China in the global capitalist system

Document for the XIV FT-CI Conference
Esteban Mercatante André Barbieri (The Left Daily) 16 November 2025

1. The crisis of the “West” and the challenge of China
China has become a prominent player in the international capitalist system and one of the two poles of an increasingly fragmented global economy, a consequence of geopolitical security concerns, strategic decoupling, protectionism, and tariff conflicts. This observation takes on a specific form in the context of the end of the neoliberal era, which entailed the relatively harmonious integration of economies and global value chains for more than three decades since the Cold War. The old world order dictated by American unipolarity is in crisis, marked by the hegemonic decline of US imperialism itself and the fractures within the old corpus of the "West," now fragmented by Donald Trump's disruptive policies and his disregard for traditional transatlantic alliances.

In this process of reinterpreting the characteristics of a period marked by crisis, wars, and abrupt changes on the global stage, China has emerged as a voracious power, the world's second-largest economy with the second-largest military budget. It is a country that has ceased to be a mere recipient of capital and foreign direct investment, becoming instead a nation that competes for niches of capital accumulation among weaker states. Thus, China's rise positions the country as a key player in the dilemmas of the capitalist crisis, and also as a receptacle of its effects. Xi Jinping's China, as never before, is shifting all the most explosive contradictions of the global economy and class struggle to the very foundations of its national structure .

This transformation has serious consequences for the capitalist structure. The main one is that China is becoming an influential—and decisive—actor in the dispute over who will pay the costs of the exhaustion of neoliberal globalization. Given the absence of significant new spaces for capitalist accumulation—as happened with China itself after its reabsorption into the sphere of surplus-value extraction in the 1990s—and the fact that, following the Lehman Brothers crisis, state bailouts have left economically weakened companies afloat that are not investing, the tendency toward geopolitical frictions with military implications is becoming increasingly prevalent, even if they have not yet escalated into a global conflict.

In this dynamic, where the United States remains the dominant imperialist power within the global capitalist system, China plays an unprecedented role in the distribution of global resources. The war in Ukraine, representing the most significant moment for challenging the domination scheme designed by globalization, was used by China to gradually advance its "revisionist" challenge to American unipolarity. In this conflict, both the United States and China, without troops on the ground, implemented their policies through other means: the United States, under NATO's command, fought to preserve the unipolar order that emerged from the Cold War, subordinating the capital of Russia and China; and China, advancing its alliance with Moscow, but in an increasingly asymmetrical alliance as a consequence of Russia's dependence on China following its break with the West (an asymmetry that generates resentment in Moscow). China does not seek to subvert the capitalist economic system that underpins this order, but rather to improve its position within it.

At the same time, China continues to seek the technological and military conditions that will allow it to expand its challenge to US supremacy in matters of global importance. While it is true that China's rise has altered the old pattern of undisputed US dominance, it must be acknowledged that the country starts from a more backward base compared to the established powers. These factors of incongruity in the pace of development are fundamental to understanding the scope and relative limits of China's emergence, which can only be resolved within the framework of interstate disputes and the international class struggle.

Today, capitalist China is under the Bonapartist one-party regime of the Chinese Communist Party, which survived the Restoration and manages its effects. China has a sui generis capitalist model , quite different from what we traditionally know in the West, due to the mark of "state interventionism" and the conditions under which the Restoration originated , which absorbed the gains of the 1949 Revolution. The CCP retained some strategic economic niches (energy, telecommunications, transportation, finance), but put its state apparatus at the service of promoting the law of value and the international projection of its native capital, where state ownership has influence but diminishes proportionally with the growth of the private sector. It maintains the country as a global manufacturing center thanks to the iron discipline of the colossal Chinese working class. Without systematic repression and coercive discipline in the centers of production, denying any attempt at worker organization, it would be unthinkable for the CCP to maintain its industrial system.

The unique foundation of China's rise, from a country with a colonial history to a capitalist superpower that is beginning to alter the internal dynamics of the most fragile nations, lies in its absorption, through counter-revolution, of the achievements of the 1949 Revolution, without which this leap would have been unthinkable. The Revolution had unified the country, created a strong sovereign state for the first time in its history, lifted millions of workers out of poverty with education and discipline, achieved high literacy rates and life expectancy, and established mechanisms of economic control—planning (albeit bureaucratic), nationalization of strategic industrial assets, etc.—within a relatively decentralized institutional framework that allowed for provincial autonomy. Born already bureaucratically deformed, the People's Republic did not promote the existence of direct democracy bodies such as the Commune or the Soviet councils, nor the international expansion of the achievements of 1949. Isolation and backwardness, fueled by the global situation of regression of workers' gains—the fall of the Berlin Wall and the disappearance of the Soviet Union—unleashed the forces that would return China to the web of global capitalism.

The entire phase of capitalist restoration reforms that began with Deng Xiaoping in the late 1970s and accelerated throughout the 1990s, culminating in China's entry into the WTO in 2001, was preceded by Beijing's rapprochement with Washington, initiated with the Nixon-Mao summit. China would become a key link in global value chains. This was due to the availability of a massive, cheap, and skilled workforce, whose mobility within the country was strictly controlled by the CCP. This control facilitated the rapid provision of tens of thousands of workers to companies in the Special Economic Zones, where export-oriented production projects were located. Thus, China became the world's great "factory." Its integration into global capitalism was fundamental to capital's international offensive against labor, the neoliberal cycle that, starting in the 1980s, decimated workers' rights. This occurred in imperialist and peripheral countries, while transnational corporations increased their profit margins.

China and the developed capitalist (imperialist) countries maintained a symbiotic relationship during the neoliberal period. In particular, with the United States, during the 2000s, the term “Chimerica” was used to describe the close ties that were established. Of course, the relationship was never without tensions. After the Tiananmen Square massacre in 1989, relations cooled. There was also a spike in tension during the Kosovo War, when one of the missiles launched by NATO forces in Belgrade struck the Chinese embassy. But these were isolated incidents in an otherwise cooperative relationship.

Following the Great Recession, a new dynamic began to emerge in China's relations with the United States and other major powers. From the American perspective, the idea that China posed a threat to its dominance gained increasing traction. The admission that the US Treasury relied on Chinese bond purchases for financing was a clear demonstration of the Asian giant's economic power. This fueled a growing debate among American strategists about how to respond to the "Chinese threat," with widely divergent positions among them (as seen between John Mearsheimer and Henry Kissinger, for example). Obama's "pivot to Asia" materialized both in a greater military deployment in Southeast Asia and in the pursuit of the most ambitious free trade agreements proposed to date, the TTIP and the TPP. Under Trump, the objective of containing China translated into substantially different policies, a "trade war" within a context of competition, especially in technology. In the area of ​​security, the push for the Quad alliance (comprising the US, Japan, Australia, and India) was one of the most visible displays of strength in the face of China's rise. Trump authorized record arms sales to Taiwan while promoting naval voyages across the Taiwan Strait, which have since become routine. Biden was even more aggressive in restricting China's access to critical technologies, such as semiconductors, and in promoting regional security alliances in Southeast Asia against China. In 2021, AUKUS, the strategic military alliance between Australia, the UK, and the US for the Indo-Pacific region, was established.

From the Chinese perspective, the 2008 crisis confirmed the fallibility of Western capitalism and the moment to emerge as an “alternative model” of governance and economic outlook, under the guise of “socialism with Chinese characteristics”—a euphemism for the kind of unfettered capitalism in China under the state rule of the Chinese Communist Party. In response to Obama’s “pivot to Asia,” Xi Jinping introduced the concept of a “new type of great power relations.” This shift in China’s global stance was complemented by the concept of a “community with a shared future for mankind,” which seeks to emphasize the idea that the Chinese leadership intends to play a positive and constructive role in global affairs. This has revived the theme of supposed “benign multilateralism” under Chinese leadership, which has influenced public debates among populist, neo-reformist, or “progressive nationalist” sectors that identify with the notion of the “Global South.” This spectrum of opinions has been the subject of debate in numerous FT-CI materials, always from an anti-imperialist and independent perspective towards all capitalist states.

While majority state ownership of some strategic sectors was preserved and financial sector deregulation was limited, leaving the state with numerous levers for active intervention in economic planning, a robust private sector emerged, expanded, and consolidated, receiving ample benefits to enrich itself as it adapted to state objectives. The Chinese working class led numerous struggles and resistance movements against the effects of the restoration and strengthening of the private sector, from rural struggles in the 2000s against Hu Jintao's land expropriations to the wave of strikes in the automotive and electronics industries in Guangzhou in the 2010s. Class struggle was not absent, although it has not yet reached the threatening character seen during the Tiananmen Square uprising, where the student revolt was followed by the entry of the working class. Government repression, which intensified dramatically during Xi Jinping's era, thwarted these processes, further increasing the already considerable obstacles to workers' organization in the workplace. However, the slowdown in the Chinese economy, the crisis in the real estate sector, and problems of overproduction in industry, along with high youth unemployment and a yearning for greater democratic rights, may generate new processes that, in a country like China, will inevitably encompass sectors of the working class.

Considering the reasons why China has become more assertive, one cannot ignore the tensions that such rapid development inevitably generates in any society. This has potentially destabilizing effects, which could be its main Achilles' heel. The intensification of international rivalries could be exacerbated, generating serious internal social and economic consequences—processes that are ongoing and could alter the course of China's development.

The rivalry between the United States and China has intensified without qualitatively altering their extreme economic interdependence. The United States represents the country's largest consumer market. The United States has the world's second-largest manufacturing sector, accounting for 13% of global output, while China accounts for more than double that, at 35%. Therefore, while Donald Trump's tariff measures during his new term sometimes threaten to trigger a drastic decoupling, they are difficult to sustain. We must consider the challenge posed by China and the debate about its place in the global system in light of the historical peculiarities imposed by this internationalization of production in the 21st century.
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