Thursday, 29 March 2012


The struggle in China: Capitalist crisis versus planning


The following is Part 2 of a series on the leadership struggle in China.

As contradictions mount in the global capitalist economy, they are reflected in China. The factional struggle in the Chinese leadership can only be understood as a struggle over which way to go forward and how to contain and resolve the mounting economic and social contradictions arising out of capitalist development.

The Chinese economy has been growing on a dual basis. First, it is based on centrally planned guidance designed to develop the productive forces and the material foundations for a society encompassing 1.3 billion people. However, since the victory of Deng Xiaoping and the “capitalist road” faction in 1978, planning has been increasingly based on the central government fostering and attempting to manage capitalism and the capitalist market as the means for national development.

The central government, through control of interest rates, credit, taxation and vast state-owned enterprises, both guides the economy toward broad economic and social goals and fosters capitalist development. The latter means class exploitation, inequality and corruption. The present political struggle is over which side of this contradiction to strengthen.

This complex subject will be discussed at length in subsequent articles. But suffice it to say that the so-called “reform” groupings in China — with the enthusiastic support of world imperialism and global finance capital — want to move away from state intervention, planning and central guidance and go further toward turning the fate of China over to the capitalist market, both internally and externally.

In our last article we covered the fact that Bo Xilai was summarily ousted from his post as Chinese Communist Party Secretary of Chongqing. This was a blow against the growing forces in the CCP and throughout China who want to combine the use of the capitalist market with social and economic planning and state intervention in order to deal with growing inequality and who emphasize the needs of the masses. In Bo’s case, this economic orientation was combined with a popular attempt to revive Maoist culture and socialist values.

In China today, the concept of planned guidance of the broad direction of the economy and its various sectors is a drastic modification from the direct economic planning initiated after the triumph of the great Chinese Revolution in 1949. At the same time, it is an attempt to retain the planning principle as the fundamental framework guiding the overall development of the Chinese economy.

Consider just some of the goals and objectives outlined by the 12th Five Year Plan for 2011-2015, and the antagonism between planning and the anarchy of the capitalist market becomes utterly transparent. This plan was developed beginning in October 2010 and was approved by the National People’s Congress in March 2011.

The government is planning to devote 4 trillion renminbi ($158.7 billion) to the development of seven Strategic Emerging Industries: biotechnology, new energy, high-end manufacturing equipment, energy conservation and environmental protection, clean-energy vehicles and next-generation internet technology. (APCO worldwide, Dec. 10, 2010)

An article in the March 4, 2011, New York Times detailed the plan’s goals, including:

* A 19.1 percent cut in the amount of energy used per unit of economic growth and a rapid expansion of the service economy.

* Building a national nanotechnology research center, 50 engineering centers, 32 national engineering laboratories and 56 other labs focusing on technologies like digital television and high-speed internet.

* Laying 621,000 miles of new fiber-optic cable and adding 35 million new broadband ports for a total of 223 million.

* A cap on total energy use, especially limiting the burning of coal.

* The development of well-equipped statistical and monitoring systems to gauge greenhouse gas emissions.

* Accelerated construction of sewage treatment plants, the retrofitting of coal-fired power plants with pollution controls, and the continuation of a pilot project to develop low-carbon cities.

In the previous period the state had opened 3,100 miles of new railroads and 74,600 miles of highways, completed 230,000 sports and fitness projects for rural residents, and built or renovated 891 hospitals and 1,228 health clinics.

In the realm of social welfare, the broad goals are to increase consumption from 35 percent of the gross domestic product to between 50 percent and 55 percent by increasing minimum wages, health care services and social welfare payments of various kinds.

Of course, it goes without saying that under a genuinely socialist government, workers would have their fundamental economic rights guaranteed as political rights. But those rights were largely overturned by the reforms that developed in China after 1978. Instead, in the environment of the capitalist market — with its mountains of corruption of government and party officials — the welfare of the workers and peasants has to be built up slowly and painfully through an uphill battle, which happens only through the intervention of the state. (More on this in future articles.)

Whether or not the government achieves the precise goals set out is not the issue. The point is that such sweeping social and economic goals could not possibly be handed over to profit-driven capitalists and the anarchy of the commodity market. The bosses would seek the highest rate of profit. They would never voluntarily raise wages, improve working conditions, build hospitals, clinics, rural fitness centers or anything that did not bring a profit.

China’s response to 2008-09 world capitalist crisis

To grasp the seriousness of the proposals to further limit planning and intervention by the state, it is only necessary to consider what happened during the world capitalist financial and economic crisis of 2008 and 2009, when the global crisis of capitalist overproduction and the financial collapse invaded China.

More than 20 million workers lost their jobs, mainly in manufacturing and predominantly in coastal provinces such as Guangdong, where special economic zones had been set up so imperialist corporations, companies from Taiwan, Hong Kong and South Korea, and other exploiters could take advantage of low-wage migrant labor flooding in from the rural interior.

During this period production of world capitalism dropped more than it had in 70 years. Tens of millions of workers worldwide were thrown onto unemployment lines. Most of them are still there. Bankruptcy followed bankruptcy, and the capitalist system has still not recovered.

What happened in China? When the crisis hit, China’s central planners went into motion. Plans drafted as far back as 2003 to go into effect in future years were pushed forward and implemented.

Nicholas Lardy, a bourgeois China expert from the prestigious Peterson Institute for International Economics, describes how consumption in China actually grew during the crisis of 2008-09, wages went up, and the government created enough jobs to compensate for the layoffs caused by the global crisis:

“In a year in which GDP expansion [in China] was the slowest in almost a decade, how could consumption growth in 2009 have been so strong in relative terms? How could this happen at a time when employment in export-oriented industries was collapsing, with a survey conducted by the Ministry of Agriculture reporting the loss of 20 million jobs in export manufacturing centers along the southeast coast, notably in Guangdong Province? The relatively strong growth of consumption in 2009 is explained by several factors. First, the boom in investment, particularly in construction activities, appears to have generated additional employment sufficient to offset a very large portion of the job losses in the export sector. For the year as a whole the Chinese economy created 11.02 million jobs in urban areas, very nearly matching the 11.13 million urban jobs created in 2008.

“Second, while the growth of employment slowed slightly, wages continued to rise. In nominal terms wages in the formal sector rose 12 percent, a few percentage points below the average of the previous five years (National Bureau of Statistics of China 2010f, 131). In real terms the increase was almost 13 percent. Third, the government continued its programs of increasing payments to those drawing pensions and raising transfer payments to China's lowest-income residents. Monthly pension payments for enterprise retirees increased by RMB120, or 10 percent, in January 2009, substantially more than the 5.9 percent increase in consumer prices in 2008. This raised the total payments to retirees by about RMB75 billion. The Ministry of Civil Affairs raised transfer payments to about 70 million of China's lowest-income citizens by a third, for an increase of RMB20 billion in 2009 (Ministry of Civil Affairs 2010).” (“Sustaining China's Economic Growth after the Global Financial Crisis,” Kindle Locations 664-666, Peterson Institute for International Economics)

The Ministry of Railroads introduced eight specific plans, to be completed in 2020, to be implemented in the crisis. The World Bank called it “perhaps the biggest single planned program of passenger rail investment there has ever been in one country.” In addition, ultra-high-voltage grid projects were undertaken, among other advances.

The lesson is that while the anarchy of production of world capitalism invaded China, the rational and meticulously developed plans drawn up for social use overcame the anarchy of the capitalist market. This not only protected the masses from a protracted, massive unemployment crisis, but it actually continued the process of raising the standard of living during a time when hundreds of millions of workers throughout the entire capitalist world were left helpless and traumatized by the crisis of capitalist overproduction.

In Marxist terms the principle of planning, established by the Chinese socialist revolution of 1949 — even though it has been watered down to the practice of “guidance” — overcame what Marx called the law of labor value, the very law that governs the operation of capitalism itself. The Chinese leaders were compelled, and had the capability, to use rational planning based on satisfying human need to overcome the disaster brought about by their own policy of relying on the world capitalist market.

To be continued.

Goldstein is the author of “Low-Wage Capitalism” (2008) and “Capitalism at a Dead End” (2012) published by World View Forum. Both books as well as his articles and speeches can be found at


'Chinese loans are funding many of the infrastructure projects changing the face of the continent'

This is an article from the left-liberal Guardian newspaper in Britain. It is an article about the economic developments in Mozambique, and is quite lengthy, I have produced just a clip of it below. For some reason the word 'basket-case' is often used by the west when they are talking about African states.

It's just a shame that writers like this don't also admit that the negative aspects of African states are in overwhelming large part to do with how the west has ensured that Africa does not unite, and does not develop itself for its people, and the most violent and obvious example of this attitude is their destruction through last year of the African state which has the highest human development index - Libya.

The writer sees rather reluctant to state in the article that it is thanks to the nature of relations with China that has resulted in Mozambique seeing some positive indicators to its economic development. What the article doesn't explore is the issue that if it is relations with China that is giving Africa a massive boost, why hasn't the same been the case with Africa's relations with the west? Going into that just wouldn't wash with the white man's burden types who run the newspaper.

A uniting and economically rising Africa is what the west fears, and the west will and is doing all it can to ensure this does not happen, and it is definitely alarmed that this is developing with a increasingly close partnership with China.

Nation of Islam leader Louis Farrkhan said in his latest speech that the usa is planning a war with China, but is already involved in a war on China, and cited the case of nato's war on Libya being also a war on China with the resultant departure of Chinese involvement in Libya and the 130,000 Chinese workers there.

Sukant Chandan, Friends of China

Boom time for Mozambique, once the basket case of Africa

The shells of stylish colonial-era buildings, like shipwrecks on the ocean floor, still give Maputo a distinct character. But the capital of Mozambique no longer feels like an urban museum. Amid the crumbling grandeur rumble cranes and mechanical diggers, carving out a different skyline.

A construction boom is under way here, concrete proof of the economic revolution in Mozambique. Growth hit 7.1% last year, accelerating to 8.1% in the final quarter. The country, riven by civil war for 15 years, is poised to become the world's biggest coal exporter within the next decade, while the recent discovery of two massive gas fields in its waters has turned the region into an energy hotspot, promising a £250bn bonanza.

The national currency was the best performing in the world against the dollar. Investment is pouring in on an unprecedented scale; as if to prove that history has a sense of irony, Portuguese feeling Europe's economic pain are flocking back to the former colony, scenting better prospects than at home. Increasingly this is the rule, not the exception in Africa, which has boasted six of the world's 10 fastest-growing economies in the past decade. The first oil discovery in Kenya was confirmed on Monday, while the British firm BG Group announced that one of its gas fields off the Tanzanian coast was bigger than expected and could lead to billions of pounds of investment. Bankers, analysts and politicians have never been so bullish about the continent, which barely 10 years ago was regarded as a basket case.

From Cape Town to Cairo, there are signs of a continent on the move: giant infrastructure projects, an expanding middle class, foreign equity scrambling for opportunities in telecoms, financial services and products aimed at a billion consumers. Growth is no magic bullet for reducing inequality or fostering democracy, but the stubborn truth that it is still the world's poorest continent has done little to dull the confidence and hype about the African renaissance.

Africa has 16 billionaires, topped by Nigerian cement tycoon Aliko Dangote with an estimated fortune of $10.1bn (£6.5bn), according to Forbes magazine. Economic growth across the continent will be 5.3% this year and 5.6% in 2013, the World Bank predicts, with some countries hitting double digits. "Africa could be on the brink of an economic take-off, much like China was 30 years ago and India 20 years ago," the bank says. Many of the African lions are already outpacing the Asian tigers.

Africa exports its natural resources with the price and demand for them determined by growth in China, whose bilateral trade with Africa has grown tenfold in a decade, eclipsing that of the United States.

In return, Chinese loans are funding many of the infrastructure projects changing the face of the continent.

There are an estimated 1 million Chinese in Africa: trading, investing, building, labouring, running micro-businesses and, critics say, exploiting its wealth of natural resources.

On a recent afternoon at the Southern Sun hotel in Maputo, overlooking the Indian Ocean, the arrival of a delegation of Chinese businessmen in smart suits surprised no one. Mozambique is now an immensely attractive prospect as it emerges from a traumatic past of colonialism and civil war.


Wednesday, 28 March 2012


The ouster of Bo
A critical moment in China


It is now world news that Bo Xilai, a high-ranking member of the 25-member Politburo of the Chinese Communist Party, has been removed from his key post as Party Secretary of the important Chongqing branch of the CCP.

This move comes as the CCP is preparing to choose a new leadership this fall. Bo had been widely regarded as a clear candidate for the nine-member standing committee of the Politburo. That is now out. This is the first open breach in the Chinese CCP leadership in two decades.

Bo was known for trying to revive the culture of Mao Zedong through many public programs. He emphasized state intervention in the economy and advocated planning for massive low-income housing projects for migrant workers and others, as well as fighting to reduce inequality in general.

Bo has also been known for a fierce anti-corruption campaign in which the masses were encouraged to point out corrupt officials and gangsters. Several thousand people were arrested, among them business people, and many were sent to jail. The highest police official in Chongqing was executed during the anti-corruption campaign.

Bo was removed after an incident in which the subsequent police chief of Chongqing, Wang Lijun, who worked with Bo in a widely celebrated anti-corruption campaign, fled Chongqing on Feb. 6 to the U.S. Consulate in the nearby city of Chengdu and asked for political asylum.

According to Chinese government and party sources, Wang claimed to have documents incriminating Bo. Wang was taken from the consulate, and is now being held in Beijing.

There has been much speculation about Bo and Wang and what happened. Much has been alleged about Bo’s flamboyant personal style, his ambition, a factional struggle within the leadership for position and so on. Perhaps all these factors played some role in his ouster.

But one thing is clear. The imperialists have all taken a position against Bo, and are overjoyed to see his downfall.

To be sure, there is no evidence that Bo was trying to abandon the reliance on capitalism in China’s development that followed the death of Mao. On the contrary, his outlook is fully within the general framework of using capitalism and foreign investment to grow the economy in Chongqing. But within that framework, he emphasized the so-called “third hand,” the need for the state to play a significant role in the economy, to ensure the well-being of the masses and to reduce inequality as a matter of priority.

Effect of global capitalist crisis

It is important to put this struggle in the broader context of the global capitalist crisis and its effect on the Chinese economy and on the political and factional struggle inside China.

The economic crisis in the capitalist world has undermined in a very fundamental way the argument that China should bank its fate and future on capitalist development and the capitalist world market as a foundational strategy.

The collapse in 2007-2009 of the world capitalist financial system and the global market, the ensuing mass unemployment, the wild speculation, the overproduction, the economic dislocation, the flood of bankruptcies, the gyrations of the stock markets and the continuing threats on the horizon must haunt all of China’s leaders and give ammunition to all those who oppose the further unleashing of capitalism in China.

The imperialists and the more pro-capitalist forces in the CCP and the state know this. So they have rushed to fortify their position in the face of the monumental evidence of the failure of capitalism and its dangerous effects in China during 2008 and 2009.

They made their moves just as China’s legislative body was preparing to consider and approve various plans and when the subject of future leadership was under private discussion.

It is significant that the World Bank presented a 448-page document just in time for the 18th National People’s Congress last month, entitled “China 2030.” What makes the public presentation of this document so ominous is that it was co-authored by the Development Research Center of the State Council, the top executive body in China. Liu He, who worked on the document and who meets regularly with U.S. officials, is an adviser to the standing committee of the Politburo who has argued publicly that foreign pressure should be used to push capitalist reforms in China.

To underscore the collaborative nature of the document, the subtitle is “Building a Modern, Harmonious, and Creative High-Income Society.” The term “Harmonious Society” is the slogan of China’s present leaders, President Hu Jintao and Premier Wen Jiabao.

The world was treated to a video circulated online in February that showed Du Jianguo, editor of an environmental magazine in China, disrupting a press conference by World Bank President Robert Zoellick as Zoellick was unveiling his document. In front of the world press, Du stood up and denounced the document as “unconstitutional,” saying it would “subvert the basic economic system of socialism.” Before he was pushed off the platform by security, Du called the bankers’ document “poison” aimed at capturing China’s markets for international capitalists. (Wall Street Journal, Feb. 23)

World Bank’s attempt to promote counterrevolution

This document is part of the background to the factional struggle in China. It represents a firmer and more dangerous nexus between imperialism and the so-called “reform” faction, the more aggressive pro-capitalist faction, in China.

The Executive Summary of the document reads:

“First, implement structural reforms to strengthen the foundations for a market based economy by redefining the role of government, reforming and restructuring state enterprises and banks, developing the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets. As an economy approaches the technology frontier and exhausts the potential for acquiring and applying technology from abroad, the role of government and its relationship to markets and the private sector needs to change fundamentally. While providing relatively fewer ‘tangible’ public goods and services directly, the government will need to provide more intangible public goods and services like systems, rules, and policies, which increase production efficiency, promote competition, facilitate specialization, enhance the efficiency of resource allocation, protect the environment, and reduce risks and uncertainties.

“In the enterprise sector, the focus will need to be further reforms of state enterprises (including measures to recalibrate the role of public resources, introduce modern corporate governance practices including separating ownership from management, and implement gradual ownership diversification where necessary), private sector development and fewer barriers to entry and exit, and increased competition in all sectors, including in strategic and pillar industries. In the financial sector, it would require commercializing the banking system, gradually allowing interest rates to be set by market forces, deepening the capital market, and developing the legal and supervisory infrastructure to ensure financial stability and build the credible foundations for the internationalization of China’s financial sector.”

In other words, the World Bank, with the collaboration of the Development Research Center of the State Council, is recommending that state enterprises be reduced to dispensers of state services and advice, withdraw from the production of infrastructure, steel, energy and other “tangible goods,” and leave that to private capitalists. They further recommend that the banking system be integrated with world imperialist finance capital and that state planning be reduced to a nullity.

In short, they advocate the destruction of the very socialist structures that hold Chinese society together and that have enabled it to withstand the most severe capitalist crisis since World War II.

For a representative of the highest state body to help draft such a counterrevolutionary document, publicly associate his name with it and urge its adoption shows the degeneration of key sections of the highest leadership and, within the broader state apparatus, highlights the pernicious influence of unleashed capitalism in China.

This explains the urgent disruption of Zoellick’s press conference and the push-back that is coming from various quarters in China. This is not to say that the viewpoint represented by the World Bank document will be victorious. There are many forces in China, including the workers and peasants, who would strongly resist any attempt to fully implement this program.

Christine LaGarde, head of the International Monetary Fund, also chose the moment of the National People’s Congress to issue a statement in high praise of China’s economy. This was undoubtedly coordinated with the World Bank presentation of “China 2030.”

The severity of the struggle over the future of China also broke out in the open at the World Economic Forum in Davos, Switzerland, in January.

“A group of Chinese speakers warned in stringent tones on Friday morning [Jan. 27] in Davos that the country’s free-market reform is stalled, and China is sliding backwards towards greater state control of the economy.

“Hu Shuli, editor of Caixin Magazine and widely recognized leader of China’s ‘reform’ faction, launched a breakfast forum by identifying delayed economic reform as one of the two key risks for the Chinese economy going forward, alongside the weakening exports in the wake of the euro-zone crisis.” (Wall Street Journal, Jan. 27) Other Chinese participants agreed.

The world capitalist crisis has brought this struggle on at a crucial time of change in the Chinese leadership. The ouster and public humiliation of Bo, which brought this struggle to light, can best be understood in terms of a struggle over dangerously deepening capitalist reforms. With or without Bo, this serious struggle will continue.

For those who believe that there has been a complete restoration of capitalism in China, this whole matter may seem to be of little importance. But to the workers and peasants of China and to the rest of the world, the question of stopping the further advance of the counterrevolution is of supreme importance.

To be continued.

Monday, 5 March 2012


Top China paper criticizes Clinton over Syria

BEIJING (source) - China's main official newspaper Monday described U.S. Secretary of State Hillary Clinton's criticisms of Beijing's stance on Syria "super arrogant" and argued that, after the Iraq war, the United States has no right to speak for Arab people.

The People's Daily, the top newspaper of the ruling Communist Party, gave China's first public answer to Clinton's comments Friday, when she called the Chinese and Russian veto of a U.N. resolution on Syria "despicable.

China's response in the People's Daily was equally vehement.

"The United States' motive in parading as a 'protector' of the Arab peoples is not difficult to imagine. The problem is, what moral basis does it have for this patronizing and egotistical super-arrogance and self-confidence?," said a commentary in the paper that cited the U.S. invasion of Iraq.

"Even now, violence continues unabated in Iraq, and ordinary people enjoy no security. This alone is enough for us to draw a huge question mark over the sincerity and efficacy of U.S. policy," it said.

The spreading bloodshed in Syria, where government forces have been bombarding neighborhoods held by opposition forces, has turned into a broader test pitting Western powers against China and Russia over how forcefully the world should intervene in civil turmoil.

Beijing and Moscow are traditionally resistant to international intervention in domestic upheavals, and Russia has close ties with the Syrian government.

"They are setting themselves not only against the Syrian people but also the entire Arab awakening," Clinton said of China and Russia, which have resisted Western and Arab calls to push Syrian President Bashar al-Assad from power.

On February 5, China and Russia used their veto power as permanent members of the U.N Security Council to stymie a proposed resolution backing an Arab plan pressing Assad to step down. As well, China and Russia both refused to attend a "Friends of Syria" meeting in Tunis Friday, when Western and Arab nations sought to escalate pressure on Assad.

The commentary in the People's Daily repeated China's argument that its unwillingness to take sides in Syria's conflict best reflected the interests of that country's people.

"It is disturbing that as it fully enters into Syria's domestic turmoil, the United States has never seriously considered how to end this calamity quickly and at a minimal cost to the Syrian people," said the newspaper.

"While U.S. foreign policy claims the moral high ground by trumpeting 'democracy' and 'freedom', Washington is also constantly flinging epithets at Russia and China," it said.

Russian Prime Minister Vladimir Putin also warned the West against backing military intervention in Syria. Clinton has indicated there is no enthusiasm in Washington for war.

The People's Daily commentary was published under the pen name "Zhong Sheng," meaning "Voice of China," which is often used to give the paper's view on foreign policy issues.

The Chinese Foreign Ministry has yet to respond to Clinton's criticisms and the outcome of the meeting on Syria in Tunis, where powerful Gulf Arab countries demanded more forceful intervention against Assad.


China's achievement is literally the greatest in world economic history


Economic development’s purpose is to improve the conditions of human beings. Robert Lucas put it eloquently, in frequently quoted words, examining the consequences of different rates of economic growth: ‘I do not see how one can look at these figures without seeing them as possibilities. Is there some action a government of India could take that would lead the Indian economy to grow… If so, what, exactly?… The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.’

In this framework it should be stated, soberly and with due consideration, that China’s economy since 1978 is the greatest economic achievement in world history. This article shows this in the prosaic language of statistics. But of course that is not the real issue. What really counts is the consequences of this for human beings – escape from poverty, improvement in life expectancy, improved health, expanded potential for education, improvement in the position of women, and many other dimensions. Economic statistics, such as GDP per capita, simply underpin this improvement in human conditions.

The scale of China’s economic achievement

A problem in assessing the true scale of China’s economic achievement is that partial statistics are frequently used to state it. Some of these, for example that China has become the world’s second largest economy, or that it has raised 620 million people out of internationally defined poverty, are extremely striking (Quah, 2010). But nevertheless, because they are partial, they do not capture the full scope of what has occurred. Only when systematic data is used does the full magnitude of China’s achievement become clear.

Again, even when systematic comparisons are attempted, the scale of China’s economic achievement is frequently underestimated because inappropriate measures are used. For example when comparing rates of economic growth, in calculating contributions to economic welfare, it is misleading to take individual countries as the unit of comparison, rather than the proportion of world population affected – rapid economic growth in a small country evidently contributes  less to human well being than rapid growth in a large country.

In order to give an initial systematic comparison, therefore, Table 1 shows the percentage of world population affected at the point when sustained rapid growth commenced in major economies. For example the first country to experience sustained rapid economic growth was the UK in the industrial revolution - which was in a country with 2.0 per cent of the world’s population. The sustained rapid US economic growth after the Civil War was in a country with 3.3 per cent of the world’s population.

There are, of course, arguments about some additional individual countries that might be included in the comparison – for example Italy from 1950 (1.9 per cent of the world’s population) or Spain from 1960 (1.0 per cent of the world’s population). But it is evident from the data that introducing such extra countries makes no difference to the essential situation.

No other economy starting sustained rapid economic growth even approaches the 22.3 per cent of the world’s population in China in 1978 at the beginning of its new economic policies. For comparison Japan’s rapid post-World War II growth was in a country with 3.3 per cent of the world’s population, and the growth of the four Asian ‘Tigers’ (Hong Kong, Singapore, South Korea, and Taiwan) was in economies with only 1.4 per cent of the world’s population.

Only India’s sustained economic growth after the late 1980s, in a country with 16 per cent of the world’s population, even begins to approach China’s achievement in scale, but the percentage of the world population affected is still lower than China’s, as is India’s growth rate.

Table 1

Introducing the necessary correction of population size also makes clear that the method sometimes utilised of ranking by country size is misleading. To see why it need only be noted that, if current exchange rates are used, on the World Bank tables for 2010, the latest year for which comprehensive statistics are available, 87 of the countries for which data was available have a higher GDP per capita than China and 83 had a lower. This appears to place China about half way up the list of world rankings. As when the People’s Republic of China was created in 1949, or economic reform was launched in 1978, China was one of the world’s most economically underdeveloped countries this might appear a quite good performance, but it wholly understates China’s achievement.

The reason is that ranking by country takes no account of relative population. For example among the countries above China are the Seychelles, Palau, St Kitts and Nevis, Dominica, and Antigua and Barbuda – all with a population of less than 100,000. If the real international position of China is to be assessed then, again, size of population must be taken into account. Figure 1 below, therefore, shows the percentages of world population living in countries with GDP per capita above and below China and shows the real proportions of China’s economic achievement.

In 1978 countries containing only 0.5 per cent of the world’s population had a GDP per capita below China’s, while 73.5 per cent had a higher one – China itself accounted for 25.9 per cent of the world’s population for which data was available. By 2010, using the same measure, the percentage of the world’s population living in countries with a higher GDP per capita than China was 31.3 per cent - given the speed of increase, it is clear that when 2011’s data is published it will show that less than 30 per cent of the world’s population lives in countries with a higher GDP per capita than China.

Figure 1

Therefore in only slightly over thirty years China, containing more than twenty per cent of the world’s population, has moved from being one of the world’s least economically developed countries, to a position where less than one third of the world’s population lives in countries with a higher GDP per capita, and where China’s position is rising rapidly.

Checking these current price statistics against international parity purchasing powers (PPPs), which takes into account different price levels in different countries, confirms the same result. Measured by PPPs in 1980, the first year for which World Bank data is available, only 1.3 per cent of the world’s population lived in countries with lower GDP per capita than China and 73.0 per cent in countries with a higher one. By 2010 only 31.5 per cent of the world’s population lived in countries with a higher GDP per capita than China.

Another way of measuring is to compare China to the rest of the world’s population. To do this, the best measure is not the average as, for well known statistical reasons, averages covering wide ranges are excessively affected by small numbers of extreme values. This is confirmed very clearly by world data. Only 25 per cent of the world’s population has a GDP per capita above the global average and 75 per cent have one below it. A better, and the standard, measure of incomes is to make a comparison to the median – the exact mid-point.

In 1978 China’s GDP per capita was only 42 per cent of the median for the rest of the world’s population. By 2010 China’s GDP per capita was 289 per cent of the median.

That since 1978 China, with more than one fifth of the world’s population, has moved from being one of the poorest countries in the world to a situation where less than one third of the world’s population has a higher GDP per capita is without historical precedent. Never before in human history has such a large proportion of the world’s population advanced so rapidly.

A number of conclusions clearly follow from the above data – in addition to the obvious one of simply recognising this as a fact of economic history. But for now it need simply be noted, soberly and with due measure, that China’s is quite literally the greatest economic achievement in world history.

*   *   *

An earlier and shorter version of this article appeared, in English and Chinese, in Global Times.


Quah, D. (2010, May). 'The Shifting Distribution of Global Economic Activity'. Retrieved January 2, 2012, from London School of Economics:


The Chinese people absolutely will not tolerate foreign aggression, nor will they supinely tolerate seeing their neighbours being savagely invaded by imperialists. Whoever attempt to exclude the nearly 500 million Chinese people from the U.N. and whoever set at nought and violate the interests of this one-fourth of mankind in the world ... will certainly break their skulls.
- Zhou En Lai

Chinese People Will not Tolerate Aggression
Zhou En Lai
Oct 1950

A YEAR HAS ELAPSED since the founding of the People's Republic of China on October 1, 1949. This has been a year of great victories and swift advance for the Chinese people.

We have traversed the past year under conditions of continuous victories in the people's liberation war. The Chinese people's war of liberation, which began in July 1946, had already achieved fundamental victory on the eve of the founding of the People's Republic of China in 1949. But, at that time, the remnant of Kuomintang brigands still occupied the South China area, with Canton as its centre, the South-West China area, with Chungking as its centre, and some islands.

During the past year, the People's Liberation Army liberated all South China and Fukien Province. It later liberated all South-West China—with the exception of Tibet, the Choushan Islands, the Tungshan Islands, and other islands. Our army wiped out 203 entire enemy divisions, consisting of about 2,180,000 men.

The Chinese people have annihilated the American- equipped Kuomintang brigand armies throughout China's mainland and won this enormous victory. What lesson can we learn from this? The most important lesson is: such a big victory can never be an accidental phenomenon of history, but is the necessary outcome of the many revolutionary struggles of the Chinese people during the past century. Such an enormous, swift and thorough victory cannot be conceived apart from the selfless support of millions of people.

China United

This victory of the Chinese people is entirely different from all the "unifications" in China's history. Formerly, there was this and that sort of "unification", but the unifiers were either the oppressors of the people from the start or else became so afterwards. Therefore, they could not achieve real unification, and such unifications could not but collapse after a little while.

Today the first unification of the Chinese people has emerged. The people themselves have become the masters of Chinese soil, and the rule of the reactionaries in China has been irrevocably overthrown.

Since the enemy annihilated by the Chinese people was armed by the U.S. Government, then we can completely affirm that the Chinese people have not only won victory over the enemy at home, but also over the enemy abroad—that is, the imperialist interventionists of the United States. If the American imperialists still want to intervene in and invade China with whatever new means and in whatever new forms, they will then meet with the same defeat that befell the Kuomintang.

The struggle between the Chinese people and the remnant of Kuomintang reactionaries has not yet come to an end. This is because Taiwan, which is occupied by the reactionary remnants, is now under the direct control of the American Navy and Air Force.

The People's Liberation Army is determined to liberate Taiwan from the grip of the American aggressors, and to clear out the lairs of the reactionary brigands of China once and for all. It will be seen that, in the war for the liberation of Taiwan, our strategic position is much better than any enemy's. On our side stands inspired righteousness; our rear is close, vast and consolidated and we are now redoubling our efforts for the final victory. The People's Liberation Army is also determined to march westward to liberate the Tibetan people and defend the frontiers of China. We are willing to undertake peaceful negotiations to bring about this step, which is necessary to the security of our motherland. The patriots in Tibet have expressly welcomed this, and we hope that the local authorities in Tibet will not hesitate in bringing about a peaceful solution to the question. .

Foreign Policy of People's China

The foreign policy of the People's Republic of China has been clearly laid down in the Common Programme passed by the Chinese People's Political Consultative Conference. The Common Programme Stipulates: "The principle of the foreign policy of the People's Republic of China is protection of the independence, freedom, integrity and sovereignty of the country, upholding of lasting international peace and friendly cooperation between the peoples of all countries, and opposition to the imperialist policy of aggression and war."

On the question of establishing diplomatic and trade relations with foreign countries, the Common Programme stipulates: "The Central People's Government of the People's Republic of China may, on the basis of equality, mutual benefit and mutual respect for territory and sovereignty, negotiate with foreign governments which have severed relations with the Kuomintang reactionary clique and which adopt a friendly attitude towards the peoples of China, and may establish diplomatic relations with them." "The People's Republic of China may restore and develop commercial relations with foreign governments and peoples on a basis of equality and mutual benefit." The foreign affairs of the Central People's Government in the past year were conducted in accordance with these basic principles.

Since the founding of the People's Republic of China, seventeen countries have established formal diplomatic relations with our country. They are the Soviet Union, Bulgaria, Rumania, Hungary, Korea, Czechoslovakia, Poland, Mongolia, Germany, Albania, Burma, India, Viet Nam, Denmark, Sweden, Switzerland and Indonesia. Eight other countries—Pakistan, Britain, Ceylon, Norway, Israel, Afghanistan, Finland and the Netherlands—have also expressed willingness to establish diplomatic relations with our country. Among them, four countries—Britain, Norway, the Netherlands and Finland—are still conducting talks for the establishment of diplomatic relations with our country.

Friendship With U.S.S.R.

The People's Republic of China resolutely sides with the world camp of peace and democracy headed by the Soviet Union and has established the closest fraternal relations with the Soviet Union. During Chairman Mao Tse-tung's visit to the Soviet Union, China and the Soviet Union signed the Sino-Soviet Treaty of Friendship, Alliance and Mutual Assistance, which is of great world historic significance. Because of this treaty, great peoples of the European and Asiatic continents to the number of nearly 700 million have united in close alliance militarily, economically and culturally, and have thus greatly strengthened the power of the two countries to safeguard themselves against aggression in the east.

Simultaneously with the signing of this treaty, or a little later, China and the Soviet Union further signed the agreements on the Chinese Changchun Railway, Port Arthur and Dairen, the agreement on the granting of credit to the Central People's Government of the People's Republic of China, and five other economic and trade agreements.

In these agreements, our great neighbour extends Much generous assistance to China in the period when she is recovering from her war wounds. The whole Chinese people are greatly elated with the signing and implementation of the treaty and agreements between China and the Soviet Union and express their boundless thanks for the friendship extended to them by the leader of the Soviet Union, Generalissimo Stalin, and the Government and people of the Soviet Union.

China has also signed trade contracts and agreements with Poland, Czechoslovakia and Korea. Trade negotiations are under way with Germany and Hungary.

Trade relations have also developed between China and certain capitalist countries. The total amount of China's foreign trade is estimated not only to reach, but to surpass the original plans.

Relations With Capitalist States

The problem of the establishment of diplomatic relations with capitalist countries is more complicated than that of establishing trade relations. Here 1 may mention, especially, our long-drawn-out negotiations with Britain, out of which nothing has yet come. The reason for the fruitlessness of the negotiations is that the British Government has made known its recognition of the People's Republic of China on the one hand, while on the other it agrees to permit the so-called "representatives" of the reactionary rump of the Chinese Kuomintang clique to continue its illegal occupation of China's seat in the United Nations. This makes it difficult to commence formal diplomatic relations between China and Britain. And Britain's extremely unjustifiable and unfriendly attitude toward Chinese residents in Hong Kong and other places cannot fail to draw the serious attention of the Central People's Government.

Throughout the Chinese people's war of liberation, the U.S. Government sided with the enemy of the Chinese people, assisting the Kuomintang reactionaries with all its might in their attacks on the Chinese people. The enmity that the U.S. Government harbours towards the Chinese people has increased since the founding of the People's Republic of China.

Despite the just criticisms of the Soviet Union, India, and other countries, the U.S. stubbornly obstructs the representatives of the People's Republic of China from attending the United Nations and its various organs, and shamelessly protects the seat of the so-called "representatives" of the Kuomintang reactionary rump. Similarly, the U.S. debars the Chinese representatives from attending the Allied Council for Japan and plots to exclude China and the Soviet Union in concluding a peace treaty with Japan, in order to rearm Japan and retain America's occupation troops and military bases in Japan.

The U.S. deliberately concocted the assault of the Syngman Rhee gang against the Korean Democratic People's Republic in order to expand its aggression in the East and then, on the pretext of the situation in Korea, despatched its naval and air forces to invade Taiwan, a province of China, and announced that the so-called problem of Taiwan's status should be solved by the American-controlled United Nations. Moreover, time after time, it sent its air force, which is invading Korea, to intrude into the air over the Liaotung Province of China, strafing and bombing, and sent its naval forces which are invading Korea to bombard Chinese merchant shipping on the high seas.

By these frenzied and violent acts of imperialist aggression, the U.S. Government has displayed itself as the most dangerous foe to the People's Republic of China. The U.S. aggressive forces have invaded China's borders and may at any time expand their aggression. MacArthur, Commander-in-Chief of the American aggression against Taiwan and Korea, long ago disclosed the aggressive design of the U.S. Government, and is continuing to invent new excuses for extending its aggression.

Against American Aggression

The Chinese people firmly oppose the aggressive brutalities of America and are determined to liberate Taiwan and other Chinese territory from the clutches of the U.S. aggressors.

The Chinese people have closely followed the situation in Korea since she was invaded by the U.S.A. The Korean people and their People's Army are resolute and valorous. Led by Premier Kim Jr Sen, they have scored remarkable achievements in resisting the American invaders and have won the sympathy and support of people throughout the world. The Korean people can surely overcome their many difficulties and obtain final victory on the principle of persistent, long-term resistance.

The Chinese are peace-loving people. One hundred and twenty million Chinese have already signed their names to the solemn Stockholm Appeal and this signature movement is continuing to develop among the Chinese people. It is obvious that the Chinese people, after liberating the whole territory of their own country, want to rehabilitate and develop their industrial and agricultural production and cultural and educational work in a peaceful environment, free from threats. But if the American aggressors take this as a sign of the weakness of the Chinese people, they will commit the same fatal blunder as the Kuomintang reactionaries.

The Chinese people enthusiastically love peace, but in order to defend peace they never have been and never will be afraid to oppose aggressive war. The Chinese people absolutely will not tolerate foreign aggression, nor will they supinely tolerate seeing their neighbours being savagely invaded by imperialists. Whoever attempt to exclude the nearly 500 million Chinese people from the U.N. and whoever set at nought and violate the interests of this one-fourth of mankind in the world and fancy vainly to solve any Eastern problem directly concerned with China arbitrarily, will certainly break their skulls.