Last year, Jason Hickel and Dylan Sullivan published an article in Al-Jazeera chalking American belligerence toward China up to two factors: an increase in Chinese wages eroding the profitability of foreign investment and the rise of native Chinese industry threatening western monopolies over advanced digital technology, energy generation, automobile manufacturing, biotechnology and robotics. Since western-dominated global capitalism has shown an uncanny ability to offshore capital and relocate investment in low-wage countries, it is undoubtedly China’s threat to monopoly capitalism that has western governments especially concerned.
The ability to export capital and extract profits from the cheap labour and resources in the Global South has been an extremely lucrative racket for the advanced imperial core countries. $152 trillion was transferred from the developing world to advanced capitalist countries between 1960 and 2021.
This racket has worked for centuries, ever since Columbus landed on Caribbean shores. It has evolved from outright theft of land and gold, into more sophisticated neocolonial arrangements which harness sweatshop labour and mine resources for sophisticated products stamped with western corporate logos and sold the world over.
The result has been a river of profits pouring into Europe and the United States, soaking elephantine financial industries and buoying astronomical stock market valuations. But that river only flows so long as the aggregate of advanced technology, patents, licences, designs and money-capital remains steadfast with western corporate headquarters.
China’s entry onto the stage of high value production does not simply add a new player to the game—it threatens to flip over the board. America is staring down hundreds of billions of dollars worth of potentially stranded assets invested in the AI sector alone.
China’s Marxian approach to economics has led them to force-feed their supply chain with an abundance of rare earths and critical minerals, renewable energy, steel, electric vehicles and batteries, artificial intelligence platforms, drones, pharmaceutical products and high speed trains. In a bid to transform quantity into quality, China is converting the lucrative monopoly industries of the past into at-cost utilities for the present. And they are squeezing western corporations out of the global market in the process.
This context is the key to understanding the posture of NATO countries as they pursue rearmament in unison: Trump is demanding a 50% hike to an already-bloated trillion dollar military budget, Canada has signed $100 billion contract for submarines, the UK will dispense an extra £63 billion, Germany has approved a 33% rise in weapons spending, France has committed $500 billion more to its military by 2030—it goes on and on like this. With Russia pinned down by the quagmire of Ukraine, it beggars belief that these trillions of additional dollars are being earmarked to counter threats from Moscow. Western leaders hold their citizenry in contempt when making this claim.
If human society was governed by anything but the ruling class interests that Karl Marx described, the dawning reality of a new global economy would have spurred a movement toward cooperation, integration with the Belt and Road Initiative and major political and economic reforms adjusting to the new landscape. After all, the people of the West could benefit from low-cost advanced technology, public banks, renewable energy and rational economic planning at the highest levels. But the momentum behind centuries of imperial accumulation does not dissipate like the heat of lightning when the clouds break.
So long as warfare and financial speculation lines the pockets of the powers-that-be, ungodly sums will continue to be extracted from the working class and put into the service of a western oligarchy determined to break China’s back. Only then can swarms of cheap labour return to East Asia and US corporate monopolies be assured.
The problems with all of this are legion. What worked yesterday is not always destined to work tomorrow and we are fast approaching a night when tomorrow does not come. Western morality was buried under rubble alongside the bodies of Gaza’s children and the illusion of military supremacy was sunk to bottom of the Persian Gulf. If Iran is the canary in the coal mine, it is clear that all of these billions dumped into offensive weaponry will not yield the surplus required for imperial capitalism to maintain itself.1 In a dialectical reversal for the ages, the quest for self-preservation puts western capitalism on the express path to terminal crisis.
China has been described as the factory of the world and it would be prudent to now call it the world’s laboratory and power plant as well. Never mind that going to war with such a formidable power would obviously be unwinnable and catastrophic—it well could happen given the incredibly low calibre of people running the Occidental show. When it comes to protecting their property, history demonstrates that the oligarchy is always willing to fight to the last working class man. As David Harvey pointed out in The Limits of Capital:
Capitalism is stabilized through the defence budget, albeit in ways that rob society of more humane and socially worthwhile programmes. But the present theory suggests a rather more sinister and terrifying interpretation of military expenditures: not only must weapons be bought and paid for out of surpluses of capital and labour, but they must also be put to use.2
The collapse of the western economy necessarily entails an enormous loss of property on the most rarefied rungs of capital ownership—and this is the good news. If we’re lucky it will happen before an apocalyptic war can commence. Marx wrote that “the violent destruction of capital as a condition of its self-preservation is the most striking form in which advice is given it to be gone and to give room to a higher state of social production.”3 The collapse will not be where the fight for our future ends. It will be where it begins.
Thanks for reading!
In Seventeen Contradictions and the End of Capitalism (Oxford University Press, 2014): 40, David Harvey recounts other modes of production that have disappeared by failure to generate surplus. ↩︎
David Harvey, The Limits of Capital (Verso, 2018): 445. ↩︎
China is one of the most misunderstood countries in the West for all of the predictable reasons: the far-away geography, the curious culture, the unfamiliar politics, the ferocious economy. It is either portrayed as a one-dimensional menace to democracies or, less often, as the last hope to save the biosphere or the Global South. China can be the rigid communist or the wild capitalist—it only depends on the point of view of the observer. Dan Wang is the latest to re-cast China, an engineering state in contrast to the lawyerly society of the United States. He hit the shore of this discovery when it occurred to him that many of America’s founding fathers were lawyers and Deng Xiaoping had promoted a lot of engineers in the 1980s. According to Wang, this is the reason why China builds a lot more stuff than the U.S. today. But he’s wrong.
What Wang discovered is only a basic difference between Marxist-Leninist societies and liberal capitalist ones. The Soviet Union was dominated by engineers, as China and Vietnam are today. Even Cuba has been described as “a society of engineers.” Conversely, western bourgeois revolutions were all dominated by those with legal backgrounds; Thomas Jefferson in the U.S., Oliver Cromwell in Britain, Maximilien Robespierre in France—to name only the most notorious. The first prime ministers of Canada, Australia and India were also lawyers. But if the American “lawyerly society” was able to out-build and outproduce the Soviet engineering state, why can’t it do the same against the Chinese?
The answer has little to do with lawyers or engineers and everything to do with economics and governing ideology. Whereas the American commitment to capitalist class power led it directly into a deindustrialized, cannibalistic financial economy, China’s commitment to building socialism led it to becoming the greatest workshop in human history, in command of entire supply chains and advanced technology. America had built a great industrial power by the early twentieth century and organized labour had won considerable political power throughout the New Deal and Cold War eras. But this unravelled almost the moment the Cold War wound down. The disciplining of the western workforce was inevitable in an economic system pursuing profit for the sake of profit, and it arrived in the form of offshore manufacturing, real estate speculation, vulture capitalism, super-exploited migrant labor and intensified corporate lobbying.
Marxism-Leninism in China
China, meanwhile, was an accident of epic proportions. Whereas other Marxist-Leninist states in the Soviet bloc were successfully marginalized from the global capitalist economy, the U.S. under Nixon and Kissinger embraced China in a successful effort to defeat Moscow by exploiting the Sino-Soviet split. Successive presidential administrations gambled that global capitalism would so thoroughly corrupt Chinese socialist aspirations that the country would abandon Marxist thought altogether. This has turned out to be a bad bet if the words of paramount leader Xi Jinping are any indication: “If we deviate from or abandon Marxism, our Party would lose its soul and direction. On the fundamental issue of upholding the guiding role of Marxism, we must maintain unswerving resolve, never wavering at any time or under any circumstances.”
Statements like this from Chinese leadership mystify western audiences, both left and right. Too many people view socialism through the narrow paradigm of the Soviet system or left wing politics at home and conclude that China has hopelessly deviated from Marxist theory. But what if it is the western left that is aimless and the Soviets who were forced to deviate? Western politics is so saturated with capital that even nominally “progressive” forces don’t understand the corporate interests being served by mass migration crises and obsessional identity politics. And the Soviet Union, facing multiple foreign invasions at the outset, rapidly nationalized most of its economy and placed it under a central command in order to first stave off European aggression and then counter American containment strategies. The Soviet Union was able to achieve incredibly high levels of human development and military superpower status, but balancing these two priorities against western counter-pressure proved unsustainable over the long haul.
China pursued somewhat similar policies to the Soviets until American rapprochement came in 1972, when Nixon visited Mao. Imperial pressure against China was lifted, culminating in large amounts of western commercial investment by 1979 and a U.S. State Department upgrade for China to “friendly, developing nation.” This is where the great misunderstanding of China began: for the left, China was seen as selling out the socialist movement to imperialists and for the right, China was increasingly seen as a nascent capitalist champion. Neither side was completely right or wrong.
China did embrace capitalist investment in a way that was not geopolitically possible for other Marxist-Leninist states. The private sector of China is notoriously wild and cutthroat. At the same time this does not represent a reversal of the Marxist course in China, as originally charted by Mao. Consider the Chinese flag: four small stars representing the national bourgeoisie, petit bourgeoisie, the working class and the peasantry. Mao, while fiercely antagonistic toward rent-extracting landlords, had a different understanding of China’s domestic capitalists:
The national bourgeoisie differs from the imperialists, the landlords and the bureaucrat-capitalists. The contradiction between the national bourgeoisie and the working class is one between exploiter and exploited, and is by nature antagonistic. But in the concrete conditions of China, this antagonistic contradiction between the two classes, if properly handled, can be transformed into a non-antagonistic one and be resolved by peaceful methods.1
In Marxist theory, capitalism is seen as a major progressive advance over the feudal mode of production. When Mao came to power, China was largely a feudal state. For this reason Mao favoured China’s capitalist elements over the landlords of the feudal order. Mao proposed a five-tiered structure of ownership during China’s transition phase which has been applied throughout the country: state-owned enterprises, cooperative land ownership, individually owned businesses, private corporations and public-private partnerships. The Communist Party of China, while it bristles under imperialism, has always recognized this classical Marxist principle: capitalism is the mother of socialism, not its enemy. Karl Marx:
The bourgeois period of history has to create the material basis of the new world—on the one hand universal intercourse founded upon the mutual dependency of mankind, and the means of that intercourse; on the other hand, the development of the productive powers of man and the transformation of material production into a scientific domination of natural agencies. Bourgeois industry and commerce create these material conditions of a new world in the same way as geological revolutions have created the surface of the earth. When a great social revolution shall have mastered the results of the bourgeois epoch, the markets of the world and the modern powers of production and subjected them to the common control of the most advanced peoples, then only will human progress cease to resemble that hideous pagan idol who would not drink the nectar but from the skulls of the slain.2
Having built a mass-party of over 100 million members, the CPC believes that China has already completed its great social revolution and have set themselves the task of mastering “the results of the bourgeois epoch.” In Building Socialism with a Specifically Chinese Character, Deng Xiaopingdescribes foreign investment as “a major supplement in the building of socialism,” with the goal of “highly developed productive forces and an overwhelming abundance of material wealth.” This is a redux of Engels, who said that the forces of production “must be multiplied to the extent necessary for the creation of a communal society” before private property can be abolished.3
Whereas the advanced capitalist countries were able to develop their productive forces through a historical process involving colonial extraction, debt bondage, slavery and corporate-driven markets, China is doing the same with a combination of foreign capital investment, state owned enterprises, domestic start-ups and state-dominated markets operating under the umbrella of five year plans and consultative democracy.
The Limits to Capital
Since the dawn of civilization, Marx noted, the property relations of an economy eventually become barriers to the further advancement of technology and production.4 In feudalism, there was only so much progress that was possible in an economy dominated by illiterate subsistence farmers paying rent to lords. The limits inherent to the feudal order are what eventually provoked daring exploration missions leading to the discovery of the Americas, European mercantilism, the plantation economy and subsequent Industrial Revolution.
As industry has progressed, it has gradually given way to rent-seeking financial monopolies and Big Tech companies which are posing enormous barriers to production in western economies. Even our Gross Domestic Product (GDP) data can no longer be trusted, as the economist Michael Hudson explains: “Bank penalties and fees are now counted toward GDP rather than as an economic cost. GDP accounting is now a travesty that credits finance as producing a product rather than zero-sum transfer payments.”5 Our system cannot solve this problem because our system is the problem—and no quantity of Trumpian neofascist rebellions will change the fundamental contours of the western economy. Only a revolution can do that.
Post-revolutionary China, on the other hand, has seen enough to avoid these pitfalls. Financial capital currently plays an important role allocating resources toward innovation and productivity but, left to its own devices, it will devolve into debt predation, real estate speculation and inflating unproductive assets like stocks and cryptocurrencies. According to Marxian economics, money has a price but only production can create objective value. Banks in China are state owned and directed to fulfill the five year plans that build their country. Salaries and compensation for financial service managers have been reigned in and regulatory frameworks ensure that Chinese hedge funds invest in domestic products like DeepSeek rather than asset prices. It’s been said that the West can never produce like China and this is why.
Projects from state owned enterprises, clockwise from left: Raffles City, Huajiang Grand Canyon Bridge, China Energy Engineering Corporation. The public sector can build according to use rather than profit.
Marx and Engels supported free trade and industrial competition as a means of provoking technological revolution and working class development.6 China has used both instruments to build out world-leading high speed rail, renewable energy infrastructure, electric vehicles, high tech skyscrapers and record-setting bridges. Unlike capitalist countries that over-promise and under-deliver on almosteverything, China’s public sector consistently beats its own targets. They have a working class of 772 million people, of which 500 million are considered middle class. But the contradictions created by technological change, fluctuations in value and financially ruinous competition often spur crises, and these crises promote changes to economic relations and political orientation.
Socialism with Chinese Characteristics
For China, crises precede expansion of the public sector. Banking, land and resources are already under socialized ownership. Further, there are 362,000 state owned enterprises in the country comprising 60% of total market capitalization. With many people forecasting future economic turbulence, economists Minqi Li and Lingyi Wei see a China that is well-positioned to:
Either take over the remaining capitalist enterprises or invest in new socially owned enterprises to replace the bankrupt capitalist enterprises. Eventually, this could pave the way for social control over economic surplus, to be used for the free development of all individuals in manners to be determined by democratic decisions.7
Throughout their work, Marx and Engels stressed the need to not simply oppose capitalism but to go beyond it.8 Neither the workers’ state of the Soviet Union nor the welfare states of western nations have actualized this concept.9 By prioritizing production over distribution, China is doing exactly what Marx outlined in his Contribution to the Critique of Political Economy and Engels in his Principles of Communism: driving the forces of capitalist production to their technological limit before crossing the barricade that capitalist relations inevitably impose.
The colossal solar plants, hydro dams and wind farms that China is constructing are not just for show. They are the building blocks of a fully-automated robotic economy powered by the Sun. Under social ownership, an advanced economy of this type makes class distinctions extinct. It makes economic democracy viable, free development of individuals possible and the Communist Party unnecessary—as Mao envisioned.10
In America, plantation slavery funded industrial capitalism and industrial capitalism, in turn, made slavery obsolete. In China, capitalism is funding a high-tech socialist economy and socialism, in turn, will make capitalism obsolete. Marx wrote in The Poverty of Philosophy: “The hand-mill gives you society with the feudal lord; the steam-mill, society with the industrial capitalist.”11 China finishes the thought: “And the socially-owned robot gives you society without class.”
Karl Marx, “The Future Results of British Rule in India,” Dispatches for the New York Tribune: Selected Journalism of Karl Marx (Penguin, 2007), 125. ↩︎
Karl Marx, “Preface” of A Contribution to the Critique of Political Economy: “At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or—this merely expresses the same thing in legal terms—with the property relations within the framework of which they have operated hitherto.” ↩︎
Michael Hudson, “Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover,” in Review of Radical Political Economics, Vol. 53, No. 4: 12. ↩︎
Karl Marx, Capital Volume II (Penguin, 1992): 250. ↩︎
Minqi Li and Lingyi Wei, “Surplus Absorption, Secular Stagnation & the Transition to Socialism in China,” in Monthly Review Vol. 76, No. 5: 25. ↩︎
Erich Fromm, “Marx’s Concept of Socialism” in Marx’s Concept of Man: “Marx, the man who every year read all the works of Aeschylus and Shakespeare, who brought to life in himself the greatest works of human thought, would never have dreamt that his idea of socialism could be interpreted as having as its aim the well-fed and well-clad “welfare” or “workers’” state. ↩︎
Mao Zedong, On Contradiction and On Practice (Midnight Press, 2023): 47. “To build the Communist Party is in fact to prepare the conditions to eliminate the party and all parties.” ↩︎
To be honest, I did not pay much attention to China until I learned that a number of my colleagues were using DeepSeek and preferred it to the American ChatGPT. Since then I have become aware of their advanced renewable megaprojects, electric vehicles and 6G technology, the Great Green Wall, their leading high speed rail network and epic skylines and bridges.
After the recent military parade, a number of people have told me that the advanced equipment on display may not be real, that the West still leads in terms of military power and computer chips. But considering the other ways they have left Western nations behind, I am not so sure. Are they the new superpower? Is China for real?
Thanks,
Bruce.
Dear Bruce,
You’ve answered half of your own question: if the existing civilian technology and visible infrastructure in China is more advanced than anywhere else, why wouldn’t their military be the most advanced as well?
There are obvious safety reasons explaining why live explosives aren’t going to be marched down the centre of Beijing. But given China’s successful track record deploying technology, it is likely that the weapons on display are already operational or will soon be in production. There were many potential customers in the audience, after all.
China is definitely for real. The question about superpower status is difficult to answer and I’ll refer you to a previous article about where things currently stand between Chinese and American supremacy. Questions of that sort are often only apparent in hindsight. Ten years from now, we may look back at the 2025 China Victory Day Parade as a decisive turning point in world history.
The doubters will claim that the power of these weapons is unknowable until they are tested in battle, as if rooting for war. If Xi Jinping has learned any lessons from the great Chinese military strategist Sun Tzu, let’s hope it was this: “The skillful leader subdues the enemy troops without any fighting.”1 With a U.S. shift away from Asia on the horizon, Xi’s parade may have done the trick.
