Charles Brown
Detroit
"China's answer to international economic crisis " PWW Nov. 21, 1998
by Victor Perlo
China's methods for dealing with the economic crisis that continues to spread its carnage around the world are the opposite of those imposed by the I M F -at U.S. dictat - on Asia, Africa, Russia and Latin America.
Instead of "conditionalities" that gurarantee profits for western TNC's, China has launched a massive program of reconstruction of the infrastructure and has sustained a GDP growth rate of more than 7 %.
I am the first to admit that China has made concessions to imperialism in order to obtain capital and technology - and that this brings dangers of capitalist counter-revolution. But I believe the Chinese leadership is consciously striving to ensure development of a socialist society in a very complicated international situation that includes strong U.S. pressure against China.
China's success has caused sections of U.S. finance capital to sit up and take notice - to face, as Stephen S. Roach of Morgan Stanley recently wrote in a company publication: "The unarguable fact is that China has defied conventional wisdom for most of the past year."
China's success shows the superiority of socialism to capitalism, despite contradictions in the Chinese version of socialism. I conclude with a lengthy excerpt from Roach's article.
" In the eyes of the Western press, China can do nothing right... The view is widespread that China is about to join the dominoes that have already fallen in the Asian Crisis. My advice: Don't believe what you read.
"I have been to China three times in 1998...the unarguable fact is that China has defied conventional wisdom for most of the past year. Its economy is reaccelerating... The 7.6 % gain in {the third quarter} was not a fluke, in my view ... officials I met suggested growth will improve further.
"To compensate for the crisis-induced shortfall in export demand, China has embarked on an aggressive public sector-infrastructure stimulus... The combination of monetary easing.. and an accelerated pace of housing reform underscores China's efforts to boost domestic demand.
"The Chinese have some of the best currency traders in the world {who} manage $140 billion in foreign currency. The Chinese fully expect another round of yen-related pressures... but that's where China's strong currency defenses - a closed capital account, a large current accounts surplus, vast currency reserves and limited foreign debt - will come back into play... Fear not... an imminent devaluation ... is not in the cards.
"With the rest of the world moving rapidly in reverse, China's progress is all the more astonishing. That's what the new China is all about.
"{A} largely unappreciated source of Chinese economic growth [are] the township and village enterprises (TVEs), the modern-day equivalent of the old Chinese collectives. The TVEs are among the most flexible and technologically advanced of China's producers... In 1997, TVEs accounted for 30 percent of China's industrial output, well in excess of the 26 percent share of state-owned enterprises (SOEs)." (Chinese leaders regard TVEs and SOEs as different forms of socialsit enterprise.)
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