A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
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Thiranjala Weerasinghe sj.- One Island Two Nations
?????????????????????????????????????????????????Wednesday, June 14, 2017
This is the century of new state forms
China’s outreach will popularise state-capitalism
by Kumar David=June 10, 2017
A Chinese Puzzle: A one-party state economic superpower with global ambitions
The New Silk Road(Maritime routes are broad-brush and incomplete)
The convolution of state forms is likely to change more during this
century than in any previous 100 year period of human history. The
ancient civilisations Mesopotamia, Egypt and Indus Valley survived
unchanged for several thousand years; so did the hydraulic society of
ancient China. Lanka’s later dry-zone system continued for a millennium.
Military power cum slave-production dependent societies such as Greece,
Rome, the Mayas and the Aztecs flourished for hundreds of years; Rome,
close upon a millennium. The reign of capitalism has been 370 years if
we count from 1648; nearly 230 years from 1789. Stabilisation of a new
state ‘genotype’ in China, the collapse of the Soviet order, the chronic
disorders of late capitalism and the prospect of guaranteed minimum
income societies, taken together with leaps in a technology broadly and
IT specifically, are quickening the pace of change.
This essay is about two factors in this metamorphosis; the prevailing
state form in China and the future global impact of this super-state. By
super-state I mean a nation state that is projecting economic power,
political influence, security concerns and territorial ambitions,
globally. I will take it in two steps; first the nature of the state in
China (is it capitalist, socialist or something else?) and second,
perspectives on future impact of this super-state. Donald Trump handed
Beijing a walkover in their bilateral rivalry by refuting globalisation
and asinine withdrawal from the Paris Climate Accord; but these are
ephemeral to my big picture and merit no further mention.
Characterisation of the
Chinese State
Whether the state in China is capitalist or not is not abstract
disputation among idle scholars. It matters to countries which are
destinations of Chinese investment or lie along the proposed land and
sea corridors. In former days whether a small country was allied to the
US or USSR mattered in economics, politics and social relations. (The
nature of their state matters even more to citizens and classes within
China but that dimension is absent from my discourse today). I have been
researching the nature of the Chinese state from the mid-1980s and my
first definitive paper was in December 1999 at the Hector Abhayavardhana
Felicitation Symposium at the Ecumenical Institute (ESIDA).
The proceedings, edited by Rajan Philips, were published in 2001 as ‘Sri Lanka: Global Challenges and National Crisis’.
If I may brag a bit, when I reread the paper I was elated how well its
50 pages ("China’s Socialist Market Economy: Viable Concept or
Oxymoron") had held up for two decades. The three paragraph Conclusion
could well have been written yesterday, or tomorrow! I concluded (a)
China was not capitalist, nor definitively on a road to capitalism; (b)
the viability of an alliance of non-capitalist (sate and collective)
sectors with private capital was being established; and (c) I offered
the prognosis that the character of this state would eventually be
decided by international developments. If I were asked now, 20 years on,
how I would like to update this I would go further than the caution
that held me back then. I would confidently assert the state in China is
state-capitalist; a term I held back in the 1990s.
On the second point it is apparent that China is state-capitalist with
the feature that the party-state is the leading partner and private
capital plays an auxiliary role. On the third point, global influence,
reality has gone beyond my anticipation. I was then ruminating that the
class nature of the Chinese state would be decided by the strength and
evolution of global capitalism in the twenty-first century. It has gone
much further; the global system is being set by China as much as the
other way round. In the remainder of this sub-section I will argue that
state-capitalism in China is led by the party-state with capitalism and
the market playing auxiliary roles.
The monopoly of power in the hands of the Chinese Communist Party (CCP)
defines the nature of the state. The CCP and its leaders retain control
over state, economy, army, media-culture-web and many aspects of
everyday life. There is a temptation to trace a Mao-Deng-Xi Jinping
lineage but this is exaggerating the individual dimension. The economy
and economic decision making is integrated into polity. The growth and
prosperity of the private sector and the global reach of the Chinese
economy (mostly through ‘private’ companies) has hardly altered this
hierarchy. At root the state controls politico-economic power relations;
no Chinese company, no "filthy" billionaire dare defy the state. And
the Party holds reserve power over the state. This is the mechanism,
much admired by some, which endows decision making in China with such
authority. In the domestic market and the panoply of international
projects, many led by purportedly private companies, authority lies with
the state. Washington cannot bring Microsoft, GE, Blackrock or Bank of
America to heel with the muscle that Beijing’s writ has over Chinese
enterprises.
About 50% of China’s output in the modern (non-peasant, non-informal)
sector is created by private capital. But . . . but! All land is state
owned only usufruct is conceded to farmers, provinces and private
enterprises. A property bubble may produce billionaire property
developers but their edifices stand on state owned land; ditto for
private industrial plant. China’s four giant banks are state owned;
private and foreign ones are comparatively tiny. The economy is credit
intensive, not equity intensive since domestic savers do not have deep
pockets, so the banks who pay the piper call the tune. The state
intervenes directly and indirectly in enterprise decision making; the
Party reigns through trade unions and cells. Apart from this there are
120 giant state-owned conglomerates which dominate energy, petroleum,
telecoms, defence, coal, aviation, chemicals, steel and base metals.
It is not that Chinese capitalism is effete; of course not. It is robust
and powers on. Hundreds of millionaires and billionaires have surfaced.
The Gini Coefficients which measure wealth and income inequality are
worse in China than America. But these giants stand on quicksand and
clay. Yes, Chinese capitalism is solid; its entrepreneurs thrive better
than their Western counterparts. The use of market forces is real; an
exploding economy cannot function without market rationalism in price
determination and resource allocation. Indeed, Chinese capitalism
flourishes, but at the end of a short leash.
China goes global
It is not possible to cover the whole gamut of Global China Inc. within
the confines of this essay. One star item, land and maritime expansion
known by the ugly moniker One Belt One Road, OBOR, will have to suffice.
OBOR is economic (lubricating China’s gigantic export and import
market), it is political (China hopes to replace America as the world’s
premier power, within, maybe 25 years; leadership in Asia is already
secure), and it is strategic, supplementing its expanding military
spending. Analysts argue whether the impetus behind OBOR is more
economic or political. In perspective, the two cannot be separated. In
the short-term it is also driven by infrastructure overcapacity and the
need to deploy China’s huge foreign savings and construction capacity.
OBOR is structured along two land corridors, two spurs and an ambitious maritime expansion.
* A railway corridor from central China and another from northern China to Europe through Russia
* A non-rail corridor from western China through Central Asia to Iran,
the Levant and Turkey. (This mimics the famous Silk Road of yore from
Xian to Rome)
* A spur to the port of Gwadar in Pakistan through Afghanistan and Kashmir
* A spur from south-west China through Burma to the port of Sitwe
* Port developments in Burma, Lanka (Colombo and Hambantota), Pakistan,
West Africa, and even Greece (Prius) until it was blocked by a nervous
European Union.
Financing calls for massive deployment of capital; China says it will
invest $4 trillion and analysts estimate other countries en route will
chip in $1.6 trillion till 2030. These estimates are wildly exaggerated;
actual expenditure will be much less in view of China’s huge domestic
debt*. Lanka has run up a sovereign debt of $60 billion; 10% is owed to
China and to resolve this, our government will convert debt into
equity. The $15 billion China-Uzbekistan deal is a quarter of
Uzbekistan’s GDP; the $37 billion China-Kazakhstan deal, the $46 billion
China-Pakistan agreement and the $24 billion China-Bangladesh pact each
represent about a fifth of GDP of the partner countries.
[*Though China has large foreign reserves, domestic debt has risen to
$17 trillion due to massive credit expansion to state corporations and
private enterprises to boost activity and create jobs following the
post-2008 downturn in exports].
OBOR is Chinese government driven but construction is in the hands of
private companies at market rates; a classic state-capitalist
arrangement. For some countries, the impact will be overwhelming; for
some like Lanka very large. The greatest impact will not be political
subservience or financial imbalance per se, but rather copycat ideas of
how to organise the nation state. It is impossible not to be influenced
by how they do things in China. If not governments, then some political
movements will be impressed. Whether Beijing intends it or not - most
likely it is indifferent - imitating features of state-capitalism ("With
national characteristics!") by small countries is unavoidable.
Therefore, the global landscape of the next half-century will consist of
a plurality of interwoven state forms; common or garden capitalism in
some countries mainly in the West, re-emergence of social-democracy as
the futility of neo-populism strikes home, and thirdly the
state-capitalist model. You have the advantage over me in that you will
know the UK election results when you read these lines. If Labour does
well, the polls say victory is impossible, it will signal the return of
social-democracy to European centre-stage. Copycat state-capitalism will
not lag far behind in small nations along the New Silk Road.