International Committee of the Fourth International
Fourth International Vol. 20 (1994): Capital, Labor and the Nation-State

The political background of the restoration of capitalism in China

On the night of Tuesday, July 7, 1992, more than 250 women were working their shift at the 100 Stars Clothing Factory, a Taiwanese-owned plant in the Shenzhen Special Economic Zone, one of the dozens of areas in China where the Stalinist bureaucracy has invited foreign capitalists to invest, taking advantage of a cheap and plentiful supply of labor.

A fire broke out in the warehouse a floor below the work area, and dozens of women were trapped in the stairwell and overcome by smoke. By the time the fire was put out and the grim task of sorting the living from the dead was completed, at least sixteen women had been pronounced dead, while twenty-six more suffered serious injuries.

The fire was the worst industrial disaster in Guangdong province since the Chinese Stalinist regime publicly announced its embrace of capitalism in 1979. The tragedy was not an “accident” but an inevitable consequence of the bureaucracy’s policy of throwing open the doors of China to imperialist penetration. As the Associated Press admitted, “Factory fires have been common in Guangdong province, where working conditions are often substandard.”

While the capitalist and Stalinist media lose no opportunity to laud the “economic miracle” now unfolding in southern China, the working class in the Special Economic Zones, and increasingly throughout China, faces the revival of brutal exploitation for profit and the most barbaric social conditions.

The vast majority of workers in the Shenzhen SEZ are young women drawn from the peasantry. They work up to twelve hours a day in factories making garments, shoes, toys, electrical components and a wide variety of hardware, earning one-tenth the wages of similar factory workers in Hong Kong, one-twentieth the minimum wage in the United States. They sleep in crowded, unventilated dormitories.

These workers have no unions, and the bureaucracy’s police agencies ensure that there is no interference with the sovereign rights of the capitalist bosses. One US academic described this combination of untrammeled capitalism and Stalinist police state as “the world’s most successful laboratory for free market totalitarianism.”

Alongside omnipresent police repression is the threat that any worker who resists can readily be replaced from among the sixty million unemployed workers and peasants who have flooded the major cities of southern China looking for work—an army of unemployed larger than the total population of most of the countries of Western Europe.

The rapid expansion of capitalist production and market relations in China is being accompanied by the revival of a myriad of social evils abolished or mitigated by the 1949 Revolution—prostitution, sale of women, drug trafficking, child labor, corruption at every level of the state.

In April 1992 a crackdown by police in Guangdong province resulted in 7,000 arrests of prostitutes and customers in hundreds of brothels. The People’s Daily reported that “party cadres and national cadres” were engaged in the prostitution racket. According to official estimates, there are 20,000 prostitutes in Shenzhen alone, one out of every 100 people in this city of 1.9 million.

Three months later, eighty-eight people were arrested for prostitution at the Dengyue Hotel in Guangzhou (Canton), the provincial capital. The hotel is jointly owned by a Hong Kong development company and the Canton Women’s Association, a government organization controlled by the Stalinist bureaucracy.

According to one police investigator who defected after his life was threatened, the police in Shenzhen were “like a criminal syndicate,” involved in smuggling, prostitution, auto theft and narcotics trafficking. Four Guangdong policemen were executed in June after the exposure of a drug trafficking ring involving Communist Party members and army officers, according to the Hong Kong-based Ming Pao newspaper.

Widescale narcotics addiction was introduced into China by British imperialism. Britain fought three Opium Wars in the nineteenth century to compel China to trade its goods in exchange for opium grown in British-controlled India. At the time of the 1949 Revolution, there were an estimated twenty million opium addicts, but the vast majority were reeducated and reemployed by the new regime. Today, the official toll of drug addicts has risen to 300,000, mostly in Guangdong and other areas adjacent to Special Economic Zones.

Another pre-revolutionary relic which has made a comeback is the sale of women as brides and concubines. This feudal practice was outlawed after 1949 and largely disappeared, but began to revive in the late 1970s with the turn to market relations under Deng Xiaoping. Women are either sold by their parents, usually desperately poor peasants in the more remote and backward regions, or kidnapped by gangs who act as middlemen, transporting the women hundreds of miles and then selling to them to prospective husbands. Retarded women are especially targeted because of their greater docility in the role of domestic slaves.

Press reports indicate that the price of a woman ranges from 2,000 yuan to 5,000 yuan (about $400 to $900), and that the number sold must be in the hundreds of thousands yearly. In 1990 alone, according to official government figures, 10,000 women were rescued after being kidnapped and sold. Far more are unable to escape, as most are illiterate and unable to communicate with their families. Some 65,000 people were arrested for trafficking in women in 1989 and 1990 combined. Until 1991 kidnappers of women generally received a sentence of five years in prison, the same penalty meted out for stealing two cows.

Some time in the first half of 1992, the policies of Deng Xiaoping, the principal leader of the Chinese Communist Party, passed a milestone. For the first time since the nationalization of basic industry and the land in 1949, industrial production by private and cooperative (“collective”) enterprises surpassed the total industrial output of state-owned industry.

State factories accounted for more than 80 percent of industrial output in 1979, the year that the faction of the Stalinist bureaucracy headed by Deng scrapped its socialist rhetoric and openly announced its support for the capitalist market. Since then, the state-owned proportion of industry has steadily dropped, to 76.0 percent in 1980, 64.9 percent in 1985, 54.6 percent in 1990, and 52.8 percent in 1991.

The trend is accelerating. In 1991 the output of state industries grew only 8 percent, while the output of collectives rose 18 percent, the output of entirely private enterprises rose 24 percent and the output of enterprises with foreign investment rose 56 percent. In 1989, the last year for which complete figures are available, nonstate factories accounted for 70 percent of all industrial growth.

As a proportion of the overall Chinese economy, state ownership accounts for far less than half. Much of the service and construction sector has also been shifted from state ownership to private or “collective” ownership. And agriculture, which accounts for one-third of the national income, has been almost entirely privatized since the dissolution of the rural communes in 1978.

The shift from state to private ownership is reflected in the proportion of China’s Gross National Product which goes to the government. State revenue as a percentage of GNP fell from 31.2 percent in 1978, when the total GNP was 358 billion yuan, to 18.7 percent in 1990, when the GNP stood at 1,768 billion yuan. The government of China administers a smaller proportion of the national economy than the government of the United States, where federal spending averages about 23 percent of the GNP.

The most rapid growth of capitalist relations is in the southern Chinese province of Guangdong, which borders on Hong Kong. The British colony is scheduled to revert to Chinese sovereignty in 1997, but the real transformation has already begun, with an explosion of capitalist investment, first in the Shenzhen Special Economic Zone adjacent to Hong Kong and then throughout Guangdong province as a whole.

Shenzhen was one of five Special Economic Zones set up under Deng’s auspices in 1979, in which foreign capitalists were invited to set up shop with an assured supply of cheap labor and freedom to repatriate their profits.

From open fields on the other side of the barbed wire barriers set up by the British around Hong Kong, Shenzhen has mushroomed into a city of 1.9 million, with 7,000 companies, 3,000 of them financed by foreign capital. The enclave, only thirty-two square miles, has absorbed one-seventh of the foreign investment in all of China. Growth has been nearly as rapid in the Zhuhai SEZ, adjacent to the Portuguese colony of Macao, and in Shantou (Swatow), further up the coast in Guangdong province.

An influx of foreign capital has transformed not only Shenzhen, but the entire Guangdong province. The Gross Domestic Product of Guangdong rose an average of 19.7 percent per year in the 1980s and the growth rate accelerated to 27.7 percent in 1991. Foreign investment rose by 26 percent in 1991 alone. There are 15,376 foreign-funded enterprises, joint ventures or cooperatives, and Guangdong exports $10.7 billion in manufactured goods to the world market, 17 percent of China’s total.

In the economic relations of Hong Kong and Guangdong, it is the British-controlled enclave, not the surrounding province, which is the dominant partner. Although its population is only 6 million compared to 83 million people in Guangdong, Hong Kong’s GNP is nearly twice as large. Hong Kong investment in Guangdong accounts for two-thirds of all foreign-funded enterprises and 80 percent of the $22.5 billion total investment in the province over the past twelve years. Hong Kong takes 80 percent of Guangdong’s exports, most of which are reshipped to the United States and other final destinations.

Three million workers in Guangdong labor in factories owned by Hong Kong capitalists, five times the number of factory workers in Hong Kong itself. Many of these workers are paid in Hong Kong dollars—more prized than the Chinese yuan. Already 20 percent of Hong Kong’s total currency issue is in circulation in Guangdong.

The economic integration of Guangdong and Hong Kong has reached the point that the senior Communist Party cadres in the province have proposed that the border with Hong Kong be scrapped for trade purposes immediately, without waiting until 1997.

According to the provincial government’s planning authorities in Guangzhou (Canton), central planning accounts for only 13 percent of Guangdong’s economic activity, with the rest controlled by market forces. Industrial production is divided into roughly equal parts—one-third state-owned, one-third owned by local Guangdong capitalists and “collectives,” one-third owned by foreign capitalists, mainly from Hong Kong.

Market relations are penetrating into formerly state-run sectors of the economy, such as housing and real estate. While land remains officially nationalized throughout China, more than 600 land contracts were signed with foreign investors in Guangdong province in 1991, granting them property use rights for up to fifty years. Of 11 million square meters of residential housing sold in the capital, Guangzhou, in 1991, 63 percent went to private rather than state buyers. This compares to only 3 percent in Beijing. In agriculture, the province has become the first in China to decontrol grain prices.

The growing together of Hong Kong and Guangdong has weakened the ties between southern China and what remains of the central planning apparatus in Beijing. In 1991 only 3 percent of total investment in Guangdong came from the national government’s budget. The provincial government has rejected growth targets in the five-year plan adopted in 1991 by the National People’s Congress, adopting its own economic policy, which includes financing the provincial capital budget—for highways, railroads, bridges and other infrastructure—by issuing its own bonds.

The transformation of Guangdong has the full support of the dominant faction of the Stalinist bureaucracy. In February 1992 Deng Xiaoping emerged from nearly three years of public inactivity to make a heavily promoted tour of the province, which included visits to the Shenzhen and Zhuhai SEZs. Deng called for Guangdong to become Asia’s fifth “little dragon,” referring to the rapid economic growth of South Korea, Taiwan, Hong Kong and Singapore, and his speeches set the tone for a nationwide campaign in the press to accelerate the capitalist development of China.

Soon afterwards, Vice Premier Zou Jiahua, head of the state planning agency in Beijing, convened a meeting of officials from a six-province region of southern China—Yunnan, Guizhou, Guangxi, Hainan and Sichuan in addition to Guangdong. He called for coordinating the economic life of the entire area, with a total population of over 240 million people, on the basis of the methods pioneered in Guangdong. Zou declared, “It is necessary to study and spread Guangdong’s experience.”

The initial government decree in 1979 authorized five special economic zones in which foreign capitalist investment would be permitted: Shenzhen, Zhuhai and Shantou in Guangdong province, the island of Hainan and Xiamen in Fujian province.

While the British colony of Hong Kong has swallowed up Guangdong province, a transformation equally dramatic but much less publicized is taking place in Fujian, the province which faces the island of Taiwan. In the 1950s Fujian province was on the front lines of the Cold War, as imperialist politicians like Nixon and Kennedy vowed to go to war to defend the offshore islands of Quemoy and Matsu, ruled by the Kuomintang regime on Taiwan, against the hordes of “Red China.”

Today an invasion across the Taiwan Strait is taking place, but in the opposite direction. Capitalists from Taiwan are pouring investments into China, and the main recipient is Fujian province. The Xiamen SEZ has received $900 million in investment and pledges totaling $2.66 billion, while Fujian province as a whole has absorbed $1.7 billion. The bulk of this investment is Taiwanese capital flowing through Hong Kong.

Even in the early 1960s, under Mao Zedong, Chinese expatriate capitalists who brought their capital home to China were hailed as “patriotic” and permitted to retain their wealth, hire labor and make profits. With the open embrace of capitalism in the 1980s, it has become commonplace for Chinese millionaires in Taiwan, Singapore or Hong Kong to move back to the mainland, primarily to Fujian and Guangdong, the home provinces of most overseas Chinese. One large town in Fujian province, Fuqing, has been completely rebuilt by a single overseas Chinese who brought his $70 million fortune home.

The Taiwanese tycoon, Tan Wu, was recently given Beijing’s approval to launch a $2 billion program of building luxury hotels and resorts, with the first to be opened in Xiamen. Other Taiwanese capitalists are building China’s first golf course in that city, while the Japanese Ikawa Trust and Investment Group has begun a feasibility study for China’s first “bullet train,” a high-speed rail link between Xiamen and the provincial capital of Fuzhou.

The five original SEZs have since been joined by a whole series of new zones with differing titles. Shanghai is opening the Pudong “free trade zone” east of the Huang Pu River, seeking to attract $50 billion in foreign investment. Communist Party officials in the city have vowed to provide whatever incentives are required to restore the city to its prerevolutionary status as a major financial center, opening the first stock exchange since 1949 and inviting foreign banks to locate their Chinese offices in the Pudong zone.

Tianjin (Tientsin), China’s third largest city and the port of Beijing, has established an “economic and technological development zone.” Set up in 1985, the zone now has 310 enterprises representing $590 million in investment.

Qingdao, the port city of Shandong province, is allowing foreigners to buy property in a new real estate project, the first in the northern half of the country to permit foreign ownership. In the late nineteenth century, the city was a German concession—a possession extracted by German imperialism from the enfeebled Chinese Empire, where German law prevailed. It was seized by Japan during World War I, and remained a Japanese possession until 1945.

Every provincial capital and every port city on the Yangtze River is being permitted to set up some kind of economic zone where foreign investment will be courted. Even in remote Sinkiang, in Chinese Central Asia, three cities have been designated to give favored treatment to foreign investors. And in 1992 the government opened the border of Tibet to foreign trade for the first time since the border war with India in 1962.

One glaring example of the prostration of the Chinese regime before imperialist economic penetration is in Manchuria, occupied by Japan from 1931 to 1945. In Dalian, the main port city of Liaoning province, a foreign trade zone has been established with $300 million in investment, mainly by Japanese capital.

The Washington Post noted: “Within the zone, authorities have now carved out an exclusive Japanese industrial park with a total investment of $64 million. The Japanese stake is 80 percent. The Chinese equity consists of two roads. The Japanese, who will have land-lease rights of up to fifty years, have virtual freedom to develop the zone as they wish, a significant move in a country with a history of foreign concessions.”

The same article notes that two strikes have already taken place against super-exploitation of Chinese workers, one at Dalian Aupac, which makes electric brushes for machines, and the other at Star Micronics Manufacturing, which makes dot matrix printers.

The Bourgeoisie and the Proletariat

The Chinese capitalist class was not liquidated by the 1949 Revolution, but driven into exile, in Taiwan, Hong Kong, Singapore and elsewhere in the vast diaspora formed by the emigration of 30 million Chinese to every country on the rim of the Pacific Ocean.

The open turn by the Stalinist regime to the promotion of capitalism has been accompanied by the repatriation of overseas Chinese capital and the transformation of a section of the Stalinist bureaucracy into capitalist owners of industry or comprador agents of foreign capital.

In the fourteen years since Beijing reopened the country to the entry of foreign capital, a huge proportion has come from Chinese expatriates. Of the 3,737 foreign businesses registered in China in the first quarter of 1992, 82.2 percent were from Hong Kong, Macao and Taiwan. Hong Kong is the largest foreign investor in China, Taiwan third and Singapore fourth. (Japan, the former imperialist occupier of half of China, is second).

Taiwan-China trade conducted via Hong Kong hit $5.79 billion in 1991, up 43.3 percent from 1990, and total Taiwanese investment on the mainland is now estimated at over $3 billion. Even this influx could be dwarfed in the coming years, once the full integration of Hong Kong and China is carried out, as each of the overseas Chinese territories has accumulated vast reserves available for investment.

Hong Kong has $28.8 billion in reserves, Singapore $34.1 billion and Taiwan a staggering $83.1 billion, more than any other country. By comparison, West Germany’s reserves on the eve of its takeover of East Germany were $73 billion.

The increasing integration of Hong Kong and China has resulted in the entry of many Chinese state companies into the Hong Kong market, where they have gone into partnership with Hong Kong and international companies, and through their actions sought to reassure the international bourgeoisie that Beijing will faithfully guard their property interests after 1997.

More than $10 billion in state funds have been invested in Hong Kong properties, including behind-the-scenes efforts to bail out the Hong Kong Stock Exchange during the 1987 world stock market crash and, more recently, to prevent a financial panic over the prospective 1997 Beijing takeover. Guangdong Governor Zhu Senlin visited Hong Kong in 1991 and returned with a glowing report, calling his tour of the stock exchange “inspirational.”

Chinese state companies have purchased property, hired wage labor, extracted profits and otherwise conducted themselves as capitalist-style corporations. One state company, the China International Trust and Investment Corp., purchased a 10 percent interest in Cathay Pacific, the Hong Kong airline, and a similar share of Hong Kong Telecom.

China Merchants Holdings Co., owned by the Ministry of Communications in Beijing but based in Hong Kong, announced in July 1992 that one of its subsidiaries would become the first state-owned company listed on the Hong Kong exchange, when shares in its paint-making subsidiary, Hai Hong Holdings Co., go on sale. Another CMH subsidiary, China Southern Glass, was recently listed on the Shenzhen exchange. CMH owns 300 subsidiaries in China and has international investments in the US, Britain, Canada, Japan, Australia, Thailand, Singapore and Kenya, with total assets of over $2 billion.

The first two stock exchanges to be opened on the mainland, in Shenzhen and Shanghai, have been the scenes of rampant speculation and profiteering, despite the limited number of shares listed and traded. The Shenzhen exchange has seen increases in stock prices averaging over 400 percent.

In Shanghai, two small investors committed suicide in the spring of 1992 after losing their investments, less than $1,000 each—the life savings of their entire families. The initial price rises and the incessant promotion of capitalist finance in the state-run media have produced buying frenzies in which hundreds of thousands of people have queued to receive tickets for a lottery giving them the right to buy stocks.

Managers of state companies have rushed to cash in on the stock boom. Shanghai Vacuum Electron Device Co., one of the biggest enterprises in the country with 18,000 workers, moved its headquarters from Shanghai to a special economic zone in order to lower its tax rate from 55 percent to 15 percent. It became the first state-owned company to sell shares of stock. The company is now half-owned by the state, half by stockholders, who include foreign investors.

In recent weeks, officials of the Beijing regime have gone even further, promising that state companies will be fully transformed into shareholding capitalist enterprises. Jiang Lemin, deputy commissioner of the State Administration of State-Owned Assets, said, “We are now considering reorganizing some state-owned enterprises ... into joint stock enterprises which will openly issue shares in foreign countries and have their shares listed and transacted on the stock exchanges in these countries.”

The Chinese state has also gone into business as a labor contractor, making Chinese workers one of the country’s principal “exports.”

In 1991, 70,000 Chinese workers were sent abroad in return for $2.25 billion in contracts, including 10,000 to Hong Kong alone. In the first half of 1992, the Chinese government signed labor contracts totaling $3.7 billion, more than all of 1991, and the exported labor force topped 100,000 workers. The Chinese government sponsored a modern-day slave auction—a trade fair in Harbin for its labor-contracting companies where American and Japanese corporate executives rubbed shoulders with Kuwaiti sheiks and Indonesian military officers to bid for the right to make profits from the labor of Chinese workers.

Alongside the official investments is a vast unofficial capital flow in which the assets of the Chinese state are being systematically plundered by functionaries of the Stalinist regime and their families. Hong Kong serves as a sort of laundry for investment, which flows out of China as state money and returns as private capital, frequently owned by close relatives of Communist Party officials. One of the most popular way stations—before it was closed in 1991—was the Shenzhen branch of the Bank of Credit and Commerce International.

China posted the largest “net errors and omissions” of any country in 1990, $8,161 billion, five times the previous year’s figure, according to the International Monetary Fund. Of this, the IMF estimated that at least $3 billion represented the misappropriation and transfer abroad of state funds. According to reports in the financial press, much of the capital flowing into Guangdong province from Hong Kong is really state assets stolen by the bureaucracy and brought back into the country as “foreign investment.”

The transformation of Stalinist functionaries into capitalists is taking place on an increasing scale within the borders of China, even without the intermediation of Hong Kong subsidiaries and Swiss bank accounts. The phenomenon of Communist Party cadres opening up their own businesses and looting the agencies they administer has become so pervasive that the Farmers Daily published an article criticizing corruption and profiteering by such elements.

Even more common is the establishment of “collective” enterprises, in which the shell of the old state-owned enterprise is maintained, but production is geared to the market, with profit sharing for each participant, like a producer’s cooperative. Almost invariably, the factory manager and the Communist Party secretary—frequently the same person—receive the lion’s share of the profits.

In many cases the children of high-ranking Stalinist bureaucrats have become highly paid agents of giant multinational corporations and banks. Huang Bin, Harvard-trained son of former Foreign Minister Huang Hua, is Citibank’s chief representative in Beijing. Bank of Nova Scotia, the Canadian Imperial Bank of Commerce and the Swedish bank Svenska Handelsbanken have hired as their representatives the three Guo brothers, sons of a former ambassador and friends of Deng Zhifang, the son of Deng Xiaoping.

In an especially notorious case, Bo Xicheng, director of the Beijing Tourism Administration and son of leading Stalinist Bo Yibo, resigned after corruption allegations. Bo Xicheng declared that he was voluntarily renouncing his lifetime state job in order to become a pioneer of the new market policy. He then opened a private profit-making hotel management company which will manage new luxury hotels being built in the capital by foreign investors.

The bureaucracy is not only rapidly accumulating wealth, but flaunting it with increasing recklessness. One press account noted, “Egalitarianism, hallmark of the Mao generation, has given way to a rush for maids and cooks. Horse racing made its official debut in April, and there are reports that a casino will soon open for foreign passport holders, the first legalized gambling since the Communist takeover of 1949.”

In the Dalian special economic zone, China’s first international yacht club has opened, under the sponsorship of Qiao Shi, head of the secret police and a Politburo member, whose former aide is the club’s vice chairman. The yearly membership fee for Chinese citizens is 30,000 yuan, more than forty years’ income for a peasant. Lifetime membership is 100,000 yuan. The manager, Zheng Dacheng, said, “After so many years of reform and opening up, China now has millionaires all over the country. There are lots of rich people.”

In a speech July 1, 1992, Communist Party General Secretary Jiang Zemin cautioned that the conduct of the bureaucracy was arousing anger among the masses of workers and peasants. He warned, “Successors to the socialist cause should not act like overlords, abusing their power to make a fortune. If these decadent phenomena are allowed to continue, the party will be doomed to self-destruction.”

But for the most part, the leading circles of the Stalinist bureaucracy have brushed aside such concerns, relying on the military and the secret police to suppress opposition in the working class and demanding that any restraints on private profit-making be removed.

Li Ximing, the Beijing party secretary and a Politburo member, denounced allegations of corruption in a speech published in the state-run Beijing Daily. He declared: “We must resolutely attack and mercilessly punish criminals who wreck the reforms.... Directors and managers of enterprises that are falsely accused of crimes because they vigorously reformed... must be protected, and those who frame them must be tracked down and investigated.”

A commentary in the People’s Daily revealed the depths of cynicism in the Stalinist apparatus, where Marxist phrases are habitually used to cover up the bureaucracy’s hostility to genuine Marxism and the political independence of the proletariat. The commentary blamed criticism of the government’s pro-capitalist policies on “some people who still believe that the party’s primary task is to effect changes over the relationships of production, to make ‘revolution,’ and to ‘struggle.’”

The Stalinist bureaucracy, while still mouthing phrases about constructing “socialism with Chinese characteristics,” has publicly announced a campaign to close large sections of state-owned industry and create mass unemployment. Tens of millions of workers are to be thrown out of their jobs and made available as cheap labor to the rising capitalist class, into which the bureaucracy seeks to integrate itself.

The one-third of state factories which presently record large operating deficits are the first targets for closure or for merger with capitalist firms, either those newly arising in China or giant multinationals entering the Chinese market from abroad. As a first step, the central government ordered each of the thirty provinces to shut down ten state-owned enterprises which were losing money.

In 1991 the Stalinist press issued the slogan “smash the three irons,” targeting the “iron rice bowl,” under which workers at state factories were guaranteed their jobs, the “iron salary,” under which wages were maintained and increased by guaranteed amounts, and the “iron armchair,” which maintained positions for factory managers regardless of the profitability of their enterprise. The Stalinists called for a new version of the “three irons,” in which factory bosses were to demonstrate “an iron heart, an iron face, and an iron hand.”

“The uniform pay system is being abolished because it is egalitarian and hinders the workers’ enthusiasm,” a Ministry of Labor official told the official China Daily. “The only automatic part of the new wage system is that those who work for enterprises that aren’t turning a profit won’t receive a raise at all,” the newspaper said, adding that 40 million workers would receive no pay increase because their state companies were running at a loss.

This was combined with measures to reduce the availability of medical care (previously provided free by the state to the urban population), the raising of rents tenfold in most cities and huge increases in the prices of consumer items like rice, sugar and cooking oil.

The result was a series of explosions in which workers fought the effects of the new economic policies in outbursts of resistance ranging from individual violence to spontaneous strike action. These actions were so widespread that even the state-controlled press was forced to acknowledge they had taken place, while downplaying their significance.

In the port city of Tianjin, the municipal government ordered a hold in the attack on the “iron rice bowl” following several worker suicides and a wildcat strike at a watch factory where 2,400 workers were laid off. At one point troops were called out in the city.

When angry workers learned that the Chongqing Knitting Mill in Sichuan province was to be shut down, they went on strike and besieged the plant. When the head of the city’s textile department came to negotiate, they took him hostage. The workers only returned to work after the local Communist Party secretary arrived and promised that no one would lose his job.

At the Jinzhou Petroleum Refinery in Liaoning province, an oil worker, Wang Fuqing, was executed for going to his boss’s home and stabbing him after the official tried to transfer him from his job. The incident inspired other workers to break windows in the homes of other managers.

In July 1992 the Stalinist regime took another major step towards carrying through the destruction of state industry. Premier Li Peng issued a law making state businesses responsible for their own functioning, including foreign trade.

Under this law, “Chinese enterprises will enjoy full operational autonomy in 14 areas, including imports and exports, investments, labor, employment, pricing, marketing and the right to reject any apportionment of manpower, funds and materials,” the New China News Agency said. Managers would be responsible for the efficiency of their enterprises, the agency said. The law allows state-owned firms to diversify production or declare bankruptcy if necessary.

The state media has carried a series of commentaries on the political implications of resistance to its assault on jobs. The aim of this propaganda is to undermine class consciousness in the working class and fill workers with illusions of a bright future under capitalism.

Wu Mingyu, deputy director of the Development Research Institute of the State Council, in an article carried by the China News Service, wrote, “At present, with the price of grain rising, housing rents going up, workers’ ‘rice bowls’ being further smashed, it is extremely easy for contempt and even dissent to be created among the tens of millions of workers. If we cannot find a good solution, it will easily lead to social unrest.”

The Economic Daily carried a commentary declaring that workers’ opposition to Deng Xiaoping’s policies was based on a misunderstanding. “Many people now fear that ‘smashing the three irons’ means ‘shattering their rice bowl.’ This is incorrect,” the newspaper said.

Using an argument virtually identical to that of corporatist trade union bureaucrats in the United States, the newspaper continued, “It is just the opposite. Those workers who truly love their enterprises and who think both about the good of the company and their own personal benefit will be able to win the rewards they deserve through ‘smashing the three irons.’”

But the real implications of this campaign were suggested by a column in the Worker’s Daily, which called on state enterprises to adopt as their model for labor policy—the McDonald’s hamburger chain. The newspaper pointed out that most McDonald’s workers had flexible hours and worked on call. “McDonald’s has challenged our traditional worker systems, and given us ideas and enlightenment,” the column said.

It complained that Chinese factory managers had to look after every detail of their employees’ life, providing free medical care, low-cost housing, day care and benefits. “It’s not good for human development,” the Worker’s Daily said.

In mid-1992 Labor Minister Ruan Chongwu announced that one million workers had been laid off since January. At a news conference in Beijing, he admitted that there were many strikes, but branded the workers involved as common criminals, denying they were motivated by hostility to the “three irons” campaign.

“I think people who want to commit crimes will commit them, so these incidents are not necessarily connected with labor reforms,” said Ruan, a former police official. “The number of crimes hasn’t increased since the labor reforms.”

The attacks on the working class are combined with an onslaught on the peasantry, still the vast majority of China’s population, numbering more than 840 million. Large sections of the peasantry benefited from the initial economic measures undertaken by Deng, especially the dissolution of the rural communes. These had been established by Mao, not on a genuinely socialist basis, which would have required a much higher level of technique and economic wealth, but largely as a police measure, to regiment the peasantry, stamp out political opposition and shore up the dictatorship of the bureaucracy.

But the reestablishment of private farming resulted in only a limited and short-term improvement in the conditions of the peasantry, largely in the upper strata. The increase in peasant incomes arose more from the growth of small manufacturing industries in rural areas and the migration of peasants to take jobs in the cities than from any general rise in income from farming.

In the last three years, peasant incomes have not risen at all. The average farmer’s annual income is still only 710 yuan, less than $130 a year, making the Chinese peasants among the poorest in the world. An estimated 50 million peasants fall below the official poverty line of 300 yuan, or $55 a year.

Agriculture remains terribly backward, with tens of millions of peasants tending tiny plots of land—averaging one-tenth to one-sixth of an acre—many without even animals to pull their plows, let alone tractors. Although 60 percent of the labor force is in agriculture, they produce only 33 percent of the national income.

There is an enormous oversupply of labor in agriculture, with an estimated 120 million young peasants who cannot find adequate employment on the land. Under a genuinely socialist regime, such a vast reservoir of human labor power would be utilized in the creation of a modem infrastructure, the rebuilding of antiquated factories, the modernization of agriculture itself, and the extension of public services like education and medical care—still not available in many rural areas.

Under the counterrevolutionary Stalinist regime of Deng Xiaoping, the prospect of hundreds of millions of unemployed peasant youth strikes terror in the hearts of the bureaucracy. “Stability in rural areas is not easily come by, and it is of utmost importance that we continue to maintain it,” Beijing spokesman Yuan Mu said in a speech on the deteriorating conditions for the peasantry. “We should pay close attention to the problem that in recent years peasants have increased their output, but they have not increased their income.”

The bureaucracy is incapable, however, of maintaining even the most elementary gains which the 1949 Revolution brought the peasantry, such as flood control. Catastrophic floods—once a hallmark of Chinese life, but greatly reduced in the 1950s and 1960s—have resumed their annual toll, with hundreds swept away and drowned in the spring of 1991 and again in 1992.

This is not simply a “natural disaster,” but the result of cutbacks in state spending on flood control, as the regime tacitly acknowledged in 1991. According to a Reuters news agency dispatch, “The government ordered improvement of dikes, long neglected during China’s decade of economic reform, in favor of more profit-oriented investments of public money such as luxury hotels.”

Stalinism and the Chinese Revolution

The People’s Republic of China was founded in 1949 after the defeat of the Kuomintang forces by the Red Army, led by the Chinese Communist Party. The People’s Republic did not represent, even in the most distorted sense, the dictatorship of the proletariat.

Despite its name, the ruling Chinese Communist Party was based on the peasantry, not on the working class. Its program called, not for a workers government and socialism, but for the establishment of a radical bourgeois democratic regime, which would uphold the interests of the peasantry.

The vast majority of the CCP membership and cadre came from the peasantry. Rather than representing the historical interests of the working class, the Stalinist party only adapted itself to the proletariat and usurped its leadership. All independent action of the working class was ruthlessly suppressed by the new regime.

Communist Party cells were established in major factories and workplaces, not as part of the mobilization of the working class to carry out the 1949 revolution, but afterwards, to subordinate the Chinese workers to the administrative apparatus of the new government and block any independent assertion of working class power.

Mao Zedong explicitly rejected the suggestion that the new government represented the dictatorship of the proletariat. It was, he said, a “bloc of four classes,” the national bourgeoisie, the urban petty bourgeoisie, the peasantry and the proletariat. Capitalist private property was guaranteed and protected by the new state, so long as the capitalists pledged loyalty to the Chinese Communist Party. While the majority of the capitalists were expropriated after they fled to Taiwan, Hong Kong and America, private ownership of the means of production remained legal in the new Peoples Republic for nearly a decade.

The most important demonstration of the anti-proletarian character of the Peoples Republic came in its treatment of the Chinese Trotskyist movement, the authentic representatives of the Chinese proletariat. Mao Zedong had supported and endorsed the bloodbath against Marxism carried out by Stalin in the purges in the Soviet Union between 1936 and 1938. Once in power, he proceeded with the same methods. By 1952 the Maoist regime had arrested and executed or imprisoned virtually all the leaders and cadres of the Fourth International in China.

The Stalinist-trained leadership of the Chinese Communist Party was not a bureaucratic stratum arising out of the degeneration of a mass workers party, like the Stalinist bureaucracy in the Soviet Union. The bureaucratic apparatus of the CCP was, from the late 1920s, based largely on the peasantry, especially the poor and middle strata of the peasants who made up the vast bulk of the rural population.

Long before it came to power, the CCP had turned its back on its historical origins in the movement of the Chinese working class. The Stalinist party had little influence in the urban proletariat even in 1949, when the Red Army was routing the Kuomintang forces on the battlefield. Conversely, the working class had no influence whatsoever within the CCP, nor was the Stalinist party the vehicle for the expression of its independent movement and struggle.

The transformation of the Chinese Communist Party from a revolutionary party of the working class to a predominately peasant party based on a petty-bourgeois and nationalist program was the product of the crisis of leadership of the international workers movement, reflected above all in the Stalinist degeneration of the Soviet Union and the Communist International, which led directly to the bloody defeat of the Chinese proletariat in 1927.

The Chinese Revolution erupted as part of an international process, a series of massive upheavals which swept the continent of Asia in the wake of the 1905 Russian Revolution. In 1907 a revolution in Persia against the regime of the Shah was only put down through the intervention of Russian troops. In 1908 came the initial revolt of the Young Turks against the Ottoman Empire. In 1911 the moribund despotism of the Manchu dynasty, which had ruled China since the 1600s, collapsed.

A bourgeois democratic leader, Sun Yat-sen, briefly came to power as a figurehead president, claiming to base himself on the American Revolution and espousing platitudes about Jeffersonian democracy and independence for China. But Sun Yat-sen and his Kuomintang (Nationalist) Party were quickly ousted in a military coup, retaining power only in the southern region around Canton. Central authority virtually disintegrated, as a series of regional warlords came to power in the provinces.

The Chinese bourgeoisie was incapable of leading a genuine struggle against imperialism or the old feudal order. Virtually all of Chinese industry was owned or controlled by foreign concerns and had been built up inside and around the “concessions,” the port cities which the Chinese empire had been compelled by military force to cede to British, German, French, Japanese and American imperialism. The first Chinese capitalists were the merchants in these treaty ports, or compradores, as they were titled at the oldest of these enclaves, Portuguese-controlled Macao. For the most part, Chinese merchants, bankers and industrialists were the junior partners or front men for far more powerful foreign capitalist interests. These comprador capitalists were nothing more than the stooges of the rival imperialist powers.

The Chinese bourgeoisie did not emerge as an independent social force, as it did in Western Europe, but was inextricably linked to the dominant class in the countryside, the landlords who monopolized as much as 80 percent of the arable land. Land ownership in China had long been on a commercial basis, with landless peasants working as tenants for landlords who frequently lived in the cities and controlled trade or occupied government positions.

As one student of China’s prerevolutionary agrarian conditions described it: “Quite unlike the landlords in France sous I’ancien regime, the landlords in China are often quadrilateral beings. They are rent collectors, merchants, usurers and administrative officers.... Landlords often possess breweries, oil mills and grain magazines. On the other hand, the owners of warehouses and groceries are mortgagees of land, and eventually its lords” (Chen Han-seng, Present Agrarian Problems, p. 18, quoted in Harold Isaacs, The Tragedy of the Chinese Revolution [New York: Atheneum, 1968).

Economically weak and morally corrupted, tied to international imperialism on the one hand and to the rural landlords on the other, the Chinese bourgeoisie could not carry out any of the fundamental tasks of the democratic revolution—freeing the country from imperialist domination, national unification and the liberation of the vast peasantry from the semi-feudal slavery in which it had existed for millennia.

In the great bourgeois revolutions of Western Europe, the capitalist class was able to take the leadership of the peasant rebellion against feudal oppression and utilize it to establish its own class domination. But in China, as in tsarist Russia, the bourgeoisie was too weak to play this role. The urban ally and political leadership for the agrarian revolt would be found, not in the bourgeoisie, but in the working class, which grew rapidly in China in the second decade of the twentieth century, especially after 1914, when Chinese industry expanded under the stimulus of World War I.

International events provided the spark for a political explosion in 1919, when the imperialist powers meeting at the Versailles Conference agreed that Japan should acquire all the concessions and treaty rights in China previously held by defeated Germany. On May 4, 1919, a mass student movement erupted, with thousands of workers joining the students in nationalist and anti-Japanese demonstrations which swept the major cities.

In May 1920 the first Communist group was founded in Shanghai, the industrial center of China, under the leadership of Chen Tu-hsiu. By July 1921 when the Chinese Communist Party held its founding congress, there were local organizations in Shanghai, Beijing, Wuhan, Changsha, Canton and Tsinan. The CCP was based in the urban working class, organized the most important trade unions and fought for the proletariat to lead the peasants in rebellion against landlord-capitalist oppression.

But the development of the Chinese Communist Party was crippled by the growth of Stalinism. The bureaucratic degeneration of the Soviet state and the Communist Party of the Soviet Union, under the impact of the isolation of the USSR, the backwardness inherited from tsarist Russia and the defeats of the international working class, had a catastrophic impact on the Communist International, with the most tragic consequences in China.

At the direction of Stalin, the Chinese Communist Party was instructed to enter the bourgeois Kuomintang Party and look to the Chinese bourgeoisie to lead the revolution against imperialism and landlordism, with the working class playing only a subordinate role. The Soviet government established political relations with the Kuomintang, financing its operations and supplying military training for its cadres at the Whampoa Military Academy, set up in Canton under the direction of an ambitious army officer, Chiang Kaishek.

The opportunist policy of Stalin, which reflected the conservative social interests of the burgeoning bureaucratic stratum in the Soviet Union, repudiated the most fundamental lesson of the October Revolution of 1917. In Russia, the bourgeoisie had proved incapable of carrying out the tasks of the bourgeois democratic revolution. Under the leadership of Lenin and Trotsky, the Bolshevik Party refused to subordinate the working class to the Russian bourgeoisie, took power in its own right and established the first workers state. The democratic revolution was transformed into the socialist revolution.

In China, Stalin pursued the policy advocated in Russia by the Mensheviks, not the Bolsheviks. Because the revolution was a bourgeois revolution, arising from the decay and breakup of the old semi-feudal order, the Comintern decreed that it must be led by the bourgeoisie and that the task of the Communist Party was to support the “progressive” section of the capitalist class and its party, the Kuomintang. There could be no talk of the struggle for socialism or the formation of soviets, independent organs of workers power, as this would only alienate the bourgeoisie and “split” the national struggle against imperialism.

The Stalinist policy was implacably opposed by Trotsky and the Left Opposition, who based their criticism on the experience of the October Revolution. Trotsky rejected the claim that the oppression of China by imperialism softened the class contradictions between the Chinese proletariat and the bourgeoisie. “The revolutionary struggle against imperialism does not weaken but rather strengthens the political differentiation of the classes,” he wrote (Leon Trotsky on China [New York: Monad Press, 1976], p. 161).

Trotsky denounced the claim of Stalin and Bukharin that it was possible and necessary to establish a “bloc of four classes” by means of the integration of the Chinese Communist Party into the Kuomintang. A genuine alliance of the proletariat and the peasantry, indispensable for the revolution in a backward, largely agrarian country, could only be established through the political independence of the working class from the bourgeois-landlord class, fighting to mobilize the peasantry behind it on the basis of a radical agrarian program.

Trotsky wrote that Stalin’s Menshevik-opportunist policy was subordinating both the working class and the peasantry to the Chinese bourgeoisie. “The Bolshevik way,” he wrote, “consists of an unconditional political and organizational demarcation from the bourgeoisie, of a relentless exposure of the bourgeoisie from the very first steps of the revolution, of a destruction of all petty-bourgeois illusions about the united front with the bourgeoisie, of tireless struggle with the bourgeoisie for the leadership of the masses, of the merciless expulsion from the Communist Party of all those elements who sow vain hopes in the bourgeoisie or idealize them” (ibid., pp. 168-69).

Trotsky’s analysis of the policy of the Comintern was tragically confirmed in the second Chinese Revolution, the events of 1925-1927, which culminated in a shattering defeat for the working class. On May 30, 1925, British police opened fire on crowds of workers and students demonstrating in Shanghai, killing seven and wounding dozens. Mass demonstrations broke out throughout the country, and a second massacre took place in Canton on June 23, with 57 people killed and 117 wounded by British and French military police, who opened fire with machineguns on unarmed demonstrators. The working class of Canton and Hong Kong responded with a general strike and a boycott of all trade with Hong Kong.

The influence of the Communist Party grew rapidly, with more than two million workers organized into trade unions controlled by the CCP. In the rural area of Hailuifeng, the CCP organized the first peasant unions, advancing a program of land redistribution and the freeing of the peasants from their crushing debts.

But the CCP remained politically straitjacketed by its subordination to the Kuomintang. In March 1926 Chiang Kaishek staged a military coup in Canton, arresting 50 leading members of the Communist Party working in Kuomintang military units and disarming workers in the strike committees and trade unions. Chiang established his personal dictatorship inside the Kuomintang. Still, Stalin and the Comintern insisted that the CCP could not break with the Kuomintang.

In July 1926 Chiang Kaishek launched the Northern Expedition, a military offensive against the regional warlords in central and northern China aimed at establishing a national government. In barely six months, the whole of central China, the provinces of Jiangxi, Fujian, Zhejiang, Hunan, Hubei, Anhui and Jiangsu, passed into the control of Kuomintang forces. Millions of workers and peasants joined unions and peasant associations organized by the Communist Party. In Shanghai, the industrial center of China, the CCP led an armed insurrection of the working class on March 21, 1927, which seized power, drove out the warlord forces and opened the city to the advancing Nationalist troops.

Trotsky and the Left Opposition in the Soviet Union continuously warned that the Chinese working class was being led into a dangerous trap. It was correct for the Communist Party to support the Northern Expedition and mobilize support in the working class and the peasantry for the defeat of the warlord regimes, a historically progressive task. But a military bloc with the Kuomintang against the warlords was only permissible so long as the Communist Party maintained the political independence of the working class, fought ruthlessly against any illusions in the role of the Chinese bourgeoisie and prepared the working class for the conflict which would inevitably erupt between the working class and the Kuomintang.

Instead Stalin, the Comintern and the CCP leadership pursued the opposite policy, sowing illusions in the progressive role of the bourgeoisie and subordinating the Communist Party to the Kuomintang. They literally disarmed the working class, rejecting the call of the Left Opposition for the formation of soviets and armed detachments of workers in the major cities, with catastrophic results.

Three weeks after the Shanghai insurrection, on April 12, 1927, Chiang Kaishek carried out a counterrevolutionary coup in the city, mobilizing Kuomintang troops together with local gangsters to massacre the workers and exterminate their revolutionary leadership. More than 20,000 were murdered in less than a week, the bloodiest slaughter of workers since the Paris Commune of 1871.

Stalin and the Comintern refused to draw any lessons from this defeat, clinging to the policy of an alliance with the Chinese bourgeoisie, this time pinning their hopes on the “Left” Kuomintang, a faction headed by Wang Ching-wei, which had established a regime in Wuhan in conflict with Chiang Kaishek.

Writing two weeks after the Shanghai bloodbath, Stalin declared, “the revolutionary Kuomintang in Wuhan, by a determined fight against militarism and imperialism, will in fact be converted into an organ of the revolutionary-democratic dictatorship of the proletariat and the peasantry.” Less than two months later, Wang Ching-wei ordered the expulsion of all members of the Chinese Communist Party from the “Left” Kuomintang and the military forces of the Wuhan regime began rounding up and murdering the leaders of party branches, trade unions and peasant organizations.

After the revolution had already suffered these staggering defeats, the Comintern leadership suddenly swung from opportunism to adventurism, ordering the Chinese Communists to launch immediate insurrections in the cities and rural areas where they still retained influence. Bloody massacres of workers and peasants followed throughout the fall of 1927, in the city of Nanchang, the provinces of Hunan and Hubei, and, most tragically, in Canton. A three-day insurrection there December 11-13, 1927, ended with the extermination of thousands of workers and the utter discrediting of the Communist Party in the major industrial center of south China.

The Establishment of the People’s Republic

After the disastrous defeat of 1927, what was necessary was to rearm the Chinese proletariat and reestablish the confidence of the working class in the Communist Party by drawing the lessons of such a defeat. But this was impossible under the leadership of the Comintern, completely dominated by Stalin and the bureaucratic stratum in the Soviet Union. A few leaders of the Chinese Communist Party were removed as scapegoats—including Chen Tu-hsiu, who had warned of the fatal consequences of Stalin’s policies—but the Comintern’s strategy and tactics were declared correct in every respect. Chen Tu-hsiu subsequently was expelled and became the founder of the Trotskyist Left Opposition.

Fragments of the shattered party’s military cadres had regrouped in the isolated rural area of southern Jiangxi province, fought a series of battles against local warlords and Kuomintang units, and proclaimed a “Soviet” government protected by a “Red Army” comprised largely of peasant guerrilla fighters.

For seven years, the Chinese “Red Army” waged a heroic but unequal military struggle against a series of extermination campaigns launched by Chiang Kaishek. The political leader of this struggle was Mao Zedong, son of a small landlord and a figure who had always stood on the extreme right wing of the CCP when it was a working class party. (In the period of CCP-Kuomintang collaboration, Mao had worked as a propaganda officer in the Kuomintang apparatus.)

Under Mao’s direction, the Chinese Communist Party abandoned its orientation to the urban proletariat and set its goal as the organization of peasant-based guerrilla warfare against the Kuomintang regime. The task of party work in the cities was to provide support for the Red Army. “Every strike is a rear support for the Soviet districts,” Mao declared.

Workers recruited into the party were brought into the rural districts, which had the effect of depriving the urban masses of their most capable class leaders, while dissolving the advanced workers in the peasant milieu. The number of workers organized in CCP-controlled trade unions fell from 2.8 million in 1927 to only 60,000 in 1930.

The collapse of Communist Party influence in the cities was demonstrated in 1930, when Mao’s Red Army occupied Changsha, the capital and largest city of Hunan province. The CCP leaders confidently predicted a mass uprising of the urban population throughout central China, although they had no significant cadres there. The uprising did not materialize, imperialist gunboats bombarded the city and the Kuomintang governor returned to power and carried out a massive slaughter.

The turn to the peasantry inevitably became a political adaptation to capitalist property relations and the wealthier sections of the petty bourgeoisie. Mao rejected the radical agrarian program advanced by the CCP during the 1925-1927 revolution in favor of conciliation towards “small” landlords and rich peasants.

Noting that the Red Army depended for its survival on food supplies and other resources controlled by the wealthier layers of the peasantry, one historian of this period wrote, “Mao believed the solution to this problem lay in a more lenient policy toward the intermediate classes, who in the villages he defined as small landlords and rich peasants. The major political task of the party, as long as it controlled only a small and weak base, was to win the support of these classes” (John Rue, Mao Tse-tung in Opposition [Stanford University Press, 1966], p. 110).

Mao himself observed that the rich peasants “usurped the provisional power, filtered into the armed forces, controlled the revolutionary organizations, and received more and better land than the poorer peasants” (Isaacs, p. 334).

By 1934, facing encirclement by the superior Kuomintang forces, the Red Army was forced to break out of Jiangxi and undertake the Long March, a trek of 6,000 miles through southern and western China, reaching Yenan in northwest Shaanxi province in October 1935. Despite the courage and military brilliance of the Red Army fighters, the Long March was an admission of political bankruptcy. The program of building an isolated, peasant-based regime had proven a dead end. The Jiangxi “Soviet” was liquidated and the province abandoned to the Kuomintang, which carried out bloody reprisals. The population of the largely rural area, 27,560,000 in 1926, fell to 20,320,000 in 1936, a decline of 7,240,000 in ten years.

In the Yenan period, the CCP’s class axis underwent a further shift. Its operations were no longer in rural areas relatively close to the major centers of the proletariat, in Canton and Shanghai, but in the remote northwest, where the CCP leadership would have virtually no contact with the working class. The poverty and backwardness of the region around Yenan lessened the class differentiation among the peasantry. Virtually the whole peasant population consisted of middle peasants with small plots of land, with relatively few tenant farmers and landless agricultural laborers. The CCP became a party which fought for the interests of the middle peasants, advancing a petty-bourgeois program based on debt reduction, honest administration of the villages and hostility to the landlords and usurers, who for the most part lived in distant cities, not in the villages themselves.

While Chiang Kaishek began assembling forces for a new extermination campaign against Yenan, the Chinese Stalinist leadership returned to the policy of an alliance with the bourgeoisie which had led to disaster in 1927. This was promoted by the Comintern in its new turn to the “popular front,” under which Communist parties entered into political blocs with sections of the bourgeoisie in the name of defending democracy against fascism.

In the notorious Sian incident, in December 1936, Chiang was kidnapped by dissident generals who proposed to execute him. This was forestalled by the intervention of the CCP and Chou En-lai personally, who won Chiang’s release in exchange for a promise to wage a serious military struggle against Japanese imperialism, which had seized control of Manchuria in 1931 and was preparing a new onslaught on China. In return, the CCP promised to dissolve the Red Army and the Yenan government and subordinate itself to Chiang’s bloodstained regime.

Before Mao could carry out this policy, however, war broke out with the Japanese invasion of China in 1937. Japanese imperialism seized Beijing, Shanghai, Nanking, Canton and other major cities. Chiang Kaishek was driven back into the interior, establishing his capital at Chungking, in Sichuan province. The Kuomintang regime sank into a maelstrom of corruption and gangsterism, with large sections going over to the Japanese and forming a puppet government in Nanking, headed by Wang Ching-wei, once lionized by Stalin as the leader of the “Left” Kuomintang.

The Japanese invasion opened the road to power for the Chinese Communist Party, which was the only force willing and able to organize national resistance to the occupation of China. From its small redoubt in northwest China, the CCP expanded from 1938 on into Shanxi, Hebei, Henan, Shandong, Jiangsu and Anhui provinces, fighting guerrilla war against the Japanese and civil war against the Kuomintang. By 1943 Kuomintang troops had abandoned the whole of north and central China north of the Yangtze River.

Fighting a two-front war, on the mainland of Asia and across a vast area of the Pacific, Japanese imperialism was compelled to concentrate its attention on its most dangerous antagonist, American imperialism. From Pearl Harbor to the end of 1943, Japanese forces on the Chinese mainland observed a virtual cease-fire with the Kuomintang, while engaging in scattered combat with guerrilla forces led by the CCP. Then in 1944, with the Pacific war clearly lost, the Japanese Army launched a major offensive in China, attempting to establish a stronger position from which to negotiate. This final offensive further weakened the regime of Chiang Kaishek, while the forces of Mao Zedong were able to retreat and regroup.

By the end of the war, the population living in territory ruled by the CCP had grown from 9 million to 90 million. The membership of the Chinese Communist Party rose from 40,000 in 1935 to 1,000,000 in 1945, with the vast majority recruited from the peasantry, especially its more impoverished sections and those oppressed by tenant farming. Only a handful of urban workers were members of the CCP. In the leadership of the CCP, declassed intellectuals from the rural areas predominated. According to one study, “The characteristic Communist leader was the son of a landlord or rich peasant, whereas the characteristic Kuomintang leader was the son of a merchant or other urban person” (Robert C. North in World Revolutionary Elites [Cambridge: MIT Press, 1965], p. 395).

With the surrender of Japan, both the Stalinists and the Kuomintang raced to claim the occupied cities, disarm Japanese troops and build up their military forces by absorbing units of the Nanking puppet regime. In the civil war which followed, the Communist Party prevailed, basing its victory on the active or passive support of the vast bulk of the peasantry. Chiang Kaishek fled to Taiwan and set up his exile regime on the island, protected by American warships and planes.

It was the international contradictions of world capitalism, not the political farsightedness of Mao Zedong, which propelled the Chinese Communist Party into power. Mao’s victory was only possible because of the exceptional historical circumstances arising from the defeat of Japanese imperialism in World War II and the utter corruption and decay of the Kuomintang regime. Even in these conditions, he had to reject the direct orders of Stalin that the Chinese Communist Party terminate the civil war and reach a coalition settlement which would maintain an imperialist stooge regime in Beijing.

The working class in the cities played virtually no role in these events. The Chinese Revolution of 1949 was not the product of a gigantic rise in the level of class consciousness and political confidence of the proletariat, like the October 1917 Revolution in Russia, led by the Bolshevik Party under Lenin and Trotsky. The People’s Republic of China, proclaimed by Mao in October 1949, was not established by the working class, but by the Red Army, comprised largely of peasants mobilized by the Stalinist-trained Chinese Communist Party.

Trotsky had examined the possibility of a peasant army coming to power in China and explained its implications for the working class in his exceptionally important letter to the Chinese Left Oppositionists, published under the title “Peasant War in China and the Proletariat.” This letter was written in 1932, while the Mao-led Red Army was still fighting a defensive struggle in Jiangxi province, but it anticipated theoretically the situation in 1949. Trotsky wrote:

“The peasant movement has created its own armies, has seized great territories, and has installed its own institutions. In the event of further successes—and all of us, of course, passionately desire such successes—the movement will become linked up with the urban and industrial centers and, through that very fact, it will come face to face with the working class. What will be the nature of this encounter? Is it certain that its character will be peaceful and friendly?” (Leon Trotsky on China, p. 523).

Trotsky discussed the experience of the Russian Revolution with peasant guerrillaism, including the clashes with the anarchist army of Makhno in the Ukraine and with White Guard-led peasant movements, and explained that the relations between a peasant army and the proletariat would be rooted ultimately in the difference in class position and training of workers and peasants.

“The worker approaches questions from the socialist standpoint; the peasant’s viewpoint is petty-bourgeois. The worker strives to socialize the property that is taken away from the exploiters; the peasant seeks to divide it up. The worker desires to put palaces and parks to common use; the peasant, insofar as he cannot divide them, inclines to burning the palaces and cutting down the parks. The worker strives to solve problems on a national scale and in accordance with a plan; the peasant, on the other hand, approaches all problems on a local scale and takes a hostile attitude to centralized planning, etc.” (ibid., p. 524).

The peaceful resolution of conflicts between the peasantry and the urban proletariat could not be guaranteed merely by the role of the Chinese Communist Party, which had arisen historically out of the workers movement, in the leadership of the peasant army. On the contrary, Trotsky pointed out that the leading cadres of the CCP were not from the working class or educated in “the school of proletarian struggle. For two or three years they live the lives of partisan commanders and commissars; they wage battles, seize territories, etc. They absorb the spirit of their environment. Meanwhile the majority of the rank-and-file communists in the Red detachments unquestionably consists of peasants, who assume the name communist in all honesty and sincerity, but who in actuality remain revolutionary paupers or revolutionary petty proprietors. In politics he who judges by denominations and labels and not by social facts is lost. All the more so when the politics concerned is carried out arms in hand” (ibid., p. 525).

The transformation of the class basis of the Chinese Stalinist party had enormous significance, Trotsky declared:

“In the years of the counterrevolution they passed over from the proletariat to the peasantry, i.e., they undertook that role which was fulfilled in our country by the SRs when they were still a revolutionary party. Had the Chinese Communist Party concentrated its efforts for the last few years in the cities, in industry, on the railroads; had it sustained the trade unions, the educational clubs and circles; had it, without breaking off from the workers, taught them to understand what was occurring in the villages—the share of the proletariat in the general correlation of forces would have been incomparably more favorable today.

“The party actually tore itself away from its class. Thereby in the last analysis it can cause injury to the peasantry as well. For should the proletariat continue to remain on the sidelines, without organization, without leadership, then the peasant war even if fully victorious will inevitably arrive in a blind alley” (ibid., p. 527).

The establishment of the People’s Republic was the product of precisely such a “fully victorious” peasant war. Trotsky’s warning that such a regime would be a “blind alley” has been completely vindicated. The Stalinist bureaucracy, under the leadership of aging veterans of the Long March and the civil war, men who played major roles in the founding of the People’s Republic, has embraced capitalism and subjected China to renewed imperialist exploitation.

In his letter to the Chinese Left Opposition, Trotsky warned that the transformed class base of the Communist Party carried with it profound dangers for the Marxist vanguard of the working class, the cadres of the Chinese Trotskyists.

“Bureaucratic centrism, as centrism, cannot have an independent class support. But in its struggle against the Bolshevik-Leninists it is compelled to seek support from the right, i.e., from the peasantry and the petty bourgeoisie, counterposing them to the proletariat. The struggle between the two communist factions, the Stalinists and the Bolshevik-Leninists, thus bears in itself an inner tendency toward transformation into a class struggle. The revolutionary development of events in China may draw this tendency to its conclusion, i.e., to a civil war between the peasant army led by the Stalinists and the proletarian vanguard led by the Leninists.

“Were such a tragic conflict to arise, due entirely to the Chinese Stalinists, it would signify that the Left Opposition and the Stalinists ceased to be communist factions and had become hostile political parties, each having a different class base” (ibid., p. 530).

This prophetic warning was written in 1932—that is, four years before the “civil war” between the Stalinist bureaucracy and the proletarian vanguard erupted in the Soviet Union itself in the form of the genocidal massacre of Marxists carried out in Stalin’s blood purges. It was written while the Trotskyists still considered themselves an opposition tendency within the Comintern, hence the references to the Stalinists as a “communist faction.”

By 1949, what Trotsky had identified in 1932 as a tendency had become a full-fledged actuality. The Chinese Communist Party now represented different class interests from those of the proletariat. It was based on a petty-bourgeois program and defended private ownership of the means of production.

The Balance Sheet of Maoism

The 1949 revolution in China therefore did not place the working class in power. The People’s Republic founded by Mao Zedong and the Chinese Communist Party was a Bonapartist regime which rested on the peasantry, but was hostile to any independent initiative of the worker and peasant masses.

After his armies entered Beijing, Shanghai, and Canton in 1949, Mao initially proclaimed the “bloc of four classes,” which had been the goal of the Stalinist-trained CCP leadership since Stalin’s first disastrous intervention into Chinese politics in the 1920s. The new government was declared to be an alliance of the peasants, the working class, the urban petty bourgeoisie and the so-called “national” bourgeoisie—i.e., those few capitalists who did not flee to Taiwan and Hong Kong with Chiang Kaishek’s routed Kuomintang forces.

This regime was thus not even nominally a government of the working class, let alone committed to the establishment of socialism. It defended bourgeois property, suppressed strikes and outlawed any independent organizations of the working class.

According to Peng Shu-tse, then one of the leaders of the Chinese Trotskyists, “When the CCP occupied the cities it imposed severe restrictions on all activity or spontaneous organization of the working class. When the workers went out on strike to demand wage increases or to resist oppressive conditions, it was brutal in its repressions. For example, the strikers in several factories in Tientsin were arrested and executed.... All of this demonstrated this petty-bourgeois party’s attitude toward the working class, an attitude of distrust, hostility and even murderous rage” (The Chinese Communist Party in Power [New York: Monad Press, 1980], p. 132).

From 1949 on, the Fourth International defended the People’s Republic of China against attacks by imperialism, as in the Korean War, without initially characterizing the new regime as a workers state. The mere assumption of power by a Stalinist party did not mean the establishment of workers rule. It was not until the mid-1950s that the Fourth International characterized China as a “deformed workers state,” that is, a state which from its inception was crippled by the parasitic Stalinist bureaucracy. This regime would, if not overthrown, ultimately destroy the conquests of the Chinese workers and peasants.

This definition—whose makeshift and conditional character should be emphasized—was seized on by the Pabloite opportunists who sought to liquidate the Fourth International into Stalinism and the bourgeois nationalist movements in the period following the Second World War. The Chinese Revolution, like the expropriation of the bourgeoisie in the states of Eastern Europe in the period from 1946 to 1948, was cited by the Pabloites as proof that Stalinism could be compelled, under the pressure of objective forces, to play a revolutionary role in the struggle against capitalism.

They projected a period of “centuries” of deformed workers states, making the Stalinist bureaucracy, not the revolutionary proletariat, the instrument for the establishment of socialism. They made a fetish of the nationalization of industry and land, as though such measures, imposed from the top by the bureaucracy, could substitute for the political mobilization of the working class and establish a workers state, independently of the level of political consciousness and organization of the proletariat.

In reality, these nationalizations, despite their sweeping character and the socialist rhetoric employed by the bureaucracy, did not at all settle the question of the class character of the state. These gains proved to be shortlived. Instead of the “centuries” envisioned by the Pabloites, the Stalinist puppet regimes in Eastern Europe collapsed after barely forty years. In China itself, the period during which nationalized property was the dominant economic form lasted only twenty-two years, from 1956 to 1978.

The Chinese Revolution of 1949 was made possible because the major imperialist powers were unable to intervene effectively and prevent the victory of Mao Zedong’s armies over the corrupt Kuomintang regime. Japanese and German imperialism had been defeated in World War II and occupied, while French and British imperialism had been bled white by the war and were facing uncontrollable upheavals in their colonies.

The United States emerged from World War II as the dominant imperialist power, economically, militarily and politically, but its hegemony was relative and not absolute. Washington was preoccupied with its efforts to forestall social revolution in Europe—where it relied above all on the collaboration of Stalin and the Soviet bureaucracy—and to straitjacket the powerful labor movement at home created by the CIO upsurge of the 1930s.

Although sections of the ruling class called for military intervention in China, American imperialism did not have the resources to carry out such a massive undertaking. In the summer of 1950, the Truman administration responded to the outbreak of war in divided Korea with a major commitment of American troops. But when MacArthur’s offensive to the Yalu River provoked Chinese entry into the war and major defeats for the American forces, the US government was compelled to reverse its policy. MacArthur, an advocate of nuclear war with China, was dismissed, and the American bourgeoisie abandoned efforts for the immediate subjugation of the People’s Republic.

Chinese intervention in the Korean War proved to be the high-water mark of the conflict between the Stalinist regime in Beijing and world imperialism. In 1953 the People’s Republic backed the armistice which ended the conflict with the Korean peninsula divided between Stalinism and the pro-imperialist stooge regime of Syngman Rhee.

A year later Chou En-lai played a major role at the Geneva Conference which carved up Indochina and deprived the Vietnamese people of the fruits of their long struggle against French colonialism. The Stalinist regime sacrificed the Vietnamese to further their relations with British and French imperialism, which joined in the talks despite the refusal of the United States to take part.

Contrary to the ravings of the McCarthyite witch-hunters in the United States, the Beijing regime was not the extension into China of an “international communist conspiracy” centered in Moscow. The leadership headed by Mao Zedong was based on the nationalist program of Stalinism, which repudiated the struggle for the world socialist revolution in favor of “socialism in a single country,” or, as Mao and his henchmen rephrased it, “socialism with Chinese characteristics.”

As Trotsky had predicted more than two decades before, the logic of “socialism in one country” led inexorably to conflicts between Stalinist regimes in different countries, each pursuing their “national interest” at the expense of the international working class. In the Sino-Soviet split which erupted after 1960, both Mao Zedong and Khrushchev conducted themselves as national leaders. While occasionally employing pseudo-Marxist jargon about the struggle against imperialism, they were defending the interests of rival nationally-based ruling cliques, seeking to curry favor with imperialism and suppress opposition from their own working class.

With the escalation of US military intervention in Vietnam from 1965 on, both Beijing and Moscow provided limited military assistance to Hanoi. This had nothing to do with any genuine internationalist support for the liberation of Vietnam from imperialist domination. Instead, each Stalinist regime sought to use the Vietnamese revolution as a bargaining chip in their maneuvers with the United States and the other imperialist powers.

In 1972 the Chinese regime discarded the anti-imperialist rhetoric which had characterized its attacks on Moscow in the 1960s. Mao Zedong held his notorious meeting with Nixon while US bombers rained death on Vietnam. Beijing became the steadfast ally of American imperialism in counterrevolutionary conspiracies in many parts of the world, providing military aid to the South African-backed UNITA forces of Jonas Savimbi in Angola, sponsoring the Khmer Rouge forces of the mass murderer Pol Pot, supporting the right-wing mujehadeen guerrillas in Afghanistan and carrying out a massive military assault on Vietnam in 1979. In 1990, as the Bush administration prepared its genocidal onslaught against Iraq, it relied on Chinese support to push a series of resolutions through the United Nations Security Council.

The domestic policy of the CCP leadership was a series of economic and political zigzags, shifting back and forth between emphasis on material incentives and the market and emphasis on “ideological” struggle and mass enthusiasm as the basis for economic development. The zigzags were associated with the struggle for power within the Stalinist bureaucracy, with Mao maneuvering among the factions, alternately purging and rehabilitating rivals within the leading circles of the CCP.

There was one constant in the bureaucracy’s policy: it sought to find a social base to safeguard its political domination against the working class. During the swings to the “right,” the bureaucracy relied on nascent capitalist elements and the wealthier layers of the peasantry. During the periods of “left” radicalism, the Stalinists sought to mobilize the poorest strata of the peasantry and the unemployed rural and urban lumpen-proletariat, especially the youth, as a counterweight to the working class.

China maintained a substantial private sector from 1949 to 1955, when Mao proclaimed that “state and private joint ownership” should be the predominant form of property. Only in 1956 was private capitalist ownership virtually liquidated, and the Stalinist regime declared itself to be “the dictatorship of the proletariat”—without consulting the working class, of course.

In 1957 came the first swing to the “left.” Mao launched the “Great Leap Forward,” ordering the complete collectivization of the peasant landholdings and the formation of rural communes which would carry out both industrial production and agriculture. The peasant masses were plunged into an adventure for which they were unprepared politically and which China did not have either the economic resources or technical development to sustain. The result was a disastrous fall in production, widespread starvation and a forced retreat by the Stalinist bureaucracy.

Mao admitted that the “Great Leap Forward” had been based on ignorance of central planning and that he had “no idea” of economic policy. He told the Eighth Plenum of the CCP Central Committee, “No calculations whatever were made relative to coal, iron and transportation capacity. Coal and iron cannot move themselves. They must be transported on freight trains. I did not foresee these things. Neither I nor the Premier (Chou En-lai) had previously given any thought to these matters, which makes clear that we understood little of the business of planning” (translated from Rainer Hoffman, Maos Rebellen [West Germany]).

In 1966, there was a new and even more destructive attempt to carry out a radical domestic policy, in the form of the Cultural Revolution. Mao mobilized unemployed youth drawn from the peasantry and the urban lumpen-proletariat against rivals such as Liu Shao-chi, whose base was in the trade union apparatus and nationalized industry.

Mao had long idealized the role of the lumpen-proletariat. As early as January 1926 he had submitted an essay to the CCP journal which focused on the declassed layers of society, whom Mao divided into five categories—”soldiers, bandits, robbers, beggars and prostitutes”—and declared, “To find a place for this group of people is the greatest and most difficult problem faced by China.... These people are capable of fighting very bravely, and, if properly led, can become a revolutionary force” (Dick Wilson, Mao: the People’s Emperor [Garden City, Long Island: Doubleday, 1980], p. 106).

Mao’s Red Guards, mobilized from the countryside, aroused considerable hostility in the urban proletariat, which frequently greeted their entry into cities with general strikes and the so-called “three stoppages,” the cutoff of electrical service, running water and public transportation. Ultimately, after Liu Shao-chi and his supporters were ousted as “capitalist roaders,” Mao called out the army to suppress the youth. Thousands were killed in clashes with the military, and hundreds of thousands were deported to remote rural areas, while party bureaucrats who had been purged and humiliated were rehabilitated.

Two years after Mao’s death in 1976, the faction headed by Deng Xiaoping emerged victorious in the conflicts within the bureaucracy. The so-called Gang of Four, consisting of Mao’s widow Chiang Ching and three associates, were removed from power and imprisoned. The Beijing regime dropped the pretense that it was committed to socialist rather than capitalist methods of economic development, with Deng issuing the slogan, “To get rich is glorious.” Private property was given legal equality with state property, both in agriculture and in industry and commerce.

In the 1960s Maoism enjoyed a vogue among wide layers of the radical middle class, especially in the United States, Germany, Japan and other imperialist centers. Superficially, the Maoists could claim that the Chinese regime had adopted a more consistently anti-imperialist policy, denouncing Khrushchev and his successors for “revisionism” and collaboration with American imperialism.

But the appeal of Maoism had a more fundamental class basis. Sections of the petty bourgeoisie gravitated to Mao’s regime precisely because it combined the suppression of the working class with a verbal radicalism, suggesting a revolutionary road independent of and even opposed to the actions of the working class.

It promised a nonproletarian road to socialism which bypassed the protracted struggle to educate and train a revolutionary vanguard in the working class and thus was more suited to the strivings of the radical petty bourgeoisie. Mao’s coming to power as the leader of a peasant army, without any conscious intervention by the working class, was taken as proof that the example of the October 1917 Revolution in Russia was historically outmoded.

The Maoists rejected the mobilization of the working class under revolutionary leadership in favor of the mobilization of the petty bourgeoisie, the organization of peasant-based insurgencies that would move “from the countryside into the cities.” For the revolutionary internationalist program of Lenin and Trotsky, expressing the historical interests and strivings of the working class, the Maoists substituted the nationalist program of peasant guerrilla leaders like Mao and Ho Chi Minh, or petty-bourgeois adventurers like Castro and Che Guevara.

In practice, these policies produced unmitigated disaster for the tens of thousands of youth who were misled and betrayed by the Maoists. Peasant-based insurgencies were bloodily suppressed in Bolivia, Venezuela and other Latin American countries, or dragged on sporadically, as in the efforts of the Naxalites in India.

The Communist Party of Indonesia, with a mass base in the urban proletariat, followed the political lead of the Chinese Stalinists into a bloodbath of historic proportions in 1965. Pursuing Mao’s policy of a bloc with the “progressive” section of the bourgeoisie, represented by Sukarno, the PKI disarmed the masses and paved the way for a military coup in which half a million workers, youth and poor peasants were slaughtered.

The only instance in which a Maoist party took power by means of peasant-based guerrilla warfare provided a grisly demonstration of Maoism’s hostility to the working class. The Khmer Rouge came to power in Cambodia in 1975 after the destruction of much of the country by US bombing raids. The peasant army of the Khmer Rouge looked upon the entire urban population, including the working class, as its enemy. The cities were emptied and more than one million people murdered in a genocidal onslaught which was only ended by the Vietnamese invasion in 1978.

In the United States, there are a half dozen middle class radical organizations formed at different stages of the decomposition of Maoism. They defend the present Beijing regime, or the “Gang of Four” ousted in 1978, or the former Albanian regime of the late Enver Hoxha, or North Korean tyrant Kim II Sung. The anti-working class character of these groups is typified by the ravings of the Revolutionary Communist Party, which publicly denounces the American working class as a privileged group whose living standards must be drastically slashed.

While the economic and political zigzags of post-1949 China took the form of factional struggles within the bureaucracy, they had a deeper significance. The bureaucracy was unable to establish a stable social basis for its rule and was constantly thrown into convulsions because of the fundamental bankruptcy of the Stalinist policy of “socialism in one country.”

As Trotsky explained from 1924 on, after Stalin first advanced this anti-Marxist monstrosity as the program of the rising Soviet bureaucracy, “socialism in one country” was a repudiation of the most basic conceptions of Marxism. The historical development of capitalism has created the world market, which subordinates all the national economies to itself. The system of rival nation-states created by capitalism is now the most reactionary impediment to the development of the productive forces.

Socialism is inseparable from internationalism. Its goal is not to force economic life back within the national straitjacket, but to put an end to the nation-state system and capitalist private ownership of the means of production and establish a centrally planned world economy, democratically controlled by the working people. The theory of “socialism in one country” meant the betrayal of socialist internationalism in the interests of the ruling bureaucracy in the USSR.

The crisis and collapse of the USSR and Eastern Europe demonstrated the failure, not of genuine international socialism, but of Stalinist national socialism. Cut off from access to the resources and division of labor in the world market, and above all from the development of new technology symbolized by the computer and the microchip, the Stalinist regimes began to lag further and further behind the advanced capitalist countries.

Likewise in China, it was impossible to overcome centuries of inherited backwardness without access to the resources of the world market and the technology developed in the most advanced capitalist countries. The Maoist policy of isolated national economic development—the Chinese version of the Stalinist program of “socialism in a single country”—was a reactionary utopia. It led inexorably to the shift to the right, carried out during Mao’s final years, towards a political rapprochement with imperialism, and then to the open embrace of capitalism under Deng Xiaoping.

As with the Soviet Union, there are only two roads to overcoming the gap in productivity between the isolated planned and nationalized economies and the world market, still dominated by capitalist relations. Either the working class overthrows capitalism on a world scale, making available the resources of the entire planet for the planned development of the productive forces, or capitalism will be restored in all the territories from which it was expelled by the Russian and Chinese Revolutions, with the most terrible consequences for the Soviet, Chinese and international working class.

The very existence of the Beijing bureaucracy is bound up with the betrayal of the world revolution by Stalinism. It cannot lead a struggle against world capitalism because it is, in the final analysis, an agency of the international bourgeoisie within China, subordinating the Chinese workers and peasants to the demands of imperialism. To take the revolutionary road, the Chinese workers must overthrow the bureaucracy and the rising capitalist class.

In China, the regime of Deng Xiaoping has gone much further than the Stalinists of the USSR and Eastern Europe in promoting the development of capitalism and the integration of the country into the world market on a capitalist basis, while at the same time maintaining political power in the hands of the bureaucracy.

The bureaucracy is well down the road of reintegrating China into the world market on a capitalist basis. Chinese exports have risen from 4 percent of GNP in 1978 to 12 percent in 1988 and 19 percent in 1990. China’s total foreign trade rose 20.2 percent in the first half of 1992, compared to the same period a year ago. Foreign investment in the first half of 1992 was up an astonishing 95.6 percent, with $14.6 billion approved, $3.2 billion actually spent. The energy minister announced that the oil industry would be opened up to foreign investment, saying that the increasing technical needs of the industry “require closer global cooperation in the field.”

In July 1992 the Stalinist media announced that a nationwide inventory of state assets would begin, to be carried out over the next two years. This has nothing to do with defending or maintaining the nationalized property—just the opposite. The purpose is to provide the bureaucracy with a comprehensive picture of the state sector of the Chinese economy so that the bureaucrats can seize the choicest parts for themselves and their imperialist patrons, while allowing the rest to collapse.

The Economic Daily commented, in reiterating the necessity to smash the “iron rice bowl” despite the opposition of the workers, “The times demand that we grasp firmly to reform and to changing the way our enterprises are managed. No one can escape the trend of the times.” What is this “trend of the times”? It is the drastic lowering of the social position of the working class and the elevation of the capitalist market as the sole organizing principle of mankind, a process which, as the bureaucracy points out, is under way on every continent.

While the Chinese Stalinists have bemoaned the collapse of the bureaucratic regimes in Eastern Europe and urged their Soviet counterparts to follow the example of Tiananmen Square in order to maintain the political dictatorship of the Communist Party, the Beijing regime is in full agreement with the social content of the transformation which is taking place in Eastern Europe and the USSR—the restoration of capitalism and the destruction of the conquests of the October Revolution.

It is worth noting that in 1989, when mass protests against the Stalinist regime began in Beijing, the bureaucracy initially displayed a conciliatory attitude to the students, many of them its own children and espousing a pro-capitalist program. But when the working class began to come on the scene, the bureaucracy shifted course dramatically and carried out the bloodbath at Tiananmen Square. This class difference was evident in the repressions which followed the massacres, as student leaders and dissident officials received jail terms, while workers who led strikes were summarily shot.

The state which issued from the Chinese Revolution no longer defends or maintains the limited gains won by the workers and peasants in 1949. On the contrary, the bureaucratic apparatus is systematically dismantling state property, expanding the sphere of capitalist relations and seeking to integrate its most privileged sections into the capitalist class which has grown rapidly over the past fourteen years.

The Chinese state is not, even in the most distorted sense, an instrument for the defense of the interests of the working class. It decrees the wiping out of jobs, the lowering of wages, the destruction of health benefits, the raising of rents and prices on basic necessities. The state defends the interests of the bureaucracy as a privileged social layer increasingly linked to the rising capitalist class and, through them, the interests of imperialism itself.

As the International Committee pointed out at the time, the agreement between China and British imperialism on Hong Kong has enormous historical significance. The Stalinist regime has undertaken to safeguard capitalist property relations for fifty years after Hong Kong is returned to Chinese sovereignty in 1997. By means of this agreement, the Chinese state has made itself the guarantor of the interests of the Chinese and world bourgeoisie against the workers of Hong Kong and of China as a whole.

The task facing the Chinese working class is to mobilize its strength for the revolutionary overthrow of this state and the establishment of a genuine workers state which would expropriate the holdings of the capitalists, both Chinese and foreign, establish workers control over the nationalized property which still remains and reorganize economic life to serve the worker and peasant masses.

The road forward for the Chinese working class, as for its class brothers in every country, is the building of a new revolutionary leadership, based on the program of socialist internationalism. This means the building of the International Committee of the Fourth International, the world party of socialist revolution.