Encyclopedia of Anti-Revisionism On-Line

Michael Lee

Changes in China’s socialist system


First Published: Unity, Vol. 8, No. 2, February 15-28, 1985.
Transcription, Editing and Markup: Paul Saba
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(This report is based upon a recent visit to China by the author, who has visited China several times since 1971.)

Major reforms over the last several years have brought a new look to China’s socialist system. The success of the changes has far-reaching implications for how socialism will be constructed in China and may even influence socialist construction elsewhere.

China is currently enjoying a six-year period of widely appreciated stability and prosperity. Gone is the uneasiness of the turbulent years of the Cultural Revolution (1966-76) and its aftermath when the Communist Party made self-criticisms of the long upheaval. During that time people expressed serious doubts about the socialist system. The economy had stagnated as had enthusiasm for work.

But I did not see these during my recent visit. The economic reforms begun in 1978 have changed the situation by raising the standard of living and renewing interest in politics and the Communist Party of China (CPC).

Contrary to press reports in the U.S., these reforms have not ushered in capitalism, but are strengthening socialism. Wishful-thinking reporting by the Western bourgeois press is responsible for much of the misunderstanding of the reforms, but so are misconceptions and dogmatic views about socialism within the left.

Reforming socialism

The economic reforms are based upon the view that socialism can prove itself a superior system only if it brings about a far better livelihood for the masses of people than capitalism. The criterion of looking at the results of policies is guiding the re-examination of many policies previously taken as unchallenged assumptions and the formulation of new ones.

The economic reforms aim to end what the Chinese believe has been over-centralization in economic planning, the stifling of individual and local creativity and initiative, inattention to economic laws (such as that the price of commodities should closely reflect their actual value), and inadequate practice of the socialist principle “to each according to one’s work” (people should be paid more for more and better work).

At the heart of the new view is a belief that China had not developed the productive forces and people’s standard of living as rapidly as possible.

New economic policies

The new policies include:
replacing collective farming with a family “responsibility system” where peasants contract with their commune for a parcel of land. After fulfilling a quota for the state, the family has the freedom to decide what to grow and how to dispose their products;
encouraging sideline entrepreneurial activities in the countryside, such as animal husbandry or small-scale manufacturing. The owners of these projects usually provide all the labor, although they may hire a few others;
granting more autonomy to industrial enterprises to determine their own operations; and
ending central government planning over some products and allowing the market to play a greater role in influencing production.

Results of the economic reforms

The results of the reforms are impressive: in the countryside, peasant family income is up over 200% compared to 1978. Forty percent of the families have constructed new houses or rebuilt their old ones. One can see evidence of this everywhere in the countryside.

Consumption of pork is up over 60%, along with a general shift of the peasant diet away from grain toward more eggs, meat and vegetables. Fifty percent of China’s peasants now have televisions, when just a few years ago there were almost none in the countryside. This is almost all because of the great increase in agricultural production spurred by the incentives given to the peasants.

In the cities, real income for workers and office staff has climbed 43% since 1978. The stores are brimming with new and better made consumer goods. Rationing of pork, cotton, sugar and eggs has ended.

The amount of state-financed housing constructed between 1978 and 1982 was equivalent to that built during the 19 years between 1958 and 1977. From 1978 to 1982, bicycle production went up 180%, sewing machines up 160%, wrist watches up 140% and televisions up over 1,000%.

The increased attention to the light and consumer products industries is the reason for these improvements. More state funds are being diverted into these areas, and the greater autonomy for the enterprises has made them more responsive to the market.

No one can question that the standard of living of the average Chinese peasant and worker has been measurably improved in the six years since 1978. The quality and quantity of some consumer items have already passed that of the Soviet Union. Shoppers from the families of Soviet diplomatic personnel in China have been astonished at the variety and stylishness of goods available in China’s department stores.

Socialism versus capitalism

But is capitalism being reintroduced into China?

Some of the reforms have included utilizing capitalism to help the country. The aim, however, has been to improve socialism, not replace it.

Take for example foreign investment. China believes it has something to gain in permitting the limited exploitation of its natural and human resources. This, they admit, is part of the cost China must pay to learn about modern production techniques.

As yet the scale of foreign investment is small and Chinese officials scoff at the idea that major detrimental consequences will result. Production from foreign investment in Shanghai last year amounted to less than 0.1% of its total product. The Chinese point out that their country is immense, state power is firmly held by the Chinese working people and investments are directed toward serving specific needs of China. Most of the production from foreign investments are for export and not for the domestic market, and carefully negotiated contracts spell out all the terms of the investment, including the wages and working conditions of workers.

Lessening central government planning and ending collective farming are more complicated reforms. These are breaking with some of the old assumptions about socialist economics, but which, I believe, cannot be said to be capitalist.

In the U.S. our understanding of socialism has been strongly influenced by the belief that socialism is equivalent to highly centralized state planning and control. The policies of the Soviet Union and until recently China (though to a lesser degree) were based on this view. It has been commonly held that the more planning was centralized, the more socialist it was.

Practice of socialism

But the actual experience of socialism has been more complex. Lenin’s writings during the early 1920’s reflect a great deal of flexibility and practicality in building the new socialist society.

Lenin recognized the usefulness of controlled foreign investment, the need to practice the principle “to each according to one’s work,” the danger of bureaucracy, and the necessity to observe economic laws. The Soviet Union under Stalin stressed the centralization of state control of the economy. Significant advances in the economy were made during the Stalin years, especially in heavy industry. In many ways the hostile international environment faced by the young Soviet republic compelled it to centralize the economy and emphasize the development of heavy industry.

However, from the beginning of People’s China in 1949, there were strong tendencies away from the Soviet approach – Mao’s writings on socialist construction express many concerns about rigidly following the Soviet experience. In China decisions about agriculture were never centralized to the degree they were in the Soviet Union. Even in industry, a number of collectively owned enterprises remained outside of strict government planning. The Cultural Revolution accelerated the accumulation of power in central organs, although many people had originally hoped that the upheaval would weaken bureaucracy.

In Eastern Europe, several countries have gradually shifted away from the Soviet approach. Yugoslavia, for instance, has given industrial enterprises considerable autonomy in decision making. The favorable results of these experiments have served to highlight the continuing bureaucratic problems in the Soviet Union.

Therefore, the reforms in China form a part of a historical current concerned with making socialism less bureaucratic, more efficient, and more responsive to the people. While retaining essential economic features of socialism – the Chinese maintain these are public ownership of the main means of production, the abolition of the system of exploitation, and pay according to work – the Chinese believe that policies regarding how much or what type of planning, pricing, marketing, etc. can vary considerably depending upon what can best serve to improve the living conditions of the people and develop the economy.

We must remember, too, that the reforms are occurring within a basically planned economy. Sixty vital commodities will continue to be under direct state direction. Other sectors of the economy will be regulated by taxation and guidance from central authorities. And most importantly, the fundamental aim of production remains the improvement of the livelihood of the people.

The means of production, including land in the countryside, remain public property and cannot be transferred by individuals. Investment to expand production is carried out mainly by the state. And the rights of workers will be maintained: if a state-owned plant must be closed because of unprofitability, the workers will continue to receive full salaries and benefits until they have new employment.

In addition, worker democratic control over factories is expanding: the directors and other administrators of more and more factories are elected by the workers, who also supervise management through elected workers’ congresses. Labor is not being transformed into a commodity.

Furthermore, allowing market forces to play a greater role in production and prices to more accurately reflect value and supply and demand cannot be said to be “capitalist methods.” These policies are as much capitalist under a socialist system as nationalization of the post office or the railroads is a “socialist” method under capitalism.

The essential fact is that power is in the hands of the working people of China, which makes it possible for them to make major adjustments in their economy based on the overall needs of society. Such a thing is impossible under capitalism where decisions are made based on the interests of a small capitalist minority of society.

More enthusiasm for socialism

Overall, the economic changes have not weakened support for socialism but have revitalized it. There is a new respect for the party and its leadership. The people have seen in practice that the party can criticize its shortcomings and make necessary changes.

Over 90% of the young workers and students in many work places and schools have joined the Young Communist League. Many young people are once, again expressing interest in the communist ideals of the CPC and want to join the party.

Throughout the country, attention is being placed on the ideological and cultural side of socialism, not merely its material aspect. Great stress is being placed on elevating the ethics, values and behavior of the people. This is evident in the call to build a modern socialist civilization and remains the basic incentive for the people, which is not being eclipsed by the material incentive. The party has emphasized the necessity of its political and ideological role in leading socialist construction.

This is not to say that the recent reforms have not created new problems. They have. There are reports of selfish acquisitiveness caused by the new rural policies. The influx of tourists and foreign investment are powerful sources of bourgeois influence. And some of the new entrepreneurs would like to hire more workers and become exploiters.

But as yet these have not become major problems, and Chinese officials say they are sensitive to these dangers. They believe they are taking measures to ensure that non-socialist tendencies will not become rampant. These include conducting education among the people, severely punishing economic crimes, and strengthening party discipline and outlook through the current rectification campaign.

The future

China emphasizes that many of the current reforms are still experimental, and more practice is necessary before definite conclusions can be drawn. Undoubtedly, there will be more twists and turns and new problems and adjustments.

The Chinese believe that the construction of socialism is a dynamic process, especially where so much attention must be paid to the development of the productive forces from a relatively backward base. China stresses the need to be creative in socialist construction and to summarize 35 years of practice based on the dictum: “practice is the criterion of truth.”

Socialism in China is taking a particular form due to the conditions of that country. What socialism will look like in the future in the U.S. will be determined by our own circumstances. There are basic principles of socialism which are broadly applicable, but socialist policies will take a variety of. forms since conditions vary considerably from country to country.

The U.S., the most advanced capitalist country in the world, will produce a very different type of socialism than what we are seeing in China. The need to apply Marxism-Leninism creatively requires a willingness to look at things for what they are and to apply the lessons of practice.

China is trying to take this creative attitude and is seeking her own path to socialism. We should wish her well.