Workers World, Vol. 23, No. 10
March 3, 1981: These are difficult days for the Chinese government, for the people, and above all for the party leadership which has set out on such a perilous rightward course.
Superficially, there is not great, imminent crisis facing People’s China. Its foreign and domestic policy find few critics abroad in the bourgeois camp. But China stands alone today as never before since the revolution.
How could that be? China is recognized today by almost all of the major countries on the planet, at least more than 100. It has normalized relations with the imperialist countries and has achieved entrance into the “mainstream” of world politics, that is, into the vortex of imperialist relationships in diplomacy, commerce, and finance.
It is a goal which the current Chinese leadership has striven hard to achieve. This goal, however, was conceived, at least for popular consumption in China, and probably among hundreds of thousands if not millions of cadres in the party, as a means toward the basic and ultimate end – the construction of a socialist society. Unfortunately, this process of development is leading directly, if not swiftly, in an opposite direction.
The stream of news releases coming out of Beijing, almost on a daily basis, attests to this. For instance, the International Monetary Fund (IMF) announced on March 2 that it approved a $550 million loan to China. The loan must be very badly needed or China would not have faced the humiliating procedure of borrowing from the World Bank.
It is futile and indeed embarrassing to cite to the Deng-Hua leadership the meaning of borrowing funds from this notorious imperialist instrumentality. One only has to look back upon the pages of the Beijing Review, not to speak of the daily press in China, to be reminded of what a commendable job the Chinese press did in discrediting and exposing the true character of the World Bank as an instrument of imperialist policy for purposes of penetrating and destabilizing the economies of the underdeveloped countries.
One must also remember how the Chinese press admonished other socialist countries not to be hoodwinked into accepting loans from the bank.
The recent resignation of the self-proclaimed liberal, Robert McNamara, as its chief executive has given way to a far harsher, more demanding and more stringent stewardship by the president of the Bank of America, which is too well known for the more severe conditions it has proposed for granting loans to Third World countries.
The approval of the IMFL loan puts China in the same position as any other oppressed Third World borrower and subject to the same severe supervision and monitoring processes by the imperialist that the underdeveloped countries must submit to.
The irony of it all – imperialists supervising and helping socialist construction! Really, one must take leave of one’s senses altogether to believe it.
The IMF, it must be remembered, advances loans strictly upon certain conditions. One of these is that the borrower must take “economic measures to strengthen its international accounts [to the imperialists].” By this is meant an accounting of how much China has borrowed abroad, its schedule of payments, and its capacity to meet them.
An article in the New York Times (March 3, Section D), states that the IMF has already made an analysis of China’s latest measures in that direction and has concluded “that the Chinese authorities have embarked upon the proper course.” For whom?
What this means in plain language is that the imperialist overlords who run the World Bank and the IMF first suggested certain economic “reforms” and only after seeing that the Chinese authorities are actually putting them into practice have they approved the loan. It is what the imperialist financiers have been practicing for years in all of the underdeveloped countries as a special form of neocolonialist penetration.
“The main objectives of the [Chinese] government’s economic program for this year, says the Monetary Fund, are the elimination of inflationary pressures, the readjustment of the investment pattern to foster resumption of rapid economic growth, and it maintain the current account (trade and services) deficit at a sustainable level” (New York Times).
This is precisely the Chinese version of what the Western bankers have recommended – really ordered – the besieged Polish government to do.
It is wholly unnecessary to point to Poland’s economic woes as a portent of what will occur in China. For a March 1 article in the New York Times shows precisely what the World Bank and IMF mean by the adoption of economic measures to strengthen the economy of China. It means, as this dispatch shows, sharp cuts in government expenditures for socialist construction by close to $10 billion. Capital construction will be reduced from a previously planned figure of $36 billion to $20 billion, an almost 45% reduction.
This is an austerity program with a vengeance! Hardly anybody in China would have believed this was possible only a few years ago.
According to the New China News Agency, Deputy Prime Minister Yao Yilin is quoted as saying that all this was necessary “to regulate the economy according to the pressures of supply and demand in the market, within the state plan. Where necessary, administrative measures should be used to control market forces to avoid economic anarchy.”
The deputy prime minister also announced huge budget cuts in oil and coal production – the sinews of China’s economy – and also defense and administrative costs.
It is difficult to conceive a more sweeping retreat from the plans announced a bare two years before. The deputy prime minister calls this a “temporary retrogression.” In reality it is a deep reactionary thrust at the very vitals of the socialist economy. A temporary retreat may, of course, be necessary even in a healthy socialist country, depending upon circumstances. But if it is tied to the exigencies not merely of the growing capitalist market in China but of the world imperialist banks and political institutions, it is a wholly different matter.
Yao says that the Chinese government is determined to regulate the economy according to the pressures of supply and demand in the capitalist market. But he hastens to qualify “within the state plan.” But the plan itself, which was conceived in the spirit of economic adventurism, was made contingent upon the imperialist Western and Japanese banks and now the World Bank and IMF, which are basically controlled by the U.S. and some of its imperialist allies.
To regulate the economy according to the pressure of supply and demand” in the capitalist market – what does this mean? Once the capitalist market is given sway it generates social inequality by virtue of the fact that the capitalist market is based upon commodity exchange. Commodity exchange inevitably generates social inequality and tends to erode the planned character of the socialist sector unless it is firmly controlled and limited.
All the evidence, the stream of news releases coming from China itself and its authorized sources, shows the increasing growth of the capitalist market at the expense of the socialist sector. These budget cuts are of such an immense proportion that they will inevitably mean the layoff of several million workers. How sweeping these cuts really are is shown by the fact that even defense expenditures will be cut.
This is precisely what is happening in all of the capitalist countries, except their defense expenditures are not cut but expanded.
Clearly the capitalist malaise has inundated the Chinese economy. Inflation is growing, unemployment is growing, and the prices of consumer products are rising.
Let us assume that the errors and miscalculations in planning are only the result of sheer inefficiency, mistakes in the projections for capital construction, and so on – in other words the ordinary type of mismanagement which could happen to any socialist country. Is the best way to solve these problems by the gearing of a socialist economy to the whims of the capitalist market and the imperialist-controlled financial institutions?
If there is a shortage of capital, if an austerity program has to be instituted, is that the way to begin it?
One notes that in the capitalist countries, the capitalist crisis has forced them all to cut back on social services, lay off workers, and close down plants. But they have all expanded the military.
Why is it necessary to cut defense in a socialist country, cut back on the allowances for military personnel, benefits to rank-and-file soldiers, and so on? Is it because the danger of imperialist attack is lessened by the presumed friendship between the U.S. and China? (Why are the Dutch allies of U.S. imperialism so determined to sell submarines to Taiwan?) Since when does defense of the socialist homeland become an instrument of the zig-zags of the reactionary economic planners?
Rather than a cut in the defense expenditures as such, an orderly pullback of China’s armed forces from confrontation on the Soviet border would not only result in economic savings but would not necessarily signify a material diminution of the defense of People’s China against imperialism.
This, however, has its risks. Not that the Soviet Union will launch its long-predicted mythical attack on China. But it would endanger the many loans, as well as commercial and industrial contracts with the imperialist powers, especially the U.S. and Japan.
Would the IMF agree to a half-a-billion-dollar loan were the People’s Liberation Army (PLA) to withdraw in an orderly and agreed upon basis from confrontation with the Soviet Union?
The PLA forces on China’s northern border are said to pin down at least an equal number of Soviet divisions. According to imperialist calculations, these divisions would then be withdrawn from the Chinese border and “threaten” Western Europe.
That, too, is a lie. Both the PLA and the Soviet Red Army personnel that are freed from border duty could more productively participate in socialist construction, rather than be a drain on the socialist economy of China and the Soviet Union.
Nothing would suit the socialist cause so much and put Sino-Soviet relations on a proper if not amicable basis as such a mutual arrangement. The rationale for China’s policy of making the USSR the main source of the war danger and sounding the tocsin for all the imperialists to unite against the USSR has not brought prosperity to China but economic destabilization and demoralization of the revolutionary workers.
All the propaganda emanating from Beijing about the need for a hard line to “Moscow hegemony” has finally come to fruition. There are now in Washington the real hardliners that the reactionary leaders in China have long called for.
The Reagan-Haig-Weinberger trio is precisely what the Deng-dictated press has called for. And what has it turned out to be? An ally of socialist China? A friend in need?
Reagan has been in office now for almost two months. He extended courtesies to all of the imperialist allies of the U.S. – Helmut Schmidt of West Germany, Margaret Thatcher of Britain, the French foreign minister, Japan, as well as lesser allies.
And to China? Thinly-veiled hostility. The hardliners China wanted to fight the USSR are not one bit less anxious to also do in the socialist republic of China.
Moreover, it took only a direct offer by Leonid Brezhnev to the U.S. for a summit meeting which forced the White House to suddenly drop its vitriolic, anti-communist tirades and call the offer “constructive.” Such are the needs of imperialist demagogy in the face of the deep fears by the people of a military adventure by the U.S.
Brezhnev’s offer to meet with Reagan was described by the bourgeois press as a conciliatory gesture. This was at least equally true regarding China, as a reading of that part of Brezhnev’s speech indicates, especially in light of contemporary Sino-Soviet relations.
Of course, it should be remembered, diplomatic maneuvering by a socialist country is permissible, especially when it is under siege from imperialism. In this case, it is at the same time an offer by the USSR to the U.S. to get off its collision course with the USSR, even if it only constitutes a temporary interlude.
The U.S. cannot afford to turn it down flat as we profoundly believe they would like to do, which shows the value of proper Soviet diplomacy in these difficult circumstances.
But how much China view it? Certainly it fills the leadership with apprehension. It raises again all the fears that the Chinese leadership had for years with regard to summit meetings between the USSR and the U.S.
Presumably by carving out a path to U.S. imperialism and by becoming a strategic ally to it, China would be consulted in any such summit meeting.
But China’s leaders must have read in the press, just the way we did, that the Reagan administration, if it is to have a summit meeting with the USSR, would consult its allies -- its imperialist allies. And these were spelled out.
China is therefore excluded. It in reality stands alone. While it has diplomatic relations with most of the countries on this planet it has not one socialist ally and has dubious one-sided arrangements with its imperialist strategic partners.
Was the degeneration of the Sino-Soviet ideological dispute into an alliance with imperialism against the USSR worth that much?
Aside from the political and diplomatic balance sheet, which shows China more isolated than at any time since the revolution, Deputy Prime Minister Yao ought finally to look at the economic balance sheet. For here, the disastrous results of the shift to the right is causing more havoc than anywhere else.
Of course, a shift away, even a gradual one, from collaboration with imperialist depends also on the foreign policy that the USSR pursues, which has not at all been free from mistakes and hostility toward China.
A new initiative by either of the socialist countries in relation to each other can prove of far greater significance for the well-being of both countries, the struggle against imperialism, and the cause of socialism in general.
Last updated: 11 May 2026