On State Capitalism

The following is the fourth part of the lecture on why foreign scholars are as yet unable to understand China’s socialist market economy. It deals with ‘state capitalism’, which is probably the most widely used term in both Marxist and non-Marxist traditions. As will become clear, what they mean differs considerably.

By 2008’s Atlantic financial crisis, or what is now called ‘The Great Recession’, the neoliberal project effectively came to an end. Since then, it has been in retreat, to the consternation of the true believers. The WTO is no longer setting the agenda in the way it used to do, for it is being changed from within, the ability of the United States to coerce others is in noticeable decline, the United States and Europe no longer see eye to eye, and a series of alternative international structures have gained significant influence, such as the Asia Infrastructure Investment Bank, the Shanghai Cooperation Organisation and the Belt and Road Initiative. How to make sense of these developments? On the back foot, more and more neoliberal true believers have begun once again to speak of the spread of ‘state capitalism’, with dire warnings as to its effects. By state capitalism they mean that the state is a large and influential corporation in its own right, a business enterprise and indeed core component that controls significant parts of a capitalist market economy.

But I have leapt ahead of myself, for the terminology of ‘state capitalism’ was developed mostly in the Marxist tradition, particularly in Lenin’s hands. The term itself may be older, used in relation to Bismarck’s project in Germany, but it is from the Marxist tradition that its most sophisticated sense arose. So let us consider Lenin’s contribution, after which I analyse a number of different paths that arose after Lenin.

Towards the end of his life, Lenin used ‘state capitalism’ on quite a number of occasions (Lenin 1918 [1965]-b, 1918 [1969]-b, 1918 [1965]-a, 1918 [1969]-a, 1921 [1965]-a, 1921 [1970]-a), but the fullest statement may be found in the key work, ‘The Tax in Kind’ (Lenin 1921 [1965]-b, 1921 [1970]-b). Lenin argued that in light of the sheer devastation and economic collapse caused by the First World War and the Civil War, as well as the very premature state of socialism in Russia, a measure of private enterprise was necessary to get the economy moving again. Peasants could sell the grain left over after paying the ‘tax in kind’, small private light-scale industry could be established, and concessions and leases would be given to foreign capitalist enterprises. All of this would entail the extraordinary dialectical point of building socialism through capitalism, or of private capital helping socialism.[1] How so? It would enable the initial impetus for the ‘development of the productive forces’ (Lenin 1921 [1965]-b, 342-43, 345-46).

Of course, Lenin had to overcome ‘left-wing’ opposition to do so, making two crucial points. First, he mapped out a process of transition, since it was not possible to move from a backward, imperialist situation immediately to full-blown socialism. Thus, he envisaged a series of transitions, from petty-bourgeois capitalism (and later from ‘War Communism’), through state capitalism, to socialism itself, during which elements of capitalism would remain.[2] Or, as he puts it more simply, from capitalism, through state capitalism, to socialism. Second, it all depends on the over-arching socio-economic and political system. His two examples are Germany (after Bismarck’s reforms) and Russia after the October Revolution. In Germany, this ‘state capitalism’ was firmly in the hands of ‘Junker-bourgeois imperialism’; by contrast, in Russia the socialist system already emerging was the key, with the nature of the socialist state and the proletarian dictatorship playing the major roles. Thus, argued Lenin, it would be highly advisable to learn from the German model and locate it within the Russian socialist system.

What has been the fate of Lenin’s insights? Four paths may be identified. First, some Western Marxists have sought to use ‘state capitalism’ to speak of socialist countries, albeit without acknowledging Lenin’s careful development of the idea. Thus, they have applied ‘state capitalism’ to both the Soviet Union and China in a purely negative sense. They do by ignoring Lenin’s key insights and understand ‘state capitalism’ as a system – with its new ‘bourgeoisie’ as exploiters – that is diametrically at odds with socialism, let alone communism (Cliff 1948 (2003); Pannekoek 1937; Norman 1955; Crump and Buick 1986; James 1986; Weil 1996, 26-27; Hooper 2017). Common to these works is a Western ‘betrayal narrative’, trying to find some moment when the Marxist tradition was ‘betrayed’ (see more below).

Intriguingly (and this is the second path), they also come close to a more recent group of non-Marxist scholars, who have begun to use ‘state capitalism’ in relation to a significant number of countries – including socialist ones – that have either refused or turned away from neoliberal approaches. In more detail, they see state capitalism as significant and long-term ‘intervention’ of the state in ‘the market’, by which they mean an entity separate from society and the state. They are also fond of using tired old categories, such as the opposition between ‘autocratic’ and bourgeois ‘democratic’, inefficient and efficient, so that state capitalism means inefficient ‘authoritarian’ capitalism and is contrasted with efficient ‘free-market’ capitalism. It should be no surprise that they see the spread of such state capitalism as a threat and hope to identify its shortcomings. Although they often focus on China as a favoured example (Haley and Haley 2013; MacDonald and Lemco 2015, 43-69; Naughton and Tsai 2015; Kurlantzick 2016; Chen 2015; Hundt and Uttam 2016, 189-220), this type of ‘state capitalism’ in certainly not restricted to China. The number identified is relatively large, whether one offers an analysis of the current situation or takes a historical perspective. In terms of the current context, the list includes most countries in East Asia, Central Asia, more and more Latin American and African countries, Russia and some Scandinavian countries. Historical surveys like to begin with modern state forms in Europe after the Peace of Westphalia of 1648, and then identify various forms of state capitalist ‘intervention’ in mercantilism, European colonialism, the Soviet Union and Eastern Europe, the welfare state in Europe (especially Scandinavia), many post-colonial states in Africa and Asia, and the Asian economic rise in the last 30 years or so, with particular focus on Singapore and South Korea (Kurlantzick 2016, 49-63; see also MacDonald and Lemco 2015, 17-42). One does begin to wonder whether ‘state capitalism’ has become a catch-all category that can be applied to all states to a greater or lesser degree.[3] Ultimately, this tendency is less of a problem than the fundamentally flawed assumptions and its oppositions – state versus market, autocracy versus bourgeois democracy, efficiency and inefficiency – that arise from the Western European liberal tradition, a tradition that has for too long seen the rest of the world in its own image. Unable to think outside this tradition, unable to seek truth from facts, they have resorted to the category of ‘state capitalism’ to try to understand the global shifts that became apparent in 2008.

Third, a few foreign Marxist scholars have continued to use the term, and to their credit they do so through careful engagement with Lenin and the New Economic Policy (which ran for almost a decade in the 1920s). More specifically, they propose that China’s Reform and Opening Up is a longer version, developed in terms of specific conditions, of the NEP (Kenny 2007). This brings us to the fourth direction arising from Lenin’s work, concerning which I need to mention Chinese scholarship. These scholars have pointed out that part of the inspiration for Deng Xiaoping’s breakthrough with the Reform and Opening Up was precisely Lenin’s New Economic Policy (1985 [1993], 143; 1985 [2008], 140; Yang and Li 1998; Le 2000; Wang 2001; Tao 2008).[4] But there is one very important feature of this argument concerning the influence on Deng Xiaoping: the scholars in question rarely, if ever, use the term ‘state capitalism’. Let me put it this way: as we look back after a century, we can see certain shortcomings in Lenin’s approach. Notably, he assumed that private enterprise and market exchange were by definition capitalist, while public ownership and a planned economy were necessarily socialist. We now know that this is not the case, for market economies have existed under many different – and non-capitalist – conditions (as Marx already argued in his analysis of ancient Greece (Marx 1894 [1998], 588-605; 1894 [2004], 583-99)). At the same time, Lenin did make the crucial point that everything depends on the underlying system within which a market economy works. But in order to understand how this point remains relevant, we need to clarify the terms. Lenin called this ‘state capitalism’, in light of the evidence and knowledge available at the time, especially from Germany. But in light of subsequent historical research and current experience, especially in China, it would be better to speak of a market economy as a component of a larger socialist system (Huang 1994). Let me emphasise that this point is not made by foreign scholars, since they tend not to use Chinese sources for their work.

To sum up, state capitalism has an intriguing and complex history, with its initial development in the Marxist tradition through Lenin, its subsequent misuse by a number of Western Marxists in relation to the Soviet Union and China, its redeployment (without knowledge of the Marxist tradition) to try and understand the turn away from the neoliberal project, its Leninist sense by a small number of Marxists in relation to China, and then Chinese scholarship that fully acknowledges Lenin’s influence on Deng Xiaoping but then takes his insights a significant step further.

Bibliography

Chen, Zongshi. 2015. The Revival, Legitimization, and Development of Private Enterprise in China: Empowering State Capitalism. New York: Palgrave Macmillan.

Cliff, Tony. 1948 (2003). ‘The Nature of Stalinist Russia’. In Marxist Theory After Trotsky, Selected Writings, Vol. 3, 1-138. London: Boomarks.

Crump, John, and Adam Buick. 1986. State Capitalism: The Wages System Under New Management. New York: St. Martin’s.

Deng, Xiaoping. 1985 [1993]. ‘Reform is the Only Way for China to Develop Its Productive Forces’. In Selected Works of Deng Xiaoping, Vol. 3, 140-43. Beijing: Foreign Languages Press.

———. 1985 [2008]. ‘Gaige shi zhongguo fazhan shengchanli de biyouzhilu (1985.08.28)’. In Deng Xiaoping Wenxuan, Vol. 3, 136-40. Beijing: Renmin chubanshe.

Haley, Usha, and George Haley. 2013. Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy. New York: Oxford University Press.

Hooper, Michael. 2017. ‘Opposite Directions: The NEP and China’s Opening and Reform’. Australian Marxist Review: Journal of the Communist Party of Australia 64 (April).

Huang, Nansen. 1994. ‘Shehuizhuyi shichang jingji lilun de zhexue jichu’. Makesizhuyi yu xianshi 1994.11.15:1-6.

Hundt, David, and Jitendra Uttam. 2016. Varieties of Capitalism in Asia: Beyond the Developmental State. London: Palgrave Macmillan.

James, C.L.R. 1986. State Capitalism and World Revolution. Chicago: Charles H. Kerr.

Kenny, Thomas. 2007. ‘Lessons for the “Socialist Market Economy” of People’s China from the Soviet “New Economic Policy”‘. Nature, Society & Thought 20 (1):80-90.

Kurlantzick, Joshua. 2016. State Capitalism: How the Return of Statism is Transforming the World. New York: Oxford University Press.

Le, Chengyao. 2000. ‘Dengxiaoping lilun shi dui liening xin jingji zhengce de jicheng he chaoyue’. Ningxia dangxiao xuebao 2000 (3):11-16.

Lenin, V.I. 1918 [1965]-a. ‘”Left-Wing” Childishness and the Petty-Bourgeois Mentality’. In Collected Works, Vol. 27, 323-54. Moscow: Progress Publishers.

———. 1918 [1965]-b. ‘Session of the All-Russia C.E.C., April 29, 1918’. In Collected Works, Vol. 27, 279-313. Moscow: Progress Publishers.

———. 1918 [1969]-a. ‘O “levom” rebiachestve i o melkoburzhuaznosti’. In Polnoe sobranie sochinenii, Vol. 36, 283-314. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1918 [1969]-b. ‘Zasedanie VTSIK 29 aprelia 1918 g’. In Polnoe sobranie sochinenii, Vol. 36, 239-76. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1921 [1965]-a. ‘Report on the Tax in Kind Delivered at a Meeting of Secretaries and Responsible Representatives of R.C.P.(B.) Cells of Moscow and Moscow Gubernia, April 9, 1921’. In Collected Works, Vol. 32, 286-98. Moscow: Progress Publishers.

———. 1921 [1965]-b. ‘The Tax in Kind (The Significance of the New Economic Policy and Its Conditions)’. In Collected Works, Vol. 32, 329-65. Moscow: Progress Publishers.

———. 1921 [1970]-a. ‘Doklad o prodovolʹstvennom naloge na sobranii sekretareĭ i otvetstvennykh predstaviteleĭ iacheek rkp(b) g. moskvy i moskovskoĭ gubernii 9 aprelia 1921 g’. In Polnoe sobranie sochinenii, Vol. 43, 146-61. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1921 [1970]-b. ‘O prodovolʹstvennom naloge (Znachenie novoĭ politiki i ee usloviia)’. In Polnoe sobranie sochinenii, Vol. 43, 205-45. Moscow: Izdatel’stvo politicheskoi literatury.

Lüthi, Lorenz. 2010. ‘Sino-Soviet Relations during the Mao Years, 1949–1969’. In China Learns from the Soviet Union, 1949–Present, edited by Thomas Bernstein, 27-60. Lanham: Lexington.

MacDonald, Scott, and Jonathan Lemco. 2015. State Capitalism’s Uncertain Future. Santa Barbara: Praeger.

Marx, Karl. 1894 [1998]. ‘Capital: A Critique of Political Economy, Vol. III’. In Marx and Engels Collected Works, Vol. 37. Moscow: Progress Publishers.

———. 1894 [2004]. ‘Das Kapital. Kritik der politischen Ökonomie. Dritter Band. Hamburg 1894’. In Marx Engels Gesamtausgabe, Vol. II:15. Berlin: Akademie Verlag.

Naughton, Barry, and Kellee Tsai. 2015. State Capitalism, Institutional Adaptation, and the Chinese Miracle. Cambridge: Cambridge University Press.

Norman, David. 1955. Marx and Soviet Reality. London: Batchworth.

Pannekoek, Anton. 1937. ‘State Capitalism and Dictatorship’. International Council Correspondence 3 (1):8-16.

Tao, Lin. 2008. ‘Liening de xin jingji zhengce jiqi shidai jiazhi xin tan—jian lun qi dui deng xiaoping lilun de yingxiang’. Ha’erbin xueyuan xuebao 2008 (4):11-18.

Wang, Lirong. 2001. ‘Liening de “xin jingji zhengce” he dengxiaoping lilun zhi bijiao’. Zhongnan caijing daxue xuebao 2001 (5):13-16.

Weil, Robert. 1996. Red Cat, White Cat. New York: Monthly Review Press.

Yang, Chengxun, and Zhusi Li. 1998. ‘Dengxiaoping lilun dui liening xin jingji zhengce sixiang de jicheng he fazhan’. Makesizhuyi yu xianshi 1998 (5):12-17.

[1] It was in ‘The Tax in Kind’ – as noted earlier – that Lenin subsumed his earlier usage of ‘state monopoly capitalism’.

[2] In an insightful section, Lenin identifies the many components present in Russia at the time, in which petty-bourgeois production (mainly peasants with their patriarchal tendencies) and private capitalists were at war with a coalition between state capitalism and socialism (Lenin 1921 [1965]-b, 331; 1921 [1970]-b, 207). Indeed, Lenin argued frequently that many aspects of approaches first developed under capitalism would also have a proper function under socialism: ‘Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. It is inconceivable without planned state organisation which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution. We Marxists have always spoken of this’ (Lenin 1921 [1965]-b, 334; 1921 [1970]-b, 210).

[3] Earlier, I noted the effort by Kurlantzick to limit the meaning of state capitalism in terms of an implicit state monopoly capitalism.

[4] Deng Xiaoping hints at this influence in 1985: ‘What, after all, is socialism? The Soviet Union has been building socialism for so many years and yet is still not quite clear what it is. Perhaps Lenin had a good idea when he adopted the New Economic Policy’ (Deng 1985 [1993], 143; 1985 [2008], 140). Apparently, Zhou Enlai had advocated learning from the NEP already in the 1950s (Lüthi 2010, 36).

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On David Harvey’s Neoliberalism (with Chinese Characteristics)

The is the third part of my lecture text on why foreign scholars as yet do not understand China’s socialist market economy. This part focuses on David Harvey’s influential yet deeply flawed book, A Brief History of Neoliberalism (2005).

The reaction to state monopoly capitalism was – as indicated already on a few occasions – the rise of neoliberalism at the end of the 1970s and its aggressive promotion in 1980s and 1990s. It may be defined as a ‘theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade’ (Harvey 2005, 2). I have taken this definition from David Harvey, since his work is the main focus of this section. The elaboration on this definition sounds very much like a reiteration of Adam Smith (1776 [2000]) as interpreted through the neoclassical economists (Alfred Marshall, William Stanley Jevons, and Leon Walras): minimal state presence, except for guaranteeing the basic institutional environment for a capitalist market economy, the inherent value of ‘self-interest’ and so the primacy of the private individual, with the addition that any state with too many possessions should ‘privatise’ them. In fact, for Harvey the process of privatisation is enough to designate a government’s project as neoliberal.

A Brief History traces the way this liberalism was rediscovered as neoliberalism (Friedrich von Hayek, Milton Friedman and others) and applied with gusto first in the UK and the United States under Thatcher and Reagan, two of the places where Western liberalism itself first arose (Losurdo 2011). In the 1980s and 1990s it was copied by like-minded countries and forced on others not so like-minded, through the standard mechanisms of United States colonial power play – known as ‘regime change’. Of course, states enacting neoliberal policies are bound to be quite ‘interventionist’, as Harvey notes, as were the international bodies such as the IMF and World Bank, which were tasked with the authoritarian imposition of such policies on less-than-willing countries.

All this is reasonably well-known, although Harvey is keen to emphasise the regular crises generated by neoliberal policies. The book was published before the major Atlantic crisis of 2008, so he was unable to realise that the crises were not merely due to internal causes, but also external ones. I mean here the cumulative effect of China’s Reform and Opening Up, which was beginning to have a global effect by the 1990s. Countries following the neoliberal agenda could not help being affected by the Chinese return to being a global power of some weight. This point, of course, brings us to Harvey’s most wayward chapter, ‘Neoliberalism with Chinese Characteristics’ (2005, 120-51).

Before I engage with this chapter, we need to pause for a moment to identify some problems that have already arisen. The key problem is that Harvey refuses to countenance both Marx’s theory of labour value and the falling rate of profit in capitalist enterprises. He has been criticised for such omissions (Harvey 2017; Roberts and Harvey 2018; Das 2017), although I do not need to engage with such debates here. More significant is the ramification: what is the cause for the move to neoliberalism? For Harvey, it is nothing more than the result of the political will of the capitalist ruling class (Harvey 2005, 19; see also here). It is a voluntary act by the ruling capitalist class that makes such decisions in order to respond to economic challenges and threats from anti-capitalist opposition. Not only is this approach focused on relations of production and determined by political rather than economic factors, but I am reminded of Marx and Engels’s criticism of Bakunin. At one point, Marx observes: ‘Willpower [Der Wille], not economic conditions, is the basis of his social revolution’ (Marx 1875 [1973], 633; 1875 [1989], 518).[1]

To be sure, Harvey likes to call his approach ‘uneven geographic development’, along with the invocation of multiple, complex and interwoven factors in the capitalist market relations. But he is unable to provide an adequate Marxist reason for the turn to neoliberalism and away from state monopoly capitalism (which he calls ‘embedded liberalism’). By contrast, had Harvey deployed the falling rate of profit (from Marx), he may have been able to account for the turn to neoliberalism. The earlier tendencies towards state monopoly capitalism  – popular in the context of two World Wars with states becoming become active players in social and economic life through widespread militarisation, capitalist welfare states, and a spate of nationalisations of banks, railways and public utilities – had run to its limit in terms of the ability to extract more profit. A response was needed from the Western liberal tradition: the state had to retreat so as to enable ‘private’ capital to seek new fields to generate profit. Already I have invoked another possible reason in light of the previous section: the tension between bourgeois state control of the capitalist economy and its retreat to enable private capital to come into its own for a while.

With this point in mind we come to the China chapter. Harvey espies a neoliberal turn with the Reform and Opening Up, launched by Deng Xiaoping in 1978. Why? The only answer I can find in Harvey’s work is that it was due to the political will of the CPC, which decided for some unaccountable reason to move to private enterprises alongside state enterprises. I have said enough on the inadequacy of such a voluntarist approach and have more criticisms to make, but let us pause for a moment to see how Harvey unfolds his hypothesis. To begin with, he explicitly connects the Reform and Opening Up with the neoliberal turn elsewhere in the world, although he is careful to point out that it may also have been due to issues internal to China (he does not elaborate).

Harvey is perfectly willing to admit that the result has been stunning, with one of the fastest periods of economic growth in human history, the lifting of hundreds of millions out of poverty, and China’s re-emergence as a major international power. He also notes problems that arose, such as socio-economic inequality, exacerbation of city-country differences, environmental pollution, and labour unrest (his information is limited to the period up to the early 2000s). And he notes that the government has been adept at dealing with new problems that arose. However, Harvey is committed to the idea that this is neoliberal capitalism.

Apart from the fact that Harvey neither cites any reputable Chinese language material on the topic, nor engages in careful study of what Deng Xiaoping actually said and did (apart from some decontextualized ‘sound bites’), the key problem here is that he assumes that a market economy is the same as a capitalist market economy. This may seem like a simple point, but it is fraught with implications. It is also – and unfortunately – quite common among Western economists, social scientists and philosophers – Marxists included. But it is wrong, since a market economy is not by definition a capitalist market economy. I will return to this issue later, save to point out here the multiplicity of different types of market economy is supported by Marx’s own work in Capital, historical investigation, and Chinese research. It is perfectly feasible to have a socialist market economy, which unleashes the forces of production and which is not a capitalist market economy. But Harvey is unable to make this point.

David Harvey has been profoundly influential through his lectures – worldwide – on Marx’s Capital. His method in such talks is simple yet profound: he offers a careful reading, an exegesis, of a few pages of Capital, which he invites the audience to study once again. But the problem of influence is twofold: while Harvey may have encouraged a good number to study Capital once again, this very same influence has encouraged the perpetuation of a number of profound mistakes.

Bibliography

Das, Raju. 2017. ‘ David Harvey’s Theory of Uneven Geographical Development: A Marxist Critique’. Capital and Class 41 (3):511-36.

Harvey, David. 2007. A Brief History of Neoliberalism. Oxford: Oxford University Press.

———. 2017. Marx, Capital, and the Madness of Economic Reason.

Losurdo, Domenico. 2011. Liberalism: A Counter-History. Translated by Gregory Elliott. London: Verso.

Marx, Karl. 1875 [1973]. ‘Konspekt von Bakunins Buch “Staatlichkeit und Anarchie”‘. In Marx Engels Werke, Vol. 18, 597-642. Berlin: Dietz.

———. 1875 [1989]. ‘Notes on Bakunin’s Book Statehood and Anarchy‘. In Marx Engels Collected Works, Vol. 24, 485-526. Moscow: Progress Publishers.

Marx, Karl, and Friedrich Engels. 1845-1846 [1973]. ‘Die deutsche Ideologie. Kritik der neuesten deutschen Philosophie in ihren Repräsentanten Feuerbach, B. Bauer und Stirner und des deutschen Sozialismus in seinen verschiedenen Propheten’. In Marx Engels Werke, Vol. 3, 9-530. Berlin: Dietz.

———. 1845-1846 [1976]. ‘The German Ideology: Critique of Modern German Philosophy According to Its Representatives Feuerbach, B. Bauer and Stirner, and of German Socialism According to Its Various Prophets’. In Marx and Engels Collected Works, Vol. 5, 19-539. Moscow: Progress Publishers.

Roberts, Michael, and David Harvey. 2018. Marx’s Law of Value: A Debate between David Harvey and Michael Roberts. In The Next Recession. thenextrecession.wordpress.com/2018/04/02/marxs-law-of-value-a-debate-between-david-harvey-and-michaelroberts.

Smith, Adam. 1776 [2000]. The Wealth of Nations. London: Modern Library.

[1] See also the earlier observation on Max Stirner. who was – write Marx and Engels – committed ‘to mere change of will [eine bloße Veränderung des Willens]’ (1845-1846 [1973], 317; 1845-1846 [1976], 335). This is nothing more than the ‘domination of arbitrariness [Herrschaft der Willkür]’ (1845-1846 [1973], 317; 1845-1846 [1976], 335).

On State Monopoly Capitalism

This is the second part of a lecture I am preparing on why foreigners are still unable to understand a socialist market economy. This part examines state monopoly capitalism, which was a significant part of Soviet and European Marxist debates up to the end of the 1980. The text is as follows:

State monopoly capitalism is first and foremost a Marxist category, arising in Soviet thought (abbreviated as stamocap) and gaining widespread usage after the Second World War. Notably, in this tradition ‘state monopoly capitalism’ is used almost exclusively to speak of capitalist countries in light of the evolving stages of capitalism. With one exception: I have been able to find one example – an implicit one – where a certain type of state monopoly capitalism has been used more recently in relation to socialist countries (among others). I will deal with this exception towards the end.

State monopoly capitalism may be defined as a ‘distinct stage of capitalism characterised by the fusion of monopoly forces with the bourgeois state to form a single mechanism of economic exploitation and political domination’ (Jessop 1982, 32).[1] I have taken this definition from Bob Jessop, who provides what is arguably the most comprehensive critical overview of the theory. The date of publication is also telling, for in 1982 the theory was still relatively widespread. There were two main components: a new stage of capitalism in light of its internal crises, which entailed a closer alignment of monopoly capital and the bourgeois state; a development of communist strategy to exploit the contradictions through popular front activities.

The theory initially arose in the Soviet Union (Varga 1964, 1964 [1968], 1934) and became dominant from the 1950s to the 1980s, so much so that The Great Soviet Encyclopaedia has a major 1979 entry (Cheprakov 1979). The origins may be traced back to Marx and Engels, concerning the contradiction between competition and monopoly, and Lenin’s relatively undeveloped observation that imperialism entails the growth of state monopolies (Lenin 1916 [1964], 1917 [1964]-b),[2] so much so that – and here he quotes a resolution – ‘monopoly capitalism is developing into state monopoly capitalism’ (Lenin 1917 [1964]-a, 305; 1917 [1969]-b, 443).[3]

During its heyday, the theory of state monopoly capitalism developed in a number of directions, depending on the emphasis and context. Jessop identifies four, with copious references:

1) General crisis approach, in which the capitalist world faced yet another stage of crisis, generated by the increasing number of socialist countries, the collapse of European colonialism in light of anti-colonial liberation struggles. The response of a decaying capitalism was to find new domination through the merging of the state and monopoly capitalism.

2) Monopoly-theoretical tradition (strong in the Soviet Union and Germany), in which the contradiction of competition and monopoly leads to a permanent domination of the latter. This was seen as a new stage of capitalism, beyond imperialism – as Lenin had initially argued (Lenin 1916 [1964], 1916 [1969]). Here too we find the challenge of socialism, but now seen primarily in class terms: the international challenge of socialism leads to the fusion of monopolies and state, with resultant militarism and a focus on technological development.

3) The capital-theoretical tradition (England, but also in Germany and the Soviet Union), which focuses on the basic laws of capitalist motion. This approach emphasises that state monopoly capitalism is a crisis-driven response to the contradiction between the increasing socialisation of the forces of production and private nature of the relations of production. The state’s active role at multiple levels effectively further socialises the relations of production through the state. On the British side (Fine and Harris 1979, 120-45), this entails not a new stage of imperialism (see above), but a third stage in the capitalist mode of production, after laissez-faire and monopoly capitalism. The state’s active role – through nationalisation, taxation, and state credit – not only negates working class access to real state power through direct control, but also internationalises productive capital by working with multi-national companies and establishing international organisations such as the World Bank and the International Monetary Fund.

4) The French ‘overaccumulation’ approach, which was framed in terms of the contradiction between private monopoly capital’s overaccumulation and its revalorisation through the state. Basing its approach on the cyclical crises of capitalism, which at times reach a crescendo so that structural changes are needed, the French approach identified the increasing role of the state in ensuring that the falling rate of profit (which leads to overaccumulation) is arrested for a time by comprehensive structural changes. Thus, state monopoly capitalism becomes a necessary development to ensure, through the state’s central role, that private monopoly capital is able to produce surplus-value. And it does so through reorganising the relations of production, with the resultant increase in exploitation and polarisation of classes.

To sum up, most approaches agreed on a few basics: state monopoly capitalism was a new stage, either beyond imperialism or a third stage in capitalism (after laissez-faire and simple monopoly); this new stage was yet another systemic effort to deal with unsolvable contradictions, whether in terms of the relations of production and globalised class conflict or in terms of the means of production; it entailed new types of exploitation for workers and efforts to suppress of socialism. But they also differed in many ways, with a core difference determined by whether the focus was primarily political or economic. Thus, those who saw the development in political terms (monopoly-theoretical) were keen to find new approaches to political agitation, but they ran the risk of determining the economic analysis through such an agenda. By contrast, those who preferred to focus on the internal laws of capitalism (capital-theoretical and overaccumulation approaches) at times seemed to come close to Marxist ‘book worship’ and thus a type of economism.

I would like to close with two final questions. First, are there any abiding insights from this material? At a deeper level, it was very useful in identifying the inescapable role of the bourgeois state within a capitalist economy. Debates may continue as to the changing ways this happens, but it is a useful corrective to the neo-classical (and indeed neoliberal) approach which sees the market as a separate entity, within which the state intervenes from time to time.[4] One way of seeing the tensions within capitalist economics is in light of these two theoretical approaches: while the state is deeply and structurally involved, there are at the same time constant moves to delink the state, to privatise state assets and seek a ‘small state’. Periodically – such as during wartime or extensive economic crises – one approach dominates, but then we find a reactive move in the other direction.

This point brings me to the second question: why did state monopoly capitalism as a theory virtually disappear among foreign Marxists after 1989 and the counter-revolution in the Soviet Union and eastern Europe? One reason is that it was due to the tensions within capitalism outlined above: the drive to state monopoly capitalism produced a reaction in the 1980s, with the revival of laissez-faire economics under the label of ‘neoliberalism’. Another reason is that many of the theorists saw a major contradiction at a global level between capitalism and socialism. The latter was growing at the time, with successful revolutions in Asia, anti-colonial struggles and national liberation in Africa, Asia and elsewhere, while the capitalist world was shrinking. The counter-revolution in Eastern Europe seemed to suggest that this analysis was wrong. Instead, socialism seemed to be in retreat and capitalism was gaining momentum.

Or that is how it seemed to Western eyes in the 1990s and early 2000s. Since then, of course, much has changed. Socialist countries, especially China, are now more powerful and influential than they have been for a very long time. Many formerly colonised countries have found that the economic models borrowed from the West have not worked and they are looking for alternative models adapted to their own conditions. And these countries have also been active in international bodies, from the United Nations to the World Trade Organisation, transforming them from within to suit the conditions of a rapidly changing world.

Indeed, I suspect that ‘state monopoly capitalism’ may make a comeback as a category of analysis, albeit in a different way. Thus far, state monopoly capitalism has not been applied to socialist countries,[5] but there is a beginning of efforts to do so, albeit without any awareness of the Marxist origins and development of the term. Let me give one example, although it is implicit rather than explicit. It appears in the recent work by the neo-classical economist, Kurlantzick, who works within the framework of state capitalism but seeks to delimit its application. Realising that ‘state capitalism’ potentially applies to all states, he offers this definition: ‘countries whose government has an ownership stake in or significant influence over more than one-third of the five hundred largest companies, by revenue, in that country, a situation that gives these governments far greater control over the corporate sector than a government in a more free-market oriented nation like the United States or the United Kingdom’ (Kurlantzick 2016, 9). This definition is extremely intriguing, for Kurlantzick must work very hard to exclude a number of countries – such as France, Japan and the United States – from his list. In order to so, he adds:

  1. The ownership and control of key enterprises must be direct and not indirect (since the United States provides massive indirect subsidies to its military and automobile industries)
  2. This ownership and control must be long-term and not during economic crises, as we found after 2008 in some countries.
  3. Direct government spending on items such as welfare is also excluded.
  4. Sovereign wealth funds are excluded.

Only in this way can he focus on what are implicitly seen as state-monopoly capitalist countries. A major reason for the restrictions is that Kurlantzick is desperate to save mostly Western countries from being versions of state (monopoly) capitalism, for he sees their ‘free market’ approach and its attendant liberalism as under severe threat and failing. But even with these restrictions, the number of state monopoly capitalist countries is quite large, as the following table indicates (Kurlantzick 2016, 28):

More monopolised                    Hybrid           Less monopolised

Two socialist countries make the list, China and Vietnam, although they are by no means the most ‘monopolised’ according to Kurlantzick’s criteria. The question arises as to why this implicit state monopoly capitalism should be recurring now, albeit without awareness of the Marxist tradition. Has the effort to revive laissez-faire economics under the label of ‘neoliberalism’ run its course? I will say more on this question in the section on state capitalism.

Bibliography

Bollana, Primo. 1981. ‘Some Characteristics of State Monopoly Capitalism in the Soviet Union’. In Soviet Revisionism and the Struggle of the PLA to Unmask It, edited by Institute of Marxist-Leninist Studies at the CC of the PLA. Tirana: “8 Nëntori” Publishing House.

Cheprakov, V.A. 1979. ‘Gosudarstvenno-monopolisticheskiĭ kapitalizm’. In Bolʹshaia sovetskaia ėntsiklopediia. Moscow: Izdatel’stvo Sovetskaia Entsiklopediia.

Fine, Ben, and Laurence Harris. 1979. Rereading Capital. London: Macmillan.

Herzog, Phillippe. 1972. Politique économique et planification en regime capitaliste. Paris: Editions sociales.

Hoxha, Enver. 1978 [1985]. ‘Imperialism and the Revolution’. In Selected Works, 358-707. Tirana: “8 Nëntori” Publishing House.

Jessop, Bob. 1982. The Capitalist State: Marxist Theories and Methods. Oxford: Martin Robertson.

Kurlantzick, Joshua. 2016. State Capitalism: How the Return of Statism is Transforming the World. New York: Oxford University Press.

Lenin, V.I. 1916 [1964]. ‘Imperialism, the Highest Stage of Capitalism: A Popular Outline’. In Collected Works, Vol. 22, 185-304. Moscow: Progress Publishers.

———. 1916 [1969]. ‘Imperializm, kak vysshaia stadiia kapitalizma (Populiarnyĭ ocherk)’. In Polnoe sobranie sochinenii, Vol. 27, 299-426. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1964]-a. ‘Speech in Favour of the Resolution on the Current Situation, April 29 (May 12), 1917’. In Collected Works, Vol. 24, 305-8. Moscow: Progress Publishers.

———. 1917 [1964]-b. ‘War and Revolution: A Lecture Delivered May 14 (27), 1917’. In Collected Works, Vol. 24, 398-421. Moscow: Progress Publishers.

———. 1917 [1965]. ‘The Impending Catastrophe and How to Combat It’. In Collected Works, Vol. 25, 323-69. Moscow: Progress Publishers.

———. 1917 [1969]-a. ‘Groziashchaia katastrofa i kak s nei borot’sia’. In Polnoe sobranie sochinenii, Vol. 34, 151-99. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-b. ‘Rech’ v zashchitu rezoliutsiia o tekushchem momente, 29 aprelia (12 maia)’. In Polnoe sobranie sochinenii, Vol. 31, 443-46. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-c. ‘Voina i revolutsiia: Lektsiia 14 (27) maia, 1917g’. In Polnoe sobranie sochinenii, Vol. 32, 77-102. Moscow: Izdatel’stvo politicheskoi literatury.

Varga, Evgenii. 1934. The Great Crisis and its Political Consequences: Economics and Politics, 1928-1934. London: Modem Books.

———. 1964. Ocherki po problemam politékonomii kapitalizma. Moscow: Gospolitizdat.

———. 1964 [1968]. Politico-Economic Problems of Capitalism. Moscow: Progress Publishers.

[1] Compare the definition in The Great Soviet Encyclopaedia: ‘new, more developed form of monopoly capitalism, characterized by the joining of the forces of capitalist monopolies with the power of the state to preserve and strengthen the capitalist system, enrich the monopolies, suppress the workers’ and national liberation movements, and unleash aggressive wars’ (Cheprakov 1979).

[2] Lenin speaks of ‘the beginnings of state-controlled capitalist production, combining the colossal power of capitalism with the colossal power of the state into a single mechanism and bringing tens of millions of people within the single organisation of state capitalism’ (Lenin 1917 [1964]-b, 403; 1917 [1969]-c, 83). For a comprehensive assessment of Lenin’s contribution, see Jessop (1982, 32-36).

[3] Lenin is, however, not entirely consistent in his usage and the theory remains somewhat undeveloped. Before the October revolution, he saw state monopoly capitalism as a development, especially in the context of war, to a new level of capitalism itself, although even here it was already seen as a step towards socialism (Lenin 1917 [1965], 361-63; 1917 [1969]-a, 191-93). Later, he quotes from this 1917 text – ‘The Impending Catastrophe and How to Combat It’ – in ‘The Tax in Kind’ from 1921, where he argues for the need for a muted verison of state capitalism during the New Economic Policy. In other words, he subsumed state monopoly capitalism under state capitalism (see below), which he saw as a (major) step towards socialism. This inconsistency is most likely due to different circumstances: the initial proposal was made before the October Revolution during the last phase of Russia’s engagement in the First World War, while his later development of the idea took place after the revolution and Civil War, particularly in light of the need to develop the New Economic Policy.

[4] Indeed, one of the debates over state monopoly capitalism concerned the relation between state and economy: were they fused under state monopoly capitalism, distinct, or did they function in terms of ‘contradictory separation in unity’ (Herzog 1972, 125)

[5] One does find very occasional accusations internal to the former Eastern Bloc that the Soviet Union and Yugoslavia had descended, from the time of Khrushchev, to a type of state monopoly capitalism (Bollana 1981; Hoxha 1978 [1985], 414-15).

Hong Kong: a failed palace coup by spoilt rich kids

Palace coup: when a disgruntled section of the ruling class attempts to seize power. This assumes that it no longer has power, but in the past used to have it.

I have drawn the term from Ernst Bloch and it describes very well what has been happening in Kong Kong. How so?

Let me begin with a certain Nathan Law, a leader of the protests, riots and violence in Hong Kong, who jetted off to Yale University while urging others to stay on the streets. Less than impressed, many young Chinese in Hong Kong began a series of takes on his brave act.

‘I go to Yale, you go to jail‘ is one.

‘Blockheads boycott lectures, but I must first go to class’ is another, as in the following:

Such elitism is always popular:

But underlying this effort by spoilt rich kids is the reality that Hong Kong’s moneyed elite has lost the power it once had. The cosy deal with British imperial governors, who never allowed street protests let alone any type of parliament, is over. Now there is a parliament, elections and way more free expression. So they are anxious and worried, as this article points out.

And who is out on the streets, waving US and British colonial era flags, calling on the UK to restore the colonial past, if not urging Donald Trump – believe it or not – to ‘liberate’ Hong Kong?

Spoilt rich kids and those they have duped. They are mightily annoyed they will not have the influence once enjoyed by their parents.

Problem is that it is not working, despite the deliberate misinformation being peddled in a small number of former colonial countries (known as the West). Most people in Hong Kong are singularly unimpressed, and as for the rest of the mainland, they can see right through it. As can most people outside the old colonial cabal.

Now, the Hong Kong government is in control and busy charting a way forward, and we can expect a spate of reforms to secure Hong Kong’s future and minimise the corrosive effects of Western liberalism. Meanwhile, it will need to learn to play second fiddle to nearby Shenzhen, which has been designated as a model socialist city to drive the economic powerhouse of the Pearl River delta.

 

 

 

 

Why more and more people are looking to work with and in China

 

An intriguing article from Dr Ralf Speth, CEO of Jaguar Land Rover. He obviously has an immediate business interest, but the long-term experience of engaging with China also presents a broader picture. Note especially the comments on his daughter, who is working in Shanghai and finds Chinese medical research and technology the more advanced than anywhere else. Copied from the People’s Daily.

I visited China for the first time in the early 1980s. Back then, China had just started reforming and opening up, and was in an early stage of accelerated urban construction. There were not many cars, but the people there, many of whom were riding bikes on the streets, were showing energy in their eyes.

About 10 years later, I went to China again. The country was showing even greater signs of change, with a rapid development of infrastructure. The living standard of the Chinese people was improving everywhere you looked. There was a tremendous momentum all throughout the country.

To put it simply: one noticed right away that the roads were wider, and that automobiles were getting more affordable for average families. I started to realize that, as China’s automobile market took off, the country was seeing huge market demand. This demand would soon make China the world’s fastest-growing and largest auto market.

Subsequent visits to China gave me a more comprehensive understanding of the country’s development potential. After I became the CEO of Jaguar Land Rover in 2010, I immediately led the company to enter the Chinese market. We soon achieved leapfrog growth after entering what had indeed become the world’s largest auto market.

We started cooperation with China’s Chery Automobile Co., Ltd to produce automobiles and engines. So far, we have set up offices in four Chinese cities, including Shanghai, Beijing, Guangzhou and Chengdu, employing over 6,000 staff and authorizing 245 dealers across the country. I continue to be hugely optimistic about the Chinese market, and look forward to finding out what the future will hold.

As a witness of – and participant in – the miracle of China’s development, I am amazed by the spectacular progress achieved since the foundation of the modern nation. My daughter also developed a strong interest in China, under my influence. After she came to see it firsthand, she was immediately attracted by the dynamism and charm of the country. Now she is a doctor serving an internship in Shanghai.

As I started to learn more about this country, I came to understand why young people around the world are yearning to engage with it. My daughter often tells me that being a doctor in Shanghai means working at the forefront of medical science and having access to the world’s most advanced technologies.

This is true. It only took a few decades for China to become one of the leading countries in medical science, and ‘miracle’ has become the most frequently used word to describe China.

China has not only achieved economic development, but also advanced technological progress and an open and inclusive culture. The country is promoting world peace and development through dialogue and cooperation.

In recent years, China has lifted more than 10 million people out of poverty annually; it is seeing rapid expansion of the middle-income group, which is resulting in a growing set of expectations for the country from the world.

I believe China’s development is not only quantitative, but also qualitative. The country is leading the world in multiple areas and becoming one of the most attractive destinations on offer. Young graduates from many countries hope to work in China and get involved in the great tide of the country’s development.

Rather than focusing on only its own development, China also hopes to promote shared progress across the world. The Belt and Road Initiative (BRI) being implemented by the country has created a great opportunity for global economic prosperity. Today, the joint construction of the BRI is yielding rich developmental fruit.

In particular, the initiative is rapidly improving the infrastructure of participating countries. Infrastructure is an accelerator of commercial development, and the Belt and Road countries are seeing the benefits from it already.

Culturally, joint construction of the BRI has significantly boosted understanding and inclusiveness among different civilizations and diverse cultures. The BRI advocates for the principle of seeking shared benefits through consultation and collaboration, which not only helps innovation and fosters mutual understanding, but also improves the livelihood of the people. Besides, it also bears huge significance for promoting peaceful development.

We, as multinational enterprises, welcome the application of such principles. In our industry, the ideals being upheld by the BRI ultimately facilitate the international auto trade and the trade in auto parts. Only by sticking to this kind of reciprocal cooperation can enterprises achieve long-term development.

Chinese economic indicators stable, indicating further growth in 2019

As a number of reports (here and here) indicate, China’s economic situation is stable and set to grow at over 6 percent in the rest of 2019. One example: as this report from the always reliable Xinhua News (via the People’s Daily) indicates, the foreign trade figures are very good indeed. Obviously, the BRI and AIIB are major factors, as well as the inherent strength of the Chinese socialist market economy.

BEIJING, June 10 (Xinhua) — China’s foreign trade registered steady growth in the first five months this year despite growing external uncertainties.

The country’s foreign trade of goods rose 4.1 percent year on year in the first five months of this year to 12.1 trillion yuan (about 1.76 trillion U.S. dollars), data from the General Administration of Customs (GAC) showed Monday.

Exports increased 6.1 percent year on year to 6.5 trillion yuan during this period, while imports grew 1.8 percent to 5.6 trillion yuan, resulting in a trade surplus of 893.36 billion yuan.

In May alone, the country’s exports and imports totaled 2.59 trillion yuan, up 2.9 percent from one year earlier.

Li Kuiwen, director of the GAC’s statistics and analysis department, said although faced with the slowdown of global economic growth and international trade, the Chinese economy has continued an overall stable upward trend.

The fundamentals of China’s economy, in that it is resilient and full of potentials, have not changed either, he added.

Government policies aimed at stabilizing foreign trade and investment as well as the improving business environment have also laid a solid foundation for the steady growth of China’s foreign trade, he said.

Zhuang Rui, deputy head of Institute of International Economy with the University of International Business and Economics, called the trade reading a “hard-won” result amid sluggish trade growth around the globe.

Last week, the World Bank revised down its forecast for global trade growth in 2019 by a full percentage point to 2.6 percent, the weakest since the global financial crisis, citing growing trade tensions, among other factors.

Monday’s GAC data also showed China’s trade with the European Union surged 11.7 percent year on year in the first five months, while trade with the ASEAN was up 9.4 percent.

As cooperation between countries participating in the Belt and Road Initiative keeps strengthening, China’s trade with Belt and Road countries increased 9 percent year on year during the period, with the pace of growth 4.9 percentage points higher than the overall pace.

Benefiting from the prosperous cooperation under the initiative, bilateral trade volume between China and Belt and Road countries accounted for 28.8 percent of China’s total trade volume, up 1.3 percentage points from the same period last year, the GAC data showed.

China’s private businesses reported faster trade growth in the first five months. Their trade volume increased 11.1 percent to 5.02 trillion yuan, accounting for 41.4 percent of the total trade volume in the period, up 2.6 percentage points year on year.

 

 

China’s Peaceful Rejuvenation

This China Daily article by Zhang Weiwei, dean of the China Institute at Fudan University, makes at least one good point: China’s economic development was not undertaken through plundering or colonising another country, or through exporting problems. I would add that it also did not require massive international debts to do so. In this respect at least, China’s socialist construction is analogous to the Soviet Union, which also had to find an endogenous path. The contrast with the Soviet Union, whose ‘socialist offensive’ of the 1930s effectively turned it into an economic powerhouse, is that it was often deeply disruptive and occasionally violent. China’s longer path – over the 40 years of Reform and Opening Up – has been overwhelmingly peaceful and stable.

China’s development is in sharp contrast to that of Western powers which has been based on wars of aggression and the plundered resources

The sharp contrast between China and Western countries in their rise shows that what China has achieved in the past 70 years really did not come easy. China’s per capita resources are so limited that the cost of its industrialization has been very high.

What’s more, China has had to properly handle relations with both Western powers and developing countries on the one hand, and address various domestic social contradictions and destabilizing factors on the other.

It is China’s unremitting goal to seek development and harmony within the country and to pursue cooperation and peace with the international community. This has already become the will of the country and has been translated into national development plans and guidelines and implemented in practice.

Guided by the goal of peaceful development, China’s various measures of reform and opening-up have promoted its development and progress across the board. The Communist Party of China’s observation of the ever fiercer competition and numerous challenges in the world, as well as its sober assessment of the times, are reflected in its governance wisdom and enabled the country to get a clear understanding of the current world, and closely follow the major trends and seize the momentum of the times.

China exports no revolution or ideology, engages in no arms race or value-oriented diplomacy, and does not intervene in the domestic affairs of other countries. China does not identify a circle of friends based on ideology and far transcends the cold-war zero-sum game mentality of countries being either friends or foes. Instead, it is committed to a path of win-win cooperation and a partner network of global reach is taking shape.

China’s participation in the World Trade Organization, the world’s largest multilateral trading system, has enormously enhanced win-win cooperation between China and the world, facilitated the allocation and flow of production factors in the world, helped China become the world’s biggest trader in goods and made it possible for China and other countries to benefit from the dividend of China’s peaceful development through fair trade.

China is both a contributor and a beneficiary of economic globalization. The essence of Western-propelled globalization over these years is the globalization of neoliberalism. It is both economic and political, and includes liberalization, privatization, marketization and democratization. Economic globalization is a major trend of history which China must seize and follow. Of course, it is a double-edged sword, if properly handled globalization will improve the wellbeing of the Chinese people, but if mismanaged it will lead to disaster or even obstruct China’s development. Therefore, China has taken the approach of drawing on its advantages and avoiding any pitfalls that may be created by its opening-up.

China has set a clear definition for globalization: It’s economic, not political. Instead of abandoning socialism, China uses the strengths of socialism with Chinese characteristics to harness the globalization of neoliberalism that is driven by Western countries. This has made China stand out on the international stage and made the Chinese beneficiaries of economic globalization.

A key reason why China can maintain its peaceful development is that it has relied on endogenous development. As a super-sized country, China faces population, environmental and social development pressure. But to resolve these difficulties, China has relied on domestic economic, social and political reforms to constantly emancipate and develop productivity. This forms a sharp contrast to some Western countries which exported their own crises to other countries. In some sense, the road of socialism with Chinese characteristics means finding Chinese solutions to various difficulties in the process of industrialization, urbanization and agricultural modernization and creating a new set of approaches.

History shows that China’s peaceful development is a journey in which it has to confront and overcome challenges of all kinds. China’s current efforts involve transitioning from exports and investment-driven growth to industrial upgrading and innovation and consumption-driven growth. This road of endogenous development is wider and brighter, China is likely to become the world’s largest consumer market. Endogenous growth and development can help us maintain patience and resolve, handle international trade frictions in a reasonable manner and push forward the Belt and Road Initiative and new-type of globalization.

The Chinese love and cherish peace, and there is a profound historical and cultural tradition in this nation for peaceful development. For the best part of the past 2,000 years, China was the world’s largest economy with a far more sophisticated economy than Western countries at the same time. The fleet of Zheng He’s overseas expeditions in China’s Ming Dynasty (1368-1644) was 100 times larger than that with which Christopher Columbus “discovered” the American continent. But what China engaged in was only international exchanges and trade. There was neither expansion nor colonization. China has held the wisdom from ancient times that a warlike country, not matter how strong as it is, contains the seeds of its own destruction.

President Xi Jinping has stressed that the 5,000-year-old Chinese civilization has always upheld peace; and that the pursuit of peace and harmony is deeply rooted in the spiritual world of this nation and runs in the blood of its people. The Chinese nation has always advocated precious harmony, peace for the whole world and good neighborly and friendly relations. The history of Western invasions and national humiliation have given the country an acute and deep understanding of the value of peace. Therefore, the People’s Republic of China, from day one, has made solemn pledges that China will never seek hegemony even when one day it is strong. The success of China’s peaceful development is also rooted in the traditional wisdom of its civilization which valued harmony and stability. The success embodies the combination of our cultural genes and modern spirit. Our cultural legacy has been brought into life by reform and opening-up, and has become a major source of wisdom for China.

The resilience of a socialist market economy

In the article copied below are some useful insights into the current ‘trade war’ that the USA has launched against China (among many other countries). I am not sure the article – by John Ross – fully understands the socialist market economy of China, but the reality is that this economy is far more integrated, resilient and advanced than the chaotic and hollowed-out capitalist market economy of the USA – which Ross does analyse quite well. One thing is increasingly clear: the US advisors who are calling the shots are both annoyed and alarmed that they are hurting and now slipping behind.

Global Times, 13 May 2019:

Current US administration actions on trade make it important to carry out a calm objective comparison of the economic situation of China and the US. This is particularly necessary because the US administration engages in inaccurate boasting while China tends to present its economic situation in a calm, even modest, way. But, in very serious matters, there is no virtue in exaggeration — there is only virtue in realism.

Factual comparison of the economic situations of China and the US reveals the following: growth under the Trump administration is extremely slow by US historical standards, while China’s economy is growing twice as fast as the US and has greater resilience than the US, and China’s methods of macroeconomic control are much stronger than those of the US. These relative situations are confirmed by both the latest economic data and long-term economic trends.

To accurately analyze US economic dynamics it is necessary to remove false claims made by the US administration. President Trump has repeatedly claimed that “America’s economy is booming like never before,” but when this claim was made to delegates at the UN General Assembly, the Washington Post noted that “people actually laughed.” Such skepticism was justified. Facts show that under President Trump, the US is currently experiencing the slowest economic growth of any presidency since World War II.

Using the method by which the US presents data, peak growth under Trump of 4.2 percent in the second quarter of 2018 was significantly lower than the 5.1 percent under Obama, 7.0 percent under George W Bush, or 7.5 percent under Clinton. These peaks were in turn lower than under former US presidents since World War II. Peak growth under Nixon was 11.3 percent.

To make an accurate comparison to China, it should be understood that the way the US presents economic data differs from China and most countries. China states its economic growth as the increase from one quarter compared to the same quarter in the previous year – that is real year-on-year growth. The US presents economic growth as one quarter’s growth compared to the previous quarter presented at an annualized rate – approximately multiplied by four. This greatly exaggerates short-term US growth. The real highest year-on-year growth achieved under President Trump, making an accurate comparison with China, is only 3.2 percent.

China’s economic growth of 6.4 percent in the first quarter of 2019 was therefore twice the peak growth under Trump. But this still understates China’s growth lead over the US. US growth is more cyclical than China’s and falls to lower levels – during the last five years US growth fell to 1.3 percent during 2016. In that five-year period US average growth was 2.6 percent, whereas China’s was 6.8 percent — two and a half times as fast as the US. China’s lowest growth was 6.4 percent – almost five times as fast as the lowest US growth.

This determines the economic problem currently facing the US administration. US growth in the last quarter of 3.2 percent was a peak in the current business cycle – unsustainably above average growth. Therefore, US growth is likely to decline during 2019. The IMF projects US growth to fall as low as 2.3 percent for the year compared to China’s projected 6.3 percent. More worryingly for President Trump, as 2020 is a presidential election year, the IMF projects US growth to fall to only 1.9 percent in that year, while China’s growth is projected as above 6 percent.

This forecast of a US economic slowdown explains both current domestic economic demands by the US President and the administration’s position in trade talks. China does not undergo significant cyclical slowdowns because it has a socialist economy.  Tom Orlik, author of a serious Western study of China’s economy, Understanding China’s Economic Indicators, summarized why China had a more resilient economy: “Most economies can pull two levers to bolster growth: fiscal and monetary. China has a third option. The National Development and Reform Commission can accelerate the flow of investment projects.”

The dilemma the US faces amid threats of an economic slowdown, is that it rejects state intervention in the economy and is already running a very large budget deficit. Therefore, the only weapon available to attempt to limit an economic slowdown, which would affect the 2020 presidential election, is to reduce interest rates. Consequently, President Trump has recently launched public attacks on the US Federal Reserve, demanding that it reduce interest rates.

This threat of a US economic slowdown simultaneously explains the aggressive approach taken by the US in trade talks and the sharp falls on the US share market in reaction to this. Foreseeing that China’s economy will continue to grow far faster than that of the US, and that the US will slow, US neo-cons are desperate to attempt to slow China’s economy through tariffs. However, US stock market thinks that the combination of a slowing economy and tariffs would be toxic.

 

Book outline: Socialism with Chinese Characteristics

This book arises from a contradiction in our time: Chinese scholars and indeed most people in China are well aware of the key arguments and developments that form the basis of socialism with Chinese characteristics (zhongguo tese shehuizhuyi); non-Chinese scholars are largely ignorant, even though I find that more and more want to know at least something. In China, many of the topics presented in this book were settled quite a few years ago, so much so that one finds relatively little debate today. Other topics have a renewed vigour – such as contradiction analysis and rule of law – but these rely on earlier debates. By contrast, one struggles to find even remotely adequate treatment of these topics in foreign materials – if they are studied at all. I will examine some of the reasons in the introduction to the book, but three may be identified here: first, some have a tendency to say they prefer to look at the practice and ignore the theory, but this is a profound abdication of not only proper research, but Marxism itself (where theory along with practice is crucial); second, the material that does appear stops with the death of Mao Zedong (some, especially by Knick Knight, is excellent); third, the vast bulk of available scholarship is in Chinese. Obviously, one needs to be able to research this Chinese-language material.

Even so, the primary purpose of this book not to engage in polemics (lunzhan – fighting theories), but to make available for a non-Chinese audience the sophisticated debates and conclusions in China concerning socialism with Chinese characteristics. Without knowing this material, one can come to superficial perceptions and profound misunderstandings; knowing it, one begins the first steps in understanding and thereby trust. The following begins with a careful philosophical analysis of Deng Xiaoping, and the implications of his core ideas and practices. This study is the basis of what the rest of the book: contradiction analysis; the Marxist philosophy of the Reform and Opening Up; the basis and nature of the socialist market economy; socialist modernisation; rule of law; sovereignty and human rights; minority nationalities and the anti-colonial project; and Xi Jinping’s thorough Marxism in a Chinese situation. I should say that I have about a year of further in-depth research before me, so some of the material below will be revised as the project develops.

Introduction

The introduction begins by tracing the idea that while Marxism has core principles, or sets of problems, the way it develops in different locations has distinct characteristics. While there are global commonalities, each region has its distinct history, culture and philosophical tradition. As a result, in each situation the problems are somewhat unique and require new answers – hence the specific ‘characteristics’ of Marxism in such a location. We may trace this idea back to the late writings of Marx and Engels, as they faced developments of socialism in other parts of the world. But it begins to appear more clearly with Lenin and Stalin, and of course with Mao Zedong and Deng Xiaoping. Obviously, the idea is not original to Deng, although he gave it a particular resonance in China.

The introduction also attempts to explain why there is precious little treatment in non-Chinese material of the Marxist basis of the Reform and Opening Up, with which ‘socialism with Chinese characteristics’ has been most closely associated. In order to understand this situation, I elaborate on the distinction between ‘before’ and ‘after’ October. In other words, a crucial divide in analysis appears between those who take the perspective of ‘before October’, before the communist revolution, and those who analyse Marxism ‘after October’, after the revolution and in the difficult period of the construction of socialism. As Lenin and Mao said repeatedly, gaining power in a communist revolution is relatively easy; by contrast, constructing socialism is infinitely more complicated. Obviously, this study is concerned with ‘after October’, with the project of constructing socialism.

Finally, the introduction presents the main features of Chinese scholarship on socialism with Chinese characteristics. This material is immense, so I introduce the main resources, journals and themes – with a distinct focus on the philosophical foundations as they are manifested in practice.

Chapter 1. Reading Deng Xiaoping

‘Less talk, more deeds’ – Deng Xiaoping is mostly remembered as a leader of concrete acts rather than extensive theoretical reflection. In non-Chinese works, one may find biographies, studies of foreign policy, and scattered quotations taken out of context (albeit usually within a western European liberal framework). Few indeed are the studies of ‘Deng Xiaoping theory [lilun]’. Apart from Domenico Losurdo, no-one outside China has credited Deng with a sophisticated and insightful theoretical basis.

Through a careful study of Deng’s speeches and writings, along with relevant Chinese scholarship, I analyse the philosophical basis in two related ideas: liberating thought, and seeking truth from facts. While the terms seem simple enough on the surface, at a deeper level they identify the need to escape from the trap of Marxist dogmatism (as Mao also urged) and the need for careful analysis of the particular conditions of China in order to develop new answers in light of the Marxist tradition. From these two core ideas flow many of Deng’s positions: liberating the forces of production (see further the chapter on the socialist market economy), seeking a moderately well-off (xiaokang) society, to each according to work, and of course socialism with Chinese characteristics.

Chapter 2. Contradiction Analysis

Deng Xiaoping presented less of a break with Mao or indeed the Marxist tradition and more of a creative continuity within that living tradition. A significant element of this continuity was ‘contradiction analysis [maodun fenxi]’. This topic requires an initial step back to Mao Zedong (‘On Contradiction’) and how he developed a whole new phase in the Marxist tradition of dialectical analysis, via Lenin and Chinese conditions. Crucial for the construction of socialism is the idea of non-antagonistic contradictions: contradictions will appear under socialism, but the focus should be in ensuring they are non-antagonistic. Subsequently, from Deng Xiaoping to Xi Jinping, we find contradiction analysis at the basis of philosophical thought and government policy. For example, it appears in: class analysis in the primary stage of socialism; socialist market economy; poverty alleviation; education: medicine; workplace realities; core socialist value; and – of course – the crucial need to identify a primary contradiction as the basis of all policy (as Xi Jinping did at the nineteenth congress of the CPC in 2018).

Chapter 3. The Marxist Basis of the Reform and Opening Up

It is perhaps less realised than it should be that the Reform and Opening Up is not a compromise, but a distinctly Marxist project. As Deng Xiaoping pointed out repeatedly, the Reform and Opening Up provides a distinct path to socialism (and not, as some misguided foreigners suggested, to capitalism). To understand this emphasis, we need initially to go back to Lenin and his insight into the relationship between revolution and reform. Instead of seeing these two terms as an either-or, Lenin argued that reform is absolutely necessary, but it should always be undertaken in light of the communist revolution. During the era of constructing socialism, this means that reform must be undertaken by a communist party in power. In a Chinese context, I would like to focus on the following issue (until more have been identified in research): the tension between equality-justice and improving the quality of life for all. In many respects, the Reform and Opening Up may be seen as an effort to keep the two sides of the contradiction in a productive and non-antagonistic relationship. Finally, this chapter offers a brief survey of the leading Marxist philosophers during the forty years of the Reform and Opening Up.

Chapter 4. Socialist Market Economy

With the socialist market economy, we come to a question that was settled in China 25 years ago, but of which foreigners remain noticeably ignorant. After immense debates in the 1980s and early 1990s, the following was seen as the solution. First and following Stalin, the core contradiction of socialism is between the forces and relations of production. How is this manifested? It can be – and often is – seen in terms of the ownership of the means of production. Thus, workers and peasants need to seize ownership of the means of production from the former bourgeois and landlord owners. But what happens after such a seizure and the destruction of the former ruling class? The contradiction shifts to one between the underlying socio-economic system (zhidu) and its specific components (tizhi). In the first category, we find – for example – a capitalist system and a socialist system; in the second, there are political, social and economic components. Here the productive forces also appear, of which one manifestation is a market economy. To summarise a more detailed analysis: a market economy may form part of a larger socio-economic system, including socialism; a market economy is not  always the same and is not inherently capitalist, but is shaped and determined by the system in question (as found already in Marx and in historical analysis); the overall system not only determines the nature of a market economy, but also its purpose, whether profit (capitalist system) or social benefit and meeting the needs of all people (gongtongti fuwu) as in a socialist system. Finally, this approach to a socialist market economy entails a recalibration of the question of ownership. Initially, the ownership of the means of production was related to secondary status, with a mix between public and private ownership, albeit with the state owned enterprises (SOEs) as the drivers of the economy. However, since the 2010s, one may identify a new development: the very distinction between public and private has begun to ‘die away’ (to parse Engels). How this works is the focus of the final part of the chapter.

Chapter 5. Socialist Modernisation: Seeking a Xiaokang Society

Since Zedong and Zhou Enlai, ‘socialist modernisation [shehuizhuyi xiandaihua]’ has been a major feature of government policy and action.[1] But what does it mean? Let us begin with Deng Xiaoping’s famous observation in 1979: ‘By achieving the four modernizations, we mean achieving a “moderately well-off family [xiaokang zhi jia]” … a moderately well-off country [xiaokang de guojia]’. For Deng, this is modernisation with Chinese characteristics.

To understand this statement, we need to go back and forward in the Chinese tradition. Deng was the first to pick and reinterpret the old Confucian category – from the Books of Rights and Book of Songs – of xiaokang in light of Marxism, with the sense of being moderately well-off, healthy and peaceful. It is a more achievable aim than datong, the ‘Great Harmony’, at least in the foreseeable future, although both terms (through He Xiu and Kang Youwei) are intimately connected. If we move forward in the more recent tradition, Deng’s insightful move led to a ‘moderately prosperous society in all respects’ becoming central to the Chinese socialist project under Jiang Zemin, Hu Jintao and especially Xi Jinping. Indeed, the end of 2020 – following hints from Deng – was set as the ambitious but achievable goal for a xiaokang society. But what are the benchmarks? Xi Jinping has identified three: managing profound risks, poverty alleviation and environmental health. The last section of the chapter considers each of these items, with a focus on the impact of lifting 750 million rural and urban workers out of poverty since 1978 and the noticeable advances in achieving an ‘ecological civilisation’.

Chapter 6. Socialist Rule of Law

‘Governing the country according law [yifazhiguo]’ – this four-character phrase encapsulates a range of permutations, from the new Social Credit system, through core socialist values, to religious policy. However, it also has a distinct history that enables us to understand what it means in China, specifically as a socialist rule of law. Although traces of usage appear in much older texts, the key development is precisely during the Reform and Opening Up.

Initially (1978-1996), most of the debate centred around the opposition between ‘rule of human beings [renzhi]’ and ‘rule of law [fazhi]’, after which the latter became the agreed-upon position. Subsequently (1997-2011), the relationship between ‘rule of law’ and ‘legal system [fazhi]’ (sometimes misleadingly translated as ‘rule by law’) was debated, with the two clearly demarcated. Thus, while ‘legal system’ is the basis and concrete manifestation of ‘rule of law’, ‘rule of law’ is itself the ultimate framework and goal of the legal system. During this time, ‘governing the country according to law’ entered the 1999 revision of the Constitution. Finally (2012 to the present) we find increasing clarity of more and more aspects of rule of law, along with its consistent and impartial application. Tellingly, in 2018, the Constitution was revised further, replacing ‘improve the socialist legal system’ with ‘improve the socialist rule of law’.

Theory is crucial, but so is practice. The final part of the chapter examines some concrete manifestations of the rule of law in China: the Social Credit System as an effective and creative way to ensure rule of law at all levels; core socialist values as the positive side of the anti-corruption campaign; and ensuring that the long-standing laws on freedom of religion are strictly observed, especially in light of the revised Regulation on Religious Affairs (2018) and its emphases on self-government, self-support and self-propagation. In all of this, it should re remembered that we are speaking of a socialist rule of law, which is a crucial bulwark of China’s socialist system and is distinct from a capitalist rule of law.

Chapter 7. Sovereignty and Human Rights

This chapter offers a comparison between two traditions concerning human rights, through the prism of state sovereignty: the Western European liberal tradition and the Chinese Marxist tradition. It does so as follows. The first part introduces the distinction between false and rooted universals. A false universal forgets the conditions of its emergence and asserts that its assumptions apply to all irrespective of context, while a rooted universal is always conscious of and factors into analysis contextual origins, with their possibilities and limitations. With this distinction in mind, the next part deals with state sovereignty. In a Western European context, the standard narrative of this development has two main phases: the initial Westphalian definition (1648) and its significant restriction after the Second World War. The main problem with this narrative it that it largely neglects what drove the shift: the success of anti-colonial struggles in the first half of the twentieth century (the last phase through the United Nations under the inspiration of the Soviet Union). In light of this global perspective, it becomes clear that in formerly colonised and semi-colonised countries the very definition of sovereignty is transformed into an anti-colonial and non-theological definition. It is not simply an extension of the Westphalian definition, an assumption that entails a false universal. The next two parts of the argument deal directly with human rights. Initially, it focuses on the Western European tradition, which is predicated on the identification of human rights as private property and their restriction to civil and political rights. Here is the risk of another false universal: the assertion that this specific tradition applies to all, irrespective of context and of anti-colonial sovereignty. The final topic is the Chinese Marxist tradition of human rights, which arises from the intersections of Confucianism and Marxism. In this tradition, anti-colonial sovereignty is a prerequisite but does not determine human rights, and the core human right is the right to socio-economic wellbeing, through which civil, political, cultural and environmental rights arise.

Chapter 8. Minority Nationalities and the Anti-Colonial Project

The main topic of this chapter – minority nationalities policy –arises from the Chinese Marxist approaches to human rights. In brief, the comprehensive minority nationalities (which are sometimes called ‘ethnic groups’) emphasises the core human right to socio-economic wellbeing. Before we get to that point, we need to engage in historical analysis. The Soviet Union was the first socialist country to develop a comprehensive minorities policy, so much so that it was crucial in the very formation of the Soviet Union and was embodied in government structures. Much was learned, from both successes and failures. The Soviet Union was also the first country to see the intrinsic connection between an internal minorities policy and the international anti-imperialist and anti-colonial struggle. It supported most of them, from logistics and weapons to initiating declarations in the United Nations (especially the 1960 ‘Declaration on the Granting of Independence to Colonial Countries and Peoples’, which forced France, the UK, Denmark and the Netherlands, among others, to give up their colonies for the sake of independence).

But what did the minority policy entail? Here I turn to China, which – like other socialist countries – adopted the Soviet policy, adapting it and strengthening it in light of their own conditions. This ‘preferential policy [youhui zhengce]’ fosters minority languages, cultures, education, governance, and – above all – economic development as the basis for all the others. After the collapse of the Soviet Union, in the 1990s the policy was strengthened in a dialectical manner; minority rights and incentives were enhanced significantly, precisely as way of ensuring the inviolability of China’s borders. To give a sense of how this policy works, I deal with two pertinent case studies: Tibet and Xinjiang. In both cases, we find short-term and long-term programs. Short-term: enhanced fostering of security (anquan), stability (wending) and harmony (hexie), in order to counter the effects of separation, extremism and terrorism. Long-term: renewed and revised projects to improve the socio-economic wellbeing of all who live in Tibet and Xinjiang. At this point, the Belt and Road Initiative (BRI) plays a significant internal role, with marked results in the six years or so of its implementation.

The BRI brings us finally to the question of international relations. Here we find a distinct development: while material from the 1950s and 1960s still used the terminology of anti-colonial struggle, it substantially disappears from use thereafter. Why? Already in the late 1950s, Mao Zedong and Zhou Enlai had proposed the ‘Five Principles of Peaceful Coexistence’, which was taken up with enthusiasm by Deng Xiaoping as China sought not confrontation but peaceful development (although he was also quite clear that China would always have closer connections with formerly colonised countries due to a shared common history). The more recent manifestation of this emphasis appears with Xi Jinping’s promotion of a ‘community of shared future for humankind [renlei mingyun gongtongti]’, concretely manifested in the BRI, and the policy – as an alternative to the Western European liberal emphasis on ‘zero-sum’ – of ‘both win, many win, all win’. Or simply, ‘win-win’.

Chapter 9. Xi Jinping on Marxism

Xi Jinping has confounded those international observers who ignored much of what I have discussed in the previous chapters and concluded that China had abandoned Marxism. But Xi Jinping’s resolute emphasis on Marxism makes perfect sense if we keep these developments of socialism with Chinese characteristics in mind. At the same time, it is true that Xi Jinping has also re-emphasised Marxism at its many levels, so much so that the CPC has been noticeably strengthened. Older members are once again proud of the party and what it has achieved, while young people are once again keen to join and study Marxism.

How did this happen? While Xi Jinping’s many writings and speeches (in the good tradition of communist leaders, he is also a thinker and writer) cover a wide range of topics, my focus is on his direct engagement with Marxism. The core piece for analysis is his major speech on the 200th anniversary of Marx’s birth, delivered on 5 May, 2018. While the speech deals with Marx’s biography (as an engaged intellectual), the basic premises of Marxism, its history as a living tradition and its emergence to sustained leadership in China, the main part of the speech elaborates on nine topics of relevance to China’s situation. Calling on all the ‘study Marx’ once again, he begins each sub-section with quotations from Marx and Engels and then elaborates on what they mean for the time after the communist revolution, during the complex and often difficult process of constructing socialism. The topics are: development of human society; sticking to the people’s standpoint; productive forces and relations of production; people’s democracy; cultural construction; social construction; human-nature relationship; world history; and Marxist party building. These topics open out to a series of other dimensions of Xi Jinping’s writings, with which I deal when analysing each section.

Conclusion

Given that most of the material in this book concerns material already known in China, it may be of interest to Chinese readers who wish to see what a foreigner engaged with and working in China thinks about socialism with Chinese characteristics. But I anticipate that it will mostly be of use to non-Chinese readers whose minds may already be open, or perhaps should be opened, to what such a socialism actually means in theory and practice.

Note

[1] The original four modernisations are: shaking off China’s poverty and backwardness [pinqiong luohou]; gradually improving the people’s living standards; restoring a position for China in international affairs commensurate with its current status; and enabling China to contribute more to humankind.

The Silk Road is active again: Thousands of trains now run the route

Many centuries ago, the routes of the ‘Silk Road’ used camels and whatnot for covering the thousands of kilometres between east and west on the Eurasian landmass. In more recent times, when Chinese planners were thinking about the reincarnation of the Silk Road – what is now known as the Belt and Road Initiative (BRI) – they took into consideration a number of factors: trains, even slower ones, are faster than ships; the US navy likes to bully others on the high seas; Central Asia, Russia and Europe will become more and more keen on Chinese products as the latter move to high quality production. One of the key solutions was actually a relatively old one: trains.

I am a great lover of trains, taking them whenever possible. And China is now the world leader in train innovation, technology and implementation. But the development of long distance cargo trains on the Eurasian landmass has largely gone under the radar. From a modest beginning back in 2011, when the first cargo train left Chongqing in China for Duisburg in Germany, it was the beginning of a monumental shift. Back then, there were perhaps a couple of routes trains could follow. Now there are many indeed and they keep increasing exponentially.

Every few days in the Chinese newspapers (for example, here and here), I read of yet another service that has opened, so much so that now there are now 65 routes between 48 cities in China and 40 in Europe. For example, in 2108 alone, 6300 trains with cargo made the journey to Europe, an incease of 70 percent from the previous year.

More detail in this recent article from Xinhua News, the largest and most reliable news service in the world:

URUMQI, April 9 (Xinhua) — The freight train service linking Chinese cities with Europe are breathing new life into the ancient Silk Road with its rapidly expanding network.

In May 2011, a rail route was opened between Chongqing and Duisburg in Germany, marking the start of the China-Europe cargo train service.

Boosted by the Belt and Road construction, the international train service has been expanding fast over the past eight years.

A total of 48 Chinese cities have launched 65 freight train routes, reaching 14 countries and more than 40 cities in Europe in 2018. Over 13,000 trips have been conducted by the China-Europe trains as of March.

Nan Jun, deputy general manager of the Xinjiang Xintie International Logistics Company, operator of Urumqi China-Europe train logistics center, has been a witness to the development of the train service, as 70 percent of the China-Europe trains exit or enter China through Xinjiang.

According to Nan, when the logistics center was opened in May 2016, only four international lines were available, with trains operating once per week. Now there are 21 international lines, with at least three trains operating daily.

International trains starting from Urumqi can reach destinations in Kazakstan in 48 hours, Uzbekistan and Tajikistan in 72 hours, Russia in eight days, the Netherlands in 16 days and Italy in 19 days.

Cargoes traveling on the China-Europe rail routes have also been expanding in categories, from electronics and grocery products initially to some 200 categories including mechanics, chemical products, textiles and foods.

Local products in Xinjiang have also caught these trains heading for Europe. For example, locally produced tomato ketchup has arrived at the dinner tables of Italians, thanks to the train service.

The Alataw Pass and Horgos of Xinjiang are the two ports through which the trains enter or exit China.

Wang Chuanjie, head of the Alataw Pass Customs, said the port now sees an average of seven international trains passing through it every day, compared to only one every month several years ago.

Staff at the two ports have been working to improve customs clearance efficiency for the trains, from 24 hours previously to less than 14 hours.

Ning Jizhe, deputy director of the National Development and Reform Commission, said earlier this year that more places would be connected by the China-Europe trains.

China will continue promoting the commercialization of the trains and upgrade the trains with digital technologies, he said.