The Rise of China and the Capitalist World Order

Li Xing

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9780754679134
• eBook ISBN:
  9781317017615
• Topic: Economics
• Subtopic: Globalisation
• Index: Economics

China's rise within global society and politics has brought it into the spotlight - for social scientists, the country's long and dramatic transformations in the twentieth and twenty-first centuries make it an ideal case study for research on political and economic development and social changes. China's size, integration and dynamism are impacting on the functioning of the capitalist world system. This book offers a non-conventional analysis of the possible outcomes from China's transformation and provides a dialectical understanding of the complexities and underlying dynamics brought about by the rise of modern-day China. The theoretical and methodological approaches will prove useful for students and researchers of development studies and international relations.

Chapter 1
The Eastern Wind Will Not Subside: China’s Long March Back to the Future?

Jacques Hersh

Introduction

The intention of this chapter is to discuss the developing relationship between China and the Western core nations within the context of the capitalist world system. The level of analysis as well as the methodology involved can thus be seen as belonging to the body of social sciences encapsulated by interdisciplinary International Political Economy. In other words, the emphasis on economic history serves to situate the past relationship between “advanced” China and “backward” Europe before the advent of Western capitalism. The search for an explanation to the Chinese societal downturn from the 19th century on to its modern ascendancy cannot be achieved without taking into account the binary historical process of the modernization of Western capitalism as well as what is perceived as its present relative decline vis-à-vis the dynamism of emerging economies as exemplified by China’s growth.

To comprehend the significance of the contemporary processes the world is witnessing, the analysis includes a discussion of modernization theory which aims at explaining the development trajectory of Western capitalism as the universal model to be emulated. Seen in this light, the level of analysis in relation to China’s ascendancy is its integration into the world economy and the resulting structural consequences this may have for the viability of capitalism and the hierarchical order.

Situating the Historical Experience

Since the demise of “real-existing socialism” the evolution of East Asia has become a primary concern of social sciences and political strategists. Indeed, if there ever were a need to disprove the thesis of “The End of History” (Fukuyama, 1989) a look to this part of the world would be sufficient to convince us that we may be witnessing the beginning of a new historical phase. In other words, a shift of the centre of economic vitality from West to East or as implied by some a return to normalcy in world history (Frank, 1998).

Much thought was devoted in the 1970s and 1980s to the shape of the world capitalist system as a result of the emergence of Japan as a leading economic powerhouse together with the East Asian Newly Industrialized Countries. Regardless of the fact that the Japanese economy is only second to the United States, this challenge was successfully contained by US economic and financial strategy (Hersh, 1993). In recent years, however, the question of East Asia’s future position in the world has become of even greater concern for Western strategists.

The reason for this revolves around the impact China is having/will have on the international economic and political system. Because of that nation’s size, population and potential this awareness is not only a product of the 20th and 21st century. In the beginning of the 1800s, Napoleon supposedly warned about the potential consequences of a dynamic China: “China is a sickly sleeping giant. But when she wakes the world will tremble” (quoted in Safire, 1993). He is also said to have advised that the best course for the advanced countries would be to “let China sleep”.

The 19th century stereotype portrayal of the Chinese socio-economic formation as being in a state of dormancy had the implication of depicting it as anaemic in comparison to the dynamism of the Western capitalist powers. This assumption can be ascribed to the “Orientalism” of Western thought in its appraisal of non-European pre-capitalist societies. But as a matter of fact, prior to the industrial revolution in England and before the “eclipse” of China in the 19th century, Adam Smith had considered China as being ahead of Europe along the path of a similar trajectory. According to Andre Gunder Frank:

Smith … was the last major (Western) social theorists to appreciate that Europe was a Johnny-come-lately in the development of the wealth of nations: “China is a much richer country than any part of Europe”, Smith remarked in 1776. Smith did not anticipate any change in this comparison and showed no awareness that he was writing at the beginning of what has come to be called the “industrial revolution. (Frank, 1998: 13; see also Arrighi, 2007: 25-26)

It is often forgotten that leading figures of European Enlightenment such as Leibniz, Voltaire, and Quesnay, among others found inspiration in many aspects of Chinese society and political organization. They “looked to China for moral instruction, guidance in institutional development, and supporting evidence for their advocacy of causes such as benevolent absolutism, meritocracy, and an agriculturally based national economy” (Adas, 1989: 79; quoted in Arrighi, 2007: 3). The historical achievements and advances of the Chinese socio-economic formation are essential for understanding the relationship between East and West. In addition such a comprehension contributes also to a critical questioning of the Eurocentric interpretation of the so-called European miracle. Prior to the emergence of the Western world’s domination, Asia was central in providing for the largest reproduction of people. Early in the contact between Europe and Asia, “sixteenth-century Europeans had considered Japan and China to be the great hopes of the future”, according to the seminal work Asia in the Making of Europe by Donald Lach and Edwin van Kley (Lach and van Kley, 1965, in Frank, 1998: 11). The Chinese state – under successive dynasties – developed an administrative system of governance that facilitated the growth of economic resources and population. Before most governments in the world had even conceived of policies for preventing distress and death caused by famines, the Chinese had implemented the strategies of procurement, storage, and distribution of grain in order to protect the population against the eventual ravages of famine through “ever-normal granaries”.

During the Qing era, the state was proactively involved through an investment programme in agricultural improvement, irrigation and waterborne food transportation (Bagchi, 2005: 141, 142). Chinese urban centres were more developed than corresponding contemporary European cities. The wealth of major cities and the level of craftsmanship amazed many first-time European travellers to China. In the sphere of scientific discoveries and application to production processes, China was at the forefront of modernization. The three inventions, which according to Francis Bacon changed the world: paper, gunpowder, and the magnetic compass, were of Chinese origin. After a long time lag they spread to Europe and other parts of the world (Needham et al., 1954). Before the growth of machine-based manufacturies in Britain, China and India were the two most important suppliers of manufactured goods to the world. “In 1750 China produced 32.8 percent of world manufactures, India (meaning the subcontinent of South Asia) produced 24.5 percent, and today’s developed countries together produced 27.0 percent” (Simmons, 1985: 593-622, in Bagchi, op. cit.: 135). Silk manufacturing from the cocoons to the major silk-working machinery was pioneered by Chinese producers and the country was a major supplier to the world. For more than 2,000 years, the so-called “silk road” had become a major long-distance trade route for export of Chinese textiles and porcelain wares to Europe and North Africa (Ibid.: 137). From the 16th century onwards the Chinese economy became more closely connected to the formation of a global economy through the activities of Portuguese and Spanish merchants with the extension of ocean trade routes.

The accumulation process that resulted from the economic relations established on the world scale after the incorporation of the Americas and Africa was essential to the evolution of European capitalism. Without access to the resources from these continents and the products from Asia, Western capitalist development might have followed a different trajectory. Contrary to the conventional interpretation, industrial capitalism was not an exclusively home-grown phenomenon. From different perspectives, both Adam Smith and Karl Marx recognized the importance of this historical period for the development of the world. In his magnum opus, The Wealth of Nations, written in 1776, Smith writes that: “The discovery of America, and that of the passage to the East Indies by the Cape of Good Hope, are the two greatest events recorded in the history of mankind” (Smith, 1937: 557, in Frank, 1998: 13).

Opposite his present-day followers, Adam Smith was somewhat dubious concerning the benefits or misfortunes these great events would have for human kind (Smith, 1937: 189 in Frank 13). Writing after the impact of the industrial revolution had revealed itself, Karl Marx and Friedrich Engels were more explicit about the importance of the geographical extension of economic relations to other continents for the establishment of an international division of labour for the development of capitalism:

The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonization of America, trade with the colonies, the increase in the means of exchange and in commodities generally, gave to commerce, to navigation, to industry, an impulse never before known, and thereby to the revolutionary element in the tottering feudal society, a rapid development. … Modern industry has established the world-market, for which the discovery of America paved the way. (Marx and Engels, 1958: 35)

Contrary to the Eurocentric interpretation of history, it cannot be emphasized sufficiently that until late in the game Europe was the inferior partner in the relationship to Asia. The trade balance was clearly in favour of the Chinese with the Europeans covering the deficit with the silver mined in the Americas. As Bagchi puts it: “… for two centuries after the discovery of the Americas, the Europeans were unable to compete on equal terms with Asian manufactures” (Bagchi, op.cit.: 142). Consequently, neither Spain nor Portugal, the two powers that gained most immediately from the exploitation of the Amerindians, was able to impinge on the power of the big Asian or Eurasian empires of Ottoman Turkey, China, India, or Persia (Ibid.).

Modern Western social sciences have had difficulties coming to terms with the comparative development of Europe in relation to these non-European entities. It has been difficult for mainstream sciences to admit that the level of development in extra-European regions of the world might earlier have been more advanced than that of the Western socio-economic formations. According to this position, the reasons for the present disparity between developed and underdeveloped nations are to be found in the inherent superiority of European capacities to innovate in relation to the other cultural spheres. In this way of thinking, the “exceptionality” of European civilization is attributed to the internal dynamism of European culture. In recent years, however, the Eurocentric interpretation of world economic history has been challenged by scholars whose aim is to explain the origins and sequencing in time and space of the disparity between Europe and the rest of the world in the context of the divergent paths of development. It has been documented that as far as societal development is concerned, the two most populous entities of the world, India and China, were doing just as well as the best-performing regions of Europe down to the middle of the 18th century. With regard to commercialization, craft production and agricultural growth, China, India and Japan were not behind contemporary major European countries. With the exceptions of England and the Netherlands, there was little to distinguish most of early modern Europe from major states in Asia during the 16th to 18th centuries with regard to economic organization, property rights, or civil society – traits that according to Eurocentric historians had marked Europe out for its “manifest destiny” (Bagchi, 2005: 174; Goldstone, 1998: 249-84).

There cannot be any doubt that the trajectory of Western Europe would have been different had it not been for the discovery of America and the subjugation of its population and that of Africa. In economic terms emerging Europe had been in a catching-up position especially vis-à-vis the Asian centres. The establishment of plantations of sugarcane, cotton and tobacco in the Americas with slave labour imported from Africa was critical for the development of European capitalism. The flow of precious metals extracted from mines in America was essential in settling Western Europe’s accounts with Oriental countries. In the words of Bagchi: “… the colonial edge was less a product of initial or technological superiority in civil production than of advantages won on the battlefield” (Bagchi, ibid.: 175). According to this perspective, the industrial revolution in Britain had been contingent on the conquest of India and the reduction of China to a subsidiary position relative to the Western powers.

What is being argued here is that the late development of Western Europe to a large extent came about through the tribute of extra-European regions which contributed to the capital accumulation process of the continent and served to redress the trade imbalances with Asia.

Conceptualization of Capitalist Development

Interpreting the process of “uneven development” is what differentiates the three schools of international political economy that have confronted each other in explication of the development of capitalism in the past few centuries. While liberalism assumes that market relations – with as little state intervention as possible – lead to a harmonious world economy, economic nationalism recognizes that late development is mainly a political project of industrialization which protects the national economy against the interests of the first developers’ control of the world market. The dependency school, which is an offshoot of Marxism – with its focus on the creation and division of the surplus under capitalism – and Leninism – with its inclusion of the concept of imperialism, brings in the exploitation of other societies in the conceptualization of capitalism.1

Regardless of the fact that Marxism was the most antisystemic approach in the analysis of capitalism, it nevertheless has had difficulties in coming to terms with the Eurocentric perspective. The dilemma is reflected in the fundamental assumption depicting capitalism as the most accomplished socio-economic formation in the history of mankind. In the pamphlet Manifesto of the Communist Party, which was published in London in 1848, K. Marx and F. Engels offered a problematic understanding of the functioning of European capitalism’s mode of expansion to other regions of the world:

The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image. (Marx and Engels, 1958: 38)

The supposition that the competitive superiority of capitalist production is the explanation behind the European miracle became axiomatic for Euro-Marxism. This notwithstanding, the fact is that Marx and Engels had actually displayed awareness that the success of capitalism was much more than the functioning of purely economic mechanisms. They recognized that the use of military power had been the midwife to the breaking down of opposition to the expansion of European capitalism. In an article published in 1853 in the New York Daily Tribune, Marx touches upon the Opium Wars whereby Britain broke down Chinese resistance to the importation of opium from British India in order to do away with the trade deficit with China. The wars left Chinese society in ruins. He remarks that:

Up to 1830, the balance of trade being continually in favour of the Chinese, there existed an uninterrupted importation of silver from India, Britain and the United States into China. Since 1833, and especially since 1840, the export of silver from China to India has become almost exhausting for the Celestial Empire. (Marx, n.d: 16)

The narrative utilized by neo-Marxism, especially in the Dependency School version, to describe the ascent of Europe to its world hegemonic position, includes the tribute that non-European social formations paid to the process. In this respect the conquest of the Americas by the Spaniards and Portuguese, following the “discovery” of that part of the world, led to the establishment of plantations of sugarcane, cotton and tobacco utilizing African slave labour. This together with the flow of precious metals, such as silver, extracted from mines in America became crucial in settling Western Europe’s trade deficit with Asia. The control of this flow of wealth became a source of contention between the leading contenders for hegemony. The accumulation of capital resulting from this type of triangular trading pattern was critical for the societal transition to European capitalism and its later evolution. In the words of Bagchi: “The role of colonialism did not cease with the end of the phase of merchant capital in Europe. The final conquest of India and the beginning of the reduction of China to a subsidiary of European powers played important roles in facilitating the progress of the industrial revolution in Britain” (Bagchi, op. cit.: 175). It can consequently be argued that the other side of the coin of European industrial capitalism was the strangulation of the industrialization process in Asia. By protecting its own textile industries from cotton goods of Indian origin and denying these exports access to the European continent, British trade policy sheltered the country’s cotton mills and enabling them to develop without having to face this competition. Duties on imports of textiles were prohibitive until the end of the 18th century. Not only that, but under British rule Indian domestic producers suffered reverse discrimination: they were made to pay higher duties on Indian exports than on English imports. “India was turned into the biggest consumer of products of the British cotton mills, which for a long time remained the industry employing the largest number of British workers” (Bagch, ibid.: 176).

China was imposed a similar fate after the First Opium War (1839-1842). At the turn of the 19th century, the West imported Chinese silks, porcelain, and tea. China who had a diversified economy was in contrast not seeking to import Western goods. The Western nations – foremost Britain – were, as mentioned above, eager to redress the balance of payment deficit through the export of silver. By forcing China to import Indian opium the outflow of silver was reversed and the British commercial expansion came to depend on this trading relation: “Though the First Opium War was launched to defeat Chinese attempts to ban the opium trade, the British also wanted to ‘open’ China to Western trade and commerce on terms acceptable to them” (Nee and Peck, 1975: 5). The international division of labour accompanying the expansion and extension of European capitalism was the result of the pattern of trade established during this period. The colonies of European powers became, besides their strategic value, important consumers for the products of the industrialization process in the North Atlantic realm. “Thus colonies played a critical part in the maturin...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures and Tables
• Notes on Contributors
• Introduction: The Rise of China and the Capitalist World Order: The “Four-China” Nexus
• 1 The Eastern Wind Will Not Subside: China’s Long March Back to the Future?
• 2 The Myths and Realities of the Rising Powers: Is China a Threat to the Existing World Order?
• 3 China and the International Aid System: Transformation or Cooptation?
• 4 The Diaspora and the Rise of Nations: China and Africa Compared
• 5 Peak Energy and the Limits to Economic Growth: China and the World
• 6 The Transformation of China: The Next between Internalities and Externalities
• 7 Chinese Globalization: State Strategies and their Societal Anchoring
• 8 Why is the Chinese Communist Party Able to Sustain its Hegemony in Eras of Great Transformation?
• Index