“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx
Mar 14, 2016
Less than a year ago, the media were still raving about China – its economy could pull the world out of the crisis. China was supposedly “a tiger.” Well, no more!
In fact, the Chinese economy has been sliding down a slippery slope for a long time. The crunch came in the form of a series of brutal falls on China’s stock market. So far, massive injections of fresh cash by the central bank – equivalent to nearly 142 billion dollars – have failed to stop the meltdown.
So what’s happened to the Chinese “tiger”? Of course, there is the world crisis. A sharp reduction in orders from Western companies caused a wave of bankruptcies and plant closures in China. What is more, China’s ability to export was hampered by protectionist measures introduced by some of the rich countries. The U.S., for instance, China’s biggest export market, slapped a 277% duty on a whole range of its steel products.
But there was another, more vicious factor. After the 2008 collapse, the craze among Western big business was to lend money at extortionate interest rates to “emerging countries.” In China, which was their main target, huge infrastructure projects got off the ground on the back of this massive inflow of speculative capital. Whole new towns were built for a so-called “new middle-class,” which only existed in the dreams of Western speculators. Soon, China was littered with a host of ghost towns and other white elephants.
Having pocketed fat interest payments for a number of years, Western speculators finally decided that China was becoming too dangerous for them. Last year, they pulled out massively, taking about 700 billion dollars out of the country. This left China’s finances in tatters, with a mountain of debt, and caused the meltdown of its stock markets over the past months.
Today, by an ironical twist, it is China’s economic slowdown which is threatening the world economy with a boomerang effect. The reduction in world trade, which, so far, has been partly concealed by China’s ever increasing imports, is coming back with a vengeance. But, in addition, the massive flows of speculative capital roaming the world in search of a quick buck are now inflated by those which have fled China – thereby threatening to destabilize the whole planet’s economy even more brutally.