First of all, it is necessary to mention a point that has played an important role in the economic policies of capitalist states, especially the Soviet and Chinese camps, and that is that now and for a long time now, the world’s surplus population, that is, the unemployed, underemployed, and sometimes employed labour force, has reached astronomical figures. The era when industrial capital was hungry for the labour force of impoverished, landless peasants who came from the countryside to the cities in search of work has long been over. The surplus agricultural labour force and the landless poor of the villages in rural areas have no demand from these areas of capital, despite the growth of agricultural and livestock capital. As a result, continuous migration from villages to cities, especially in large parts of Asia, Africa, and Latin America, has become part of a routine process that is increasing day by day in the peripheral areas of cities, and when these areas are filled with unemployed and surplus population, parts of it, in the millions, follow the path of European and North American countries. The same process is also true for India. We will discuss China in detail later, but this does not mean that this large and populous society is exempt from this problem. The economic growth rates of the countries of Africa, East Asia and India are high, but none of these regions create a small amount of rural land for the unemployed and landless masses. A large class of small peasants, together with agricultural workers, formed the majority of Chinese society. These were different from the prosperous farmers, i.e. the large and medium-sized peasants who owned large tracts of land and each had several agricultural workers in their service. The small peasants were usually only the appearance of an independent peasant class. The property, the small means of production, the fertilizer and seeds they needed were acquired in exchange for loans on onerous and onerous terms. It was not these peasants but the usurers, the banks and the capitalist state who were the real owners of the land. These peasants did not want to lose their plots of land, nor did the original owner, the capitalist state, want them to abandon their lands and join the vast surplus population in the cities.
On the other hand, small producers, the average landowners who also employ workers and earn a profit from the surplus value they produce, always hope to reach the ranks of the richer class. This is one of the prominent aspects of Chinese society, especially the average Chinese farmers, who fear being reduced to the status of wage labourers. According to Marx, the possession of a small amount of their means of production is inversely proportional to their feeling of insecurity. In this regard, the small landowners of India also have similar conditions. The participation of agricultural workers, poor farmers and small landowners in the annual workers’ demonstrations, which are organized, planned and targeted by the unions and the Communist Party, has its roots in this insecurity. The Chinese government has paid special attention to these farmers, including large to medium-sized and small and poor landowners, since its formation and establishment in the middle of the last century. The main policy of this government, like what we saw in the Soviet camp, has been based on two axes. First, continuing the process of increasing the value of the total capital of society by maintaining the role of agricultural, livestock and forestry capital and products in the process of production and circulation of capital, second, making the vast rural poor dependent on their places of life and livelihood and preventing unwanted and unplanned migration to the cities. The latter has played and continues to play an important role in organizing and planning capital crises in both densely populated and vast countries. The mass of Chinese agricultural workers (known as migrant workers) currently comprises one-third (290 million workers) of the total working population of China. This number is by no means constant, but rather its ratio to the total population is constantly increasing. Keeping wage rates low, not spending on insurance and health for this huge workforce, and increasing the intensity and daily hours of work to the limit have been among the levers for countering the downward trend in the average rate of profit. It goes without saying that these policies are not specific to these two capitalisms, but to all international capital, and all governments have inherently pursued them and necessarily continue to pursue them. Now, how much and to what extent they succeed in this is a separate discussion that I will not go into here.
Before entering into the history of the growth of capital in China, it is necessary to draw certain conclusions from the growth of capital in the Soviet Union and its decline. As mentioned in the previous chapter, the dimensions of the growth of capital accumulation in the Soviet camp reached such proportions in a short time that it left behind the previous empire of capital, Britain, and began to compete with the giant of capital on the other side of the Atlantic. This capitalism, like any other capitalism, followed and continues to follow the same general and inherent laws of capital: fierce competition among capitals, the expansion of its world market, the export of goods and the implementation of expansionist policies in other countries, the gigantic export of capital, especially capital goods, and the daily effort to obtain as much share as possible of the surplus value produced by the world proletariat. It resorted to all means and possibilities to utilize technical knowledge, increase labour productivity and competitiveness (let us not forget that the great Soviet scientific institutes were on a par with the most gigantic scientific institutes of Western Europe and America in discovering, applying and exploiting its results) in international markets under the auspices of centralized state capital and state-subordinate monopolies. In addition, state-camp capitalism enjoyed another advantage over the conventional use of religion, diplomacy, culture, war and other tools by capitalism up to that point to increase its share in competition with other competitors and in the class arena and confrontation with the working masses. It introduced itself in the form of communism, formed a world camp of the people’s bourgeoisie in opposition to the capitalist states, blocked any workers’ movement in other countries in its favor and used it as a means of confrontation and bargaining with the rival bourgeoisie. But with all this, when the crises of capitalism knocked on the door after several decades of economic growth after the second imperialist war, it did not work. And if the Western capital bloc found solutions and extricated itself from the predicament, the Soviet bloc politically disintegrated and never returned to what it was before 1989. The general cause and the only cause explaining the crisis of capital is in the production of capital itself. Production for profit and its accumulation. Capital is always looking for more and more profit. With profit, or the surplus value produced by the worker, the accumulation of capital becomes possible and capitalists re-enter the flow of production for greater profit. Capitalist production is in its essence the production of surplus value and capital, and the continuous creation of profit is the support for its routine self-expansion and self-expansion. When the capital invested increases, some of the capitals turn to increasing the productivity of labour in competition with other capitalists, which causes the growth of production in a given time, reducing dependence on labour. The process of production of surplus value is therefore at the same time and inevitably a process of a tendency towards a fall in the rate of profit, and it is this tendency which, under certain conditions, forcibly gives rise to the crushing crises of capitalism. The development of the productive power of labour manifests itself in two ways: first, in the volume and value of the productive forces already accumulated (fixed capital), and second, in the relative smallness of the living labour power which is necessary for the reproduction and valorisation of a given amount of capital in the process of production. The social productivity of labour in relation to the labour force used also manifests itself in two ways. First, it shortens the necessary labour time and increases surplus labour. Second, it leads to a reduction in the number of workers to set in motion a certain amount of capital. These developments put pressure on the rate of profit, and since the total volume of profit is the same as the total volume of surplus value, and the rate of profit is the result of dividing surplus value by total capital. On the other hand, surplus value is tied to its rate on the one hand and to the variable labour force or capital that creates this rate on the other (Chapter 15 of Volume 3 of Capital by Marx well explains the process of formation of capitalist crises from this perspective). In this way, the capitalist crises after two decades after the end of the second imperialist war, which was itself the result of previous crises and had to achieve a new arrangement by refining capital, crushing parts of it, and in this process, using all the technical achievements of the war as a springboard for an astronomical increase in capital production, laid the groundwork for the crises of the 1970s and onwards. But it never turned to other processes for the production of chemicals, or petrochemical sub-assemblies, and the Soviet Union did not reach the point of competing with medium-sized American companies in this field either. Steel and metal production was carried out to a high extent in this vast country, but these important capital goods were also exported only as raw materials to Europe and India, and a small part of their mass production was and is being converted into semi-capital and consumer goods at home. None of the goods mentioned underwent the normal process that a capitalist system goes through, in which the surplus value of the working masses is added to each other in subsequent processes and added to their social capital, in the Soviet Union. The only area of capital advance that followed a complete process and brought in exorbitant profits to the social capital of the Soviet Union and Russia today is military goods. Make no mistake, I am not suggesting here that a capitalist society must be perfect in all its production processes in order to be considered capitalist, but it is equally clear that this is a great advantage, both in terms of the growth of social capital and in creating certain means to deal with the emergence and progress of crises. With this imbalance between the different sectors of commodity production, as well as the huge shortage of medium and small capital, which always acts as a shield and obstacle in the path of heavy and devastating blows to big capital, both during and after the crisis, and prevents the depth of the crisis and its tensions, the depth of the crisis, its prolongation and its social consequences have caused more than their effects on the Western bloc of capital. Any capital that has a larger volume, higher labour productivity in its field of accumulation, greater competitiveness of its capital, and a larger volume of production also receives a larger share of profits and surplus values. In this regard, capitals and capitalisms with a high organic composition in commodity exchanges, capital exports, and exchanges with capitals and capitalisms with a low organic composition (which is always synonymous with a large volume of labour in the ratio of fixed capital to mass production of surplus value) use themselves to some extent in times of crisis from surplus profits, including surplus values due to the operation of the general rate of profit resulting from high labour productivity at once, which even if it is not the product of workers who are directly exploited by this capitalist, is the product of social labour, and monopoly profits resulting from the formation of temporary and permanent monopolies and monopolies (a clear example of this is production in the oil sector, which on the one hand is accompanied by continuous growth in labour productivity, and on the other hand, the OPEC monopoly causes prices to be set that are very high in some periods) obtained in these exchanges to cover and reduce the effects of the decline in the rate of profit. This trend is true even within a given capitalism and a given country, so that industrial giants always absorb, along with medium and small capitals with low organic composition, a significant part of the social surplus values produced by the working masses. The Soviet bloc enjoyed and benefited from this trend very little compared to the capitals of Western Europe and America, as well as compared to the dimensions of its large capitals and gigantic monopolies. The Soviet bloc had political and military influence in the world in all spheres of the world, but these political and military influences and exchanges never led to the attraction of large profits for the benefit of this capitalism as much as Western capitals. These exchanges within the Soviet bloc also did not respond to the lack of profits of large monopoly capitals due to the small and insignificant nature of the capitals with low organic composition. When the signs of capitalist crises became apparent, the capitalists of Western Europe quickly set about forming a common market, reducing competition, and creating the necessary levers to deal with economic crises. This process was the opposite in the Eastern Bloc of capital, which led to the disintegration of the Soviet and Yugoslav camps. The result of this political effort and the disintegration of the Eastern Bloc of capital was not as it is said in the West. These blocs no longer exist in their old forms, but their capitals continue to exist with less competitiveness. There is another specific difference between these two blocs, and that is that the Western Bloc of capital, which also includes the United States, began the process of globalization and the export of capital from its very birth. This later became one of the most important factors inhibiting the tendency to reduce the rate of profit. In the third section of the third volume of Capital, Marx lists the factors of this inhibition and examines and dissects each of them in detail. Among other things, regarding foreign trade, he raises the question, “Does the general rate of profit increase as a result of the rate of profit earned by capital in foreign and colonial trade?” He answers, “Capitals devoted to foreign trade can generate a higher rate of profit, because in this case, first, there is competition with goods produced in lands with less ease of production, so that the more advanced country sells its goods above their value, even though they cost less than competing countries.” To this argument, we must add the new conditions of capital export and the merging of European-American capital with the capital of countries such as Iran, all of Asia and Latin America, which the excellent combination of these capitals with the inferior combination of the capitals of the aforementioned countries causes a raging flood of super-profits to the social capitals of Europe and America. The capitals of the Soviet camp never experienced these conditions. From the very beginning of its formation, the Soviet Union began to create its own political counterparts abroad, used the leverage of the Comintern only to exploit its political-military influence in the countries of Latin America, Asia and Africa, and later in Europe it also began to form fraternal parties. This political influence, which in some cases was also thrown from the opposition to the government (such as the Baath parties of Iraq, Syria and other parties in the Horn of Africa), never and in no case became a channel for the export of capital and goods, and the state capitalism of the camp never had the opportunity to become a competitor in international exchanges for European-American and, naturally, Japanese goods in obtaining super-profits. Another important factor that was not considered in the past, until after the second imperialist war, was the cheapness of labour in Asian and Latin American countries, despite the important infrastructure of roads, airports, important research facilities, and good agricultural and livestock lands. These were important causes of the difference in the production prices of goods that were produced in the original country and now, by exporting the same technique, it increased the average profit for the exported capital and in this way it rushed to compensate for the decrease in the profit rate. For this reason, Soviet capital was unable to compete with its Western competitors. The establishment of the Isfahan Iron and Steel Works and its like here and there was more of a symbolic aspect than a threshold for obtaining large profits. Therefore, when the crises of capitalism knocked on the door of the entire system, the social capital of the Soviet camp did not have any deterrent or mitigating factors.
It is necessary to mention a point here, namely that there is no intention at all to seek the causes of the crisis in the lack of consumption or its insufficiency. Long before Marx, there were economists who sought the causes of the crisis not in production but in the exchange and distribution of goods, and even socialists who saw the causes of capitalist crises in competition, the free market for production and exchange of goods, and in a word, the lack of an organ to control capital’s competition. We have nothing to do with this group, but Marx criticized the first group from the very beginning. Marx writes in the introduction to the first volume of the Grundrisse (translated by Sadeq Ansari) “Our conclusion is not that production, distribution, exchange and consumption are nothing more than one thing, but that all of these constitute parts of a whole or distinct aspects of a single category. The scope of the influence of production in its contradictory social form (i.e., in class formations) is not only limited to its own sphere but also extends to the sphere of other elements of the production complex. Everything goes back to production and is constantly renewed on its basis. It is clear, then, that exchange and consumption cannot be the dominant factor. Similarly, distribution, as the distribution of products, while distribution, as the distribution of factors of production, is itself an element of production, and thus a certain type of production determines certain types of consumption, distribution and exchange. Just as it determines certain relations of consumption, distribution and exchange”. Therefore, the source of capitalist crises cannot be sought anywhere else than in the production of capital.
After these introductions, let us return to the main discussion to see whether Chinese capitalism has a different destiny, what differences does the process of capital accumulation show, and what is this destiny like?
First of all, let us examine the development of the sphere of industrial agrocapital. I do not see the need to enter the historical-political period of Mao here, but rather go straight to the 1970s, and that too after Mao’s death. L. John W. Langworth writes in his book “China’s Agricultural Development in International Comparison, translated by Mohajerani.” In the 1970s, there were three capitalist institutions.:
1.Large state institutions such as state farms 2. Cooperatives and collective units 3. Small and generally family units such as small farms. He also writes about urban industries: shipbuilding, steel industries, coal, etc. In addition to small agricultural units, he mentions short-distance transportation and the production of building materials for local sale.
The decisions of the 11th National Congress of the Party in late 1978 led to the dismantling of the people’s communes (a type of large-scale farm in the countryside that was created in 1958-61 and followed the model of Soviet Russia). The allocation of large-scale and state-owned land to family farms and the transformation of the ownership structure (it should be noted that all land, including agricultural, livestock and forest land, belongs to the Chinese government by law and is transferred to individuals and families in exchange for rent and a commitment to sell the products to the government). Labor productivity increased so much that agricultural productivity led to a grain production of more than 400 million tons in 1984, which was unprecedented in Chinese history up to that time. Until then, the Chinese capitalist state had acted in the same way as the Soviet Russian state, i.e., it ate from both the manure and the trough, aiming to maximize its own profits. It owned the land and collected rent, levied taxes on goods, including agricultural goods, and producers (here, we mean small, medium, and large capitalists in agriculture and livestock, because, just as was customary in the Soviet Union, poor peasants were not even able to produce their annual needs on the little land they owned, so nothing from them went to the state) were forced to sell their products to it. The 11th Congress increased the price of agricultural products purchased by state institutions and reduced the number of these products under state control. These policies increased the income and profits of agricultural and livestock companies. Between 1975 and 1986 (a decade), the volume of chemical fertilizers used in agriculture more than tripled, and the increase in the production of seeds, seedlings, and agricultural machinery was a direct result of the growth in agricultural production during this period. For six years, between 1979 and 1984, grain production increased by 30 percent, per capita income tripled, and the number of active workers reached 70 million. But by the end of this period, unemployment in the countryside had increased sharply, with some villages accounting for 40 percent of the workforce by 1988. Unemployment was also rampant in the cities. Thus, unlike the previous history of capitalism in Europe, the surplus rural labour force that resulted from land reforms and the transfer of common lands to capitalists was not a basis for attracting this labour force in the cities. At this point, these wage earners faced three scenarios: 1- Becoming part-time rural agricultural labourers. Because there was no other option for rural workers with half a hectare of land, poor quality land, or landless workers, who had already formed a significant part of China’s migrant workers. 2- Leaving the countryside and farms and seasonally migrating to the cities. 3- Migrating to the cities and settling permanently, even without the prospect of selling their labour. In the first two cases, the laws of the Chinese capital state are so strict that the maximum stay in the city is one year, and at the end of this period, clear and acceptable reasons for extension must be presented, otherwise the worker is forced to return to the countryside. In the third case, which generally includes landless workers, all conditions are up to the worker himself, meaning that if he does not find work, he does not receive any expenses or assistance from the central or local government. At the beginning of this period, i.e. 1980, about 80 percent of China’s population of just over one billion lived in villages. Rural cooperatives with small and medium capital employed about 3.4 percent of the rural labour force. The value of gross industrial production before 1950 was about 10 percent of the total, and in 1978 it reached 74.4 percent, and the value of agricultural and livestock products at the same time fell from 90 percent to 25.6 percent at the end of the period. This was despite the fact that there was little change in the wage labour force in these two areas. The rural labour force was about 76 percent of the total labour force in the country, while the rural population was still about 80 percent of the total population. Although these figures are approximate and estimated by the central government and the National Congress, they clearly show one thing: the Chinese capitalist state has been largely successful in controlling the migration of labour to the cities. The productivity of rural labour was very low between 1965 and 1977, and for this reason the production of food and agricultural raw and semi-capital materials from oilseeds, hemp, cotton to livestock and marine products for industries has been very low. Just as in Soviet Russia in the 1930s, we witnessed price fixing (the government was the price setter and the main buyer of agricultural, livestock, and forestry products) of these products, which in practice ended up at the expense of industrial products because a significant portion of farmers did not deliver their products to the government, and the prevalence of the black market was a direct consequence of this policy, which itself caused a downward trend in labour productivity in the villages. However, in both the Soviet Union and China at this time (where the government was the main buyer and seller of products), large industries such as steel, energy, oil and gas, machinery, and the like, which had a rare need for rural products, continued to grow, and the process of capital accumulation, although slow, continued. In the meantime, small and medium-sized industries had very little growth. In 1979, the government, as the main buyer, raised the price of agricultural goods. From 1979 to 1984, the value of agricultural goods increased by an average of 9.1 percent annually, and during the same period, the value of total industrial goods in cities increased by 8.9 percent. In addition, small and medium-sized enterprises in rural areas increasingly focused on increasing labour productivity, and as a result, more and more unemployed labourers were moving to cities. Capital in rural areas began to accumulate. The investment trend of the central government and local governments in agriculture, rural industries, forestry, and animal husbandry, as well as the purchase and sale of products, decreased. The accumulation of capital in rural areas, together with cheap labourers who were ready to do any work for a small wage, led to the growth of small and medium-sized rural industries, so that in 1986 the value of these products reached 354 billion yuan, which was 31.7% of the country’s total industrial output. While ten years ago, this value was about 26%. At this time, 79 million workers in rural areas were engaged in the production of surplus value, of which about 62% were urban industrial labourers. This shows that agriculture, animal husbandry, and forestry industries used a huge labour force and their value output was very low. For this reason, the migration of agricultural workers and poor rural farmers to cities is constantly growing. Over the course of five years (1979-84), 23 million rural workers migrated to the big cities in search of work, and about 3.8 million settled permanently in the cities. Some of these poor farmers rented small, poor plots of land, which provided a small portion of their seasonal needs. These workers generally migrated to the industrial coastal cities of eastern China, where industrial growth, urban expansion, and the availability of construction, restaurant, and cleaning jobs were greater than anywhere else in China. These workers, who would henceforth be known as “migrant workers” and did not migrate from areas other than rural China, increased in number year by year, reaching over 100 million workers in the early years of the twenty-first century. Together with the expansion of capital accumulation, the growth of labour productivity in both industries and in the capital-intensive agricultural sectors, in 2019 they reached an astronomical number of 290 million (one-third of the labour force in China’s densely populated country). The hungry and poor worker who goes from door to door in search of a morsel of bread to feed himself and his family, carrying a burden of misery and displacement from village to city and from province to province every year, is in migration. At the end of these five years (1984), there are about 300 million farmers (including agricultural workers, small-scale farmers, other landowners and livestock farmers), which is much more than the arable agricultural land (China has about 100 million hectares of arable land). After the Chinese Revolution and in 1950, the lands of large landowners (about 47 million hectares) were first taken over by 60 to 70 percent of the landless peasants. Small and medium-sized agricultural cooperatives were formed to make it possible to use larger fields with the use of combine harvesters, and at the same time, large agro-industrial companies were formed that cultivated, farmed and industrially harvested under the ownership of local governments and people’s communes. This process continued until 1978. The latter consisted of cooperatives of the poorest farmers, whose land, both in terms of area and quality, was of poorer quality than that suitable for mechanized or high-labour- efficiency farming. Moreover, these peasants were unable to acquire mechanical equipment after paying rent to the government and bearing the expenses of local governments. According to the 1978 census, about 86 percent of the assets of these peasants consisted of very primitive and low-value tools of labour, grain in warehouses, which was generally the daily life reserve of the family, and land that could have been transferred to a richer owner to add something to the limited life of these poor peasant masses. In fact, these peasants, with equal shares among themselves, were practically agricultural workers that the government tried to show to the world as a manifestation of socialism. Then, the changes that took place after 1978, despite the pompous and beautiful titles, did not bring any change in the situation of these workers and their families. The only fundamental change was the constant share of taxes to the government and the share of cooperative reserves, which was done with the aim of increasing the incentive to produce more for higher incomes. This could have increased the share of personal household consumption. On the other hand, the cooperative share led to the acquisition of capital facilities such as irrigation systems, agricultural machinery, and the like, which could generally benefit farmers who had higher reserves than the poor peasants in the commune. These farmers, who owned the means of production, livestock, buildings, and irrigation systems in their cooperatives, enjoyed larger and better land, which, although it belonged to the state, each member of the cooperative owned the remaining product after paying rent, taxes to the state, and the cooperative share. Reforms were carried out and the retreat of the capital state, as in Soviet Russia, was nothing more than the recognition of a parallel market that had formed alongside the state as a buyer and seller of agricultural and livestock goods, landowner, tenant, and tax collector. Let’s dissect this phenomenon a little.
The smuggling of goods, the empty state-owned stores, and the intense activity of private black market centres are spontaneous phenomena common to Soviet Russia and China at certain periods, which eventually forced the governments of these societies to recognize and approve them as steps towards the creation of a free market in trumpets and trumpets!! For years, the cover of state ownership of industries and industrial agriculture owned by local governments and the central government of both the Soviet Union and China was a hollow shell, but their managers acted in their planning like their own capital, for this reason every tul that was within the control of its managers acted as a special monopoly. This was a harsh, material and real reality that forced high-ranking party politicians to accept and formulate it in party statutes, resolutions, and platforms. All the intra-party disputes from the Mao era to Deng Xiaoping, which are based on how capital grows in China, have been nothing more than adapting policy to the needs of capital growth and accumulation. For this reason, I have not entered into these processes, because the final result, which is the growth of accumulation and its history, is what we are witnessing today. However, there are some characteristics that distinguish this capitalism from the formation and expansion of capital accumulation in the Soviet camp. Mao and other Chinese leaders of that time closely followed the fate of the Soviet Russian Empire. Mao entered into trade with the world of capital outside China with complete discretion and welcomed the active participation of foreign capital, especially the most powerful and advanced capital in the world, namely American capital. The Chinese government knew and was well aware that China’s huge labour force, important sources of mineral reserves and the ability to grow capital with a centralized government would attract much more attention from foreign capital than what had become known as the Asian tigers. In addition, Chinese capitalism enjoyed and still enjoys a unique competitive position alongside the advanced capitalisms of Japan, and then Korea and Taiwan. Let us return to the structure of agriculture. Over a long period of time, farmers with limited land ownership (on average half a hectare), who comprised the majority of the population, who were called peasants, informally leased their lands to larger owners and tenants who, depending on their capital, connected these small plots of land and created large agricultural units with the capacity to plant and harvest technology and increase labour productivity. This process was initially illegal, as usual, but after the approvals of Congress, it was recognized because the need for capital required that agricultural units be converted to industrial agriculture as much and as widely as possible so that the smallest possible labour force could produce the most goods. In this way, the number of agricultural workers and the concentration of the population in the villages were reduced and the working population in the cities was increased. This process had begun in the early 1980s, and during this decade, the production of rural non-agricultural goods such as forest products and livestock and marine products, raw materials used by industries such as oilseeds, fibres, etc. grew rapidly. The villages around large cities were transformed into agro-industrial towns. Large agricultural lands were used to use combines, pesticides, chemical fertilizers and harvest crops, as well as to convert these products for use in industries, restaurants with low capital and low labour, which reduced production costs. The most important agricultural product of any country, which plays a major role in food production, raw materials in many industries, and also in international competition, is grains (of course, each grain or set of grains is different in each country), and China, with its billion-strong population, is the best market for these goods. From 1979 to 2005, agricultural output increased by 12 kilograms per year (a total increase of 73.5 kilograms). With this trend of growth and accumulation of capital, the formation of larger companies and the use of machinery increased the size of agricultural lands, and at the same time, the social division of labour led to the formation of specialized companies such as transportation of goods, purchase and sale of agricultural machinery, fertilizer, seeds, and plant pest control that operated within the city and village limits. Some agricultural families pooled their capital and labour, providing more capital, while many became agricultural workers in agricultural and industrial companies. This trend is also ongoing, with many cooperatives, by adding their capital to each other, turning to the cultivation of products that, while providing high returns, provide more profit than grain cultivation. Most of these products are basic and raw materials for industries such as (oil seeds, fibres, peanuts, sesame, oilseed rape, cotton, hemp, sugarcane, and tobacco). The establishment of livestock farms, fish farming, and aquaculture are also of this type. Recently, the use of modified seeds, the production and use of special chemical fertilizers, and the cultivation and breeding of various animals have led to the formation of huge capital in a short period of time. In the mid-1980s, when a significant part of the Chinese population still lives in villages and rural towns (nearly 800 million), the capital state is no longer the only buyer of agricultural, livestock, and forestry products, but a collection of companies, private institutions, and local governments are active in this process, and the central government, even if it wanted to, is unable to finance this mass in terms of capital. From trade in products, raw materials, and auxiliary industries to the production of technology, bank credit and forest loans from capital institutions have been formed in a relatively short period of time, and the central government has become one of the capital factors in this complex.
The total value of the means of production, from products, to means of production and buildings to transportation, all took place in the process of production, reproduction and accumulation of capital, and the total of these doubled between 1978 and 1985 (Table 6). During this period, the capital of small enterprises increased by almost nine times and by more than four times the ratio of total capital. At the same time, the number of landless people increased, and the number of wage workers increased. From the book “China’s Agricultural Development by John W. Longworth: A Symposium on Rural Development Strategies in Theory and Practice”.
Capital allocation in different areas over 6 years (in percentage)
Table 7 The growth of transportation and the formation of commercial units as well as rural industries was accompanied by an increase in the prices of chemical fertilizers, pesticides and agricultural machinery due to high demand from farmers and ranchers. Fertilizers grew by 43 percent, pesticides by 83 percent and machinery by 90 percent during these six years (Table 7).
Table 8 Distribution and change in investment in the production of agricultural, livestock, etc. products in percentages based on commodity prices.
The main reason for the decrease in the share of grain cultivation is the increase in labor productivity and greater efficiency of cultivated land, which has led to the accumulation of capital in this area and has provided the possibility of investment in other areas such as forestry, fish farming, beekeeping, etc. (Table 8). At the same time, along with the production of more agricultural, livestock, forestry and related industries, trade and the purchase and sale of goods have been freer than in the past. Since the early 1950s, the government has been the main buyer, the main price setter, as it is the main owner of agricultural land, forests and pastures. In fact, a significant part of the surplus value produced by workers in these areas was appropriated by the Chinese capital government for a long time. The Chinese government had no other model than Soviet Russia. This greatly contributed to the establishment of industries, the expansion of cities and the capital communication network. However, this policy was not always successful, as in the late 1950s it showed its unfortunate results in the reduction of agricultural production, the emergence and growth of the black market for goods produced in the villages, and the reduction of the capital government’s sources of income. In this case, too, Soviet Russia was a model, with the difference that the central government of China was gradually forced to retreat and allowed competitors and small and medium-sized capital to grow. Therefore, a normal supply and demand market was created in the field of agricultural, livestock and forestry trade. This quickly spread and turned into cities in China’s domestic trade and commerce. After paying the government’s share in the form of taxes and land rents and some local government fees, the surplus production was used to accumulate capital in the villages and towns around them in the form of cooperatives, private and joint-stock companies. These developments began in the mid-1970s during the party’s and its various factions’ competitions, all of which were models of state capitalism, with different forms, different speeds and determination of the share of each faction. Finally, with the leadership of Deng Xiaoping, the task was determined and the process of capital growth took the direction that we are witnessing today. However, in 1985, two major commodities, grain and cotton, had two prices and two markets. A market that the government intended for its purchases, and a free market where cooperatives and individual capitalists sold these two commodities after paying the government’s share. Just like in Soviet Russia, part of the trade in agricultural and livestock goods was under the supervision of local and even central governments, meaning that a vast network of state-owned enterprises under the name of cooperatives was present in the cities to buy and sell these goods. For example, in 1985, about 85 percent of the egg market, 50 percent of vegetables, 38 percent of chicken, and a small amount of the seafood market were still under the control of the Shanghai municipality. The retreat of the government as the main owner and major planner of social capital was a move that had been seen in the Soviet camp. It was natural that the government, as the main owner of major social capital, with the aim of accumulating as much as possible in the shortest possible time, would make decisions such as pricing agricultural, livestock and forestry goods below their value (the price of these goods on the black market was always much higher), leading to the expansion of the black market, the official parallel market, and even the refusal of farmers and livestock farmers to deliver goods to the government. Therefore, from the late 1970s, the central government and state governments began to retreat. In all cases, what was parallel was approved and formalized by the governments. This was a trend that we also witnessed in the Soviet camp. Therefore, it was not the governments that took the initiative to create the market, but the same activists of parallel capital were allowed to officially continue the black work. The reduction in the number of government-rationed goods from 21 to 18, the reduction in control of government-controlled goods such as grains, cotton, and oilseeds, and the acceptance of a market for them, led to a slight reduction in the government’s share of below-market pricing. For example, the amount of grains sold to the government at prices below their market value in 1981 reached 64 percent of its amount in 1978. The increase in the price of some goods sold to the government increased. In this way, the market came out of its hidden state, which also led to its expansion. The result of this process was the growth of capital accumulation in the villages and towns around the villages in a short period of time. In 1985, the central government lifted the obligation of rural capitalists to deliver and sell goods to the government. Between 1985 and 1987, the production of these goods increased. Red meat grew by 14.3 percent, fruit by 18.2 percent, and aquatic products by 13.9 percent. This trend continued in 1986 and included most agricultural and livestock products. The capital accumulation ratio reached 22.5 percent in the same two years. All the efforts of the state-owned enterprises of China’s capital act on the basis of pricing in their own interests to transfer as much profit as possible from small and medium-sized agricultural producers to the large state capitalist. In this regard, even commercial cooperatives act in the interests of the large capitalist. These cooperatives, which are responsible for purchasing products from rural producers and supplying consumer goods to these producers, although they became independent financial units in the mid-1980s and their government subsidies were eliminated, and they were supposed to compete with private capitalists, nevertheless act in their role as commercial intermediaries in favor of large state-owned capital because all their work is dependent on the government bureaucracy. The number of business units in 1984 was about 7 million with tens of millions of workers in rural areas. In a relatively short period of time, business units and commodity exchanges were transformed into a network of regional, national and even international markets. At the same time, a vast network of commodity communication routes was created, which accelerated the transportation and transportation of goods. Companies for packaging goods, warehousing, construction, and commodity exchange markets sprang up and grew like mushrooms. But tractors were still the main means of transporting agricultural and livestock goods (about 59 percent of rural transportation), and the share of special trucks was about 14 percent. By the late 1980s, the increase in labour productivity in agriculture, the social division of labour in it, and the increase in agricultural land area as a result of land acquisition and the formation of larger agro-industrial units led to the unemployment of about 30 to 50 percent of agricultural workers in eastern China. During this period, about 50,000 small and large capital enterprises, some cooperatives, joint-stock companies, partnerships with state organizations were created, but these forms were not fixed, but, as in any capitalist system, they are changing and evolving in terms of ownership, the amount of capital, its organic composition and the speed of accumulation, as well as the area of advancement. The policy of household ownership and production, which contained limitations such as dispersion, lack of capital and generally lack of access to advanced tools, is rapidly shifting towards larger institutions with more capital. So that the attraction of capital and technology from outside China has also become popular. In some areas, joint projects with high profits have been provided by partnerships with foreign institutions, which has led to a significant increase in labour productivity and has attracted the attention of other agricultural institutions.
When farmland was divided among households a few decades ago, the per capita landholding of each household was about 0.5 hectares, and this amount created extensive limitations in terms of the development of labour productivity, specialization, and division of labour. For this reason, it quickly showed its inadequacy, so that many poor farmers (about 70 million) transferred their lands to larger landowners with payments and became wage and seasonal workers. In the continuation of this process, a significant part of the rural labour force migrated to cities by 2000 in search of work in urban industries and towns around the village, either temporarily or permanently, so that the rural population decreased to 60 percent of the total population of China. What is called migrant workers in China are these workers from poor peasant families who, in some cases, remain in the village while maintaining their small plot of land, and generally the man of the family comes to the city in search of work. This number was about 18% of the total rural workforce in the late 1980s, and this figure even reached 27% in the industrial areas and east coast of China.
The development of forestry, the conversion of some agricultural land into forests, pastures for livestock, fish farming and other ancillary industries increased. The area under grain cultivation decreased by more than 9 million hectares in the late 1980s compared to the previous decade, while the area under industrial agricultural enterprises increased by about 7 million hectares during the same period. Other sectors in rural areas such as housing and construction in general, transportation, mining, trade and services grew during the same ten-year period and by the end of it had reached 43% of the total value of rural products. The same sectors accounted for 56% of the total value of industrial products in the east and east coast of China at the same time. Based on research conducted on what is called rural households in China in the period 1980 to 1990, they are divided into two groups. The first group, which includes a significant portion of peasants who have an annual income of less than 200-yuan, 90 percent of which is the result of agricultural work, and this income is generally non-cash and in-kind (more than 50 percent of which is in-kind). In other words, these are peasants who, due to limited land and insufficient quality of land, are unable to produce goods and supply them to the market and generally produce for their own livelihood. These are the same migrant workers who either work for large farms and industries or come to the cities to sell their labour temporarily. Another group is the farmers, who are fewer in number but have tools and some bank deposits. Some of them hire other workers for wage labour. But a significant part of this group relies on family labour on their land or livestock farms. This form of peasant household has been planned in China for decades and has remained almost untouched. The reason for this is the planning and management that the Chinese capitalist state consciously carries out and, with rules and regulations, prevents the untimely and uncontrolled influx of peasants, especially the poor (agricultural workers). This group of poor peasants, who are not even able to produce their own livelihood, constituted about 38 percent of all households living in villages in 1985 and is increasing. In the mid-1980s, the cost of grain production increased due to the increase in the price of machinery, chemical fertilizers, and even high-quality seeds. This trend added to the collapse of medium-sized farmers, and some of them transferred their meager capital to non-agricultural areas such as animal husbandry, fish farming, agricultural commodity trading, warehousing, etc. The number of small and medium-sized rural enterprises that went bankrupt has been increasing since 1984. In 1978, the total consumption rate of rural gross output was 42 percent, with agricultural output accounting for only 32 percent. Ten years later, these figures rose to 50.2 and 38.3 percent, respectively. Meanwhile, the price subsidy paid by the government to agricultural enterprises fell from 25.5 percent of the total price of manufactured goods in 1978 to 2 percent in 1986. (China Statistical Yearbook 1900, China Rural Statistical Yearbook). From the 1950s to the mid-1980s, the share of agricultural output in total GDP fell from 67.4 percent to 35.5 percent, while about 88 percent of the labour force in agriculture fell to 76 percent, meaning that there was a large rural poor who could not even find a wage job, and China’s industries were unable to absorb such a surplus population. Therefore, urban workers’ wages were kept low. This trend greatly benefited industrial capital and all capital active in the cities because the balance and competition between wages and the surplus value produced by workers was strongly in favor of the latter. This was also the precursor to the growth of industrial capitalism in China.
In most analyses and writings on recent Chinese history (since 1950), it is said and argued that China, with its large peasant population, has special and unique conditions for the growth of capital. The rural population combined with the limited arable land is the common theme of all these writings. Exactly the same conditions and premises can be considered for all African and Latin American countries. Has the accumulation of capital in this vast geography taken a special form over a long period of time? This has been the situation of the entire capitalist world after its initial development and especially the beginning of the growth of labour productivity, which led to an increase in the surplus labour population. Almost no country in the capitalist world is not only unable to absorb this huge labour force, but this factor has also caused pressure on the volume of capital state expenditures. Meanwhile, the entire world capitalism uses this massive population as a lever to keep wages low, to reclaim the insignificant concessions that it has been forced to pay under the pressure of labour struggles (such as workers’ retirement age, social insurance, reduced medical costs, reduced quality of education, etc.). China is no exception to this rule. It is noteworthy that China’s arable land has also decreased by about 13 percent from 1957 to 1985, and this decrease has been achieved by converting this land into pastures, forestry, and areas for the production of non-agricultural goods. On the one hand, China’s industrial agricultural capitalism, like other competitors, has enjoyed high progress in land productivity, increased labour productivity in this advance area, and on the other hand, as we will see, it has enjoyed a positive balance in international agricultural commodity exchanges. In the mid-1980s, the Chinese government estimated that there were about 100 million surplus workers in rural areas, meaning that they could not earn a living from small plots of land and could not find work in cities. This was because cities were also overpopulated. During this period, not many factories and work canters had been built, and capital accumulation was so small that it could not absorb the surplus population in cities and villages. According to the 1986 Statistical Yearbook of the Chinese National Bureau of Statistics, cereals accounted for only 44 percent of the gross value of agricultural output in 1985. While its share was 59 percent eight years earlier, the shares of other crops, livestock, and agricultural by-products (excluding industrial goods, fisheries, and forestry) had increased by more than half, to 15, 22, and 6 percent, respectively. Capital accumulation in the areas of rural industry, forestry, and services rose sharply in this decade, from 31 percent in 1978 to 47 percent ten years later. These developments, along with the decline in the role of grain production, indicate the rapid industrialization of China’s overall social capital. The production of agricultural products such as grains (except rice) is moving in a direction that increases the import of these products, and the production of products such as livestock products, fruits, vegetables, and off-farm products is moving forward. This process of capitalist progress is motivated by the production of higher profits and accumulation through production in new areas, which follows the pattern of other East Asian countries such as Japan, Korea, and Taiwan with the new refinement and arrangement of capital. The trend of a relative decline in the share of agricultural products and the transfer of capital to new areas of capital advance such as livestock, forestry, rural industries, rural transportation, and the growth and expansion of credit companies and local banks all stem from the growth of accumulation and saturation of capital in conventional areas. In this way, Chinese capitalism is rapidly entering the process of exchanging basic agricultural, forestry, and livestock commodities with the world of capital outside its borders. The mass production of livestock products led to a social division of labour and necessitated the importation of more of these goods, as their production outside China’s borders, especially in the United States and Latin America (Brazil and Argentina), was cheaper due to the huge advances in labour productivity. The same trend was true for cotton production.
All the growth of capital accumulation, new arrangements and the emergence and expansion of new areas such as restaurants, food industries, textile weaving, clothing production, footwear, etc. have increased the need for basic infrastructure facilities such as communications, transportation, post and telecommunications, electricity, water conservancy and canalization projects, which the central government of China has deemed necessary to expand. Generally, communication and transportation in China’s history have been carried out mostly through waterways. In 1985, the total number of roads and highways was about 65,000 kilometres, which, despite an 8% increase compared to 5 years earlier, was very primitive for the vast and densely populated country of China. This was while China’s domestic water transportation consisted of 109,000 kilometres. Water transportation in China has always been essential and important for the agricultural and livestock sectors and their goods. The number of motor ships transporting agricultural and livestock products increased by about 119 percent in just 5 years to 1985, and this increase was parallel to the formation and expansion of rural land transportation companies and institutions. In 1985, of the approximately 50,000 companies and economic institutions formed in villages, about 17 percent were in the field of communications and transportation. In 1986, the Chinese capital government decided to increase the capacity of the capital transportation sector by 45 percent by 1990 in order to prevent the congestion of goods in ports, the lack of railways, and the obstacles to the transportation of capital goods such as oil, coal, and agricultural goods. State-owned transportation companies have played an important role in this interstate and intrastate capital sector. In the mid-1980s, these companies transported about 40 percent of all wheat, corn, and rice, or about 140 million tons of goods. The need to return to the field of cargo transportation is necessary, but for now, this seems to be enough.
During the 1980s, the industrial agro-industrial complex of China and India accounted for one-third of global fertilizer production, and the share of these two major capitalist economies in the consumption, production, and import of these raw materials was 70, 53, and 85 percent, respectively. In this regard, as in many other areas of capital, the Chinese government and its companies play a major role in purchasing, importing, and selling these products. The growth in fertilizer consumption in China has been accompanied by the growth in capital accumulation and the increase in the number and size of agro-industrial companies that are able to use these materials usefully and effectively. In 1952, these products were used on average at 0.6 kilograms per hectare of cultivated land, and in 1986, they reached 120 to 130 kilograms per hectare, which is about 210 times the amount used in the early years of their use. During this period, the role of production and consumption of improved seeds, selection of seeds with high labour productivity in all agricultural products such as oilseeds, sugar beets, sugarcane, cotton and other fibers, fruits, tea and other plants was constantly increasing. During this period, the efficiency of fertilizer use (increased labour productivity) in the production of rice was 90 percent, corn and wheat was 70 percent, and the same proportion was for sugar beets and other root crops. Of course, fertilizer use does not always lead to an increase in labour productivity and land yield and remains within a certain range, and in some cases its final productivity decreases. The government provides economic support to both producers of various types of chemical fertilizers and agricultural companies with various subsidies and always covers their profit reduction. Other policies of the Chinese capital government, like other capitalist ones, are investment in infrastructure in the irrigation system, agricultural research, providing agricultural credit, fertilizer distribution networks and even creating local markets for buying and selling agricultural goods. All these investments totaled about 260 trillion yuan from 1950 to 1985. During this period, profits from the purchase and sale of agricultural products, machinery, investment profits in agriculture, land interest (as mentioned earlier, the Chinese government owns all land, including agriculture, forests, and grasslands in China), and the sale of government bonds in the aforementioned areas, as well as the allocation of special taxes (for example, a 7 percent tax in 1987 was set aside to finance energy and communications). Since the second half of the 1970s, when the Chinese capital government reduced a significant part of its control over the production, purchase, sale, and planning of agricultural products in favor of existing capital and their growth in this area, the amount of fundamental investments such as water conservation, the creation of water reservoirs, irrigation networks, the allocation of credit for the mechanization of industrial agriculture, the improvement of poor state-owned lands, the creation of the necessary grounds for the production of forest products, fruits, livestock, poultry, and the establishment of fish farms, the increase in financial resources and investment in agricultural technology, the provision of better types of seeds, the improvement of seeds in order to increase the productivity of agricultural labour, and the increase in labour productivity per unit of cultivated area by increasing the quality of agricultural land increased. In this way, the government’s share in providing direct capital and credit did not exceed 10 percent, and the share of local capital, agriculture, industries, and livestock farmers reached 90 percent in 1986. This was made possible by raising the purchase price of agricultural products and creating a minimum tax and the government’s share of foreign exchange duties in favor of capitalists. During this period, with the growth of profits from capital advances and the accumulation of capital in villages and towns, and the development of agricultural companies, which led to the consolidation of more land, the government raised taxes on these companies to obtain a larger share in the distribution of profits. At the same time, interest-free loans were provided to increase the share of forest products production, grain trade, and rural industrial production between 1980 and 1990. Foreign capital was also attracted to areas of China’s industrial agriculture. Such as the North China Plain Project to desalinize and desalinize this region, and to reclaim some lands for the production of oilseeds and rubber.
The role of agricultural production in China’s total economy excluding services until 1985 Source: China’s National Bureau of Statistics 1986
During this period, there were still two pricing systems in place: one government, 60 percent, and the other companies and institutions, 40 percent. *
While agricultural production was the largest sector of China’s economy in the late 1970s, accounting for 37 percent of GDP (Table 9), it was still very backward and primitive, employing three-quarters of the labour force, but growth in those decades fluctuated only slightly. Reforms that began in the latter part of the decade freed up peasant and ranch capitalists to join their fields and start mass cultivation. On the other hand, the Chinese capitalist state, which was the main buyer of grains, vegetables, oilseeds, cotton, and other industrial staples, raised prices and allowed merchants to enter the agricultural and livestock commodity trade and compete with the state. This quickly paid off, and grain production surged to 400 million tons in 1984, an unprecedented level in the country’s history. Increased labour productivity, resulting from the use of fertilizers, planting and harvesting machines, water pumps, and food processing machinery, led to greater mass production. The tripling of chemical fertilizer use between 1978 and 1990 led to a leap in land productivity. Wheat production continued to grow, reaching 50 million tons in 1999, and the increase trend climbed to 600 million tons by 2013. Let’s go back to the beginning of this period, 1980. The temporary migration of rural workers to cities to earn a living to support their families led to the growth of capital institutions that had invested their capital in the employment sector. Urban and rural enterprises are commercial companies that were formed in the early 1980s and five years later employed about 70 million rural workers for urban industries. These non-governmental institutions are in a way competitors to state-owned enterprises of the central and local governments, but they are growing rapidly. State-owned enterprises at all levels invested through state budgets until the 1990s. Since 2003, they have become joint-stock enterprises and have become partners in urban and rural enterprises through shares. This gradually changed the monopoly status of urban and rural enterprises, as state-owned enterprises have become their major competitors in most areas of capital. At the same time, the forced dependence of rural workers and poor villagers on their meager land, planned by the central government, was reduced by easing restrictions on the movement of workers, and in the meantime, companies and institutions with vested interests found a freer hand to supply labour to urban industries. At the same time, the families of these workers were prohibited from migrating to the cities.
During this period, the wage labour force in agriculture is constantly decreasing (a significant part of it is converted into the rural surplus population). While the share of agricultural values produced decreases even more. Apart from the producers’ avoidance of handing over their goods to the state and selling them on the black market (which generally continued until the late 1960s), the period after the second half of the 1970s, the values produced in agriculture increase simultaneously with the decline in the rural population. From this date onwards, we witness the growth of these two trends. The growth of capital accumulation in the villages coincides with the growth of misery, poverty and misery of the poorest farmers and the constant increase of the surplus population (migrant workers).
Distribution of capital in agriculture in several Asian countries
The amount of local accumulated capital in 1986 was almost five times that of 1978, and its amount was about 167 billion yuan. This trend continued in the first quarter of 1987 and doubled in the same period as 1986. During the same period, from 1978 to 1986, China’s GDP doubled (the average GDP growth rate was 10.1 percent per year). The share of the government as a tax collector between these years was about 32 percent of the profits of small and medium-sized rural enterprises (59 billion yuan of total profits of these enterprises and 18.6 billion yuan of taxes were poured into the State Capital Fund of China (Table 10). These figures do not include land taxes and profits of state-owned enterprises, both central and local. The Chinese government, as the owner of land, including agricultural, livestock, and forest land, collects rent from its tenants, regardless of whether the tenant’s plant or harvest anything, graze animals, or convert forest trees into timber. The rent must be paid annually to the original owner.
As the figures of this period show (Table 11), the Chinese capitalist state is gradually transforming into a conventional state, and this process will continue more or less in the following decades. The Chinese capitalist state, like other capitalist states, is more concerned than ever with important capital infrastructures, on the basis of which companies and capital institutions, with a small capital advance, cultivate huge profits without investing a single penny in these infrastructures, which require heavy capital and whose costs, like any capitalist state, are based on taxes and levies on workers’ labour.
In the same year, state investment in industry (mainly urban) was 16 billion yuan, four times that of agriculture, while the growth rate of capital accumulation in industry was 12 percent compared to 4 percent in agriculture. This is a trend that will continue with increasing acceleration from now on. We are entering an era of Chinese capital that is generally characterized by double-digit annual growth rates.
Rural industrial establishments and settlements (number of workers)
*In addition, a large number of rural industrial enterprise unions have been established, for example, the Dairy Producers’ Union, more than 1,700 specialized producer unions throughout China (Table 13).
Before 1979, all income and expenses of state farms were under the control of the central government, and the profits were deposited into the state treasury. After this date, a different financial system was established, and each unit took responsibility for its own profits and losses. Profits were allocated to the company itself, and no subsidies were paid by the government for losses. The number of wage workers in these companies varied across China. For example, in Jiang Province, there were 286 enterprises with 107,000 wage workers. In Sichuan Province, 26 farms, two companies, and two tea processing factories were run under the supervision of the city council. Over the course of three years, the value of agricultural and industrial products increased 1.3 times, profits increased 141 times, and taxes paid to the government increased 1.4 times.
Chart 1 Growth of capital accumulation and labour productivity trends in China’s industrial agriculture and livestock sectors
Source: US Department of Agriculture
Simultaneously with the growth of labour productivity in the capital-intensive areas of agriculture, industry, livestock, and rural industries, China’s exports increase, and as we will see later, China’s international capital relations reach a stage of growth where the above areas import goods that are associated with an increase in production costs domestically, while the global division of labour has created different conditions where countries or parts of countries in Africa and Latin America mass produce these goods for the entire world of capital. Brazil, Argentina are the main producers of oilseeds and meat, Colombia and some African countries of tobacco and coffee, etc. Therefore, China’s agricultural and livestock capital enters into extensive commodity exchanges not only in these areas but also much wider. Today’s agro-industrial capitalism China (2015) produces 50 percent more grain than in the 1980s, three times more oilseeds and six times more meat, while being the largest importer of soybeans than the world’s largest producer, Argentina. The growth of capital accumulation, especially in the fields of agriculture, livestock, fish farming, forestry, is comparable to that of other major capitalist economies. For example, the production of corn as animal feed per hectare is much higher than in Brazil, India and South Korea, and slightly lower than in the United States (6 tons per acre in China, while the United States has a yield of 8.5 tons per acre).
But at the same time, as mentioned, the field of capital agriculture and animal husbandry in the capitalist world has now reached a stage where vast areas in the world, the size of a country or parts of a country, such as Latin America, Eastern Europe, East Asia, and even Africa, are engaged in mass production of fertilizer, fruit, oilseeds, tobacco, coffee, corn, potatoes, various types of meat, etc. in a planned and systematic manner, using genetically modified seeds and organisms, to the point that no specific capitalist country is able to produce all of these goods with high profits and low costs.
Chinese industries
The production of industrial goods and total exports began in the late 1970s, when the conflict and competition between different strata and groups of the Chinese ruling class took shape and came to an end. Certain factors had more influence than others in this beginning. Among them were 1- The growth of capitalism in East Asia and countries such as South Korea, Japan, Taiwan and other countries that later became known as the Asian Tigers, and the direct result of this was the huge accumulation of capital in a short period of time, the huge export of all kinds of goods, including consumer, capital and semi-capital goods. 2- Hong Kong as one of the largest financial and commercial canters in the world. 3- Growth of commodity exchanges through container shipping 4- Growth of the digital capital and electronics industry in Taiwan and the transfer of some of its sectors to mainland China in the late 1990s. 5- Creation of suitable conditions for attracting large foreign investments and large international capital companies with the prospect of earning super profits, so that these investments reached their peak by 2006 and in this process, the hands of domestic companies became more open in competition and seeking shares and the share of state-planned companies decreased. Other factors that are included in addition to these are China’s accession to the World Trade Organization, the huge investments of the Chinese government until 2000 in infrastructure such as ports, airports, internal transportation routes, the launch of power plants, and the expansion of telecommunications and digital networks.
One point should be made clear here, and that is the legal form of capital ownership. Most industrial concerns and banks in China were formed in their current form in the first decade of the last century. First, state-owned capital institutions were transformed into joint-stock companies, and then these companies began to enter the stock market and acquire capital to increase production and economic activity. For example, the China National Petroleum Corporation (CNPC) was spun off from the Ministry of Oil and Gas and is now an independent company investing and making profits around the world.
Although some key and strategic industries (raw materials, oil and gas, steel, infrastructure such as ports, airports and roads, some banks and aerospace and military industries) are managed by the state, private capitalists and joint-stock companies are present in these areas and form a hybrid set of capital. Despite the concentration of capital in these institutions, medium and small capital companies and institutions grow and increase like mushrooms and, under the generality of social capital, they earn profits according to the general law of capital, that is, they appropriate the surplus value produced by workers in proportion to their capital. However, in 2010, the state share of the 20 largest monopolies in all areas of Chinese capital was between 60 and 100 percent (the exception is China Railway Group with a state share of 56 percent). The following is the government share of the capital of the following institutions expressed in percentages, which means that the rest is the share of individuals and joint-stock companies. Moreover, these ownerships are constantly changing names and legal forms, such as these institutions that have a question mark in front of them instead of a percentage. The management of state-owned institutions, like any other company, bases the company’s strategy on profits and the largest possible share in capital competition, both domestically and globally. Therefore, although the China National Petroleum Corporation, like any other company, benefits from the global share of surplus value produced by workers based on the amount of its capital and the productive power of its work, it is included in the list below as a state-owned company. For this reason, the discussion of the state and private share of the total social capital is equally ridiculous and misleading for workers. In other words, just as Lenin’s and the entire social democracy’s narrative of capitalism and the capitalist mode of production is a bourgeois narrative based on legal ownership of the means of production, competition, and as a result, the anarchy of production and the impossibility of planning, it considers state capitalism and the ownership of capital in the hands of the state to be the same as socialism. But it has long been clear to all workers that state capitalism is not opposed to the free market of capital, and that social capital, whether in the hands of the state or in the hands of individuals and joint-stock companies, shares in technology, labour productivity, and profits to the same extent based on the amount of capital and its organic composition. The fact that capital, the production unit and labour use the levers of the state of capital, the influence of government managers, etc. to their own benefit and that of their company does not change the issue, because all of these levers, with or without the existence of the state of capital, have been instruments of capitalist production relations since the beginning of its emergence. The form of ownership of the means of production and the concentration of this ownership are not indicators or determinants of the identity of a mode of production and the social relations based on it. The form of ownership of the means of production has always taken different forms throughout history, while different forms of production relations have dominated in the same periods. What distinguishes capitalism from previous forms of production is not the mere private ownership of the expression of production and exchange in this system. The role of determining identity here is not played by the legal appearance of ownership, but by the commodity nature of labour, the purchase and sale of labour as a commodity, and the complete separation of the worker from work and the fate of his work.
Chinese companies and their percentage of state ownership (it should be noted that the rest is the percentage of shares of individual and joint-stock capital institutions)
ICBC 71%, China Mobile Communications 100%, CNPC 100%, State Grid 100%, Sinopec 66%, China Railway Group 56%, China Railway Construction 61%, China Life Insurance? CCB China State? ,Dongfeng Motors 100%, China Southern Power Grid 100%, BOC 68%, ABC Shanghai 79%, China telecommunication 100%, Sinochem 100%, Construction Engineering China National Offshore 62%, Nobel Group? ,China Communication Construction 70%, Automotive Oil 70%.
However, the monopolies and the process of capital concentration in China are proceeding faster and more intensively than in other large capitalist countries such as the United States, Japan and Germany.
Banks The financial sphere of capital also includes 7 banking monopolies, which directly control more than two-thirds of the banking market, especially all large transactions, the capital market and all global transactions, and the remaining one-third indirectly.
Chinese monopolies among the world’s 500 largest monopolies by total revenue
Table 14 In 2000, ten Chinese monopolies were on the list of the world’s 500 largest monopolies, this figure rose to 16 in 2005 and 46 in 2010. During this period, almost one in every 10 monopolies belonged to China, and it accounted for one-tenth of the total asset sales of the world’s top 500.
Rank in 2010 (number of monopolies)
Table 15: Despite the acceleration of capital concentration and the progress of the process of forming monopolies, by 2010 the United States and Japan had the largest and most powerful monopolies.
Number of monopolies from 2000 to 2010
Table 16 As mentioned, the growth trend of capital concentration in China has been faster than that of its Western competitors and Japan.
Table 17: Chinese capitalist monopolies and their international competitors in 2010. I will discuss some of these monopolies and their status in later periods.
The current status of some of these monopolies:
Steel Production
One of the areas of China’s social capital that has seen astronomical growth and its global share is constantly increasing, as mentioned earlier, is the production of raw steel and the export share of its semi-finished capital goods. A significant part of China’s raw steel production is used as a raw material for domestic consumption. This strategic capital product contains a huge and heavy added value from the beginning of mining to the production of raw iron and steel by millions of workers, and in the case of China, tens of millions of workers, which no capitalist can ignore. China’s steel market has been more prosperous in recent years than in the past, and for this reason, steel production has required the import of iron ore. Even steel sheet exporters from India, Japan, and South Korea have the Chinese market in their sights. Despite the heavy shadow of the halt and slowdown in global trade in 2020 and 2021, the Chinese capital government plans to implement previous projects between January and July 2021, such as the construction of 14 airports worth $15.3 billion, 22 railway and urban rail projects in the first 7 months of the year, and 16 projects aimed at about 6,000 rail lines across the country. Steel consumption through these projects, rail projects, airports, etc. will increase more than in the years before 2020. The One Belt, One Road initiative is a program with hundreds of billions of dollars of investment in the New Silk Road in the field of goods transportation (roads, railways, ports and pipelines for transporting gas and gas condensate) by land to Central Asia to Europe and even Africa and by sea and ports from East Asia, Southeast Asia to the Middle East and Southern Europe. It should be noted that China currently benefits the most from road and sea routes for transporting containers carrying goods. The One Belt, One Road initiative is one of the reasons for the growth of steel production and subsequent capital goods in China. In the field of steel production, China is now (2019) the largest producer and consumer of this metal with wide applications. Steel production in China, based on the endless need of capital sectors for this basic metal along with the energy of this important raw and auxiliary unit of capital, has led to the growth of labour productivity in this sector more than in other sectors of capital. China’s social capital, which has been the main producer of this metal for many years, has increased labour productivity in this area of capital advance in the process of capital accumulation, so that the organic composition of capital has reached such a high level that it has reduced the need for labour by millions of workers. For this reason, the Chinese capital government presented a plan in 2016 to reduce the labour force in these two sectors of steel and coal by between 5 and 6 million workers over a period of four years.
Table 18 As shown in (table 14) above, China’s steel production has dominated the world for many years, with China’s surplus capital requirement for this metal increasing steadily since 2005 (last column of the table). Although the Chinese government began laying off workers in this capital-intensive sector in 2016, increased labour productivity has continued to increase production. China’s steel production in the years after 2015 is shown in the table below in millions of tons per year. Although global steel production in 2020 decreased by 0.9 percent compared to the previous year, China’s share of production increased by three percent.
Chart 3, extracted from data from the World Steel Producers Association, shows China’s share of global steel production in the last two decades.
China’s production surplus has been constantly increasing. In 2005, China’s steel production as a capital good was equal to its domestic production consumption, but since then its surplus has been increasing. There is no information about this surplus after 2015, but it can be estimated that this production surplus is still increasing from the increase in production in China despite the decrease in global production.
Coal
In the case of coal production and consumption (Figure 4), the situation in this area of capital investment in China is different. First, the capital investment of this commodity is in fierce competition with other raw materials such as crude oil and gas. Fluctuations in the prices of these two commodities have a direct impact, albeit with a time lag, on the production and consumption of coal. In 2019, China met about 58 percent of its domestic energy needs through coal. In addition, it should be noted that Chinese capitalism has less and less access to domestic oil and gas resources, and the cost of extracting them, in relation to the ability to extract these resources, constantly increases the need to purchase both commodities. China is currently the largest buyer of oil in the world, consuming about 15 million barrels of oil per day. Coal production, like steel, is also associated with a very high increase in labour productivity, and as mentioned above, the dismissal of excess labour in this area of capital investment has been on the agenda of the Chinese capitalist government for years. Despite the extremely destructive effects of climate change, global warming, and their consequences, the Chinese government, at its March 2021 congress, decided to produce and consume coal until 2060 because its production cost is much lower than oil and gas production in the world.
Chart 4 Coal production and consumption in the last two decades
Banks
Some banking monopolies were in a different position in 2019 (compared to what is shown in Table 17), including two Chinese banks with capital of about $700 billion, ranked first and third among the eight largest global banks. China Development Bank (CDB) finances large development and infrastructure projects at home and abroad. Since the bank itself is financed through the issuance of securities, it is also one of the largest partners in the Chinese market. Ten years ago, the bank was ranked no higher than the 20th bank in the world, but in 2019, it rose to first place with a capital of $375 billion and has been ranked first in the world for years in terms of profitability and investment in the stock market. The Export-Import Bank of China, which is an export-import bank specializing in export-import transactions, is also ranked third among banks in the world with a capital of $320 billion, given the growth of China’s international capital trade. It goes without saying that these banks each own each other. One of the major Chinese banks that plays a significant role in investment in China is the People’s Bank of China (PBC), which has about 950 million personal bank accounts, the majority of which are workers who keep their wages in savings accounts. For them, these wages must be spent on daily necessities to reproduce their labour force, but for the bank, these are capital that earn astronomical profits from investment in labour and production units (Chart 5).
Chart 5
After these very large banks, there is a group of 14 banks that are among the 500 largest monopolies. After these banks, there are about 140 city banks, most of which are commercial banks in cities.
Cooperative banks, cooperative loans and savings accounts operate in cities and provinces. To these must be added about 40 large banks and several small banks with foreign ownership.
Industrial and Capital Bank of China (ICBC) is one of the world’s most profitable banks, with 387,000 employees and operates in a wide range of industries around the world. In 2010, it focused its economic activities on Asia and the Americas, but in recent years it has expanded its activities to Europe. The bank is involved in major projects in Africa, including the special project “Station Power B Morupule Botswana. Coal-fired power plant, which is being built in partnership with Standard Bank of South Africa. Africa South of Bank Standard.
And now Chinese banks and their position in the international arena by 2025
2025 Global Top 1000 Banks List: Many Chinese Banks Rise in Ranking
2025-12-31 23:41
On July 2, the British magazine “The Banker” released the 2025 list of the world’s top 1000 banks. The list shows that the top ten banks in the world in 2025 are: Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, JPMorgan Chase, Bank of America, Citigroup, China Merchants Bank, Bank of Communications, and Wells Fargo. From the list, we can see that domestic banks continue to occupy an important position, with six Chinese banks entering the top ten. This is also the second consecutive year that Chinese banks have occupied six of the top ten.
Among them, ICBC, CCB, ABC and Bank of China are still the four banks with the largest Tier 1 capital in the world. ICBC, the ” Universe Bank”, has Tier 1 capital of USD 541.021 billion, nearly twice that of the fifth-ranked JPMorgan Chase, which has USD 294.881 billion. Ma Tian jiao, an analyst at the China Banking Research Institute, said that as capital replenishment is implemented, the global competitiveness of large Chinese banks will be further consolidated and enhanced, which may lead to an increase in the concentration of the global banking industry.
Large banks have significant advantages
The list mainly considers the size of a bank’s Tier 1 capital, reflects the bank’s ability to resist risks and increase profits, and is one of the important bases for evaluating a bank’s global competitiveness. Judging from the ranking changes of the top ten, China Merchants Bank has been advancing step by step. In 2024, the bank surpassed HSBC Holdings and ranked tenth. In 2025, China Merchants Bank’s Tier 1 capital increased by 11.3% year-on-year, ranking first among the top 30 banks, and it’s ranking further rose to eighth, exchanging positions with Wells Fargo Bank of the United States. The rankings of other banks remained unchanged. In addition, Postal Savings Bank of China ranked 12th; Industrial Bank’s Tier 1 capital increased by 7.8% year-on-year, and its ranking rose from 16th to 14th; China CITIC Bank ranked 18th; and Pudong Development Bank ranked 19th.
Among the top 20 banks in the world, Chinese banks account for half.
Among the top 50 banks, 15 are Chinese banks, of which 6 banks have improved their rankings compared with the previous year, and none of them have fallen in the rankings.
Ma Tian jiao analysed that in the context of an increasingly complex global economic and financial environment, large banks have shown stronger operational resilience, and the concentration of the global banking industry has increased slightly. At the end of 2024, the top 20 banks’ Tier 1 capital accounted for 37.2% of the total Tier 1 capital of the 1,000 banks, an increase of 0.2 percentage points from the previous year, and their total assets accounted for 36.6% of the total of the 1,000 banks, an increase of 0.4 percentage points from the previous year. As capital replenishment is implemented for large Chinese banks, their global competitiveness will be further consolidated and enhanced, which may drive up the concentration of the global banking industry.
Capital issuance
Which is called the best economic project in Africa in bourgeois economic circles. Capital exportation occurs in various forms. One of these forms is that the capitalist or capital institution buys or expands a company abroad, for example in a country in Africa, and in fact makes direct investment (FDI). This is the best type of investment. The other type is lending and participating in production and commercial activities. The first type makes the conditions for the capitalist to become an important strategic investor in terms of acquiring the means of production, raw materials and their extraction.
The export of capital and goods cannot be separated, one provides the right conditions for the other, both complement each other. Capitalisms have always made the export of goods the basis for the export of capital since its inception, but for a long time, with the penetration of capital into all parts of the world and even the most remote villages and human communities in the heart of the Brazilian jungles, it has also provided preliminary conditions for the export of capital.
Capital issuance in the form of direct investment in 2009
End-of-year 2009 stock and annual exports in billions of dollars
Table 21: China’s direct investment compared to the 12 largest capitalist countries between 2005 and 2009
China ranked fourth in the world in direct investment in 2009, but a year later it surpassed France and the United Kingdom in this area. The reason for this overtaking can only be explained by the capital recovery on the part of China after the economic crisis of 2009. Because the entire Western world of capital, namely the largest economies of the Western world, America and Europe, did not recover until years later. The total stock of Chinese investment abroad in 2010 reached about $1,399 billion, of which $114.734 billion was direct investment.
Chart 6 Chinese capitalism has been very active in direct investment. The above chart shows this point well by considering the ratio of these funds to gross fixed capital formation. Although the peak of this investment as a percentage of China’s total fixed capital was in 1994, it should not be forgotten that the absolute amount of these funds has increased because China’s fixed social capital has accumulated more annually than the decline in direct investment.
Foreign direct investment, net inflows (% of GDP) – China
International Financial Statistics and Balance of Payments databases, International Monetary Fund (IMF); International Debt Statistics, World Bank (WB); World Bank GDP estimates, World Bank (WB); OECD GDP estimates, Organisation for Economic Co-operation and Development (OECD)
Foreign direct investment, net inflows (% of GDP) – China
Foreign direct investment, net inflows (% of GDP) – China
Some European newspapers and capital institutions analyses this: China’s financial power is on the path to economic and political subjugation of countries. China is the world’s largest creditor. China’s massive loans to developing countries come with onerous conditions and are aimed at exerting economic and political influence. According to a study, this policy by Beijing could fuel a new debt crisis. Some Asian and African countries welcome billions of dollars from China to finance their infrastructure. Others believe that China is pushing half the world into economic and political dependence with its financial loans. This is called “debt slavery.” A group of influential US senators have warned in a letter to US Secretary of State Mike Pompeo that Beijing is holding part of the world “financial hostage.”
According to the German weekly Der Spiegel, little is known about how much money this People’s Republic is pouring into other countries. China’s foreign assets amount to six trillion dollars (six trillion dollars). But apart from China’s ruling party, almost no one knows where this money is flowing under what conditions and what risks it poses to the recipients of this money.
Recently, the results of a joint study by a group of American and German economists led by Carmen Reinhard, a professor at Harvard University, were published. They spent months researching, drawing on both known and previously unknown sources, and have produced the most comprehensive analysis yet of China’s foreign loans. The data show that many countries, especially in poorer parts of the world, have borrowed more from China than previously thought. Most of the agreements have imposed a heavy burden on these countries and are heavily tailored to Beijing’s strategic interests; and there is a real risk that many Third World countries will slide into a financial crisis. “The West has not yet understood how much China’s rise has transformed the international financial system,” says Christoph Trebsch, an economist at the University of Kiel in Germany and one of the authors of the report. The professor at the Institute for the World Economy shows SPIEGEL an excerpt from an analytical report on his laptop, which contains the duration of the loans, interest rates, location of the funds and various guarantees for around 5,000 Chinese loans and grants to 152 countries. The information is based on data collected from development agencies, banks and the CIA. With the help of his colleagues, he carefully compared this information with official sources and, in the final assessment, arrived at such a comprehensive picture of China’s assets that the Chinese government may never be willing to publish such a report. According to this study, the point is not only that the People’s Republic of China’s export capital to developing, and semi-industrialized countries exceeds the total export capital of advanced industrialized countries, but also that Chinese credits often have features that are detrimental to the debtor countries.
While European governments and international institutions grant their loans to third world countries with long repayment terms and low interest rates, Beijing typically sets its loans with short repayment terms and high-risk penalties, which of course yields more income. These loan contracts have given the Chinese side many rights, so that in the event of non-payment of instalments, the Chinese government can seize food supplies, raw materials or receive a portion of the profits of state-owned companies.
On the other hand, China deposits the money directly into the accounts of Chinese contracting companies that play a major role in the construction of airports, ports and dams; In such a way that a closed financial loop is created in which no external financial accounts are involved.
Government institutions disbursing loans
More than 75 percent of direct development loans granted in the past few years have been disbursed by two state-owned financial institutions, the Export-Import Bank of China and the China Construction Bank. Thus, the Chinese government has complete control over all these credits. This provides a high opportunity for the Chinese government to activate the guarantees it has received from the borrowing country before other creditors step in.
According to this study, China has created a new model of development assistance based on which “government disbursers grant loans on commercial terms.”
But it is naive to imagine that Chinese capitalism can and has the ability to forgo competition in various fields in the mother of world capitalism, Europe.
The ultimate goal of China, which its leadership constantly thinks about, is to make China a superior and advanced power that other rivals cannot compete with. China’s economic and political presence in Europe is increasing. In 2016, Chinese investment in the European Union was 36 billion euros, an increase of about 20 billion euros compared to the previous year, 2015, and most of this investment came from the Chinese state sector. Until 2016, European leaders were happy with Chinese investment, but after a while, concerns arose, especially in small countries. In 2017, Chinese investment in Europe fell to 35 billion dollars, indicating a decrease in Chinese foreign investment abroad. Chinese investments in different regions of Europe vary. In Eastern Europe, China focuses on infrastructure so that it can easily connect the continent and the One Belt, One Road project. In Southern Europe, Chinese investors invest to solve the economic crises of that region. But the largest volume of Chinese investment is concentrated in Western Europe. What is China ultimately seeking? The ultimate goal of China, which its leadership is constantly thinking about, is to make China a superior and advanced power that other rivals cannot compete with. The program to expand China’s influence has been carried out within the framework of the so-called 16+1 plan. China is trying to bring several Eastern and Central European countries with it within the framework of this plan and turn these regions into its political backyard. The development of cooperation has progressed at an increasing pace since 2016. China’s goals for investment in Europe: Eric Brattberg, in an analysis published by the Carnegie Endowment for International Development, wrote: Chinese direct investment in Europe is currently nine times higher than in the United States. The two main drivers of this event are the Trump administration’s efforts to economically dominate China and Beijing’s own efforts to impose stricter capital controls. These events have also given rise to new discussions in Europe about China’s economic influence. The reason for Europe’s scrutiny of Chinese investments is the concern that these investments may not be purely commercial in nature, but part of a coordinated government strategy. The strong interest of Chinese investors in European companies with specialized technologies has raised fears that their purchases may actually be aimed at extracting European know-how and displacing Western companies from key industries as part of the “Made in China 2025” initiative. Another concern is the possibility of unwitting transfers of advanced or dual-use technologies. However, despite new measures to closely monitor Chinese investments, Europe remains an attractive destination for Chinese investors, especially compared to the United States. China and the Belt and Road Initiative: The Chinese government’s strategic project to build an integrated transport network from its mainland to the heart of Europe is known as the Belt and Road Initiative. This massive project began in 2013 and, if realized, will change the face of the world. The goal of this plan is primarily economic, and it is intended that by developing transportation and communication infrastructure in Asia, Africa, and Europe, Chinese-made goods will reach European markets at a faster rate. According to official statistics from the Chinese government, the total investment in the plan is equal to one trillion dollars. The majority of this capital will be provided by the Chinese government and will be spent on the construction of railways, ports, docks, roads, power plants, fibre optic routes, and special economic zones both in China itself and in Southeast Asia, South Asia, Central Asia, Russia, West Asia, Africa, Southern Europe, and Eastern Europe. One of the main economic goals of this project is to facilitate the transfer of goods to target markets in Europe in order to compete economically with the United States. Although Beijing always tries to emphasize the economic aspect of this plan and call it a win-win game, the geopolitical implications of the plan have long aroused concerns among regional and global rivals, including Japan, India, the European Union, and the United States, and the United States has adopted policies to prevent China’s increased presence. China has found loyal friends in Europe for its goals: it has invested $600 million in the port of Piraeus in southern Greece, transforming it into one of the world’s 50 largest ports, making southern Europe a hub for China, from where Chinese products will be shipped to other parts of the world. China’s cooperation with Prague has been such that the Czech Republic, as during the Cold War, has once again become the biggest obstacle to liberal democracy. Despite China’s efforts to exert influence in the economic and political spheres, Europe can benefit more from China’s presence and use this presence to its advantage. Europe will also benefit from the infrastructure built by the Chinese government, which is in line with China’s goals.
To fully explain the above trends, we must refer to China’s foreign trade, but before each point, it is necessary to explain a few points.
What is quite clear is that the higher the fixed capital employed by a given number of workers, the lower the rate of profit. In other words, the upward trend of the organic composition of capital is intertwined with the downward trend of the rate of profit. If what we see is generalized to all the capitals of society, to social capital, if the upward trend of the organic composition of capital encompasses the cycle of vaporization of social capital, then, assuming that the rate of surplus value remains constant, the decline in the general rate of profit is inevitable. This is inevitable and inherent in capital, which requires an increase in the productivity of labour for greater profit and greater self-promotion. As labour productivity increases, the volume of raw materials, auxiliary means, and components of fixed capital is transformed into products by a smaller number of workers, the organic composition of capital increases, a trend that inevitably leads to a fall in the rate of profit. The increase in the value volume of fixed capital, along with the decrease in the variable component of capital, also causes the products to become increasingly cheap. For the obvious reason that each separate unit of the commodity will contain less socially necessary labour than before. The downward tendency of the rate of profit is in fact an expression of the gradual development of the social productivity of labour, which is specific to the capitalist mode of production. This does not mean to deny the influence of other factors on the dynamics of the decline in the rate of profit. The important point to emphasize is the nature of the capitalist mode of production, which, with its further development, the average rate of surplus value is homogeneous and accompanied by a falling rate of profit. Why? The answer is the same as above. In this mode of production, the volume of living labour that is employed is constantly decreasing in relation to the volume of objectified and dead labour that is set in motion by this living labour and transformed into products. In this regard, the unpaid portion of the labour of workers also decreases in relation to the total volume of advanced capital, as long as the rate of surplus value remains constant, or, to put it more clearly, the rate of profit decreases. This law seems very simple and trivial, but it is worth pondering that no bourgeois economist or any great scholar of political economy from Smith to all his successors has managed to discover it!! , They have talked about it a lot, considering its importance to capitalism, they tried to recognize and challenge it, but the more they tried, the deeper they sank, they were unable to recognize this inner workings of capital, just as they did not recognize the difference between constant and variable capital. In the same way that they considered profit to be something other than surplus value and a phenomenon that exists in nature!! Recognizing each of these requires the free human root consciousness. The bourgeoisie, by virtue of its social existence, lacks this consciousness and recognition. With the example we gave at the beginning of the discussion, we showed that the more capitalism develops, the average social productivity of labour rises, and this rise still leads to a downward trend in the rate of profit even when the rate of surplus value rises with increasing speed. This trend and what was said about the successive stages of capitalist development in a country are also true for other parts of the world. The lower the capitalist development of a society, the higher the average rate of profit of that society, and the opposite is also true. The difference in the distinct and separate rates of profit of countries can be reduced or even eliminated due to the low degree of labour productivity in the less developed society.
The law of the downward trend of interest rates
Rereading “The Critique of Capital by Karl Marx, Volume 3, Chapter 13” by Nasser Paydar
“Another important point is that in a society with a more developed capitalism and a higher average organic composition of capital, even a shorter working day compared to the longer working day of less developed countries can generate a higher rate of surplus value and therefore a higher rate of profit. For example, the Scandinavian 8-hour working day, due to the higher productivity of labour, may be equal to the 12-hour working day of the Philippines. If we divide the working time of the two countries equally, then the 4 hours of extra work of the Danish worker can represent a higher value than the 6 hours of extra work of the Filipino worker. In this regard, a larger part of the daily work of Danish workers compared to Filipino workers will be surplus labour.
The tendency to a fall in the rate of profit is a necessity of capitalism and expresses the fact that for any given quantity of average social capital, a constantly increasing part is allocated to the means of production and fixed capital and a constantly smaller part to living labour. The ratio of living labour to dead labour decreases; with the relative decrease in living labour, the unpaid component, or surplus value produced by it, also decreases. A trend which at the same time illustrates the unstoppable upward trend of the productivity of labour in capitalist production. Let us give an example. Let us consider two separate capitals at two different levels of labour productivity and organic composition. The first capital is 80c+20v with a rate of surplus value of 100% and the second capital is 20c+80v and a rate of surplus value of 50%. The new value created by the first capital is 40 and the second is 120. The surplus value of the first is 20 and the second is 40. The rate of profit of the first capital is 20% and the second is 40%. The second capital, despite its lower rate of surplus value, has a higher rate of profit because it exploits more workers. Let us not forget that the present discussion is focused for the time being on the process of capital appreciation under different conditions, with different rates of surplus value and rates of profit. How the data we have mentioned change under the pressure of competition, the dynamics of the formation of production prices and the general rate of profit is a matter that has been explained earlier and will be discussed later.
The relative decrease of the variable component of capital in comparison with its constant component does not in any way negate the absolute and continuous growth of living labour exploited by the social capital of countries or by the total world capital. Just as the falling rate of profit does not contradict the rising growth of the rate of surplus value. Let us consider a working population of 2 million with a daily wage of 20 million dollars, which transforms 80 million dollars of fixed capital into product, the amount of surplus value is 20 million and its rate is 100%. Now the number of workers, the daily work, the intensity of exploitation and the ratio between paid and unpaid labour remain constant, but the composition of capital undergoes a change, and the volume of its constant component reaches 180 million dollars. With this change, the rate of profit decreases and falls from 20 percent to 10 percent, because the same amount of surplus value is divided over a larger fixed and variable capital. The other course of events is also conceivable. If the fixed part of capital increases from $180 million to $400 million, at the same time the number of workers increases from 20 to 30 million and their daily wages from $20 million to $30 million. Here the rate of surplus value and the daily rate of labour remain unchanged, but the volume of surplus value has increased by 50%. The ratio of variable to constant capital has also changed from 20 to 180 to 30 to 400. With these changes, the rate of profit also falls to about 7%. In the first situation, the total volume of fixed and variable capital was $200, and the volume of surplus value was $20 million. In the second situation, the total volume of capital is $430 million, and the volume of surplus value is $30 million.
The capitalist production process is also inherently a process of accumulation. In the course of the progress of accumulation and the growth of the productivity of labour, the mass of value that must be maintained and reproduced, even assuming that the number of labour forces remains constant, continues to rise. In this process and with the increasing growth of the social labour force, the volume of created consumption values, whether means of production or means of subsistence, continues to grow, and it is this growth that creates the need for an increased working population. Let us remember that in the labour process, the worker deals with the volume of means of production and subsistence, not with their value. All this implies that the increasing accumulation and concentration of capital leads to the increasing growth of means of production and subsistence and their conversion into capital, a process that entails the need for more labour or a larger working population. An increase proportional to the limits of capital’s requirements or even more, because if the number of workers is lower than the requirements of capital, it may cause an increase in wages. Which in itself will be the basis for population growth. All this is but one side of the story, the other side is the continuous progress of knowledge, technique and the introduction of ever more modern machinery into the market of accumulation. A process that implies a progressive improvement in the productivity of labour and makes the emergence of a relative surplus of workers inevitable. Capital is intertwined with all these functions, and their overall result is that in the process of the development of production and accumulation, with the growth of the volume of constant capital, the value of this part of capital grows much larger and more rapidly than the value of variable capital. In the same process, the absolute volume of profits increases astonishingly, but the rate of profit begins to decline. This process is fraught with another accident. With the continuous growth of the volume of capital, the number of capitalists can increase, but small capitals, under the pressure of the falling rate of profit, lose the possibility of increasing in value. They are swallowed up by larger capitals and are dispossessed of their owners. This reveals why individual capitalists, despite the drastic change in the ratio between the variable and fixed parts of their capital, still rule over a large army of workers and, despite the falling rate of profit, still capture astronomical profits.
Given the number of workers, if the rate of surplus value increases due to the extension of the working day, the intensification of the pace of work, or the increase in the productivity of labour, the volume of surplus value and, consequently, the absolute volume of profit will increase despite the decrease in the ratio of variable capital to constant capital. The increase in the productivity of social labour, the same process that causes the relative decline of the variable component of capital to its constant component, is accompanied by the trend of an increase in the absolute number of workers, an increase in the absolute volume of surplus values, an increase in the absolute volume of profits, and a decrease in the rate of profit. The question is how these contradictory functions come together. How do the increase in the absolute volume of profit and the decrease in the rate of profit flow from a single source? The answer is simple. The increase in the productivity of labour vastly reduces the paid component of labour in Favor of its unpaid component, converts an ever-increasing share of labour into surplus labour or surplus value, the absolute volume of profit rises, but this trend is accompanied by a rapid increase in the constant component of capital and therefore total capital, and the rate of profit, which is the excess of surplus value over total capital, falls.
Let us suppose that the amount of social capital of a society is 100 billion dollars and its average organic composition, which determines the rate of profit, is 80c+20v or 80 billion fixed against 20 billion variables. With the relative decrease of the variable component in relation to the fixed component, even if the intensity of exploitation remains unchanged or even increases, the rate of profit will still fall. Because the ratio of surplus value to total capital falls. Let us remember that not only the relative amount of surplus value falls, but its absolute amount also falls. A rate of surplus value of 100% produces a surplus value of 20 for a capital with a composition of 80c+20v, but with a change in the composition of capital to 70c+30v the surplus value becomes 30, and for capital with a composition of 60c+40v this amount becomes 40. These changes occur in the volume of surplus value and profit, and their origin is the change in the amount and proportion of living labour exploited by a given volume of capital with an average organic composition. Since the value of capital by which surplus value is measured is known, any decrease in the ratio between surplus value and this constant amount of capital indicates a decrease in the absolute amount of surplus value and, consequently, profit. The opposite is also true. This means that any increase in the aforementioned ratio results in an absolute increase in surplus value and profit. Let us clarify the discussion by giving another example.
Let us consider a capital of one million dollars with a composition of 60c + 40v and a rate of surplus value of 100%. The amount of surplus value is 400 thousand and the rate of profit is 40%. If we increase this capital to two million two hundred thousand with a composition of 80c + 20v, the amount of surplus value becomes 440 thousand and the rate of profit is 20%. The amount of surplus value has increased slightly, but the rate of profit has halved. All these examples confirm the same law as previously stated. That with the relative decrease of variable capital and the development of the productivity of social labour, a larger and larger volume of capital is required to set in motion the same amount of labour power and to absorb the same amount of surplus labour. Accordingly, the more capitalist production expands, the greater the possibility of the appearance of a relative surplus population of workers. A surplus population whose origin is the disproportion between the constantly increasing increase of capital and the relative decrease of its need for labour power or the growing population. If the rate of profit falls by 50% and we want the volume of profit to remain at the same level, the capital stock must necessarily double. In order for the volume of profit to remain unchanged if the rate of profit falls, the coefficient of increase in total capital and the index of the fall in the rate of profit must be inversely proportional. When the rate of profit falls from 40% to 20%, maintaining the previous surplus value and profit depends on the doubling of total capital. If this decline continues to 8%, then the volume of capital must increase fivefold to 5 million.
This is in conditions where the capitalist is concerned with maintaining the previous volume of profit. If he wants to increase the volume of profit while its rate falls, then the total capital must necessarily increase by a higher ratio than the ratio of the fall in the rate of profit. For example, the previous capital of one million dollars increases to two million and five hundred thousand dollars. With this increase, the composition of capital changes from the previous 60c + 40v or (600,000c + 400,000v) to 80c + 20v or (2,000,000c + 500,000v). The rate of surplus value is still 100%, but its volume has increased from 400,000 to 500,000 and the rate of profit has fallen from 40% to 20%. The very important point evident in all these examples and which we emphasize is that the evolution of the social productive force of labour in the dynamics of the development of the capitalist mode of production, on the one hand, appears as a tendency for the rate of profit to fall, and on the other hand, simultaneously exhibits a continuous increase in the absolute volume of surplus value. As the relative decrease of variable capital and profit coincide with the increase of the absolute value of both. This process at the same time shows that the more capitalist production expands, the more capital is required to exploit the same amount of labour. A process that inevitably leads to the birth and growth of a relative surplus labour population. Political economy is unable to explain the law of the decline of the rate of profit. Under the pressure of this ignorance, its “scholars” from predecessors to contemporaries have said everything and hung on to every hook, but they have only fallen into the abyss of the same talk, have woven contradiction after contradiction, have not understood the close and homogeneous relationship between the relative decline of variable capital and profit on the one hand and the simultaneous increase of their absolute values, have not understood the fundamental and real causes of it, and have induced everything in a distorted way.
The law of the concomitant growth of the productivity of labour, the fall in the rate of profit, and the simultaneous increase in volume, also implies that the fall in the price of commodities is homogeneous with the relative rise in the profit inherent in them. A rise and change that manifests itself in the process of sale. With the continuous development of capitalism and the average increase in the organic composition of social capital, a constantly increasing quantity of the means of production is set in motion by a decreasing quantity of labour. In other words, each given component of the product or each separate commodity represents a smaller volume of living labour. The same applies to the depletion of fixed capital. The total elements of fixed capital, whether raw and auxiliary materials or the share of depreciation of fixed capital, carry relatively less living labour. It is on this basis that the price of commodities falls. A fact that is a sure proof and confirmation of the law of value. The fact that “the value of every commodity is determined by the socially necessary labour embodied in it” means that the price of a unit of a commodity has fallen from the total annual product of labour and production, meaning nothing more than that a smaller volume of labour has been required to produce a larger quantity of the commodity. The rate of profit falls despite the increase in the rate of surplus value because, firstly, the total crystallized in the newly created commodities has fallen, and even the enlarged component of unpaid labour (surplus value) contained in each unit of the commodity has become smaller in comparison with the unpaid labour crystallized in the previous commodity. Secondly, the organic composition of capital has risen and its variable component, which alone creates new values, has fallen in comparison with its constant component. These changes in the organic composition of capital are also introduced into the constituent parts of each unit of the commodity and cause its price to change.
The rate of profit is certainly an external part of the surplus value of the total capital, and not just the capital used in the production of the commodity, but the volume of profit is in any case equal to the volume of surplus value that is embedded in the commodity itself and is realized through its sale. As the productivity of labour increases, the price of a single commodity or a given volume of commodity decreases. The number of commodities increases; the volume of surplus value or profit concentrated in a single commodity and in relation to the totality of commodities decreases. These are facts that are subject to misinterpretation or misinterpretations in the appearance or external procedure of the matter. This interpretation, as if the capitalist, by his own will and according to his will, sells each individual commodity at a lower profit and in return compensates for his loss by selling more in bulk!! A theory without any foundation that sees the source of profit in sales!! Competition induces everything upside down. The individual capitalist can think that he lowers his profit per unit of commodity in order to sell more goods and gain more profit, everything boils down to the method of sale!! Political economy theorists also turn this same false idea into a theory and create a mind-boggling mess.”
End of quote from Nasser Paydar’s rereading of “Marx’s Critique of Capital”.
With these explanations, I have partially explained the reason for the desire of Chinese capital to export, especially to regions of the world where the organic composition of capital is low (I will explain other issues such as raw materials, cheap labour, etc. later). We enter the specific discussion of China’s foreign trade.
China’s Foreign Trade
In the field of online commerce, although the American company Amazon was founded only four years before its Chinese rival Alibaba, at the end of 2014, Alibaba became one of the largest and most valuable e-commerce companies in the world by selling part of its shares for $22 billion. In 2015, Alibaba’s total investment was $1.682 billion and Amazon’s was $4.5 billion, which is three times Alibaba’s investment, but in the same year its net profit was nearly one twentieth of Alibaba’s. The number of Alibaba workers in 2015 was about 34,900, while Amazon had 231,000 workers, which is 6.6 times the number of Alibaba workers. This trend has been the case since the second decade of this century and until 2020 (Figure 8), the latest corporate balance sheet reports. Economic analysts and Amazon itself explain this by the expensive warehouse space, high wages and taxes. Alibaba’s profit in 2020 was more than three times that of Amazon. All this can be answered by the high organic composition of Amazon’s capital in the United States and the low composition of Alibaba’s in China. The increasing concentration of individual capital in the hands of a single person is a factor that, by realizing it, can increase labour productivity and increase the volume of production without the need for a larger capital advance. Amazon uses this to its best advantage. But the surplus value produced in goods made in China for the invested capital is much higher than in the United States, and the low organic composition of capital in China means nothing other than higher profits for the invested capital. It should be noted that the profit does not mean the specific profit of Alibaba, but the profit of this capitalism is determined based on the average rate of profit. Let us pause here to see what remains unknown and uncertain. The process of production of surplus value is at the same time and inevitably a process of a tendency towards a fall in the rate of profit, and it is this tendency that, under certain conditions, inevitably gives rise to the crushing crises of capitalism. The development of the social productive power of labour results from the insistence of capital on making profits in the shortest possible time. This is manifested in the volume and value of the productive forces already accumulated, in the form of more advanced means of production and faster means of exchange of commodities, and at the same time in the relative smallness of the living labour force that must employ these means to reproduce and increase the value of a given amount of capital. This social productivity of labour in relation to labour power leads to a shortening of the necessary labour time and an increase in surplus labour. At the same time, it leads to a reduction in the number of workers to set a given amount of capital in motion. These two developments reduce the rate of profit (the total amount of profit is the total volume of surplus value produced by the workers, and the rate of profit is the division of surplus value into total capital). In this regard, what happens is that the progress of productivity, to the extent that it reduces the paid component of labour, increases the amount and rate of surplus value, but at the same time reduces the volume of exploited labour or the only source of surplus value production. In other words, the amount of profit that each capitalist, and in this case Alibaba, separately appropriates is not the net surplus value produced by the workers he exploits, but a share of the total surplus value produced by the working masses of society and the world, which is appropriated to him under the influence of the aforementioned factors and the competitive power of his capital. This is a trend that has long plagued capital and is the main root of capitalist crises. Chinese capitalism is not exempt from this rule. In this process, the rate of growth of social labour productivity and the organic composition of capital in all areas of capital advance is different from the blocs and Western capitalism, and therefore, relying on the high rate of surplus value produced per social capital, China has been able to pay its costs more than any other major capitalist. Alibaba workers generated more than $12,000 million (over $12 billion) in net profit in 2015, while their wages, as in most work units and as wages or the cost of reproducing their labour force, are delayed for months and added to the accumulation of capital. The situation is the same in Amazon. The mass of workers of this commercial giant, which at this point is nearly 7 times larger than its competitor, have generated $598 million in profit for its capital owners in 2015, while they themselves eat something from the intensity of their work to regain some of their lost strength and, according to reports, defecate standing up in a container! This is what capital does to the worker, making the result of his work the cornerstone of its own self-aggrandizement, self-expansion and self-expansion. These two giants, like other large, medium and small capitalists and the entire capitalism, separate the worker from his work and the product of his work and deprive him of any right to intervene in determining the fate of his work, production and life. Dead work is the working class that is completely alien to him, dominates his existence and non-existence, is against him, sacrifices his work and the product of his work and his existence on the verge of self-aggrandizement, makes him a passive, mute, captive, obsolete and inferior cog in the machine of its own profit production and self-expansion. Capital is a social relationship, a relationship that constitutes the essence and fabric of present society and makes economics, politics, law, civilization, culture, ethics, ideology, and thoughts its socially embodied forms and governs them.
Chart 10: Annual profits of Alibaba and Amazon over the last decade. Source:
Statista is a German company specializing in market and consumer data
China’s trade balance with the rest of the world capital
China’s trade balance in billions of dollars from 1995 to 2025. Share of foreign companies in trade in goods, private and state-owned enterprises. National Bureau of Statistics of China.
Since the early 1990s, about a third of China’s exports have been carried out by foreign companies, in some cases with mixed capital (Chart11), and this reached its peak of 58 percent in 2005. The role of foreign companies with a high organic composition of capital in the production and export of goods from China reached 80 percent in the first decade of the twenty-first century, and thus foreign capital was capturing most of the surplus value produced by hundreds of millions of Chinese workers in the form of superior profits. Although this trend decreased by a few percentage points by 2015, the share of profits of foreign capital with high labour productivity still accounted for about three-quarters of all Chinese exports. It is worth noting that these companies did not have the same high role in Chinese industrial production. But this trend has undoubtedly contributed significantly to the increase in capital accumulation in China. The share of Chinese domestic companies in exports and trade surplus has increased. For most of the first decade of the 2000s, more than half of exports and two-thirds of the trade surplus were accounted for by foreign companies. By 2014, the share of foreign companies in this surplus had fallen to less than half. The trade surplus in the form of capital accumulation by China’s non-state-owned enterprises was twice the surplus of foreign companies at the end of this period (2015).
Chart 11
Capitalism is a mode of production based on wage labour, the relationship of buying and selling labour power, and the anatomy of capitalist society must be sought here, in the existence of capital, in capital as a social relationship. Capitalism has long since created a world-wide market and had it in front of it. In this market, after the initial period of the primitive accumulation phase of capital, the transition of each separate society to the emergence and flourishing of capital, it had a close relationship with other capitalisms. Chinese capitalism had sung the hymn of its emergence since the beginning of 1950, and now, with the growth of industrial capital in the cities, it was beginning the stages of development and creation of a global market and the export of goods to all parts of the world. Everything that has been said so far about the progress of the accumulation of industrial capital in agriculture, livestock, and forestry was a prelude to the emergence of a capital giant in the capitalist world. This huge giant was looking for new areas of capital accumulation. Since capital never recognizes nationality and national borders, Chinese capitalism, in its process of self-expansion and globalization, has sought to partner, share profits, and even devour wherever it saw the prospect of competition in its favor, from small-scale production, mining industries to automobile manufacturing, medium-sized and in some cases large-scale capital, but lacking the power to compete. Just as Chinese capitalism has transformed from a producer of low-priced textiles and cheap consumer goods in the 1980s into a country with advanced and extensive industries in the automotive, shipbuilding, machinery, chemicals, and precision computer instruments. As the growing share of global manufactured goods exports shows, the competitiveness of Chinese products on the global stage is continuously increasing.
Since 2010, China has been the world’s largest market for private cars, and all vehicles sold are domestically produced. To date, there have been two types of manufacturers. One is joint ventures between domestic investors, both public and private, and foreign partners, consisting of international giants such as American, Japanese and European automotive companies of global importance. The other is independent automakers and private and state-owned companies. Joint ventures account for about 80 percent of the industry’s profits to date, and independent Chinese companies generally export their cars to markets in the Middle East, Central Asia, Latin America and Africa. But one of the most successful car companies is Geely, which bought passenger car manufacturer Volvo in 2010 and now sells its high-quality products in Europe and the United States. In 2009, China surpassed the United States for the first time with sales of 13.6 million cars (10.3 million of which were passenger cars) (7.4 million passenger cars, or 72 percent of all passenger cars, were produced in China). The share of development and labour productivity in car production in China this year was 30 percent for passenger cars, 45 percent for trucks, and the rest for foreign car manufacturers.
In addition to automobiles, Chinese companies are manufacturers of jet engines and various types of car parts for major world markets such as Europe, America and East Asia. Other areas of capital investment in which Chinese companies and institutions have made great progress are power generation equipment, telecommunications network equipment, electronics, computers and smart phones. These industries accounted for only 5% of world exports in 2000 but increased to 40% in 2014. Huawei and Xiaomi products are examples of a business model that has managed to turn many markets, such as parts of Asia, Africa and Latin America, into their vast sales areas, in the form of 80% quality but 60% price. Another example is Lenovo, which is now the largest manufacturer of personal computers in the world by volume. The company is now part of IBM and has good sales worldwide. When talking about foreign investments, it should be remembered that these funds generally become part of the social capital of these societies after a short period of time, and this is especially true in the case of China, because these funds are not deposited today only to leave this society tomorrow with 900 million cheap workers and hand over the field to competitors (or actually lose). As an example, here are some examples. One point to keep in mind here is that the separation of capital into domestic and foreign in exports and the share of exports is very complicated and complicated. In 1978, total foreign investments in China were only $ 2.5 billion, but China’s exports in the same year were $ 10 billion. These amounts reached $20 and $62 billion in 1990 (total investment and exports), and $40 and $270 billion in 2000, which increased to $70 and $1,400 billion in 2008, and in this year China’s share of world exports reached 16%. In 2014, these figures became even more astronomical. In this year, total foreign investments in China increased by $120 and China’s exports increased to $2,342 billion, and China’s share of social capital in total world exports reached 18%. Of these exports, the share of electronic appliances increased to 40%, while this share was only 5% in 2000. China’s social capital trade balance with the world has not always been positive. The trend of increasing exports began in the 1990s, and its end depends on important factors that will be explained at the end of this study.
Table 22 China’s trade balance with the world capital during the growth of capital accumulation between 1979 and 2005 in billions of dollars.
It is clear that China’s trade balance with the world capital follows different forms and interests. While it is positive in favor of China’s social capital with Western European countries and the United States, it is facing negative growth with other countries in the East Asian region such as Taiwan, Japan and South Korea. It is in a trade balance with Asian oil and gas producers and some African countries.
Half of foreign capital came through Hong Kong in the 1990s, where European and American companies had partners inside China. In this decade, many companies based in Hong Kong moved their production, factories and institutions to China and provinces such as Shenzhen and its surroundings in the industrial province of Guangdong. But these capitals were counted in the calculations of China’s international relations even before Hong Kong was actually returned to China. The same process is true for Taiwan. China’s IT and digital industries played a major role in the development of similar industries in China and were generally present in cities on China’s east coast such as Shanghai. About 900,000 Taiwanese skilled workers in this field of capital are currently working in China and commuting between the two. In addition, a significant part of foreign capital was made by Chinese capitalists, companies and industrial and financial institutions outside China, and this channel is still active. These institutions enjoy tax privileges, cheap labour, access to cheap raw and auxiliary materials, and the vast market of China and its neighboring countries. Companies such as Alibaba, Tencent and other digital, technology and manufacturing giants first set up their offices outside China and benefited from international investments and large stock exchanges. Then, when the production wheel in China accelerated and the process of capital accumulation became present and stable, they moved their most important production, distribution and new investment activities inside.
Chart 12a (above) shows China’s trade balance with a significant portion of the world, Europe, Asia, and the Americas, in billions of dollars. The balance with the world in 2020 was $535 billion, three times the balance in 2019. US Customs data shows that China’s exports to the US have increased by 46% despite continued tariff increases during the trade war with Washington.
Chart 12 b (below) China’s social capital trade balance with the entire world capital. In 2020, China’s merchandise trade surplus reached about US$535.4 billion.
The surplus value has declined significantly since 2015, when it reached a record high of $594 billion. In 2015, the US bilateral goods trade deficit with China accounted for about two-thirds of China’s total goods trade surplus. For 2021, the trade surplus increased from $535 billion in 2020 to $670.4 billion, the highest on record, as exports increased by 29.9 percent and imports by 30.1 percent. In 2020, Chinese imports of goods were about $2.06 trillion, while total exports increased to about $2.6 trillion. The 2021 trade period began as follows: In the January-October period, China’s trade with its three major trading partners (the Association of Southeast Asian Nations, the European Union, and the United States) maintained strong growth. During this period, the growth rates of China’s trade value with the three trading partners were 20.4%, 20.4% and 23.4% respectively. Customs data showed that China’s trade with countries along the Belt and Road increased by 23% year-on-year in the same period. Private enterprises saw a 28.1% increase in imports and exports to 15.31 trillion yuan in the first 10 months, accounting for 48.3% of the country’s total. Imports and exports of state-owned enterprises increased by 25.6% to 4.84 trillion yuan in the period. Exports of mechanical and electrical products showed strong growth in the first 10 months. Automobile exports increased by 111.1% year-on-year in the period. China has taken many measures in 2021 to boost foreign trade growth, including accelerating the development of new business forms and practices, further deepening reforms to facilitate cross-border trade, optimizing its business environment at ports, and promoting reforms and innovations in trade and investment facilitation in pilot free trade zones.
Chart 12 b
As China’s US exports plunge in 2025, Beijing banks on diversification for 2026 growth. China’s exports soared to record highs in 2025, defying trade tensions with Washington as Beijing’s diversification strategy successfully mitigated a decline in US-bound shipments. However, that resilience could face a new test this year, analysts warned. Full-year exports for 2025 climbed 5.5 per cent from a year earlier to US$3.77 trillion, according to customs data released on Wednesday, higher than the 5 per cent growth projected by financial data provider Wind.
China’s GDP growth
China’s share of global industrial production and value added reached 14 percent in 2010 (up from 3 percent in 1990. China’s share of global GDP this year was 9.6 percent, while the US share was 23 percent (Chart 13 b).
Although this increase in China’s share will slow slightly in 2021, the gap between the two capital giants is narrowing due to the decline in US GDP in recent years. While China’s share of total global GDP is increasing, America’s share is constantly decreasing.
Chart 13 a
“China’s economy is expected to slow in 2022,” the World Bank wrote in a report in late December 2021. After a strong rebound in the first half of 2021, economic activity in China slowed sharply in the second half of the year. Real GDP growth in 2021 was forecast to peak at 8.0 percent, before easing to 5.1 percent in 2022. Although growth was expected to slow next year, asset managers say they expect it to accelerate, helped by a more accommodative fiscal stance. China is likely to record its weakest economic growth in more than a year when it releases its latest quarterly data as it weighs in on the costs of a deep property market slump and disruptions caused by the virus outbreak. Gross domestic product grew 3.3 percent in the final three months of last year, the slowest pace since the second quarter of 2020. A similar trend was seen in the third quarter. The National Bureau of Statistics announced at the same time that gross domestic product grew by 4.9 percent in the third quarter compared to the previous year. The National Bureau of Statistics said at the same time that gross domestic product grew 4.9 percent in the third quarter from a year earlier. That missed expectations for a 5.2 percent increase, according to analysts polled by Reuters. Industrial output rose 3.1 percent in September, below the 4.5 percent expected by Reuters. Many factories were forced to halt production in late September as rising coal prices and power shortages prompted local authorities to abruptly cut power. The central government has since stressed that it will increase coal supply and ensure electricity availability. Data released the following day also showed that businesses were less willing to invest in future projects. Property concerns: Fixed asset investment for the first three quarters of the year came in weaker than expected, the National Bureau of Statistics data showed. It rose 7.3 percent from a year earlier, compared with expectations of 7.9 percent. December data for industrial production, retail sales and fixed asset investment are also expected to be weaker. The loss of momentum is fueling speculation of more monetary stimulus. Many economists have been forecasting rate cuts as policymakers prioritize economic stabilization this year. The slowdown late last year stands in sharp contrast to the first half, when the economy was recovering from the pandemic slump and policymakers were tapering stimulus to contain financial risks. The economy is expected to grow 8% for the full year in 2021, well above the administration’s target of “more than 6%.”.
(Chart 13 b)
* China’s statistics in all these cases do not include Hong Kong and the Macau Islands.
One point should be kept in mind about the gross product and the total annual capitalist production of a country and even all world capital, and that is that the total value of the annual product is always greater than the total value of the labour spent on its production during this year. If we subtract from the total value of the annual product the value added to it by the labour of the current year, the remainder is not exactly the value that has been reproduced, but only the value that has appeared in a new form of existence. Why does the difference between the value of annual labour and the social product produced in the year not coincide? The reason is that the relatively large mass of values that are recreated and preserved each year by the annual labour of workers are values that were produced by the masses of workers in previous years and even more distant past and have become fixed components of fixed capital. In capitalist economic calculations, they put everything together to account for the production of the annual social product!! But let us not forget one important point, that in capitalist production, basically, the largest part of the annual social labour is in the service of the production of fixed capital. Capitalist production is the production of surplus value, the excessive increase in surplus value through the uncontrolled weighting of surplus labour at the expense of necessary labour, the conversion of surplus values into additional capital, the cancerous self-aggrandizement of capital, and the explosive accumulation of capital in the world. Accumulation in this mode of production is also naturally extensive accumulation. Global reports from the International Monetary Fund and the World Bank report the trend of increasing capital production in China in 2021, and that China’s GDP is accelerating faster than its rival giant, the United States. The share of these two capital giants of the total gross capital production in the world now reaches 42 percent. But a few points should be kept in mind in these calculations. First, China’s double-digit annual growth after 2016 has not been repeated and is not likely to be repeated. One point should be kept in mind about the gross product and the total annual capitalist production of a country and even all world capital, and that is that the total value of the annual product is always greater than the total value of the labour spent on its production during this year. If we subtract from the total value of the annual product the value added to it by the labour of the current year, the remainder is not exactly the value that has been reproduced, but only the value that has appeared in a new form of existence. Why does the difference between the value of annual labour and the social product produced in the year not coincide? The reason is that the relatively large mass of values that are recreated and preserved each year by the annual labour of workers are values that were produced by the masses of workers in previous years and even more distant past and have become fixed components of fixed capital. In capitalist economic calculations, they put everything together to account for the production of the annual social product!! But let us not forget one important point, that in capitalist production, basically, the largest part of the annual social labour is in the service of the production of fixed capital. Capitalist production is the production of surplus value, the excessive increase in surplus value through the uncontrolled weighting of surplus labour at the expense of necessary labour, the conversion of surplus values into additional capital, the cancerous self-aggrandizement of capital, and the explosive accumulation of capital in the world. Accumulation in this mode of production is also naturally extensive accumulation. Global reports from the International Monetary Fund and the World Bank report the trend of increasing capital production in China in 2021, and that China’s GDP is accelerating faster than its rival giant, the United States. The share of these two capital giants of the total gross capital production in the world now reaches 42 percent. But a few points should be kept in mind in these calculations. First, China’s double-digit annual growth after 2016 has not been repeated and is not likely to be repeated.
Every capitalist, by virtue of its internal mechanism, is forced to continuously increase labour productivity in order to capture as much of the surplus value produced by the global working masses as possible, in order to push competitors back in capturing the average international profit share, and China, despite its planned capitalism, is not exempt from this rule. The higher the fixed capital employed by a given number of workers, the lower the rate of profit. In other words, the upward trend of the organic composition of capital is intertwined with the downward trend of the rate of profit. We must generalize this to all of society’s capital, to social capital. When the upward trend of the organic composition of capital encompasses the cycle of social capital’s valuation, then, assuming that the rate of surplus value remains constant (the rate of surplus value is the result of dividing surplus value by the variable component of capital), a decline in the general rate of profit is inevitable because the rate of profit is outside the portion of surplus value that is added to the total capital, both fixed and variable. This is inevitable and inherent in capital, which requires increasing the productivity of labour for greater profit and greater self-promotion. As labour productivity increases, more and more raw materials, auxiliary equipment, and fixed capital components are converted into products by fewer and fewer workers, and the organic composition of capital rises, a trend that leads to a forced decline in the rate of profit. China’s large and expensive capitalist projects contain such heavy fixed capital that sooner or later the impact of such a decline in the rate of profit of social capital will become apparent. Therefore, it cannot be expected that this giant, which has just emerged from the water and is increasing its capital volume with such speed, will be able to continue this trend for a long time. Second, the figures for economic growth and GDP, especially in recent years, should be considered in relation to the decline in these figures starting in 2016. The situation has worsened in the last two years, as a result of which the apparent growth should be considered together with the negative figures of the last two years in order to understand the true and correct view of the growth of capital accumulation. Third, in 2020 and even now, capital governments, together with central banks, have pumped huge amounts of capital into industrial, financial, and research hubs, which is unprecedented in the two-hundred-year history of capitalism. According to data from global capital organizations, by March 2021, $30,146 billion (35 percent of global GDP in 2019, $84,991 at constant 2010 prices) of capital has been pumped into the world’s social capital. The US’s share of this amount was $16,704 billion, and the European Union’s was 6,642 billion GEL.
This is while only a small percentage of the total result of our work and production is the cost of living, medicine, treatment, health, education, water, electricity, welfare or the whole so-called life of our class and more than 90 percent of it is the unruly flood of capital of the capitalist class, power, welfare, pride, wealth and the rule of the owners of capital or the means of our physical and intellectual suppression by the capitalist state. As long as we live under the control of the capitalist system, the foundation of the existence of capital is based on our separation from our work and we are free from any kind of interference in determining the task of work, the result of suffering and production and our lives. The role of governments in the beginning and continuation of the Covid-19 pandemic was determined in a more inhuman way to achieve this goal. As far as the lives of billions of workers on earth are concerned, governments opened the way for the invasion of the virus. They saw every dollar spent on the challenge of the pandemic as a cost in reducing profits and ran away from it with all their might. Nowhere were they willing to close any factory, any work and production center, any part of the profit-making cycle. They refused to provide the most basic medical facilities needed by hospitals. At the same time, they approved the most gigantic budgets to prevent the decline in capital profits and made them available to giant financial and industrial trusts. These thirty trillion dollars of the proceeds of the exploitation of workers were dedicated to ridding companies of the risk of crisis. About thirteen years ago, the capitalist system turned its explosive global crisis into a mechanism for slaughtering more food, clothing, housing, medicine and treatment, education or basic livelihood facilities of the working masses. It made all possible plans so that a new round of prosperity could emerge for a part of global capital. This struggle failed under the pressure of the inherent contradictions of capital and its tsunami-like rebellion. Year after year, capital production declined. Until this time, and before the rebellion of the pandemic, the volume of government debt rose from 51 trillion dollars, and now it is necessary to add 30 trillion dollars to this figure. These will be deducted rial by rial from the wages of workers. Taxes, various levies, reductions of all that was listed above should compensate for such a huge volume of capital pumped in by the capitalist governments. In fact, in this way, overnight and with the participation of all factions of the ruling class of capitalist societies, nearly 100 trillion dollars of paid labour of the working class was converted into unpaid labour or profits and capital of trusts. This money and paid labour are included in the calculations of the gross production of the capitalist governments. Along with this, the capitalists and the capitalist governments made millions of workers unemployed and sent them to the wasteland of poverty and hunger. In addition to these two, every year a significant part of capital accumulation takes place in areas that are not included in any calculations and books. The area of military and security industries of capital, secret research on chemical and biological weapons, capital accumulated in paradises outside the supervision of conventional organs of capital, the massive volume of capital advanced annually in the production, storage and sale network of drugs, etc.!!
Chinese capital in Africa
Before any discussion on the export of goods, export of capital and international exchanges of capital, one point must be clearly stated, and that is the inherent need of capital for its continuous and global development, and that capital is not satisfied with this, but in the process of increasing productivity and the rise of its organic composition, it is forced to further globalization and division and redistribution of the world. This is the main core and foundation of the contradictions and differences between the domestic capitalists of a country, a specific geographical region and a specific market and international capitals, especially the social capitals of countries with greater economic power, the advancement of production and exchange technologies and high productivity of labour, and inevitably determines the cost of production and the price of goods in certain areas and, in most cases, most of the areas of capital advance. The social capitals of the world’s economic giants also apply the same mechanism to the domestic capitals of their geographical areas, and for them, there is no difference between local, domestic, familiar and unfamiliar capital. The fragmentation and stratification of the bourgeoisie and the competition between them are also an inherent and inherent part of capitalism. The root of these contradictions is also in the share and the way in which the surplus value produced by the workers is distributed. The share of each, whether in the limited domestic or international market, is determined in terms of the organic composition of capital, the level of labour productivity, the volume of capital reserves in a given area. In this process, each owner of capital tries with all his might to achieve more profitable production conditions, to take these conditions out of the hands of competitors, and thereby to gain as much profit as possible. This is the source of internal competition within the capitalist class, both within a country and around the world. Capitalist production is essentially the production of profit and capital and the accumulation of capital. What capital is exported and how it is exported is also secondary to capital, because in the advanced era of capitalism, commercial, financial and banking capital and the export of goods are all part of industrial capital. The same rules of political economy apply to China’s private and state capital as to any other capitalism. Here, China’s social capital needs to develop, export and expand in areas in African and Latin American countries with a low organic composition of capital more than other large capitalisms. These capitals operate on the same competitive principles of concessions and give-and-take that other capitalisms have operated on throughout their history of growth and expansion. The capitalist governments of Britain and America have been and are demanding the largest share of resources, the most golden profits and the best privileges in the trade of their country’s social capital against the countries and social capitals of the host country. The role of capital states is also the same: in their own country, they first appropriate a huge share of the surplus value produced by workers, and on the other hand, by collecting taxes and various duties from the working masses, they provide the basic investment facilities needed for capital accumulation by investing heavily in roads, airports, ports, and communications, both physical and digital. The same process is carried out by the capital states of the host country of capital in Africa and Latin America. As we know, in the circulation of capital, the specific and direct process of production is only a link in it. A link that is seen both as an intermediary in the circulation process and the circulation process is considered its intermediary. The continuous appearance of capital in a productive form in both cases is conditioned by its transformation during the circulation process. At the same time, reproduction is a necessary condition for the transformations that capital continuously performs within the circulation environment and appears in different forms. Trade is a specific form of exchange of produced goods. In this form, goods lead to money, and vice versa, money leads to the purchase of goods. Whether China’s investment takes place domestically or globally are just different forms of the commodity-money circulation process, and here we should not draw a Chinese wall between industrial production and commodity exchange. However, to understand the influence and growth of capital accumulation, it is necessary to examine commodity exchanges. The movement of social capital includes the sum of the movements of its components or the turnover of individual capitals, and each individual capital is an independent part of social capital. If the transformation of an individual commodity is a link in the chain of the transformation of the world of commodities, the turnover of individual capital is also a link in the circulation of social capital. This circulation involves the purchase of labour power by the capitalist and the liquidation of the worker in the capitalist production process. The tendency of capital to develop accumulation, the expansion of the market and the international development of the sphere of exploitation of labour power, in short, its globalization, is the inherent tendency of this mode of production. On the other hand, capital is generally accompanied in its process of concentration by an increase in the productivity of social labour, which leads to greater possibilities of reducing necessary labour in favor of surplus labour. This inherent tendency of capital leads to a continuous increase in the organic composition of capital. The opening up of new areas of capital’s advance in access to new surplus values, the expansion of trade, the export of capital and the partnership with capitals of lower organic composition expand access to the sources of profit production. But these sources are not infinite, which is why they increase the challenges of capitalism in combating the tendency to a falling rate of profit for a long time. These conditions are characterized, on the one hand, by the high rate of organic capital formation in most major industrial countries, America, Western Europe, and some countries in East Asia and Oceania, and, on the other hand, by the increasing intensity of labour exploitation, the reduction of wages below their value, the continuous increase in the surplus population, and the expansion of world trade with fierce competition that has multiplied the shadow of war and short confrontations between capitalisms and its blocs.
China’s Investments in Africa
Strategic Goods, Raw Materials, Cheap Labor, and the Commodity Market.
In 2009, trade in raw materials accounted for about 23% of world trade. The largest importer was the United States with about 15%, followed by Japan with 9% and China with 8.6%. This is partly a result of the growth of China’s manufacturing industries and also because of the sheer volume of this growth. But it is also a result of the shortage of raw materials in many areas in China. A quarter of all Chinese imports are from oil and gas to various mineral products that are not agricultural raw materials.
China has therefore now become a major consumer in the raw materials market. This is partly a result of the growth of China’s manufacturing industries and also because of the sheer volume of this growth. But it is also a result of the shortage of raw materials in many areas. For example, in the case of oil and gas, where China (according to a 2009 study by the oil concern Exxon) has only 1.2% of the world’s oil and 1.3% of its gas reserves but consumes 10% of the world’s oil.
In the case of oil and gas, where China has the greatest needs, China’s reserves accounted for only 1.2% of global oil and 1.3% of global gas resources in 2009, while it consumed 10% of the world’s oil production (chart 14). Since the beginning of the last century, the most important oil exporters to China have been Saudi Arabia and Nigeria, and at sometimes Nigeria’s exports to China have exceeded Saudi Arabia’s.
Chart 14: China’s oil production and domestic consumption in million barrels per day over the past four decades
government, to Africa’s raw material resources has been focused on specific materials and their resources in some African countries since the beginning of China’s trade relations with these countries. African countries’ reserves of the world’s oil resources are estimated to be close to 20 percent but given the almost undisputed influence of Chinese capital in these countries and the existence of pristine and untouched resources of black gold, this continent is a lifeline for Chinese capitalism. China’s oil imports from African countries in 2005 and China’s investment in oil-owning countries.
Chart 15: Largest recipients of loans from China in 2016 among African and Latin American countries. China’s investments in African and Latin American countries show careful planning given the massive reserves of these countries, including oil (Venezuela has the largest oil reserves in the world), even a $3.5 billion loan to Bolivia is being made considering the country’s vast resources of semiconductor minerals.
Since the beginning of the 2000s, the competition between the major capitalist countries of Asia in commodity exchanges with African countries has entered a new stage, and this trend has continued with the huge growth of China’s commodity exchanges, so that the giants of capital, first from Asia and then recently from Europe and America, have gradually left the main stage of competition. The competition is not only over the commodity market, but also over Africa’s resources and capital goods. China’s social capital needs mineral resources, oil, and especially basic metals, which some African countries have as a major and important source in the world, along with a low labour force, along with the possibilities of rapid urbanization, which some call the Fourth Industrial Revolution in Africa. While sufficient infrastructure to realize this transformation does not yet exist. China and India are taking advantage of this gap. According to Forbes magazine in April 2021, China is Africa’s largest trading partner, and the annual volume of bilateral exchanges reaches $200 billion. According to this report, more than 100,000 Chinese companies are active in Africa. According to data from the China-Africa Trade Research Center at Johns Hopkins University, the largest African exports to China in 2019 came from Angola, South Africa, and the Republic of Congo, respectively. Forbes magazine writes that Africa supplies 20 percent of China’s cotton needs. Africa also has half the world’s magnesium reserves, which are used in the steel industry, and the Democratic Republic of Congo alone has half the world’s talc (magnesium silicate) reserves. Africa still has significant reserves of coltan, which is needed by the electronics industry (Table 24). China needs all of these resources. Talc is used in industries such as papermaking, rubber, ceramics, hair oil, grease and lubricants, electrical cable production, food processing, paint and coating production, plastics, cosmetics, pharmaceutical applications and even recently in the provision of semiconductors. Here we should pause and consider the fact that the increase in relative added value in recent periods through the growth of social labour productivity is generally achieved by industrial developments in informatics. This development requires a great deal of resources, raw materials and auxiliary materials that play a fundamental role in a variety of electronic and digital industries. The use of each of these materials has increased the speed of information transmission, the size of these goods from centimetres to millimetres and a few years ago micrometres (one thousandth of a millimetre) and now to 5 to 10 nanometres (one thousandth of a micrometre or 9-10 meters), the volume of electronic devices and tools and their high resistance. Fierce competition between manufacturers of computer equipment, access to essential raw materials and the creation of advanced production techniques and the astronomical evolution of labour productivity in this area have become the advance of capital. Now and for a long time, the capitals that dominate these areas, including raw materials, software tool production techniques, play an important role in the distribution and redistribution of social capital profits in general. Chinese capitals, like their Western and Eastern competitors, are searching for these minerals everywhere in the world, under every rock, in every village and in the minerals of the whole world to discover and extract these materials.
In addition, China’s social capital is investing heavily in major road projects (the so-called African Silk Road), urban development, the creation of health centers, etc. The Benguela freight-passenger railway in Angola. This line starts from the city of Lebito in Angola and ends in the city of Tenke in the Democratic Republic of Congo. China has adopted exactly the same strategy in other African countries. In exchange for rebuilding infrastructure, China’s social capital imports about a third of its oil needs from African countries.
Chart 16: Chinese direct investments in African countries between 2003 and 2020
Statista is a German company specializing in market and consumer
The reports of international investment organizations differ from the data of Chinese government investment organizations, and the reason for this is generally that these organizations, such as the World Bank and the US Economic Reporters, do not include investments by the Chinese government and Chinese banks in their calculations. In these cases, I have considered the actual figures without considering the legal ownership of the investor. In 2013, Chinese investment in sub-Saharan African countries reached $3.37 billion (about 7 percent of global direct investment from China, while the US share was 7.3 percent) (Figure 18), which was 1.2 percent of the gross domestic product of these countries. This ratio was only 0.1 percent of their gross domestic product in 2003. Investment in the fixed capital sector of these countries by China increased from 0.37 percent in 2003 to 0.8 percent in 2012. The countries where most of these investments were made were South Africa, Zimbabwe, Nigeria, Angola, Sudan and Ethiopia in the fields of roads and construction, manufacturing plants and energy. Of course, during this period, investments in different countries have varied. For example, in 2004, the highest direct investments of China were in Sudan ($150 million), Nigeria $50 and South Africa $20 million, while in other African countries such as Guinea, Congo, Ivory Coast, Zimbabwe and Tanzania it was very insignificant.
Chart 18: Chinese direct investments in African countries between 2003 and 2020 in billions of dollars
Chart 19 The competition between Chinese and American capitals in dominating resources, cheap labour, and gaining market share in these countries with a low level of organic capital composition reached its peak in 2013 and 2014 (chart 19), and after this date, American capitals lost ground to Chinese capitals. Here, I refrain from mentioning what happened to the capitals of the European Union countries because in this competition they lost more ground than their American competitors and partners. The total trade exchange of the United States with African countries by 2015 amounted to 935 billion dollars, of which about 700 billion dollars (75 percent) were exports from these countries to the United States. During the same period, China had a trade exchange of about 1,624 billion dollars with African countries, of which about 890 billion dollars (55 percent) were exports to China.
Chart 20: Chinese direct investment in selected African countries in 2017 in billions of dollars
Chart 21: Chinese direct investment in projects and company creation in 20 African countries in 2017
The growth of Chinese capital in Latin America
Although the United States has been Latin America’s largest trading partner and investor, in recent years China’s capital footprint has become heavier and more significant in both trade and investment balances in the region. According to the World Trade Organization, in 2018, about 27 percent of Brazilian goods were destined for China, while the United States’ share of Brazilian goods was 12 percent. Chilean goods were exported to China by 34 percent, while the shares of the United States and Europe were insignificant this year. If we consider Latin America and the Caribbean as a whole, the region’s total exports to China in 2000 were about 1.1 percent of the region’s exports, which reached 12.4 percent in 2018, while the trend is the opposite for the United States, falling from 58 percent to 43 percent of these countries’ exports to the United States during this period. If we exclude Mexico’s relationship with the United States from these calculations, the region’s exports to China are 21 percent and to the United States 15 percent.
Chart 22 Exports of the largest Latin American economies over two decades in percentages. China’s share of Latin American exports has been steadily increasing over the past century (in billions of dollars). Latin American exports to Europe and the United States over ten years in billions of dollars.
Chart 23 Over the past three decades, exports of copper from Chile and iron from Brazil to their largest partner, China, have been steadily increasing.
Chart 24: Latin American exports of crude oil, soybeans, and other oilseeds to China and the rest of the world (thousand tons), as well as Chilean copper and Brazilian iron to China and the rest of the world (thousand tons), over twenty years.
Chart 25 Exports of Brazilian iron ore and crude iron, Chilean copper ore and crude copper to China in the last twenty years, based on thousand tons.
The above trend (exports of copper and iron to China) continued from the first to the second decade of this century for Chilean copper and Brazilian iron. This is even true for oilseeds, including soybeans and oil. It is noteworthy that exports of most of these goods to China have exceeded their exports to the rest of the world. This trend began many years ago, namely in the 1980s, and continues until the second decade of this century. China’s rapid increase in the share of raw materials from Latin American countries (almost entirely oilseeds, soybeans), crude oil, iron ore and crude iron concentrate, copper ore and crude copper concentrate. These four capital goods account for 59 percent of total exports by weight to China, which has significantly exceeded the demand of other markets. The above graphs show that during the twenty years, the highest growth in exports to China has been The above chart shows low Latin American crude oil exports to China, and the reason for this is that most of this oil is refined in American refineries and plants and transported from there to China (an example of this is Venezuelan oil, most of which is refined and exported in the United States).
Chart 26 South American exporters of goods are highly dependent on China for trade, but their overall GDP growth rates are much less dependent on China than these export figures suggest. The value of exports to China in both Brazil and Argentina was less than 2 percent of GDP in 2010 (Figure 27, right). This reflects the fact that trade plays a relatively small role in the economies of Brazil and Argentina, where export-to-GDP ratios are 9 percent and 18 percent, respectively (Figure 27, left). This is important for most of Latin America. Chile, where exports account for a third of GDP. Furthermore, as Figure 27 shows, copper exports account for the vast majority of its exports to China. This explains why the value of Chile’s exports to China 9 percent of its GDP is.
Chart 27: The ratio of exports of four Latin American countries to China and the rest of the world in 2010 to the gross domestic product of these countries.
Chart 28: Exports and imports of Latin America and the Caribbean over two decades as a proportion of the gross domestic product of these countries. Thus, Latin America’s trade balance with China has been very much in China’s favor over the past two decades. To this balance should be added the meager wages of the hundreds of millions of workers in these countries, the low organic composition of capital in these countries compared to the organic composition of capital in China, which ultimately leads to a torrent of capital profits flowing to China.
Chart 29 China has continued to focus on the main export commodities of these countries. In 2017, the latest year for which comprehensive data is available, China accounted for 11 percent of these countries’ total exports, of which 16 percent were industrial agricultural products and 26 percent were extracted capital goods (industrial raw materials). Both of these capital goods contain a huge amount of surplus value produced by the working masses of Latin America and the Caribbean, which feeds China’s social capital with astronomical profits.
Chart 30 As is clear from the chart above, in the proportion of Latin American exports to China between 2014 and 2018, more than half of these exports were mineral-extractive products and goods. This concentration shows that for Chinese capital, these goods are worth more than twice as much as all other goods.
Chart 31 Mergers and acquisitions of companies in Latin America by Chinese capital, including mainland China, Hong Kong, Macau and Taiwan, by area of capital advance and year in billions of dollars. Over the five years (2014 to 2018), China accounted for 19.44 percent of total direct investments (purchase of companies or shareholdings) in Latin America, making it the second largest investor in these countries after the United States. Almost half of the infrastructure, including electricity, roads, airports, ports, followed by the extraction of resources from metals and other mineral deposits (24 percent). Together, these two constitute a third of all Chinese investments in Latin America. 2019 saw the highest level of Chinese direct investment (purchase of companies or shareholdings). The following year, these direct investments decreased significantly. New investments or expansion of existing projects still continue to be strongly concentrated in the extraction of mineral resources, the construction of roads and airports, and the acquisition of chemical and automotive component manufacturers. Chinese direct investment in Latin America and the Caribbean grew only slightly over the 12 years leading up to the 2009 crisis, before accelerating astronomically in the second decade of this century. This trend has continued in the years since and has been accelerated by the COVID-19 pandemic. Exports of beef from Uruguay and Argentina, copper from Chile, oil from Colombia, and soybeans from Brazil and Argentina are flowing like a great river, while Chinese capital and goods have flooded the Dominican Republic, El Salvador, and Panama in the past four years. Chinese technology companies such as Huawei, ZTE, Dahua and Hikvision have taken over regional infrastructure. This is while the same companies are denied entry into North America. Currently, 19 Latin American and Caribbean capital governments have joined the $1 trillion trade infrastructure network initiated by the Chinese government. Now, Shanghai Cosco Shipping Co. The $3 billion project to build the new Chancay Port in Peru is aimed at a transcontinental railway connecting the Pacific and Atlantic coasts of South America from Brazil to Chile. Explained: The $3.6 billion Chinese-funded Chancay port project in Peru, US concerns around it. What exactly is the Chancay port project and what does China stand to gain from it? We explain: Chinese President Xi Jinping inaugurated Peru’s Chancay Port on Thursday (November 14), describing it as the starting point for a “new land-sea corridor between China and Latin America”. Funded under China’s Belt and Road Initiative (BRI), the massive $3.6 billion project has also raised concerns in US policymaking circles over Chinese influence in a region traditionally seen as its backyard.
ColombiaOne.comWorld Peru’s Chancay Port Opens New Trade Route Between China and Latin America in June 2, 2025 :
The beginning of operations at the new Chancay Port in Peru marks a milestone in Latin America’s port infrastructure and will play a key role in the region’s trade with China. Located 80 kilometre’s north of Lima, the mega-port officially begins commercial operations today. Developed by the Chinese Peruvian consortium Cosco Shipping Ports Chancay, the project is positioned as a strategic logistics hub, directly linking South America with Asia—especially China. The new Chancay Port will be pivotal for Latin America-China trade
The Chancay Port represents a total investment of approximately US$3.5 billion. The first phase, completed in November 2024, included the construction of four berths, an administrative complex, logistics facilities, and a nearly two-kilometres tunnel linking the port to the Pan-American Highway. With a natural depth of over 17 meters, the port is built to accommodate vessels of up to 24,000 TEUs, making it the first deep-water port on the South American Pacific coast. The launch of Chancay Port has the potential to reshape the region’s trade dynamics. By providing a direct shipping route to Shanghai in just 23 days, it drastically reduces transit times and logistics costs for South American exports. This is particularly advantageous for countries like Colombia, Ecuador, and Chile, which can use Chancay as a transshipment hub for goods headed to Asia. Additionally, the port is part of China’s Belt and Road Initiative, reinforcing the Asian giant’s presence in Latin America and opening new avenues for investment and regional development.
An opportunity for Colombia-China trade
The new infrastructure presents a significant opportunity for trade between Colombia and Asia, particularly with China. As the Colombian government deepens its partnership with the Asian giant following its recent accession to the Belt and Road Initiative, Chancay Port is expected to play a vital role in facilitating the flow of goods between the two countries. Colombia’s Buenaventura Port, located on the Pacific coast, will be central to this effort. According to Gonzalo Ríos, Deputy Manager of Cosco Shipping Ports Chancay, Buenaventura has joined Cosco Shipping Lines’ WSA5 route to connect with Chancay and access Asian markets. “It’s an optimization of transit times without transshipment. Chancay enables not only a trade window but also production along with other elements of the logistics chain, such as shipping lines and connectivity,” Ríos explained. Both Colombia and Brazil—Latin America’s regional powerhouse—stand to benefit from a reduction of up to 10 days in transit time. Liborio Cuéllar, manager of Colombia’s Buenaventura Port, stated late last year that Chancay “will complement Buenaventura.” “It won’t take cargo away from us—we handle nearly one million containers,” he said, emphasizing cooperation rather than rivalry between the two ports. As for why China chose to invest its multibillion-dollar project in Peru rather than Colombia, Chinese Ambassador to Bogotá Zhu Jinjiang attributed the decision to the policies of previous Colombian administrations. “It’s a consequence of the country’s earlier stance of keeping its distance from China and not joining the new Silk Road. Now that Colombia has addressed this shortcoming, I believe good news is on the way,” he said.
The growth of Chinese influence in Latin America
Over the past two decades, China has cemented its role as a major economic force in Latin America, overtaking the United States as the top trading partner for several South American countries, including Brazil.
According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), bilateral trade between China and the region has multiplied 35-fold since 2000, reaching a record $480 billion in 2023.
This surge has been largely fueled by Chinese demand for raw materials such as soybeans, minerals, and oil from countries like Brazil, Chile, Peru, and Argentina.
Chinese investment in infrastructure has also played a significant role. Among the most prominent examples is the Chancay Port—officially inaugurated today—which was financed by the Chinese state-owned company Cosco Shipping. Meanwhile, competition between China and the United States for regional influence has grown more intense. As Washington continues to follow the protectionist and tariff-heavy policies set during the Trump administration, countries such as Colombia have opted to deepen ties with Beijing by joining initiatives like the Belt and Road.
This evolving landscape presents Latin America with a complex balancing act: leveraging economic opportunities from both global powers while safeguarding its sovereignty and long-standing strategic alliances.
Source: Statista is a German company specializing in market and consumer
Chart 32 In 2020, total direct investment in Latin America fell by 42% compared to 2019, from $1.5 trillion in 2019 to $859 billion in 2020. The United States recorded a 48% drop in foreign direct investment in the continent, reaching $134 billion, while China saw an 11% drop in direct investment this year. Thus, the industrial giant of world capital is bowing to the Chinese thousand-headed dragon in Latin America, just as it lost ground to Chinese social capital in Africa.
China’s foreign exchange resources
Chart 33 Growth of China’s foreign exchange reserves from 1990 to 2006 in billions of dollars
Source: Official Chinese government data
Chart 34, a repeat of the data in chart 33, shows China’s foreign exchange reserves through 2020. A country’s foreign exchange reserves, and in this case China’s social capital, play a major economic and even political role in exchanges and the regulation of contracts. This role can traditionally tip the balance of support in Favor of one capitalist giant over another during capitalist crises.
China’s foreign exchange reserves have fluctuated after 2020 but have not declined significantly. Official Chinese government data at the end of 2025 showed this, and reports from January 2026 indicate continued maintenance of foreign exchange reserves.
“China’s foreign exchange reserves rise in December 2025
Updated: January 7, 2026, 19:34 Xinhua
BEIJING, Jan. 7 — China’s foreign exchange reserves totalled 3.3579 trillion U.S. dollars at the end of December 2025, marking an increase of 11.5 billion U.S. dollars, or 0.34 percent, from the end of November, official data showed on Wednesday. The State Administration of Foreign Exchange stated that the U.S. dollar index declined, and global financial asset prices saw mixed movements last month, influenced by factors such as macroeconomic data and monetary policies in major economies. Driven by exchange rate conversions and changes in asset prices, China’s foreign exchange reserves increased during the month, the administration said.”
Foreign capital in China The role of foreign capital in China and its integration into the social capital of the country plays an important role in the redistribution of the surplus value produced by Chinese workers among global capital. A significant part of China’s exports of goods is made by capital imported into China. In 2005, this sector of foreign investors accounted for 58 percent of China’s exports, while this share was 41 percent in 1996. A significant part of these products was exported to the United States. In addition, Chinese capital plays an important and planned role in the purchase of US securities, so that the amount of this capital doubled from 2003 to 2006. It is clear that China’s foreign trade and its huge balance in favor of Chinese capital (Figure 10) have led to the accumulation of the largest and most valuable foreign exchange reserves in the world to date (Figure 35). China’s foreign exchange reserves have now reached an astronomical $3.108 trillion ($3,108 billion) in 2019, up from $2,916 billion in 2010, of which $1,145 billion is in US bonds. It is clear that bonds are constantly being traded, bought and sold, but the numbers suggest that Chinese capitalism is hoarding securities as strategic resources to a certain extent. The foreign exchange reserves do not consist of the volume of dollar or euro banknotes, but a large part of them are government securities that China has purchased. This means that the social capital of other countries is “indebted” to China’s social capital. Therefore, these reserves represent as much Chinese capital exports as other financial and industrial capital. A look at China’s foreign exchange reserves in the first decade of the last century shows an average increase of 33 percent per year, with Japan in second place at the end of 2010 with $1,069 billion, ahead of the eurozone with $790 billion. The United States has neither significant foreign exchange reserves nor does it need them because its currency is still the most important foreign exchange reserve. China had $168 billion in 2000, $819 billion in 2005, and $3,045 billion in March 2011, an increase of about 24 percent compared to March 2010. If we consider all forms of investment, including direct, bank and commercial credit, government bonds and securities, China’s social capital has been constantly advancing in the global capital arena, so that in 2009, with new investment of $101 billion, it ranked third in the world after the United States and France, and with a total capital density of $1,065 billion, it ranked fifth in global capital. In the months following the 2009 crisis, China’s state capital saved these capitalist economies from complete bankruptcy by purchasing 12 billion euros of government bonds from Greece, Spain and Portugal, and kept the bankrupt banks of this small country afloat with a $500 billion loan to the Icelandic government.
Table 25 Foreign investors in China and the mixing of domestic and foreign capital have been one of the most important reasons for the huge growth of capital accumulation in China in a short period of time. For example, in 1983, foreign investors invested $636 million in the Chinese market, and in 2005 this investment increased to $72.4 billion (Table 25). At the end of 2005, the total amount of investment reached $633 billion. In 2020, China’s social capital attracted $163 billion in global direct capital, which represents a growth of 9% compared to 2019, while the United States managed to attract $134 billion in direct capital, which represents a decrease of 47% compared to 2019 with a value of $251 billion.
Chinese investments in Europe and America
Chinese investments in some countries have varied in terms of both amount and percentage. In 2014, the investments were divided as follows. It should be noted that in the reports of international investment organizations, Hong Kong is considered as a separate country with an independent economy, while the People’s Republic of China considers these as part of China and the investments are also considered domestic. Not much can be found about the reasons for investments in the small archipelagos of Samoa, Guyana and Mauritius in Africa. This is while the amount of these investments in 2014 was about $70 billion. Even the destination and purpose of relatively large investments in the British Virgin Islands is not clear. These investments have also been made in previous. See Table 25: Chinese direct investment between 1979 and 2005, and 2005-2017.
In cases such as the British Virgin Islands, a Chinese investor buys a company in the archipelago with the sole aim of creating the possibility of investing abroad through participation and even ownership of the company registered in this country.
Europe and North America are the main destinations for Chinese foreign investment, accounting for 52.1 percent ($544.5 billion) of total Chinese investment between 2005 and 2017. The United States is the largest destination for Chinese capital. This investment fell by 7.14 percent in 2016, with clear reasons after the US election. This decline continued in 2018, reaching $1.8 billion (92 percent less than the previous year). From 2005 to 2017, Chinese companies invested $324 billion in Europe, which is 31 percent of China’s total foreign investment. More than 43 percent ($238 billion) of this capital went to the markets of the United Kingdom, Switzerland, Russia, Italy, France and Germany. The energy sector accounted for 26.4 percent ($76.6 billion). The Chinese government supported Russia against European sanctions with a $400 million contract with Russia’s Gazprom in 2014.
Similarly, the energy sector in the United States and Canada attracts significant investment from China. Notably, while Chinese investment in the European energy sector declined in 2012, it increased in both Canada (from $4.4 billion in 2011 to $20.79 billion in 2012) and the United States (from $200 million to $3.38 billion). Some Chinese companies have shown interest in the North American energy sector, with the aim of gaining access to innovative gas extraction techniques (fracking, a technique for extracting gas from deep underground) that could be used by Chinese investors in a timely manner. In recent years, Chinese capital has broadened the focus of its investment from resources and raw materials to achieving strategic objectives aimed at increasing competitiveness in the commodity market. From 2012 to 2017, Chinese companies invested $50.81 billion in the European and North American transportation sector, an increase of almost 5 times over the previous five-year period. Chinese capitalist planners are aiming to diversify Chinese investment, especially in Eastern European countries facing economic difficulties and deciding to open up industries previously controlled by the state. Chinese companies have invested significantly in Eastern European countries such as Hungary, focusing on the chemical and technology industries. Wanhua Industrial Group bought a majority stake in a Hungarian chemical company for $1.6 billion in early 2011, and Chinese technology giant Huawei invested $1.5 billion in a Hungarian research center in May 2012. In 2017, China National Chemical Corporation bought Swiss agrochemical company Syngenta, and the $43.1 billion deal is expected to give China access to technologies and practices that could help boost productivity in agriculture and livestock. In 2010, after the capitalist crisis, a Chinese investor bought the car manufacturer Volvo for $2.8 billion, and earlier this year (2020) there was talk of buying parts of one of the largest manufacturers of trucks and trailers, Volvo Heavy Vehicles.
According to the American Enterprise Institute, China has invested $2.1 trillion in all countries in the past 15 years alone, from wealthy countries like Switzerland and the United States to African countries like Congo. The Benguela freight-passenger railway in Angola. This line starts from the city of Lebito in Angola and ends in the city of Tenke in the Democratic Republic of Congo. This railway in Angola was revived with Chinese investment. The whole of Africa is facing rapid urbanization. Even experts say that the Fourth Industrial Revolution is happening in Africa. This is while there is still not enough infrastructure to realize this transformation. China and India are taking advantage of this gap. According to Forbes magazine, China is Africa’s largest trading partner, and the annual volume of exchanges between the two sides reaches $200 billion. Accordingly, more than 100,000 Chinese companies are active in Africa. According to data from the China-Africa Trade Research Center at Johns Hopkins University, the largest African exports to China in 2019 came from Angola, South Africa, and the Republic of Congo, respectively. Forbes magazine reports that Africa supplies 20 percent of China’s cotton. Africa also has half the world’s magnesium reserves, which are used in the steel industry, and the Democratic Republic of Congo alone has half the world’s talc reserves.
Chart 35 Africa still has significant unmined reserves of coltan (coltan is a combination of the elements iron, manganese, niobium and tantalum in a solid liquid form), which is needed by the electronics industry, glass industries, cameras, mobile phones, fine electronics industries, wind turbines, jet turbines, etc. China needs all these resources.
Iran’s share of this volume of Chinese investment was only $26.56 billion, which did not change in any five-year period; that is, the sanctions between 2005 and 2020 did not have much effect on reducing or increasing Chinese investment in Iran. The global economic crisis that began in 2008 was a good opportunity for China to gain a foothold in countries around the world, even in European countries, by providing large loans. In 2013, China launched its ambitious plan, the “New Silk Road”. This project has two main goals: 1) increasing production with cheap raw materials and cheap energy. 2) transporting raw materials and selling Chinese goods through the expansion of roads, ports, airports and railways.
According to the Center for Strategic and International Studies, China has invested about $62 billion in the railway sector of 34 countries in just six years (2013-2019). China’s active economic presence also means expanding its political influence. (CSIS)
Dan Roghefen, a Dutch researcher and founder of the Institute of Architecture, has a special interest in the expansion of urbanization in Africa. According to him, “There is no building project in Africa taller than three stories and no road longer than three kilometers that is not in the hands of the Chinese.”
The details of the 25-year strategic agreement between Iran and China have not been published. The New York Times previously wrote that the draft of this agreement was proposed by the Chinese President five years ago (2016). The draft of this agreement was signed in Beijing on July 24, 2010. Two weeks later, the New York Times obtained and published some details of the 18-page draft. According to the business website Bloomberg, on April 6, 2021, under the agreement, China “will invest $400 billion in Iran and in return will buy oil from Iran at deep discounts and on a regular basis.” China has adopted a similar strategy on the African continent. In exchange for rebuilding infrastructure, China imports about a third of its oil needs from African countries.
Chart 36: China’s crude oil imports, thousand barrels per day
Here, I find it necessary to provide readers with another explanation about Chinese investment abroad and its difference from capital exports from China.
“Foreign direct investment (FDI) has been a crucial pillar of China’s economy since it opened up, drawing in trillions and helping fuel its rise as the “world’s factory”. But outbound direct investment (ODI) has expanded rapidly over the past two decades, transforming the country into a major exporter of capital. Today, China’s outbound investments exceed inflows, and the country has consistently ranked among the top three global investors in recent years.
In this explainer, the Post examines the drivers behind China’s rise as a capital exporter, how its overseas investment model has evolved and what this could mean for the internationalisation of the yuan.
What is driving China’s ODI growth?
China’s overseas investments have climbed steadily in recent years, rising 8.4 per cent year on year to US$192.2 billion in 2024. As domestic growth slows and the trade environment becomes more uncertain, Chinese firms have pushed ODI close to the record highs seen in 2016.
Definition and Significance of ODI Key Facts, China’s Role and Differences with FDI
Outward Direct Investment (ODI), also known as outward foreign direct investment or direct investment abroad, refers to the expansion of a domestic firm’s operations into a foreign country. This strategy can manifest in several ways, including opening a new subsidiary, mergers and acquisitions, or expanding an existing facility abroad. ODI is crucial for companies seeking growth opportunities when their domestic markets become saturated or mature. Historically, developed economies such as the United States, Netherlands, Luxembourg, and Japan have been prominent in making extensive overseas investments. However, emerging market economies like China have increasingly participated as significant contributors to global ODI flows over the past few decades. Outward direct investment (ODI), also known as outward foreign direct investment or direct investment abroad, is a vital business strategy for firms looking to expand their operations beyond their domestic market. Unlike foreign direct investment (FDI) that involves a non-resident investing in a resident company, ODI refers to a resident company investing in a foreign country. In essence, it is the reverse of FDI. More recently, emerging market economies like China have also become significant players in ODI. In 2015, Chinese overseas investment exceeded foreign direct investment (FDI) in China for the first time ever, marking a turning point in its economic development. By investing abroad, China sought to secure access to key technologies, raw materials, and markets while reducing dependence on imports. This strategy played a crucial role in fueling long-term, sustainable growth and elevating China’s position as a global economic powerhouse.
The International Monetary Fund reports that Chinese companies invested over $180 billion overseas in 2016. However, this trend began to reverse starting in 2017 due to capital controls and economic downturns. Beijing tightened its capital controls to prevent capital flight and reduce outward investment flows. Additionally, China’s domestic economic slowdown dampened the appeal of foreign assets for investment. Despite these challenges, Chinese ODI continued to grow, reaching nearly $154 billion in 2020. It is essential to differentiate between Outward Direct Investment (ODI) and Foreign Direct Investment (FDI). While ODI refers to a resident company’s expansion into a foreign market, FDI occurs when a non-resident invests in the shares of a domestic firm. Understanding these investment types can provide valuable insights into how global economies grow, compete, and evolve.”
After this brief explanation, let’s return to continuing the discussion about the different areas of capital in China.
Chart 37 The role of semiconductors in shaping the size and quality of electronic chips over the past 70 years. This role has played a huge transformation in the IT industry in recent years with the use of these materials. First the microchip and now the nanochip from the book “Beyond the Wall of China’s Economy” by Arthur Kroeber, translated by Saeed Arkanzadeh and Azadeh Akbari. The shortage of semiconductors has been a particularly big challenge for many manufacturing companies in early 2021. Semiconductors are needed for all modern goods, from personal computers and phones to connected vehicles and machines to factory production, to driving fully automated vehicles, both personal and heavy. Starting a new factory requires a lot of semiconductors. For example, the company (TSMC in Taiwan) plans to invest $ 100 billion in its new factories in 2021, part of which belongs to semiconductors. Intel, which plans to build two new factories in the United States with a capital of $20 billion, is also constantly looking for the cheapest semiconductors. This company is the world’s largest manufacturer of chips and has dominated production and sales in each chip size in recent years. More importantly, in 2020, this company, along with Korean Samsung, is the only manufacturer of 5 to 10 nanometre nanochips with a daily value of $21 billion, with the Taiwanese company’s share being 90%. The size of chips has increased over time from a few micrometres in the 1970s to a few nanometres in recent years. The dimensions of this nanotechnology are very important in the evolution of all kinds of subsidies, astronomical instruments, and robots. Taiwan, along with Korean and recently Chinese companies, are the largest manufacturers, developers, and best-selling companies in this field. The smaller the dimensions of electronic devices, the exponential growth has been over seventy years, and the division of capital, its profitability, and the global division of labour have also been accompanied by the same exponential trend. It was once said that Silicon Valley is the center of production and evolution of computer equipment and computers. Today, these centers are numerous and capitalized around the world, and the size of their capital reserves is becoming increasingly astronomical. The Semiconductor Manufacturers Journal writes in January 2021:
“While the United States has traditionally been seen as the world’s leading supplier of semiconductors, the center of gravity has shifted to Asia in recent years. In fact, if we look specifically at chip production, the United States has only 12 percent of global capacity. Of course, many American companies have outsourced some or all of their production to China, Taiwan and elsewhere. In terms of the domestic market, China consumes 50 percent of semiconductors, making it the largest single-country market. It buys 36 percent of all U.S. chip sales. However, China currently meets only 30 percent of this demand with its own chip production and is investing heavily to increase its production. Taiwan is also growing its semiconductor industry, with advanced manufacturing processes, particularly the move to smaller chips, requiring huge financial resources. 5nm chips began volume production in 2020, and 3nm and 2nm are on the way in a few years.”
IBM, the computer component giant, is currently testing a new chip (Spring 2021) that, while being more efficient, consumes much less energy and can quadruple battery life. This new IBM chip is 2 nanometers and is capable of increasing the efficiency of computer systems by 45% compared to current 7 nanometre chips while consuming 75% less energy. In the computer chip manufacturing industry, the unit used is the nanometre, which is equal to one billionth of a meter and is a measure of the actual size of transistors. The smaller this size is, the more innovative and productive the manufactured hardware can be. IBM says that it has been able to fit 50 billion transistors on a chip the size of a fingernail in its laboratory using this new 2 nanometres technology. This is while the previous record of the same company, published in 2017, was 30 billion transistors in a chip made on the basis of 7-nanometer nanochips. As can be seen, in order to mobilize social capital, create new factories and even start the production of capital products such as computer circuits and chips, fixed capital is needed, or to put it more clearly, the means of production are ever larger, and this is at the same time with the smallest possible amount of living labour. This is provided by the higher productivity of labour. This cycle of succession means that in order to produce more goods, an ever-larger volume of fixed capital is needed. “The real obstacle and limitation of capitalism is capital itself, which is capital and its value-added appears as the origin, destination, motivation and purpose of production, production is only production for capital and not vice versa, that is, the means of production are not simply a means for shaping the broad life process for the society of producers (workers)” Marx, Volume III, Chapter 15 of Capital. The fiercer and deeper competition between industrial giants will lead to an ever-increasing acceleration of this trend.
Chart 38: Huge investments by the world’s IT giants in technologies in this area Capital advance in 2020
Silicon crystal is the most common semiconductor used in microelectronics and photovoltaics. The countries with the main need for semiconductors were the United States, South Korea, Japan, the European Union, Taiwan (TSMC) and China in 2018. Among the semiconductor elements are silicon (Si) and germanium (Ge), boron group (B) elements such as aluminium (Al), gallium (Ga), indium (In) and thallium (Tl). The global division of the semiconductor market based on the percentage of the need of companies in countries in 2018 and 2019 shows that despite the high need of American companies for these basic capital goods, its total production is much less than their needs. This is not something that can be changed overnight because the exorbitant costs, both in terms of capital infrastructure and basic mineral resources, are outside the scope of American social capital (Charts 40 and 41 show the price of semiconductors over the past twenty years. Although the price of these elements is determined based on supply and demand, the cost of production, limited resources, and the heavy capital invested in this area cannot be ignored in determining their price). However, this has not prevented the efforts of its politicians, including economic managers up to the level of President Biden, to form a kind of guarantee of self-sufficiency of American social capital in this area of capital, so much so that in April 2021, Biden issued an order to form a special committee in this area.
The state of chips in the world after 2020, which companies will lead?
With the global semiconductor industry continuing to race forward, a handful of companies are vying for supremacy in an era defined by AI, advanced computing, and amidst a wave of geopolitical tensions. From Nvidia’s dominance on the AI stage through to TSMCs advanced chip fabrication capabilities, competition has rarely been so intense. Whether it be traditional semiconductor players or newly emerging figures, firms across the semiconductor supply chain are looking to cement their position in the market of one of the world’s most sought after technologies.
The semiconductor industry had a robust 2024, with expected double-digit (19%) growth, and sales of US$627 billion for the year. But that’s even better than the earlier forecast of US$611 billion. And 2025 could be even better, with predicted sales of US$697 billion, reaching a new all-time high, and well on track to reach the widely accepted aspirational goal of US$1 trillion in chip sales by 2030. This suggests the industry only needs to grow at a compound annual growth rate of 7.5% between 2025 and 2030. In terms of end markets, after being flat at around 262 million units over 2023 and in 2024, PC sales are expected to grow in 2025 by over 4% to about 273 million units. Meanwhile, smartphone sales are expected to grow at low single digits in 2025 (and beyond) to reach an estimated 1.24 billion units in 2024 (6.2% year-over-year growth). These two end markets are important for the semi-industry: In 2023, communication and computer chip sales (which include data center chips) made up 57% of overall semiconductor sales for the year compared to auto and industrial (which accounted for only 31% of sales combined, for example).
The U.S. has long been a leader in the semiconductor industry, with nearly half of the global market share in 2020. China’s lack of self-sufficiency in semiconductor manufacturing meant it depended heavily on imports, particularly from the U.S., Taiwan, and South Korea. Despite ambitious government-led plans to boost domestic chip production, China still struggled with cutting-edge processes. China’s semiconductor self-sufficiency rate was only 16% in 2020. China’s ambitious goal to produce 70% of its semiconductors domestically by 2025 is one of the key drivers of the chip war. While progress has been slower than expected due to U.S. sanctions and technological limitations, China continues to invest billions in its semiconductor sector. Businesses with interests in China must prepare for a more self-reliant semiconductor supply chain. Foreign firms looking to operate in China may face tougher regulations as China tries to reduce its dependence on U.S. technologies.
Chart 39: Value of semiconductors over the last twenty years in billions of dollars
Chart 40 Global semiconductor market in billions of dollars throughout history.
The increase in semiconductor production in Japan coincided with a significant decline in the United States in the 1980s.
Chart 41: The process of increasing semiconductor production in Japan almost stopped in the 1990s, while production in the United States increased. However, Taiwan, despite a decline in production in the last century, is the largest producer of this basic raw material for modern computer systems and a variety of digital goods.
Rare earths and international competition in other areas of capital advance that play an increasingly large role.
The rapid increase in electronics, the need for batteries with high storage capacity, the increasing prevalence of electric vehicles, and the need for capital to further increase labour productivity in the production of goods, both capital and consumer, are increasing the need for metals with high electrical conductivity, formability, and other physical properties, such as lithium (Li). The main focus of Bolivia’s large companies was initially tin mining, but in Bolivia, tin is no longer the main focus. The main focus is now its massive lithium reserves (it is said to have about half of the world’s resources, other Latin American countries with large lithium (Li) reserves are Chile and Argentina), which are essential for the manufacture of electric cars. The Evo Morales government intended to sign contracts with Chinese companies to mine lithium (Li) instead of large companies such as Glencore, Jindal Steel & Power (India), Pan American Energy, and South American Silver (now known as Tri metals Mining), Tesla (owned by Elon Musk) and Tata India. With the Chinese Tianqi Lithium Group, which is engaged in mining this element in Argentina. In addition, Bolivia’s silver mines, iron mines, zinc mines and indium mines are among the most important in the world. Indium is widely used in the semiconductor industry. The Bolivian capitalist state, which has an active presence in mining through the board of the Bolivian National Mining Company (COMIBO) and the Bolivian National Lithium Company (YLB), is in dire need of large capital and advanced techniques with high labour productivity in order to maintain and even increase its position of profiting from the surplus values produced by the Bolivian working masses.
The metals known as rare earths are in this category. The market for the production of these metals, which includes the first identified mineral of these elements, is called gadolinite, which is a chemical compound of caesium, yttrium, iron, silicon and other elements. Their production is generally controlled by Chinese companies, whether their mines are in China, Africa or Latin America (especially Bolivia). Chinese companies, which control nearly 90 percent of the production and sales market of rare earths, produce them in large quantities by workers whose meagre wages below the poverty line are not paid for months and are directly added to the mass of capital profits. So far, 17 elements from the rare earth group have been identified that have industrial applications.
(La, Ce, Pr, Nd, Pm, Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm,Yb, Lu, Sc, Y)
Most of these elements, despite their names, are very abundant in the Earth. For example, caesium is the 25th most abundant element, with a concentration equal to that of copper. Due to geological characteristics, these elements are very dispersed in the Earth as fine soil particles and are not sufficiently concentrated in one place. As a result, their discovery, extraction, and exploitation are very expensive. Deposits of them that can be economically exploited are called rare earth minerals. The first identified mineral of these elements is called gadolinite, which is a chemical compound of caesium (Cs), yttrium (Y), iron, silicon, and other elements. This mineral was obtained from a mine in the village of Ytterby in Sweden. Several rare earth elements have borrowed their names from this area. These discoveries occurred in Sweden at a time when this industrialized country was going through a period of great capitalist development, a period in which, at its peak, Alfred Nobel revolutionized mining with more than a hundred discoveries and inventions, including the invention of dynamite. The proximity of these elements to the lactide group, which includes uranium, thorium, plutonium, etc., which are radioactive elements, and their type of ionic extraction is common, and in addition, these elements are created in the process of radioactive decay of elements such as uranium, and they themselves are not stable and are converted into other elements by the emission of radioactive waves, which is why their lifespan is often short, and some have a half-life of 18 years.
This process, often accompanied by their extraction, has caused environmental damage, forcing some investors in this area of capital investment to temporarily stop production. For example, the Malaysian government recently forced them to stop producing these elements due to environmental concerns. Near mining and industrial centers that extract and process them, their concentrations can increase to several times the natural level. These elements can be transported to the soil by many factors such as erosion, weather, acidity, precipitation, acidic groundwater, etc. These elements have functions similar to metals. They can be excreted or absorbed depending on soil conditions. They can be absorbed by plants through biological nutrient sources and later consumed by people and animals. In addition, strong acids during the extraction process of rare earth elements form compounds with them, which can then be transferred to the environment and water bodies, making the environment acidic. Most of these elements, along with radioactive elements such as thorium (Th) and uranium (U), are found in rare earth rocks, which are dispersed in the environment during mining and cause widespread environmental pollution. For this reason, the Chinese government was forced to temporarily stop mining these elements, especially in Inner Mongolia, in 2010, 2013, and recent years, but production and mining resumed after a short period of time. In most of these cases, the price of these important raw materials in world markets has increased several times.
In 2017, China produced 81% of the world’s rare earth resources. The country extracted the most of these elements from Inner Mongolia, which holds 36.7% of the world’s reserves. Australia is a distant second and the other largest miner with 15% of global production, but this same capitalist country enjoyed lower production growth in 2020, losing almost all of its production decline to Chinese capital. From 2014 to 2019, China’s exports of rare earth oxides doubled. 80% of China’s exports of these materials are to the United States. France, Japan, and Estonia also export processed rare earths to the United States. But they import their raw materials from China. Some important applications of rare earths are used to produce high-performance magnets, catalysts, alloys, glasses, and electronics. Neodymium (Nd) is important in magnet production. Rare earth elements are used in electric motors for hybrid vehicles, wind turbines, hard disk drives, portable electronics, microphones, and loudspeakers. Caesium and lanthanum are important catalysts for petroleum refining and are used as diesel additives. Caesium (Cs), lanthanum (La), and neodymium (Nd) are important in alloying and in the production of fuel cells and nickel-metal hydride (Ni) batteries. Caesium, gadolinium (Gd), and neodymium play important roles in electronics and are used in the production of LCD and plasma displays, fibre optics, lasers, and in medical imaging. Other uses of rare earth elements in trace amounts in medical applications are fertilization. Rare earth elements are used in agriculture to increase plant growth, labour productivity in agriculture. Rare earth elements are used in agriculture through fertilizers enriched with rare earth elements, which is a common practice in China. In addition, these elements are feed additives for livestock, which lead to increased reproduction of large animals and the production of eggs and dairy products, and in fact, increased labour productivity in this area of capital investment. The destructive effects, especially long-term and cumulative over time, on the human body, animals and nature are unknown and no research has been done in this area or, if it has been done, it is out of sight because there are huge profits involved. In this case, the same process can be compared to the period when, shortly after the discovery of radioactive elements by Marie Curie (radium Rh and polonium Po), profit-seeking capitalists sold water contaminated with these radioactive substances as the water of life!! Therefore, the radioactivity of these elements, their proximity to radioactive elements and their fission from these substances, the increase in the acidity of the soil, rain and waters of the world is another great danger that threatens the health of workers who work with these substances and the masses who feed on these substances under the influence of capitalist misinformation. But the producers and consumers of these capital goods continue to work only with the idea of profit and capital appreciation, like most areas of capital. China also has the highest mining and processing rate of these elements. In 2019, nearly 90% of the mining and processing of functional oxides of these elements was carried out in China. Almost all of the remaining 10% was produced by an Australian company in Malaysia. Malaysia plans to stop producing these elements due to public environmental concerns. New products that require rare earth elements include advanced equipment such as smartphones, digital cameras, computer components (PC components), high-capacity batteries for electric vehicles, etc. In addition, these elements are also used in new energy technology, military equipment, glass manufacturing, and metallurgy.
Chart 42: Rare Earth Resources and Reserves in the World and Major Producers in This Field Capital Advance
China is not only the largest producer of these valuable and strategic materials (Chart 43) and not only has huge reserves of these elements but also has made and continues to make significant investments in this field in African and Latin American countries. The reason for the international conflicts between the world’s major capitalists, such as the United States, Europe, and some Asian giants, is the performance of Chinese capitalism and its government in Burma (Myanmar) in recent decades over the country’s mineral resources, including rare earths, which China has complete control over extraction and production. Domestic Burmese capital reaps huge profits in this cooperation, while China, with its global dominance in these fields, like any major capitalist, reaps huge profits in return for its massive capital, high labour productivity in this field, and the production of semi-finished and fully finished goods.
Chart 43: Rare earth reserves and production in the world. China’s social capital position in these areas of capital reserves can be compared to other giants such as Russia, which according to 2020 assessments holds ten percent of international reserves, but its production and supply of these basic capital goods is close to zero. The United States, with the greatest need (from software to military needs, etc.), has reserves of about 1 percent and production of about 16 percent, Vietnam, with reserves of about 18 percent, has a negligible production. Global production of rare earth elements has been completely dominated by Chinese capital since the beginning of New China until 2020.
HDIN Research, a leading market intelligence and strategic advisory firm, has officially released its latest flagship report, Global Rare Earth Industry Strategic Outlook 2025-2035. The report, titled The Rare Earth Reckoning, suggests that the global rare earth elements (REE) market has fundamentally shifted from a traditional commodity sector to a central arena of geopolitical competition. As global Original Equipment Manufacturers (OEMs) face increasing supply chain volatility, the report emphasizes that achieving supply sovereignty and resilience is no longer optional but a survival imperative for industries ranging from electric vehicles to defense systems.
According to HDIN Research, the global rare earth industry is currently at an inflection point. While China continues to maintain a dominant position—controlling approximately 60% of mining, 90% of refining, and over 90% of magnet production—Western capitalism is aggressively pursuing an N-1 supply chain strategy to reduce dependency. The analysis highlights that while mining operations are diversifying globally, the midstream separation and refining processes remain the critical choke point for the West, with greenfield refineries requiring 6 to 10 years to become operational.
The report provides a detailed analysis of the recent policy landscape, noting the impact of export controls implemented between 2023 and 2025. Although a temporary suspension of certain controls was observed in November 2025, the underlying structural risks remain. This volatility has led to a market divergence where non-Chinese oxides trade at a 20-30% premium due to higher ESG compliance and operational costs in Western regions.
HDIN Research identifies a significant migration of value capture from mine to magnet. To illustrate the current concentration of upstream resources, the report aggregates data regarding global production distribution:
The strategic outlook outlines a three-phase evolution for the market over the next decade. The current phase (2025-2026) is defined by integration, where pilot plants transition to commercial scale and export licensing becomes the standard. The acceleration phase (2027-2030) predicts that non-China refined supply could reach 35%, driven by technological adoption such as Grain Boundary Diffusion (GBD) which reduces heavy rare earth consumption. Finally, the maturity phase (2031-2035) envisions a circular economy where recycled rare earths, or Urban Mining, exceed 10% of global supply.
Technological innovation is highlighted as a key driver for breaking the current strategic deadlock. The report details how GBD technology allows for a 50-70% reduction in scarce heavy rare earths like Dysprosium and Terbium without compromising thermal stability. Furthermore, the industry is witnessing a surge in recycling initiatives, with feedstock from end-of-life magnets expected to become a significant supply source.
This research on the production of rare earths in the world considers the position of China’s social capital in these areas of capital advance with the optimism of the 2020 assessments that the global production of rare earth elements from the beginning of modern China until then had been carried out with the complete dominance of Chinese capital, and that capital parameters such as resources and mines under the control of Chinese capital, the undisputed dominance of Chinese capitalism over the technique of extraction, refining and conversion into intermediate capital goods have been completely at the disposal of Chinese capital, and in this space, the productivity of labour and the low price of labour should be added. In this case, Western capitalism has not been able to compete with Chinese capitalism for decades, and now there is no reason for this optimism except for the great wishes of “a camel dreaming of cotton seeds sometimes eats a handful of seeds, sometimes a handful”!
It is in such circumstances that do not dream and fantasies, but ground realities determine the fate of capital. In the midst of a trade war, the Trump administration is agreeing to deals with the rest of the capitalist world that no one knew about before.
11 August 2025 https://www.bbc.com/news/articles/cx2ppgg0zvlo
Unusual. Quid pro quo. Unprecedented.
That is some of the reaction to news that two of the world’s tech giants will pay the US government 15% of their revenue from selling certain advanced chips to China. Industry watchers, former government advisers, policy makers and trade experts have been giving their views on the deal. The news comes mere months after the Trump administration banned the sale of these chips to China, citing national security concerns.
That ban was lifted in mid-July. And now it seems the US government will go a step further – becoming a part of these American firms’ business with China. And critics argue that is both confusing and worrying. What are these chips – and why do they matter?
These advanced chips are largely used for artificial intelligence (AI) applications at a time when investors are betting that AI will transform the global economy. Last month, Nvidia – which is the world’s leading chip firm – became the first company ever to hit $4tn (£3tn) in market value.
Nvidia developed the H20 chip, and AMD developed the MI308 chip, especially for the Chinese market. They are less powerful and therefore cheaper than both companies’ flagship chips. But developing them was the only option for accessing the significant Chinese market after the previous administration of President Joe Biden banned US companies from exporting the most advanced chips to China because of national security concerns.
Under Trump, even the less powerful, made-for-China chips were banned. The resumption of sales to China is a boon for both Nvidia and AMD because China is such a big market. China’s investment in AI is expanding so rapidly that analysts expect it to grow to roughly $100bn this year – a nearly 50% jump compared with last year. “
Three days before this deal, the South China Morning Post reported:
Tech war: “Huawei to unveil tech to cut China’s reliance on HBM chips, report says
While China’s top memory chip manufacturers are making progress, they still lag behind US and Korean rivals such as Micron and SK Hynix. Huawei Technologies is set to unveil a technological breakthrough that could reduce China’s reliance on high-bandwidth memory (HBM) chips for running artificial intelligence reasoning models, according to state-run Securities Times. The announcement will take place in collaboration with China UnionPay at the 2025 Financial AI Reasoning Application Landing and Development Forum in Shanghai on Tuesday, according to the report on Sunday. The event aims to promote AI reasoning models and applications in the financial sector. Huawei did not immediately respond to a request for comment on Monday 11 August 2025.”
China and World Trade
Chinese capitalist production did not come into being in a few years. A more or less long process of forced growth of accumulation, concentration, self-expansion and globalization of Chinese social capital created these conditions from its own lap. The need for capitalism to export goods and capital arises from the decisive influence of the new areas of capital advance for the entire world of capital and the exploitation of the quasi-free labour of the new areas of accumulation on the challenge of the tendency of the rate of profit of capital to fall and affects this challenge. Similarly, the reduction of the difference between labour time and production time leads to a greater profitability of capital per unit of time. “Labor time is always the time of production, that is, the time during which capital is driven into the environment of production. But the reverse is not always true, that is, the entire time during which capital is in the process of production is therefore not necessarily labour time.” Volume II of Marx’s Capital. The most obvious of the latter is the area of capital advance in agriculture and animal husbandry. This difference between labour time and production time in forestry, animal husbandry and other fields also has a significant impact on the capital return process and the costs of product production. Capitalism uses various means to reduce these costs, such as planting and harvesting multiple crops throughout the year on the same hectare of land, the use of chemical fertilizers, the use of pesticides to reduce labour waste, the use of genetically modified seeds to reduce labour time, the use of various chemicals in the cultivation of tanneries, etc., all affect the return time of capital and the increase in profit per unit of time. This acceleration of the return process of capital is also related to the time of the commodity cycle, and the reduction of the sales time also leads to a reduction in the cost of production. The return time of capital is the sum of the production and circulation periods. Accordingly, the length of the cycle also affects the return period. One of the cycles is the time of sale, or the period of time that capital is in the form of goods – capital. Changes within this time can also cause additional costs such as warehousing and the like (an example of this was the occupation of shipping containers and trailers with a mass of goods in warehouses, ports and transport terminals in 2020 and even early 2021, which caused the price of each container to increase tenfold). An important factor in the difference in time of sale and, consequently, the difference in the return period is the distance and proximity of the place of production to the sales market, a factor that Chinese social capital is struggling with in its aspirations and desire to reach the goods produced by 900 million workers to most of the world and major commodity markets around the world. The shorter this distance and the faster the goods – capital are available to customers, the shorter the period of circulation and return of capital will be. Although the improvement of means of communication and transportation has no effect on the relative difference between the time of the cycle of different capitals, it does accelerate the transfer of goods to the market. Meanwhile, the continuous increase in means of transportation, such as the number of ships and railways, causes goods to be transported to their destination quickly, rather than being piled up in ports and similar centers. The increasing role of means of transportation and mass investments in this area leads to the increasing importance of some commercial highways or ports and trading centers. This movement can also affect the time of sale of goods produced in different regions, the duration of the cycle of various capitals, and finally the payback period of these capitals. With the development of the capitalist mode of production and the expansion of means of transportation, the cycle time of some goods is shortened. This progress simultaneously leads to the increasing development of the world market and the transportation of goods to all corners of the world. The volume of goods in transit increases enormously, a part of social capital that is in the form of goods-capital grows greatly, and the growth of this sector at the same time causes the advance of a huge volume of capital in a stable and revolving manner in the transportation network instead of in the fields of production. The increasingly widespread internationalization of trade in goods, the continuous modernization of transportation facilities, the export of products produced from one continent to all other continents or the most distant regions of the world, all together shorten not only the first part of the cycle or the time of sale, but also the second part, the process of re-converting money into productive capital elements or the time of purchase. Just as British capitalism once began to conquer countries, create a large shipping fleet, and create and use roads and channels to transport goods and capital to the ends of the world as quickly as possible, based on this need, Chinese capitalism also began to implement the “One Belt, One Road” plan, which was later renamed the “Belt and Road Initiative”, for the first time proposed by Chinese President Xi Jinping as a development strategy based on communications and transit lines. This plan, which aims to enhance China’s position in the world’s trade and economic equations, will enable it to transport its goods (by land) through some South Asian countries, to Central Asia and the Caucasus, and from there to Europe by creating an international transit network centered on this country. This possibility will also be provided to this country by sea through the Pacific Ocean, the Red Sea, and the Mediterranean Sea. In 2019, about 80 percent of global trade in goods was by sea, and China’s trade with the world of capital was by sea at 70 percent. In the fall of 2013, the Chinese government first proposed the idea of jointly building and developing the “Silk Road Economic Belt” and the “21st Century Maritime Silk Road.” This grand project did not remain at the level of a plan. From the beginning, an investment of $900 billion was considered in the planning, which is considered the largest investment in the history of capitalism by a country. In 2015, $82 billion was allocated to three investment banks for the project. The Asian Infrastructure Investment Bank also received $100 billion in funding, which was quickly doubled based on needs. In 2017, a two-day summit on the project opened in Beijing with 1,500 delegates from 130 countries, including 29 heads of state and government. Two presidents, Vladimir Putin of Russia and Rodrigo Duterte of the Philippines, were also present. Although the leaders of the European Union did not make a grand appearance at the summit, it seemed that the Chinese capital government was taking the lead, not only in practice but also in conferences and meetings of capital governments. This grand project is now, to a relatively large extent, in Asia, by equipping the ports of southern and eastern China, by building a wide highway near the Indian border, and by patchwork railways here and there, like a dragon that had been sleeping until now.
The huge trade surplus over the past few years has made China the world’s largest exporter and the second largest importer. The World Bank reports that China’s foreign trade represented 35.7 percent of its total GDP in 2019. China’s main exports include telephone-radiotelephone transmission equipment (9 percent), digital call and automatic data conferencing equipment and units (9.5 percent), electronic chips, circuits and microchips (1.4 percent), and petroleum products (1.5 percent). In addition, major exports in the Chinese economy include machinery, clothing, footwear, toys, fuels and chemicals, auto parts and machinery. On the other hand, the country mainly imports electronic circuits (14.8 percent), oil and gas condensates (14 percent), iron ore (4.8 percent), and motor vehicles (2.3 percent). China and 14 Asia-Pacific countries signed the world’s largest trade deal on November 15, 2020. It is the world’s largest free trade agreement, covering one-third of the world’s gross domestic product. Despite the China-US trade war, the world’s largest free trade agreement was signed at the end of a virtual meeting of leaders of the Association of Southeast Asian Nations (ASEAN: the ten countries are Vietnam, Singapore, Indonesia, Malaysia, Thailand, the Philippines, Myanmar, Brunei, Laos and Cambodia). Japan, Australia, South Korea and New Zealand are also participating in this free trade. Under the agreement, customs duties on trade between the signatory countries will be reduced, rules governing joint trade will be developed and the ground for the transport of goods will be facilitated. India’s withdrawal from the group of countries participating in the negotiations late last year practically paved the way for an agreement. Of course, all of this agreement is still on paper and will take a long time to be implemented, but one thing is clear and obvious so far: China’s social capital sees no other way forward for its trade exchanges with the world of capital. Because trade has become an increasingly important part of China’s overall economy and has been an important tool for economic modernization. In 2020, it was reported that exports of goods in 2019 were $2,499.4 billion and imports were $2,078.4 billion (World Trade Organization), while exports and imports of services in 2019 reached $281.6 billion and $497 billion, respectively. China reported a 19.5% increase in exports and 18.7% in imports for 2019. According to World Bank data, in 2019, China’s goods trade surplus was $425.2 billion, up from $395.1 billion in 2018. Total trade in goods (including services) rose to $164.1 billion in 2019, up from $103 billion in 2018. The figures reflect the Chinese government’s efforts to forge new deals and expand road and sea routes to transport goods and capital with the outside world. In 2020, China overtook the United States as the European Union’s largest trading partner and became the bloc’s largest cross-border trading partner. According to Eurostat, the European Statistical Office, the EU’s statistical office, the bloc is now the second and third largest trading partner of the 27-nation bloc, after China, the United States and the United Kingdom, which have left the bloc. China’s economic recovery during the coronavirus pandemic has led to an increase in European exports to the country, particularly in the automotive and luxury goods sectors, while China has benefited significantly from sales of medical equipment and electronics to the continent. According to Eurostat, the EU’s trade volume with China in 2020 was €586 billion ($711 billion) and with the United States €555 billion ($673 billion). During this period, EU exports to China increased by 2.2% to €202.5 billion, while EU imports from China increased by 5.6% to €383.5 billion. In contrast, EU exports to the United States fell by 13.2% and imports from the United States fell by 8.2%. The mass production of capital in the world by the mass of 5 billion workers has led to an increase in the accumulation of capital that history has never seen before. This enormous wealth produced by the mass of workers in the world, who themselves have no choice over what should be produced, has led to the concentration of wealth in the hands of fewer and fewer capitalists. (see also Chart 12 b).
“Why Central Banks and Billionaires are Quietly Accumulating Gold”
Dec 24, 2025
We have officially reached a historic and symbolic turning point: In 2025, for the first time in nearly three decades, global central banks now hold more gold in reserves than U.S. Treasury bonds. I grew up treating the US dollar as a safe haven. Whenever the world was in crisis, the USD was the place to be. For generations, the financial world operated with the same simple, unwritten rule: the US dollar and the US Treasury bill, were the undisputed bedrock of global stability. When times were tough, everyone from the smallest investor to the world’s largest central banks sought refuge in American debt. It was the ultimate “safe haven”—liquid, reliable, and backed by the world’s largest economy. But that era is quietly fading. A generational shift is currently unfolding, one that is lightly covered by Western media and most folks in the west are not fully grasping its potential impact. The foundation of global finance is not just shaking; it is actively being rebuilt, brick by golden brick. Foreign Central banks and the world’s wealthiest individuals are making a calculated and decisive move: they are decreasing their exposure to paper currency and sprinting toward the ancient security of gold.
This is more than just a typical market trend; it’s a systemic re-evaluation of trust, and the consequences for the US economy, and your personal portfolio, will be profound. The Cracking of the Bedrock: A Historic Flip
The concept of the US dollar enjoying an “exorbitant privilege” has been true since World War II. Because the dollar serves as the world’s primary reserve currency, the US government can borrow money more cheaply than any other nation, and Washington gains immense geopolitical leverage simply by controlling the pipes of global trade.
However, the trust has cracked.
For the first time in nearly three decades, the world’s official institutions—the central banks themselves—have signaled their declining confidence in US fiscal health and the dollar’s long-term status. The evidence is staggering: the combined value of central bank gold reserves is now estimated to be approximately $4.5 trillion, essentially surpassing the $3.5 trillion held by these same institutions in US Treasuries.
This historic milestone tells a clear story: the official sector is quietly deciding that physical gold, a metal with no yield, is a more secure store of value than the bond notes issued by the US government.
The Institutional Gold Hoard is Not Slowing Down
This shift isn’t a flash in the pan. It is a sustained, strategic pivot.
Central banks have been purchasing gold at an astonishing rate, exceeding 1,000 metric tons annually for three consecutive years. This buying spree far exceeds historical norms, contributing to gold’s impressive market performance.
This institutional demand creates what financial analysts call a “non-volatile price path”. Unlike speculative buyers who might sell off at the first sign of trouble, central banks are buying based on long-term diversification goals, giving the gold price genuine, deep support.
The accumulation is widespread, too. While countries like China and Russia have been headline buyers, data from 2024 shows that nations like Poland, Turkey, and India have also been aggressively adding to their national stockpiles. As a result, central bank gold holdings now account for nearly 20% of official reserves globally, up significantly from previous years. Why the World is Ditching Paper for the Yellow Metal
The reasons behind this major shift are rooted in three main fears that have plagued global markets over the past decade: geopolitical conflict, crippling debt, and the end of the unipolar financial world.
The Weaponization of the Dollar and Geopolitical Risk
I have already stated in a prior post that in my opinion, biggest catalyst for this global pivot was the decision by the US to freeze Russian foreign-currency reserves following the invasion of Ukraine in 2022.
This action sent a clear, chilling message to every nation on the planet, regardless of its alignment with the West: Your dollar assets are not truly safe. In a time of geopolitical conflict, your currency reserves, which you worked hard to accumulate, are vulnerable to seizure or restriction by a third party.
Warren Buffett: “It takes 20 years to build a reputation and five minutes to ruin it”, “If you think about that, you’ll do things differently”.
For countries and individuals looking to avoid being caught in the crosshairs of future sanctions, owning physical gold held in their own vaults is the only way to completely mitigate this “counterparty risk.” (Remember, the western banks didn’t just freeze government money, they also froze money that belonged to private Russian citizens).
The US Debt Monster and Fiscal Discipline
The second major driver is the alarming trajectory of America’s national debt. It has soared above $35 trillion and continues to grow.
For foreign central banks, which are essentially America’s largest creditors, the high debt-to-GDP ratio raises serious questions about the long-term stability and eventual repayment ability of US Treasuries. When a borrower takes on too much debt, lenders start looking for alternatives. In the world of global finance, that alternative is gold, an asset that has zero liability and cannot be inflated away. The growing debt burden is one of the key factors keeping central bank demand high.
The Accelerating De-Dollarization Trend
The two factors above fuel the third major trend: de-dollarization. This is the global push toward reducing systemic reliance on a single, politically sensitive currency.
Surveys show that emerging economies are actively planning to diversify their reserves toward gold and other currencies, such as the euro and the Chinese renminbi. Over the next five years, analysts project that over half of all foreign exchange reserves—about 58%—could shift away from the US dollar. This is a massive, pre-planned shift in the plumbing of global trade and investment.
The Billionaires Are Joining the Party
It’s not just governments sensing the change; the ultra-rich are also signaling their intent. While central banks are the silent engines of the gold rally, the world’s billionaires are the most visible passengers. The question of where the ultra-high-net-worth are moving their money provides a critical insight into risk perception. What do the people who have the most to lose think about the current financial landscape? According to the latest studies, the trend among the financial elite is clear: they want more gold.
China’s Competition in Space and Military Production
What primarily drives capitalist capital and governments towards large-scale investments in the field of space are the conditions for development in the fields of satellite television technology, GPS, weather forecasting, progress in the military space industry and efforts to control and identify satellites and satellite tasks of competitors. All of these contribute greatly to the development of labour productivity in other areas of capital. The Chinese capitalist government also began to invest heavily in space exploration decades ago, specifically in the 60s and 70s. In the 90s, it sent satellites into space and in the early years of the last century, it sent rockets with humans into space. In 2011 and 2012, China’s independent space station was placed in Earth orbit, making China the third country after the United States and Europe-Russia to have a space station for research. In 2007, it placed its first laboratory for research in the lunar orbit, which resulted in extensive research on our surface and to a depth of several tens of meters. In 2012, the Chang’e 2 satellite succeeded in observing the asteroid Toutatis, the largest and most dangerous near-Earth asteroid that passes close to Earth every four years, at a distance of less than one kilometres (850 meters), and sending back exceptionally valuable images to Earth within 58 seconds. Over the years, the Chinese capital’s work has been known for its precision, meticulousness, and reliance on domestic research. Chang’e 3 was launched in 2013 with the aim of landing on the moon and successfully orbiting the moon for a year, sending back data for research. A year later, one of its cables got stuck in a rock and stopped moving, but it still continues to send data and is expected to do so until 2040. In 2018, the Chinese space agency sent Chang’e 4, the largest lunar rover in history, to the far side of the moon. It successfully landed on the surface of the moon in January 2019. The purpose of its robotic research is to accurately determine the history of the planet (so far 4 billion years have been determined, but data from 500 million years is still needed), collect the necessary rocks and analyse them, determine the exact temperature during the day and night, listen to and analyse space sounds and vibrations from galaxies and planets far from Earth, use infrared radiation to study the surface and depth of the moon, and conduct laboratory transfers of plant seeds, insect eggs, and soil for breeding research, which was successfully completed. The main and important goal of this satellite is to create a large space research station on the surface of the moon, which is scheduled to be ready in the next three years. The result of this extensive research and progress in robotic creation has been the creation of facilities to compete in space with other major capitalist countries. In this way, China is leaving both Russia and Europe behind in this field and competing with the United States. In December 2020, the Stockholm Peace Research Institute announced that in 2019, six of the top 10 arms and military equipment manufacturers were American, three were Chinese, and the last was British, and for the first time, Russian companies were out of the top ten. The same report added that China accounted for 16 percent of global arms sales last year, ranking second. A total of four Chinese arms companies were among the 25 largest arms manufacturers, and three of them were in the top 10. The sales of these four companies increased by 4.8 percent compared to the previous year. In 2018, these companies’ sales reached $56.7 billion. China’s military spending increased from $36.9 billion in 1999 to $266 billion in 2019. The New York-based Asia Institute recently wrote, “Beijing’s military strategy is now focused on defending its borders and its near sea. With modernization that began in 2015, China’s military has significantly strengthened its long-range capabilities. Long-range bombers and special-mission aircraft have expanded the operational range of the Chinese air force. Nine naval vessels, an aircraft carrier, and logistics ships with long-range capabilities have expanded not only military operations but also continental and foreign operations.” The institute estimates that China will have 124 warships and submarines capable of long-distance combat operations by the end of 2021. However, it is not China’s military strategy that has terrified the Western part of global capital, but the expansion of the influence of Chinese social capital in most parts of the world, the trend of production growth accompanied by an increase in the productivity of this capitalism, simultaneously with the gigantic increase in the organic composition of capital, which plays the role of transferring a significant part of the surplus value produced by the world’s workers (not to mention the mass surplus value produced by 900 million Chinese workers) from other sectors, which is the source and root of this concern. Until recently, it was the result of the work of Chinese workers, which, like a raging river, irrigated the world of capital and reduced the deepening of the crushing crises of capitalism, compensated, however insignificantly, for the decline in the rate of profit by the mass of surplus values produced by Chinese workers, but today all these important components work in favor of Chinese capitalism. This is the main source and root of the concerns of Western capitalism. Otherwise, which major global capitalism has not started to equip its military along with the expansion of its fields of production and exchange of goods, and Chinese capitalism is an exception in this regard. The British Empire had complete control over land, sea and communication channels for more than a century, and America subsequently expanded its borders even further. The latter, despite its limited two-hundred-year history, has waged the most wars, caused the most killings and created the most terrible instruments of mass destruction, and is still the largest producer, seller and developer of instruments of mass destruction. I say instruments of mass destruction because we have always witnessed, and in the last few decades it has become more evident, that in capitalist wars, the initiators of the war suffer the least military casualties and losses, and it is the millions of workers of capitalist states who pay the price of wars with their lives, with the burning of their homes and the burning, destruction and displacement of millions of families. In this breath, the claim of the Western part of capitalism that until now they have been the standard-bearers of the peaceful expansion of capital, the doves of world peace, the creators of the United Nations Institutes of Capital for world peace and tranquility, is nothing but a big lie to the workers of the world, a brazen demagoguery and a distortion of the clear reality of the day. The history of capitalism is the history of genocides. The killing of humanity is an inseparable part of the essence of capital. The separation of the worker from his work is the real source of genocide, continuous, widespread, omnipresent, serial and endless throughout the history of capitalism. Genocide in the form of tens of millions of people dying from hunger, tens of millions of people dying from lack of water, sanitation, and medicine, dozens of children dying every minute from the pressure of poverty and numerous forms of deprivation, genocide in the form of burning millions of people in the flames of global and local wars, in the fires of Holocaust-creating Nazis, fascists, the predatory American government, the bloody, filthy, and terrorizing Islamic Republic of Iran, the criminal wars of the American, European, and Russian bourgeoisie in Vietnam, the Balkans, Afghanistan, Iraq, Syria, and everywhere else. The Rwandan genocide 25 years ago was one of these massacres. In 2020, the United States spent three times more on defense than its two rivals, China and Russia combined, and with $738 billion, it topped the military budget, four times that of China ($193.3 billion) and more than 12 times that of Russia ($60.6 billion). This amount of military spending by the United States is equivalent to 40% of the total military spending of the world’s capital states. Global defense spending set a new record in 2020 with $1.83 trillion. The People’s Republic of China alone increased its military budget by 5.2% last year.
China’s solar firms, once deemed too competitive, now face monopoly accusations
China’s efforts to rein in cutthroat price wars in the solar industry have had the unintended result of creating risks of alleged price rigging, highlighting what analysts describe as an “uneasy balance” between the government’s anti-involution campaign and anti-monopoly policies.The photovoltaic industry has been among the hardest hit by vicious price wars – known as involution, or neijuan-style competition – that have affected several sectors in China in recent years, squeezing companies’ profit margins and driving deflationary pressure in the wider economy. China’s leaders have made eliminating such race-to-the-bottom tactics an economic policy priority, leading major solar companies to jointly commit to curb production and maintain minimum prices as part of a “self-discipline” campaign.
China pledges green-energy push with Global South, signals wider market opening
China has vowed to deepen cooperation in new energy and green minerals with the nations in the Global South, saying the move is in line with their industrial goals and a step towards further advancing Beijing’s economic opening-up, according to the latest front-page commentary in the Communist Party’s official newspaper.
“Amid profound changes in the global environment, [China’s commitment to further opening up] underscores our confidence and responsibility in upholding openness and win-win cooperation,” the piece in People’s Daily said on Monday 12 Jan 2026. “It sends a powerful signal that China’s high-quality development will create new opportunities for the world.”
After Trump’s Venezuela takeover, China’s investors prep for Latin American era of anxiety, 5 Jan 2026
Chinese companies operating in Latin America are bracing for greater uncertainty rather than an abrupt rupture, as Washington moves to reassert dominance in the western hemisphere following the ousting of Venezuelan President Nicolas Maduro, according to analysts.
This sense of caution comes amid intensifying US efforts to curb China’s footprint in strategic resources, infrastructure and trade across the region.
“There is little doubt that a Trump-style Monroe Doctrine is aimed squarely at countering China’s growing influence [in Latin America],” said Wang Yiwei, director of the Institute of International Affairs at Renmin University, referring to a revived interpretation of the foreign policy that seeks to reassert US dominance in the western hemisphere by curbing the influence of rival powers, particularly China.
China is expected to avoid direct confrontation with the United States following the assault on Venezuela, but analysts said Beijing might try to capitalise on the unease created among Latin American countries to deepen economic and diplomatic ties. Beijing had already been expanding its influence in the region through investments and trade, but these interests now face a direct challenge from Washington’s increasing assertiveness, with President Donald Trump saying the US is now “in charge” of Venezuela and some of its oil revenues. China’s response so far has been limited to the diplomatic front, with a slew of condemnations of the US for breaching international law and violating Venezuela’s sovereignty.
At the same time, we should not forget that the door to Latin America opened to Chinese capital not in Venezuela but in Peru. Pay attention to the report below, it will clarify things.
As the world waits to see how the return of Donald Trump will reshape relations between Washington and Beijing, China has just taken decisive action to entrench its position in Latin America.
Trump won the US presidential election on a platform that promised tariffs as high as 60% on Chinese-made goods. Further south, though, a new China-backed megaport has the potential to create whole new trade routes that will bypass North America entirely.
President Xi Jinping himself attended the inauguration of the Chancay port on the Peruvian coast this week, an indication of just how seriously China takes the development.
Xi was in Peru for the annual meeting of the Asia-Pacific Economic Co-operation Forum (Apec). But all eyes were on Chancay and what it says about China’s growing assertiveness in a region that the US has traditionally seen as its sphere of influence.
As seasoned observers see it, Washington is now paying the price for years of indifference towards its neighbours and their needs. “The US has been absent from Latin America for so long, and China has moved in so rapidly, that things have really reconfigured in the past decade,” says Monica de Bolle, senior fellow at the Peterson Institute for International Economics in Washington.
“You have got the backyard of America engaging directly with China,” she tells the BBC. “That’s going to be problematic.” Even before it opened, the $3.5bn (£2.75bn) project, masterminded by China’s state-owned Cosco Shipping, had already turned a once-sleepy Peruvian fishing town into a logistical powerhouse set to transform the country’s economy.
China’s official Communist Party newspaper, the People’s Daily, called it “a vindication of China-Peru win-win co-operation”.
Peru’s President Dina Boluarte was similarly enthusiastic, describing the megaport as a “nerve centre” that would provide “a point of connection to access the gigantic Asian market”.
But the implications go far beyond the fortunes of one small Andean nation. Once Chancay is fully up and running, goods from Chile, Ecuador, Colombia and even Brazil are expected to pass through it on their way to Shanghai and other Asian ports.
China already has considerable appetite for the region’s exports, including Brazilian soybeans and Chilean copper. Now this new port will be able to handle larger ships, as well as cutting shipping times from 35 to 23 days. However, the new port will favour imports as well as exports. As signs grow that an influx of cheap Chinese goods bought online may be undermining domestic industry, Chile and Brazil have scrapped tax exemptions for individual customers on low-value foreign purchases. As nervous US military hawks have pointed out, if Chancay can accommodate ultra-large container vessels, it can also handle Chinese warships.
The most strident warnings have come from Gen Laura Richardson, who has just retired as chief of US Southern Command, which covers Latin America and the Caribbean.
She has accused China of “playing the ‘long game’ with its development of dual-use sites and facilities throughout the region”, adding that those sites could serve as “points of future multi-domain access for the [People’s Liberation Army] and strategic naval chokepoints”. Even if that prospect never materialises, there is a strong perception that the US is losing ground in Latin America as China forges ahead with its Belt and Road Initiative (BRI).
Prof Álvaro Méndez, director of the Global South Unit at the London School of Economics, points out that while the US was taking Latin America for granted, Xi was visiting the region regularly and cultivating good relations. “The bar has been set so low by the US that China only has to be a little bit better to get through the door,” he says. Of course, Latin America is not the only part of the world targeted by the BRI. Since 2023, China’s unprecedented infrastructure splurge has pumped money into nearly 150 countries worldwide.
The results have not always been beneficial, with many projects left unfinished, while many developing countries that signed up for Beijing’s largesse have found themselves burdened with debt as a result. Even so, left-wing and right-wing governments alike have cast aside their initial suspicions of China, because “their interests are aligned” with those of Beijing, says the Peterson Institute’s Ms de Bolle: “They have lowered their guard out of sheer necessity.” Ms de Bolle says the US is right to feel threatened by this turn of events, since Beijing has now established “a very strong foothold” in the region at a time when president-elect Trump wants to “rein in” China.
“I think we will finally start to see the US putting pressure on Latin America because of China,” she says, adding that most countries want to stay on the right side of both big powers.
“The region doesn’t have to choose unless it’s put in a position where they are forced to, and that would be very dumb.”
Looking ahead, South American countries such as Peru, Chile and Colombia would be vulnerable to pressure because of the bilateral free trade agreements they have with the US, which Trump could seek to renegotiate or even tear up.
They will be watching keenly to see what happens to the United States-Mexico-Canada Agreement (USMCA), which is up for review in July 2026, but will be subject to negotiations during 2025.
Resources
China’s Agricultural Development in International Comparison by John W. Langworth,
China’s Presence in Africa: A Collection of Authors.
Beyond the Wall: China’s Economy: What Everyone Should Know / Author Arthur R. Kroeber
Statista is a German company specializing in market and consumer
The International Monetary Fund (IMF)
Hassan Abbasi January 2026