The US has just published new data for the 2nd quarter of 2017. In order to accurately compare this data with China it is necessary to understand that the way the US and China publicise their GDP data is different.
China publicises its data as a comparison to the same quarter in the previous year - that is, China's latest 6.9% growth figure is a comparison of the 2nd quarter of 2017 with the 2md quarter of 2016. This has the advantage that it eliminates any need to estimate a seasonal adjustment - as the same period in two different years is being compared.
The US publicises its figure as the growth compared with the previous quarter annualised. The actual growth of the US economy in the 2nd quarter of 2017 compared to the 1st quarter was 0.75%, which the US publicises as 3.0% annualised growth. This method has a serious disadvantage as it depends on the seasonal adjustment being accurate - but it is widely known that the 1st quarter of each year seasonal adjustment in the US is inaccurate, and persistently produces the anomaly of very slow growth. If a comparison is made of US GDP for the 2nd quarter of 2017 with the 2nd quarter of 2016 US GDP growth year on year is actually 2.2% - as shown in the chart below.
In contrast China's economic growth in the last year of 6.9% is more than three times as fast as the US.
The US business cycle
In order to judge the real dynamics of the US economy it is useful to compare present growth with the long term average. The chart below therefore compares current US year on year growth with its long term average. It may be seen that the US growth rate in the last year of 2.2% was the same as its 20 year moving average.
However, it may also be seen that in 2016 US growth was abnormally low and below its long term average - GDP growth for the whole year was only 1.6%. Therefore purely for statistical reasons of a 'reversion to the mean' it would be expected that US growth in 2017 would accelerate somewhat from 2017.
The latest data therefore shows a normal US recovery from abnormally low growth in in 2016. The US data is therefore in line with the analysis in my earlier article
The data therefore confirms US long-term economic growth rate will remain at around 2% or slightly above.
The once in five years upcoming Congress of China’s ruling Communist Party, to be held this autumn, would in every circumstance be a major global political event. But this year’s Congress will be even more significant because it will formally consolidate Xi Jinping’s position as China’s most powerful leader since Deng Xiaoping and Mao Zedong. In official terms, Xi is already designated as the ‘core’ of China’s leadership. But this position is likely to be extended formally into the ideological and policy fields in what may be termed ‘Xi’ism’.
Two simultaneous realities, one domestic Chinese and one international, characterise ‘Xi’ism’. The conclusion which flows from their interrelation in turn clearly explains why Deng Xiaping’s dictum ‘hide brilliance, cherish obscurity’ has been modified to explaining China’s analysis to a global audience in events such as Xi Jinping’s widely reported speech to this year’s Davos World Economic Forum.
Domestically, China is in transition within five years to a self-defined criterion of ‘moderate prosperity’ and within a decade to the World Bank’s definition of a ‘high income economy’.
Internationally, although this is not yet widely recognised, following the international financial crisis advanced economies face prolonged average growth that is actually slower than after the Great Depression started in 1929.
Xi Jinping is therefore the first Chinese leader facing a simultaneous combination of China’s transition to a high-income economy with low Western growth. This combination, therefore, produces China’s new policy configuration – ‘Xi’ism’.
To read my full article at The Market Mogul please click here.
From 2000 until recently the left was in government in most Latin American countries. This left had enormous achievements to be hugely proud of. It brought about a real 'revolution in distribution'. For the first time for decades a period of growth of the Latin American economies brought huge benefits to the people of Latin America with a rise in overall living standards and radical reduction in poverty.
But confronted with the sharp downturn in commodity prices from 2014 onwards weaknesses of the Latin American left's policies were shown. In most countries it had not made a 'revolution in production' - that is the development of an economic policy that could cope with the downturn of commodity prices. As a result the left lost power in key Latin American countries such as Argentina and Brazil.
One of the key reasons for this weakness was that the Latin American left had not paid sufficient attention to studying the lessons of China - a country which had produced over 30 years of the fastest economic growth in the world. The following article analyses the lessons of China for the left in Latin America - but the same key points apply in all developing countries
The article is a shortened version of my chapter 'Lessons of China's economic development for Latin America/Lições do desenvolvimento econômico da China para a América Latina' in the book Perspectivas Asiáticas published in Brazil.
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Latin America in the period led by left-wing governments made a fundamental ‘revolution in distribution’ to the enormous benefit of the continent’s people. As the World Bank analysed in 2013: ‘For the first time ever, a decade of strong economic growth within the region saw employment increase and wage inequality drop, contributing to an unprecedented reduction in poverty and an increase in prosperity for all levels of society... average real incomes in Latin America have… risen by more than 25% since the turn of the millennium. And with the lowest wages increasing considerably faster than the regional average, it has been the poorest 40% who have benefitted the most.’
From 1999-2012, 31 million people in Latin America were lifted out of the World Bank’s international definition of extreme poverty of $1.90 daily expenditure in internationally comparable terms (parity purchasing powers at 2011 prices). In the same period 52 million were lifted out of World Bank defined poverty of daily $3.10 expenditure measured in the same units.
The basis of this tremendous social progress was accelerated economic growth in contrast to the economic catastrophe produced in the late 20th century by neo-liberal policies.
Until 1993 average per capita GDP in developing Latin American economies remained below 1981 levels. By 1998 annual average per capita GDP growth was still only 0.9% – using a five-year average to avoid the influence of short term fluctuations.
Only after Chavez was elected Venezuela’s President in 1998, followed by other left wing Latin American leaders, did economic growth seriously accelerate. By 2007 annual average per capita GDP growth in Latin America reached 2.8%, again taking a five-year average, with faster growth in key countries including Venezuela’s 5.7% and Argentina’s 7.7%. The left wing governments ‘revolution in distribution’ ensured the benefits of this economic growth was shared by Latin America’s population.
But unfortunately recent economic setbacks indicate that this ‘revolution in distribution’ was not yet matched by an equivalent ‘revolution in production’ – an ability to maintain strong positive economic growth in the face of negative world economic trends.
Due to the consequences of such economic slowdowns right wing forces won Argentina’s recent presidential election, succeeded in a de facto coup d'etat to remove the President of Brazil, and imposed other setbacks. This is particularly serious as such right wing forces present themselves as ‘centrist’ for propaganda purposes but in reality their economic programmes represent a shift towards neo-liberalism – polices which have produced economic disaster not only in Latin America but elsewhere. Failure to maintain substantial economic growth in adverse global circumstances therefore led to highly undesirable setbacks.
I am based in China but follow Latin America closely and have travelled there numerous times including twice for conferences with President Chavez personally. From this experience I believe it is crucial Latin America’s left closely studies China’s economy – not in the sense that China’s model can be mechanically copied, but in the sense that key economic processes operate in it which are equally applicable to Latin America.
China successfully made a ‘revolution in production.’ For nearly four decades China’s economy grew annually at over 8%, taking it from one of the world’s poorest countries to the threshold of a ‘high income economy’ by international criteria. This was the largest ‘revolution in production’ in human history. Even after the international financial crisis produced global economic slowdown, China in 2016 achieved 6.7% growth.
Contrary to US myth, China’s growth did not benefit chiefly the rich but ordinary people. China lifted 853 million people from World Bank defined poverty. In 2015 the average inflation adjusted real disposable income of China’s population rose by 7.4%. This is the type of ‘revolution in production’ Latin America needs.
The differences between Latin America and the ‘China model’ are clear. Modern statistical methods, officially adopted by the UN and OECD, show that fixed investment accounts for over half GDP growth. China’s high investment level explained its rapid growth – in 2014 China’s fixed investment was 44% of GDP. Latin America’s far lower investment level makes it impossible to achieve rapid growth and maintain this in adverse global circumstances - Argentina’s fixed investment level was 17% of GDP, Brazil’s 20%, Venezuela’s 22% - Ecuador, however, had a decisively higher investment level at 28% of GDP. Taking into account capital depreciation the contrast is greater.
Net savings, the finance available for additional investment, is 32% of China’s Gross National Income compared to 7% in Argentina and 5% in Brazil. Some countries, Bolivia and Ecuador, have achieved levels of 15% but this is still below China’s level. With such low levels of fixed investment rapid growth and anti-cyclical stimulus packages are impossible.
The reason for China’s rapid investment growth is clear. China has both a private and a state sector but it is not a ‘mixed economy’ in a Western sense. In Western economies the private sector is dominant, in China there is a ‘dominant position of public ownership’ to use the official formula. In Western terminology China’s model can also be expressed in Keynes’ concepts: ‘the duty of ordering the current volume of investment cannot safely be left in private hands’, there should be ‘a socially controlled rate of investment,’ requiring ‘a somewhat comprehensive socialisation of investment.’
The ‘China model’ did not eliminate the private sector but made state investment the economy’s driving force - with the private sector also benefitting from the resulting growth. It is China’s ability to have a state sector which does not administer the economy but is sufficiently large to maintain and control the economy’s investment level which explains China’s success. It is this model of an economy, which does not eliminate the private sector but is driven by high levels of state investment, that explains China’s rapid growth and differentiates its model from that of most of Latin America.
For economic success, study of China’s ‘revolution in production’ should supplement the ‘revolution in distribution’ of which the Latin American left is so justly proud.
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This article was originally published in January 2016 by Telesur. It has been slightly updated to refer to events since then but there has been no need to change the bulk of the article or its analysis.
Deng Xiaoping is famous for the saying 'it doesn't matter whether a cat is black or white provided it catches mice.' As I am an unashamed Dengite in economic theory the equivalent of this is that it is perfectly possible to understand China's socialist economy in terms of either Western or Marxist economic theory - an analysis in terms of both is given on this website at 'Deng Xiaoping and John Maynard Keynes'.
This reflects the fact that economics studies a material reality and to accurately factually analyse it is the most important issue. For this reason most articles on this website, and others which I write, don't bother to quote any economist they just study the facts - that is they don't bother to discuss whether the cat is black or white, they just focus on catching mice.
But posts on this website have created some discussion among readers of a socialist viewpoint who believe the myth that China's is a capitalist economy. This is the misunderstanding that constantly leads Western analysts to make fundamental mistakes regarding China's economic dynamics - a typical example of those errors, regularly updated, are collected together on this website at 'Wrong Analyses of China - Listed by Author and Date'.
This error arises among those of such a socialist viewpoint because they have a definition of socialism deriving from Stalin rather than Marx - as will be shown below. To clarify the issues for them this article is therefore a brief outline of the key foundations of China's economic theories and why they are entirely in line with Marx. Those who prefer to use Western categories can analyse China's socialist economy in those terms - as outlined in 'Deng Xiaoping and John Maynard Keynes' - and not bother to read this article. Those who prefer just to have accurate economic analyses, without being overly concerned with what framework they are put forward in, can ignore whether the cat is black or white and just study China's economy.
China's economic theory
Deng Xiaoping as a Communist naturally explicitly formulated China’s economic policy in Marxist terms - China’s economic reform policies were seen as the integration of Marxism with the specific conditions in China. More precisely Deng stated: ‘We were victorious in the Chinese revolution precisely because we applied the universal principles of Marxism-Leninism to our own realities.’ (Deng, 28 August 1985) Consequently: ‘Our principle is that we should integrate Marxism with Chinese practice and blaze a path of our own. That is what we call building socialism with Chinese characteristics.’ (Deng, 21 August 1985)
Authors, including (Hsu, 1991), have contended that Deng’s economic policies were not in accord with those of Marx. However while China’s economic policies clearly differed from those of the USSR after the introduction of the First Five Year Plan in 1929, which introduced comprehensive planning and essentially total state ownership, it is clear that China’s economic policies were in line with those indicated by Marx. Whether people wish to formulate Chinese economic policy in Western or Marxist terms may be left to them. What is most crucial is not the colour of the cat but whether it catches mice – that is, the practical policy conclusions drawn. This appendix therefore briefly shows that Deng’s concepts in launching China’s economic reform in in 1978 corresponded to Marx’s.
The primary stage of socialism
Regarding China’s economic reform policies Deng noted, as stated in Marxist terms, that China was in the socialist and not the (higher) communist stage of development. Large scale development of the productive forces/output was the prerequisite before China could make the transition to a communist society: ‘A Communist society is one in which there is no exploitation of man by man, there is great material abundance, and the principle of from each according to their ability, to each according to his needs is applied. It is impossible to apply that principle without overwhelming material wealth. In order to realise communism, we have to accomplish the tasks set in the socialist stage. They are legion, but the fundamental one is to develop the productive forces.’ (Deng, 28 August 1985)
More precisely, in a characterisation maintained to the present, China was in the ‘primary stage’ of socialism, which was fundamental in defining policy: ‘‘The Thirteenth National Party Congress will explain what stage China is in: the primary stage of socialism. Socialism itself is the first stage of communism, and here in China we are still in the primary stage of socialism – that is, the underdeveloped stage. In everything we do we must proceed from this reality, and all planning must be consistent with it.’ (Deng, 29 August 1987)
The fundamental characterisations by Deng have been maintained to the present – thus for example in July 2011 President Hu Jintao stressed that ‘China is still in the primary stage of socialism and will remain so for a long time to come’ (Xinhua, 2011), while speaking to the UN premier Wen Jiabao noted ‘Taken as a whole, China is still in the primary stage of socialism’ (Xinhua, 2010). The conclusion flowing from this as noted by Hsu, was that: ‘From this perspective, a serious error in the past was the leftist belief that China could skip the primary stage and practice full socialism immediately.’ (Hsu, 1991, p. 11)
The conclusion of such a contrast between a primary socialist stage of development and the principle of a communist society (which, as noted by Deng above, was regulated by ‘from each according to their ability to each according to each according to his needs’) was that in the present 'socialist' period the principle was ‘ to each according to their work’: ‘We must adhere to this socialist principle which calls for distribution according to the quantity and quality of an individual’s work.’ (Deng, 28 March 1978)
In Marxist theory, outlined by Marx in the opening chapter of Capital (Marx, 1867), economic distribution according to work/labour is the fundamental principle of commodity production – and a commodity necessarily implies a market. In this socialist period a market would therefore exist – hence the eventual Chinese terminology of a ‘socialist market economy.’ As presented by Deng Xiaoping and his successors above such Chinese analysis is highly compressed but clearly in line with Marx himself.
It is clear Marx envisaged that the transition from capitalism to communism would be a prolonged one, noting in The Communist Manifesto: ‘The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible.’ (Marx & Engels, 1848, p. 504)
The ‘by degree’ may noted – Marx therefore clearly envisaged a period during which state owned property and private property would exist. China’s system, after Deng, of simultaneous existence of sectors of state and private ownership is therefore clearly more in line with Marx’s conceptualisation than Stalin’s introduction ‘all at once’ of essentially 100 per cent state ownership in 1929.
Regarding Deng’s formulations on communist society being regulated by ‘to each according to their need’ versus the primary stage of socialism regulated by ‘each according to their work’ Marx noted in the Critique of the Gotha Programme of the post-capitalist transition to a communist society: ‘What we are dealing with here is a communist society, not as it has developed on its own foundations, but on the contrary, just as it emerges from capitalist society, which is thus in every respect, economically, morally, and intellectually, still stamped with the birth-marks of the old society from whose womb it emerges.’ (Marx, 1875, p. 85)
In such a transition Marx outlined payment in society, and distribution of products and services, necessarily had to be 'according to work' even within the state owned sector of the economy:‘ Accordingly, the individual producer receives back from society - after the deductions have been made - exactly what he gives to it. What he has given to it is his individual quantum of labour. For example, the social working day consists of the sum of the individual hours of work; the individual labour time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labour for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labour which he has given to society in one form, he receives back in another.
‘Here obviously the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values…. as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labour in one form is exchanged for an equal amount of labour in another form.
‘Hence, equal right here is still in principle - bourgeois right… The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour.’ (Marx, 1875, p. 86)
In such a society inequality would necessarily still exist: ‘one… is superior to another physically or mentally and so supplies more labour in the same time, or can labour for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labour... it tacitly recognises the unequal individual endowment and thus the productive capacities of the workers as natural privileges. It is, therefore, a right of inequality in its content like every right. Right by its very nature can consist only as the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable by an equal standard only insofar as they are made subject to an equal criterion, are taken from a certain side only, for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Besides, one worker is married, another not; one has more children than another, etc. etc.. Thus, given an equal amount of work done, and hence an equal share in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right would have to be unequal rather than equal.’ (Marx, 1875, pp. 86-87)
Marx considered only after a prolonged transition would payment according to work be replaced with the ultimately desired goal, distribution of products according to members of society’s needs.
‘Right can never be higher than the economic structure of society and its cultural development which this determines.
‘In a higher phase of communist society… after the productive forces have also increased with the all-around development of the individual, and all the springs of common wealth flow more abundantly - only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his abilities, to each according to his needs!’ (Marx, 1875, p. 87)
It is therefore clear that post-Deng policies in China were more in line with Marx’s prescriptions than post-1929 Stalin policies in the USSR. Given the essentially 100 per cent state ownership of industry in China in 1978 'Zhuada Fangxiao' (keep the large, let go the small) – maintaining the large enterprises within the state sector and releasing the small ones to the non-state sector – together with the creation of a new private sector created an economic structure clearly more in line with that envisaged by Marx than the essentially 100 per cent state ownership in the USSR after 1929.
Deng’s insistence on the formula that in the transitional period reward would be ‘according to work’ and not ‘according to need’ was clearly in line with Marx’s analyses. It is notable that in the USSR itself a number of economists opposed Stalin’s post-1929 policies on the same or related grounds – including Buhkarin (Bukharin,1925) , Kondratiev (Kondratiev n.d.), and Preobrazhensky (Preobrazhensky, 1921-27). Their works were, however, almost unknown as these issues were ‘resolved’ by Stalin killing those economists who disagreed with him and banning their works, although several accounts have been published outside the USSR – see for example (Jasny, 1972) (Lewin, 1975). China’s economic debates therefore preceded primarily with reference to China’s conditions and Marx, and not any preceding debates in the USSR.
It is therefore clear that China’s post-reform economic policy is in line with Marx’s analysis of socialism and that, as stated in Chinese analysis, post-1929 Soviet policy departed from Marx’s analysis – the argument that the converse is true, by Hsu and others, is invalid.
China's economic theory certainly differs from Stalin's - because it goes back to Marx.
Bukharin, N. (1925). 'Critique de la plate-forme économique de l'opposition'. In L. Trotsky, E. Préobrajensky, N. Boukharine, Lapidus, & Osttrovitianov, Le Débat Soviétique Sur La Loi de La Valeur (1972 ed., pp. 201-240). Paris: Maspero.
Deng, X. (2 June 1978). 'Speech at the all-army conference on political work'. In X. Deng, Selected Works of Deng Xiaoping 1975-1982 (2001 ed., pp. 127-140). Honolulu: University Press of the Pacific.
Deng, X. (21 August 1985). 'Two kinds of comments about China's reform'. In X. Deng, Selected Works of Deng Xiaoping 1982-1992 (1994 ed., pp. 138-9). Foreign Languages Press.
Deng, X. (28 August 1985). 'Reform is the only way for China to develop its productive forces'. In X. Deng, Selected Works of Deng Xiaoping 1982-1992 (pp. 140-143). Beijing: Foreign Languages Press.
Hsu, R. C. (1991). Economic Theories in China 1979-1988. Cambridge and New York: Cambridge University Press.
Deng, X. (29 August 1987). 'In everything we do we must proceed from the realities of the primary stage of socialism'. In X. Deng, Selected Works of Deng Xiaoping 1982-1992 (pp. 247-8). Beijing: Foreign Languages Press.
Jasny, N. (1972). Soviet Economists of the Twenties. Cambridge: Cambridge University Press.
Kondratiev, N. D. (n.d.). The Works of Nikolai D Kondratiev (1998 ed.). (N. Makasheva, W. J. Samuels, V. Barnett, Eds., & S. S. Williams, Trans.) Pickering and Chatto.
Lewin, M. (1975). Political Undercurrents in Soviet Economic Debates. London: Pluto Press.
Marx, K. (1867). Capital Vol.1 (1988 ed.). (B. Fowkes, Trans.) Harmondsworth: Penguin.
Marx, K. (1875). 'Marginal notes on the programme of the German Workers Party'. In K. Marx, Karl Marx Frederich Engels Collected Works (1989 ed., Vol. 24, pp. 81-99). London: Lawrence and Wishart.
Marx, K., & Engels, F. (1848). 'Manifesto of the Communist Party'. In K. Marx, & F. Engels, Collected Works (1976 ed., Vol. 7, pp. 476-519). London, UK: Lawrence and Wishart.
Preobrazhensky, E. (1921-27). The Crisis of Soviet Industrialization (1980 ed.). (D. A. Filzer, Ed.) London: MacMillan.
Xinhua. (2010, September 24). 'Premier Wen expounds 'real China' at UN debate'. Retrieved February 2, 2012, from China Daily: http://www.chinadaily.com.cn/china/2010WenUN/2010-09/24/content_11340091.htm
Xinhua. (2011, July 1). 'China still largest developing country: Hu'. Retrieved February 2, 2012, from China Daily: http://www2.chinadaily.com.cn/china/cpc2011/2011-07/01/content_12817816.htm
Why you should support China in one chart - China accounts for 78% of the world reduction of the number living in poverty
The greatest problem facing the overwhelming majority of the people living in the world is inadequate incomes and poverty.
This is literally a life and death question. A person living in a low income country by World Bank standards lives only 62 years compared to 81 years in a high income economy - a difference of 19 years. In addition to living a far shorter life a person living in poverty faces few real choices.
For this reason by far the greatest contribution to world human well-being is by China. As shown in the chart below since 1981 China has lifted 853 million people out of poverty - 78% of the reduction of the number of people living in poverty in the world.
China has lifted over seven times as many people out of poverty as India, over seven times as many people out of poverty as Indonesia, over 20 as many people out of poverty as Latin America, and 85 times as many people out of poverty as sub-Saharan Africa.
The lives of those 852 million people have been vastly improved and their real choices in life greatly widened. This has contributed far more to humanity's well being than the absurd Western definition of human rights.
Ask a normal human in China to chose whether they would rather live in poverty but have the right to use Facebook (except if they are in real poverty they can't afford a computer!), or they can be taken out of poverty but not be able to use Facebook, and you will soon fine out why the West's definition of 'human rights' is a huge joke.
And the same applies to the population of other developing countries. Ask someone whether it is more important to live 19 years longer, or be able to use Facebook, and you will again see why the Western definition of human rights is a farce!
Some people want to discuss if China is capitalist or socialist. That is a useful theoretical discussion. It is rather easily settled by noting that if it was capitalism which took people out of poverty the great reduction in poverty would have taken place in all capitalist countries - not in socialist China. But even those who wrongly believe China is capitalist should recognise that its achievements in reduction of poverty make it superior to any Western capitalist model.
And some in the Western left want to oppose China or belittle its achievements. They merely show they are out of touch with what socialism really means - which is the improvement of the lives of ordinary human beings.
China has lifted more people out of poverty than the entire population of the European Union and more people than the entire continent of Latin America. The poverty reduction in other countries is dwarfed by what has been achieved in China. The left throughout the entire world should be celebrating this most gigantic of all contributions to human well-being made by China. And they should seek to learnt from the economic model that has delivered such a gigantic improvement in humanity's well being.
You can seen in that one chart on the reduction of world poverty why China should be supported!
The World Bank definition of poverty is expenditure of $1.90 a day at 2011 prices measured in internationally comparable prices - parity purchasing powers (PPPs).
An opinion poll has reaffirmed that the most popular politician in the US is a socialist - Bernie Sanders. As Vice reports:
'A new poll found that among all other notable American senators, representatives, and even the president, Bernie Sanders reigns supreme as the most popular politician in the nation...
'The Harvard-Harris Poll—an online survey conducted from August 17 to 22—culled responses from 2,263 voters who lean both left and right, along with those who identify as nonpartisan. It asked about their feelings on the Democratic and Republican parties, the biggest political moments of the past few weeks, and what issues matter most to them. It also quizzed them on America's politicians, asking how favorably or unfavorably they viewed certain lawmakers....
'Sanders—who's long held the distinction of the country's most popular politician—earned the honor once again. The poll found 54 percent of voters view him favorably, while just 36 percent feel the opposite. No other politician netted support from a majority of US voters.'
The Hill, an influential US political website, noted this poll was carried out by a totally mainline polling organisation: 'The Harvard-Harris Poll is a collaboration of the Harvard Center for American Political Studies and The Harris Poll. '
The fact a self-proclaimed socialist is the most popular politician in the US, coming after Sanders very strong performance in the Democratic primaries, is a historic shift in the US. No candidate declaring themselves a socialist has received a significant vote in a US Presidential election for almost a century, since the 1920s. In the 1950s, at the height of the Cold War, a popular US slogan was 'Better dead than Red'. Sanders is certainly a moderate socialist, but the fact that someone openly declaring themselves a socialist is the most popular politician in the US represents a fundamental shift in US politics.
The roots of these new shifts in US politics were analysed on this website in 'The "Anglo-Saxon" Political Crisis - from Reagan & Thatcher to Trump & Brexit'.
The most fundamental source of confusion for Western commentators on China's economy is that they mistakenly believe their own myth that China's is a capitalist economy - not a socialist one. In fact China is clear that the state sector plays the leading role of the economy - something no capitalist economy does.
The latest meeting of the Central Committee of China's ruling Communist Party to focus on the economy, the 3rd Plenum of the 18th Central Committee, stated: '‘We must unswervingly consolidate and develop the public economy, adhere to the dominant position of public ownership, state-owned economy to play a leading role, and constantly enhance the vitality of the state economy, dominance and influence.’
Xi Jinping in affirming the socialist character of China's economy, states clearly: 'The mainstay status of the public ownership and the leading role of the state-owned economy must not waver,'
It is therefore striking that new data confirms strong performance by China's state owned enterprises (SOEs). In January-July 2017 total revenue generated by SOEs was more than $4.3 trillion, up 16.5% year-on-year. Revenue by central SOEs rose by 15.1% percent and that from local ones rose by 18.7%.
SOE profitability also rose strongly. Overall SOEs saw a 23.1% increase in profits year-on-year from January to July. Local SOEs achieved a 35.8% growth in profits, while central SOEs profits rose 17.3%.
This strong performance shows China's policy of enhancing its SOEs perormance, and their decisive role in the economy, is bearing strong fruit.
A factual analysis of the way China uses state investment and its SOEs to maintain strong economic growth amid a relatively stagnant world economy can be found on this website here. A more theoretical analysis of how China's socialist economy differs from a capitalist one, and the consequences of this can be found at 'Deng Xiaoping & John Maynard Keynes'.
President Trump has sent out two tweets since Steve Bannon left the White House strongly confirming the analysis made earlier in 'Bannon thinks he's on vacation from the White House – but not that he has left it for good' that Steve Bannon is only on vacation (perhaps a sabbatical is the most exact concept) from the Trump team.
Bannon in his first statements after leaving the White House made clear that he continues to support Trump. Bannon said he is seeking to free Trump from forces Bannon conceives as against Bannon’s long term goals and his long term opponents within US policy making. This of course centrally includes Bannon's anti-China agenda and his statement: 'To me.... the economic war with China is everything. And we have to be maniacally focused on that.'
In his first interview after leaving the White House Bannon told Bloomberg : 'If there’s any confusion out there, let me clear it up: I’m leaving the White House and going to war for Trump against his opponents -- on Capitol Hill, in the media, and in corporate America.”
The 'love letter' Tweets from President Trump about Bannon below make clear President Trump fully intends to keep wide channels of communication with Bannon and his supporters.
China’s foreign policy will, entirely correctly, take advantage of the departure of anti-China hawk Steve Bannon from the White House to attempt to continue to convince the Trump administration that the policy in the interests of both countries is a ‘win-win’ one. This policy is clearly correct whatever the immediate results. If, most favourably, reasonable forces in the White House gain control of policy then the results of China-US economic and geopolitical cooperation will aid both countries. If anti-China forces gain control of US policy then it is important for other countries, and the people of the United States, to see as clearly as possible that it was US neo-cons which created tension which will damage both the US people and third countries.
But whatever the outcome there should be no illusions. Bannon, and the forces he represents, will remain a powerful factor in US politics due to the destabilisation of Western politics. Bannon may have left the White House but the forces he represents remain powerful both due to their resources and their strategic understanding of key features of current Western politics. Whether or not ‘Bannonism’ will gain control of the White House in the future remains to be seen, but it will continue to remain influential within US politics. Indeed, Bannon made clear in one of his first declarations after leaving the White House that he continues to support Trump, and is seeking to free him from forces Bannon conceives as against Bannon’s long term goals and his long term opponents within US policy making:'If there’s any confusion out there, let me clear it up: I’m leaving the White House and going to war for Trump against his opponents -- on Capitol Hill, in the media, and in corporate America,” he told Bloomberg. '
To put it in an aphorism Bannon is on vacation from the White House, he hasn’t left it permanently. To understand why it is necessary to grasp Bannon’s grasp of key features of present politics.
Bannon will have money
The most superficial, but nevertheless important, reason Bannon and those around him will continue to have influence is because they will be extremely well funded. Even before formally leaving the White House Bannon immediately made contact with his long-time backers the billionaire Mercer family.
Axios, the US news website which broke the news of Bannon’s departure from the White House, reported: ‘Steve Bannon's next moves will be all about the billionaire Mercer family... Bob Mercer and Steve Bannon had a five hour meeting Wednesday to plot out next steps, said a source with knowledge of the meeting.’
Bannon has at his disposal Breitbart news, which the Mercers have also supported. As Axios confirmed: ‘A source familiar with Breitbart's operations told me they would go "thermonuclear" against "globalists" that Bannon and his friends believe are ruining the Trump administration, and by extension, America…. this war — which has already begun — [is] against White House officials like HR McMaster, Dina Powell, Gary Cohn, and Jared and Ivanka."
Breitbart News itself reported ‘Steve Bannon Meets with Billionaire Mercer Family as He Prepares for War’. It noted: ‘Friends of Bannon said that he “felt liberated… ” and could… return to Breitbart News, where he was once executive chairman, to operate what he reportedly calls a “killing machine.” Breitbart News later confirmed he had returned to them as Executive Chairman.
With billionaire financial backing and a major news outlet under his direct control Bannon and the forces he represents have ample resources.
But still more significantly Bannon has a correct grasp of key features of US and Western politics and therefore a clear strategic line.
The destabilisation of Western politics
Bannon understands that Western politics has been made profoundly unstable. The traditional Western political ‘centre ground’ is being steadily eroded by the economic and social effects of the ‘Great Stagnation’ of the Western economies since the international financial crisis. Average Western economic growth is now slower than in the Great Depression – the details may be found in ‘China Faces Slower Western Growth than in the Great Depression’. The result is that Western politics, including US politics has been fundamentally destabilised – as analysed in ‘The ‘Anglo-Saxon’ Political Crisis - from Reagan & Thatcher to Trump & Brexit.’
Of the major Atlantic advanced economies only Germany, which has the highest per capita economic growth since the financial crisis, has escaped serious political destabilisation. The other major countries of this region have seen the steady rise of forces to both the right and left of the old ‘political centre’.
As he anticipates the erosion of the US political centre Bannon and those around him seek to create a right-wing US coalition on an anti-China line. As he put it in his final interview before leaving the White House, with the ‘The American Prospect’ magazine: “To me,” Bannon said, “the economic war with China is everything. And we have to be maniacally focused on that."
Bannon’s aim is to create an alliance of the US right and what may be termed the US ‘fake left’ around an anti-China basis. As Bannon put it in his interview with Robert Kuttner, co-editor of The American Prospect, which is a 'progressive' US publication: 'Bannon explained that his strategy is to battle the trade doves inside the administration while building an outside coalition of trade hawks that includes left as well as right. Hence the phone call to me.'
This US ‘fake left’, of the type of Hillary Clinton and others within the Democratic Party, and of which parallel forces exist in other Western countries, is the one that supports US military interventions abroad, that supports a US military build-up against China, that supports sanctions against Russia etc. This ‘fake left’ is to be contrasted to the real Western left, of the type of Sanders or Corbyn, which opposes Western austerity policies and such foreign policy measures – Corbyn, for example, is a strong opponent of US military build-up against China, Sanders voted against sanctions against Russia.
The conclusion which follows from these trends and events is clear. It would be wrong to be excessively alarmist. The Western economies, although not breaking out of their fundamental very slow growth, will undergo a moderate upturn in 2017 – which means there will be no very short term breakthrough of either ‘radical right’ or ‘radical left’ forces. But the underlying very slow growth of the Western economies means the forces represented by Bannon will not disappear – and China must be prepared for this at the same time as it rightly seeks ‘win-win’ solutions with the present Trump administration.
In particular the following trends should be anticipated:
Again, to put it in an aphorism, Bannon has gone on vacation from the White House, but Bannonism is, and will remain, very alive in US politics.
An extremely striking chart of surveys of South Korean public opinion on relations with North Korea has been published by The Market Mogul. It should throw a clear and sobering light on present discussions about North Korea. South Koreans, by massive margins, see North Korea show they believe North Korea is 'a country to work with' and not 'a cause for alarm' or 'a rival'. The Market Mogul's comment is appropriate:
'The increased tensions on the Korean Peninsula, exacerbated by Pyongyang’s missile testing and President Trump’s strident tweets and comments, has dominated the news... But in all the bombast, maybe more attention should be paid to the view of the South Korean’s who are on the front line. President Moon Jae-in has been talking about a revival of the “sunshine policy” of trying to build relations with the North since taking office in May and has repeatedly offered humanitarian and military talks with the north to bring down tensions. These moves reflect the wishes of the South Korean electorate. Close to 44% of South Koreans in 2016 thought that the south work together with the north, up from 36% in 2015, while only around 8% see the north as a rival.'
Perhaps outsiders would do better to stop trying to threaten war and stoke up tension when the people who would be most affected by war, South Koreans, clearly don't want it?