) has also being globalized. The final General Agreement on Trade in Services of the World Trade Organization (WTO) became effective in January 1, 1995. Although theoretically this agreement allows a country to decide which service sectors they want to open up, in reality a country is constantly under pressure from the WTO and from Regional Trade Agreements and other bilateral and multilateral trade agreements to open its service sectors. Once a country opens up its service sectors, it has to apply the rules of national treatment to all foreign businesses, meaning it cannot favor domestic firms over foreign firms. The list of services included in this agreement is vast and would take several pages to list. But main categories include business services (legal, accounting, taxation, engineering, computer, real estate, advertising, marketing, security, insurance, packing, photographic, and many more), communications, construction, distribution (wholesale and retail), education (from primary school to college), environment, finance (banks and security), healthcare, tourism and travel, recreation (entertainment), transport (air, rail, and road). The coverage is so complete; it includes anything that anyone could possibly imagine. The production of many of these service categories has already been globalized – especially important are the financial, education, healthcare, entertainment, communication, and distribution sectors.

  1. Through globalization, privatization and liberalization, global monopoly capital has gained the power to restructure class relations in the advanced capitalist countries. I am most familiar with changes in the United States but similar changes to varying degrees have also happened in other advanced capitalist countries. Monopoly capital has forced workers in these countries into retreat, giving up many of the hard fought gains (higher wages, more benefits, better working conditions, etc.) won through many labor union movement struggles in the early postwar decades. As more and more manufacturing jobs were outsourced to Mexico, China, Vietnam, and Bangladesh, workers in advanced capitalist saw their wages stagnate, benefits, such as health insurance and pensions, reduced or eliminated, and regular full-time workers replaced by temporary and part workers with even lower wages and irregular working hours. In other words in this new phase of imperialism, new rules of capital accumulation gave monopoly capital in advanced capitalist countries the advantage over labor in dismantling the “social contracts” it had made with organized labor. Some service jobs, such as telemarketing and writing computer software, have also been outsourced to less developed countries where wages are cheaper. In the United States workers with less education, many of them non-white, have taken up low paid jobs in retail, restaurants, hotels, and other service sectors. These workers earning minimum wage without benefits cannot support a family, even if they work full-time, over-time and/or hold down two jobs.

In agriculture more and more labor-intensive products are either being imported or produced almost entirely by immigrant workers. Immigrant workers who had been displaced in their own countries also take up lowest paying and most physically demanding jobs in construction and landscaping. Globalization allows free flow of capital but makes labor migration across national borders illegal. This strategy makes immigrants without legal status most vulnerable to exploitative labor practices of their employers. Although capitalism since its earliest stage of development has displaced peasants in the process of primitive accumulation, and labor migration has always been a part of capitalist development, the current massive wave of border crossings caused by the bankruptcies of family farms in many countries should still be considered part of the new content of the current phase of capitalism.  Moreover, in advanced capitalist countries many of the services that were provided by the federal, state, and local governments have been privatized. Workers who worked in the government sector had unions, which negotiated decent wages and adequate benefits including health insurance and pensions. As government services have increasingly been privatized many of those government employees lost their jobs. Like their counterparts in industrial work these workers lost most of the gains they had fought for in the early post-war decades.

  1. As capital has become global it has lost in various degrees its national character. Cross border mergers and acquisitions (M & A) have increased dramatically in recent decades. In 2014 Alibaba, the largest online commerce company in China selected the New York Stock Exchange for its IPO.[4] Before the IPO, Yahoo had owned 25% of Alibaba’s stocks – but Yahoo was planning on selling 40% of its holdings. Alibaba wanted to increase its capital and chose the New York Stock Exchange for its IPO. Is Alibaba a Chinese company or an American company? To what extent does the nationality of the largest stockholder or the CEO still matters in the current globalized capitalist system? The proposed deal between the American drug maker Pfizer and British drug maker AstraZeneca eventually fell through. Originally Pfizer wanted to acquire AstraZeneca, because the move would strengthen its research and development potential. While this deal was being negotiated there were reports that if Pfizer could complete the deal, it might move the new company’s headquarters to Britain in order to enjoy a lower corporate income tax. At the end of 2013 another potential big M & A was General Electric (American) and Siemens (Germany), both of which were bidding to buy Alstom (French).

In addition to cross border M & A, global monopoly capital has been developing other kinds of alliances, including joint ventures, technological cooperation and others. As I explained in point #5 the current phase of imperialism has helped reconstruct the class relations in advanced countries; global monopoly capitalists have not only used their mobility to take advantage of cheaper labor, they have also been able to shed their responsibility of maintaining a functional infrastructure, an educated work force, and providing some measure of social welfare. This is demonstrated blatantly in the United States. How else can we explain the depilated roads and the crumbling bridges, the decline in public education as well as the concentration of wealth and income in the top 1% of the population?

  1. In less developed countries is there still a national capitalist class? If this class has not yet totally disappeared to what extent it has been significantly weakened economically and politically? In the several decades after World War II the national capitalist class in Latin American, Asian, and African countries led the fight against their former colonizers and imperialist countries for political independence. These leaders were aspired to develop capitalism independent of the imperialist powers. They tried to industrialize their countries by adopting the import-substitution model that the United States and Germany had adopted. However, by the 1970s their efforts to develop capitalism independently came under attack by global monopoly capital assisted by the supranational financial institutions, trade organizations, and governments of powerful imperialist countries. (See Part Two) In this new phase of imperialism the global monopoly capital has successfully incorporated these countries into the global capitalist system. Capitalists in less developed countries today, some of them are monopoly capitalists themselves work closely with global capital and have benefited handsomely at the expense of the workers and peasants of their countries. From the struggles in the past several decades we have witnessed that for their own liberation not only workers and peasants can no longer count on the help of these reactionary capitalists they have to fight against them and against what these capitalists represent.

During the Chinese revolution the national capitalists (as opposed to the compradors) played a positive role. In analyzing China’s situation, Mao saw the close alliance between the workers and peasants could form a coalition with the national capitalists and other petty bourgeoisie to fight against foreign, comprador, and bureaucratic capitalists.[5] However, in today’s China any capitalist, private or bureaucratic (state, regional, or local government owned enterprises) will jump at the opportunity to cooperate with foreign capital, because it usually means an opportunity for them to expand the scale of operations, to make bigger profits, and/or to acquire any new technology. All major automobile companies in the world have formed some kind of partnership, such as joint ventures and/or technological cooperation, with China’s state (fully or partially) owned and/or private companies. This is not just true in China but is also true in almost all other developing countries as mentioned above. It is certainly true that there are still small-scale “domestic” capitalists in LDCs that operate in the domain of domestic market, however, I think they too small and too insignificant to be counted as a national capitalist class.

  1. It is more obvious than ever that capitalism in this decaying phase is no longer sustainable. While surplus production is piling up, countless people are deprived of the basic necessities of life: clean water, adequate food, housing, health care, and education. Working people in many parts of the world have risen up and are fighting for their rights to live as human beings. During this decaying phase capital accumulation has sped up the pace of destroying surplus productive facilities and products. These surplus productive facilities were built by relentless capital expansion to occupy more space and to constantly render facilities obsolete by adopting the newest technology. Overcapacity of productive facilities has always been a constant problem for the capitalist mode of production, but it reaches a critical level when economic crisis hit. All of this constant and breakneck obsolescence of plants and equipment have wasted tremendous amounts of resources, as well as the labor that went into building them. Moreover, as industrial agriculture has taken over family farms in most the advanced capitalist countries, (particularly the United States), food production has depleted the soil’s natural nutrients and chemicals have polluted the rivers and seashores in a way that is no longer sustainable. This kind of reckless accumulation has exhausted more natural resources, occupied more virgin land and natural forests, and polluted more rivers and air at a faster rate than ever before. The ongoing destruction of the global ecosystem has caused global warming, leading to rising sea levels and larger, more frequent, and more extreme natural disasters. In the long history of the human kind no productive system has ever caused such tremendous damages to the earth within such a short time span.
  2. Since the end of World War II a number of supranational institutions (organizations) have been established. The most important economic supranational institutions are the two major international financial institutions: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD or World Bank), which has subsequently developed into the current World Bank Group. These two institutions have played a very important role in the current phase of imperialism. These financial institutions have used their financial power to exert significant influence on the less developed countries. The World Bank has used loans to entice these countries to take courses of development beneficial to global monopoly capital. The IMF has used the debt crisis in Latin American and Asian countries to impose neoliberal economic policies on these governments.

In addition to the two most important financial institutions there is the trade organization. The General Agreement on Trade and Tariff (GATT), was founded in 1946 and became the World Trade Organization (WTO) in 1995. The WTO plays a crucial role in establishing trade and investment rules and regulations in the new phase of imperialism. The national treatment of foreign investors has facilitated the expansion of global monopoly across national borders. Privatization and deregulation policies took away the protection countries had for their workers, the environment, and the ability of governments to provide minimum services to their population. There are also other regional economic supranational institutions, such as the Organization for Cooperation and Development (OECD), the G-7 (later the G-8) Economic Forums, the European Union, the Asian Pacific Economic Cooperation (APEC), and more. Part two of this paper will discuss in more detail the power and influence of the most important supranational economic institutions, i.e., the IMF, WB Group, and the WTO. In addition to the economic supranational institutions there are also political and military supranational institutions and alliances. This paper will not be able to cover a discussion on these political and military supranational institutions and alliances.

  1. At the end of World War II the US dollar became the world currency, which has been used as the medium of exchange for international trade, investment, and other financial transactions. In the early part of the postwar period the US dollar was backed by gold at the rate of $35 to one ounce of gold. Thus, from 1944 to 1971 the world was in fact on the gold exchange standard. Then in 1971, the United States announced unilaterally that it no longer would exchange dollars held by foreign central banks for gold. For the past 44 years the world has been on the dollar standard – a paper currency issued by the United States. US dollar is now used in three quarters of all international transactions, is the standard of value, unit of account, and the store of value, as the majority of foreign exchanges in most central banks are in US dollars.

Since the 1970s and especially since the 1980s the United States has run current account deficits (mostly from deficits in trade and also from US investment abroad) with many countries. In the 1980s the US ran the largest trade deficits with Japan –now it runs the largest trade deficits with China. Every US dollar outside of the United States is the US’ debt. As of the end of 2014 the net external debt (the gross external debt minus the stock of US investment abroad) of the United States amounted to $18 trillion. This qualifies the United States as the largest debtor country in the world. Not only does the United States have the largest accumulated debt, it continues to run balance of payment deficits of several hundred billions of dollars year after year.

For one country (the largest imperialist country) to run such large deficits for an extended period of several decades is unprecedented in the history of capitalism. In this new phase of imperialism the United States has been able to use debt as a weapon in its dealing with other countries. In fact the ability of the US to incur large deficits has been a necessity – especially in the past two decades to keep capitalism/imperialism running. It is the only way trade surplus countries could continue to pour large quantities of merchandise into the United States. The insatiable appetite of the United States to consume, to invest, and to spend (by its government) gobbled up tremendous amounts of goods and services from the rest of the world, which in turn has helped maintain a higher level of world production than otherwise possible. It is ironic how the overspending of the United States has kept the world economy from falling into an even more depressed state. For the past several decades the United States and other trade surplus countries have been locked into this toxic relationship – a distinctive characteristic of this new phase imperialism. This phenomenon only demonstrates the incurable illness of capitalism, which is that the relentless capital expansion at increasingly faster rates is worsening in its decaying phase. The sustained size of the US deficits have stimulated the world economy and kept it from falling into a deeper hole, but the increasingly unbalanced capitalist system has the inherent tendency to head towards a total collapse. Relying on the US’ deficit spending to absorb the world’s surplus production is like taking a poison drug, which will eventually kill the patient.

To conclude, if we can agree that capitalism/imperialism has reached a new phase with the characteristics presented above, then we may question whether these new characteristics would change how we analyze imperialism itself and most importantly how we struggle against it. In previous phases of imperialism, when an imperialist power was in decline another imperialist power rose to take its place as the United States rose to replace Britain as the leading imperialist power after World War II. As we have witnessed the recent decline in the power of the United States, the temptation from the Right and from the Left has been to try to pick out its replacement. Since China has been seen as a rising economic power and it has been reaching out to be included in the big power politics, all eyes are on China as it seems to be challenging the hegemony of the United States and may rise to become the next leading imperialist power. At this point no one is suggesting that China is already an imperialist power at the rank of the United States, therefore, whether it would become one or not is based on speculation. Although we should not ignore the possibility of China becoming another leading imperialist power, however, it is a mistake in our struggle against imperialism to focus our attention on the speculation of such a possibility. I, therefore, think our analysis needs to be broadened to include the whole imperialist system instead of focusing on individual imperialist countries.

Today global monopoly capital crosses state lines as if such lines no longer exist. In the process of globalization, privatization and liberalization most countries have worked and are continuing to work on eliminating most of the rules and regulations on capital. Whatever regulations on capital left are being homogenized through the national treatment clause of the WTO. As a result the differential treatment toward “foreign” vs. “domestic” capital has to a large extent either disappeared or in the process of disappearing. Would this change the way we see the revelry among major imperialist powers? Another question is if indeed national capitalists have lost their significance as an economic class in the less developed countries as I alleged in point #7 how would that change peoples’ struggles in the less developed countries today? A related question is to what extent governments in less developed countries today could be counted as an anti-imperialistic force? To answer these questions I think we need to change our focus away from deciding which countries should be categorized as imperialist and ranking the imperialist powers among them. During the current phase of imperialism it seems clearer than before who are benefiting from imperialism as a system and who are being exploited by it and thus have suffered under it. I think we need to seriously analyze the concrete conditions and drawn a line between them, thus identifying the tiny minority who would vigorously defend the global capitalist/imperialist system with any means necessary.

I recall that in the 1960s and 1970s analyses from the Left believed that due to imperialism capitalists in advanced capitalist countries had somewhat lessened the exploitation of their workers. That was sometime cited as the reason why workers in the United States were not at the forefront against the imperialist Vietnam War. Currently I would say that capitalists in advanced capitalist countries have been able to intensify the exploitation of workers in their countries due to how the new phase of imperialism has been constructed. For this reason class analysis – capitalist versus proletariat – stands out just as, if not more, important as analysis between and among nations. We have a tremendous responsibility to analyze where to draw the line between the exploiter and the exploited in this current phase of imperialism and to work tirelessly in uniting the exploited to fight the exploiter.

I will use concrete historical facts in Part Two to explain how the supranational institutions/organizations consolidate the power of global monopoly capital and why we still need to make a distinction between the advanced capitalist countries and the less developed capitalist countries.

Part Two: Supranational Institutions/Organizations

And the Less Developed Countries

 

In order to limit the length of discussion this part will only focus on the most important economic supranational institutions and organization. The two financial institutions are: the International Monetary Fund and the World Bank Group, and the trade organization is the World Trade Organization and its predecessor, the General Agreement on Tariff and Trade. The following will discuss separately how each of these supranational institutions (organizations) has used its power to impose changes on the less developed countries and the detrimental impacts of such policies on the less developed countries.

 

  1. The International Monetary Fund

Before World War II even ended the United States took the initiative to reconstruct the postwar economic order. The World War II Allies cooperated to establish the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) in 1944.[6] The goal of the IMF was to maintain the dollar based fixed exchange rates in order to avoid the frequent competitive currency devaluations during the Great Depression. The United States, France, England, and later Germany and Japan, together held (and still hold) the majority of the votes in the IMF. The United States has had the sole veto power, because at the IMF important decisions have to be approved by 85% of the votes, and the US always holds more than 15% of the votes.

The goal of IBRD (or World Bank) was to rebuild the war torn countries in Europe and Japan. At that time both performed limited and narrow, but nevertheless important, functions to the postwar capitalist economies.

However, during the decades of the postwar years both the IMF and the WB expanded their functions, the most important of which has been using their financial power to foster and impose changes on the less developed countries.

The IMF is notorious for using debt owed by the less developed countries to take control of their domestic policies. The best example is how the IMF imposed changes on the Latin American countries during the debt crisis in the 1980s. Here is a recount of this history. After the 1973-74 and 1979 oil price increases, American banks operating in Europe and European banks received huge amounts of Eurodollar (dollars outside of the US) deposits from Organization of Petroleum Export Countries (OPEC) as a result of the higher oil export earnings of the OPEC. These banks urgently needed to recycle the new money. Economies of the advanced capitalist countries were heading into further decline after oil price increases and large multinational businesses were in no mood to take out loans. At the same time the non-oil producing less developed countries needed more foreign exchange to import higher priced oil and food, but their foreign exchange earnings from exports of primary products declined from both lower prices and lower volumes due to world recession. This happened at the time when the multinational banks were eagerly seeking new borrowers. Thus, the banks extended low-interest (sometimes at negative real interest) loans to these countries. Most of these loans were short-term.

Then, when in the early 1980s inflation peaked in the US, Paul Volcker, Chairman of the Federal Reserve Bank, tightened the money supply and pushed the prime rate to over 21% in 1982. The banks quickly responded by raising the interest rates on all the loans to the less developed countries, forcing them to borrow more simply to keep up with higher interest payments. Within a few months the burden of servicing their debt for these countries more than doubled. In August 1982 Mexico declared that it could not make the principal and interest payments for that month. By that time Latin American countries all needed to borrow more just to meet the debt payments, but at the same time lending to Latin American countries stopped abruptly. Crisis spread from Mexico to other Latin American countries, to Poland and many African countries.[7]

What had happened in the early 1980s was a crisis of the world capitalist system, expressed in the form of debt crisis in Latin American and other developing countries. The crisis of capital accumulation of advanced capitalist countries deepened when oil prices quadrupled. When Latin American countries borrowed money from major international banks, they in fact helped alleviate the liquidity problem of the world financial system. If the Latin American countries had not taken out loans from these banks, the petro dollar deposits would have been sitting in these banks as dead weight, further pulling down the world economy. The Latin American countries used what they had borrowed to pay for the imports of food, oil, and industrial products, thus putting the petro dollars withdrawn from the international financial system back into circulation. As such loans continued, by the end of the 1970s the world’s largest financial institutions had their futures tied to their loans to Latin America and other developing countries. According to Volcker, nine of the largest so-called money center banks had the equivalent of about 250 percent of their capital committed to loans to developing countries. This meant that if the indebted countries had decided to default on their loans, their action would have bankrupted the largest money center banks in the world and the chain reaction from that would have brought unthinkable damage to the world capitalist system.

In this emergency situation “rescue” plans were worked out amongst the G-7 countries, the multinational banks, the International Monetary Fund, and the individual indebted countries.[8] These plans varied somewhat but all were based pretty much on the same scheme. The advanced capitalist countries used taxpayer money to make additional contributions to the IMF, the IMF then made additional loans to the indebted countries with the condition that they had to use the new loans obtained from IMF to pay back what they owed to the international banks, and the banks restructured the rest of the loans with some new money and extended the payment periods. Countries, which received loans from IMF, signed Structural Adjustment Programs (SAP’s) with the IMF to guarantee that the loans would be paid back within a certain period. Therefore, on the surface these plans were designed to “rescue” the indebted countries but in fact in the end they rescued the largest international banks, which had faced imminent bankruptcy.

When governments of indebted countries signed the Structuring Adjustment Programs (SAP’s) required by the IMF in exchange for loans, they gave away many important aspects of their economic and political sovereignty; the SAP’s dictated their monetary and fiscal policies. These countries were supposed to fight inflation with a tight money supply and high interest rates and were required to go through austerity by achieving budget surpluses at all costs, including spending cuts on education, and health and food subsidies, among many others. These countries were required to increase their exports in order to earn foreign exchange for debt payments. What was different in these new rounds of SAP’s was the added neo-liberal agenda including: privatizing national enterprises, liberalizing government policies by eliminating restrictions on trade and foreign investment, discarding measures that were designed to favor domestic enterprises, and de-regulating rules that protect labor and environment.

The SAPs signed by some countries also included a debt-equity swap scheme that worked to the advantage of international investors. For example, when Mexico was near default, its debt could be purchased in the international capital market at deep discounts – a $100 million bond could be bought for $30 to $40 million. The international investor could buy this bond and later redeem it at the full value of $100 million when the bond was used to exchange the equities of newly privatized enterprises. Many governments owned enterprises were sold at prices far below their value. Mexico alone sold nearly 1,000 national enterprises including banks, airports, highways, bridges, telephone companies, fertilizer, coffee, tobacco companies, and many others to international as well as domestic investors.

Volcker, in a book written with Toyoo Gyohten, former Japanese Vice Minister for International Affairs, recalled the achievements made in the debacle of the Latin American debt crisis and its aftermath in these words:

 

… At the start of the 1990s, a number of important countries were poised for progress: Mexico. Chile, Colombia, Venezuela, and even Argentina … Their governing philosophy, their economic policies, and even their political systems were fundamentally revamped from the stultifying approaches entrenched for decades. They no longer crouched behind high walls of protection, sheltering their national monopolies or cartels, seeking comfort and security in widespread government ownership and control of business, and rejecting foreign ownership of enterprises and the equity and energy could bring.

To a substantial degree all that has been abandoned. Instead, tariff and other import restrictions have been drastically reduced, in some instances pretty well eliminated. Drastic steps have been taken to sell off previously sacrosanct government enterprises such as airlines, telephone companies – even some banks. (The largest Mexican banks turned out to be worth more in the market than some larger and better-known institutions in the United States.) Subsidies for favored manufactures have been cut back and more modern capital markets have begun developing. It has become easier for foreign investors and companies to participate in joint ventures, even occasionally in the particularly sensitive areas of petrochemical and oil exploration.

… What had seemed impossible in the mid-1980s became political acceptable and almost unquestioned in direction. … Virtually uniformly those in charge were justly praised in the domestic and international business communities… (Volcker and Gyohten, 187-188, 208-209)

 

For a whole decade after the debt crisis began, economies in Latin America suffered the worst crisis since the Great Depression. Countless businesses failed, unemployment went up, wages went down, real per capita income declined, and poverty increased. But for the banks and other financial institutions the crisis was over by the early 1990s and Latin America again was a safe place for new investment. Foreign investment was pouring in and earning 20-30% returns on their capital. However, the crisis never ended for the developing countries, and with liberalization and deregulation their economies are more vulnerable than ever. Dasgupta wrote in 1998, “One perennial problem with IMF or World Bank assistance is that once dependence on them begins, it seldom ends. …During 1979-89, no less than eight had used a minimum of six programs over a period of six and-a-half years. There is, thus, strong evidence that IMF policies do not allow a country to graduate away from their reliance on these organizations.” (Dasgupta, 1998, 89)

The push toward further liberalization and deregulation continued through other free trade treaties such as the North American Free Trade Agreement (NAFTA) passed in December 1993. At the one-year anniversary of its passage, Chiapas, Mexico had an open rebellion caused by land grabbing by the Mexican government. The US president Clinton called for a hemisphere summit in December 1994. In his opening speech, Clinton said, “… the so-called lost decade in Latin America is a fading memory. …These reforms are working wonders…these are remarkable, hopeful times.” Only nine days after Clinton made the speech the worst crisis ever began to unfold in Mexico.  (Naim, 49)

In the meantime a new crisis of capitalism was unfolding in another region of the world – in Southeast and East Asian countries. Asian Pacific Economic Cooperation (APEC), launched in 1989, worked as a forum to push for several rounds of neo-liberal reforms in its 21 member countries. The United States fearing Japanese’s domination in the economies of these countries insisted on being included by adding “Pacific” to the title of the organization. After rounds of reforms that liberalized, de-regulated, and privatized these countries, foreign investments poured in – direct investment mostly from Japan and portfolio investment mostly from the United States – blew up large bubbles in both the stock market and the housing market, leading to returns on portfolio investments to unsustainable levels of 30% and 40%.

Then in 1997 capital (both foreign and domestic) flight began and values of local currencies (first the Baht and followed by Rupiah and Won) collapsed. In the following years the crisis spread to Russia and these countries like their counterparts in Latin America suffered the worst economic crisis in the half of a century after the end of WWII. What then? The IMF came to “rescue” by forcing them to sign the Structural Adjustment Programs for more rounds of liberalizing their financial market, financial institutions and to impose strict fiscal and monetary discipline. In the SAP signed by South Korea, the IMF not only required South Korea to eliminate restrictions on foreign investment and borrowing, it also required South Korea to liberalize its labor market, making it more flexible in order to keep pressure on wages. What followed was the collapse of local businesses including banks, further capital flight, high unemployment, falling real wages, and the impoverishment and dislocation of people. In 1999 when the crisis was just unfolding, Paul Krugman wrote, “… Over the course of the last two years seven economies – economies that still produce about a quarter of the world’s output and that were homes to two-thirds of a billion people – have experienced an economic slump that bears an eerie resemblance to the Great Depression, “ (Krugman 1999, vii – viii)

From these examples we can see that the capitalist/imperialist system through the IMF in the current phase of imperialism has been able the to shift crises to less developed countries. Also until the 2008 global crisis, the system was able to use international financial organizations such as the IMF to control the crises within one region of the globe by applying strict discipline and penalties on people in countries of that region. We can also see that in this current phase of capitalist/imperialist system the conquerors do not take one country at a time. Instead they utilize new tools at their disposal to sweep countries in the whole region clean all at once.  Moreover, these tools enable the IMF and other financial institutions to keep the debtor countries on their leash for many years to come. According to Susan George, between 1982 and 1990, in the eight years after the debt crisis started in Latin America when IMF repeatedly applied its “rescue” plans, net capital transfer from the poor to the rich countries equaled to $418 billion. In constant dollars that equals six Marshall Plans (the post war US aid to Europe.) However, in 1990 the debtor countries owed 61% more debt than they did in 1982. (George, xv-xvi)

 

  1. The World Bank

 

The World Bank has been thoroughly transformed since its inception in 1944. Currently it consists of several components and is being referred to as the World Bank Group. One part of the WBG, the International Bank for Reconstruction and Development (IBRD), was established in 1944 together with the IMF. In the immediate postwar years IBRD had a limited goal of helping the war-torn European countries and Japan rebuild their economies, including the construction of infrastructure destroyed during the War. When the rebuilding ended, IBRD started to make long-term loans to less developed countries. Those loans were usually aimed at upgrading infrastructure in order to facilitate the export of mined resources and other primary products. In 1960 the International Development Association (IDA) was established. IBRD floated bonds on the capital market to receive funds needed for its operation so it was (and still is) self-sufficient and profitable. In contrast, from the beginning the IDA has been funded by the United States for its loans to poor countries. According to Wade this funding has made it possible for the US to assert more control on the IDA’s operation. (Wade, 2002, 203-4) The United States exercised its power when it asked the President of World Bank to withhold loans to Vietnam and warned if it failed to do so, the US Congress would stop its funding to IDA. (Kapur, Davesh et al., 1997, 1150)。

Both the IBRD and the IDA belong to the public sphere of the World Bank. These members of the World Bank Group together with some regional development banks extend longer-term loans to less developed countries as a way to influence the direction of their development. In 1961 after the failed US invasion of Cuba, President Kennedy launched the Alliance for Progress Project in Central America in an attempt to “stabilize” the economies of these countries through export based development. Central American countries converted their best land to grow cotton to meet the world’s growing textile market and cleared their forests to raise cattle for the growing US fast food industry. The IBRD, IDA, and Inter-American Development Bank provided loans for infrastructure building. Like the IMF, the World Bank imposes SAP on countries when the debtors have difficulty paying back their loans. Borrowing from these organizations continues to breed more dependence.

However, it is the less-known private arm of the World Bank Group that requires our special attention, because of its recent rapid expansion. The private arm consists of three entities: the International Finance Corporation (IFC) established in 1956, the International Center for Settlement of Investment Disputes (ICDID) established in 1966, and the Multilateral Investment Guarantee Agency (MIGA) established in 1988. The IFC does not make loans to countries – it makes loans to private corporations which invest in less developed countries. According to its website, “The IFC provides loans and equity financing, advice, and technical services to the private sector. The IFC also plays a catalytic role, by mobilizing additional capital through loan syndication.” The IFC has so far financed 3319 companies in 140 countries and is one of the fastest growing members in the World Bank Group. The IFC’s annual loans increased from $5.3 billion in 2003 to $8.3 billion in 2008 and in 2008 the IFC had a portfolio of $42.4 billion plus another $7.5 billion in its loan syndications. (http://www.bicusa.org/institutions/ifc/) The ICDID (established in 1966) and the MIGA (established in 1988) provide political risk insurance to companies in case their assets are seized by local governments or destroyed in war or other civil disturbances. These two agencies help private investors calculate their risks, and when unexpected events occur, they help minimize the damage.

According to one report, about two-thirds of the IFC’s funding goes to loans to businesses in just 15 countries – most of them  “middle income countries”. For example, the IFC supported Domino’s Pizza in South Africa, and cable television in Brazil. It invested in breweries in Romania, Russia, Tanzania and the Czech Republic, as well as expensive private schools in Pakistan and Uganda, and luxury hotels in Egypt, the Maldives, Vanuatu, Costa Rica and Mexico. The MICA has insured many of these investments. In more recent years the IFC has expanded its loans to agriculture and other food related projects, which in 2012 totaled $4.2 billion out of its total loans of $20 billion. One of such projects was the funding of Norson Holding, a joint venture in Mexico between US meat processing firm Smithfield Foods and local investors. Another example is the IFC’s loan to build Lidi supermarkets in Bulgaria, Croatia and Serbia, and loans totaling $60 million went to Coca Cola and Pepsi. In the five years before 2012 the MIGA extended more than $220 million in political risk insurance to support Citibank’s global expansion. Multinational oil companies such as ExxonMobil, Elf of France, and British Petroleum (BP) received more than $150 million in support from the IFC and the MIGA during the same period. (See IFC and MICA, The Whirled Bank Group: http://www.whirledbank.org/ifc_miga.html)

Since 1980 the IFC has also been active in directing portfolio investments in the so-called emerging markets and in recent years has become a significant player. It currently has $3 billion invested in 180 funds widely distributed across all regions including Africa, East Asia, South Asia, Eastern Europe, Latin America and the Middle East. The IFC’s role is to help funds establish themselves. When those funds are able to attract commercial investors, the IFC then moves on to fund other emerging managers. Since 2000 the IFC has held an annual Global Private Equity Conference in Washington, DC bringing together fund managers, institutional investors, financial institutions and others who are active in the global private equity industry in emerging markets. This annual event has become the most comprehensive emerging market private equity conference in the world; in May 2013 875 delegates from 60 countries attended the 14th annual conference.  (http://www.ifc.org/wps/wcm/connect/Industry_EXT_Content/IFC_External_Corporate_Site/Industries/Home/Conference/) Portfolio investment has been the most destabilizing factor in many less developed countries. It is clear that the IFC has played a significant role in these investments.

The IFC has also played an active and significant role in water privatization. Some giant water companies, such as Suez and Veolia Environment (previously named Vivendi) of France and RWE-AG of Germany have been very active in pursuing the privatization of water. The IFC has not only provided loans to these companies, it has also helped them make connections with various governments. A paper written by Maude Barlow and Tony Clarke on water privatization published in the January 2004 issue of Global Policy Forum is worth quoting at some length:

 

The World Bank serves the interests of water companies both through its regular loan programs to governments, which often come with conditions that explicitly require the privatization of water provision, and through its private sector arm, the International Finance Corporation, which invests in privatization projects and makes loans to companies carrying them out. Lending about $20 billion to water supply projects over the last decade, the World Bank has been the principle financer of privatization. A year-long study by the International Consortium of Investigative Journalists, a project of the Washington-based Center for Public Integrity, released in February, 2003, found that the majority of World Bank loans for water in the last five years have required the conversion of public systems to private as a condition for the transaction. The performance of these companies in Europe and the developing world has been well documented: huge profits, higher prices for water, cut-offs to customers who cannot pay, little transparency in their dealings, reduced water quality, bribery, and corruption.

(http://www.globalpolicy.org/component/content/article/209/43398.html)

 

A New Yorker article: “Leasing the Rain,” written by William Finnegan subtitled “the world is running out of fresh water, and the fight to control it has begun.” (Letter from Bolivia, The New Yorker, April 8, 2002) In this article Finnegan said that according to Johan Bastin, the European Bank for Reconstruction and Development considers water as the last infrastructure frontier for private investors, and that the municipal and regional water systems have been steadily coming onto the international market in the past 15 years. The author continues to say that all countries including the United States are facing the pressure of water privatization “… the main push is in the Global South, where, over the past twenty years, the World Bank and the International Monetary Fund have effectively taken control of the economies of scores of nations that are heavily in debt.” The Bank “… often works closely with the conglomerates, helping them to acquire the water assets of debtor nations.”

In addition to financing private water companies in their privatization endeavors, the IFC also plays a significant role in financing large oil companies in their fossil fuel investment projects. In April 2012 seven internationally well-known environmental groups collaborated on a report: World Bank, Climate Change, and Energy Financing: Something Old. Something New?[9] The report charged that although the World Bank Group has been building an image as a leader fighting against climate change, it has in fact expanded its fossil fuel financing and its support for large-scale carbon intensive energy infrastructure. The report said that at the 2010 United Nations Climate Change negotiations in Cancun the World Bank was named the interim trustee of the Green Climate fund and has since tried to position itself to play an even much greater role.

However, in the meantime as the Report indicated, the World Bank has been intimately involved in the fossil fuel industry in many parts of the world. For example, in 2004 the WBG approved financing to a consortium, led by Chevron, Texaco and including Royal Dutch Shell, for the West African Gas Pipeline to transport gas from the Niger Delta to Benin, Togo, and Ghana. For this project the IDA provided a guaranteed $50 million and the MIGA insured another $75 million to cover political risk. Despite strong protests from 12 community groups in Nigeria charging that this pipeline would cause irreparable damage to their land and destroy the livelihoods of their communities, and the fact that the Bank did not comply with its own policies and procedures, the pipeline was nevertheless completed. (23)

In addition, large oil companies such as Shell, ExxonMobil, and Chevron chose to burn off the natural gas associated with their oil extraction. This process of burning, known as gas flaring, has continued for four long decades, even though it became illegal in 1984. There are 100 places in the Nigeria Delta where illegal gas flaring takes place routinely, causing environmental and health damage from the emitted greenhouses gases and chemicals, such as sulfur dioxide, nitrogen dioxide, benzene, dioxin, and toluene. Nigeria’s gas flares are one of the top sources of pollution in Sub-Saharan Africa. The amount of gas burned each year is the equivalent of 25% of the US’s and 30% of EU’s total annual gas consumption. Ironically residents in the Niger Delta, who are among the poorest in the world, do not have any gas or electricity for their own consumption. Furthermore, the World Bank gave direction and provided funds to publish a guidebook for the oil and gas companies on how to obtain carbon credits under the Clean Development Mechanism (CDM) projects. Instead of being penalized for what they have done to the environment and people in Nigeria for more than four decades, these companies are to be rewarded with carbon credits for reducing their illegal gas flaring. The IFC financed large energy projects in Nigeria are one of several case studies on environmental damage reported by the environmental groups in World Bank, Climate Change, and Energy Financing: Something Old. Something New? The Report also said that the total damage of the IFC’s financing in large fossil fuel projects is unknown, because the IFC has made loans and investments through its loan syndications, whose records are not disclosed.

It is abundantly clear that both the International Monetary Fund and the World Bank have greatly expanded the very limited roles defined at their inception. In the current phase of imperialism both of these international financial institutions have played increasingly important and pivotal roles in assisting global monopoly capital to conquer economies all over the world. Both of these financial institutions have strengthened the power of global monopoly capital to deal with the laboring class worldwide, establishing new content in imperialism in the current phase. Since the United States, EU countries, and Japan control the majority of the votes, and US is the only country that has the veto power over major decisions in these institutions, it is not difficult to see who plays the dominant role in deciding the direction and in setting the policies.

 

III. General Agreement on Tariff and Trade and World Trade Organization

 

Similar to the transformation of international finance institutions, international trade organizations went through a complete overhaul over the past six plus decades. When the General Agreement on Tariff and Trade (GATT) was established in 1948, it had a limited goal of promoting international trade by cutting tariffs and eliminating import quotas. During the Great Depression, the advanced capitalist countries competed fiercely for the shrinking world market by trying to export to other countries while preventing imports from other countries. The result was that international trade came to a halt when each advanced capitalist country raised their import tariffs and restricted trade by setting up quotas. The damaging effect of trade protectionism was the same as the competitive currency devaluations mentioned above. Therefore, at the end of the War the United States and its allies were eager to restore the normal functions of international trade and began negotiations under the United Nations Conference on Trade and Employment and established GATT in 1948. In addition to cutting import tariffs and eliminating import quotas, GATT also wanted to prevent the formation of the kinds trading blocks that had happened before the War, so GATT required all participating countries to extend equal treatment to all their trading partners by establishing the Most-Favored-Nation provision. [10]

GATT was not set up as a permanent institution. Instead it served the function of holding rounds of trade negotiations among countries when the need to negotiate trade issues arose. 26 countries participated in the fifth (the Dillon Round) round of negotiations that started in 1960 and all five rounds of negotiations were completed in a few months. Trade negotiations during those first five rounds were straightforward – they were all about lowering tariffs and eliminating import quotas. The participating countries all made concessions and GATT achieved its goal in promoting international trade, which helped postwar recovery. By the sixth round (the Kennedy Round in 1964) and the seventh round (the Tokyo Round in 1973), more countries were included in the trade negotiations (62 for the Kennedy Round and 102 for the Tokyo round), and the negotiations lasted longer (37 months for the Kennedy Round and 74 months for the Tokyo Round).  By 1964 market competition increased and anti-dumping measures were added. Then in 1973 the postwar capitalist crisis entered a more severe stage, and advanced capitalist countries set up non-tariff trade barriers to block trade amongst them and also blocked imports from less developed countries.

When the eighth round (the Uruguay Round) of negotiations began in 1986 the transformation of GATT progressed to a new stage. During the eight years (1986-1994) of negotiations, significant changes took place. At the completion of the eighth round in 1995, the World Trade Organization (WTO) was established as the new permanent international trade organization.

The Uruguay Round included 123 countries and aimed to incorporate new strategies of capital offenses agreed upon by major advanced capitalist countries in the era of the new phase of imperialism – namely enforcing globalization, privatization, liberalization and de-regulation across all national borders. As we have witnessed, these new strategies were designed to find a way out for the deepening capitalist crisis. The strategies strengthen the power of capital and sweep clean all barriers that would prevent capital from flowing freely to any place where opportunities for accumulation exist. During the decades prior to the formation of the WTO, monopoly capital with the help of imperialist countries obtained many privileges from imposing Structural Adjustment Programs on less developed countries during the re-occurring economic crises. The negotiations during the Uruguay Round protected these newly obtained privileges by writing them into trade and investment rules and then enforcing these rules through trade disciplines. Thus the Uruguay Round had less to do with simply negotiating trade than with cementing these privileges obtained by global monopoly capital and pushing for even more privileges. By this time most countries no longer had any choice about joining the negotiations lest it be isolated from the world trading system. That was why the number of countries jumped in numbers to 123. When the World Trade Organization replaced GATT in 1995, the number rose to 128. Compared to the previous seven rounds, the Uruguay Round has several distinguishing features. They are briefly explained as follows:

 

  • Liberalization of foreign investment: The negotiations extended from trade to investment by setting foreign investment rules in the Trade Related Investment Measures (TRIM). The background of TRIM was that by the late 1980s foreign direct investment in less developed countries increased rapidly, and governments in these countries began to apply measures to restrict foreign investments. Most measures were intended to protect domestic business from the competition of foreign businesses, and they included local content requirements, technology transfer requirements, export performance requirements, foreign exchange requirements, and restrictions set on the foreign share of equity in joint ventures, etc. These requirements put limits on foreign investment with the hope of protecting domestic businesses. Under the new rules of TRIM, these requirements were eliminated; foreign investors would receive national treatment in all investing matters – meaning that all foreign investors would have to be treated the same as domestic businesses. TRIM like other agreements negotiated and passed during the Uruguay Round of GATT (see below) made sweeping changes to eliminate as many barriers as possible for global monopoly capital to operate in developing countries.
  • Agricultural Liberalization: While agricultural trade negotiations were not part of the first seven rounds of GATT negotiations, they were an important part of the Uruguay Round. The main reason was that advanced capitalist countries realized that they had to change their domestic policies to reduce the fiscal burden of agricultural subsidies, but each country did not want to do so unilaterally. During most of the postwar decades, advanced capitalist countries had farm policies to protect farmer income from falling agricultural prices. Internationally they used high tariffs and import quotas to block agricultural imports. Therefore, tariff reduction and import quota elimination did not include agricultural products during the first seven rounds of GATT negotiations. After the 1970s boom in the price of agricultural products, prices slumped in the mid-1980s. Governments of the US and EU used subsidies to support artificially higher farm prices that resulted in surpluses in farm products. Between 1980 and 1986 the costs of US farm programs increased five-fold in real terms reaching $26 billion, and in EU’s government expenditures on farm support programs doubled in real terms between 1975 and 1986. (Parrlberg, 5)

Then the 1985 study by the Trilateral Commission strongly advocated that in order to reform the farm program effectively all industrial countries needed to implement the reform simultaneously.[11] The new round of GATT negotiations in 1986 provided the perfect opportunity. Agricultural trade negotiations during this round aimed to facilitate reducing the fiscal burdens of farm subsidies for the United States, and EU, and at the same time opening market access in developing countries for the agricultural surpluses of developed countries.

One major areas of the agreement on agricultural trade was the reduction of subsidies. Over a period of six years the developed countries were required to reduce export subsidies by 36% in real terms and 21% in quantity terms, with a 20% reduction of certain types of domestic subsidies. All non-tariff border restrictions, such as import quotas and import licenses, are required to be converted into tariffs and then reduced by 36% over the six-year period. For the less developed countries, with the exception of the “least developed” countries, export subsidies had to be reduced by 24% over a ten-year period. The less developed countries were allowed to retain domestic agricultural support in the form of government assistance for agricultural and rural development programs, subsidies for investment and for agricultural imports, etc. As for domestic subsidies for agricultural production, the developed countries were made to reduce them to 5% of their production by 2000 and less developed countries were made to reduce them to 10% of their production by 2004.

The other area of agreement was about market access for agricultural imports. All GATT members had to allow certain minimum levels of agricultural imports at low tariffs for food staples. A “minimum access” was set at 3% of domestic consumption for the first few years, increasing to 6% by the tenth year. All countries had to allow “minimum access” imports at low tariffs. For rice imports the “minimum access” was 1% of domestic consumption at low tariffs in the first year, rising to 4% by the tenth year. Thus the agreement on agricultural trade eliminated all import quotas by converting quotas into a two-tier tariff. For example, by the tenth years all less developed countries had to allow imports equal to 6% (4% for rice) of their domestic consumption of staple food at low tariffs. Higher tariffs were permissible for imports above the “minimum access”.

We will see later how the Agreement on Agricultural Trade opened further opportunities for agricultural products exports for the US, EU and some other food exporting countries. However, in order to understand how aggressive the United States has been in pushing its agricultural surpluses onto the rest of the world, we need to look back to the US aid programs in the early postwar decades. Such aid programs (under Public Law 480) were carried out by the US exporting its agricultural surpluses (wheat, corn, cotton, dairy products, etc.) to countries all over the world. The shipments of food were sold in the local markets in countries that received aid and the receipts (in local currency) were then used for various aid projects. These food shipments lowered the price of food in these countries and were instrumental in replacing peoples’ traditional diet of food staples such as rice with US grown wheat. When the aid program ended in the 1970s wheat became part of the regular diet for people who had never consumed it before the food aid program. These countries later became regular customers for US wheat exports. When the price of wheat went up in the 1970s due to crop failures in the nations that made up the former Soviet Union, non-oil producing countries not only had to import higher priced oil, they also had to pay higher more to import wheat, further worsening their foreign exchange shortages.

South Korea is a good example of how US aid affected its domestic agricultural production and its dependence on food imports. South Koreans did produce and eat wheat but food aid under PL 480 had a strong impact on Korean wheat production. From 1956 to 1970 South Korea received a total of $800 million food aid. The result was that the area used to plant wheat shrank from 583,000 acres in the 1940s to only 39,000 acres in 1968. After the Korean War the United States sent more food aid to South Korea under PL480. In addition to wheat flour, US food aid included sugar and milk. According to Lee Kwang Seok of the Korean Peasants League in a recent interview, Korean people were grateful to receive the aid – “however, as time went by, we saw that those sectors of agricultural economy were destroyed.” Then in the anticipation of a Free Trade Agreement with the United States which pushed for further agricultural trade liberalization, Lee said, “… now with the FTA, the policies are aimed at further destroying agriculture in Korea.” (Miles and Ahn)

The Agreement on Agricultural Trade has given the United States and the EU further opportunities to expand their food exports. On the surface it seemed fair that the less developed countries were given favorable treatment for reducing their export subsidies by 24% in ten years instead of by 36% in six years as required for the developed counties. However, a closer look proves that this is not the case, because the developed countries gave large subsidies to aid agricultural exports while the less developed countries had very little export subsidies to begin with. Furthermore the developed countries extended credit to exporters to facilitate grain exports, but they do not count that as an export subsidy. From 1995 to 1998 the United States extended $12.8 billion in export credit, most of which went to agricultural exports.

As far as subsidies for domestic production is concerned, governments in less developed countries often lacked the financial resources to subsidize agricultural production. At most these governments sold fertilizer and other inputs to farmers at discounted prices and had some price guarantees for certain agricultural products. In contrast, the developed countries assisted their agricultural production heavily through agricultural research, insect control, insurance for crops and farmers and direct payments to farmers. Yet all these forms of assistance were put into a “Green Box” and items in the “Green Box” were not considered subsidies. In 1995 “Green Box” spending in developed countries totaled $110 million of which the United States, EU and Japan spent 94%. For all less developed countries “Green Box” expenditures totaled merely $19 million of which 59% were spent by Brazil, South Korea, and Thailand, while all other developing countries spent less than $8 million altogether.

The opening for staple food imports has provided new export opportunities for developed countries. In the mid-1980s while the United States was pushing for trade negotiations on agricultural products, it simultaneously and unilaterally pushed to increase its agricultural exports. The pressure was especially strong for countries that had large manufacturing export surpluses with the United States, such as South Korea, Japan, and Taiwan. The United States used it own domestic trade law Section 301 to unilaterally pressure other countries to open up their agricultural imports. In the 1980s Washington pressured South Korea to open its market for US tobacco, wine, rice, and beef. After negotiations in agricultural trade concluded and agreements became effective in the WTO in 1995, the US effort to push for bigger agricultural exports continued. In 2007 the US – Korea Free Trade Agreement was approved by both governments, and when it became active in March 2012 South Korea’s tariffs and quotas for a broad range of agricultural product imports (almost two-thirds by value) were completely eliminated. (Miles and Ahn) That was what Lee Kwang Seok of Korean Peasants League meant when he said. “… now with the FTA, the policies are aimed at further destroying agriculture in Korea.” All the efforts to open up trade did not stop at the conclusion of the Uruguay Round and the establishment of the WTO. Advanced capitalist countries continue pushing for more export and investment opportunities through additional bilateral and multilateral free trade agreements.

The plight of Korean farmers was not known to most people until it caught the media’s attention when at the 2003 WTO ministerial meeting in Cancun, Lee Kyung Hae, a farmer and former parliamentarian, committed suicide in front of South Korean delegation of farmers and union activists protesting against the WTO. In a statement passed out before his death, Lee wrote, “Uncontrolled multinational corporations and a small number of big WTO members are leading an undesirable globalization that is inhumane, environmental degrading, farmer-killing and undemocratic.”  To show the deep crisis of the Korean farm sector, farmers joined protestors from other sectors and again showed a strong force in the demonstration against WTO at the 2005 ministerial meeting in Hong Kong.

Liberalization of trade and investment has strengthened the power of global monopoly capital in their strategy to conquer the world, rendering national borders irrelevant when it comes to where to produce and where to sell. Such decisions would then be solely based on how monopoly capital could freely take advantage of profit making opportunities. As far as monopoly capital is concerned, food security and food sovereignty, sustainable environment, and displacing hundreds of thousands of active productive farmers are not issues of their concern. Former US Agriculture Secretary, John Block once expressed such a view by saying, “The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available in most cases at lower cost". (Roberts, 130)

 

  • General Agreement on Trade in Services: Negotiations on trade in services was initiated and pushed forward by the United States as early as the late 1970s. By the early 1980s the United States began to have large trade deficits. However, its large deficits in merchandise trade was somewhat balanced by surpluses in service trade. The United States saw increases in service trade as a way to reduce its overall trade deficits. Also in the early 1980s technology made it possible to sell services (financial and telecoms) to distant places and thus bring down barriers to service trade. The service industry saw new opportunities in trade, yet at the same time according to William E. Brock, the US Trade Representative, the barriers in service trade were increasing. (Brock. 229-240) In 1982 led by the heads of American Express and the Citibank, The Coalition of Service Industries (CSI) was established. The CSI’s original focus was on banking, insurance, and the right to establish banks and insurance companies in foreign countries. According to Marchetti and Mavroidus, “The CSI gathered data, organized conferences, engaged in extensive public lecturing, and heavily lobbied the US government to this effect. Prominent members of the service industry provided evidence to the US Senate Finance Committee (SFC) arguing the case for a global agreement.” (Marchetti and Mavroidus) Later John Reed of Citibank was elected to head the Service Policy Advisory Committee and James Robinson of American Express headed the advisory Committee on Trade Negotiations. (Ibid.) By this time it was clear the expansion of service was more than selling services via telephone or other means of communication. The exports of services included direct investment to set up banks and insurance companies in foreign countries.

The final General Agreement on Trade in Services went through more than a decade of negotiations. There was strong opposition from developing countries especially Brazil and India. It finally concluded at the end of the Uruguay Round, and was incorporated into the World Trade Organization and became effective on January 1, 1995. Theoretically GATS allows a country to decide which service sectors they want to open up. In reality a country is under constant pressure to submit its schedule for its commitment. Once a country opens up its service sectors, it has to apply the rules of national treatment to all foreign businesses, meaning it cannot favor its domestic firms over foreign firms.

The list of services is vast, but the main categories include business services (legal, accounting, taxation, engineering, computer, real estate, advertising, marketing, security, packing, photographic, and many more), communications, construction, distribution, education, environment, finance, health, tourism and travel, recreation, transport (air, rail, and road). The coverage is so complete and includes almost anything that anyone could possibly imagine.

Some less developed countries have voiced their concern over their capacity to regulate transnational; service businesses. Since financial services are covered by GATS, the United States and the EU have made demands on developing countries to liberalize their financial sectors, such as eliminating regulations on activities of hedge funds and trade in derivatives. The 2008 financial crisis showed how vulnerable the financial sector of these countries was and how helpless it was when it came to protecting their countries in times of global financial crisis.

Just like any agreement reached for trade in agriculture, GATS continues to evolve. The transnational corporations of services providers relentlessly push to expand into other markets. Currently the United States Trade Representative has negotiated with its trading partners toward The Trade in Services Agreement (TISA) in Geneva, Switzerland. The number of participating countries increased from 20 to 50, representing 70% of the world’s trade in services.

  • The agreement on Trade-Related Intellectual Property Rights: We should take notice that all the new agreements negotiated during the Uruguay Round of GATT were about liberalization, i.e. eliminating regulations and restrictions that existed in the late 1980s and early 1990s. Yet the new rules regarding intellectual property rights are exactly the opposite. These rules have placed stricter restrictions on patents, licensing, copyrights, trademarks, etc. to protect their holders. The Trade-Related Intellectual Property Rights agreement like all other so-called agreements is really not properly named, because it contains rules and regulation regarding intellectual property rights adopted by advanced capitalist countries which are then imposed on the developing countries.

During the early stage of industrialization, countries passed laws that granted patents to protect individuals who had invented new products. As early as 1883 eleven countries held a Paris Convention and signed an agreement regarding the protection of patents. Under this agreement each country would have its own domestic patent laws, and they agreed only on the procedures of writing such laws – not the content. They also agreed that each country should treat applications for patent by its citizens the same as applications by foreigners. There was absolutely no requirement for countries to protect patents issued by foreign countries. Since the United States and Germany developed their industries later than Britain, companies in the US and Germany could only obtain British technology by stealing industry secrets and by hiring British technicians to work for them. During the early stage of development, today’s advanced capitalist countries did not honor any patents granted by foreign countries. However, two governments could enter into a reciprocal agreement to protect each other’s patent rights when each felt such an agreement was mutually beneficial. (The Economists, September 14, 2002 75-76)

In 1967 the World Intellectual Property Organization (WIPO) was established to administer the Paris Convention. As of 2013 it had 175 contracting member countries. However, as early as 1979 the United States initiated efforts to move the intellectual property right protection negotiations to GATT. The United States wanted intellectual property rights (IPR) to be included in trade negotiations because it didn’t believe WIPO had enough enforcing power. GATT and then the WTO could use trade retaliation as an enforcing tool. Their efforts were met with opposition from Brazil and India, which later withdrew their opposition. The Trade-Related Intellectual Property Rights was formally included in the Uruguay Round of GATT in 1989.

During the 1980s the granting of patents went through drastic changes. In 1980 a researcher at General Electric found a microbe that could consume oil, so GE applied for a patent for this discovery. The US Patent Office denied the application because patents were supposed to be issued for inventions, not for discoveries. GE sued the US Patent Office and the suit went all the way to the US Supreme Court, which ruled in GE’s favor. From then on patents have been granted for the discovery of living things and later expanded to the manipulation of living things – for example, the well-known Harvard Mouse with specific genes that causes it to respond differently to cancer treating drugs. Harvard University applied for and received a patent for its mouse. From that point on, cancer researchers have had to pay Harvard University royalties to use their patented mouse for experiments. From the Harvard Mouse, the granting of patents expanded to Monsanto’s genetically engineered plant seeds. The ownership of patents has expanded to areas broader than living things and genetic manipulation of genes in living things. Seth Shulman, author of: Owning the Future claims that patents, copyrights, etc. have become more valuable than physical assets. In chapter one of his book he wrote:

 

Today doctors are claiming to own the medical procedures they once shared openly with colleagues. Software firms are winning monopolies on the basic building blocks of computer code needed to write new programs and using their ownership to stymie would be competitors. Scientists at the nation’s top universities and research institutions complain that collegial discourse has withered in the face of proprietary claims and secrecy among researchers. Drug companies are systematically gathering wild plants, insects, and microorganism from the globe’s far reaches and claiming exclusive dominion over chemicals they contain. Even our own genetic makeup is being sold: of the portion of the human genome that has been mapped, roughly a third is already privately owned. (3)

 

On the same page Shulman pointed out a comment made by an intellectual property lawyer who said that this gold rush on knowledge assets has made the nineteen-century robber barons look like “penny-ante operations.”

Since monopoly capital has been competing fiercely in the field of acquiring knowledge assets, the branch of law on intellectual property rights has become very prominent. Large transnational corporations in the fields of biotechnology, pharmaceuticals, computer hardware and software, music and movies, and many others have teams of lawyers who are specialized in such laws. In fact, the provisions written into TRIP were demands made by those corporations and written by their lawyers. Their demands were handed over to their government representatives who negotiated on their behalf. Provisions in TRIP cover a wide range of intellectual property rights including patents, copyrights, licensing, trademarks, trade secrets, and more.

Like Trade Related Investment Measures, Trade in Agriculture, and the General Agreement on Trade in Services, the Trade Related Intellectual Property involves changes in the domestic laws of WTO member countries. Provisions in TRIP not only require all member countries to honor the patents, copyrights, etc. issued by foreign countries, they also require all countries to rewrite their domestic laws or write new laws that match the same standards of intellectual property protection applied by advanced capitalist countries. This is known as the “harmonization of standards”. For example, in the United States a patent issued to a drug company that invented a new drug gives the company a 20-year protection against other companies that produce a generic version of the same drug. The United States wants other countries to write their laws to protect the patents for new drugs for the same length of time.

For less developed countries, implementation of TRIPS, which include revising existing laws and writing new laws, as well as setting up enforcement mechanisms involve significant costs. According to a World Bank study the cost of upgrading intellectual property laws and their enforcement was estimated at $30 million in Mexico. (Finger and Schuler) Moreover, in the discussion on how TRIPS would affect less developed countries economically, some have argued that under TRIPS more royalties will be paid from these countries to the transnational corporations in the developed countries. These payments are equivalent to rent transfers from developing to developed countries. The stronger and stricter the provisions in TRIPS the larger these rent transfers. Additionally after the provisions became enforceable in the WTO, in recent years the United States, in bilateral free trade agreements with a number of developing countries, included additional intellectual property obligations from these countries beyond the requirements of TRIPS. And for countries, that are currently negotiating to join the WTO, so-called WTO-plus commitments have been required as a condition. These WTO-plus commitments can take the form of additional obligations on intellectual property rights enforcement.

 

To conclude, during the current phase of imperialism, supranational financial institutions and trade organizations (including regional, bilateral, and multilateral trade treaties and agreements) gained tremendous power over governments all over the world and especially less developed countries. Part Two gives examples of the actions taken by the most important supranational financial institutions and trade organizations to show that these supranational entities work on behalf of global monopoly capital to open all national borders. These institutions and organizations closely followed the neoliberal agenda, which vigorously promotes globalization, privatization, and liberalization in order to provide an open space where global monopoly capital can conduct businesses freely without any interference.

During the past thirty plus years we have seen how governments (especially those in the less developed countries) were incapable of resisting the policies launched by global monopoly capital and supported by the supranational institutions and organizations. These policies have given global monopoly capital overwhelming advantages over working people all over the world. Neoliberal policies have made it possible for the global monopoly capital to impose its will on the allocation of resources (land, natural resources, capital and labor) especially in the less developed countries. These powerful supranational entities – the IMF, WB Group, the WTO, and others have pushed relentlessly to eliminate all barriers that prevent a complete takeover by the global monopoly capital. Their actions have replaced the conscious decision making power of national governments on how to develop their economies, in order to improve the well being of their people and protect their land, resources, and environment.

Once enjoined with these institutions/organizations and/or signed onto various trade agreements, national governments can no longer set priorities for their own economic development; they cannot set policies to develop their own industries in order to be less dependent on imports. As import duties are severely cut and import quotas eliminated, less developed countries are in no position to compete with cheaper imported industrial products. If they want to industrialize they can only participate in the new international division of labor by offering cheap labor according to their “comparative advantage.” They also have to abandon agricultural development for food security, because via the WTO large agribusinesses have effectively eliminated much of the protections for domestic farmers. Over the last few decades, large agribusinesses have caused the widespread bankruptcies of family farms in many less developed countries, just as they had done in the developed countries. Less developed countries were told to follow the golden rule of the market and concentrate on their own “comparative advantage,” and they were promised that exports, employment, and GDP would grow accordingly. Following the market has become the magic solution, instead of conscious planning for the development of their economies. If in the 19th century the United States had followed its comparative advantage in agriculture as determined by the market, it would never have attempted to develop its industries and eventually become an industrial power.

When less developed countries are in debt with the IMF and agree to sign one of the SAPs, their first priority necessarily becomes earning enough foreign exchange to pay back their debt. The SAPs require these governments to achieve budget surpluses at all costs. This means that government expenditures on health, education, food subsidy, and public transportation have to be cut drastically, creating more hardship for low and middle-income families. The privatization program of the SAPs often raises the prices of water, electricity, education, transportation, any kind of healthcare services, and other necessities of life. The majority of the population in less developed countries have repeatedly suffered from the hardship caused by the IMF imposed SAPs. In addition to fiscal austerity these countries are also required to keep a tight monetary policy to bring down inflation. In the past several decades more and more people have organized and risen up to oppose the effects of these “austerity measures”. The affects of these policies have more recently been brought to light by events in Greece, and the people’s response.

Global monopoly capital is relentless in its continuing efforts to push for policies that would further advance their positions in dealing with countries around the world. It sees no boundary to how far it wants to go. The currently pending Trans-Pacific Partnership (TPP), which has been secretly negotiated in the past few years, is being described as one of the most ambitious free trade agreements ever attempted. The TPP is a trade and investment agreement when signed by the United States, Canada and 10 other countries in the Asian-Pacific region will further lower tariff and tear down more trade and investment barriers and expand the privileges of global giant corporations. On the other hand the proposed Transatlantic Trade and Investment Partnership (TTIP) will further promote free trade and investment between the European Union and the United States. Both the TPP and the TTIP are continuing efforts of the global monopoly capital to further eliminate border restrictions after the earlier Multilateral Agreement on Investment (MAI) failed.[12]

Part Two intends to show that when governments in less developed countries reach deals with the global monopoly capital by signing agreements, they give up their responsibility to protect the land and the people of their countries. Those in governments are now unable and unwilling to act against their own interests to resist demands from global monopoly capital on their countries. Instead, they see much to be gained by cooperating with the giant global corporations. With a very few exceptions we can no longer have the illusion that they will fight against imperialist aggression and exploitation, nor can we believe that governments in less developed countries will joined together to fight imperialism as they did half a century ago when representatives from Asian and African countries met at the Bandung Conference.[13] During that era governments in less developed countries hoped to shape the development of their countries and the world. That era has passed. All the responsibility to shape the future development of their countries and the world now falls on the shoulder of the people.

Part III. China’s Role in the Current Phase of Imperialism

 

The discussion of this section includes: I) An analysis and an assessment of China’s capitalist and “opening-up” Reform, II) The conditions under which China was incorporated into the current phase of imperialism, III) China’s role in the new international division of labor, and IV) The consequences China and the Chinese people faced after it became part of the global capitalist (imperialist) system.

 

  1. An analysis and an assessment of China’s capitalist and “opening-up” Reform

The two components of Deng Xiaoping’s Reform: capitalist development and opening-up are closely linked and mutually dependent, so we need to analyze them together. In the beginning Deng used a phase to describe his Reform, “crossing the river by feeling for the stones”, meaning that the Reform did not have an overall plan and would be figured out one step at a time. But actually, Deng and his followers had a clear vision of the Reform’s direction, although the details of how they were going to achieve the goals were not spelled out. Deng and his followers saw that they could take advantage of foreign capital and foreign technology to construct a capitalist system. Additionally, allowing foreign corporations to operate in China would demonstrate the superiority of modern capitalist corporations, which could later serve as a model for privatized state-owned enterprises. China’s Reform in capitalist development was executed by intentionally linking China’s economy to the rest of the world.

The Western media often portrays the adversarial relationship between multinational corporations and the Chinese government. It rarely reports the close relationship of cooperation that has been forged between them. The multinational corporations urgently needed to invest and expand into China, and the Chinese government urgently needed them to help establish the new capitalist relation of production and to link the Chinese economy to the world capitalist system.

Just how much China should open up its economy to foreign capital was debated among the top leadership during the early stage of the Reform. Some of them feared that China might lose its control, if its economy was opened too wide. Not losing control or giving up its economic sovereignty was reflected in the 14 years of long negotiations China had with GATT and then after 1994 with the WTO. During that period of negotiations China carried out some major reforms including lowering import duties, eliminating most of the import barriers by quotas and licensing, bringing the domestic prices of major grains and energy more in line with international prices, and reform of its foreign exchange system. According to Nicholas Lardy, China started reducing its tariffs in 1992 and in eight years time, it cut its average statutory tariff by two-thirds. In 2000 the rate reached 15%, which was about half of the tariff that prevailed in India and about equal to that of Brazil and Mexico. By the late 1990s the majority of China’s domestic producers had less protection from imports than those in most developing countries. (Lardy, 33)

Another important policy regarding trade is that in order to provide incentives for outside businesses to set up processing production in China, and to include China as part of the global supply chain, the Chinese government exempted import duties from imported materials and components used in the production of finished products for export. Additionally China also provided tax rebates for processing exports. This policy was important for encouraging large number of Taiwanese companies to set up processing production in China. Taiwanese companies began to relocate their production abroad and after 1990 increasingly to China. In the second half of the 1990s well-known Taiwanese computer companies, Acer, Mitac, and First International Computer began shifting their desktop computer production to China.[14]

 

In the meantime domestic reform and preparations to join the WTO continued. In the 1980s and 1990s the reformers encountered many difficulties in their endeavor to reform and privatize state-owned enterprises and by the end of the 1990s they came to the conclusion that many of the state-owned enterprises had to be shut down in order for the Reform to move forward. By the middle of 2000 large numbers of these enterprises were closed down and 36 million workers were laid-off. (China Statistical Abstract, 2001, 39) By 2001 the top reformers reached consensus to accept the stringent conditions for China’s WTO ascension. The crisis in Asia at the end of the 1990s was an added impetus. After China joined the WTO in November 2001, it rewrote all its major domestic laws to comply with its conditions, thus helping to cement its capitalist reform. By that time the twin components of China’s Reform reached a milestone. According to the article: “China’s Foreign Trade Policy after WTO Accession” published by the Institute of American Studies, Chinese Academy of Social Sciences: “China’s WTO ascension has definitely meant that China’s ‘reform and opening’ have entered a new stage. They are now institutionalized.” [15]

 

It would be helpful to go back to the earlier years of the Reform and examine how the reformers accomplished what they set out to do. The reformers showed great interest in the strategy of Taiwan and other so-called NICs’ (Newly Industrialized Countries) using exports to promote economic growth. As early as 1980 four Special Economic Zones (SEZ’s) were established in China in Shenzhen, Zhuhai, Shantou, and Xiamen. In 1988 Hainan Province became another SEZ. Wang Jian, a researcher in the Planning Commission wrote a paper that year suggesting China could use its  “surplus” labor from the countryside to develop labor-intensive manufacturing products for export. Then with the foreign exchange earned from exporting through trade surpluses, to buy foreign technology to upgrade China’s heavy industry. In other words this strategy was to use foreign trade to link different sectors of China’s economy.  Related to this strategy related was for China to offer its market to the MNCs (multi national corporations) in exchange for their advance technology. Looking back Wang Jian might not have been just an ordinary researcher, because policies later carried out closely followed his suggestions. It has been reported that there was a backlash against the Reform after the 1989 Tiananmen massacre and there were those within the Party who called for a slowdown of the Reform. But in 1992 Deng Xiaoping traveled to several southern cities where he asserted that the Reform would proceed with full speed. In the aftermath of the Tiananmen massacre Deng promoted another surge to carry out Reform policies even though he no longer held any official government or Party positions.

From the early 1990s China’s export industry expanded rapidly and the share of labor-intensive products in China’s total exports increased to 74 percent in 1990 from 40 percent in 1980 (World Bank 1993). After China joined the WTO at the end of 2001, its exports accelerated even more. During the several years that followed, both its exports and its GDP grew at double-digit rates. By the early 2000s China was the world’s largest producer of steel (about 50% of the world total), automobile, cement, and it was the largest exporter of motorcycles, watches, bicycles, computer monitors, color television sets, washing machines, refrigerators, air-conditioners, microwave ovens, tape players and recorders, and print circuit boards.[16] (China Economic Times April 8, 2003). Despite the Great Recession China has continued to grow since 2008 – at slower rates, but still much higher than most other countries. By 2009 China’s exports of manufacturing goods reached 16% of the world total, while exports of manufacturing goods as percentage of the world total was 11% for Germany, 8% for the US, and 7% for Japan. According to the latest research from the United Nations, in 2011 China became the largest manufacturer in the world producing an output of $2.9 trillion – about half a trillion more than United States in second place. China has also received the second largest amount of foreign direct investment after the United States. More than 450 of Fortune 500 largest multinational corporations have investments in China and its GDP is the second largest only to the United States.

If one were to focus only on the fast growth of China’s manufacturing, its exports, and its GDP, without further inquiring into what was behind the phenomenon, one could easily conclude China has become a major industrial power and a “trading superpower”. All indicators show that the first half of the strategy of utilizing “surplus” labor from the countryside to expand labor-intensive manufacturing exports succeeded well beyond expectations. When the first part of this development strategy was implemented, China successfully accomplished the major reconstruction of its capitalist relations of production and established a firm connection between China and the global capitalist system. It was crucial that the global capitalist system was entering into this new phase at that point, when global monopoly capital was well situated in its leading role in the new international division of labor. China’s integration into the global capitalist system coincided almost perfectly with global capital’s new offensive strategy in the new international division of labor. There is enough evidence to suggest that this was accomplished by careful coordination between the global monopoly capital and China’s bourgeois government.

  1. The conditions under which China was incorporated into the global capitalist system

China’s ascension to the WTO was a milestone in its Reform. The collapse of the Asian economies added new urgency for China to join the WTO, because the crisis and its aftermath demonstrated the strength and dominating power of global monopoly capital and various imperialist powers (especially the United States). Chinese reformers were more convinced than ever that there was no way for China to develop capitalism without help from outside thus linking the Chinese economy with the global capitalist system was the only alternative. China was ready to make all the necessary concessions in order to make that link a reality. In his book entitled Integrating China into the Global Economy, Nicholas R. Lardy wrote how China met the market access conditions for its ascension to the WTO. It can be briefly summarized as follows: Lardy, (65-79)

 

Goods:

China agreed to eliminate all quotas, licensing, and other nontariff barriers to import no later than 2005.[17] China agreed to cut by 2004 average tariff levels for agricultural products to 15% and for industrial products to 8.9% and to bind all of its tariffs by accepting a legal commitment not to raise them in the future.

Services:

China agreed to cut tariffs and eliminate nontariff import barriers on services upon accession and to open important service markets, including telecommunications, banking, insurance, securities, audiovisual, and many professional services. Foreign firms have been granted the trading rights and the distribution rights that include engaging in imports, exports, wholesale, retail trade, after-sale services, repair, maintenance, and transportation. In terms of telecommunication, China has committed to allow the provision of basic telecommunications service by any technology, thus breaking the monopoly of China Telecom. In terms of financial services China agreed to eliminate previous restrictions on foreign banks to certain geographically locations as well as limiting foreign banks’ dealing in RMB transactions with Chinese owned businesses and individuals. Five years after the accession foreign banks would begin enjoying full national treatment. Under the terms of accession China is required to phase out all restrictions on foreign insurance companies.[18] Before accession China had strictly limited the ability of foreign firms to provide legal, accounting, management, consultancy, architectural, engineering, urban planning, medical, computer, and other professional services in China. China agreed to lift most of these restrictions after the accession.

Agriculture:

Regarding providing market access for agricultural imports China agreed to tariff reduction and the adoption of minimum access opportunity under a tariff-rate quota system. As it was mentioned in Part II according to the Agreement on Agriculture members of WTO have to eliminate all import quotas on agricultural products and replace it with a tariff-rate quota system. This quota system allows importers the minimum access opportunity to the market. The minimum access opportunity means that a certain quantity of import that equals to a certain percentage of the domestic consumption will be allowed. A low tariff levied on this quantity provides access to the market for foreign exporters and a higher tariff above this quantity provides certain protection for domestic producers. China agreed to establish an extraordinary low rate of tariffs, 1% for wheat, corn, rice, and cotton for a fixed initial quantity of imports as the minimum access opportunity. Higher tariff rates above the minimum quantity (effective after 2004) are 43% on wheat, corn, and rice and 40% on cotton. These rates are much higher than tariff within the minimum quantity but are still very low when compared with that of the developed countries. For example, EU’s above minimum quantity tariff rate on wheat is 150% and on dairy products are nearly 500%. The above minimum quantity tariff rate of United States is 200% on sugar and 250% on dairy products.

China also agreed to limit on domestic support to its agricultural producers, and to limit subsidies for agricultural exports. In the negotiation with the United States on China’s accession to WTO the US negotiators demanded and China’s government agreed to allocate parts of the import quota for each commodity to private traders. This was to prevent the government’s monopoly on trading these commodities and its attempt to maintain higher domestic prices compared to international prices. This provision was to avoid what had happened in Japan in 1994. The Japanese government used various means to restrict cheaper rice imports and paid its farmers several times the world market price for rice. By allowing private traders to engage in trade, Chinese government would have difficulties in maintaining domestic prices higher than that of the world market.

 

In his overall assessment Lardy said, “…[U]nder the pressure from industrialized countries, China has granted WTO members unprecedented authority to limit imports of Chinese products.” (Lardy, vii) In addition to these conditions outlined by Lardy, China also revised its Regulations Guiding Foreign Investment (effective on April 1, 2002) to comply with its WTO commitments on foreign investment. In the revision China allows the industries that permit wholly foreign-owned enterprises to expand to 87.6 percent of all industries. The Chinese government also committed to the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPs), and amended its patent law for implementation on July 1, 2001.[19] In a little over two decades (1979-2001) China completed its capitalist reform and formally joined the global capitalist system. It is not difficult to see how the Chinese government’s capitalist reform went hand in hand with its active negotiations to join the WTO.

 

  • China’s role in the new international division of labor

 

There are two aspects of the new international division of labor. One is shifting low profit margins and highly energy consuming and polluting manufacturing from developed countries to less developed countries. The other is shifting labor-intensive production for the developed countries to the less developed countries. China has participated in both.

Steel production is a good example of the first aspect. During the 1970s the advanced capitalist countries were confronted with the most serious economic crisis since the end of WWII. Many industries including steel had serious problems of excess capacity. In the 1980s these advanced capitalist countries started to restructure their steel industry by closing down the less efficient steel plants and by switching the steel industry’s emphasis from crude steel to prime steel and specialty steel. Steel production is highly energy consuming and if coal is used as the main source of energy it is also highly polluting. As a result of the global restructuring, steel production has generally declined in the developed countries and increased in the less developed countries, such as the BRICS (Brazil, Russia, India, China, and South Africa) and South Korea. At the end of the 1990s following the capitalist crisis in Asia, demand for steel decreased drastically in that region. Steel exporters, such as Japan, Russia, Korea and Brazil competed fiercely to expand their exports to the United States and the European Union. As a result world steel prices plummeted. By then the United States was already a net steel importer and benefited from the low steel prices. A recent report in the Financial Times estimated that the global steel industry has an overcapacity of 500 million tons. (Financial Times, February 10, 2014) Ernest and Young, the Global Mining and Metal Leader, issued a recent report in Global Steel 2013, it said that recently even though some older steelmaking capacity was removed, and that there was a modest increase in steel demand, the global percentage level of excess capacity in 2012 was greater than that of one year ago.[20]

During the past several decades China and other LDCs (less developed countries) expanded their steel production. Currently most of the excess capacity in the crude steel industry is in the less developed countries. China is the world largest crude steel producer – about 50% of the total output. It has been facing a serious over-capacity problem since the late 1990s, and the problem is getting worse. According to the Chinese Ministry of Industry China’s steel industry operated at 72% of capacity in 2012. In an effort to get rid the excess capacity and upgrade the efficiency of the steel industry, the government dismantled dozens of steel furnaces – 26 of them (production capacity of 11.36 million tons) in Hebei Province alone. However, this effort has not helped the overall over-capacity problem, because there is around 90 million steel capacity under construction as the average daily crude steel output continues to rise. (Global Times, 2013, 11, 25) The Earnest and Young Report stated, “The Chinese steel sector faced strong challenges in 2012 as it grappled with lower steel demand, overcapacity, a fragmented industry and weak profit margins.” China’s large quantities of steel production has been the source of its large imports of iron ore and coking coal, because for each ton of steel China produces it requires 1.7 tons of iron ore and more than half a ton of coking coal. The imported share of iron ore supply increased from 10% in the late 1980s to more than 50% in 2011. (Holloway, Roberts, and Rush) The need for iron ore, other raw material imports as well as imports of energy also explains why China has been searching frantically around the world for suppliers. China’s investment in other less developed countries is a way to secure its raw materials and energy in order to fulfill its role in the international division of labor.

The global supply chain has been used in the second aspect of new international division of labor. The very beginning of the global supply chain can be traced back to the 1960s when Taiwan set up export processing zones (EPZs). One kind of production in the EPZs in Taiwan was assembling parts and components from Japan and then exporting the finished products to the United States. Later maquiladoras were set up in northern Mexico along the US border to produce manufacturing products solely for exporting. Then in the 1980s the US automobile companies shipped auto parts to Mexico to be assembled and then shipped back to the United States as finished products. In the 1980s and even more so in the 1990s the multinational corporations took advantage of the information and communication technology revolution, which enabled them to disperse different stages of production to geographically separated locations, instead of completing the production process within one country. Outsourcing either parts or the whole manufacturing process from the developed countries to the less developed countries (LDC) is only possible when more and more LDCs in this new phase of imperialism give up developing their own industries and pursue “export-oriented industrialization”. What was done by Taiwan, Mexico, and other NICs marked the beginning of a simple form of the new division of labor. Later much more complex networks were developed.

According to Gereffi in the 1980s and 1990s the US retailers and brand-name companies began working with manufacturers to use offshore suppliers for most categories of consumer goods, thus establishing what he called “full-fledged global supply chains”. These global supply chains, with an emphasis on East Asia expanded rapidly in the 1980s and early 1990s. Then in the late 1990s and 2000s the industries and production associated with the global supply chains grew exponentially. (Gereffi, 2013) The rapid growth of the global supply chain is closely related to the disintegration of the former Soviet Union, the collapse of Eastern European economies and China’s capitalist Reform and its integration into the global capitalist system. These changes released the labor power of large number of workers and transformed their labor into commodities on the global market. This sudden increase in global labor supply changed the balance between capital and labor in favor of the capital on a global scale.

There have been many studies analyzing global supply chains and how they have come to dominate global production and trade. Some of these studies give concrete and factual descriptions of production and trade in today’s globalized world without coloring them too much with rhetoric and ideology. Therefore, they can be useful in understanding the reality of the world we live in. (See Gereffi and Koopman et al in the References at the end of the paper)

 

  1. The Consequences of China Joining the New International Division of Labor.

 

Using exports of labor-intensive low value-added products as a way to stimulate fast GDP growth has had very serious consequences for China:

 

  1. Low value-added production and the exploitation of Chinese workers

Studies on global supply chains reveal some important information. They provide us with a new understanding of concepts such as production, trade, and surpluses/deficits in trade. Gereffi mentions in his paper a study of iPhone production by the Organization for Economic Cooperation and Development (OECD). The study reveals that the export value of one iPhone 4 is recorded as $194.04, out of which $24.63 is imported content from the United States. Thus the trading of each iPhone 4 is recorded as a net US trade deficit of $169.41 and a net Chinese trade surplus with the United States of the same amount. However, in addition to the $24.63 imported content from the US, the other imported content of each iPhone 4 are: $80.05 from South Korea, $16.08 from Germany, $3.15 from France, $0.7 from Japan and $62.79 from other countries. For each iPhone 4 China exports it only adds $6.54 value. (Gereffi, 13, Source: OECD 2011: 40). The $6.54 is basically labor to assembly the phone plus other expenses such overhead costs, energy, and subcontractor profits. According to another source, the case of the iPhone is not an uncommon pattern for China’s exports. (Koopman, et al) Moreover, Kaplinsky notes that increasingly intangible assets (such as copyrights, brand names and design) owned by the large multinationals, which he considers rent, are gaining an increasing share of a product’s total value in the new international of labor. He further explains that the large differences in value added by each country in the global production networks can help explain the rising income inequality both within a country and between countries. (Kaplinsky).

China’s low value-added manufacturing has meant low wages and lack of benefits for tens of millions workers in the export industries. In these last few years factories in the export industries have also been the concentration of the most active workers’ struggles. In Dongguan City a strike at Yue Yuen shoe factory (owned by Yue Yuen Industrial of Taiwan) broke out in April 2014.  At first only a few hundred workers blocked a local bridge. The strike was over the factory underpaying its social security contributions and public housing funds  (both are workers’ benefits) as far back as 2006. Later other issues were added including low wages, and oppressive working conditions that allowed only a ten-minute lunch break. The strike spread to seven other shoe factories owned by Yue Yuen in Dongguan and one Yue Yuan factory in Jiangxi Province. In less than two weeks the number of workers joining the strike grew to an estimated 50,000 out of the total of 70,000 workers employed by Yue Yuan Industrial. It was the largest worker strike in China in terms of the number participants since the Reform began.

Yue Yuen is the largest shoe manufacture in the world. It was founded in 1988 and listed on the Stock Market Exchange in Hong Kong in 1992. It has had contracts with many famous shoe brands, such Nike, Adidas, Reebok, ASICS, New Balance, Puma, Converse, Salomon, Timberland, Hush Puppies, and others. The total revenue of athletic footwear market in the US is estimated to be around $53.7 billion – Nike and Adidas account for 83% of that, and both Nike and Adidas have been Yue Yuen’s major customers. Jeroen Merk who studied the international footwear industry noted that the work between the branded corporation and the subcontractor is clearly divided. Branded corporations like Nike and Adidas are in charge of marketing the end products, while companies like Yue Yuan are in charge of manufacturing. Merk concluded from his research that companies like Yue Yuen do not have any easy access to the end consumer markets, so their profits can only be squeezed out of the mass production process. He also said that Yue Yuen’s expansion in the 1980s and 1990s was supported by a repressive labor strategy that suppressed union organizing. Its high labor productivity was achieved by long working hours, forced overtime, and a high-quota piece wage rate system. Furthermore it used strict discipline and punishments to keep workers in line. (Merk, 88)

Currently Yue Yuen has factories in China, Vietnam and Indonesia with three quarters of its production in China. Yue Yuen is a very profitable company. However, the large branded corporations have a lot of power to suppress production costs, and the subcontractors in turn suppress workers’ wages, benefits and other costs associated with production.

The other well-known case of worker struggle happened at Foxconn which is owned by a Taiwanese electronic firm named Honghai. Honghai opened its first factory in Shenzhen over 20 years ago, has since built more factories in that city, and has also expanded its production to Shanghai and other cities in China. Foxconn has had contracts with Apple, Dell, HP, Motorola, Nintendo, Nokia, and Sony to manufacture many electronic products including motherboards, camera components, MP3 players, and the latest Apple iPhones and iPads. Foxconn currently employs one million workers and is the largest private employer in China. Products manufactured by Foxconn account for 40% of the revenue received by the world’s $150 billion consumer-electronics industry.

In 2011 some workers at Foxconn used suicide as a way to express their frustration over the oppressive conditions at their workplace. Between January and November of that year 14 workers committed suicide by jumping from the top of the factory building to their deaths. The incidents caught the attention of both the Chinese and foreign media. Following the incidents, students and other civic organizations investigated the working conditions in Foxconn factories and found them extremely oppressive.

The relationship between the successful Taiwanese subcontracting company Foxconn and the large branded American (as well as Japanese and Korean) electronic corporations is very similar to that of the footwear industry. Apple, Dell, Sony and others are able to reduce their production costs by subcontracting the manufacturing to companies like Foxconn.

The suffering and grievances of workers in China’s exporting industries can be traced back to the large branded American and other multinational corporations. During and after Yue Yuen workers’ strike, students and activists from Taiwan and Hong Kong came together to condemn Yue Yuen for its treatments of workers. But they did not stop there; they also held the multinational footwear corporations responsible, just as the United Students Against Sweatshops (USAS) movement did in 1997. USAS organized to fight sweatshop conditions (poverty wages, forced overtime, sexual harassment, union busting, and health and safety violations) in factories of the global apparel industry around the world. They also traced the source of the exploitation in textiles to famous branded clothing corporations, such as Jansport, North Face, and Vans to hold them accountable for what was happening in the factories manufacturing their products. They made the argument that those companies were responsible for the actions of their subcontractors, because the terms of the contracts were the impetus for the suppression of workers to extract more profit.

Workers at Yue Yuen, Foxconn and workers in other exporting industries are aware that behind their direct employers (Chinese or Taiwanese subcontractors) the real control comes from the branded MNCs. For that reason workers’ struggle in these exporting industries have to be viewed as anti-imperialist. Their struggle is also against the subcontracting companies and the oppressive Chinese State, which has consistently supported the MNCs and Chinese and Taiwanese subcontractors. When the Chinese government adopted an export-led growth policy, it allowed and assisted Yue Yuen and Foxconn and others in setting up shop and running their daily operations. The Chinese government has a large combat ready police force to beat, intimidate, and jail strikers, protestors, and organizers to maintain the law and order necessary for this kind of exploitation to continue.

Capitalists from Taiwan and Hong Kong have had decades of experience working with MNCs and have earned the MNCs’ trust. Now, there are plenty of Chinese subcontractors that have also done well performing the same function in the global supply chains. It is here we need to note that the nationality of these capitalists does not really matter. Whether they are “native” or “foreign” their function is to serve the global capitalist system.

 

  1. The depletion of China’s resources

When we look at China’s major exports from clothing, toys, footwear, sport equipment, computer hardware, electronics, large and small appliances and steel, all of them have been the result of the new international division of labor. When China and other less developed countries become manufacturing centers in global production chains they require more raw materials, to produce these products. This is one of the ways steel production was shifted from advanced capitalist countries to the LDCs. Expanded manufacturing also requires more energy. The new international division of labor was achieved by shifting manufacturing to developing countries, and in the process has helped lessen the burden of oil imports for the United State, EU, and Japan. Before 1994 China was a net oil exporter. Currently China is the largest oil consumer and the second largest oil importer.

China’s role in the new international division of labor made China the largest manufacturer in the world. For this China pays a heavy price in the depletion of its resources. China has only 9% of the world’s arable land, while it has more than 22% of the world’s population. Using limited land to feed a huge population has always been one of the biggest challenges of Chinese agriculture. The export-led growth strategy has meant taking more and more land from agriculture for industrial use. Land has been converted into industrial parks for export industries, highways, and urban commercial and residential buildings. A conservative estimate of land loss during the first 25 years of Reform up to mid-2000s was around 7% of the total area of arable land. Since then, the rate of land loss has accelerated, reaching as much as 2% a year.[21] In recent years both rural and urban residents have engaged in fierce struggles to protect their land and dwellings from land grabbing by the local governments for real estate and other development. Local governments have used force to remove people from the land they farm and from their homes.

In terms of water resources, China has only 9% of the world’s total fresh water supply. On a per capita basis, China’s access to fresh water amounts to merely 25% of the world’s average It is one of the 13 countries with the lowest per capita water supply and now much of it is polluted. Currently, 400 out of China’s 600 major cities do not have adequate water for their residents. Cities have also dug deeper for water, causing the depletion of ground water. China’s Ministry of Water Resources stated that this practice not only further aggravates the water shortage, but also lower water quality and increase the risk of earthquakes and landslides. (“China’s Water Shortage to Hit Danger Limit in 2030” People’s Daily Online: http://english.peopledaily.com.cn/). Heavy loss of groundwater has also accelerated desertification in the northwest. According to Ji Yongfu, the director of Gansu’s Desert Control Research Institute, overuse of groundwater and overgrazing has caused the desert to advance at a rate of about 2,000 square kilometers a year (Bloomberg.com, February 22, 2006). Desertification has been the main cause of sand storms in China’s northern cities, which have spread all the way to Korea, Taiwan, and Japan.

As I mentioned in Part Two, water is currently the last infrastructure frontier for private investors and municipal and regional water systems have been steadily coming onto the international market in the past 15 years. In China there has been large-scale water privatization in the past decade and half. Between 1992 and 2011 large French water company Veolia and other foreign water companies formed 36 joint ventures with Chinese water companies in Public Private Partnership (PPP) deals.[22] (http://www.chinagate.cn/english/wb/51471.htm) Again, does the nationality of the owners of these water companies matter? A related question is: would the Chinese government be willing and able to protect Chinese consumers from higher water rates?

In addition to land, water, and other natural resources, China has also exhausted its domestic oil and is currently the world’s second largest oil importer. The depletion of China’s natural resources caused by the accelerated and massive scale of manufacturing for export is unsustainable. This explains to a large extent China’s search for more resources as well as its take over of land in many developing countries especially in Africa. Saying so is not a justification for China’s aggressive behavior but to point out that it is one of the unavoidable consequences of China’s role in the new international division of labor. Neither the Chinese people nor people in other developing countries want their resources to be grabbed for the insatiable needs of global monopoly capital expansion. And fighting against China’s aggression in these developing countries is a necessary and critical part of an overall struggle against imperialism.

  1. The devastation of China’s environment

There have also been more and more active protests in China over issues of environmental pollution. Some argue that as China becomes an industrial power, it is bound to have more pollution, not unlike earlier stage of industrialization in European countries or in the United States. They argue that the air quality in London and Pittsburgh of the past was just as bad as cities in China today. People who hold this view correctly relate pollution with industrialization but fail to recognize that the problem of pollution in China today has a different root than that of developed countries in the past. Environmentalists today cannot solve the pollution problem unless they pay attention to how pollution is currently being redistributed within the global capitalist system. For example, in the 1960s 80% of Taiwan’s textile products were exported. Textile production is highly polluting, especially the dying process. This meant that people in Taiwan consumed 20% of the textile products it produced but was burdened with 100% of the pollution caused by its production. The other 80% of textile products were exported, mostly to developed countries, free of pollutants. When Taiwan shifted from exporting textile products to electronic products and computer components, the problem of pollution became more serious and the pollutants left behind were more deadly. It affected the ground, the air, the rivers, and the shorelines. In the 1970s “high” labor costs and pressure from more stringent environmental laws in the US motivated many US based MNCs to relocate to countries near and far. That was the beginning of the redistribution of pollution around the world.

Recent environmental reports from China are grim. In the winter of 2013 air pollution in Northern cities reached extremely toxic levels. Readings of particulate matter no more 2.5 microns in size (PM2.5), the most harmful type of toxic smog, reached 40 times the maximum level allowed by the World Health Organization. The 2.5 microns are deadly because they enter into peoples’ lungs. In 2010 a joint study by the WHO and a group of universities found outdoor air pollution contributed to 1.2 million premature deaths in China, accounting for almost 40% of the world’s total. Water pollution in China is just as serious. A recent report based on official statistics said that 85% of the length of China’s six biggest river systems consisted of water that is undrinkable even after treatment. The percentage of ground water that is polluted also rose from 37% in 2000 to 60% in 2013. (The Economist, May 17th-23rd 2014, 44) And China’s farmland is heavily contaminated; a recent study found 10% of rice sold contained excessive amounts of cadmium.

Pollution of the sea is also reaching a crisis. The area around Bohai, the body of water east of Beijing, is densely populated and is also the production base for energy, chemical products and steel all of which are major suppliers for the export industries. According to the “Report on Quality of Chinese Oceans” during the six years (2001-2007) when the “Cleaning up Bohai Action Plan” was being carried out, the pollution actually worsened. Experts on environmental pollution predict that if the current situation continues Bohai will be a dead sea in ten years. (Wang Zhong Yu)

The effects of these conditions have resulted in 400 “cancer villages”, where rates of cancer are unusually high, and the overall cancer rate in China has increased 80% compared to 30 years ago.  (China: The Dark of Growth, The Epoch Times, June 27 – July 3, 2013, A7)

Rarely do we see any analysis that relates China’s pollution problem to the role China has played in the international division of labor in the current capitalist system. Therefore, a recent article, “A Dirty Secret China’s Greatest Imports: Carbon Emission,” by Earth is worth noting. The article began with, “The U.S. and much of the Western world have a dirty secret. While we claim to be working diligently to decrease our emissions and switch to cleaner, non-fossil fuel energies, we are actually just exporting emissions to other countries, most notably China.” The article explains that while “the world turns toward China to be its dirty manufacturer, we all clean up our books, pushing our emissions and energy consumption onto them. We let China produce and ship our goods, and then say, “‘Who me? I don’t produce emissions. I’ve cut mine. China is to blame.’” (http://www.earthmagazine.org/article/dirty-secretchinas-greatest-import-carbon-emissions)

The article continues to say that the United State has been decreasing its total energy consumption, dropping from 359 BTUs per person per year in 1978 to 308 BTUs per person per year in 2009. Moreover, China uses a high fraction of coal in its energy mix:, 70% in China, compared to 23% in the US and 18% in the EU. As the United States reduces its coal consumption (from 50% to 45% of its electricity fuel mix) the United States has increased its coal exports from 26 million short tons in 2009 to 40 million short tons in 2010, reaching 10% of its total coal production.  US coal exports to China in the first half of 2010 was 1,000 times that of the first half of 2009. The Earth article states, “The message is clear: if we don’t burn our coal at home, we will send it to China to be used… Where we emit more carbon than ever before, but we do so through Chinese smokestacks instead of our own.” It continues to say that researchers have determined that approximately 1 billion tons of carbon dioxide emissions in China are from the production of products destined for export to other countries. This concept is what is called “embedded carbon emissions.” The article concluded, “You could say that carbon emissions is China’s greatest import. Or it’s our greatest export.” (Ibid.)

Like labor protests, protests against environmental pollution have also increased both in frequency and in scale. The most recent one happened in Hangzhou on May 10th 2014 when residents protested against plans to build a garbage incinerator, fearing it would emit mercury and dioxin. Police cars were overturned and dozens of people were injured. (China Red Flag, http://www.zghongqi.info/) In April thousands in Guangdong protested against a proposed chemical plant. Such protests sometimes involve a whole village, and police often deal with protestors with brutal force. But the protestors have also won quite a few victories. Chinese government began to publically acknowledge the seriousness of China’s environmental devastation and recently amended China’s Environmental Protection Law for the first time since 1986. The new law is supposedly stricter and allows for stiffer fines for polluters and even the detention of negligent executives. (The Economist, May 17th-23rd 2014, 44)

In 2007 the US-based Council on Foreign Relations sponsored an Independent Task Force, which gave a comprehensive report on China; the China Task Force Report clearly relates the environmental damage to China’s cheap exports and also assesses the real cost of the damage. It said:

China has chosen short-term economic development over environmental preservation, and as a result, air and water quality have been compromised. Cheap cashmere on the shelves of American department stores means hillsides of denuded of grass in Inner Mongolia. China is losing roughly 1,700 square miles of formerly productive agricultural land annually to desertification. The Chinese State Environmental Protection Administration (CSEPA) acknowledges that environmental degradation costs China 8 percent to 13 percent of its annual GDP— the push for growth is not succeeding as well as it might were China’s policies more balanced.  (15-16)

  1. The serious distortions of China’s economy

What are these distortions and how have they been related to economic development based on Reform policies?

The most serious distortion of any country that pursues the policy of using export to spur economic growth is that this country’s production must be focused on what it can export in the current global market. The country must forgo the goal of using its resources for the satisfaction of its peoples’ needs. During colonial days what the colonies produced was dictated by what was needed by the colonizers. The difference is in the past the colonizers had to use force to enforce its rule. In the current era once a country joins the global capitalist system and pursues an export-led growth strategy, the rule of the global market dictates what it produces and what it exports.  During the three plus decades of China’s Reform, the priority of the Chinese economy has been turned upside down, from an economy aimed at satisfying peoples’ needs during the socialist era to one aimed at double-digit growth in exports during the Reform era.

The second biggest distortion for China’s economy has been its need to maintain a trade surplus.  The economy of any individual country, capitalist or socialist, developed or under-developed, in a “normal” situation is confined to consume and/or invest what it produces. If a country produces more, it can consume and/or invest more but the sum of the two has to be equal to what it produces. Also, if a country consumes a higher share of what it produces, it will have smaller share left for investment. However, in this hypothetical country, where there is no international trade. If in this hypothetical country instead of not having any international trade, it had a balanced trade in goods and services (exports = imports), then the total of this country’s consumption and investment would be equal to what it produced But for many reasons including the unequal exchange mentioned above relating to their lack of development (or underdevelopment), LDCs have had a long history of trade deficits and, therefore, had to borrow from the developed countries to make up the amount of imports over exports. These countries had to pay high interests to the developed countries on the money they borrowed, often leading to more borrowing and higher interest payments. The situation they face is similar to poor people using credit cards to buy what they need and then using an increasing share of their already low income to pay high rates of interest to the credit card companies.

In this new phase of imperialism the new international division of labor determines how and where things are produced and the conditions under which they are traded. Many less developed countries that joined the new international division of labor produce and export large quantities of goods resulting trade surpluses. If a country has a yearly trade surplus that equals 5% of their total production, this country can only consume and invest 95% of what it produces. The other 5% of what it produces is shipped to the countries to which it has surpluses. Under the new international division of labor a number of LDCs now have trade surpluses, most of which are with the United States. Among them China has the largest trade surpluses (in goods and services) with the United States. In 2013 the United States had a total of $476.4 billion trade deficit in goods and services of which $295.3 billion (62% of the total) was with China. China’s trade surplus of $295.3 billion with the United States was 3.359% of its GDP. In other words China’s trade surplus with the United States in 2013 deprived China of 3.359% of what it produced for its own consumption and/or investment that year; instead $295.3 billion worth of goods and services was shipped to the US – a substantial transfer of wealth from China to the United States which has a per capita GDP more than 8 times that of China. This is a serious distortion of China’s economy. China is not the only country that has trade surpluses with the United States, but its surpluses have been the largest in terms of amounts. For example, Mexico, had a $47.3 billion trade surplus (3.997% of its GDP) with the United States in 2013. This means that in 2013 Mexico was deprived of using almost 4% of what it produced for its own consumption and/or investment and transferred $47.3 billion worth of goods and services to the United States, which has a per capita GDP of more than 5 times that of Mexico. In this phase of imperialism, when a country earns a trade surplus, it means that it transfers its surpluses to another country to be consumed and/or invested. These transfers represent a form of exploitation by the developed countries, and the United States is the number one exploiter.

China has not been able to utilize all it produces for its own consumption and investment. This distortion is caused by China’s Reform policies. The result of large trade surpluses mainly with the United States has been the accumulation of large amounts of US dollars in China’s foreign exchange reserves, most of which China uses to buy US government securities and the rest to invest abroad. In the past several decades China and the United States have been locked into this toxic and unsustainable economic relationship; neither can extricate themselves, but it is only a matter of time before it will completely unravel. In the meantime we need to understand the exploitation of LDCs including China by the imperialist countries through this new form of wealth transfer. As of April 2014 the total amount of US government securities held by other countries was $4,067.5 billion of which $1,263.2 billion, about 30%, was held by China.

A related distortion from China’s extended period of trade surpluses is its low domestic consumption. China’s consumption as a percentage of its total production has not only been very low but has continued to fall. That percentage fell from a low 46% in 2000 and to 36% in 2007, and then to 34% in 2010. In both developed and developing countries consumption as % of GDP averages around 60% to 70%. China’s high dependence on exports and low domestic consumption has become a vicious cycle. In order to be competitive in the export of labor-intensive products, employers in the export industries have put pressure on wages and benefits. That has contributed to the low household income share in the total GDP, which is reflected in low consumer spending for a large portion of the population. The weak domestic market has given manufactures more incentive to expand their markets abroad especially when manufacturers have been experiencing large amounts of excess capacity.

Another related distortion has been high levels of investment. In order to maintain a high rate of GDP growth the government and businesses together invested a high percentage of the GDP. In 2006 China’s investment already reached 38.7% of GDP, which was high when compared with developed as well as less developed countries. Then the government responded to the aftermath of the 2008 crisis, when China’s exports decline due to the weak global demand by launching an economic stimulus plan of $586 billion. Most of the stimulus plan was designated for a wide range of investment projects. Thus investment as percentage of GDP was further raised to near 50% in 2012 and currently is over 50%.

An IMF working paper: “Is China Over-Investing and Does it Matter?” poses the question and gives an affirmative answer. According to the IMF if China were to maintain its current rate of economic growth, the percentage of investment in GDP would need to increase to an unsustainable level of 60-70%. The paper also estimates that China’s high rates of investments in the past decade resulted in a yearly 4% transfer of income from consumers to investors. (Lee, et al) This paper pointed out another reason for the low level of consumption in China. Consistent high levels of investment caused not only overcapacity in factories, but also in all kinds of infrastructure, and in commercial and residential housing. New four-lane highways built in small towns with the economic stimulus money are often deserted. A new city named Zhengdong in Henan Province (east of Zhengzhou) was built from the ground up with rows and rows of residential and commercial buildings, roads, hotels and exhibition halls. But it has been virtually unoccupied. Zhengdong is a ghost town of unique kind, because it is not a city of old abandoned buildings like the old industrial cities in the US but rather a ghost town where every building is new and shiny.

China’s over-dependence on exports (trade surpluses), its low rates of consumption and its high rates of investment are all consequences of Reform policies. In recent years large numbers of intellectuals in China have begun to understand the predicament China is in. It is true that China’s export industry took off and has grown at double digits rate, however, the export strategy has not brought about a complete development of China’s economy. Also, using China’s market to exchange technology with the MNCs has not brought any significant technological advancement. One critic among many, Wang Zhong Yu presented an overall evaluation of this strategy of development in an article published on May 24, 2014: Observing the Link: Chapter I Foreign Trade Observation. Wang specifically pointed out that the second part of this strategy, namely using the trade surpluses to upgrade China’s heavy industries, was not realized. China has continued to rely on imported equipment and machinery for its manufacturing. (Wang Zhong Yu. 12)

Yet another distortion of China’s economy is the backwardness of China’s agriculture sector. China’s agricultural sector has been considerably weakened in the decades of capitalist reform, as increasing amounts of resources have been drained from it. As I mentioned earlier more and more arable land has been converted to industrial use, and for building highways, housing, and tourist resorts. Agricultural infrastructure such as irrigation and drainage systems, rural power stations, and land improvement programs built during the socialist period are now in disrepair, with very little new investment of any kind. In the past three decades approximately 160 million mostly young peasants have left their villages and migrated to cities – about half of them work in the labor-intensive export industries. It’s been widely reported that few young people are left in the countryside to farm. China’s decline in agriculture and agricultural trade under the WTO has resulted in a loss of self-sufficiency in food. China is currently importing large quantities of corn for feed and 80% of its soybeans – a major component of the Chinese diet. In 2012 China became the largest export market for US agricultural products valued at $30 billion – a 20% increase from the year before. Unlike trade in manufacturing products, the United States has had large agricultural trade surpluses with China. [23]

It is important that Chinese people hold the bourgeois regime responsible for subjecting them to the exploitation of their labor, the exhaustion of their resources, the damage to their environment, and the distortions of China’s economy – all of which directly resulted from the regime’s Reform policies. The Chinese people have suffered from the tremendous burdens imposed on them by the capitalist and open-up Reform of Deng Xiaoping and his followers and will continue to suffer for many future generations to come. From China’s experiences over the past thirty some years we now have a deeper understanding of why Mao placed China’s political and economic independence as the highest priority and why only under socialism could such independence be achieved. We also have a deeper understanding of why the bourgeois regime had to launch its capitalist reform simultaneously with linking China to the global capitalist/imperialist system. In the process the politically and economically powerful capitalist class in China has enriched themselves immeasurably. And the regime also provided both foreign and domestic capital the best opportunities to expand as it pleased. This regime has shown no concern for the consequences of its Reform on its people, land, natural resources, or environment. After three plus decades, every piece of virgin territory has been exploited for profit, and the Chinese people are rising up to fight for their own survival and for that of future generations. The struggle ahead will be long and hard but Mao’s legacy points the way and provides the tool they struggle with.

 

To conclude, the debate between those who consider China an imperialist country and those who do not is not too important. If we consider a country that possesses monopoly capital and also exports capital an imperialist country, then China is an imperialist country but so are several other countries such as South Korea and Saudi Arabia. On the other hand China is not an imperialist power ranked with the United States and other imperialist powers. Exporting capital to other countries to extract their resources and to obtain profits is exploitive. In recent years the bourgeois Chinese government has stepped up its investment in many parts of the world including, Latin America, Africa and other parts of Asia. China has invested heavily in mining and energy industries, manufacturing, and agriculture by snatching up large tracts of land to operate mega farms. Moreover, the Chinese government has recognized the power of the supranational institutions and organizations at the same time it has realized how difficult it is to compete with the United States and other imperialist powers within these existing supranational entities. Consequently, the Chinese government sought in recent years to form other supranational institutions, such as the BRICS’ Investment Bank and the Asian Infrastructure Investment Bank as alternatives to the World Bank and the International Monetary Fund. Clearly all these actions taken by China show its intension to compete with other imperialist powers. The Left in China must fight against the Chinese bourgeois regime’s exploitation in China but also what this regime has been doing in other less developed countries.

The analysis I presented in Part Three illustrates how the Reform exploited and repressed Chinese workers, depleted China’s natural resources, destroyed China’s environment and thoroughly distorted China’s economy. In this new phase of imperialism, China’s land, resources, environment and the Chinese people have not being exempted from exploitation. For these reasons the Chinese peoples’ anti-capitalist and anti-imperialist struggles are becoming increasingly active and is in fact an important component of the overall global anti-capitalist and anti-imperialist struggle. Holding the view that China is an exploited country is not a narrow nationalist view to defend the Chinese bourgeois regime. Rather it is an internationalist view that recognizes the necessity of including the most active peoples’ struggles in China in our overall global anti-imperialist struggle.

In the decades ahead China is headed towards larger and deeper crises for a number of reasons. The current weaker global demand has already slowed the growth of China’s exports, and some subcontractors in the export industry feeling the slowing of the global market and the pressure of growing workers’ demands have already begun relocating their labor-intensive production to countries where the wages are even lower. These changes together with a long period of overinvestment intensify the problem of over-capacity, which has reached an alarming scale. Moreover, as China’s agricultural sector further declines from lack of investment, losing agricultural land, and labor emigration to urban areas, China will need to import even more food to feed its population. And as China’s environmental pollution becomes even more unbearable, the government would soon have to deal with the many impending environment crises. All this means that we can expect an acceleration of peoples’ struggles in China. If we do not recognize China or Chinese people as being exploited, does that mean we would ignore the current and growing peoples’ struggles in China and exclude them from the global anti-imperialist struggle?

It seems clearer than ever who benefits from imperialism as a system and who suffers from it. The Left in each country have a responsibility to analyze the concrete situation in their countries carefully to determine where that line should be drawn. As I said earlier at the current time class analysis is as, if not more, important as analysis between and among imperialist counties.  Only through class analysis we can derive the correct strategy of how to unite the exploited to fight imperialism. In China today working people are being exploited by the capitalist/imperialist system. Shouldn’t we unite them in the fight against imperialism? How are Chinese garment workers different from garment workers in Thailand or India? Do Chinese workers receive more protection from their bourgeois government compared to their counterparts in other countries who are doing the same work for the low wages under the new international division of labor?

What happened in China tells us a great deal about countries attempting to develop capitalism in this new phase of imperialism. China joined the global capitalist/imperialist system with some advantages compared to other less developed countries. At the time when the Reform began China already had in place a strong independent industrial base with modern technology and many productive state-owned enterprises built during twenty some years of socialist development. China also had a stable agricultural sector and was self-sufficient in food. It was free of any internal and external debt. Other less developed countries who do not possess these advantages are even be less likely to develop capitalism in the age of imperialism, even if their governments are willing to submit their countries to all of imperialism’s neo-liberal rules.

 

 

Final Conclusion

 

Today the Left is facing tremendous challenges. One of the biggest challenges is in the ideological struggle. Since the end of the 1970s we have faced the dismantling of almost all the LDCs’ (many of them are in Latin America) efforts to develop capitalism independently. We have also faced the dismantling of China’s socialist state and the aftermath of China’s Reform. At the same time, global monopoly capital faced a deepening crisis and took advantage of these two concurrent world- changing events.[24] In the 1980s these two events and global monopoly capital’s response, ushered us into this new phase of imperialism, where almost all countries were being incorporated into the imperialist system. Imperialist powers launched their neoliberal policies of globalization, liberalization, and privatization, and they successfully integrated those neoliberal policies into trade and investment rules through the international trading regime (General Agreement on Tariff and Trade and the World Trade Organization) and the international financial regime (International Monetary Fund and World Bank Group). These trading and investment rules were tremendously favorable to global monopoly capital at the expense of less developed countries and all working people in the world. We were told this was the end of history and from then on capitalism would dominate the world and there was no alternative but to surrender to its rules. The Chinese bourgeois regime since 1979 has fully bought into this ideology and has done everything to enrich themselves at the expense of China, the Chinese people, and other less developed countries and their people. The bourgeois propaganda both inside and outside China has held China up as the shining example of how capitalism has successfully released the productive forces that had been suppressed under socialism. This is the biggest of many manufactured lies, which we on the Left must work diligently to expose.

 

Over the last three plus decades neoliberal policies have caused tremendous human suffering, resource depletion, and environmental disasters in countries around the world. But these policies are now under serious strain. We have seen these policies help monopoly capital expand globally with fantastic speed, but they have not been able to prevent or mitigate the reoccurring global capitalist crises. Instead, these crises have occurred more frequently and have also been deepening and widening. Even when the global capitalist economies are supposed to be in recovery from the 2008 crisis, but the “recovery” has failed to lift these economies up to their pre-crisis levels. Moreover, a number of advanced capitalist countries in Southern Europe are being crippled by their sovereignty debt. The state of the Greek economy has been compared to the Great Depression in the US in the1930s and economies of Spain, Portugal, and Ireland do not fair much better.  As a matter of fact the whole Eurozone has remained in a depressive state. On the surface the economy of the United States seems to be recovering but the Federal Reserve has not dared to end the quantitative easing policy it started in November 2008. For the first quarter of 2015 there was no growth in the US economy.

Resistance to neoliberal assaults from below is growing worldwide. There have been mass organizing, worker strikes, demonstrations and protests, as well as military rebellions against governments that have joined the global capitalist system against the interests of their people. During the years and decades to come neoliberal policies enforced by imperialist powers will only further aggravate and intensify the ongoing and reoccurring crisis and more and more people will rise up against it. Where there is oppression, there is struggle. But in order for people on the Left to build stronger and bigger anti-imperialist forces and prepare for the challenges ahead, it is of utmost importance to challenge the capitalist and imperialist ideology that has prevailed in the past three and more decades. This ideology has successfully convinced most of the world that there is no alternative to capitalism, nor can any country develop capitalism independent of the capitalist/imperialist system. Logically, then, the only way to survive is to surrender our right to self-determination and be incorporated into the global capitalist system. But in the past thirty plus years the majority of the world’s people have only experienced more hardship and deprivation. At the same time a very small minority of people in both developed and less developed countries have become extremely rich and powerful. This small minority controls global monopoly capital and dictates how the global capitalist system operates. The Left, therefore, must systematically and urgently challenge this prevalent ideology. Without seriously challenging this ideology and presenting a clear analysis of the current context of this phase of imperialism, the Left will have many difficulties in developing our anti-imperialist theories, strategies, and practice.

Serious analyses and debates by the Left are needed to show why being incorporated into the global capitalist system is not an answer for developing countries and their people. They also need to show that contrary to imperialist propaganda, socialist revolution and development is a viable option for people in developing countries. It has been proven again and again that in the age of imperialism, countries, especially the less developed countries, will not be able to use their resources to develop their own countries or to produce products to satisfy the needs of their people. Concrete developments in this new phase of imperialism demonstrate that capitalism has never been and will never be a viable, sustainable option for the majority of the people in less developed countries.

The objective conditions for all exploited people (including the exploited people in imperialist countries) to join together in struggle are better than any time in history. For our own survival people in the world can no longer afford to compete with one another to offer global monopoly capital our cheap labor, our cheap resources and our clean environment to exploit and destroy. If we are to have a future, we have to stand our ground and fight together against imperialism and for our common liberation – and to rescue the global ecosystem for the survival and prosperity of all humankind.

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is Really Made in China? Assessing Domestic Value-Added when

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Does it Matter?” IMF Working Paper (WP/12/277) November, 2012 https://www.imf.org/external/pubs/ft/wp/2012/wp12277.pdf

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[1] For the rest of the paper capitalism and imperialism will be used interchangeably.

[2] The term phase used in this paper indicates a shorter period of several decades within the stage.

[3] Monsanto controls nearly all generically modified seeds. The percentages of land area planted with GM seeds worldwide are: 79% of soy, 32% of Maize, 70% of cotton and 74% of Rapeseed. The major countries that use GM seeds (in % of area planted) are: the United States (70.1%), Brazil (40.3%), Argentina (24.4%), India (11.0%), Canada (10.8%), and China (4.2%). (See http://www.gmo-compass.org)

 

[4] As of Nov 30, 2013, there were 74 Chinese companies listed on the New York Stock Exchange and nine on a smaller subsidiary exchange established specifically for small-capitalization companies. These companies’ total market capitalization stood at $1.04 trillion on that date.

[5] The reason behind Mao’s analysis is that he saw the contradictions between the national capitalists and the foreign and bureaucratic capitalists. National capitalists as a class were weak, because China’s capitalist development was in a very early stage. This class was too weak to lead a democratic revolution. For that reason Mao called for a new democratic revolution as opposed to the old democratic revolution led by the national capitalist class. The pre-1949 China had a national capitalist class but it was weak.

 

[6] The two Bretton Woods Institutions were established supposedly under the Social and Economic Council of the United Nations. However, both of these institutions today have nothing to do with the United Nations. The UN’s Secretary General is not even allowed to give speeches at these institutions.

[7] Poland was actually the first country to declare its inability to make payments.

[8] The distribution of bank exposures to Latin Americas among major advanced capitalist countries was: US banks held 17%, Japanese banks 15%, British banks 14%, French banks 10%, German Banks 9%, Canadian banks 9%, and Swiss banks, 3%. (Volcker and Gyohten, 222)

[9] The seven environment groups are: Friends of the Earth, US, Ground Work/Friends of the Earth, South Africa, campagns per la riforna della, Bance Mondiale, CDM Watch, Environmental Rights Action/ Friends of the Earth Nigeria, International Rivers, and LIFE – Legal Initiative for Forest and Environment.

See:http://www.criticalcollective.org/wpcontent/uploads/World_Bank_Climate_Change_Energy_Financing_Report_Web.pdf

 

[10] Most Favored Nation status was a provision that required all members to treat their trading partners equally. If one country lowered its tariff to some of its trading partners, it had to do the same to all its trading partners. The Most-Favored-Nation provision was abused by the US. It because the privilege for the US to decide which countries it would grant the Most-Favored-Nation status.

[11] The Trilateral Commission formed in 1973 consists of leaders in business, banking, government and mass media from North America, Europe, and Japan. It meets regularly to discussion important issues of their common concerns. Its founding Chairman is David Rockefeller, who served as the Chairman of the Council on Foreign Relations of the United States.

 

[12] The MAI was being negotiated by the OECD countries in the late 1990s but eventually failed to reach an agreement among these countries.  The Public Citizen website said. “The goal of MAI is to apply the extreme deregulatory agenda of the GATT-WTO to the few vital economic sectors not already covered by the GATT-WTO rules.” (www.citizen.org) The most significant and damaging impact of both TPP and TIPP is that the giant global corporations would establish their own court system outside of the judicial system of the host countries where they conduct their businesses. These giant global corporations would have the right to sue any host government when they consider its regulation or action is impeding their profits.

[13] The Bandung Conference was the first large-scale conference of Asian-African countries. It was held in Bandung, Indonesia in 1955. Representatives of 25 countries attended the Conference, which aimed to oppose colonialism and neocolonialism. This Conference led to the Non-Aligned Movement.

[14] In 1999 28% of all Taiwanese PC were made in China and that percentage increased to 42% a year later. (Lardy, 52)

[15] http://ias.cass.cn/en/show_project_ls.asp?id=642

[16] In 2001, 91 percent of China’s total exports ere manufactured goods.

[17] Import quotas on aircraft, medical equipment, distilled spirits, beer and certain types of fertilizer, and other goods of importance exported by U.S. firms were eliminated immediately upon accession.

[18] On 13 December 2001, the China Insurance Regulatory Commission (CIRC) approved New York Life Insurance, Metropolitan Life Insurance, Nippon Life Insurance, and another four foreign insurers to set up or to expand business operations in China. (“China’s Foreign Trade Policy after WTO Accession” published by the Institute of American Studies, Chinese Academy of Social Sciences, http://ias.cass.cn/en/show_project_ls.asp?id=642)

[19] http://ias.cass.cn/en/show_project_ls.asp?id=642

[20] http://www.ey.com/Publication/vwLUAssets/Global-Steel-Report-2013/$FILE/Global-Steel-Report-2013_ER0046.pdf

[21] See Ching, Revolution and Counter Revolution, chapter 9,

[22] The PPP is a form of privatization. The private company will put in a certain amount of initial investment to be paid by water charges by the users for a period of 20-30 years and then the facility will be transferred back to the publid.

[23] In 2012 total US imports of agricultural products from China was $10 billion, resulting a trade surplus of $20 billion.

 

[24] As a matter of fact the decimation of less developed countries’ effort to develop capitalism independently was the well thought out strategy of the global monopoly capital itself.

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