Leftists who believe that China is different and will avoid an economic crisis (either because it previously was or still remains a workers state) usually argue that because the Communist Party owns all the big banks, it can simply keep lending money to prop up industry forever. This is in fact exactly what the Chinese state banks have have done since 2008 -- but it is no longer working. The banks can be ordered to make more loans, but the private capitalists and small businesses that Xi Jinping and Li Keqiang said would fuel Chinas next round of growth arent taking them: *there is nowhere for them to profitably invest the money if they did*. They money may be there, but China cant escape the fundamental law of capitalism, the falling rate of profit. Instead, the unprecedented issue of new credit over the past six years (more than in the entire U.S. economy) has only gone to prop up the large Party-owned industries, most of which barely turn a profit and some of which are hemorrhaging money (steel, ship construction). Even though the CCP leadership recognizes that these uncompetitive industries are dragging down the whole economy, ultimately they continue to prop them up for the same reason that states in the West and all around the world support failing banks and corporations: because their collapse would throw millions out of work, cascade into a devastating depression, and political chaos. In China the ruling classs fear of this outcome is more intense than in most other countries, because of the sheer size of the working class they rule over, the absence of a real middle class, and their memories of the revolutionary tumult of 1966-67 and 1989. Therefore, the Party will always follow policies to avoid unemployment, such as the massive construction binge on infrastructure and luxury housing in recent years. But this medicine only makes the capitalist patient sicker: in exchange for temporary job creation, more and more constant capital is accumulated which further drags down the profitability of the whole system. The economy can not purge itself as it did in the days of boom-and-bust cycles a century ago; instead the slowing rate of real accumulation is accompanied by a ballooning number of claims on the non-existent profits, a bubble of fictitious capital. As real economic growth in China heads towards zero or even negative territory in the coming years, either the weak points of this financial house of cards will start to buckle and the whole system will come crashing down into a depression, or (hopefully) even before that happens the declining pool of surplus value will totally undermine the bosses ability to grant reforms and trigger the explosion of class struggle. At that point, the only thing the CCP will have to prop itself up will be its police state and support from imperialism.
Posted on: Sun, 05 Oct 2014 03:31:51 +0000
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