What U.S.-China trade relations reveal

Much has been revealed about the world’s two largest economies in the fallout from the tariffs imposed by the U.S. government on goods from China —  and that country’s response.

When the Trump administration announced on May 10 that it was imposing a new 25 percent tariff on $200 billion worth of goods imported from China, nothing dramatic happened in the stock markets of the two countries. The Shanghai composite stock index fell only slightly and is still up by 15 percent for the year.

Trump then tweeted a warning: “China should not retaliate — will only get worse!”

His imperialist arrogance had no effect.

In less than two hours, China did retaliate, but carefully. It announced it would put tariffs ranging up to 25 percent on $60 billion worth of U.S. goods.

That was later on the same day, May 10. In reaction to this news, the U.S. stock market then plunged 617 points on Monday, May 13 — the biggest drop so far in 2019.

So which economy is more fragile and unstable? That of the wealthy imperialist U.S. or that of People’s China?

Why did talks break down?

The move by Washington to impose new tariffs on Chinese goods came after a breakdown in trade talks. According to the New York Times: “The United States and China were nearing a trade deal that would lift tariffs, open the Chinese market to American companies and strengthen China’s intellectual property protections. But discussions fell apart last weekend, when China called for substantial changes to the negotiating text that both countries had been using as a blueprint for a sweeping trade pact. American officials said that China claimed that provisions of the deal would be in violation of Chinese laws — which could not be easily changed — and that the United States was demanding too much and giving too little.” (May 10)

If this interpretation is correct, it shows several things:

The inroads of the capitalist market in China have produced a class of trade negotiators who were willing to make significant concessions to the U.S. in order to promote Chinese businesses.

The U.S. was pushing for changes to China’s laws that would weaken the role of the state in ownership and control of the economy.

When leaders of the government and the Communist Party reviewed these concessions, they saw them as incompatible with China’s socialist roots and an attack on its state-owned industries and financial institutions. They pulled the agreement back.

China’s socialist roots

China is the fastest-growing large economy in the world, set to surpass the U.S. in a few years. It has developed from a time of wrenching poverty for the great mass of its people to prosperity for the majority in the span of just two generations. Indeed, China plans to have completely eliminated poverty by 2020 — next year!

The basic elements of its economy since its revolution in 1949 have been state-owned and integrated into a broad plan for social development. However, after a great internal struggle, the ruling Communist Party decided in the late 1970s to allow capitalist ownership and investment in order to stimulate economic growth.

The results have been mixed and contradictory, with great successes and great dangers. A class of billionaires now exists in China. Their appetite for luxury and excess have a corroding influence on socialist solidarity and egalitarianism.

At the same time, the spectacular growth of China’s economy has lifted 800 million people out of great poverty — accounting for fully 70 percent of the world’s progress in this period.

Those who put China’s tremendous achievements down solely to the capitalist market — and thereby discount its great socialist revolution against both world imperialism and the internal parasitic classes of landlords and compradore capitalists — should ask themselves this: Why then is China so different from India or Indonesia or Brazil?

Why have the lives of Chinese workers and peasants improved so greatly, while those in truly capitalist countries are mired in poverty?

China — and U.S. workers — push back

The U.S. imperialist ruling class is not used to being resisted by the leaders of a developing country. Their mighty military arsenal and strong industrial development have put this U.S. class of predators on top of the world for several generations.

But the times are changing. Not only has People’s China been on the rise, but conditions for workers in the U.S. have deteriorated, leading to increased class struggle at home.

The U.S. government has accumulated enormous debt after years of giveaways to the corporations and banks, plus the great cost of maintaining U.S. military forces on bases around the world. The U.S. uses many of these bases to actively engage in shoring up repressive regimes that otherwise would have been overthrown by the people long ago.

Debt is weighing down on the U.S. economy, even as changing technology is erasing workers’ jobs and corporations vie with each other to reduce costs at the expense of wages.

To sum up, the U.S. has seen the capitalist part of China’s economy as a Trojan horse that could eventually lead to the breakup of its socialist system. It has been pushing China to change not only the laws regarding trade but the basic relationship between the state and state-owned industry.

If what is being reported is true, it would indicate that the prevailing view in China’s Party leadership is that its trade negotiators were giving in too much to pressure from U.S. imperialists.

This is good news for China’s future development as a socialist country.