By ELIAS JABBOUR*
For the Chinese leaders, at the moment, it is more important to change the ownership schemes in the country than to guarantee a certain growth rate.
I have been much sought after for my opinion on the current “energy crisis” in China. I've been talking a lot about this with Marco Fernandes, editor of Dongs heng News. A resident of China, he has been giving me information and opinions. I am in the process of elaborating a more in-depth opinion. When I speak of “deeper background”, I think that we should avoid the supply/demand/price schemes that are imposed on us to analyze situations of this type. “Everything relates to everything”. China is going through a special and decisive moment in its history, which is reflected in the emergence of contradictions in multiple determinations.
There is indeed an energy supply crisis in China. This crisis is directly related to the post-pandemic recovery and the impressive rise in coal prices. According to Morgan Stanley, Chinese demand grew 15% this year and supply only 5%. The immediate solution would be for the government to allow an increase in energy prices. It should be 10%, thus solving a good part of the problem – already thinking about the stock for next winter. But that's just the tip of an iceberg, every two years China needs to add the equivalent of all of Brazil's power generation capacity. Refuge to coal must be avoided in the face of the international environmental crisis.
We have to be careful with the attempt to justify the neoliberal bankruptcy in the world and in Brazil, which has used this crisis in China and Great Britain to justify a different energy crisis. They are three totally different problems. Investments in Brazil have only fallen since 2016, while China has not stopped investing. The result was the discovery of huge gas fields in Inner Mongolia (at a time of gas supply crisis) and yesterday of a huge oil field in Dongbei.
The issue is that the Chinese government also imposed draconian carbon emission reduction targets on the country's provinces, announced the closure of coal mines outside the country and canceled imports from Australia (China accounts for 90% of its own supply). That's where the node lives. I honestly believe that in a matter of weeks this issue will be resolved in China. Incidentally, the government has already announced that it will “pay whatever price” to guarantee energy supply. The means to solve this end are immense. The range of options is not small. But we must look at it all as part of a whole.
China is currently undergoing a series of simultaneous transitions, including: (1) energy transition; (2) transition of internal ownership schemes and (3) transition of accumulation dynamics. Such transitions occur in the midst of growing imperialist pressure on the country, imposing a pace and political time to these transitions that were not in the plans of the policy makers Chinese ten years ago, for example.
The energy transition is summarized in the goal of reducing carbon dioxide emissions to zero by the year 2060, reaching the 2030 peak in 2030. The Chinese government has been working hard on this task. Data is plentiful on the internet. China invests more than the United States and Europe combined in the search for renewable energy sources. Pilot “smart” cities have been built and powered by renewable energy sources. In the last 20 years 40.000 km of high-speed trains have been built in the country. But dependence on coal is still immense (60% of the country's primary source of energy). Such a transition is not smooth.
A new cycle of economic growth in the country will no longer be mediated by waves of institutional innovations that cyclically replace the place of the State and the private sector in the economy – with privatizations followed by nationalizations. There is no longer a border between the different forms of property in the country, but the private sector of the economy, still powerful in fundamental sectors of Chinese life (see the real estate sector) no longer responds to its own historical demands. What is happening in China right now, since the end of last year, is a new cycle of institutional innovations in the country where new and superior forms of nationalization are taking place, the case of Evergrande and the regulation of private monopolies (bigtechs e fintechs) are angular.
This is an operation with a high political cost, with impacts yet to be verified. In fact, at the moment in which China lives, it is more important to change the ownership schemes in the country than to guarantee a certain growth rate.
The transition in the dynamics of accumulation is already underway. Keynesian “aggregate demand” schemes (consumption, investment and the external sector) only cloud, and separate into parts, something that is a totality. As Michael Roberts has pointed out, the main contradiction in the Chinese economy is not between more consumption and less investment. The relationship between investment and consumption is not a zero-sum game. According to reports from the International Labor Organization, average wages in China have increased by an average of 280% over the last ten years. This did not occur at the expense of a fall in the investment rate.
The great contradiction of the Chinese economy lies in the need to raise labor productivity, catching up with the capitalist countries in this regard. For this, maintaining high investment rates is essential. This calculation includes the challenge imposed by imperialism, which decided to remove China from the international market for semiconductor inputs – known to be the Achilles heel of the Chinese economy.
Concrete is the expression of multiple determinations. I believe that each of these dimensions gives rise, at each moment, to a point of imbalance in Chinese governance, with the need for a quick capacity for intervention and solution. So far everything has been well managed. With a delay of ten years, financial market economists in Brazil announce that China sends a message of “less growth” (see the “live from the Price” commanded by the competent Olivia Bulla).
The message that China sends us and that few realize is that the country is going through real birth pangs of not just one transition, but multiple ones, occurring simultaneously.
*Elias Jabbour He is a professor at the Graduate Programs in Economic Sciences and International Relations at UERJ. Author, among other books, of China Today – National Development and Market Socialism Project (Anita Garibaldi).
