China - a third way between communism and capitalism ?

Posted in Russia | 14-Jan-08 | Author: Norman Levine

The 17th Congress of the Chinese Communist Party: "Socialism with Chinese characteristics"
The 17th Congress of the Chinese Communist Party: "Socialism with Chinese characteristics"

China is a society seeking self-definition. It repudiated Stalinism, but still identifies itself as socialist. The 17th Congress of the Chinese Communist Party (CPC) took place in Beijing from Oct. 15th until Oct. 21st 2007, and characterized the country as practicing “market socialism”, or as developing toward “socialism with Chinese characteristic.” On the level of ideology Marxism is still proclaimed as the official guiding theory, but Marxism is the trio of Marx-Lenin-Mao meaning that Stalin is excluded. Marxism and Leninism correspond with each other, Mao is an ambiguous legacy, but Stalinist Sovietism was a debasement of Marxism.

China is endeavoring to finds a historical self, to discover a uniquely Chinese model and ideology of socialism. In order to understand the paradigm they seek to create it is necessary to compare them to Lenin’s New Economic Policy of 1921. Even though the Chinese negate Stalinism they still embrace Lenin, and a brief comparative history of China in 2008 with Russia in 1921 reveals the particular features of the dilemma of contemporary China.

My remarks here only concern the issue of China’s modernization. The question of its political structure is also complex and requires a separate treatment.


Deng Xiaoping, in a 1979 interview with an American journalist, outlined his view of the future development of the country:

“It is wrong to maintain that a market economy exists only in capitalist society and that there is only ’capitalist’ market economy. Why can’t we develop a market economy under socialism? Developing a market economy does not mean practicing capitalism. While maintaining a planned economy as the mainstay of our economic system we are also introducing a market economy.”

Deng proposed that the primary reason for introducing “market socialism” was to speed the growth of the forces of production. While preserving state control of the highest tiers of the economy, oil, steel, coal, transportation, Deng permitted the marketization of the lower levels of the economic order.

Twenty-nine years after Deng set China on this new economic course the country is rent by both geographic and class divisions. In the East, the great cities that hug the oceanic coastline, Dalien, Beijing, Shanghai, Canton, Hong Kong, are booming. In the West, the agrarian areas that border on Islamic Central Asia, are impoverished. The agrarian poverty of the West unleashed a vast internal migration as desperate farmers moved out of their rural habitats and swelled the urban proletariat in the East.

I was invited to lecture in the Department of Philosophy at Beijing University during the month of October, 2007. One of my hosts in Beijing was Prof. Yang Jinhai, the Secretary-General of the Compilation and Translation Bureau, a branch of the Communist Party of China (CPC) that decides which foreign books are to be translated in Chinese. Prof. Yang gave me two invaluable printed sources, a published copy of the Party’s Secretary-General Hu Jintao’s speech to the 17th Party Congress, and a book entitled, “Introduction to the Scientific Development Outlook on Development.” which is equivalent to the official handbook of the CPC.

“Hu Jintao proposed many reforms in economic, political and cultural areas in his speech at the 17th party congress,” Prof. Yang said.

Economically, the first priority is the reduction of the social inequality that exploded under “market socialism.” In his speech to the 17th Congress Secretary-General Hu set the goal to quadruple per capita income by the year 2020. A quadrupling of per capita income would not eliminate class divisions, but insure a more just, more equitable, distribution of the expanding assets of the Chinese economic miracle.

Hu also promised additional anti-poverty programs. Currently, Chinese families must pay tuition to attend elementary, junior and senior high schools, and this system placed an onerous burden on the less fortunate in society, widening the gap between the entrepreneurial and working classes. Beginning in 2008 all tuition fees will be abolished and all children will have equal access to the entire educational system.

With a population of 1.3 billion people Chinese citizens are currently required to pay for their own medical care, and this is a particularly severe financial strain for the urban and rural poor. Middle class Chinese can pay for private health insurance, but not the urban and rural proletariat. Secretary-General Hu promised a new medical system which will start shortly, and the government will pay 70% of all medical costs, a program that approximates free universal health care.

The issue of environmental protection was addressed in Secretary-General Hu’s speech, and a goal was set to reduce pollution by 10% by the year 2010.

“Since Deng Xiaoping initiated the program of ‘market socialism’ the industrial capacity of China has grown enormously, “: Prof. Yang continued. “Last year our economy grew at a rate of 10%. Even though China now suffers from horrible class divisions our priority must be in growing our industrial capacity because without heightened productivity China will never be able to achieve a fair and equitable distribution of its manufactured products to its 1.3 billion people. Modernization must advance.”


In my conversations with Prof. Yang and other high government officials the old Stalinist vocabulary has vanished. No one ever speaks the Soviet language of the end of classes, the end of private property, the attainment of social egalitarianism, or the abolition of the state. Even though the official designation of the governing party is Communist, and even though Red flags with hammer and sickle are displayed throughout the city, Secretary-General Hu’s speech never mentioned that the goal of China was communism, but stressed the China was in the “primary stage of socialism.” Stalinist slogans are eradicated and the Chinese invented a new vocabulary to describe their historical stage of evolution. Two phrases were used continuously at the 17th Congress, and the new pronunciations speak of a “harmonious society,” and “socialism with Chinese characteristics.” The word “harmonious” was used not only to describe the future cooperative social relations between the various social strata, but also to describe the relations between nation-states in the international arena.

Chinese Secretary General Hu Jintao with Condoleeza Rice, U.S. Secretary of State. "Released from any foreign threats China will most…
Chinese Secretary General Hu Jintao with Condoleeza Rice, U.S. Secretary of State. "Released from any foreign threats China will most likely continue its programm of capitilization and liberalization"
“Politically,” Prof. Yang advised me, “the reform program of Hu is also aimed at increasing inter-party democracy. China will not have a multi-party system, we will retain the predominance of the CPC, but the processes within the Communist party will be made more democratic.”

The practice of term limits is now a part of the Chinese constitution. The Stalinist-Maoist idea of a life-long secretary-general is extinct, and the Chinese party secretary-general is limited to ten years, or two elections. The same practice is now standard throughout the Chinese civil service, as a civil servant is either promoted because of his excellent performance or they are replaced. This practice eliminates the possibility that an official can construct a bureaucratic empire and ensures the influx of new ideas and talents.

Democratic practices now exist on the village level as the peasantry can vote for their local officials. This democratic procedure is not national as only the Central Committee of the CPC can select the Secretary-General, but village inter-party democracy does allow for greater popular participation in the political process.

The transparency of the political process is also championed. Secretary-General Hu gave his speech to the entire Central Committee and this created the possibility for discussion and disagreement. One thousand foreign journalists were allowed access to the congress. An English language TV station, CCTV-9, telecast nightly reports on the congress.

“In terms of the cultural domain China has embarked upon a new “openness” to America and Western Europe,”Prof. Yang continued. “Economic globalization is now a fact of life, an internationalization of ideas is also in process, and Chinese scholars must be participants in this global discourse.”

An example of China’s entrance into the global interchange of ideas is the new publishing program of the Compilation and Translation Bureau of the Central Committee of the Communist Party, which will encourage the reconstruction of the traditional ideology of the government. First, the translation into Chinese of the original texts of Marx. During the period of the Stalinist Soviet many original manuscripts of Marx that were held at the Institute for Marxism-Leninism in Moscow were repressed. Since the demise of the Stalinist Soviet an international project, the MARX-ENGELS GESAMTAUSGABE (MEGA) was initiated to publish every manuscript ever written by Marx, and one of the centers of this project is Berlin, Germany. The Chinese Compilation and Translation Bureau is a member of this planetary project, and is translating every volume issues by the MEGA institution. Second, based on the MEGA the process of the de-Stalinization of Marxism is advancing. Not only will Chinese scholars enjoy uncensored access to all the manuscripts of Marx and be able to make their own judgements, but US and European philosophers, historians, and political economists are being invited to China in ever incresasing numbers to disseminate western ideas of economics and politics, and my own invitation was an expression of this new discursive freedom. Based upon this evolving dialogue with the West the former ideological monopoly of Stalinism has crumbled, and China, independently, will formulate a Chinese interpretation of Marx. Third, the Compilation and Translation Bureau is in the process of re-writing all the textbooks in the country’s K through 12 schools. The Bureau hopes to complete this massive task in 10 years, which will entail the rewriting of 150 textbooks, and the aim is to de-Kremlinize the nations educational system . Fourth, the development of programs facilitating the exchange of students and faculty between China and the West is accelerating. Over 5,000 PH.D. candidates are presently completing their research on the US, or Europe. Additionally, many US and European universities founded overseas campuses in Beijing, Shanghai and Canton. In terms of faculty development the Bureau underwrites collaborative research projects and conference participation with their counterparts in the Occidental world. Fifth, the Bureau is translating many more Western books than previously. This does not mean that China is the beneficiary of a free press, but it does mean that increased amounts of Western ideas are percolating through Chinese culture.

“The modernization process has conquered the world and we must modernize,” Prof. Yang concluded. “But there is a difference between modernization and westernization. We are “open” to western thought, but this does not mean we will be converted to western values and life styles.


Even though the 17th Congress affirmed the policies of Deng Xiaoping monolithic support for his program does not exist among the Chinese political class. Prof. Yi Jiexiong, Director of the Institute for Social Development at Beijing University described the five clashing schools of interpretation regarding the policy of “market socialism.”

The first school of interpretation is the Centrist camp, because they agree with the current direction of Chinese development and pay allegiance to Deng’s program of “market socialism.” The Centrist Camp is the controlling majority within the CPC.

Economically the Centrist Camp maintains that China is in an multi-generational process of “social transformation.” Even though China is in the “primary stage of socialism” the “transition period” to mature socialism will take many decades.

Politically, the Centrist Camp wishes to preserve the leadership of the CPC. They uphold the Four Cardinal principles : keeping the socialist road, upholding the peoples democratic dictatorship , the leadership of the CPC, and the ideology of Marxism-Leninism and Mao Tze Tung Thought. Retaining the “peoples democratic dictatorship”, or the dominance of the CPC, is vital because only the leadership of the CPC can ensure the increase in industrial capacity which is the substructure of mature socialism.

The Left Opposition is the second camp, and this group feels that “market socialism” means the restoration of capitalism. The are dissenters, a voice of opposition to the Orthodox Camp, claiming that this camp has renounced socialism, and led the retrogression into pre-Mao Tze Tung capitalism.

The chief spokesman of the Left Opposition is Deng Liqun, who was formerly a secretary of Mao. Deng Liqun published a book, “Twelve Years: The History I Witnessed,” and this book called attention to the class polarization and economic inequality blossoming under “market socialism,” and called the current situation a betrayal of the ideals of the 1949 Chinese Revolution. Comprador capitalism exists in China and not the “primary stage of socialism.’

The Right Opposition is the third grouping of interpretation, and they agree with the Left Opposition that comprador capitalism rules in China, but whereas the Left Opposition denounces this development the Right Opposition affirmatively applauds this evolution. Although it sees the flaws of capitalism the Right Opposition believes that capitalism is the most advanced system ever actualized in human society.

This group also advocates full political democratization of the country. The campaign for a free press, freedom of publication, and a multi-party system, and hope for the implantation of the US and European democratic institutions in China. They seek to end the political monopoly of the CPC.

The Right Opposition is China’s version of traditional Trans-Atlantic Liberalism.

The phrase Scandinavian Model accurately defines the feature of the fourth camp. Persuaded by the examples of social democracy in the Northern European countries this association wants China to imitate the socio-political structures of the Scandinavian Model. They are adherents of a mixed economy, and a multi-party system.

Representatives of the Scandinavian Model are Li Shenzhi and Li Rui, who were also former secretaries of Mao. Another protagonist for the Northern European model is Zhao Ziyang, who is now under house arrest, but who managed to have a book published in Hong Kong called “Talks With Zhao Ziyang.”

Mostly composed of scholars who are immersed in the study of Marxist theories, the fifth camp can be labeled as the Orthodox. They denounce Stalinism, and have an ambivalent attitude toward Mao. They extol Mao as a revolutionary leader, as the leader who established the independence of China, an unavoidable step if China was to achieve its freedom from western colonialism. But they are critical of Mao as an economic strategist, they refute the Great Leap Forward and The Cultural Revolution perceiving them both as copies of Stalinist Five Year Plans.

"Modernization must advance"
"Modernization must advance"
Generally supportive of the Centrist ;position, defenders of “market socialism,” the Orthodox maintain that the leadership of the CPC must continue. They are convinced that China is still in a transition period, and that only the stewardship of the CPC can navigate the correct passage to mature socialism.

Immersed in the study of the classical texts of Marx, an orthodox reading of DAS KAPITAL, this group declares that Marx saw modern history as evolving in four stages: feudalism, the overthrow of feudalism by the Industrial Revolution, the triumph of capitalism and modernized productivity, to be followed by the transition to socialism. Interpreting the Marxist texts literally,

the Orthodox Camp perceives China in basically the second stage of the Marxist evolutionary paradigm, and sees the fundamental need of present day China as the increase in productive potential, and agree with the Centrists that the country is in a transitional period in the slow progression to mature socialism.

“China is negotiating a narrow path. If we fail in our transition we capitulate to capitalism. If we succeed we have established a new example for the building of socialism in all underdeveloped countries,” Prof. Yang said

The death of Stalinism does not mean the end of Marxism. China is an experiment in developing a new paradigm for Marxist development of a harmonious society.”


Due to the generous “openness” of Prof. Fan Wen I benefitted from exceptional experience shared by very few western journalists and academicians. Prof. Fan is the Deputy Director of the National School of Administration, which is the central training institute for the highest levels of the government bureaucracy. Those people who are selected to move to the top echelons of the government receive advanced training at the National School of Administration.

As a demonstration of this new curiosity, of a new willingness to learn from the West, Prof. Fan permitted me to observe one of the classes. The students in the class were Chinese officials and they diligently took notes as a Chinese professor lectured on comparative legal systems. These elite students were being informed about the legal philosophy of the US and Western Europe, and about the constitutional and judicial procedures which protected individual rights in these countries.

On the domestic level the ideal of social harmony , of cooperative class relations is used to describe the goal of Chinese development but this concept of harmony is also applied to the international domain. Prof. Fan supplied me with a two page written English summary of Chinese foreign policy, “Four Changes of China’s Diplomatic Philosophy and the Development of Sino-American Relations,” and I quote with his permission from that document:

“Since the People’s Republic of China was a founded in 1949 its diplomatic policy has undergone

a great many adjustments. In the 1950's China’s diplomatic was to fight on the side of the Soviet Union against the US; in the 1960's it was to fight against the US as well as the Soviet Union ; in the 1970's it was to fight with the US against the Soviet Union. Since the 1980's China has established the policy of ‘openness’ trying to coexist peacefully with the US and other countries.

“The changes in China’s diplomatic policy is, on the one hand, related to the international environment, and on the other to the domestic situation. In addition it is related to some changes in China’s diplomatic philosophy. According to Mao Zedong’s diplomatic philosophy the theme of the world at that time was ‘war and revolution’, and the dialectic of contradiction should be applied to the diplomatic stage. Mao’s diplomatic philosophy shows a special kind of idealism. Deng Xiaoping thought peace and development substituted for war and revolution, and his diplomatic philosophy showed a great deal of realism. Jiang Zemin, recognizing the new situation of economic globalization put forward the theory of diversity of the world’s civilizations: each civilization, especially western and eastern civilizations should foster a concept featuring mutual trust, mutual benefit, equality and coordination. Hu Jintao put forward the diplomatic philosophy of a harmonious world. In his view China should build up a harmonious society internally and a harmonious world externally.”

The policy of harmonious inter-state relations is a corollary to China’s transition to socialism. The absence of international conflict is a prerequisite for Chinese economic evolution toward socialism.

Rapid industrial growth is the priority for China, and the acceleration of industrial production can only be achieved if the globe is non-conflictual. International harmony is a pre-condition if China is to attain socialism. Like the Politburo system, the Chinese hope that the Cold Wars are also dead. In the diplomatic sphere, as well, China seeks to avoid the blunders of the Red Kremlin.


In the 19th Cent. Marx assumed that communist revolutions were most likely to occur in Western Europe, or in countries that already experienced the Industrial Revolution. This epoch of modernization would result in the increase of the productive forces, sufficient industrial output so the needs of an entire national population could be satisfied, the largest percentage of the population would be proletariat, and the peasantry, a vestige of feudalism, would be reduced to a minimum.

In the 20th Cent. Marxist revolutions were not successful in Western Europe, but in Tzarist Russia

and China. Both Russia and China, however, were pre-Industrial Revolution. At the times of their successful political revolutions neither country enjoyed increased industrial production, a proletarian revolution constituting the majority, or a peasant class moving toward extinction.

Neither the Russian Revolution of 1917 nor the Chinese Revolution of 1949 took place in a country that possessed the socio-economic conditions for the building of socialism, and eventually communism. A disjuncture separated their political upheaval from their economic mode of production.

"The goal was set to reduce pollution by 10 per cent by the year 2010"
"The goal was set to reduce pollution by 10 per cent by the year 2010"
The question facing China today is designing the proper socio-economic policies that will allow them to overcome this disjuncture. The answers contained in Secretary-General Hu Jintao’s speech to the 17th Party Congress, and in the “Introduction to the Scientific Outlook on Development ‘ is to first increase the economic productivity of the country, and the avenue to achieve this is Deng Xiaoping’s “market socialism,” and “openness.”The Industrial Revolution must be completed, and full socialism is only possible in a country with the highest productive capacities.

“Market socialism” means the employment of capitalist practices as a means of heightening productivity. It is western capitalism with “Chinese characteristics,” for while the state controls the top levels of the economy capitalistic enterprise and property will be permitted at the lower ranges of the economy. “Market socialism” is the recognition that capitalism is the fastest way to toward economic development, but that this developmental cornucopia will be supervised and contained by communist party directives and this is what Chine means by an Industrial Revolution with “Chinese characteristics.” “Openness”, the borrowing of technological expertise from the US and the European Union, is a vital transmission belt of ideas which will speed the modernization of the country.

The position of China in 2008 is directly coincident to the predicament faced by Lenin in Soviet Russia in 1921. “Market socialism” is the equivalent to Lenin’s New Economic Policy. Confronted by the destruction of the First World War, the failures of War Communism, and the devastation of the three year Civil War, Lenin recognized that socialism was impossible in Soviet Russia without the rapid capitalist development of the productive capacities of the country. The New Economic Policy had two goals: 1) the capitalization of the lower branches of the Soviet economy; 2) strengthening the class relations between the proletariat in the cities and the peasants in the countryside.

The New Economic Policy (NEP), first articulated in Lenin’s1921 speech, “The Tax in Kind,”

ended the forced expropriation of the agricultural products of the agrarian population, and replaced these compulsory appropriations with rural capitalism. In place of state expropriations the peasant was allowed to keep his property, sold the majority of his goods in the agricultural marketplace, and paid taxes, but these taxes were “in kind”, or agrarian products. Lenin adopted the NEP because he acknowledged that capitalism was the most efficient way to increase agrarian output.

Lenin defined the NEP with the following words:

“The dictatorship of the proletariat is the direction of policy by the proletariat. The proletariat, as the leading and ruling class, must be able to direct policy in a such a way as to solve the most urgent and ‘vexing’ problems. The most urgent thing at the present time is to take measures that will immediately increase the productive forces of peasant farming.”

Another intent of the NEP was to solidify the alliance between the urban proletariat and the rural farmers. During the period of War Communism, at the time of the compulsory agrarian usurpations, class divisions began to surface between workers and peasants. Through the capitalization of the countryside the NEP brought security of property, and prosperity to the peasants and this increase in the standard of living of the rural inhabitants acted to reconstitute unity between the industrial working forces and the agrarian laborers. Stalin’s First Five Year Plan brought this class reconciliation to an end.

On the question of whether capitalism was consonant with the beginnings of a socialist state Lenin gave this answer:

“Can the Soviet state and the dictatorship of the proletariat be combined with state capitalism? Are they compatible?

“Of course they are.”

Deng Xiaoping and Hu Jintao have trumpeted their agreement with Lenin.

In order to understand the socio-economic conditions of contemporary China it is necessary to draw a parallel between it and Soviet Russia under NEP. Stalin annulled the NEP, and this was one reason China removed Stalin from the pantheon of Marxism, whereas Marx, Lenin, Mao and

Deng remain in the forefront of Chinese iconography.

Only history will provide answers to China’s search for a socio-economic identity, but it will either fail or succeed in the building of socialism. Failure itself entails two possibilities: it will either collapse like the Soviet Union in 1991, or it will succumb to a full blown capitalism, and every element of socialism will be extinguished. Success means the creation of a new model for the road to socialism, the exploitation of capitalism to engineer an Industrial Revolution, followed by the transition into the development of socialism on the basis of this post-industrial society. Success may also mean the spread of this new Chinese model into the countries of Southeast Asia, such as Viet Nam


The foreign and domestic policies of a country are always interconnected. Domestic concerns are today privileged in China because the of necessity of constructing the industrial base for the transition to socialism. This domestic priority requires that Chinese foreign policy be non-aggressive and non-expansionist. China cannot afford to de-stabilize the global equilibrium because an aggravation of international tensions would compel China to move resources out of the domestic sphere into the military front. At the moment a congruence between domestic and diplomatic concerns exists.

On the diplomatic front the US and Europe have a choice between a hard or soft approach to China. A hard, or more confrontational, approach runs the risk of igniting a movement to the Right in China. Anti-Western feelings would be rekindled, Deng’s program of “openness” would be aborted, any steps toward inter-party democratization would be eradicated, and it is possible that the beginnings of the free market would be uprooted. The West could bring about the Re-Stalinization of China.

A soft tactic, the minimalization of diplomatic tensions, is a strategy that lends support to the marketization and inter-party democratization of the country. Released from any foreign policy threats China will most likely continue its program of capitalization and liberalization. One of the tensions existing in contemporary China, one of the possible options that confronts it, is whether the employment of the free market will lead to mature capitalism. A soft diplomatic game plan, by encouraging China to maintain its current transformation, introduces the possibility that it will ultimately evolve into a Western style democratic capitalism. The best way to facilitate this denouement is to carry a soft diplomatic stick.