China is not a socialist society

In March 2017, in the National People’s Congress, on behalf of the State Council, Chinese premier Li Keqiang presented the report by playing the same old tune: “we should follow the leadership of the Party, uphold the Party’s fundamental political guidelines, and keep to the path of socialism with Chinese characteristics; we should rely on the inexhaustible creativity of the people, unit as one, and forge ahead. It is our firm belief that by doing this, we will make great new achievements in China’s development.” “We should keep in mind the fact that China remains in the primary stage of socialism and pursues a people-focused development philosophy.”

In fact, after Deng Xiaoping adopted the policy of reform and open-door, China has marched towards the capitalist market economy. With the economic growth, nonpublic sector has developed prosperously and even takes more advantages. Drawing from a news report of Wen Wei Po, dated 12 March 2016, which quoted from Nanfang Daily, dated 11 March, the author points out that nowadays nonpublic sector accounts for over 90% of the market, produces over 60% of GDP, takes over 80% of employment, owns over 90% of fixed assets, and makes over 67% of overseas direct investment (please see October Review no. 240). All these show that the public sector is no longer the core of Chinese economy, or “the main part” claimed by the CCP. It has already been replaced by the nonpublic sector.

Socialism means a society based on public ownership of means of production. At the moment, China is a society largely based on private ownership. The primary stage of socialism is one in which everybody has a job, from each according to his ability, and to each according to his contribution. In the higher stage, each according to his ability, to each according to his need. China is far from either.

The report admitted that the unemployment rate was 4.02% at the end of 2016, which was the lowest rate for over several years. Last year, there was over 80% of employment rate. In other words, there was still nearly 20% of unemployment rate. In 2015, the official statistics showed that the number of the rural poor was 70 million. In 2016, the number reduced by 1.24 million. Until 2020, China is expected to completely accomplish poverty alleviation. The report claimed that there were “deception, falsification, and the manipulation of numbers in poverty elimination work”. So, the official number of the poverty elimination is not reliable. All these show that China is not socialist society in the Marxist sense.

Nonpublic sector takes more advantages

The Report proposed that in future, the government would further support the nonpublic sector and even declared that, “we will do more to energize the nonpublic sector. We will thoroughly implement the policies and measures for supporting the development of the nonpublic sector. We will work actively to develop a new relationship between government and business. We will encourage nonpublic enterprises to participate in State-Owned Enterprise (SOE) reforms. We must ensure equal rights, equal opportunities, and fair rules, and further expand market access to the nonpublic sector. All industries and sectors for which entry is not explicitly prohibited by laws or regulations should be open to different types of market entities; all industries and sectors that are open to overseas investment should be open to Chinese private capital; and all unjustified activities that impede fair market competition should be stopped.”

Moreover, the Report stated that “we will improve the property rights protection system. Protecting property rights means protecting labor, protecting invention and innovation, and protecting and developing productive forces. We will work faster to improve the property rights protection system and protect in accordance with law the property rights of economic entities under all forms of ownership and the property rights of citizens. We will encourage people to start businesses, make innovations, and create wealth, and we will inspire and protect entrepreneurship, and ensure that entrepreneurs can run their businesses and make investments with peace of mind. Activities that infringe on the property rights of businesses and citizens must be investigated and dealt with severely; anything that has been done wrong must be corrected.”

While reviewing the governmental achievements, “with an 8.5-percent increase in profits, industrial enterprises reversed the previous year’s negative growth of 2.3 percent. Energy consumption per unit of GDP fell by 5 percent. Economic performance improved markedly in quality and returns”, it stated that “the trial replacement of business tax with value added tax (VAT) was extended to cover all sectors, slashing the tax burden of businesses for the year by over 570 billion yuan and reducing tax burdens in every sector”, including nonpublic sector which enjoyed both the polices of proactive fiscal and tax reduction.

Many problems and challenges ahead

However, the Report addressed many difficulties, “yet we must not lose sight of the many problems and challenges China faces in pursuing economic and social development. The internal forces driving economic growth need to be strengthened. Overcapacity poses a serious challenge in some industries. Some enterprises face difficulties in their production and operations. Economic prospects for different regions are divergent. Fiscal imbalance is becoming great. And potential economic and financial risks cannot be overlooked. Environmental pollution remains grave, and in particular, some areas are frequently hit by heavy smog. We need to further strengthen our steps to combat pollution. There are also many problems causing public concern in housing, education, healthcare, elderly care, food and drug safety, and income distribution. It is distressing that there were some major accidents in the coal mining, construction, and transportation sectors.

There is still room for improvement in government performance. Some reform policies and measures have not been fully implemented. Excess fees and charges being levied on businesses and difficulties facing individuals who want to access government services remain standout problems. We still see problems of laws and regulations being enforced in a nonstandard, unfair, or uncivil way. A small number of government employees are lazy and neglectful of their duties or shirk responsibility. Corruption often occurs in some sectors.”

The above is a modest description, by saying “some” and “a small number”. It has not yet discussed about bureaucratic authority and official corruption. Yet, it mentioned that China was beset with difficulties at home and abroad, “2016 was an unusual year in our country’s development. China was confronted with an external environment in which the world saw the lowest economic and trade growth in seven years, growing volatility in global financial markets, and sudden and frequent regional and global challenges. Domestically, China faced multiple difficulties: major structural problems, prominent risks and dangers, and mounting downward pressure on the economy. China found itself in a complex environment as reform entered a critical stage, profound changes took place affecting interests, and factors impacting social stability grew.”

This complex environment is due to the capitalist market economy promoted by the CCP. The more China opens its door to foreign countries, the more affected by them as the interrelations are frequent. In the domestic aspect, private property is getting strengthened, leading to problems such as class polarization, a widening gap of the rich and poor, serious class struggle, and serious conflicts between the government and people. This was exactly what the Report called “factors impacting social stability grew”.

In order to boast about President Xi Jinping’s great leadership, the Report mentioned his name ten times. It indeed deployed a tactic of personal cult. Yet, he has to bear the weight of responsibility of causing and worsening the above complicated dilemma.

15/04/2017