A woman holding the flag of the Communist Party of China, which is characterized by a red field with a yellow hammer and sickle in the upper left corner. Photo: Andy Wong/AP.
By Friends of Socialist China – Jul 23, 2026
Greg Godels has published a thoughtful response in ML Today to Carlos Martinez’s recent reply to Jacobin on China and exploitation. Godels argues that the exploitation of the many by the few remains a central driving force of the Chinese economy, and questions whether China’s market reforms and its billionaire class can be squared with a socialist trajectory.
In the article below, Carlos argues that the decisive Marxist question is not simply whether wage labour and surplus value exist, but which class holds state power and in whose interest the economic surplus is directed. On that test – the class nature of the state – China’s billionaires answer to the state rather than command it; its reforms were a conscious strategy to develop the productive forces and build the material basis for a more advanced socialism; and China provably does not participate in imperialist super-exploitation.
Greg Godels has written a considered response in ML Today to my recent reply to Jacobin on China and exploitation. Unlike much of what passes for left commentary on China, Godels writes as a comrade, not a Cold Warrior. He admires the Chinese revolution, insists that China’s fate must be decided by the Chinese people, and closes by affirming that, whatever its difficulties, “it is China’s road”. On all of that we agree. Where we part company is over a question that Godels, for all his fidelity to the classics of Marxism, never quite poses: which class holds state power?
State and revolution
Godels’s central charge is that the debate over China too rarely invokes “the exploitation of the many by the few”, and that when I ask for exploitation to be “contextualised”, I am really relativising and rationalising it. He is right that exploitation belongs at the centre of any Marxist analysis. But there is a second important category that is missing from his account entirely: the class nature of the state.
For Marx and Lenin alike, the question of whether a society is advancing towards socialism was never settled simply by cataloguing the presence or absence of wage labour and surplus value at the point of production. It was settled principally by asking which class holds power, and in whose interest the state directs the economic surplus. This is the whole point of the concept of the dictatorship of the proletariat, and of Lenin’s insistence, throughout the period of the New Economic Policy, that market mechanisms within a workers’ state are something categorically different from capitalism under a bourgeois state.
Under the NEP in the Soviet state, private capital, wage labour, rich peasants and market relations all flourished. Lenin did not conclude that the October Revolution had thereby been cancelled. He concluded that the proletarian state would make use of capitalist forms, on its own terms and under its own control, in order to build the material foundations of socialism.
Godels praises the successes of the early-1950s Chinese economy – and rightly so – yet that economy included a substantial private-capitalist sector and a national bourgeoisie, all operating within the framework of New Democracy. He invokes Stalin’s Economic Problems of Socialism in the USSR – but Stalin’s argument there is precisely that commodity production still existed in the Soviet Union nearly four decades after the revolution, and that the abolition of exploitation was a process, not an event accomplished at a stroke. If the persistence of capitalist forms disqualifies China from the socialist camp, it disqualifies Lenin’s Russia too – not to mention today’s Cuba.
Trickle down
Godels argues that rising living standards are no proof that exploitation has ceased: after all, British life expectancy has more than doubled since 1800, yet the British working class remained profoundly exploited and capital ever more concentrated. To point to China’s improving conditions, then, is supposedly to echo the capitalist promise that “a rising tide lifts all boats”.
Such an analysis ignores some important facts. In nineteenth-century Britain, rising living standards were a byproduct – wrung from a resisting ruling class through bitter class struggle, and underwritten by the plunder of empire. To the extent that the Western working classes have secured rising wages, shorter hours and welfare states, this was made possible in no small part by the super-exploitation of the colonies and neo-colonies – the imperial rent drawn from half the globe, which allowed a portion to be redistributed at home without threatening the accumulation of capital. Lenin’s account of the “labour aristocracy”, bribed with “crumbs” from imperialist super-profits, describes exactly this mechanism.
Western prosperity has always had a hidden supplier: the low-wage workers of the Global South, whose super-exploitation John Smith has shown to be the beating heart of twenty-first century imperialism. The capitalist state serves capital; whatever reaches workers does so incidentally, or as a concession extracted under duress and financed from abroad. That is what “trickle down” actually describes.
China is the opposite case. It has no empire and no colonies from which to draw imperial rent. And the rise in living standards is not a byproduct but the conscious, planned objective of state policy. Hundreds of millions of people have been lifted out of extreme poverty by design – through targeted programmes in which three million cadres were dispatched to live in poor villages until every household was raised above the line; through directed investment; through a land system that was never privatised; and through the conscious mobilisation of the state’s resources towards common prosperity.
The distinction is between a state that is an instrument of capital and one that is not. Indeed China passes Godels’s own preferred test – that in the Soviet Union sacrifice was bearable because the wealth produced was “not systematically and methodically directed to the few” but towards a better future for all. A planned economy under Communist Party command has directed the surplus into poverty eradication, mass housing, universal education and healthcare, the world’s largest clean-energy build-out, and the climb to the technological frontier. That has nothing in common with the theories of “trickle down” economics, which call for minimal state intervention and the upward redistribution of wealth.
The difference between Shenzhen and New York
Godels points out that Shenzhen has 132 billionaires to New York’s 146, and asks, what is the social utility of a billionaire?
It is a fair question, of course. The issue, however, is not the existence of great private fortunes as such but their relationship to a process of national development. In the US, billionaires effectively own the state: capital sets the limits of what politics may attempt, and no administration of either party may seriously threaten its prerogatives. In China, billionaires answer to the state. They are tolerated to the degree that their activity serves the national development plan, and they are disciplined the moment it does not – through regulation, ideological guidance, anti-monopoly action, the common prosperity agenda, the anti-corruption campaigns, and, when necessary, the halting of what would have been the largest public offering in history and the humbling of the country’s then richest man. As Eric Li puts it, in China “capital does not rise above political authority”; in the US, “the interests of capital and capital itself have risen above the American nation”.
The “iron logic” of accumulation
Godels’s deepest theoretical claim is that accumulation is “Moses and the Prophets”: capital, once amassed in private hands, is driven by an iron logic to reinvest, expand and seek profit abroad, and China’s billionaires “cannot escape that logic”. The Belt and Road, on this reading, is simply the export of their accumulated capital – China following the well-travelled road to imperialism.
The trouble is that the iron logic operates under specific conditions: where the capitalist class commands the state, and where crises of overproduction and falling profitability at home drive capital outward to super-exploit cheaper labour. Far from exploiting others, China has itself been a net loser in the world economy. Its wages have risen rapidly and it has been steadily climbing the value chain, but it super-exploits no one, and the net drain of value still runs the other way. The Marxist economists Guglielmo Carchedi and Michael Roberts calculate that surplus value has been transferred out of China to the imperialist bloc at an average of 5 to 10 percent of Chinese GDP every year since the 1990s – a drain amounting to more than 60 percent of China’s annual exports to those countries. On their reckoning, China “clearly fits into the dominated bloc”.
The Belt and Road does not reverse this by super-exploiting the Global South. It carries no austerity conditionalities. Chinese investment banks lend at roughly half Western interest rates. China is supporting countries of the Global South in modernising their economies and breaking out of underdevelopment. In fact, the largest recipients of Chinese overseas investment are the United States, Britain and Australia, which are self-evidently not targets of cheap-labour super-exploitation.
Export of capital, as Lenin’s own framework makes clear, is a necessary but not a sufficient condition of imperialism; around 90 percent of the world’s countries export capital to one degree or another. Imperialism is domination – and China dominates no one. It has no colonies, wages no wars of conquest. It has not built a global infrastructure of power projection. A country cannot have become imperialist without ever having fought its way to empire; that would be unprecedented in world history, and would render Lenin’s analysis of imperialism and war obsolete.
What I did not argue
Godels has me saying that “the ends justify the means” – that Chinese workers must suffer capitalist exploitation now so that gains may come later. I argued nothing of the kind. My argument was that exploitation must be measured against the real alternatives available to a relatively poor, blockaded, formerly semi-colonised country – against Bangladesh, against the other destinations of outsourced production, where wages are lower and repression harsher and no commensurate rise in living standards is on offer – and not against an imagined, frictionless socialist utopia.
The purpose of reform
Godels treats China’s post-1978 reforms as, in effect, a capitulation – capitalism admitted “through the front door”.
The reforms had a clear purpose, stated openly and consistently by their architects: to develop the productive forces so as to build the material basis for a more advanced socialism. This is not a retrospective gloss; it is orthodox historical materialism. Marx wrote in Volume III of Capital that the development of the productive forces is “capital’s historic mission and justification”, for “it unwittingly creates the material conditions for a higher form of production”. The vision of the Chinese leadership was to replace “unwittingly” with “purposefully” – to use capital, within strict limits and under heavy regulation, to accomplish that development consciously, under the direction of a workers’ state, rather than leaving it to the blind operation of the market. That is precisely the logic of Lenin’s NEP, applied, extended, deepened and updated.
The reforms answered a real and urgent problem. Despite its achievements, China in 1978 remained a poor country: per capita income of around 210 dollars, some 250 million people below the poverty line, food production barely ten percent higher per head than in 1952. As Deng Xiaoping put it with characteristic bluntness, “socialism means eliminating poverty. Pauperism is not socialism, still less communism”. The superiority of socialism, Deng argued, had ultimately to be demonstrated by developing the productive forces faster than capitalism and raising living standards accordingly – otherwise the whole project would forfeit its legitimacy and ultimately fail.
This was not a betrayal of the revolution’s purpose but a restatement of it: as Deng insisted, “only the socialist system can eradicate poverty”, and only a socialist state would direct development towards that end rather than towards private accumulation.
Deng’s generation drew from the decline and fall of the Soviet Union the conclusion that what fatally destabilised it was not its experiments with the market but its long failure, from the mid-1970s, to deliver rising living standards – combined with decades of ideological degeneration – such that when socialism came under attack the masses could not be mobilised to defend it. China’s reforms were, among other things, an attempt to avoid that fate: to root socialism in the tangible, improving material life of the people. While this has generated very real contradictions, it has kept the Chinese revolution alive and advancing while the Soviet one perished. An important consideration for us Marxists.
China’s internationalism
Godels appends a separate charge: that China “fence-sits” on Gaza, Iran and Cuba, and that the foremost potential counterweight to US imperialism has simply stepped aside. This issue is dealt with at length by Danny Haiphong, but the actual record is worth setting out.
Iran has been subjected since February 2026 to a criminal US-Israeli war of aggression. China has consistently condemned that war as a flagrant violation of international law, opposed the illegal sanctions regime, and repeatedly demanded a ceasefire and an end to the bombing of Iran’s civilian and energy infrastructure. Far from standing aside, China purchases the great majority of Iran’s oil exports in open defiance of Washington’s “maximum pressure” campaign, and there are credible reports that Chinese air-defence, satellite and navigation systems have materially strengthened Iran’s ability to defend itself. Coordinating with Pakistan in particular, China has also been central to efforts for a negotiated peace.
It was China that brokered the 2023 Iran–Saudi normalisation, one fruit of which was Riyadh’s refusal to let US and Israeli jets refuel on its soil. And when Iran closed the Strait of Hormuz to vessels tied to the US, Israel and their allies, it pointedly exempted China – to the point that ships have taken to switching their transponders to feign Chinese ownership in order to pass safely. As Haiphong argues, the demand that China instead “do more” by confronting the US militarily would drag it into a war no one in the Axis of Resistance has asked it to fight, on behalf of others, at enormous risk – while doing nothing to help Palestine or Iran that China’s actual support is not already doing.
On Palestine the record is likewise substantive. China was among the first states to recognise the Palestine Liberation Organisation (PLO), in 1965, and the State of Palestine, in 1988. It has used its standing at the United Nations not only to demand an immediate ceasefire but to uphold the Palestinians’ right to armed resistance. In 2024 it convened all the major Palestinian factions in Beijing and brokered the Beijing Declaration on national unity. Relations between Beijing and Tel Aviv have fallen to their lowest ebb.
One may still wish for more; but the blame for Gaza rests with the United States, which supplies the arms and the diplomatic shield, and the responsibility for stopping it rests first of all with us, in the imperialist countries, whose task is to disarm our own governments rather than to demand that a sanctioned developing country fight the empire on our behalf.
Cuba is the clearest case of all. As Washington tightens an illegal blockade that has plunged the island into daily blackouts, it is China that has stepped in – financing and building dozens of solar parks, committing to some two gigawatts of capacity by 2028, and donating tens of thousands of photovoltaic kits for rural clinics and homes, all with no conditionalities, no structural adjustment, no demand for market access. Cuba’s solar revolution is socialist solidarity in a highly concrete, life-saving, form.
While we are on the historical record, one older charge in Godels’s essay deserves correction: that Mao-era China entered a “shameful alliance with South African apartheid” in the anti-colonial wars in Portugal’s African colonies. This misrepresents what happened. In Mozambique China backed Frelimo, and in Guinea-Bissau and Cape Verde the PAIGC – the very movements that won those liberation wars. Angola is more complicated. China’s stated position was for the unity of the three liberation movements, as set out in the Alvor Agreement and recognised by the Organisation of African Unity; it received an MPLA delegation in Beijing as late as June 1975, and it never attacked the MPLA, or the government the MPLA went on to form, by name. But by loudly opposing the Soviet and Cuban role in the country, China effectively lined up against what proved to be the only genuine liberation movement – whose victory, secured with Cuban and Soviet support, was a triumph of proletarian internationalism. That turned out to be a genuine error, amid the poison of the Sino-Soviet split. But it was by no means an alliance with apartheid, and to describe it as such is to seriously misrepresent the historical record.
China’s road
“It is China’s road”, Godels concludes, and there he is absolutely right. Our task, as Marxists outside China looking in, is to defend China’s right to travel its own road, and to assess it as we assess all socialist construction – materially, historically, against the real alternatives, and not in comparison with an ideal held up precisely so that reality can come off second best. To do otherwise, at a moment when the imperialist camp is manufacturing consent for a New Cold War and rehearsing the arguments for a hot one, is to hand ammunition to the wrong side.
No question there are potholes on China’s road, as there are on every road out of underdevelopment and encirclement. But the road nonetheless runs unmistakably in the direction of socialism.
