Wednesday, January 4, 2012

China’s coming crises

Patrick Bond
Triple Crisis
January 4, 2012

With economic crashes and ecological calamities so prevalent in 2011, concluding with a do-little November G20 meeting in Cannes and a do-nothing December climate summit in Durban, January has opened with intense fear of eurozone deterioration. In this uncertain context loom the two most potent forces shaping the period ahead: China’s capital accumulation process and class struggle.

Because of the country’s uneven and combined development, within an extraordinary boom we can see the beginnings of a potentially world-scale bust, plus prodigious socioeconomic battles from below alongside brutal attacks on the environment such as coal-fired power and the Three Gorges Dam (notwithstanding exceptional ‘green economy’ advances).

Some observers of China are optimistic, but they’re mostly from the Bretton Woods Institutions. Six weeks ago, opined World Bank Chief Economist Justin Yifu Lin, “China can continue its dynamic economic growth for at least another 20 years,” and six months ago, the International Monetary Fund’s Executive Board Assessment “noted that China’s near-term growth prospects continue to be vigorous and are increasingly self-sustained, underpinned by structural adjustment.” After all, “A broad-based recovery is well in train and there has been a hand-off to private investment as the stimulus winds down.”

To receive such praise from Washington should set off warning sirens. Triple Crisis bloggers Jayati Ghosh and C.P. Chandrasekhar are more sober: “As the housing bubble in China is pricked and real estate prices fall, this will have negative multiplier effects on all related activities.” Added Paul Krugman in The New York Times last month: “China’s story just sounds too much like the crack-ups we’ve already seen elsewhere.”

My guides on a mid-December trip to south and central China were Professors Wen Tiejun of Renmin University and Lau Kin Chi of Lingnan University. We began at the South South Forum in Hong Kong, whose core theme reflected the Chinese ‘New Left’ perspective: “Mainstream scholars and commentators, purposefully or unconsciously at the service of vested interests, have often been too eager to attribute developmental experiences to generic and reified concepts such as marketization and globalization.”

To debunk mainstream stories requires understanding state (especially municipal) power to shape China’s capitalist development trajectory. In central China, the world’s fastest-growing major city, Chongqing, has since 1997 enjoyed self-management status equivalent to Shanghai, Beijing and Tianjin. With 7 million urban residents (rising a million a year), this is where China best marries efficiency and equity. The historian Philip Huang argues that a ‘Third Hand’ – the municipal corporation, between socialism and capitalism – is creating Chongqing’s extraordinary landscape.

Elsewhere in China, the vast speculative housing boom, part state-driven but then joined by private investors who overbuilt, created vast ghost cities with tens of millions of empty apartments at a time worker housing was unaffordable. In contrast to the developers’ over-priced, for-profit housing, Chongqing is building 700,000 low-cost public units for two million people in just seven years. This is critical to both labour supply management (generously state subsidised at the point of reproduction) and consumer demand, especially for appliances and other household goods.

Behind this is the model for ‘nonmingong’ migrant workers, operating similarly to what Southern Africans refer to as ‘articulations of modes of production’: male workers in capitalist firms are reproduced through gendered superexploitation because they lack urban citizens’ rights, relying instead upon rural women for childcare, healthcare for sick workers and old-age care. That apartheid-like system helps explain China’s persistently low wage rates (alongside a state-controlled, low-value currency).

A crucial factor in rearranging Chongqing’s social and economic space over the last four years is the role played by Bo Xilai, son of a former deputy premier who has the vision, determination and raw power to cut through bureaucratic red tape. He has crushed protests but also made concessions such as much higher land payments to the rural dispossessed, as well as public housing – because so far, state profits from rising land prices provide the needed subsidy.

Most estimates of annual protests in China are in excess of 100,000. University of California geographer You-Tien Hsing explains how the system can be challenged from below, to increase the compensation given via social protest of the type underway recently in Wukan. “What this new regime of social stabilisation has brought is the commodification of citizens perception of justice and rights… Constrained by the limited political space, in their struggle, cash became the goal of their struggle and the measure of justice.”

In sum, it strikes me that five ‘s’ contradictions are rising that even the finest Chinese managers will probably not overcome. First, subsidies flow from central government to select industrial sites – about $15 billion to Chongqing annually – and into the transport system, but can these continue?

Second, surpluses earned from the proletariat – which in China are unusually high, as migrants push reproduction costs back to women – may not be so easy to realize when exporting to shaky world markets. (Chongqing’s take has been $30 billion/year.) Can the model shift quickly enough from dependence on foreign trade?

Third, structure/struggle dialectic means that from above, on the one hand, sociopolitical leadership from the likes of Bo Xilai is rare, and required a sustained attack on Chongqing’s strong mafioso elements – but how replicable is this leadership? And on the other hand, from below, massive social unrest continues from peasants and workers – but can it link beyond the current localized grievance expressions and pay-outs?

Fourth, the maniacal speculation in real estate required for ever-increasing municipal revenue appears now to have peaked, threatening even Chongqing’s model.

Fifth, sustainability in ecological terms is failing, with severe air and land pollution, climate change and water shortages. Beyond the fast trains, massive tree-planting and vast solar panel production, the broader western fossil-fuel model of accumulation needs questioning.

The extraordinary accomplishments made possible by a strong state taming capital accumulation may not withstand such contradictions. Given the troubles above and turbulence below, it is overdue for China’s emerging New Left to take its critiques to scale and connect these dots.

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