Translated "Avante" article by Ângelo Alves, Member of the PCP Political Committee and of the International Department

The Shanghai stock market suffered severe losses, last Monday, followed by a “domino” effect, with great impact throughout the world. All attentions are facing China , the second most important world economy, that in the last two and a half decades registered an average of 10% of its GDP growth, and has , with its population purchase power increase (20% of the world population), served as a cushion for the deep capitalism economic and financial crisis, absorbing raw materials exports and energetic resources from other “emergent” great economies along with products and technologies originated from great capitalist centres, as the USA and Germany.

The dominant analyses point out to the emptying of a financial bubble, provoked by what some call the “Chinese crisis”. The idea of “danger” is created regarding the world economy, currently coming from China. But reality is ought to be different. For some time, the Chinese market financial capital has undergone flight movements, dismantling the tent and moving on to speculate elsewhere, owing to the decrease of rentability rates , not “adequate” for voracious profits. That is how financial capital acts and the casino economy works out, a characteristic of capitalist economy and its high degree of financialization. And naturally, China is not immune.

Following a simplistic analysis, one ought to say that what is going on is, as some “analysts” point out, “the first great Chinese capitalist crisis” through its financial component. But that ought to be not but a simplistic analysis but as well a not rigorous one.. In reality, Chinese economy contains, namely in some sectors and regions, a capitalist economy characteristic elements, and the Chinese leadership, itself, recognizes it holds risks. But it would be a mistake to ignore the possibilities the Chinese state and government have to intervene in its own economy – the state, as owing many important economic key- sectors and foreign currency important reserves -; the Chinese home market dimension and the importance of productive sectors regarding its GDP (agriculture and industry represent about 60% of the GDP being responsible for 2/3 of the labour force) ; and the fact that the growth perspectives are to keep higher levels than the forecasts for the USA and the EU.

Therefore, what is important to retain from this situation, is that China does not offer any threat to the world capitalist economy, but exactly on the contrary. Economic stagnation, in economies, such as within the EU or Japan, together with a USA fragile growth and not sustainable, regarding its industrial production growth and consumption increase are factors that oblige China to deepen its decision, considered beforehand, concentrating on what concerns its home market, slough down /reduce exports, and consequently, squeeze imports. The latter, associated and having an impact in the deepening of raw materials’ crisis ( the oil barrel achieved an historical minimum of 44 dollars, metals and other raw materials are in free-fall) which makes the financial capital ( “provide” a liquidity crisis surplus owing to the capital injections operated in the USA and the European Union) currently seek other destinies, in order to keep up their profit rates.

These facts, in the origin of these events, prove two other fundamental realities: the first, is that capitalism structural crisis is very deep and far from being resolved. Tendencies carry on to demonstrate world consumption contraction and deflationary. The second, as one had previewed, the measures used in the main capitalist centres were adopted in the name of the fight against the crisis and they were seeds for new crisis. So… currently, there they are, reaching emergent markets and threatening the second most important world economy.