China's Role in the Post 2008 Economy

It is interesting to note that as the US economy contracted violently, the Chinese economy spurted upward at an amazing 10.1 percent for 2009. Initial estimates put the expansion at 6 percent. Initially China experienced 10 million unemployed at the outset of the collapse in late 2008. By and large, these unemployed have been re-absorbed in the workforce due to the expansion. In the US, unemployment increased by a similar amount, raising the level of US unemployment to 10 to 20 percent depending on who you source. But why did China's economy mushroom when the rest of the world shrank? The clue lies in the way that the capitalist economy works.

In order to increase profits, costs must be cut in every way possible. This is done by means of increasing mechanization, cutting wages, eliminating unions, avoiding environmental costs, neglecting safety and health issues and increasing productivity. In the US the costs are high, so prices on commodities must rise in order to obtain that elusive profit. But rising prices make for less sales and shrinking profits. This is especially true if the capitalist is also relying on foreign sales where incomes is much lower and people look to lower priced commodities. It is a classic contradiction.

The international bourgeoisie have organized the world and distorted workers' states such as China with their economic influence. Under the Chinese revolution led by Mao Tse Dung, the workers' state was born deformed. Though the people gained things like universal medical care, housing, education and jobs, the deformity of the bureaucratic body politic was open to making deals with capital. This was made plain what Mao Tse Dung shook hands with Richard Nixon. This single act dealt a death blow to Maoist organizations around the world and Maoism suffered a near death blow. However, deformed as the Chinese revolution was, the gains were made by the proletariat. Under most of China, the benefits of the revolution have been maintained to the present day. For many Chinese, the quality of life has generally improved, despite huge changes all over China that uprooted tens of millions.

When Britain gave up the colonial rule of Hong Kong in 1999, the Chinese bureaucrats took over, but left capitalist interests intact. This is how capitalism got a foothold in China and spread its influence into the mainland and economy. Chinese bureaucrats did not end the planned economy so much as using the capitalist world to fuel an expanding economy. Chinese interests in growth to improve their own economy meant that the fast road to development was taken, sacrificing safety, health and the environment. This was crucial for US investment as the US economy and capitalists were saddled with the costs of safety, high wages, unions and environmental restrictions.

The best way to shift from high costs to low costs to boost profit is to rig the economy at home to collapse so that production forces could be shifted elsewhere to manufacture commodities at a much lower cost. The checks and balances placed in the US economy after the great depression were dismantled under Ronald Reagan's presidency under the real voodoo economics. Taxes were lowered while costs of government went up. Controls on investment were deregulated allowing for increasing market speculation. Banking that was strained to the limit was given the power of fractional reserve banking. A hint of what the future would bring was revealed in the Clinton Whitewater land scandal. The stage was set for the planned collapse of the economy.

The current crisis has its roots as far back as 2004, but the real state of things became apparent in 2006 and matured in September 2008. From then to now, workers were laid off in the millions. Even though the auto union was forced to enforce huge wage cuts, the big auto producers went bankrupt and needed bailout money from the Obama government in 2009. Despite this, most auto workers lost their jobs anyway, and this fueled the ongoing mortgage foreclosure crisis and accumulating "toxic assets". Meanwhile, jobs moved offshore to China's capitalist sector that had no environmental protection laws, low wages, no regulation of safety and health standards in manufacture and a huge, cheap workforce that was unemployed in the initial stages of the world economic collapse triggered by the US when the hyperinflated real estate bubble burst.

When jobs disappeared in the US, Canada and Europe; they re-emerged in China and also in India. News shipped out from China from two sources tells us that there are no environmental or safety or health standards. Wages for making automobiles are $100 per month on average in China versus up to $90 per hour in the US. What a saving for world capitalism! In addition, China developed an appetite for US, Canadian and European electronic garbage and recycled metals. These were shipped over by the freighter full to be prossessed with no environmental regulations or safety considerations. Thus the green awareness of the developed world was bought by the lack of environmental controls in China. Jobs exploded by way of opportunity in China while they evaporated in the rest of the world. The jobs were mainly in secretive recycling facilities in mainland China that were funneled through Hong Kong. Costs were slashed, even though there was a vast shipping distance involved. Finished product was shipped back, but with the high unemployment, there were fewer sales. But in China, the juggernaut economy picked up the slack were Chinese people got very car and electronic commodity hungry.

In all of this the environment was ignored despite public relations. Out of China is emerging a phenomena of brown clouds and global dimming. It is coming out of India too, but no where near the volume that emerges from China. China is also a number one customer for US coal and much of their power is produced using coal. The world has received a double whammy in the form of cheap labor and escalating pollution. All of it was planned; not accidental as thought. The swiftness in which this all unfolded, indicates a well planned event. There are too many parallel and simultaneous developments.

What is the future for Europe, the US, Canada, Australia and Japan? If we are to take the past response in Canada and the US as a measure, there are work camps for the millions of unemployed with deplorable working conditions, shabby housing, poor and limited food, and low, low pay. These conditions were written about in John Steinbeck's Grapes of Wrath and are also told by those two people who still survive in Canada who made the “on to Ottawa trek” in 1935 and were met with violent suppression. The future is also indicated by what has happened in the past in Peenumunde and Mittlewerk if the current trend continues, but within a poisoned planet. Many hope that this is not so, but if nothing is done and we continue to live in fantasy land, then these things must unfold according to the formula of profit making.