Ricardo Molero - Simarro Third Seminar of the Fourth International on the Economic Crisis

1. Karl Polanyi in Beijing: Chinese Growth Model Reorientation and China’s Changing Role in the World Economy Ricardo Molero-Simarro Third Seminar of the Fourth International on the Economic Crisis International Institute for Research and Education Amsterdam, 15th February 2014

2. Introduction:¿Adam Smith or Karl Polanyi in Beijing? • Giovanni Arrighi (2007): Adam Smith in Beijing: → U.S.-China long-run global balance of power • Katz (2011): “¿Imperialismo contra economía de mercado?” [“Imperalism versus market economy?”]: • Karl Polanyi (1944): The Great Transformation: → The self-protection of society against market self-regulation • China: to avoid social instability by the “externalization” of internal contradictions → Changing role in World Economy

3. 1. The Chinese Growth Model (1978-2007)2. Growth Model Reorientation (2008-2013)3. China’s Changing Role in the World Economy

4. 1. The Chinese Growth Model (1978-2007)

5. 1. The Chinese Growth Model:Growth and Inequality

6. 1. The Chinese Growth Model:Agricultural prices and rural-urban migration

7. 1. The Chinese Growth Model:Internal Migration and Productivity-Wages Gap

8. 1. The Chinese Growth Model:The World Market Conquest

9. 1. The Chinese Growth Model:The Symbiotic Relation with the U.S.

10. 1. The Chinese Growth Model:Wages, Consumption and Exports

11. 1. The Chinese Growth Model:Exports and Profits

12. 1. The Chinese Growth Model:Profits, Investment and Growth Rates

13. 1. TheChineseGrowthModel:Profits and Top Incomes

14. 1. The Chinese Growth Model:Wage Share and Income Inequality

15. 1. The Chinese Growth Model: Contradictions • Lin (2006): The contradictions of Maoism among socialism, developmentalism and nationalism • Hart-Landsberg and Burkett (2004): The contradictions of the Chinese economic reform: the increasing power of the market in the economy • Hui (2004): The contradictions of Tiananmen: political system continuity and radical mercantilization of the economy • Hung (2008): The contradictions of the relationship with the U.S.: the rhethoric of conflict and the “America’s head servant” • The contradictions of the growth model reorientation process: redistributive policies and “decisive” role of the market

16. 2. Growth Model Reorientation (2008-2013)

17. 2. Growth Model Reorientation:Strategy • ScientificDevelopment (kexuefazhan: 科学发展) concept (HuJintao y WenJiabao, 2003-2012): • Reorientationtowardsinnovation, highvalue-added industrial and servicesectors • Reduction of dependencyonexports and investment • Boost of householdsconsumption. • Harmonious Society (hexieshehui: 和谐社会) concept: • Sharing of the fruits of growth (urban-rural and interprovincial inequalities reduction) • Social stability • Stimulus plan against the World Crisis:

18. 2. Growth Model Reorientation:Measures

19. 2. Growth Model Reorientation:Outcomes

20. 2. Growth Model Reorientation:Limits • Overaccumulation of capital (Gaulard, 2011) • Potential profitability crisis (industrial profitability rate decreased in the first half of 2012) • Housing and infrastucture bubbles (increasing housing prices and too many infrastucture projects) • Increasing local public debt default risk • Non-performing loans in State (major) and local banks

21. 2. Growth Model Reorientation:The Struggle for Power inside China • “New signs of hope” (Au and Bai, 2012): • Peasants struggles against corrupt land expropriations • Factory strikes • Village and cities protests against ecological degradation • Exporter bourgeoisie complaints of labour force shortages and lack of application of the Labour contract law • Intelectual debates: Chongqing vs. Guangdong models (Leonard, 2012)

22. 2. Growth Model Reorientation:The Struggle for Power inside the CCP • Partyfactions: CommunistYouth League (Populist) coalition vs Shanghai (Elitist) coalition • Struggleforpower in the XVIII NationalCongress of the CCP (November 2012): Unequaldistribution of power and preeminence of theScientificDevelopment concept • TheThirdPlenumSession of the XVIII Central Committee (November 2013): • “Decisive” role of themarket (furtherprivatization) • Establishment of a “modern” financialsystem (interestratesliberalization, financialderegulation, renminbiconvertibility) • Creation of a “statesecuritycommittee” • Innovation of systemstoprevent social disputes • “Red line” forecologicalprotection

23. 3. China’s Changing Role in the World Economy

24. 3. China’s Changing Role in the World EconomyThe externalization of internal conflicts • Growing pressure on raw materials providers in Africa and South American (land acquisitions and free-trade agreements) • Low-wages industries offshoring to West and Central China and to other Asian countries (Bangladesh, Myanmar, Vietnam…) • Rising high-tech competition with major economies (United States, European Union, Japan)

25. 3. China’s Changing Role in the World EconomyThe Expanding Relevance of China’s Finance • Increasingconvertibility of therenminbi (through Hong Kong), bilateral currency swaps and the new role of China in financialmarkets • European states public debt purchases and the new role of China in Europe’s politics • Thedebtor-creditorrelationship and prospectsforthe China-U.S. conflict: • Subordinationtothe US (Chimerica) orreorientationtowards South-South trade (Hung) • Inabilityto control internalconflict and externalpacification (Arrighi) • Interimperialistconflict (Katz) • Demise of thecapitalistWorldeconomy (Li, 2008)