Thanks, this resonates...
On 5/19/2024 5:57 PM, Charlie wrote:
On Sun, May 19, 2024 at 08:51 AM, hari kumar wrote:
The leading forces of Chinese capitalists have (if belatedly)
switched from land-building-web) to some more fundamental economic
forces.
It looks more like overaccumulation continues, even as it runs into
political-economic limits.
Just presented a paper last week to the Africa Coal Network (EJ
activists) here in Joburg and hope to run it by comrades in Shanghai
next month too... an excerpt on this matter is below, so does it need
adjusting or updating?
*The Elusive Rainbow at the end of the Belt and Road:*
*Chinese investment, finance and trade controversies in Southern Africa*
By Patrick Bond
EXCERPT
...
Trade, finance and extractive industries are all notorious for predatory
features, but even in the two main Special Economic Zone sites in South
Africa where Chinese manufacturing production occurs or is envisaged,
there have been profound problems: Coega and Musina-Makhado. The limits
to the BRI spatial fix can be blamed, since overaccumulation of
industrial capital is so severe at Chinese East Coast production
facilities that even in areas where South Africa should develop its own
manufacturing capacities, such as solar and wind infrastructure,
batteries and electric vehicles, these are being consistently undercut
by Chinese exports’ low prices.
*China’s persistent overaccumulation of capital*
The fact that during their April 2024 trips to Beijing, U.S. Treasury
Secretary Janet Yellen and Secretary of State Tony Blinken arrogantly,
threateningly pointed out durable overcapacity in China’s electric
vehicle (EV), solar panel and battery industries, and that Ursula van
der Leyen did the same when Xi Jinping visited Paris in May 2024, does
not negate the reality: the problem of Chinese export-oriented factory
overproduction is the contemporary ground zero of global capitalist
crisis formation, in the manner Marx predicted. However, it is important
to acknowledge at the outset, that two features are contested in 2024
debates among political economists (several of whom are openly
pro-Beijing, politically): excess capacity as a problem in and of
itself, and implications for what can be termed China’s sub-imperial
behavior within global value chains especially associated with mineral
extraction (Bond 2024b).
For Michael Roberts (2024), Yellen was speaking “nonsense,” because the
“particularly pathetic” claims about overcapacity ignore the fact that
“China has no problem selling its exports to the rest of world’s
consumers and manufacturers, who are eager to buy.” Roberts attacks “the
Western mainstream view that China is stuck in an old model of
investment-led export manufacturing...” Moreover, Roberts (2024)
continues, China “cannot be considered even sub-imperialist, let alone
imperialist” – a position echoing the Tricontinental Institute’s (2024)
assertion that in the context of a ‘hyper-imperialism’ centred at the
U.S. Pentagon, “Objectively, there is no such thing as sub-imperialism
or non-Western imperialist powers (such concepts are subjective
deceptions that cloud over the factual realities).”
This narrative negates a venerable political economy tradition
introduced by Brazilian dependency theorist Ruy Mauro Marini (1972),
followed by David Harvey (2003), Sam Moyo and Paris Yeros (2011) and
Samir Amin (2019). As the latter remarked about the post-apartheid
economy in his posthumous autobiography, “nothing has changed. South
Africa’s sub-imperialist role has been reinforced, still dominated as it
is by the Anglo-American mining monopolies.” In mid-2023, the
assimilated layer of the BRICS+ economies and regimes were of even more
profound importance within the global corporate power structure, global
value chains and Western-dominated multilateral institutions (Bond 2024b).
And in 2024, with eight out of ten BRICS+ governments giving
net-positive material support to Israel during the genocide of
Palestinians (excepting only South Africa and Iran), with a
normalisation processes being pursued by Saudi Arabia (in the wake of
BRICS+ members Egypt and the UAE), and with Sergei Lavrov having
remarked that the Netanyahu and Putin invasions of Gaza and Ukraine were
‘nearly identical’ insofar as they sought ‘de-Nazification,’
geopolitical arrangements simply do not justify optimism about BRICS+
opposing Western imperialism. The April 2024 re-election of neoliberal
economist Kristalina Georgieva as International Monetary Fund (IMF)
Managing Director, with unanimous BRICS+ support, and the failure of the
‘de-dollarisation’ initiative to gain critical mass within the bloc’s
finance ministries, central banks and banks, further illustrate the
sub-imperial not anti-imperial location (Bond 2024b).
When it comes to whether Chinese Gross Domestic Product is slipping
(hence requiring what Beijing has termed the ‘going out’ process),
Renmin University economist John Ross (2024) insists, “the U.S. has
launched a quite extraordinary propaganda campaign, including numerous
straightforward factual falsifications, to attempt to conceal the real
international economic facts,” which are that China’s growth will give
it a 60% larger economy than the U.S. by 2035, “decisively overcoming
the alleged ‘middle income trap’ and, as the 20th Party Congress stated,
China reaching the level of a ‘medium-developed country’.”
But there are real problems these critiques of Washington’s conventional
wisdom gloss over, and they have vital implications for the BRI – and
then for South Africa and Africa which are recipients of overaccumulated
Chinese capital. (Similar rosy predictions to Ross’ were made for Japan
in the 1980s, before the massive financial crash of 1990 and the
flatlining of GDP ever since.) There are indeed indicators of a
slow-down in Chinese capital accumulation, including falling profit
rates in the new-tech industries, while shifts of excess capital are
occurring to a dangerous degree, as banks rapidly redirect lending from
real estate to production. And by using GDP as a central measure of
prosperity, crucial factors are simply ignored, such as unpaid women’s
work in social reproduction (which makes a profound long-distance
contribution via Chinese migrant labour similar to apartheid’s Bantustan
system), greenhouse gas emissions, local pollution and non-renewable
resource depletion.
Ross, Roberts and Tricontinental Institute staff (led by Vijay Prashad)
certainly produce extremely useful analysis. However, in addition to an
uncritical use of GDP – which ignores feminist-economic and
ecological-economic insights into super-exploitation even though they
are of enormous importance for Chinese capital accumulation given the
economy’s reliance upon the hukou system (for nearly 30% of labour
supply) and extractivism – they believe China is largely socialist.
Hence none would acknowledge the theoretically-informed conclusion
Ho-fung Hung (2015) arrived at by the mid-2010s: “Capital accumulation
in China follows the same logic and suffers from the same contradictions
of capitalist development in other parts of the world… [including] a
typical overaccumulation crisis, epitomised by the ghost towns and
shuttered factories across the country.” By 2015, the confirmed
overcapacity levels had reached more than 30 percent in coal,
non-ferrous metals, cement and chemicals (in each, China was at the time
responsible for 45-60 percent of the world market) (Bond 2021). The
subsequent need for overcapacity shrinkage was the central reason for
the crash of raw materials prices in 2015.
Today, overproduction problems remain in heavy industrial sectors,
especially steel, petrochemicals, cement and construction of major works
(such as coal-fired power plants). As one illustration of rising
productive capacity, higher capital intensity and hence greater
efficiency was witnessed in Chinese industry’s 2022 utilisation of
285,000 robots, compared to less than 50,000 in each of the second-fifth
most robot-populated industrial facilities: Japan, the U.S., South Korea
and Germany (Statzon 2023). To accommodate this new investment wave,
Chinese bank credit lines that were once reserved for real estate
developers – e.g. with year-on-year additions of more than $1 trillion
at peak in 2019 – switched urgently to manufacturing, suddenly reaching
$700 billion more in 2023 than in 2022. The resulting production prowess
meant China’s trade surplus in manufactured goods rose from less than
0.3% of world GDP before 2000, to more than 1.5% of GDP by 2022.
But the higher-growth green economy did not mop up these prolific
production surpluses. As the U.S. and European leaders complained,
Chinese excess capacity had by late 2023 risen to exceptionally high
levels in solar energy equipment, batteries and EVs. The components of
solar photovoltaic production are profoundly imbalanced between supply
and demand given China’s dominance in the four main components – modules
(75%), cells (85%), wafers (97%) and polysilicon (79%) – at a time the
country’s consumption comprises 36% of world demand (Statzon 2023).
Moreover, the location of the world’s lithium-battery plants is
revealing: 77% are in China, followed by the U.S. (6%), Poland (6%),
Germany (3%) and Hungary (3%), and nowhere else (in spite of Zimbabwe’s
ambitions to have a battery industry, and its apparently futile attempt
to prevent its raw lithium ore from being exported and processed in
China) (Figures 1-4).
Figures 1-4:
Solar PV demand, manufacturing capacity, 2021 Industrial robot
installations, 2022 (1000s)
https://statzon.com/insights/ifr-world-robotics-2023
Bank loans: manufacturing and real estate (y-o-y rise) Manufactured
goods trade surpluses
This degree of capital overaccumulation in EVs, solar and batteries is
ominous, because all these commodities should, in an ideal world,
represent global public goods for which multilateral agencies would
prevent any demand constraint as the world’s transition to renewable
energy proceeds. Indeed, solar, wind, non-invasive energy storage and
electric transport should be provided gratis by the high-emitting
countries – including not just the West but most BRICS+ countries –
simply as a downpayment on their climate debt. And this should be done
in a manner characterised by collectivised commoning, not using South
Africa’s model of unreliable, chaotic Independent Power Producers.
Without this anti-capitalist approach, global capitalism will simply not
achieve the needed emissions cuts for the world – especially vulnerable
Asian and African countries – to survive the climate apocalypse that was
hinted at in South Africa on 12 April 2022, when a Rain Bomb (350
millimeters) killed 500 Durban residents. But capitalism in the
mid-2020s appears, as neoliberal U.S. politicians openly acknowledged,
incapable of mopping up Chinese exports when sold at market prices, or
even with enormous implicit subsidies from Bejiing (as Yellen and
Blinken alleged, attempting to save Biden’s Inflation Reduction Act
support for similar U.S. industries).
It appears inevitable that global effective demand for renewable energy
and electric transport will continue to be severely constrained during a
period, since early 2022, of rapidly rising interest rates, debt crises,
financial chaos, productive-sector stagnation, durable price inflation
in some sectors, and worrying levels of geopolitical volatility that
affect the economy (e.g. grain and energy price hikes due to Russia’s
invasion of Ukraine, or Red Sea shipping disruptions due to Yemenese
solidarity with Palestine following Israel’s genocide, or another
potential Israel-Iran military flare-up).
In spite of Ross’ (2024) celebration of still-rising GDP, the Chinese
economy is badly exposed on many of these fronts. To illustrate,
transnational corporations (TNCs) often watch the inventories of their
subsidiaries and outsourcing partners most closely and with the most
expansive global vision. Revealingly, FDI into China fell to $33 billion
in 2023, which at 82% below 2022’s figures, is also the lowest level
since 1993 (Bloomberg 2024). Indeed by early 2024, the return of
productive-sector overaccumulation in China was profound and reinforced
the need for a viable international spatial fix, after the apparent
exhaustion of China’s relatively powerful local spatial fix, which
during the 2010s had taken the form of massively-expanded infrastructure
and housing.
But by the early 2020s the BRI began experiencing problems in displacing
overaccumulated Chinese capital, largely due to financial crises
bubbling up in many Asian and African countries. Even after the dramatic
2021-22 recovery from Covid-19 lockdowns – which spurred a brief
commodity price spike appreciated in South Africa and the rest of the
continent – the contradictions were also being displaced along the BRI.
To be sure, several of the sovereign defaults and austerity programmes
can be blamed upon limits to the temporal fix (credit creation)
represented by the U.S. Federal Reserve’s excessively rapid interest
rate increases in 2022-23 following the excessively loose Quantitative
Easing practiced there and across the world in 2020-21 (even South
Africa, briefly, in April 2020).
What did we learn from the prior episode of overaccumulation in 2010s’
China? There were some, like myself (Bond 2019), who believed Beijing
could effectively manage such overaccumulation. This would occur through
not only displacement, but by actively devalorising the overaccumulated
capital through Beijing’s centralised control and planning power. One
example was Beijing’s order to shut down high-carbon industry and
coal-fired power plants in Hebei Province earlier than they would have
otherwise, in part to improve air quality. Another example of that power
to mothball polluting industry was witnessed during the Beijing Winter
Olympic Games in 2022. Indeed from late 2015, Beijing’s “Supply-Side
Structural Reforms” were meant to “guide the economy to a new normal,”
using five five strategies: capacity reduction, housing inventory
destocking, corporate deleveraging, reduction of corporate costs, and
industrial upgrading with new infrastructure investment. The “three
cuts, one reduction, and one improvement” strategy was, the World Bank
observed, a welcome “departure from China’s traditional demand-side
stimulus policies” (Chen et al 2018).
However, in 2019, I asked this question: “whether the other
contradictions in the Chinese economy, especially rising debt and the
on-and-off trade war with the United States (potentially spilling into
other economies trying to resist devaluation), would turn a managed
process into the kind of capitalist anarchy that causes overaccumulation
in the first place” (Bond 2019)? The latter seems to have occurred these
past five years, with worse overaccumulation than ever.
Xia Zhang (2017) was more realistic about Beijing’s propensity to avoid
devaluation much earlier, instead explaining China’s capitalist
externalisation of uneven development as a geographical “restructuring
as the result of overaccumulation. Often jointly with various
representatives of Chinese capital, the Chinese state is compelled to
reconfigure Chinese capitalism on a much larger spatial dimension so as
to sustain the capital accumulation and expansion. Hence it must engage
in a ‘spatial fix’ on an unprecedented scale.”
Throughout capitalist history, the first of two main strategies to
combat overaccumulation has typically been a spatial fix involving
trade, FDI and labour migration (so as to lower wage rates). But a
further dilemma for Beijing is the second strategy: rising cross-border
finance. Not only did Chinese banks overextend, but they did so in the
context of an unpatriotic bourgeoisie. As Hung (2018) remarked, “the
elite who control the state sector seek capital flight, encroach on the
private sector and foreign companies, and intensify their fights with
one another.”
Even the IMF recognised this by 2021, in its survey of economic sectors
suffering low capacity utilisation, which revealed that overaccumulation
was correlated to Chinese firms’ overseas Mergers & Acquisitions during
the critical period of going out through overseas investment, during the
mid-2010s. The IMF economists blamed Beijing’s gift of subsidies to
firms, so they would “constantly expand capacities in sectors where
their comparative advantage led to ever greater international market
shares, which in turn reinforced such comparative advantages. However,
as growth began slowing down in China, capacity utilisation started to
decline, putting pressure on corporate profitability.” Then in turn,
“Chinese companies had to seek new markets to relocate capital and keep
the pace of expansion, the latter an important consideration for the
State-Owned Enterprises as they were often tasked to support governments
at all levels to meet the growth targets” (Ding et al 2021).
Progressive Chinese activists understand this too, including the “Hong
Kong People’s Forum on BRICS and the BRI” (Lee 2017, 1), a group forced
into exile four years later. Their BRICS counter-summit statement was
critical of a BRI “whose main purpose is to export China’s surplus
capital, and in this process seek the cooperation and ‘mutual benefit’
of big foreign TNCs and regimes which are often authoritarian. The price
of these investments is often borne by the working people and the
ecological balance.” And as a delegation of us from South Africa could
testify at that Forum, we were seeing already by the mid-2010s how much
Chinese displacement of overaccumulation relied upon accumulation by
dispossession.
All of these insights are of enormous importance when it comes to the
ways a genuine ‘public goods’ approach emerges from the global (and
Chinese) overcapacity crisis in solar, wind, energy storage and EVs, so
that instead of being treated as commodities, they become decommodified
contributions by the wealthier countries, to planetary preservation.
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