(Editor’s note: The first article in this series discussed the astounding advances which China is making through the application of digital technology – already surpassing the West in certain areas. In this article, we will examine how China’s Party-state operating system has put technological development at the forefront of its modernization program and its program for national “rejuvenation.” We will look at the phenomenon which might be described as “digital Marxism” – and consider whether this weakens or strengthens Party rule in China.)

The fog of ideology continues to cloud Americans’ view of China’s development. Beijing’s critics—abundant in the Ü.S. media, academia, and governance— predict that China’s modernization will stall. Measurable growth is indeed slowing, and many analysts cite an array of factors that could very well complicate the Party’s economic ambitions, such as currency troubles, loss of competitive edge in cheap exports, demographic crises, persistent (though often exaggerated) inefficiencies in the state sector, an underdeveloped regulatory framework for protecting private property and intellectual rights, and so on. It is worth noting that the same people for decades have chided “Red China” for not showing deference to Western nostrums, for not undertaking sweeping privatization, not liquidating the remaining state sector, not opening up markets wholesale, not democratizing, not embracing liberal political values, etc. Indeed, China’s ongoing success would seem to pose a glaring contradiction to American policy prescriptions. Where did we go wrong?

Understanding China’s system

The People’s Republic of China (PRC) is not a liberal-capitalist democracy or a nation currently transitioning into one. The Communist Party is intent on keeping a firm grip over society, industry, and commerce, and it does so through a complex web of institutions and planning organs embedded into the pervasive Party-state apparatus. The Party’s legitimacy is not grounded in the whims of electorates, but in the organization’s ongoing ability to steer China in a progressive direction. In exchange for the consent of the governed to its monopoly rule, the Communist Party of China (CPC) is responsible for ensuring the nation’s ongoing development in a way that manages the aspirations of both elites and a broader public which have come to expect higher standards of living, better working conditions, and cleaner ecological conditions. Responsibility for China’s failure or success rides on the Party—a fact of which the leadership is well aware.

But herein lies one key to the Party’s longevity: China’s communists have put strategic technological development above ideological squabbles, by insulating core technology projects from the vicissitudes of post-1949 Chinese politics. Over time, the Communist Party of China has fine-tuned the nation’s unique developmental model, combining utopian goals with pragmatic management, and smart state macroeconomic planning with the dynamism and vigor of relatively unencumbered markets. China today may have aligned the precise constellation of institutions, political procedures, economic norms, and social patterns needed to ignite full-scale digital modernization.

It was the Korean War which first confronted China’s new Communist administrators with the stark realities of technological backwardness. Mao Zedong had utopian ambitions, but he drew a distinction between ideological “progress” and matters of core national preservation; as a result, Mao chose to isolate communities of top scientists from the social turbulence of the Cultural Revolution. Zhao Yuezhi points out that technology development was placed above the Two-Line “capitalist road” vs. “socialist road” struggle during the Mao period, with China’s ambitious nuclear program succeeding in detonating a fusion nuclear weapon in 1967. “This legacy of military-led techno-nationalism has a profound impact on China’s ‘digital revolution’ during the post-Mao era,” writes Zhao.[1]

Through the ensuing reform and opening-up period and the re-introduction of market-based economic norms in China, Chinese leaders prioritized indigenous, state-led R&D with greater ambitions in mind. The nationalistic Four Modernizations program of the early reform period “crystallized the post-Mao Chinese elite’s re-articulation of the deep-seated modern-era Chinese belief that the only way to redeem the Chinese nation from its past humiliations by the technologically and militarily superior foreign imperial powers and to avoid being bullied again in the future was to ‘catch up with the West.’”[2] Subsequent high-tech projects have sought to “yoke technological achievements to strategic goal of the state.”[3] The central government’s 863 Program, launched in March1986, provided a springboard to advanced R&D in information and communication technologies, for example.

China’s Communist planners learned from the mistakes of both the Soviet Union and Ü.S.A. In the former they identified the limitations of excessive centralization and full-scale public ownership, in the context of general economic backwardness. In the latter, China observed the limitations of free-market fundamentalism, partisan deadlock, and the ongoing impact of our nation’s lack of coordinated, planned, and purposeful development.

Instead of micromanaging production, or leaving everything up to the “free market,” China’s system uses the visible hand of the Party-state to guide the market towards fulfilling strategic economic priorities. China’s hybrid socialist-market system serves Party objectives by permitting market interplay between SOEs and private-sector enterprises, which contain deep links to the Party-state through managerial structures and Party cells. Over time, the quality of Chinese manufacturing improves as Chinese companies—both public and “private”—hone their competitiveness in domestic and international markets. In time, the private sector becomes ever more intertwined with the Party. Thus, the socialist market is the coordinating mechanism used by Party planners to boost China’s economic performance and productivity, with a socialist endpoint in the distant horizon.

China’s new growth model

The old growth paradigm of cheap exports and state-funded construction binges is spent. China’s bumpy road to modernization now entails shifting towards a new growth model oriented towards high-tech and innovation-based production. The growing pains of transitioning from quantitative to qualitative growth certainly present unique social and political challenges. However, this has not dampened the forecasts or ambitions of Party planners and theorists.

Indeed, Xi Jinping’s term is being framed in Party documents and publications as the start of the “great rejuvenation” of the Chinese nation—restoring China’s dignity and status as a global power after 100 years of “humiliation” at the hands of Western powers. In the narrative of Chinese communism, Xi Jinping’s status is now on par with Deng Xiaoping and Mao Zedong, his “thoughts on governance ‘the latest achievement of the Sinicization of Marxism.’”[4] This is not the language of a political organization that is losing its grip on power. On the contrary, the triumphal language of current CPC theory suggests that Party leaders are convinced that they have “cracked the code” of Chinese development and have formulated an “operating system” that will allow China to thrive.

Theory is taken seriously in Chinese policymaking circles, and Marxism remains the fundamental theoretical guidepost of Communist Party policy initiatives. Party planners and theoreticians frame the digital era in their long-term, historical-determinist outlook on Chinese modernization, dividing development into critical stages which must be attained and then surpassed with the rise of new technologies and corresponding changes in the relations of production. As the agricultural revolution improved mankind’s capacity for sustenance, and the industrial revolution enhanced man’s physical strength, the digital revolution will expand man’s “thinking strength,” Xi Jinping has said.

At a recent conference on cybersecurity and informationaization, Xi Jinping clarified the role of digital development in Party theory, stating that “the cybersecurity and informatization undertaking represents new productive forces and a new development direction.”[5] China remains relegated to a “low stage of socialism” in light of the nation’s recent industrialization and residual feudal social patterns, and can only ascend to a more “advanced” stage of socialist development when the nation has mastered the most advanced forms and relations of production. Digitalization is a stepping stone.

Private enterprise and markets are essential under the Party’s Bukharinite framework for understanding socialist development in conditions of relative backwardness, which utilizes commodity production and markets until such modes of organizing economic activity can be supplanted by superior coordinating mechanisms.

The private sector is key to driving informationization and digital R&D, and Xi’s administration has frequently stressed the need to support entrepreneurial startups in the form of SMEs, to deepen overall reform, and to ensure the “decisive” role of the market in resources allocation. As Xi Jinping said, “implementing a basic economic system with public ownership at the core, and in which many different kinds of ownership develop together, is a fundamental state policy established by the Communist Party of China.”

Close coordination between SOEs and research institutions “upstream” and entrepreneurial startups “downstream” ensures that the fruits of state-led R&D can be applied to manufacturing with real-world applications, which, in turn, promotes digitalization of the overall economy. The “convergence of informatization and industrialization” provides the basis for China’s continued modernization.

China’s Digital Strategy

It is in the context of Xi’s grandiose national revival campaign that China has fully articulated its cyberstrategy, which seeks to facilitate “converged development of the Internet and the real economy” so as to transform the PRC from a follower to a leader in high-tech R&D, while simultaneously reshaping the economy and governance through “informationization” and the emergence of a ubiquitous network society.

China’s “informationization” of the economy and governance, involving the widespread development and deployment of Information and Communication Technologies (ICTs), combines private sector competition with state planning and publicly-owned manufacturing, as laid out in the Made in China 2025 and Internet Plus action plans. The Belt and Road project for trans-Eurasian integration also plays an important role by integrating China into global supply chains and research hubs. These programs aim to position domestic tech manufacturers at the forefront of the production of high-end technological components, gradually reorient national production in favor of high value-added goods, and greatly boost labor productivity and wages. Informationization is also seen as a sort of fuse for triggering the full creativity of the Chinese population, as access to digitalized modes of production is available to all with basic coding proficiency and web design aptitude.

China is unlikely to surpass the West through purely indigenous research, having commenced digital modernization from a position of relative weakness. As Xi said, “when we stress indigenous innovation, it does not mean that we close the doors to do research and development; we must absolutely persist in open innovation.”[6]

Greater integration with the global market system has long been a pinnacle of Beijing’s economic strategy, as transnational supply chains provide pathways for new technologies, which can then be indigenized. Gaining technology, schematics, and concepts for digital production processes from the outside world remains critical, and one route is through Silicon Valley, where dozens of start-ups have been recipients of Chinese investment. Chinese firms involved in Silicon Valley not only reap financial rewards, but also gain access to technologies which can be sent and replicated back home. Chinese investment in Bay Area non-real estate ventures reached $6 billion in 2016, with some Silicon Valley tech start-ups complaining of strong-armed tactics from major Chinese investors, such as Alibaba.[7] The China-Silicon Valley nexus has undoubtedly contributed to China’s rapid mastery of such “new wave innovations” as virtual reality, mixed reality, drones, and an array of smart devices.[8]

Chinese leaders have concluded that advanced technology and critical components cannot be secured exclusively through trade with foreign countries, however. Continued reliance on the Ü.S. and other nations for processors, microchips, and other critical components puts China at a disadvantage to other powers, and poses a critical threat in the context of resurgent economic nationalism in the era of Trump and Brexit. As Xi said, “market exchange does not bring core technology; we can also not buy core technology with money. We must rely on our own research and our own development.”

Trade and technology embargoes are a frequent lever applied by Washington, and previous Ü.S. trade restrictions on ZTE and Huawei undoubtedly shaped Beijing’s approach to the Digital Sphere. Chinese companies involved in ongoing projects and technology transfers with nations such as Syria, Iran, and North Korea may be subject to sanctions from various Ü.S. agencies. Moreover, China’s ongoing exclusion from NASA collaboration in the realm of space exploration provides added impetus for China to accelerate its own R&D programs. “Made in China 2025” is the Party’s blueprint for digital industrialization in light of present domestic and international conditions.

The “Made in China 2025” plan

On the surface, the Made in China 2025 plan, unveiled by the State Council in 2015, borrows from the playbook of European-style regulatory capitalism, which is more open to macroeconomic planning. Based loosely on Germany’s Industrie 4.0, Made in China 2025 identifies nine key areas of priority, including “improving manufacturing innovation, integrating information technology and industry, strengthening the industrial base, fostering Chinese brands, enforcing green manufacturing, promoting breakthroughs in 10 key sectors, advancing restructuring of the manufacturing sector, promoting service-oriented manufacturing and manufacturing-related industries, and internationalizing manufacturing.”[9]

The plan seeks to promote “intelligent manufacturing” across all sectors using the levers of the Party-state, with the Party’s second centennial goal of 2049—100 years since the founding of the PRC—as the approximate finish line for achieving parity with the West. The plan reveals that targeted investment in indigenous R&D, as well as expanding China’s reach globally, such as by acquiring stakes in Silicon Valley enterprises and other global tech hubs, are both critical tactics of China’s digital strategy.

Made in China 2025 aims to fulfill the Party’s digital aims by:

  • utilizing smart policies and commercial finance to promote next-generation technology
  • promoting domestic and international capital markets for financing IT enterprises
  • enhancing state support for innovative manufacturing zones
  • increasing state funding to institutions of research and firms engaged in intelligent manufacturing
  • promoting public-private partnerships (PPP)
  • offering tax incentives to companies engaged in R&D and technological upgrades
  • fostering small and medium-sized enterprises (SMEs) by providing access to loan channels through state banks
  • devising a human resources development plan for the manufacturing and tech development industries
  • creating tech advisory commissions

Made in China 2025 provides a roadmap for China’s manufacturing modernization not vastly dissimilar to that of Germany and other emerging nations. Unlike other countries, however, China has chosen to compete head-on with the U.S. Beijing has encouraged local tech entrepreneurs to challenge Silicon Valley, resulting in tech giants such as Tencent, Baidu, and Alibaba. China has built its own search engines, social networking platforms, and integrated apps, which easily rival American variants; similar achievements are largely absent across Europe and other BRICs nations. Moreover, China has used its Great Firewall as a lever of digital protectionism, ensuring that local tech companies continue to dominate the Chinese market. For the most part, the only people complaining about the inaccessibility of Facebook, Google, and Youtube are China’s community of expats.

Digital Marxism

Ambitions aside, the PRC is not like other emerging nations in one more critical aspect: China’s Marxist-Leninist Party-state system entails totally different organizational principles, decision-making mechanisms, channels for implementing decisions, methods for evaluating and reformulating policy, and procedures for selecting and promoting expertise, as well as vastly dissimilar political norms, values, and long-term goals. For all of China’s well-known shortcomings, an integrated Party-state system may enjoy greater capacity for coordinating overall economic development than traditional liberal capitalist democracies, provided the Party is able to enforce discipline, instill motivation, and ensure upward mobility of legitimate experts.

The technocrats who fill the ranks of the CPC have all ascended the organizational hierarchy at least in part through their credentials, performance, and knowledge of Party theory. Policies are formulated after economic and social issues are evaluated from a wide-angle lens, as the Party takes a holistic view of development rooted both in ancient Chinese philosophy and Marxist political economy. Whether one takes “socialism with Chinese characteristics,” the “Sinicization of Marxism,” or other CPC ideological projects seriously, the fact remains that China’s digital strategists have bigger ambitions than simply beefing up their nation’s export portfolio, fabricating better defense technology or “playing catch up” with the West; their stated aim is to realize their nation’s “rejuvenation” and long-term ascendence to “higher” socialism through the development of advanced means and relations of production, crossing fully from the mechanical to the digital age more rapidly than even the Ü.S., which initiated the new epoch.

China’s program of economic and political digitalization is laid out in a comprehensive long-term strategy, and that strategy reflects the ancient philosophical underpinnings of the Eastern sphere. The “ubiquitous network” is analogous to the ancient concept of Qi, the original energy which flows through all living matter. The ubiquitous network distributes access to digital modes of production and commerce in order to integrate the total creative energies of the populace into the Party’s overall scheme for development. China’s digital visionaries lack the disruptive ethos of their Western peers; in China’s Eastern world-view, maintaining balance is the prime imperative. Thus, China’s system aims to strike balance between different players in the economy—the private and state sectors—as well as between elites and masses. Xi Jinping’s rhetoric, with its theme of lifting up the poor while moderating the excesses of elites, elicits the ancient notion of Dao, or “The Way,” rather than revolutionary Marxist conceptions of a classless society.

All indications suggest that Chinese policy makers and economic planners have thought out the wide range of possibilities afforded by comprehensive digitalization. Perhaps it is no coincidence that Marshall McLuhan’s Understanding Media was translated into Chinese in recent years. “Electric media,” as McLuhan wrote, represent an “extension” of man far above and beyond previous mechanical technologies, which simply augmented man’s physical abilities. The Digital Sphere, in McLuhan’s view, represents an extension of man’s consciousness. Indeed, Xi captures the essence of McLuhan’s thinking when he said, “the information revolution is strengthening humanity’s thinking strength; it is bringing another qualitative leap in productivity.”[10] The total convergence of production, governance and culture with cybernated modes of activity provides the path for bringing to full fruition mankind’s productive potential, creativity, innovation, and cultural resplendence. It is the digitalization of Marxism.

Integrating the nation’s productive, administrative, and cultural life into the Digital Sphere transforms both the economic base and the corresponding superstructure of human society simultaneously, and far more rapidly than previous technological innovations. This fulfills the core material prerequisite for social progress in the Party’s dialectical materialist outlook.

The Sinicization of Marxism may factor in emergent digital modes of production and their corresponding social relations in the Chinese cultural context. McLuhan’s writings, which have been studied by Party scholars, may provide a hint at China’s “revised” Marxist theoretic framework. As McLuhan writes, “Marx based his analysis most untimely on the machine, just as the telegraph and other implosive forms began to reverse the mechanical dynamic.”[11] McLuhan postulated that mechanical technology promoted specialization and individualism, whereas electric media foster tribal and communal modes of social activity. Party theoretical campaigns in recent years emphasizing a “harmonious society,” “scientific development,” and the “sharing economy” could be grounded in a new understanding of social relations and human consciousness in the digital epoch. Interestingly, China’s longstanding reform-era model of decentralized economic experimentation coincides with McLuhan’s prescriptions. As McLuhan wrote, “[t]he implosion of electric energy in our century cannot be met by explosion or expansion, but it can be met by decentralism and the flexibility of multiple small centers.”[12]

Informationalized Party Governance

The comprehensive informationalization of China’s system is laid out in the Internet Plus action plan. True to the Party’s theoretical grounding in Marxist political economy, Internet Plus integrates both political and economic digitalization. A detailed action plan was established in 2015 for eleven key industries through Internet Plus, outlining government plans to spur greater “downstream” development by leveraging big data and cloud technologies.[13]

The greater significance of Internet Plus lies in the political dimension, as the Internet Plus Government Services Model fuses government services into the Internet, with the aim of promoting better information sharing between departments, streamlining bureaucratic processes, making government more efficient and transparent, cutting costs and opening space for greater creativity. It is worth observing that governments around the world are now adopting new modes of cyber-coordination to improve services and better satisfy public demand. Once again, however, China is different.

Controlling the rapid dissemination of vast quantities of data is now a prerequisite for stability across regime types. But China’s system offers unique potential for coordinating decision-making extensively and rapidly. Internet Plus makes use of developments in core chips, servers, cloud technology, and big data in order to digitalize the nervous system of the Party-state, extending the organization’s penetration of society to previously unimaginable depths. The Organization Department of the CPC, which coordinates promotions throughout the Party structure, as well as government, bureaucracy, SOEs, and academia—thus shaping China’s professional class—can now better analyze personality profiles when determining appointments. Leading cadre and SOE managers can now be monitored more carefully. Political education can be more thoroughly administered, and compliance can be more meticulously ensured.

Meanwhile, the Central Propaganda Department enjoys vast new possibilities for understanding and then re-shaping public opinion. Fun new apps and online games with subtle political content can be developed. Dissent can be monitored. Social mobilization outside of the Party sphere can be easily tracked and then quelled. Added cyber security, product development and new productive platforms are mere added benefits of Internet Plus. Allowing the organism of Party governance to grow, adapt, and function more efficiently is the primary goal.

The function of Internet Plus is both practical and ideological. Optimized information sharing between regions, as well as between various departments, strengthens stability and reinforces Party rule. It helps resolve problems stemming from the misallocation of resources and persisting urban-rural disparities. Public anger over corruption or environmental damage can be channeled into new portals for receiving complaints and grievances; whether or not the sender receives a response, her anger will be assuaged simply by typing her thoughts out and knowing that somebody has received them. The government will publicize litigation against “bad eggs” who were caught on camera committing crimes; whether or not digital petitioning resolves social and political ills, it will seem that the system is more responsive to the public.

Far from constituting an existential threat to the “regime,” the Internet is an unparalleled boon for Communist Party governance. New opportunities for “guiding” public opinion abound in a dazzling array of new media, social-networking, and entertainment platforms. Class cleavages that can’t be eradicated can at least be blurred in new virtualized social spaces. Perhaps “social harmony” can even be programed into the matrix.

The cybernated Mass Line

All this is not to construe the PRC in a dystopian light. In China’s “consultative democracy,” the Internet also provides an important tool by which the Party can track social trends and public opinion in a positive sense. Indeed, Internet Plus represents a sort of cybernated Mass Line—the key organizational principle and method of leadership underlying CPC rule.

A cornerstone of Maoism revived by the Xi administration, the Mass Line emphasizes that Party cadre must remain thoroughly aware of the trends, preferences, and hopes of “the masses.” The Party’s responsibility is to interpret the suggestions of the public and adjust them to the framework of Marxism-Leninism and Party rule. Xi Jinping has emphasized the need for the Party to “adapt to the people’s expectations and requirements.” As Xi has stated, “wherever the masses are, there our leading cadres must go.” “The common people have gone online…so popular opinion has gone online.” Continued Xi: “to be good at using the network to understand the popular will and do one’s work is a basic skill for leading cadres to do their work well under new circumstances.”[14] Being “plugged in” is now a requirement for all cadre and leaders to fulfill their Mass Line responsibilities.

In the heyday of Maoism, cadre were often dispatched to the countryside to “learn from the peasants.” In the digital age, Party officials can analyze events and formulate policy using information extracted from social media platforms, opinions posted on news media, feedback from surveys, and complaints received online. The Internet enables the Party to analyze long-term trends and respond rapidly to sudden developments. This is why Xi Jinping has instructed cadre to monitor social media and use public preferences as a benchmark for decision making.

The constant upward transmission of information enables Party leaders and state economic planners at all levels to formulate better policies, grounded in more accurate and timely data, which are then passed downwards; enforcement of policies can thence be tracked by the Party at all levels, again, using information extracted from digital channels. This “digital feedback loop” strengthens itself as technology improves, although the Party’s resolve to enforce proper behavior and punish deviation from Party norms is critical. Xi Jinping’s high-profile rectification drives and crackdowns on “decadence” and elitism amongst high cadre suggest that resolve is strong in the present period.

China is no democracy in the Western liberal sense, but the digital feedback loop may better take into account, and fulfill, public demands across the board, than some Western parliamentary systems.

* * * *

In the third and final article, we will look at where China is headed. We will see how the Chinese leadership is using the Digital Revolution to return China to its status as a global power, and how China is being reshaped into a ubiquitous network society – examining the role of tech giants such as Baidu, Alibaba, and Tencent. We will see how China’s evolving model combines market-friendly economic norms and competitive internal markets, with socially-conscious economic planning and the state’s overall objectives.

  1. Zhao Yuezhi, “After Mobile Phones, What? Re-embedding the Social in China’s ‘Digital Revolution,’” International Journal of Communication 1 (2007), p. 96.
  2. Zhao, p. 97.
  3. Evan Feigenbaum, China’s Techno-Warriors (Stanford University Press, 2003) p. 163.
  4. Nectar Gan, “Is it Xi’s turn to be written into China’s Communist Party constitution,” South China Morning Post, March 27, 2017, http://www.scmp.com/news/china/policies-politics/article/2082415/it-xis-turn-be-written-chinas-communist-party?amp=1.
  5. Xi Jinping, “Speech at the Work Conference for Cybersecurity and Informationization,” posted April 19, 2016, https://chinacopyrightandmedia.wordpress.com/2016/04/19/speech-at-the-work-conference-for-cybersecurity-and-informatization/.
  6. Xi Jinping, “Speech at the Work Conference.”
  7. Elizabeth Dwoskin, “China is flooding Silicon Valley with cash: Here is what can go wrong,” Washington Post, August 6, 2016, https://www.washingtonpost.com/business/economy/new-wave-of-chinese-start-up-investments-comes-with-complications/2016/08/05/2051db0e-505d-11e6-aa14-e0c1087f7583_story.html?utm_term=.fc18ed601343.
  8. “Chinese investors show a growing presence in Silicon Valley,” Global Times, February 3, 2017, http://www.globaltimes.cn/content/1031249.shtml.
  9. “‘Made in China 2025’ plan unveiled,” Xinhua, May 19, 2015, http://www.chinadaily.com.cn/bizchina/2015-05/19/content_20760528.htm.
  10. Xi Jinping, “Speech at the Work Conference.”
  11. McLuhan, p. 38.
  12. Ibid., p. 71.
  13. “China: Increasing Investments in AI, Big Data and Digital Health,” What’s the Big Data (Blog), August 25, 2016, https://whatsthebigdata.com/2016/08/25/china-increasing-investments-in-ai-big-data-and-digital-health/.
  14. Xi Jinping, “Speech at the Work Conference.”