Amazon.com, Pearson PLC, and CBS are all well known to be US-owned corporations. However, under a loophole in Chinese law, they have avoided the strict regulations that foreign companies operating in China are supposed to face. Utilizing that loophole, they have been able to create a proxy called a “VIE Structure,” which functions on their behalf, and allows them to enjoy the advantages given to domestic Chinese businesses.
However, a newly proposed regulation from the Chinese Ministry of Commerce would change that. Foreign businesses who have acquired “VIE Structures” would no longer be allowed to function as domestic Chinese companies. The US Chamber of Commerce, the American Chamber of Commerce in China, and the American Chamber of Commerce in Shanghai have all issued a joint statement opposing the new legislation — and begging for a 25-year grace period to be exempt from it.
The new proposed law is just the latest example of the new direction in Chinese politics. The small but bold changes in the practice and policy of the Chinese state are causing a high level of anger and frustration among the rich and powerful, especially in the United States. Why are Chinese leaders suddenly displaying more hostility and distrust to US businesses? Why is China continuing its massive clampdown on corruption? The answer to these questions can be found in the reality of the changing global landscape, as well as the link between US militarism and economics.
Enforcing the Law
In the last few months, editorials in the US press describing Xi Jinping as a repressive tyrant and comparing him to Mao Zedong –or even Joseph Stalin — have become more frequent. The anti-corruption “Mass Line Campaign” launched and continued by the Chinese Communist Party has touched a nerve with the US press and its corporate owners.
Xi Jinping, the President of the People’s Republic of China, is deemed to be a dangerous radical, linked to “neo-Maoists” by the New York Times. What is the reason for this widespread assessment of a highly popular foreign leader?
Xi Jinping isn’t exactly a “neo-Maoist.” He has not presided over a massive re-nationalization of private assets. He has not revived the “revolutionary internationalist” foreign policy of the early Mao era, funding revolutionary movements in other countries. Xi Jinping has not called on China’s youth to drive “capitalist roaders” from the government. The policies and styles of leadership of Mao and Xi, though both rooted in the ideals of the 1949 revolution, are very different.
Xi is not like Mao Zedong, Fidel Castro, or Che Guevara. He does not see himself as part of a world revolutionary movement, and he does not appear to be attempting to create or restore a Soviet-style command economy. The actions taken by Xi Jinping that infuriate western capitalist investors, as well as many wealthy domestic Chinese people, can be summed up in a simple two-word phrase commonly used in western society: “law enforcement.”
The existing culture of dishonesty and bribery — which wrought horrors like those observed and exposed at the factories of Foxconn Technology — is being widely challenged. The Chinese government, led by the Communist Party, is clamping down on the foreign investors who have poured into the country since the 1980s.
Just as the voices of big business in the US complain about workplace safety laws, union protections, and other regulations that cut into their profits, the US press is infuriated with China’s clampdown on illegal but previously overlooked activities. Joshua Eisenman of the American Foreign Policy Council decried it by saying: “China has been making it harder for foreign firms to operate in the mainland by disproportionately targeting them in crackdowns … clamping down on their operations and employing innovative discriminatory tactics to restrict their ability to conduct business.”
Unlike the proposed law around VIE structures, most of Xi’s widely popular campaign does not involve any changes in established law. Officials who take bribes and overlook crimes by foreign companies are now facing harsh penalties for their actions. The idea that allowing US corporations to break Chinese law would encourage them to invest further was once widespread among Chinese officials. Deng Xiaoping’s mantra of “to get rich is glorious” was interpreted to mean that huge sacrifices had to be made in order to raise gross domestic product and promote international investment. This mindset has been gradually reversed, and the sweeping reforms of Xi Jinping have meant that Chinese law regarding foreign investors is now being enforced to the letter.
It is likely that almost every China-investing capitalist felt threatened when seven top employees of Mcdonald’s meat supplier OSI were taken away in handcuffs. The arrests by the Shanghai Food and Drug administration came after the corporation was exposed on state television for selling rotten meat. The Chinese pro-Communist media cheered as the right of the public to not be served unsafe food was protected by the state. Have big business executives in any western capitalist country ever been subjected to this kind of punishment for endangering the public or their employees?
“Slowdown” Strengthens the “Chinese Dream”
The new regulations and enforcements are not the only sign of rapid change in Chinese policy. The recent boom of Chinese steel production has driven the price of steel down 28% in 2014. This was a clear example of the state sector of Chinese society flexing its economic muscles. Steel manufacturers in the United States, Germany, Japan, and south Korea were forced to the negotiating table by the roar of a well oiled, government-owned steel manufacturing juggernaut.
China has agreed to slow down its steel output — but western capitalists are still not happy. Though it will stop expanding, China’s steel production apparatus is only expected to decrease its output by 1 or 2 percent. Like the condemnations of the VIE law, the official complaint of western steel manufacturers read like a speech from the climax of an Ayn Rand novel, bemoaning the reality that in China there “continues a strong role for the state rather than true market forces.”
The much heralded “slowdown” in the Chinese economy has only reinforced in the minds of China’s people and leadership the need for regulation and control of capitalism’s “invisible hand.” The Chinese Central Bank is currently escalating the debt easing policies that saved China from the harsher effects of the 2008-2009 financial crisis. The billion-dollar government project of creating a massive irrigation system in China’s impoverished countryside has not been halted. At a recent conference in Indonesia, Xi Jinping received thunderous applause as he promised billions of dollars of investment throughout third world, and announced that impoverished countries would receive preferential treatment in Chinese trade laws.
Millions of people in China are studying a collection of Xi Jinping’s speeches which are compiled into a book called “The Governance of China.” In this widely distributed book, the words “socialism” and “communism” are repeated hundreds of times. Almost every speech compiled in this formal collection explains China’s current government policies in the political context of Marxist-Leninist ideology, Mao Zedong Thought, Deng Xiaoping Theory, and upholding the traditions of the 1949 revolution. Xi Jinping’s trademark references to the “Chinese Dream” are commonly understood to be a subtle rejection of the idea that the so-called “American Dream” is universal. Xi Jinping also frequently invokes the concept of a “New Silk Road,” in which China can team up with impoverished countries in economic partnerships to develop outside the clutches of Wall Street and London.
US economists, Wall Street billionaires, and US politicians are being reminded more and more each day that China is not like so many of the other countries in the so-called “global south.” The Chinese Communist Party runs the country, and the huge apparatus of state-owned and controlled economic entities remains dominant. Western capitalism is allowed to invest and make profits, but only on terms that the Communist Party is willing to accept.
Modern China was born in a revolution. Mao Zedong’s portrait is still on display. Every significant political leader is a Communist Party member who swears to “serve the people” as a basic principle of membership. Every Chinese industrial worker is a member of a Communist Party-controlled union, and despite widespread corruption and tolerance for malfeasance, business owners still have no basic economic rights guaranteed by the state. The China is not — and will never be — Wall Street’s playground.
No Real “Recovery” For Neoliberal Capitalism
The current shift in China’s attitude toward foreign investors must be placed in an international, global, and historical context. In a world where weapons and the attendant military apparatus are so profitable, military and economic policy are often closely linked.
The economic boom of the 1990s, following the collapse of the USSR and the computer revolution, was only temporary. Technology has made production cheaper than ever in the 21st Century. Fewer workers are required than ever before, and the level of skills and training these workers need has been driven further and further down. Millions of industrial jobs have been eliminated, not just in the western countries, but all over the world. The global market is glutted with cheaply and efficiently manufactured products that cannot be sold as workers on a global level see a rapid drop in both their living standards and purchasing power. The current situation may lack the sudden, dramatic events of the 2008-2009 financial crisis, but the economic situation is still bleak. For most, the “recovery” has simply been an adjustment to a “new normal” of poverty, austerity, and systemic unemployment.
The economic crisis has also manifested as a global crisis of migration. People are fleeing from the most impoverished corners of the globe because they are desperate to survive. The rise of human trafficking and mass immigration to Europe and the United States cannot be ignored. Within the global imperialist centers, governments continue to face crises of “debt,” each of which results in harsher cuts in social spending. The means of life for millions of people in Spain and Greece have been gutted, with the peoples of Germany, Britain, France and the United States not that far behind them. The explosions of violence in Ferguson and Baltimore show the United States is gradually spiraling into ungovernable chaos. The attempts to control the increasingly impoverished population with harsh police state tactics have only backfired.
The Danger of War
In the context of a downward economic spiral, the Wall Street-London cartels have escalated their international aggression against competitors and opponents. Western countries are spreading war and chaos throughout the formerly colonized world, hoping they can stay atop the market despite their system’s continued failure and crisis. Syria, led by the Baath Arab Socialist Party, is facing a bloody, lengthy civil war with over 200,000 already dead. Western countries have poured billions of dollars into the armed terrorist insurgency against the Syrian government. Libya, formerly the most prosperous African country, has been reduced to rubble and chaos.
The Bolivarian Republic of Venezuela has exposed a campaign of domestic terrorism funded and directed by the United States. The overthrow of Yanukovich has put Ukraine into a state of civil war, with a “national guard” made up of neo-Nazis receiving direct training and funding from the US as it terrorizes the population. The US continues to fund and promote opposition within Russia itself, and recent events in Brazil and Ecuador are probably “false starts” or failed attempts to foment “color revolutions” in Latin America.
Despite the violence from the United States, the Third World continues to gradually march away from western control. African countries get friendlier to China each day, and Buhari’s return to power in Nigeria likely means an even bigger push in this direction. Bolivarianism is rising in Latin America. The Islamic Republic of Iran sits at the center of an alliance of anti-imperialist forces in the Middle East. The global economic model is changing, and western, laissez-faire neoliberalism is being pushed aside.
The only hope western finance capital has for keeping its grip on economic power is forcibly smashing any emerging competitor. This is done with economic sanctions, funded campaigns of subversion and terrorism, and direct military assault.
The Chinese Communist Party, with its millions of members who have studied the Marxist methods of analyzing the world, know what is on the horizon. They see the “Asian pivot” of the US military, as well as the joint military exercises of the US and its allies in the Philippines. They see the increased US presence in South Korea, and know very well what to expect.
As China emerges as a stronger, economic competitor with the United States, Wall Street will be driven to restore its economic hegemony — not with stiffer competition and improving its products and services, but with war.
Building Solidarity in Chinese Society
China is preparing to defend itself from the increased hostility of the United States. The anti-corruption campaigns are designed to restore and reinforce the support Chinese people have for the Communist Party, and roll back any level of cynicism that has developed over the course of the last few decades.
Films criticizing the policies which led to the destruction of the Soviet Union are being shown and discussed by military and government officials, as China is strengthening itself, preparing for any attack that looms on the horizon. Its no secret that, in the USSR, the depoliticization of much of the population and widespread corruption were key to that country’s destruction. In this context, it should be no surprise China is slowly returning to the egalitarian principles that built the People’s Liberation Army and held the country together even in the hardest years.
Anticipating the possibility having to fight for its life, the People’s Republic of China is strengthening itself, re-establishing its roots of support among the working class and the peoples of the countryside. China is adjusting its economic and political setup for a world in which the threat of a desperate western monopolists onslaught constantly hangs over its head.
Prominent voices in the US bemoan the actions of Xi Jinping: firstly because it directly cuts into Wall Street street profits, and secondly because they fear that he is building alliances across Chinese society that are unbreakable.
Campaigns of austerity and political repression are making western capitalist societies weaker. The “Mass Line Campaign,” and the revival of Mao Zedong Thought and concepts like “Serve the people”, are preparing China to be stronger than ever before.
Caleb Maupin is a political analyst and activist based in New York. He studied political science at Baldwin-Wallace College and was inspired and involved in the Occupy Wall Street movement, especially for the online magazine “New Eastern Outlook”.