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Globalization and Transnational Capitalism in Asia and Oceania [1 ed.]
 1138016225, 9781138016224

Table of contents :
Cover
Title
Copyright
Contents
List of figures
List of tables
Notes on contributors
Section 1 Introduction
1 Global capitalism and transnational class formation in Asia and Oceania
Section 2 Transnational capitalist class
2 Statism and the transnational capitalist class in China
3 Japanese transnational capitalists and Asia–Pacific free trade
4 The rise of China and India and the formation of a transnational capitalist class in the Asia/Oceania region
5 Lean production as a tool of global capitalism in Asia: the transnational capitalist class in action
Section 3 Labour and the global economy
6 Global capitalism and the transformation of China’s working class
7 Transnational class formation: a view from below
8 National champions in a global arena: rhetoric and inequality in global capitalism
Section 4 Finance and production capital
9 Offshore tax havens: the borderlands of global capitalism
10 Conflicts within transnational finance capital and the motivations of climate-interested investors
11 From client state to rentier state? New compradors, transnational capital, and the internalization of globalizing dynamics in Australia, 1990–2013
Section 5 Transnational dynamics and (under)development
12 Uneven geographies of transnational capitalism in Laos
13 From missionary to new middle-class schooling in the era of global capitalism: dilemmas of inclusive education reform in India
14 From transnational trends to local practices: monitoring social impacts in a Papua New Guinea mining community
Section 6 Transnationally oriented elites and the state apparatus
15 Global capitalism, the BRICS, and the transnational state
16 State, capital, and class struggle in Australia: reflections on the global capitalism perspective
17 The regionalization of capital in the patchwork economy and the transnationalization of the subnational state
Section 7 Conclusion
18 Global capitalism and its discontents: towards a political economy of the possible
Index

Citation preview

Globalization and Transnational Capitalism in Asia and Oceania

News headlines warn of rivalries and competing nations across Asia and the Pacific, even as powerful new cross-border relations form as never before. This book looks behind the Asia-Pacific curtain: at the new forms of social, economic, and political integration taking place through a global capitalism that is rife with contradictions, inequality, and crisis. We are moved beyond traditional conceptualizations of the inter-state system with its nation-state competition as the core organizing principle of world capitalism and the principal institutional framework that shapes the makeup of global social forces. These important studies examine and debate over how there is a growing transnationality of material (economic) relations in the global era, as well as an emerging transnationality of many social and class relations. How does transnational capitalist class fractions, new middle strata, and labor undergird globalization in Asia and Oceania? How have states and institutions become entwined with such processes? This book provides insight into a field of dynamic change. Jeb Sprague is in the Department of Sociology at the University of California at Santa Barbara and is a founding member of the Network for Critical Studies of Global Capitalism. View his academic website at: https://sites.google.com/site/jebsprague/.

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Globalization and Transnational Capitalism in Asia and Oceania Edited by Jeb Sprague

First published 2016 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2016 Jeb Sprague The right of the editor to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Globalization and transnational capitalism in Asia and Oceania / [edited by] Jeb Sprague.   pages  cm   1. Economic development—Asia.  2. Economic development—Oceania.  3. Capitalism—Asia.  4. Capitalism— Oceania.  5. Transnationalism.  6. International trade.  7. International economic relations.  8.  Capitalism—History—21st Century.  9.  Power (Social Sciences)  10. Social classes.  11. Globalization  I. Sprague, Jeb. HC681.G544 2015 330.12’2095—dc23   2014049894 ISBN: 978-1-138-01622-4 (hbk) ISBN: 978-1-315-70844-7 (ebk) Typeset in Galliard by Apex CoVantage, LLC

Contents

List of figures List of tables Notes on contributors

viii ix x

SECTION 1

Introduction1 1 Global capitalism and transnational class formation in Asia and Oceania

3

JEB SPRAGUE

SECTION 2

Transnational capitalist class19 2 Statism and the transnational capitalist class in China

21

JERRY HARRIS

3 Japanese transnational capitalists and Asia–Pacific free trade

40

HISANAO TAKASE

4 The rise of China and India and the formation of a transnational capitalist class in the Asia/Oceania region

56

JENNY CHESTERS

5 Lean production as a tool of global capitalism in Asia: the transnational capitalist class in action ROBERT JONES, SAMIR SHRIVASTAVA, CHRISTOPHER SELVARAJAH, AND BERNADINE VAN GRAMBERG

73

vi Contents SECTION 3

Labour and the global economy89   6 Global capitalism and the transformation of China’s working class

91

KEVIN LIN

  7 Transnational class formation: a view from below

108

BOB RUSSELL, ERNESTO NORONHA, AND PREMILLA D’CRUZ

  8 National champions in a global arena: rhetoric and inequality in global capitalism

125

SIVAKUMAR VELAYUTHAM

SECTION 4

Finance and production capital143   9 Offshore tax havens: the borderlands of global capitalism

145

ANTHONY VAN FOSSEN

10 Conflicts within transnational finance capital and the motivations of climate-interested investors

163

DAVID PEETZ AND GEORGINA MURRAY

11 From client state to rentier state? New compradors, transnational capital, and the internalization of globalizing dynamics in Australia, 1990–2013

180

DREW COTTLE AND JOE COLLINS

SECTION 5

Transnational dynamics and (under)development197 12 Uneven geographies of transnational capitalism in Laos

199

KEARRIN SIMS

13 From missionary to new middle-class schooling in the era of global capitalism: dilemmas of inclusive education reform in India MOUSUMI MUKHERJEE

214

Contents  vii 14 From transnational trends to local practices: monitoring social impacts in a Papua New Guinea mining community

229

VLADIMIR PACHECO CUEVA

SECTION 6

Transnationally oriented elites and the state apparatus245 15 Global capitalism, the BRICS, and the transnational state

247

WILLIAM I. ROBINSON

16 State, capital, and class struggle in Australia: reflections on the global capitalism perspective

269

TOM BRAMBLE

17 The regionalization of capital in the patchwork economy and the transnationalization of the subnational state

285

DAVID CANNON AND KANISHKA JAYASURIYA

SECTION 7

Conclusion301 18 Global capitalism and its discontents: towards a political economy of the possible

303

FRANK STILWELL

Index

319

Figures

   4.1    4.2    8.1    8.2 10.1 12.1 16.1 16.2

GDP/capita: 2001–2011 59 Distribution of billionaires within the Asia/Oceania region: 2001–201164 Income inequality increased in most, but not all OECD countries, as shown in Gini coefficients of income inequality: mid-1980s and late 2000s 126 Change in inequality levels, early 1990s vs. late 2000s, in regard to Gini coefficient of household income 127 Potential influences on investment behavior relevant to climate 165 Total FDI flows into Laos: 1985–2012 203 Australia’s export ratio: 1825–2010 272 Australia’s foreign investment ratios: 1885–2010 274

Tables

  2.1    2.2   3.1   4.1   4.2   4.3   4.4          

A.1 A.2 A.3 A.4 A.5

  7.1   7.2   9.1   9.2   9.3   9.4   9.5   9.6  12.1

 oreign parent and affiliate corporations in emerging F economies28 Foreign corporate investments in China’s state-owned corporations29 Trend of Japanese cumulative FDI per year 43 Trends in GDP/capita in selected nations, 2001–2011 61 Comparison of wealth/adult and median wealth/ adult of selected nations in 2012 62 Distribution of billionaires in Asia/Oceania region: 2001–201163 Distribution of billionaire wealth in Asia/Oceania region: 2001–201164 GDP/capita 2001–2011 selected nations 68 Wealth Gini Coefficients for Asia/Oceania nations in 2000 69 Distribution of billionaires 2001–2011 69 Billionaire wealth of selected nations 69 Wealth of Australian billionaires associated with mining: 2001–201370 Largest IT/BPO companies operating in India: 2013 112 Estimates for MNC BPO captives operating in India 114 Asia–Pacific and all developing countries’ illicit financial flows: 2001–2010 149 Asia–Pacific country rankings, by largest estimated illicit financial flows from developing countries: 2001–2010 150 Estimated total flows of China’s licit and illicit capital in offshore financial centers: 2005–2011 151 China: illicit financial flows, 2000–2011 152 China: inward direct investment positions, 2010 152 China: outward direct investment positions, 2010 153 The 10 leading origins of FDI providers to Laos: 2001–2009 203

Contributors

Tom Bramble teaches and researches in labor relations and political economy at the University of Queensland. He has held visiting positions in South Africa, New Zealand, and the UK. He is also a political activist who has been involved in a wide range of labor rights and antiracist campaigns. David Cannon is a visiting research fellow with the Department of Politics and International Studies (POLIS) at the University of Adelaide. His research interests include state transformation and the rise of subnational actors within the context of the regionalization of the economy. He also researches in the areas of ethnonational politics and insurgency/terrorist groups, and the political economy of ethnonational conflict and radicalization. Jenny Chesters completed her Ph.D. at the University of Queensland in 2009. She is currently a research fellow at the University of Canberra. Her recent publications include 14 journal articles and seven chapters in edited volumes. She is currently examining global wealth inequality and inequality in educational attainment. Joe Collins is a Ph.D. candidate in the Department of History and Political Thought at the University of Western Sydney. His abiding interest is the political economy of the capitalist mode of production. Drew Cottle teaches history and politics at the University of Western Sydney. He has an abiding interest in political economy. He has written books and journal articles on a variety of topics, ranging across such as the political economy of cocaine, revolutionary struggle in Nepal, workers’ struggles in Australia, the political economy of a Tsunami disaster, the corporate funeral industry in Australia, and the Sydney rich in the 1930s Great Depression. Vladimir Pacheco Cueva is assistant professor in the Department of Culture and Society at Aarhus University in Denmark. He specializes in issues of economic democracy and social impacts of large economic projects. Premilla D’Cruz is a professor of organizational behaviour at the Indian Institute of Management Ahmedabad. Premilla teaches micro-organizational behaviour and workplace creativity, and researches the thematic areas of workplace

Contributors  xi bullying, emotions at work, self and identity, organizational control, and information and computer technologies (ICTs) and organizations. Jerry Harris is a founding member and national secretary of the Global Studies Association of North America, and an international executive board member of the Network for Critical Studies of Global Capitalism. His frequent articles on globalization can be found in Science & Society (New York), Race & Class (London), Critical International Thought (Beijing), and Das Argument (Berlin). Kanishka Jayasuriya is currently director of the Indo-Pacific Governance Research Centre (IPGRC) and professor of international politics at the University of Adelaide. He has published extensively and is author or editor of nine books and over 100 articles. Robert Jones is professor of human resource management and organization studies at Swinburne Business School, Melbourne, Australia. His current research interests lie in critical management theory and practice, especially with regard to globalization issues. He has published three books and numerous articles in leading international journals such as Organization Studies and Public Administration. Kevin Lin is a Ph.D. candidate at the China Research Centre, University of Technology Sydney. He studies China’s political economy and labor politics. His doctoral research analyzes the changing labor regime in China’s state-owned heavy industries over the last decade. Mousumi Mukherjee is a Ph.D. candidate at the University of Melbourne. Her research interests lie in the area of globalization and educational policy reforms for social justice, equity, and human rights. She is co-chair of Education for Sustainable Development (SIG) at the Comparative and International Education Society (CIES), and a Congress standing committee member of the World Council of Comparative Education Societies. Georgina Murray is associate professor in humanities at Griffith University, in the Centre for Work, Organisation and Wellbeing. She lectures in political economy and sociology and is the author of many articles and papers. She is the author of Capitalist Networks and Social Class in Australia and New Zealand (2006), coauthor of Women of the Coal Rushes (2010), and coeditor of Financial Elites and Transnational Business – Who Rules the World? (2012). Ernesto Noronha is a professor of organizational behavior at the Indian Institute of Management Ahmedabad, where he teaches research methodology, sociology of work and employment, and organizational dynamics and pursues research on workplace ethnicity, technology and work, labor and globalization, and qualitative research methods. David Peetz is professor of employment relations at the Centre for Work, Organisation and Wellbeing at Griffith University. He is a fellow of the Academy of Social Sciences in Australia, as well as the author of Unions in a Contrary World

xii Contributors (1998) and Brave New Workplace (2006) and coauthor of Women of the Coal Rushes (2010), in addition to numerous academic articles, papers, and reports. William I. Robinson is a professor of sociology at the University of California at Santa Barbara, where he is also affiliated with the Latin American and Iberian Studies program and with the Global and International Studies program. He has previously published seven books, among them the award-winning Promoting Polyarchy (1996), A Theory of Global Capitalism (2004), the award-winning Latin America and Global Capitalism (2008), and Global Capitalism and the Crisis of Humanity (2014). He has published some 50 articles in academic journals and is a member of the editorial board of 15 academic journals. In 2013 Robinson was elected chair of the Political Economy of the World-System section of the American Sociological Association (ASA). Bob Russell is a retired sociologist who has held positions at the University of Saskatchewan in Canada and Griffith University in Australia. He is the author of numerous books, the latest being Smiling Down the Line: Info-Service Work in the Global Economy, University of Toronto Press. Recent research has also appeared in Work, Employment and Society, the journal New Technology, the journal Work and Society, and the Journal of Industrial Relations. Christopher Selvarajah is professor of international business at Swinburne Business School, Melbourne, Australia. His current research interests lie in leadership and cultural diversity issues in international management and business. He has published several books and numerous articles in leading international journals. Samir Shrivastava is senior lecturer in human resource management and organization studies at Swinburne Business School, Melbourne, Australia. His current research interests lie in systems thinking and organizational learning. He has published articles in leading international journals such as Human Relations and Human Resource Management. Kearrin Sims is a fourth-year Ph.D. candidate at the University of Western Sydney. His current research interests focus on the geopolitics of development aid, the rise of Asia and “new” aid donors, and the implications of macroscale development initiatives at the local scale. Jeb Sprague is in the Department of Sociology at the University of California at Santa Barbara and is an international executive board member of the Network for Critical Studies of Global Capitalism. View a list of his publications at: https:// sites.google.com/site/jebsprague/ Frank Stilwell was the first professor of political economy to be appointed at the University of Sydney. He taught there for over 40 years. He has written 12 books and coedited six others. He continues to be the coordinating editor of the Journal of Australian Political Economy. Hisanao Takase, a Ph.D. candidate at Hitotsubashi University in Japan, works in the areas of neoliberal globalization, transnational capitalist networks, and the incorporation of the Japanese capitalist class into a transatlantic bloc.

Contributors  xiii Anthony van Fossen is adjunct research fellow in the social sciences at Griffith University in Brisbane, Australia. He has written extensively on tax havens, global capitalism, and politics, economy, and society in the Pacific Islands. His latest book is Tax Havens and Sovereignty in the Pacific Islands. Bernadine Van Gramberg is dean of Swinburne Business School, Melbourne, Australia. Her current research interests lie in industrial relations law and policy, dispute resolution, and public sector management. She has published numerous book chapters and articles in leading international journals. Sivakumar Velayutham is professor of accounting and dean of the faculty of business at Nilai University. Sivakumar’s research interests include education, accounting, culture, and economic development. He has previously published in the British Accounting Review, Accounting Education, Asian Profile, and Critical Perspectives on Accounting.

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Section 1

Introduction

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1 Global capitalism and transnational class formation in Asia and Oceania Jeb Sprague

News headlines warn of rivalries and competition between nations across Asia and the Pacific, even as powerful, cross-border relations form on an unprecedented scale. This book looks at the reality behind this façade of nation-state competition, examining the new forms of social, economic, and political integration and conflict fostered by a global capitalist system rife with contradictions, inequalities, and crises. We move beyond traditional conceptualizations of the interstate system, with its nation-state competition as the core organizing principle of the world economy, and the institutional framework in which global social forces operate. Political economists have long viewed nations as containers that hold social formations, yet these important studies map the growing transnationality of both material (economic) relations and social relations. To what degree are such processes taking place? How do transnational capitalist-class fractions, new middle strata, and labor undergird capitalist globalization in Asia and Oceania? How do states and institutions connect to these shifting social patterns? How do local, national, regional, and international processes clash or link with transnational processes? This book provides insight into a field of dynamic change. For the purposes of this volume, it is important to first emphasize the difference between national, international, and transnational processes. Whereas national processes occur within the frontiers of the nation-state, international processes occur across borders. Transnational processes, while occurring across borders, also take place through functional integration. Functional integration refers to how amalgamations of different components (or agents) are constituted through their joint-operation. Processes that take place across frontiers in this integrated manner alter the very ways in which space and geography are implicated in material and social production. Political economists in recent years, for instance, have shown how transnationally oriented class relations have developed through the shift from the international phase of world capitalism to the global phase of world capitalism (Carroll, 2010; Harris, 2006; Liodakis, 2010; Robinson, 2004, 2014; Sklair 2001). This transition has occurred as earlier national economies have fragmented and become integrated into new global circuits of accumulation. South and East Asia and the Oceania regions are geographic spaces and frames of reference that we can use to examine how production networks and financial flows have changed alongside shifting social and class relations. A number of nuanced studies have looked at the particularities of global political economy in

4  Jeb Sprague the context of Asia and Oceania (to reference just some of these: Breslin, 2013; Chun, 2013; Jayasuriya, 2004a, 2004b; Li, 2009; Murray, 2007; Zhao, 2008). Many other scholars have written on dynamics of ethnicity and gender in Asia and Oceania, and in connection with diverse and interconnected histories and cultures. Yet, to date, there has been no comprehensive study focused on shifting relations of production in the context of transnationalism across these regions during the era of global capitalism (an era that we can date starting from the last quarter of the 20th century and continuing into the 21st century). Much of the mainstream, academic, and even critical discourse on the political economy of these regions takes up surface-layer views of geopolitical and national competition occurring through the interstate system: China’s growing role abroad; the rise of the association of five major emerging “national” economies, the BRICS (Brazil, Russia, India, China, and South Africa); the unending political crises on the Korean peninsula; the emergent role of the developing nations of South and Southeast Asia; Australia’s partnership with the North Atlantic Treaty Organization (NATO); India’s competition with its neighbors; and the squabbles over islands in the East China Sea as Japan reasserts its power in tandem with the United States foreign policy establishment’s “pivot to Asia.” Yet the rationale for this edited volume is that much of the analysis and theorizing on contemporary events – and more broadly on globalization and the contemporary dynamics of political economy – remains deeply impoverished and reflects the zombie language of the Westphalian, state-centric approach. The following volume contributes to a growing body of research on transnational social and class relations that have coalesced as a collective research effort by scholars associated with the Network for Critical Studies of Global Capitalism (NCSGC). The NCSGC was founded at a conference titled “Global Capitalism and Transnational Class Formation,” held in September 2011 at the Academy of Sciences in Prague in the Czech Republic. An edited book volume (Murray and Scott, 2012) and two scholarly journal issues (Haase, 2013; Struna, 2013) were published with papers from the conference. Two years after the initial conference, the network held its second conference, “Global Capitalism in Asia and Oceania,” at Griffith University in Brisbane, Australia in June 2013. The chapters in this edited volume, furthermore, were first presented at this conference. A purpose of the conference in Brisbane has been to continue the debate on the political economy of global capitalism and transnational class formation, with particular attention to Oceania and East and South Asia. Authors in this volume reflect back and engage with works of the “global capitalism school” that have examined changing material relations alongside transnational class and social relations and the subjective and objective dynamics therein. The chapters of this volume explore how shifting production relations interconnect with various power blocs and the rise of a globalist bloc, as well as with states, corporations, and other institutions. In particular, it looks at how these dynamics have played out in Australia, China, Japan, India, Laos, Papua New Guinea, and in regions of the world more broadly. Some of the major themes and questions prompting these chapters are:

Global capitalism and transnational class  5 1) How can the political economy of Asia and Oceania be seen in light of the novel dynamics of the globalist era, with the rise of transnational social, economic, and political processes? 2) How are one-time nationally or internationally oriented state apparatuses, institutions, and corporations converging with new transnational processes? 3) How do social classes and various social groups in Asia and Oceania connect objectively and subjectively to transnational and global processes? 4) How do shifting social and material relations play out regionally or within particular frontiers or built environments? 5) What contradictions are connected to these processes? For example: (1) the crisis of legitimacy that occurs through the abandonment by state managers of national development as they seek transnational integration, (2) social polarization, and (3) the global environmental crisis.
 Rather than reify the interstate system, placing the nation state at the core of capitalism, this volume calls on us to consider how a growing amount of class power is exercised transnationally, manifesting itself both across and within national borders in complex and contradictory ways. This volume looks, for example, at the Trans-Pacific Partnership (TPP), through which many elites from across the Pacific Rim are seeking to more closely integrate their states’ economic and regulatory frameworks. Through such forums, for instance, dominant groups have sought to create the conditions through which transnational corporations (TNCs) can override domestic laws by appealing regulations through international tribunal. This also occurs as states maintain the deregulation of national financial systems, allowing for the continued ease of capital mobility and flight. Related to this, Chapter 9 in this volume examines how tax havens have emerged as important nodes for transnational capitalist-class formation while also becoming a battleground between the differing visions of state policymakers. A close examination of the emerging transnational capitalist class (TCC) that operates across national contexts in Asia and Oceania is a central focus of this study. The chapters demonstrate that global capitalist integration is not motivated by the idea of contributing to national economic development or national job creation, or transforming the productive powers of labor as a national objective. The authors instead illuminate shifting capital-labor relations in Asia and Oceania, considering for example how new waves of proletarianization in China and India are connected with global capitalist accumulation, as labor-power is incorporated into transnational value chains. This does not mean that class ­relations are not riven by conflict and impacted by historic and national differences – for instance, as workers operate in particular labor regimes and built-up environments – and fractions of capital hold closer ties with some state power blocs as compared with others. Several chapters go into depth by depicting how particular fractions of the TCC operate with regard to specific states and institutions in Asia and Oceania. As Ietto-Gillies explains, transnational-oriented capitalists with interests across various countries “use their economic position and clout to strengthen their ties and claims . . . [with] specific countr(ies) and exercise influence to secure special

6  Jeb Sprague treatment” (Sprague and Ietto-Gillies, 2014: 44). Take, for example, the intense rivalry and competition among transnational capitalist conglomerates. While particular state policies may not benefit all transnational capitalist groups equally, many state policies facilitate transnational capital distinct from more locally or nationally oriented capitalists. Next, I will lay out some of the stakes of this book project in regards to the broader literature that it engages with.

The global capitalism school So how have scholars of the “global capitalism school” examined transnational social and class relations? Although there are many differences between the various approaches, what binds them together is the argument that global capitalism represents a qualitatively new epoch in the history of world capitalism. Scholars have theorized and shown empirically many of the novel social arrangements that have come about in the era of global capitalism (Harris, 2006; McMichael, 1996; Robinson, 2004; 2014; Rodriguez, 2010; Sassen, 1991; Sklair, 2001, 2002; Van der Pijl, 1998), but have also raised questions for conceptualization (Embong, 2000). As global networks of production and finance that pushed through TNCs and other institutions redefine the scale of the world economy (Dicken, 2011), transnational relations form within and between class fractions and social groups. One of these new classes, the TCC, is tied together as a conscious class, a class in and of itself whose material basis is in TNCs and the accumulation of global capital (Robinson, 2004; Sklair, 2001). However, such a class is not monolithic. Different fractions actually exist within this class, as a segment or portion of the whole class that are grouped around different forms of economic activity. Some scholars have begun to theorize how transnational class relations are also emerging among subaltern groups, with, for example, different static, diasporic, and dynamic global proletarian fractions coming into existence (Struna, 2009). In addition, as some class fractions are becoming transnationally oriented, others remain more nationally oriented or have not developed into a conscious class fraction, even as they have become objectively interconnected with transnational chains of accumulation. In addition to the rising vast number of human beings living in slums (Davis, 2007) and the many unemployed, in recent decades we can also see the solidification of precariaty, and as large parts of the world’s population have come to be structurally underemployed and marginalized in relation to the global economy. In regards to the TCC, this is an idea that has been theorized in different ways. The TCC, as Robinson (2004), Harris (2006), and Liodakis (2010) argue, is the dominant social class in this new era, the age of global capitalism. These theorists utilize a historical-materialist understanding of the division of labor into social classes upon the basis of property ownership. They understand the individuals of the TCC as people directly involved in global capital accumulation, whereas others involved in its promotion but not accumulation are described in other ways, such as transnational elites and functionaries (but not as capitalists). By contrast, Sklair’s more eclectic approach constructs a TCC model that not only includes

Global capitalism and transnational class  7 groups directly involved in global capital accumulation, but those who promote it as well – for example, some media and state functionaries. Sklair outlines four major propositions in regard to the TCC. First, it is a class that benefits from its connection to TNCs, emerging “more or less in control of the processes of globalization” (2001: 5). Second, it is acting as a “transnational dominant class in some spheres” (ibid.). Third, a “profit-driven culture-ideology of consumerism” exists as a mechanism of persuasion, solidifying the participation of populations in global capitalist chains of consumption. And finally, the TCC is faced with two global crises: class polarization and ecological crisis (ibid.: 6). Furthermore, Sklair presents a TCC structure that includes four primary groupings. These are: (1) those who own and/or control the major TNCs and their local affiliate (corporate fraction), (2) globalizing bureaucrats and politicians (state fraction), (3) globalizing professionals (technical fraction), and (4) globalizing merchants and media (consumerist fraction). In regard to the state, Sklair argues that what others term the transnationalization of state apparatuses is more accurately conceptualized in terms of ongoing individual struggles between what he describes as the state fractions of the TCC (globalizing politicians and officials) and politicians and officials who see their interests in more local terms. Differing from Sklair, in Chapter 15 of this volume William I. Robinson goes into more detail in regards to the analytical abstraction of emergent transnational state apparatuses. Sklair (1996a, 1996b) was among the earliest to consider transnational class relations in regard to Oceania, through studies in which he looked at the limitations of domestic markets and growing globalist trends among leading Australian-based corporations, the rise of transnational capital in Australia, and the growing transnational orientation of leading state bureaucrats undergoing a shift from protectionism to policies of global competitiveness. In recent years, scholars have carried out expanded studies of the TCC in Australia and New Zealand (Murray, 2007; Murray and Scott, 2012). Contemporaneously, scholars began to look at how the economic restructuring of the global era occurred alongside a political restructuring, as state elites and reshaping power blocs promoted polyarchy where political decision-making and electoral options were confined to narrow, dominant segments of societies, such as has occurred in the Philippines and other countries (Robinson, 1996: 117–145). Political economists writing on global capitalism in Asia have sought in particular to understand how China’s historical experience with a particular form of socialism and state capitalism has led to a unique mode of integration into the global economy. Jerry Harris (2006) has researched the rise of statist fractions of the TCC within China. Another scholar, Yuezhi Zhao (2003), has examined the ways in which transnational and local social forces in China have intersected to structurally reshape China’s mass media and communication industry. She first recognizes the complex constellation of interests effecting Chinese media’s integration with transnational capital: from integrationist, culturist, and nationalist perspectives, to the rising influence of non-Chinese capitalists on the industry and shifting alignments of social forces and power relations in the country. She points out how

8  Jeb Sprague Chinese bureaucrats hold unique rationalizations for the neoliberal reforms that have been undertaken, which over time have helped ease China into the global system, as with its ascension into the World Trade Organization (WTO). Chinese media has been reorganized under global market logic, yet remains connected with the country’s statist political model. Here her argument shares some similarity with Harris’s (2009) observation of a statist TCC in China, as she describes how the country’s development will continue to be heavily managed by state elite, whose interests have aligned with fractions of transnational capital. Zhao points out, for instance, how the media has come to serve dominant groups: The rising business and urban middle classes are increasingly using the media to articulate their interests and shape state policies toward their preferred ends, the rally cries of tens of thousands of Chinese workers and farmers in their struggles for economic and social justices, for example, have simply fallen on deaf ears in the Chinese media system. (Zhao, 2003: 63) While occurring through local specificities, transnational media capital in China serves as a key mechanism through which information is tilted toward the interests of dominant, transnationally oriented groups, both from within and without. In looking at Taiwan and China, Hsiu-hua Shen (2011) has examined how transnational capitalists in Taiwan have utilized “nationalist” state policies as favorable opportunities for their cross-strait strategies of capital accumulation and integration. A contradictory process initiated with the lifting of martial law and the opening of family and business travel from Taiwan to China in 1987, the outward orientation of Taiwanese transnational capital has greatly intensified in the years since, as Taiwanese investors have come to prefer the regimented labor system in China and have gained significant wealth through subcontracting in mainland China. By manipulating the political systems of both countries toward its own end, transnational capital has helped generate tremendous economic growth, as well as heightened social inequality in both Taiwan and China. By the late 1980s, Chinese state policymakers saw Taiwanese transnational capitalists as valuable sources of capital, and put into place special laws to encourage their investment. Scholars have also noted the role of the TCC in other parts of East Asia. For instance, in a study examining the political economy of South Korea, Phoebe Moore identifies the dominant role of a TCC (2007: 44). Other studies on the TCC in Asia have researched Indian and Indian diasporic transnational capitalists (Biradavolu, 2008; Upadhya and Vasavi, 2013). Writing on India in regards to transnational class relations, Carol Upadhya (2004), for example, has shown the emergence of an early TCC fraction rooted among entrepreneurs in the software outsourcing industry. As one of the least regulated industries in India and emerging relatively autonomously from the “old economy,” Upadhya traces how the software outsourcing industry expanded rapidly in the 1990s and into the 21st century, becoming globally competitive alongside underlying transformations in social and material relations. Looking at specific companies, she shows how middle-class professionals founded the initial Indian

Global capitalism and transnational class  9 software enterprises. These companies underwent a decisive shift as foreign and cross-border capital investments grew, occurring not just through the direct investment of TNCs but also through venture capital (Upadhya, 2004). The industry’s expansion was also tied to the growth of an Indian diaspora business community in the U.S. (most importantly in California’s Silicon Valley), who use their connections with India in their business activities. She points to new contradictions and the necessity of studying how outsourced and diasporic labor – harnessed through virtual space – impacts the structure of global capital. Others have shown how these new high-technology ventures have facilitated the exploitation of segments of the Indian workforce through new 24-hour economic hubs where transnational telecommunications and sales corporations are heavily present (Sandhu, 2010). Some studies have also begun to look at the role of state apparatuses in the region in promoting transnational labor regimes, such as Robyn Magalit Rodriguez’s (2010) recent work, in which she observes how the Philippine state has become actively involved in marketing its citizens to companies and labor-receiving governments around the world for low-wage and closely monitored temporary jobs. She explains how Philippine state elites have become entwined with global capitalist accumulation to such an extent that managing and promoting networks of transnational migration has become an important part of their own social reproduction (Sprague, 2011). With similar approaches and lines of enquiry to the studies previously discussed, this edited volume helps to form an interrelated body of work on the emergence of transnational social and class relations in Asia and Oceania.

Transnational capitalist class The chapters within the first section of this volume examine fractions of the transnational capitalist class. Harris, in Chapter 2, deepens his study on the rise of a Chinese, statist-oriented fraction of the TCC. He explains that state enterprises have been utilized to incubate and promote this class fraction’s increasing involvement in global chains of production and finance. Here he expands on his previous research on statist fractions of the TCC (Harris, 2009). In Chapter 3, focused on Japan, Hisanao Takase argues that transnational productive capital has gained hegemonic status over other fractions of capital. To support this argument, he looks at the global orientation and activities of Toyota, showing how Japanese transnational capitalists hold a dominant influence over policy-making and push for stronger global economic integration, including the Asia-Pacific free trade accumulation strategy (the FTAAP). He points out, though, that many problems and contradictions face the implementation of Asia-Pacific economic integration, including the balance of social forces and the geopolitical conflict centered on China’s role in the region. Jenny Chester’s Chapter 4 looks at the emergence in recent decades of leading transnational capitalists in China and India. Connecting the world systems approach (Robinson, 2011; Wallerstein, 2004) with the global capitalism school approach, she argues that rapid economic growth and rising inequality within the territories of China and India has been linked to the exacerbation of wealth inequality in Australia and other parts of Oceania and Asia. The author explains

10  Jeb Sprague how leading capitalists hailing from China, India, and Australia have become transnationally oriented and geared toward global competition, rather than localized markets or national development. Chester also looks at the number of billionaires in the region, showing that financial speculation, rapid urbanization, and real estate development have generated much of the massive new wealth of top billionaires in India and China. In Chapter 5, a multi-authored piece, Robert Jones, Samir Shrivastava, Christopher Selvarajah, and Bernadine Van Gramberg examine how the rise of transnational capitalists and TNCs has occurred alongside declining well-being and job security for workers. The authors look at how processes of lean production have come to function, with case study research on the operations of Toyota in India. The standardization of lean production is enforced by a cohort of managers that are transferred between different locations around the world. Workers, meanwhile, are monitored in increasing detail by management through new technologies and organizational models. Workers that last as employees are those that remain uninjured, continually achieve cost, time, and production targets, and display themselves as compliant and loyal to management. Globally standardized labor regimes, promoted by transnational capital and operated by managerial groups, are thus used to extract more and more surplus labor from workers, with the value created incorporated into transnational chains of production.

Labor and the global economy With vast tracts of humanity marginalized as “supernumeraries” of the global economy, many are propelled into migration as exported laborers, while others remain in relatively spatially fixed positions within nations as their labor-power is incorporated into transnational value chains. Only in recent years have scholars begun to theorize the emergence of global proletarian fractions (Robinson, 2014: 48-59; Struna, 2009). Many new studies have focused on the intensifying flexibility and precarious nature of labor in the 21st century. The chapters in this section further seek to illuminate labor-capital relations in the global era, examining the novelties that have come about, as well as engaging with the work of Struna and other global capitalism school scholars. Kevin Lin, in Chapter 6, through theories of a global proletariat and transnational capitalism looks at the changing structural features of labor in China. With China’s integration into the global economy over recent decades, Lin explains how millions of proletarianized workers have come to be embedded in new circuits of transnational accumulation. Here it is important to take into account the historical trajectory of Chinese labor through the Maoist period, up through the market reforms of Deng Xiaoping, and into the heightened capitalist globalization of recent decades. Taking under consideration Struna’s (2009) theory of global proletarian fractions, Lin suggests how different fractions of the working class in China have come to exist through the era of capitalist globalization, observing how different skilled, immigrant, and statically located workers have had their labor-power transnationalized. Yet at the same time, as the author argues, many

Global capitalism and transnational class  11 are grounded within a national context where their experiences and conditions are shaped heavily by local peculiarities. As the author recognizes, novel relations have led to new contradictions where local specificities both clash with and become enmeshed with transnational processes. Lin adds how these changes occur alongside open-ended labor struggles that face particular problems in building cross-border solidarity, such as being channeled through bureaucratic hierarchies and with their international ties heavily influenced by powerful state apparatuses (a problem that labor unions face in other parts of the world as well, including within the U.S., as Scipes (2011) has documented). Expanding on the work of Upadya and others who have examined the contradictory nature of India’s integration into the global economy, Chapter 7, by authors Bob Russell, Ernesto Noronha, and Premilla D’Cruz, focuses on business process outsourcing (BPO) as a leading up-and-coming sector of India’s globally integrated economy. BPO is a type of outsourcing in which the activities of specific business functions are contracted out to a third-party service provider, often specializing in creating flexible and “more efficient” labor-intensive tasks. While Russell, Noronha, and D’Cruz recognize the transnationalization of capital in the industry, with subcontracting forming a vital aspect of local capitalist integration into the global economy, they point to many existing problems that hold back and box in working-class organizing, subjectivity, and agency. They argue that workers within these industries have yet to exhibit tendencies that would lead to a globally oriented “class for itself,” but instead remain confined to primarily local struggles, organized through national bodies and occasionally taking part in international campaigns. This points to a major problem and contradiction of capital-labor relations in the global era: whereas transnational capital intensifies its cross-border integrative practices, labor struggles are usually nationally or locally geared. Labor unions and movements from below have a long way to go in order to effectively organize against transnational capital. Yet, as William I. Robinson (2014) and others have argued, if radical changes to this system are to occur and humanistic alternatives are to percolate, working-class organizing and consciousness too must globalize. In Chapter 8, Sivakumar Velayutham points out how national rhetoric has become a mechanism through which policymakers of national states facilitate competitive engagement with the global economy. Foregrounded in the context of rising income inequality worldwide, Velayutham emphasizes how, through the era of global capitalism, government regulation and labor protections have been undermined through neoliberal reforms that have strengthened transnational capital. The author argues that as a part of this process, nationalism and national identity have been repackaged as a tool for competition in the global arena.

Finance and production capital While the globalization of capital has occurred unevenly (for example, with divergent economic growth rates; distinctive consumer preferences; varied competitive environments; divergent regulatory standards and tax regimes; different currencies, cultures, and operating and management models), there has also been

12  Jeb Sprague growing standardization of regulations, a wide-scale lowering of tariffs, increasing rates of cross-border mergers and acquisitions, and broad structural shifts toward global competitiveness. Financial speculation has reached unimagined heights through high-tech and organizational advancements, with stock markets and many banks now interconnected around the world. Asia has become a nexus for global chains of production and transnational banking and financial systems, with highly developed “global cities” such as Singapore and Hong Kong. In Chapter 9, Anthony van Fossen argues that offshore tax havens have served as key nodes for transnational capitalist-class formation, observing, for example, how “[n]ew and powerful entrants to the TCC in the Asia-Pacific, such as most of China’s elite, have formed symbiotic relationships with offshore tax havens.” Much of the chapter deals with how, among the TCC and their state and institutional associates, there have been different approaches toward tax havens. Van Fossen describes these factions/approaches as (1) libertarians who seek opaque tax havens that weaken the role of sovereign states to regulate capital, (2) structuralists who aim to lightly regulate havens through minimal common norms, and (3) regulationists who push for global law and regulations over tax havens). With transnational capital and power blocs not reaching a consensus over tax haven policy, there has been a relative incoherence in practical policies toward havens. Authors David Peetz and Georgina Murray, in Chapter 10, look at the TCC in connection to the global phenomenon of climate crisis, which now affects every region across the planet. Recognizing climate crisis as a by-product of capitalism, they seek to see whether fractions of transnational finance capital can be motivated to interrupt or avoid climate crisis. They seek specifically to understand how individual capitalists or agents of capital might be motivated to take environmentally friendly and even activist positions on matters of corporate behavior in relation to climate change. In Chapter 11, Drew Cottle and Joe Collins, using the Marxian idea of ground-rent in their study of mining in Australia during the global era, make clear the role of land and nature in the creation of values of various forms of capital. Recognizing the “dominance of the transnational mining capital fraction within the ensemble of capital in Australia” they furthermore reference Beiler and Morton’s argument on how the interests of transnational capital internalize within different forms of state. To articulate some contradictions they identify, their case study emphasizes “comprador” capitalists operating in “semi-peripheral” Australia. The term comprador, which is also used by Frank Stilwell in his summary at the end of this volume, was utilized throughout much of the 20th century to describe capitalists in colonial and postcolonial societies that played a subordinate role to metropolitan capital. Future studies can debate the usefulness of the idea of comprador capitalists in understanding contemporary class relations.

Transnational dynamics and (under)development To understand the structures and agencies that undergird global society, the chapters in this book tend to emphasize as more determinant (of causal priority)

Global capitalism and transnational class  13 the role of social production, and then, while also important, uneven geographic development. Whereas the academic field of development studies has long been wedded to nation-state centered frameworks, as Robinson suggests: “the way forward is a reconsideration of the relationship between space and development, and a new conception of development based not on territory but on social groups” (2002: 1048). Examining the class nature of contemporary development and underdevelopment, Kearrin Sims, in Chapter 12, looks at the social and economic transformation of Laos. The only chapter in this volume to focus on the Indochinese peninsula in Southeast Asia, it explains how Laos has become a nexus through which people and capital move between more highly developed surrounding areas and, in the process, has become deeply incorporated into global chains of capital accumulation and rising inequality. Long considered an isolated area in the region, through secondary sources and ethnographic research the author shows the quantitative and qualitative expansion of global capital into this zone, with new city districts, transportation routes, upgraded airports, and other infrastructure developed for the purpose of facilitating the movement of transnational capital. The author connects the lived experiences of lower-income communities displaced from their homes with the activities of dominant groups seeking to open space for new transnational capital investments, such as in real estate. Though looking at a much more highly developed part of the world, Harvey (2008: 38) has also recognized the role of transnational capitalists in reshaping cities and real estate development. Also informed by ethnographic research, Mousumi Mukherjee’s Chapter 13 charts how middle-class education in India has historically been incubated in private, missionary schools. She argues that the successor models of this earlier missionary approach are now focused on their insertion into a globally competitive educational market. Seeking to adapt to shifting social and material patterns, under local and global pressures, such schools are dropping policies of social inclusion and are becoming more exclusive, increasingly immersed within structural inequalities of the global system. Mousumi provides detailed testimonials she gathered from educational workers in Kolkata to support her argument. In Chapter 14, Vladimir Pacheco, emphasizing uneven transnationalization, looks at the local impact of transnational corporate mining on the remote island of Lihir in Papua New Guinea. He focuses specifically on how the industry seeks to measure and promote the data they have gathered. Having formerly worked in the mining industry himself, Pacheco provides an insider’s view. He observes that “the worldwide deregulation of investment in mining, oil, and gas facilitated the entry of private foreign multinational companies into developing countries,” with various projects starting up at that point. The growth in global capitalist industrial production in locations such as China has sent transnational capital fractions in search of new raw materials, giving impetus to new investments in oil, gas, and metal industries in the developing world. For this reason, new mining enclaves in developing countries such as Papua New Guinea have become substantial locations for global capital investment. Pacheco explains how mining companies conduct detailed studies of the impact of their operations, in part to comply with

14  Jeb Sprague national and transnational regulatory regimes but also to show global competitiveness and secure legitimacy. He concludes that the tensions between the mining company and local communities he observed in Papua New Guinea were not diminishing, but rather were “rooted in structural, historical, and economic disparities” perpetuated by the transnational legal system that upholds international contracts while sidelining substantive debate and depoliticizing local struggles.

Transnationally oriented elites and the state apparatus In regards to the state, Robinson (2004), Harris (2006), and others have argued that a parallel political project connected to the class power of the TCC is nascent. Conceptualizing political restructuring in the global era, they have argued that transnationally oriented elites operating through various state apparatuses (often aligned with different fractions of the TCC) have become the dominant actors in most governments and major political institutions. The theory of emergent transnational state apparatuses, as coined by Robinson (2004), claims that through globalization a nascent political, juridical, and regulatory network is taking shape through numerous local, national, and supranational state institutions. The TCC, to promote and ensure its power, requires a concomitant political project. Such a political project would involve, for example: (1) promoting investor confidence in the global economy, (2) setting up mechanisms and institutions for responding to economic, political, and military crises that threaten the stability necessary for global markets, and (3) establishing a degree of macroeconomic policy uniformity across borders. Some scholars have used this approach to look at how international law has been impacted during the global era (Chimni, 2010). Jayasuriya (Sprague, 2010) and Bieler and Morton (2013/2014) explain how specific state forms or subunits within states have come to incubate or be penetrated by transnational interests, emphasizing (as does Robinson) that particular mechanisms of statecraft and regulatory regimes have become sites of political contestation and transnational conflict. Robinson, in Chapter 15, expands on how, over recent decades, state elites operating through different national state apparatuses have worked to congeal the political project of transnational capital by way of state reforms and policies that promote the interests of transnational capitalist fractions. His chapter examines in particular the relationship between the TCC and the BRICS association (Brazil-Russia-India-China-South Africa), observing how state apparatuses within the BRICS association have become transnationally oriented. While recognizing the importance of the BRICS in helping lead toward a more multipolar interstate system, Robinson argues that BRICS do not represent a liberatory alternative for the global system’s class society. This is because the BRICS are deeply integrated within the highly unequal class relation of capitalist globalization. He explains that mainstream political economy perspectives, through the lens of nation-state competition, ignore the fundamental changes undergone through the transnationalization of capitalist relations, leading many to overlook how capitalists in the BRICS have become inseparable from capitalists worldwide. He observes,

Global capitalism and transnational class  15 for instance, that the China National Petroleum Corporation (CNPC) now has “co-investments and joint ventures around the world with virtually all the major private transnational oil companies” and rather than being shut out of U.S.-occupied Iraq, it was ushered into the Iraqi petroleum market with the assistance of U.S. policymakers. In another example, he points out “agribusiness interests in Brazil . . . bring together Brazilian capitalists and land barons with the giant TNCs that drive global agribusiness, and that themselves in their ownership and cross-investment structures bring together individual and institutional investors from around the world, such as Monsanto, ADM, Cargill, and so forth (Patel, 2007: 197–200). He adds, “simply put, ‘Brazilian’ agricultural exports are transnational capital agricultural exports.” Brazilian state elites who promote the dropping of U.S. agricultural subsidies in fact advance the interests of certain TCC fractions, not Brazilian national capital. The same can be said of many state elites operating through their national state institutions in Oceania and Asia, where their social reproduction has become dependent upon the investment and accumulation of global capital. Robinson also takes on some of his critics in the chapter’s endnotes, elaborating, for instance, upon how political economists Andreas Bieler and Adam David Morton (2013/2014) have mischaracterized his approach. Tom Bramble, in Chapter 16, provides a fascinating historical and analytical overview of the trajectory of capitalism in Australia. Accepting the usefulness of some aspects of global capitalism theory, while critical of others, he attempts to critically appropriate some ideas therein. In contrast to many of the other studies in this volume, Bramble argues that inter-state rivalry remains a driving force of international capitalism, as he claims nationally rooted capitalist monopolies are defining features of the international system, in turn propelling competition and conflict between different states. Even so, his chapter attempts to connect aspects of the “global capitalism school” approach with earlier Marxian theories of international political economy. In the context of globalization and mining, David Cannon and Kanishka Jayasuriya, in Chapter 17, seek to lay out how changes to political economy have occurred regionally and through state regulatory apparatuses, utilizing examples from Australia (such as the heightening impact of transnational Chinese mining capital on Australian institutions). Identifying the transformation of what they call subnational state institutions, the authors examine how transnational interests and processes have become embedded within governmental bodies. The authors open to further debate how best to understand the transformations occurring through particular state forms and institutional units within states.

Conclusion Much has been made in recent years of the so-called Asian century and the rise of China and the crises it faces, with emphasis on heated geopolitical conflicts new and old, and the governmental and business policy challenges all of this entails. Through traditional state-centric approaches, social scientists have focused their

16  Jeb Sprague attention on the development of phenomena occurring within the borders of a single nation, making comparisons between nations, or at times considering international processes that occur back and forth between countries or companies (identified with the nation-state in which they are domiciled). This book however, as I have outlined, seeks to break from Westphalian state centric analysis. It seeks to place emphasis on the transnational chains of accumulation and social reproduction that are forming and how these are entangled with local and regional phenomena. It seeks to draw our attention to the relations, conflicts, contradictions, and novelties of global capitalism as a new phase in the history of world capitalism. Highlighting class relations in the globalist phase of world capitalism, this edited volume illustrates their integrative yet intensely exploitive, dehumanizing, and crisis-prone nature. This volume emphasizes how theories of transnational class relations remain contested, with plenty of avenues for further study. In Chapter 18, noted Australian political economist Frank Stilwell provides his conclusive remarks, seeking to connect theories of transnational class relations and global political economy with earlier theories of international political economy (as illustrated in this volume). The studies that follow will help serious scholars consider how different social classes, class fractions, social groups, and strata operate in parts of Asia and Oceania and are unevenly integrated into today’s global economy and society.

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Global capitalism and transnational class  17 Jayasuriya, K. (2004a), Asian Regional Governance: Crisis and Change, New York: Routledge. Jayasuriya, K. (ed) (2004b), Governing the Asia Pacific: Beyond the “New Regionalism”, Third World Quarterly Series, New York:, NY Palgrave Macmillan. Li, M. (2009), The Rise of China and the Demise of the Capitalist World Economy, New York: Monthly Review Press. Liodakis, G. (2010), Totalitarian Capitalism and Beyond, London, UK: Ashgate. McMichael, P. (1996), Development and Social Change: A Global Perspective, Thousand Oaks, CA: Pine Forge. Moore, P. (2007), Globalisation and Labour Struggle in Asia: A Neo-Gramscian Critique of South Korea’s Political Economy, London, UK: I. B. Tauris. Murray, G. (2007), Capitalist Networks and Social Power in Australia and New Zealand, London, UK: Ashgate. Murray, G. and Scott, J. (2012), Financial Elites and Transnational Business: Who Rules the World?, Cheltenham, UK: Edward Elgar Publishing. Robinson, W. I. (1996), Promoting Polyarchy: Globalization, US Intervention, and Hegemony, Newcastle upon Tyne, UK: Cambridge University Press. Robinson, W. I. (2002) ‘Remapping in light of globalization: from a territorial to a social cartography’ Third World Quarterly, 23(6), 1047–1071. Robinson, W. I. (2004), A Theory of Global Capitalism: Production, Class and State in a Transnational World, Baltimore, MD: John Hopkins University Press. Robinson, W. I. (2011), ‘Globalization and the Sociology of Immanuel Wallerstein: A Critical Appraisal’, International Sociology, 26(6), 1–23. Robinson, W. I. (2014), Global Capitalism and the Crisis of Humanity, Newcastle upon Tyne, UK: Cambridge University Press. Rodriguez, R. M. (2010), Migrants for Export: How the Philippine State Brokers Labor to the World, Minneapolis: University of Minnesota Press. Sandhu, A. (2010), Servicing Global Capitalism: Transnational Work, Labor and Culture in India’s Silicon Valley, Dissertation for University of California, Santa Barbara. Sassen, S. (1991), The Global City: New York, London, Tokyo, Princeton, NJ: Princeton University Press. Scipes, K. (2011), AFL-CIO’s Secret War against Developing Country Workers: Solidarity or Sabotage? Lanham, MD: Lexington Books. Shen, H. (2011), ‘Transnational or Compatriotic Bourgeoisie? Contesting Democracy across the Taiwan Strait’, in K-S. Chang and B. Turner Contest Citizenship in East Asia: Developmental Politics, National Unity, and Globalization, New York, NY: Routledge, 115–132. Sklair, L. (1996a), ‘Australia in the Global Capitalist System’, Social Alternatives, 15(1), 14–17. Sklair, L. (1996b), ‘Conceptualising and Researching the Transnational Capitalist Class in Australia’, Journal of Sociology, 32(1), 1–19. Sklair, L. (2001), The Transnational Capitalist Class, Malden, MA: Wiley-Blackwell. Sklair, L. (2002), Globalization: Capitalism and Its Alternatives, Oxford, UK: Oxford University Press. Sprague, J. (2010), ‘Statecraft in the Global Financial Crisis: An Interview with Kanishka Jayasuriya’, Journal of Critical Globalisation Studies, 3, 127–138. Sprague, J. (2011), ‘Review of Robyn Magalit Rodriguez, Migrants for Export: How the Philippine State Brokers Labor to the World (2010)’, Science & Society, 75(3), 442–444.

18  Jeb Sprague Sprague, J. and Ietto-Gillies, G. (2014), ‘Transnational Corporations in Twenty-First Century Capitalism: An Interview with Grazia Ietto-Gillies’, Critical Perspectives on International Business, 10(½), 35–50. Struna, J. (2009), ‘Toward a Theory of Global Proletarian Fractions’, Perspectives on Global Development and Technology, 8(2-1), 230–260. Struna, J. (ed) (2013), Globalizations, 5(10). Upadhya, C. (2004), ‘A New Transnational Class? Capital Flows, Business Networks and Entrepreneurs in the Indian Software Industry’, Economic and Political Weekly, 39(48), 5141–5143, 5145–5151. Upadhya, C. and Vasavi, A. R. (2013), In an Outpost of the Global Economy: Work and Workers in India’s Information Technology Industry, New Delhi: Routledge India. van der Pijl, K. (1998), Transnational Class and International Relations, London, UK: Routledge. Wallerstein, I. (2004), World-Systems Analysis: An Introduction. Durham, NC: Duke University Press. Zhao, Y. (2003), ‘Transnational Capital, the Chinese State, and China’s Communication Industries in a Fractured Society’, Javnost – The Public, 10(4), 54–74. Zhao, Y. (2008), Communication in China: Political Economy, Power, and Conflict. Lanham, MD: Rowman & Littlefield Publishers.

Section 2

Transnational capitalist class

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2 Statism and the transnational capitalist class in China Jerry Harris

Will China rule the world? Or more precisely, will the class that rules China rule the world? It’s an important distinction. The class question turns our attention to transnational capitalism, while poising the question as “China” asserts the primacy of nation–states in international relations. Most students of China take a nation-centric viewpoint, and Western observers constantly worry about the changing balance of power. But if we take the class approach to China’s global economic integration we find a transnational capitalist class with Chinese characteristics. In analyzing the ruling class we can identify different power networks that interconnect and often overlap. These networks divide into four nodes. The most important sector is the capitalist class – those who own and control the means of production and, to a large extent, determine the relations of production and the relations of power between classes. The political elite are responsible for the state and can moderate the relations of production, guide social and environmental reproduction, regulate production, and through state ownership control essential aspects of the physical and social infrastructure, as well as determine the economic conditions for public workers. The governing elite also includes the political and technocratic leadership of transnational institutions such as the World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank. The military/industrial complex (MIC) should be considered a separate network of power, a hybrid of the state and war industry with an internal culture that sets it off from other institutions. The fourth network is within the cultural and ideological sphere, which includes media, entertainment, think tanks, public intellectuals, and academics. What is unique to China is that all networks are tied closely to the state, and therefore constitute a statist transnational capitalist class. China is not alone in this transnational statist formation (Harris, 2009), but it is the most important and influential model. Among the top 2,000 global transnational corporations (TNCs), 167 are from China and Hong Kong. The 121 TNCs based in China have sales of $1.6 trillion, profits of $167.5 billion, a market value of $2.9 trillion, and assets of near $10 trillion (Castillo-Mussot, Sprague, and Garcia, 2013). There is also a vigorous private sector that has produced more billionaires than any other country except for the U.S., 117 according to Forbes. But

22  Jerry Harris 117 individuals do not constitute a ruling class – perhaps in Monaco, but not in China. However, before plunging into an analysis of the Chinese transnational capitalist class (TCC) we need to discuss the relationship of the transnational economy to the nation–state. The central dialectic in the present era is the ascent of the global economy and the descent of national economies. This is a complex process played out over an extended period of time, with as many variations as there are nation–states. The political economy of globalization is characterized by an array of developments. Some of these include foreign direct investment (FDI), cross-border acquisitions and mergers, cross-border stock investments, the growth of foreign affiliates, outward-bound capital from sovereign wealth funds, global assembly lines and values chains, joint ventures and joint research and development, the growing network of global cities, and the composition of corporate boards. Even among firms that have few connections outside their country we find most are tied to transnational corporations through supplier networks. Capitalist accumulation operates through globalized circuits, and few remained untouched either in commodities bought or sold. I define the Chinese state and private sectors as transnational because they fit the previous description. This stems from capital coming into China, working with both private and state sectors through thousands of relationships that tie the internal economy to transnational circuits of accumulation. It is also true of outward-bound Chinese capital that forms joint ventures abroad, is dependent on the surplus value produced in global assembly lines, and is immersed in world-spanning financial investments. Chinese national development is bound hand and foot to the global economy, as is the economic well-being of the Chinese ruling class. The hegemonic political ideology and economic strategy within the Chinese Communist Party is to link national development to global accumulation. Although globalized circuits of accumulation define capitalist relations throughout the world, each country integrates into this system through its own unique conditions. For the TCC there is no national economic strategy that stands outside of transnational integration. Growth cannot take place based on a national industrial policy delinked from global investments. National development, job growth, profits, a healthy GDP, and a sharp competitive edge are all synonymous with globalization. Therefore, a common political and economic project of the TCC is to reengineer the state and economy to facilitate transnationalization. This takes place at the level of world governance in bodies such as the WTO and IMF – but also importantly, and perhaps decisively, at the national level. Just as the TCC wages a daily war to transform all social institutions to its needs, class forces opposed to globalization fight to maintain their hold over society. Working-class rights and privileges won in the industrial era and inscrolled in social contracts are not easily abandoned.1 Market shares, taxation rules, and subsidies for national firms are not given up without demands for concessions or outright opposition. Within the TCC,

Statism, China, and the TCC  23 different sectors have their own priorities and preferences in policy. All these conflicts are mediated by the historical conditions and social context found in each country. How strong is the tradition of government planning and industrial policies? What is the level of technology, education, and health care? Is there a tradition of resistance, a democratic culture, or legal protections for opposition politics? What is the relation of class forces, the strength and size of the TCC fraction, and what has been the country’s place in the world system for the past 150 years? All these questions and relationships affect how fast and deep a country will align with transnationalization. They also affect the political and social structure of that alignment, giving each country its particular national characteristics within the globalizing process. Therefore, drawing too sharp a distinction between the TCC and national capitalist fractions misses the main point. Both sides are involved in a dialectic that is forming the transnationalized synthesis. One side does not exist without the other, and globalization takes form and exists within the contradiction between the two. Some see globalization as a neoliberal project fostered on the world by a hegemonic U.S. (Gindin and Panich, 2008). This Western-centric view ignores two essential features of capitalism. The first is the deep, global economic integration of production, investments, and finance that gives rise to a competitive but codependent TCC. Furthermore are commonly held ideologies that unite elites across borders, redefine national interests, and trump nationalist economics. Globalism, in both its neoliberal and neo-Keynesian manifestations, aligns TCC members no matter their country of origin. Consequently, the transnational project did not arise solely from the U.S. ruling class, but was a response by capitalism to a transformative era in technology, production, and accumulation. Different models of transnational capitalism are fought over, and policies are debated in forums from Davos to the trade courts inside the WTO. While these differences are based in the history and corporate culture of countries or regions, the common project remains the same – to construct a working and stable system of global capitalist accumulation. Given this framework we can now begin to look at China. The defining feature of China’s last 100 years is its determination to be free of imperialist control, to insist on self-determination and its own path of development, and to occupy a respected place on the world stage. This history certainly molds the contours of China’s insertion into globalization. But today’s ruling class is at the polar opposite of Mao’s approach to self-reliance. Mao’s peasant socialism looked inward to the shoulders of its own farmers and workers to transform the country. Not only was it isolated from the capitalist world, the Soviet Union also pulled out long before the Cultural Revolution. Today’s statist TCC has a vision of China’s modernization through its strategic engagement with global capitalism. This strategy is in harmony with TCC ideology the world over. However, integration will not happen through the dictates of the Washington Consensus, but through a project conceived and designed in China. This realignment was carried out through state activity planned and

24  Jerry Harris executed by the TCC fraction inside the Chinese Communist Party (CCP). Within the CCP there exist Marxist, nationalist, and transnational fractions, as well as others trends. But the TCC maintains hegemony by aligning other fractions behind its globalist strategy for national development. Strategic insertion into global capitalism took place step-by-step over the past 35 years. This process includes the disbanding of farming collectives, privatization of land, special economic zones, massive layoffs from state-owned enterprises, the breaking of the iron rice bowl, the mass migration of labor into urban centers, the restructuring of finance and banking, opening the country to FDI and foreign run production, and the export of capital into overseas investments. As this process unfolded it created and consolidated a statist TCC whose formation is distinct to China’s specific conditions. This is different from the market-driven process in the West, where rewriting economic, trade, and tax legislation responded to rapid economic changes. In China, where the state controls and directs the economy, the political process came to define and lead the insertion into global markets. Therefore, it would be incorrect to characterize only the private and foreign sectors as transnational while maintaining the state sector as national. The transnational sector could not, and would not, exist without the state’s redesign of the economy and labor market. In fact, state corporations, state banks, and China’s sovereign wealth fund are the most active foreign investors. Having secure monopolies inside China provides a solid base for expansion abroad. The Rhodium Group estimates China’s outward-bound capital may reach between $1–2 trillion by 2020. As noted in the Financial Times, “China wants to accelerate the integration of the global economy, but on its own terms . . . is not seeking a rupture with the international economic system . . . it is looking to mould more of the rules, institutions and economic relationships that are at the core of the global economy. It is trying to forge post-American globalisation” (Dyer, Pilling, and Sender, 2011).

Energy, resources, and manufacturing We can start our survey of transnational capitalism in China with its energy and natural resource industries. These industries cause the greatest concern for those who fear China’s rise as a new hegemon. Chinese TNCs visit continent after continent, seemingly to gobble up resources in a nationalist drive to prevent access to national competitors. Moreover, China’s three major energy TNCs are all state owned. PetroChina, with its subsidiary, the China National Petroleum Corporation (CNPC), is the world’s fifth largest oil producer and the world’s first trillion-dollar enterprise. The China Petroleum and Chemical Corporation (Sinopec) has the world’s third largest refinery capacity. It attracts international and private capital through listings on the Shanghai and Hong Kong stock exchange, but its parent company is wholly government owned. Lastly, the China National Offshore Oil Corporation (CNOOC) is 70 percent government owned, incorporated in Hong Kong, and traded in Hong Kong and New York. All three

Statism, China, and the TCC  25 TNCs have ample access to state-backed loans from China’s Development Bank. Among major metal resource TNCs is state-owned Chinalco. It is the controlling shareholder of the world’s second largest aluminum producer, Aluminum Corporation of China (Chalco), listed in both Hong Kong and New York. State-owned China Metallurgical Group Corporation is also world class, and one of Fortune’s Global 500. Since these are all majority-owned state corporations, should we consider them national champions or transnationalized corporations? There are three questions to consider in evaluating their character and economic strategies. The first regards their integrated relationships with other TNCs, the second the effect of their international investments on supplies and competition, and the third regards who benefits from their control of resources. As we examine China’s largest 23 natural resource deals between 1996 and 2010, we find deep ties to other transnational actors (Moran, 2010). CNPC’s first major overseas venture was in 1996, with The Greater Nile Operating Company in Sudan. The joint production partnership had CNPC holding a 40 percent share; Arakis Energy Group, a Canadian company, a 25 percent share; state-owned Malaysian Petronas a 30 percent share; and Sudanese, state-owned firm, Sudapet, a 5 percent share. Another deal in Sudan was struck in 2001, incorporated in the British Virgin Islands, and included the exploration and production of 29,000 square miles. CNPC held 41 percent, Petronas 40 percent, Sudapet 8 percent, Sinopec 6 percent, and Al Thani, from the United Arab Emirates, 5 percent. CNPC’s first full acquisition came in 2005 in a $4.18 billion deal for PetroKazakhstan, although a third of the shares were sold back to the Kazakh national oil and gas company. Between 2005 and 2008, PetroChina/CNPC had annual acquisitions of $2 to $4 billion. Then, in 2009, the government called for an expansion of outward-bound capital, and PetroChina responded by buying $7 billion worth of refineries and reserves in Australia, Canada, Singapore, and Central Asia. In the same year CNPC made two large investments in Iranian oil fields. The first was a $4.7 billion development contract for the giant Pars Gasfield, to be paid back with production. The second was a 70 percent stake in the South Azadegan oilfield in joint partnership with the National Iranian Oil Company’s Swiss-based subsidiary Naftiran Intertrade Company, and Japan’s Inpex. CNPC is expected to invest $4.26 billion in the development of South and North Azadegan, relinquishing rights when payments in production have been completed. Moving to Australia, we find CNPC working with Western oil majors to develop various gas resources. In 2010 PetroChina and Shell bought Arrow Energy for $3.2 billion. They struck a $41 billion contract with Exxon Mobil to supply Australian liquid natural gas for the next 20 years. And finally there was a $4.7 billion joint venture between Chevron and PetroChina to exploit natural gas in western Australia.2 Next we can examine Sinopec, beginning with its 2004 ventures into Angola. Entering into partnership with Angola’s state-owned Sonangola, it completed a $2.4 billion deal for oilfield blocks previously owned by Shell. In 2009 Sinopec

26  Jerry Harris partnered with CNOOC to buy into another block for $1.3 billion, jointly owned by Marathon, Total, Sonangol, ExxonMobil, and Portuguese Galp Energia. Sinopec turned to Iran in 2007 to invest $2 billion in the Yadavaran oilfield, holding a 51 percent stake and Naftiran Intertrade holding 49 percent. In the largest corporate takeover by a Chinese TNC, Sinopec acquired Swiss/Canada’s Addax Petroleum for $7.22 billion cash in 2009. Addax held properties in Nigeria, Gabon, Iraq, and Kurdistan and is listed on both the Toronto and London Stock Exchange. In another 2009 deal that rivaled the Addax acquisition, Sinopec paid Spain’s Repsol $7.1 billion for a 40 percent stake in its Brazilian unit. This is a joint venture with Petrobras to develop Brazil’s giant offshore oil discovery. Furthermore, in return for a low interest $10 billion loan from state-owned China Development Bank, Petrobras will supply Sinopec with oil for 10 years. Lastly, in 2010 a contract was signed with ConocoPhillips for a $4.65 billion stake in Syncrude, which is digging oil sands in Canada. Together, CNPA and Sinopec plan to invest an amazing $32 billion in equity acquisitions in 2012. The last energy giant to review is CNOOC, which in 2002 was involved in one of the world’s largest gas projects located in Australia. This partnership included BHP Billiton, BP, Chevron, Shell, Japan Australia LNG, and Woodside Energy. In 2006 CNOOC paid $2.27 billion for 45 percent of the Akpo offshore oilfield in Nigeria. Other owners include Total, Petrobras, and Nigeria’s state-run Sapetro. In 2010 CNOOC increased its global buying spree with a $2.16 billion deal for a Texas oilfield from Chesapeake Energy. CNOOC secured its first South American beachhead by paying $3.1 billion for stakes in Argentina’s Bridas Energy, with fields held in Argentina, Bolivia, and Chile. And in China’s largest acquisition to date, CNOOC took over Canada’s energy giant Nexen in a huge $15.1 billion transaction in 2013. Other important ventures in natural resources would include two state-owned enterprises, China Railway Engineering Company and Sinohydro, forming a joint venture with the Congolese government for 10 million tons of cooper. As part of the arrangement a $9 billion loan from China’s Export Import Bank will help build 2,400 miles of roads, 2,000 miles of rail, 32 hospitals, 145 health centers, two universities, two airports, and two dams. This pattern is also seen in the $3.4 billion agreement by China Metallurgical Group (M.C.C.) in Afghanistan for copper. M.C.C. will also build schools, roads, and mosques, investing hundreds of millions in infrastructure improvements. Promising to staff the entire project with Afghan workers and management, M.C.C. will be the government’s single largest source of tax money and its most important business partner. Meanwhile, Chinalco, alongside Alcoa, obtained a 14 percent stake in Australia’s Rio Tinto for $14 billion and is now its largest shareholder. Another contract of note is China’s Development Bank loan of $25 billion to Russia’s state-owned Rosneft and Transneft to build an oil pipeline to China. The loan will be repaid in oil, with China receiving no equity in the infrastructure. China is also involved in building more than 200 dams in countries throughout the world (Araugo and Cardenal, 2013). So let us put all this data into the context of the three questions previously posed. First, we see that Chinese state capital is transnational in character and

Statism, China, and the TCC  27 growing significantly more so in the last few years. China’s investments have merged Chinese economic interests with other statist TCC fractions, as well as private TCC sectors. There is little evidence of acquiring controlling positions but rather a pattern of partnerships and joint ventures creating unified networks of common TCC concerns. Furthermore, Theodore Moran, in a study for the Peterson Institute, argues that the large majority of these ventures do not tie up resources for China’s own national interest, but rather “expand and diversify the global supplier system, making it more competitive” (Moran, 2010: 45). In another study, Rosen and Houser show that the majority of oil bought by Chinese TNCs never reaches China, but is sold in international markets. No energy from Canada, Syria, Venezuela, or Azerbaijan is used inside China, and only a small amount is used from Ecuador, Algeria, and Colombia (Rosen and Houser, 2007). What oil does reach China is sold to domestic refineries at international prices because Chinese energy TNCs act as profit-centered corporations, not as politically manipulated national instruments of the Communist Party. Therefore, China is not tying up resources for its own use, but rather is involved in joint projects producing mutually shared global profits. Lastly, consider the energy and resources brought into China. In large part these feed China’s great export machine, whose engines are TNCs from around the world. When Nigerian oil powers the assembly lines at Honda and Volkswagen, or Iranian energy lights up FoxConn so computers for Dell and HP can flow off the assembly line, just who is benefiting? This is part of the vast transnational value chain – it doesn’t simply serve the Chinese national economy. All contingents of the TCC benefit in the densely interconnected networks of global capitalism. Of the world’s top 500 TNCs, 483 operate in China. Globally there are 82,000 TNCs with 810,000 foreign affiliates – of these, 286,232 are present in China. China continues to grow as a source for both inward- and outward-bound FDI. In 2008 China attracted $108 billion, putting it just behind the U.S. ($316 billion) and France ($118 billion) as a destination for FDI. About half of all inflows go to manufacturing. If we include Hong Kong figures, China’s FDI soars to $171 billion (UNCTD, 2009: 253). In 2008 China’s outward-bound FDI surged to 132 percent, reaching $52 billion – but adding Hong Kong it shoots up to $112 billion. This compares to FDI outflows from the UK at $134 billion and Japan at $128 billion in the same period. In terms of greenfield investments, outward FDI from China and Hong Kong represents 28 percent of the total from the developing world between 2004–2008 (UNCTD, 2009: 231–233). To understand just how dominant China is as a TNC destination we can compare it to other leading countries in Table 2.1. Table 2.1 makes clear China’s role in transnational accumulation. TNC incorporation into the Chinese economy is due in part to requirements to source materials from, and form joint ventures with, Chinese corporations. Such laws serve a number of purposes. They ensure the national economic development of both Chinese private and state capitalist sectors. They develop a broad network of subcontractors bound to TNCs, and strengthen the ties between transnational capitalists from abroad with private and state capitalists in China. The result is to

28  Jerry Harris Table 2.1  Foreign parent and affiliate corporations in emerging economies Country

Parent Corp. in Economy

Foreign Affiliates in Economy*

China Hong Kong Brazil Czech Republic India Romania South Africa South Korea

3,429 1,167 226 660 815 20 216 7,460

286,232 9,712 4,172 71,385 2,224 89,911 769 16,953

* UNCTD (2009)

combine China’s national development with foreign TNCs and integrate global sectors of the TCC.

Finance Transnational networks also exist in the major state-owned banks and financial institutions. Although China has been careful to protect its capital from speculative runs, transnational financial groups can partner with and buy into Chinese firms. The first step was taken by transforming the largest state-owned banks. This meant cleaning up bad debt, overhauling management systems, imposing strict corporate governance standards, and then selling stakes to global investors. This was accomplished by establishing a foreign advisory council that included Sir Edward George, former governor of the Bank of England; Gerry Corrigan, former president of the New York Federal Reserve; Andrew Crockett, former general manager of the Bank of International Settlements; David Carse, former deputy chief executive of the Hong Kong Monetary Authority; and Sir Howard Davies, former head of the UK’s Financial Services Authority. Morgan Stanley did the initial public offering (IPO) for China Construction Bank and Goldman Sachs and UBS the IPO for Bank of China. Credit Suisse First Boston helped list the Industrial and Commercial Bank of China, which set an IPO record by attracting $21.9 billion. The Agricultural Bank of China, with 24,000 branches and 350 million customers, was the last to list in 2010. By 2010 China had become the world’s largest lender, with loans totaling $110 billion and surpassing the World Bank (Araujo and Cardenal, 2013). To invest in the Shanghai stock market, foreign firms need to partner with local investment banks, but are limited to 49 percent ownership. Among the most important investors are Barclays, BlackRock, Capital Group, Credit Suisse First Boston, Deutsche Bank, Fidelity, HSBC, Invesco, JPMorgan, Massachusetts Mutual Life Insurance, Morgan Stanley, Schrodders, Vanguard, and UBS. Additionally, Goldman Sachs has the largest nongovernment stake in the Industrial and Commercial Bank of China.

Statism, China, and the TCC  29 In a study by David Peetz and Georgina Murray, they list the largest 30 shareholders of the world’s top 250 industrial corporations and the 50 largest financial corporations. The Chinese government ranked third, reflecting its dominant stock position in large state industries. Peetz and Murray also measured assets holdings. Of the largest 300 TNCs, 10 are Chinese, with $2.2 trillion in assets or 7.6 percent of the total. Japan, with 48 TNCs, held 6.1 percent, and Germany, with 20 TNCs, held 6.9 percent (Peetz and Murray, 2010a). Obviously, the 10 state-owned Chinese TNCs have a huge footprint in global economic affairs. An additional indicator of global power is Fortune’s list of the world’s 500 largest corporations based on revenues. China ranked number three with 49, behind Japan with 71 and the U.S. with 139. Six of these Chinese TNCs ranked within the top 32 most profitable corporations in the world (CNNMoney, 2010). In examining the nine largest Chinese TNCs by assets, we find 112 major investors – 59 are foreign investment and banking firms holding 158 investments out of a total of 271. In all the Chinese TNCs the government and Chinese investment firms owned between 56 and 81 percent of the total stock. Nevertheless, there exist important relationships with some of the largest and most influential Western financial institutions. Table 2.2 lists the seven financial firms with the most investments.

Table 2.2  Foreign corporate investments in China’s state-owned corporations Financial Firm

Home

Foreign-Held Stock in Largest Chinese Corporations

BlackRock

U.S.

Fidelity

U.S.

HSBC

UK

JPMorgan

U.S.

Vanguard

U.S.

UBS

Switzerland

Invesco

U.S./UK

Bank of China, ICBC, China Construction Bank, Sinopec, PetroChina, CRCC, CREGC, China Telecommunications, CCCC* Bank of China, ICBC, China Construction Bank, Sinopec, PetroChina, CREGC, China Telecommunications, CCCC Bank of China, ICBC, China Construction Bank, Sinopec, PetroChina, CRCC, CREGC, China Telecommunications, CCCC Bank of China, ICBC, China Construction Bank, Sinopec, PetroChina, CRCC, CREGC, China Telecommunications, CCCC Bank of China, ICBC, China Construction Bank, Sinopec, PetroChina, CRCC, CREGC, China Telecommunications, CCCC Bank of China, ICBC, China Construction Bank, Sinopec, CRCC, China Telecommunications Bank of China, ICBC, Sinopec, PetroChina, CRCC, CREGC, China Telecommunications, CCCC

* Industrial and Commercial Bank of China (ICBC), China Petrochemical Corporation (Sinopec), China Railway Construction Corporation (CRCC), China Rail Engineering General Corporation (CREGC), China Communications Construction Corporation (CCCC) (Peetz and Murray, 2010b)

30  Jerry Harris Other important stock holders include Barclays, Capital Group, Deutsch Bank, Franklin Resources, Hong Kong’s HKSCC Nominees Limited, Massachusetts Mutual Life Insurance, Schroders, State Street Corporation, Waddell and Reed Financial, and the French banks Axa and BNP Paribas. Some financial institutions with strong positions sold shares due to their weakened condition from the global crisis. The Royal Bank of Scotland offloaded its entire stake of $2.3 billion in the Bank of China. Additionally, Bank of America reduced its position in China Construction Bank by half; but its original investment of $10 billion for 25.6 billion shares has increased in value to about $19.6 billion. We need to remember these investment firms represent a broad network of transnational investors – so we need to recognize the deep and multiple links that are being established. The investments of Western transnational capital into the state-owned financial sector helps to integrate the TCC. In these entangled networks, Western money facilitates the global expansion of Chinese banks, sharing in profits and power. Although such Western partners lack controlling stakes, perhaps more essential is a common ideology about the role and function of TNCs in the global economy and universally held business practices. Consequently, national identities, as well as the nature of statist and private capital, are secondary. This is not to say that competition ceases, or that different visions of the global system aren’t important, or even sometimes primary. But to understand global capitalism one must appreciate the underlying phenomenon of integration (Harris, 2005). David Rubenstein, cofounder and managing director of the Carlyle Group, speaks of this common business culture as a lure for China’s state capitalists. Rubenstein explains, “what makes the Chinese government encourage companies like The Carlyle Group to come invest there? It isn’t the capital . . . They have $2.4 trillion in foreign reserves . . . It’s the management that private equity firms have . . . I think the government is trying to get contacts, expertise, technology and skill sets, not capital” (Wharton, 2009). If business expertise draws China to private equity firms, what is the draw for Rubenstein and his cohorts? As he remarks, China is going to set the tone for private equity because a large number of their sovereign wealth funds are going to be investing large amounts of money outside of China, and they’re going to be setting the rules and the patterns for what some of those investments are going to be. . . . The United States has been the dominant player in private equity for the last 30 or 40 years. China will soon be almost as important as the United States in the world of private equity, and may replace the United States at some point because of the enormous amount of money that’s being invested – not only in China but the amount of money China is investing through CIC and other organizations outside of China. (Wharton, 2009) Transnational capitalists like Rubenstein are not worried about the national origin of money; their main concern is the availability of huge pools of capital for investments. It’s through the merger of business culture and money that the

Statism, China, and the TCC  31 TCC takes formation. As DealBook points out, “all of the major Wall Street banks have sought closer ties to China, probably the one foreign market they want to be in above all else” (DealBook, 2010). To appreciate what Rubenstein is so excited about we need to examine Chinese finance capital. China Development Bank (larger than the World Bank and Asian Development Bank combined) has made over $300 billion in foreign loans, invested $3 billion into Barclays, and entered into partnership with Nigeria’s United Bank for Africa. Its activity between 2009 and 2010 exceeded lending by the World Bank. Ping An Insurance, with major holdings from the family of former prime minister Wen Jiabao, invested $2.7 billion in Fortis to become its leading shareholder. And China Construction Bank is the fifth most profitable TNC in the world. The Industrial and Commercial Bank of China (ICBC) is the world’s third most profitable TNC and the largest bank by market capitalization. In the biggest foreign acquisition by a Chinese bank, ICBC bought 20 percent of South Africa’s Standard Bank for $5.56 billion in 2007. In 2013 ICBC expanded its global operations by moving to buy Standard Bank’s commodity trading business based in London. ICBC Chairman Jiang Jianqing made this deal a priority in pursuing his strategic plans for international expansion by increasing the bank’s entry into the global trading markets of crude oil, copper, and raw materials. ICBC is the most active Chinese bank in overseas acquisitions and includes banks in Thailand and Argentina (Rabinovitch and Davies, 2013). Global financial institutions have also been active in the Chinese debt market, similar to the speculative activities that swept through the West. Huarong and Cinda are two asset management firms created by the government to help take on the $229 billion of nonperforming loans of China’s four biggest banks. Converting debt into equity stakes, the firms attracted Goldman Sachs, Deutsche Bank, and Morgan Stanley to buy $1.5 billion in bad debt from Huarong, while UBS and Standard Chartered took part in a $1.6 billion stake in Cinda. Both firms are planning IPOs in Hong Kong, hoping to raise $2–3 billion that can then be leveraged into about $16 billion (Davies, 2013). The TCC has also played an important role in investment and equity firms. In the financial sector TPG Capital and Kohlberg Kravis Roberts (KKR) jointly acquired Morgan Stanley’s 34 percent stake in China International Capital Corporation (CITIC), a leading investment bank in China run by Levin Zhu, son of a former premier. The $1 billion stake helped put Henry Kravis of KKR and David Bonderman of TPG on the board, alongside Jin Liqun. Jin, who is now chairman, joined CICC from the huge Chinese sovereign wealth fund CIC, which holds 43 percent of CITIC (Sander and Rabinovitch, 2013). Here we see the blending of Chinese private and state financial interests, along with foreign transnational capital. TPG also established a $1.5 billion investment fund in partnership with the city governments of Shanghai and Chongqing, and holds equity stakes in Lenovo, the Shenzhen Development Bank, and China Grand Auto. Other holdings that integrate Chinese and transnational finance capital can be seen in BlackRock, the largest investment TNC in the world, with stakes not only in ICBC, China Construction Bank, and Bank of China, but also in CITIC,

32  Jerry Harris China Pacific Insurance, China Life Insurance, and major state energy and oil TNCs. CIC has a $1.7 billion stake in Morgan Stanley and a $3 billion investment in Blackstone. Although CIC lost money on the Blackstone deal, Blackstone has deepened its commitment to China by establishing a local investment fund with the Shanghai government. Blackstone, alongside significant private investors from China, also created a $15 billion buyout fund for acquisitions in emerging markets (Lattman, 2010). Another important relationship is between Prudential, the Carlyle Group, and the Fosun Group of Shanghai. Carlyle is among the biggest private equity TNCs, with about $2.5 billion invested in China. Fosun is one of China’s largest privately owned conglomerates, with holdings in real estate, steel, mining, and pharmaceuticals. Early investors included Hong Kong billionaire Li Kashing, the government of Singapore, and American International Group (AIG). Expanding globally, Fosun joined with Prudential and Carlyle, establishing funds to invest in emerging companies and overseas acquisitions, tapping private Chinese capitalists for equity investments (Barboza, 2010). A further financial factor to consider is that both Chinese state and private corporations raise billions through IPOs on world stock markets. In just the first half of 2010 Chinese companies launched 214 deals, bringing in $34.7 billion and accounting for one-third of global IPOs. In comparison, the U.S. offered 62 IPOs, raising $9.2 billion. By the end of the year on the Nasdaq and New York Stock Exchange China accounted for 23 percent of all IPOs in the U.S., up from just 1 percent in 2000. Foreign currency and cross-border loans to Chinese corporations have also expanded rapidly, rising from $270 billion in 2009 to $880 billion by early 2013 (Sunday Morning Herald, 2013). In all the previous statistics the main characteristic that stands out is financial integration. TNCs, whether state or private, don’t work as singular national champions. Global networks are thick and integrative. As a result, examining the manner and level of integration is key to understanding the TCC. Unfortunately, literature and data banks still list TNCs by where they are headquartered, thereby immediately casting a national framework on all analysis. But such identifiers often hide the deeper nature of TNCs and the character of the transnational capitalist class. Lastly, we need a closer consideration of CIC, China’s $300 billion sovereign wealth fund (SWF). One of the largest SWFs in the world, CIC is an important avenue for China’s statist TCC to invest around the globe. As previously noted, CIC has large holdings in Blackstone and Morgan Stanley; but additionally it has shares in AIG, Apple, Bank of America, Citigroup, Coca-Cola, Johnson & Johnson, Motorola, News Corp., and Visa. By 2010 CIC had $9.63 billion in equity stakes in more than 60 U.S. corporations and added Morgan Stanley’s CEO to its advisory council. In Canada it has positions in Research in Motion, the maker of BlackBerry mobile phones, and a $3.5 billion stake in the mining company Tech Resources (Barboza and Bradsher, 2010). Additionally, CIC invested $1 billion in Oaktree Capital Management, $1 billion in JSX KazMunaiGas in Kazakhstan,

Statism, China, and the TCC  33 $956 million with UK’s private equity firm Apax, and $850 million for a 15 percent stake in Hong Kong’s Noble Group, a commodity-trading powerhouse. Its total foreign investment portfolio sits at $98 billion (Truman, 2010). CIC has also aided Europe’s financial crisis by buying government bonds in Greece and Portugal, and $7.9 billion in Spanish debt. Other holdings in Europe include 10 percent in London’s Heathrow Airport, 9 percent in Thames Water, and 7 percent in Eutelsat Communications in France. Overall, 33 percent of Chinese foreign investments go to Europe (Araujo and Cardenal, 2013). Chinese financial institutions are not the only corporations going abroad to expand their capital interests. Huawei, the giant, privately owned Chinese telecom manufacturer, has opened a London office to oversee its transnational financial concerns. The Chinese TNC has hired a number of seasoned bankers to oversee its foreign exchange risk and country risk and help manage Huawei’s relationships with global banks. Huawei has a credit line of $33 billion, 77 percent of which comes from foreign financial institutions (Thomas, 2013). As Fortune notes, a big part of the future will involve China investing in financial assets and real estate. Look only at the number of trips that the world’s leading hedge fund managers have been making to Beijing this year. They go for the same reason Willie Sutton robbed banks, but they arrive at the headquarters of CIC as supplicants on bended knee, desperate for investable capital in the one place in the world where that is very much in surplus. (Prasso, 2010) Such supplication worries TCC fractions that have long held to free market ideology. There is about $9.2 trillion held in SWFs internationally, with $3.9 trillion in assets under management. This represents a substantial amount of wealth under government control. Such great pools of capital mean a transfer in power and decision making that clashes with Western private sector traditions. Most SWF wealth resides in the emerging South, which has had little say in shaping the framework and governance of global capitalism. We have already begun to see a power shift with the G-7 transforming into the G-20 and some rebalance of voting strength inside the International Monetary Fund. Edwin Truman writes there are further fears “that governments would use their SWFs to buy control of large ‘national champion’ firms in key sectors. This dynamic would contribute to the creation of ‘sharecropper societies’ in the West as foreign government investments would pour into industrial countries that had lost control over their own affairs” (Truman, 2010: 2–3). Such fears have had political ramifications, with a number of transnational deals being cancelled. In part this reflects fractional lines between the TCC of emerging and developed economies. But leaving our observations there would be shallow and incomplete. Many corporations in the West welcome inflows of SWF capital. As Fortune points out, “the U.S. ought to set aside its current economic

34  Jerry Harris insecurity and answer a simple question correctly: If the Chinese want to park more of their money in American assets (besides Treasury bills), why wouldn’t we open our pockets and take it?” (Prasso, 2010). Truman adds, for decades, the traditional industrial countries have preached doctrines of open markets and receptivity to capital flows, particularly in the form of foreign direct investment . . . the shoe is now on the other foot on openness, with the important qualification that many of the new breed of foreign investors are governments. Hypocrisy in international finance is no more attractive than in other areas of human and sovereign interaction. (Truman, 2010: 66–67) Implicit in Truman’s remarks is the recognition that SWF funds, whether controlled by Abu Dhabi, Singapore, or China, are an important element in transnational circuits of accumulation. As such, statist transnational capitalism is as much a part of global capitalism as private, Western TNCs. The acceptance of SWF capital undercuts arguments that globalization is a U.S. or Western project. Rather it points to the growing integration of the TCC and the crystallization of a common project.

Business and the state China has 143,000 government-owned enterprises. Among these are 129 world-class conglomerates that answer to the central government, with one-half of their chairmen or chairwomen appointed by the central department of the CCP. Among the 100 largest publicly listed TNCs, 99 have majority state ownership. These corporations occupy the commanding heights of the economy, and are concentrated in finance, construction, infrastructure, communications, energy, the military, and some key manufacturing sectors. More open to foreign TNCs and private capitalists are light industry, retailing, and the huge export sector. Although some view state TNCs as national champions, as we have seen throughout this chapter the largest state-owned enterprises (SOEs) are involved with global TCC networks at many levels. In reality, private and state capital are two wings of the Chinese TCC, with the statist fraction in a dominant position. The relationship between the CCP corporate executives and the state-centered political leadership is a blending of mutual interest and tensions. State-owned TNCs compete with each other, arm themselves with lobbyists, and focus on making profits not political strategy. Party rules now separate military, government, and corporate officials, leaving executives free to maximize profits. When Beijing policies conflict with profits, executives are not shy about fielding their political clout and lobbyists. Corporate leaders expect the government to protect and extend their interests, creating powerful connections within the statist TCC fraction. Western TNCs make similar demands on their governments, but not

Statism, China, and the TCC  35 with the same bonded relationship that comes with Chinese state ownership. Political leaders ensure preferential treatment for state corporations, and many of the CEOs sit on the CCP’s Central Committee. Since the onset of the global crisis, Chinese officials have been more open in challenging neoliberal market policies. This has meant a return to stronger government involvement and greater economic support for state TNCs. According to the World Bank, investments by state corporations surged with the influx of stimulus money, as did industrial production by state manufacturers. In 2009 municipal governments set up 8,000 new state-owned enterprises. SOEs have also gained in popularity among university graduates, offering better job security and rising salaries. But more support for regional and local SOEs doesn’t necessarily mean replacing the transnational sector with more nationally orientated industries. Fred Hu, the former head of Goldman Sachs in China, noted, “state-owned enterprises offer the chance for private equity to make real change and real money. Private equity can play a good role partly as capital provider, but also to help change the culture and the mindset” (Davies, 2014). Clearly, transnational capitalists view SOEs as profitable investments, as well as institutional paths to transform the structure of the economy to accommodate global capitalist accumulation. While the Chinese TCC is a mix of private and state fractions, it’s also important to consider the role of Hong Kong, and to a lesser extent Taiwan. These questions deserve greater attention, but we can make some beginning observations. Among the top 100 nonfinancial TNCs from the developing world, China and Hong Kong dominate with a combined number of 39. 11 are from the mainland and 28 from Hong Kong. Taiwan is second with 14. In terms of Taiwan, although political tensions remain high, economic integration is great. In the future, if Taiwan rejoins China, one can imagine the combined economic power of Chinese transnational capital and the blending of private and state interests. This is particularly true in the field of information technology. Taiwanese factories on the mainland make 85 percent of the world’s desktop monitors, 90 percent of all laptop computers, and 70 percent of the motherboards for desktop PCs. Taiwan has invested $150 billion in the mainland and employs 14.4 million workers, a figure equal to 60 percent of the entire population of the island (Wharton, 2010). Most manufacturing jobs in China come from Taiwan, Hong Kong, and South Korea, and about 60 percent of Chinese exports are produced by foreign affiliates. Accordingly, links to global markets through Taiwanese capital are substantial. If politically united with the mainland, Taiwanese capitalists would be a significant fraction within the Chinese TCC, and are already influential on issues like labor law. Hong Kong’s economic data is usually separated from the mainland in international business journals, although Fortune’s Global 500 now combines both. From a class and political standpoint, Hong Kong capitalists are becoming ever more integrated with the mainland. The official relationship and policy is one country, two systems. While important differences in how people live and do

36  Jerry Harris business remain, the statist ruling class in China constructs the governance and economic realities in Hong Kong. The differences are historic, but also designed to benefit a mutual relationship. There is no question that huge amounts of money flow between the two, and that Hong Kong is a global outlet for Chinese finance. In return, large investments move into China in finance, manufacturing, and real estate. There are 320,858 Hong Kong–funded projects in the mainland and a total of $446.49 billion in FDI. That figure accounts for 43 percent of all FDI in China (China Knowledge, 2010). This affects Hong Kong’s transnationality index (TNI), as measured by the United Nations. TNI is the ratio of foreign-held assets, employment, and sales to national assets, employment, and sales. Hong Kong TNCs have an average TNI of 72.8, mainland corporations a TNI of 25.7, and Taiwan a TNI of 53.4 (UNCTD, 2009: 214). Although significant investments in China push up Hong Kong’s TNI, its global orientation is high even compared to Western TNCs. Consequently, Hong Kong is an immensely important avenue for the statist TCC to link with worldwide capitalist networks. There are other interesting ties between Hong Kong and mainland capitalists. There are 875,000 people worth over $1.5 million in China. The China Reform Foundation estimates that 10 percent of the population is hiding about $870 billion in corrupt “grey money.” One place this money flows to is London real estate. Since no Chinese citizen can invest more than $50,000 a year overseas, the wealthy bypass restrictions through foreign bank accounts and trust funds often situated in Hong Kong. As The New York Times reports, “mainland Chinese investors have already replaced those from Russia and the Middle East as the busiest real estate buyers with deep pockets, looking for trophy assets and pushing up prices” (Werdigier and Wassner, 2010). Hong Kong real estate, with prices that rival Manhattan, has also attracted mainland millionaires. Deposits of renminbi in Hong Kong grew 246 percent in 2010, and the city is used as a testing ground for financial liberalization. Real estate firms have grown to be among the largest private interests in the Chinese economy. Most of this has been based in the vast and rapid urbanization process and closely linked to local governments who regularly push farmers off their land. Through land seizures peasants have lost between $3.1 and $5.4 trillion since 1978 (Tatlow, 2011). But both private and state-owned real estate corporations are now expanding their holdings abroad. Pressure to move abroad is coming from a new round of local real estate capital gains taxes instituted in March 2013. Consequently, developers are looking for overseas profits, with investments in the U.S. surging to $2.5 billion midway through 2013. These deals are joint ventures that include: Xinyuan with billionaire Sam Zell, Vanke in business with Tishman Speyer Properties, and Soho China working with the Safra family of Brazil. State-owned Shanghai Greenland Group has bought a stake in a large development site in Los Angeles with CalSTRS, the California teachers pension fund. Shanghai Greenland is also involved in deals in Sydney, South Korea, Spain, and Germany. Additionally, in the residential housing market, buyers from China and Hong Kong are the second largest group of foreign buyers in the U.S. (Yuk, 2013).

Statism, China, and the TCC  37

Conclusion TCC formation is now clearly embedded among elite Chinese families. The wives, daughters, sons, and other relations of top political leaders have huge assets and investments. Holdings range from Chinese to foreign-owned corporations in every economic sector, often with close ties to transnational financial corporations such as JPMorgan, Credit Suisse, Deutsch Bank, UBS, Citigroup, and Goldman Sachs, all of whom employ family members of important CCP leaders. The names of CCP leaders whose close relatives hold millions in wealth include Hu Jintao, Jiang Zemin, Wen Jiabao, Wu Bangguo, and Xi Jinping (Barboza, 2013). Whether or not these CCP and state elites disapprove, ignore, actively hide, or partake in these riches is of secondary importance. What is essential are the structural changes brought about by top political leaders that have directly led to immense wealth for their families, in much the same manner that wealth and power converged in capitalist societies. The deep and vast integration of the economy into global circuits of accumulation is carried out, not with Chinese TNCs and finance capital working by their selves and on their own behalf, but in close coordination with and for the mutual benefit of transnational capitalists. This combination of interests includes both state and private sectors, and the areas of investments have expanded year to year. But working with foreign capital does not mean a return to a colonized China – far from it. The Chinese TCC has emerged on the world stage as a major player and an equal partner. Its vision of national development in China is an essential feature of transnational capitalism, as a base for its own power, as well as a key center for TCC production and investment. Both the private and state sectors of the capitalist class are embedded in transnational accumulation and transnational class networks. It is simply globalization with Chinese features.

Notes 1 For more on the working class in China and its relationship to global capitalism, see the chapter in this volume: Lin, K. (2016) ‘Global capitalism and the transformation of China’s working class’, in J. Sprague, Globalization and Transnational Capitalism in Asia and Oceania, Routledge. 2 For more on Chinese and Australian transnational capitalists, see another chapter in this volume: Chesters, J. (2016) ‘The rise of China and India and the formation of a transnational capitalist class in the Asia/Oceania region’, in J. Sprague, Globalization and Transnational Capitalism in Asia and Oceania, Routledge.

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38  Jerry Harris Barboza, D. (2013, August 20), ‘Many Wall Street Banks Woo Children of Chinese Leaders’, The New York Times, available at http://dealbook.nytimes. com/2013/08/20/many-wall-st-banks-woo-children-of-chinese-leaders/. Barboza, D. and Bradsher, K. (2010, February 9), ‘After Buying Spree, China Owns Stakes in Top U.S. Firms’, The New York Times, available at http://dealbook. nytimes.com/2010/02/08/buying-spree-nets-china-stakes-in-top-us-firms/. China Knowledge (2010), ‘Mainland China-Hong Kong trade up 33% in Jan.Nov’, available at http://www.chinaknowledge.com/newservice (accessed 15 March 2010). CNNMoney (2010), ‘Fortune Global 500’, available at http://money.cnn/magazines/fortune/global500/2010/countries (accessed 1 December 2010). Davies, P. J. (2013, August 15), ‘China Moves Towards Market Remedy for Bad Loans’, Financial Times. Davies, P. J. (2014, January 21), ‘Financiers Could Play a Transformative Role at China’s SOEs’, Financial Times, available at http://www.ft.com/intl/cms/s/ edc468cc-0592-11e3-8ed5-00144feab7de,Authorised=false.html?_i_location= http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fedc468cc-0592-11e3-8ed500144feab7de.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer= https%3A%2F%2Fwww.google.com%2F#axzz3Z1xXdk4A. DealBook (2010, July 16), ‘Mack and C.I.C.: Morgan Edges Closer to China’, The New York Times, available at http://dealbook.nytimes.com/2010/07/16/ mack-and-c-i-c-morgan-edges-closer-to-china/. del Castillo-Mussot, M., Sprague, J., and de la Lama García, A. (2013) ‘Global Capitalism and “North-South” Unevenness: In Light of Ranking, Statistical Correlations, and Profits of Forbes’ World List of Top 2000 Firms’, Perspectives on Global Development and Technology, 12, 219–245. Dyer, G., Pilling, D., and Sender, H. (2011, January 18), ‘A Strategy to Straddle the Planet’, Financial Times, available at http://www.ft.com/intl/cms/s/0/ b852a826-2272-11e0-b6a2-00144feab49a.html#axzz3Z1xXdk4A. Gindin, S. and Panich, L. (2008), ‘Perspective on the U.S. Financial Crisis’, available at http://canadiandimension.com/articles/174 (accessed 10 November 2008). Harris, J. (2005), ‘Emerging Third World Powers’, Race & Class, 3(46), 7–27. Harris, J. (2009), ‘China, Russia and the Gulf States’, Science & Society, 1(73), 6–33. Lattman, P. (2010, December 21) ‘Blackstone Nears $15 Billion Fund’, Private Equity. Moran, T. (2010, July) ‘China’s Strategy to Secure Natural Resources: Risks, Dangers, and Opportunities’, PIIE Update Newsletter. Peterson Institute for International Economics. Peetz, D. and Murray, G. (2010a), The Financialization of Global Ownership, Brisbane, AU: Griffith University. Peetz, D, and Murray, G. (2010b, July), Global 2009 Shareholding Unit Database, Unpublished data, Brisbane, AU: Griffith University [derived from Osiris database, Bureau van Dyk, Amsterdam]. Prasso, S. (2010, May 24), ‘American Made . . . Chinese Owned’, Fortune, 84–92. Rabinovitch, S. and Davies, P. (2013, August 7), ‘ICBC Closes in on Standard Bank Deal’, Financial Times, available at http://www.ft.com/intl/cms/s/0/ f6874724-ff23-11e2-aa15-00144feabdc0.html#axzz3Z1xXdk4A.

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3 Japanese transnational capitalists and Asia–Pacific free trade Hisanao Takase

In November 2010, APEC’s leaders supported the declaration entitled 2010 Leaders’ Declaration, The Yokohama Vision-Bogor and Beyond (APEC, 2010). Their statement said: we will take concrete steps toward realization of a Free Trade Area of the Asia-Pacific (FTAAP), which is a major instrument to further APEC’s regional economic integration agenda. FTAAP should be pursued as a comprehensive free trade agreement by developing and building on-going regional undertakings, such as ASEAN+3, ASEAN+6, and the Trans-PacificPartnership, among others. Established in 1989, APEC is the largest framework for economic cooperation in the Asia–Pacific region.1 There are 21 economies that participate in it: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea (Republic of Korea), Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Chinese Taipei (the designated name used by Taiwan to participate in APEC), Thailand, the United States, and Vietnam.2 A researcher noted the weight of APEC economies (Yamazawa, 2012: 5): the combined GDP for APEC’s 21 economies amounted to $30 trillion in 2007. As FTAAP was proposed by the APEC Business Advisory Council (as previously noted), it aimed to promote the integration of all the free trade agreements (FTAs) that had mushroomed in the region over the past decade, thus creating a greater single market to achieve the maximum scale economy. A key figure was Fred Bergsten, director of the Peterson Institute of International Economics, chairman of the APEC Eminent Persons Group, and powerful member of Trilateral Commission (TC).3 He expressed his concern about the hobbled negotiations of the World Trade Organization’s (WTO) Doha Development Agenda (DDA), and recommended FTAAP as a “plan B” in preparation for the failure of the DDA. Since then, the DDA negotiations have been halted, so the “plan B” is still relevant. Against this background, the APEC leaders supported FTAAP (Yamazawa, 2012: 85–87). FTAAP is also supported by the Japanese economic elite who are transnational capitalists representing transnational corporations (TNCs). Here, elite is a group of individuals who occupy top positions in an authoritarian organization

Japanese transnational capitalists  41 (Hartman, 2007). In contemporary societies, the economic elite are leaders of the capitalist class, owning large quantities of stocks or occupying the executive board of corporations. Opposite the capitalist class is the working class (van Apeldoorn, 2002: 21–31). According to some researchers, the transnational capitalist class (TCC) has formed, in recent decades of neoliberal globalization, around North America, Europe, and, to a lesser extent, Japan. TCC is a group of owners and senior managers of TNCs who pursue and share their interests in widening opportunities for transnational capital to develop across boundaries of nation–states, despite occasional conflicts based on various differences, such as their home countries or regions, geographical concerns, and main sectors or functions in the global circuit of capital (Robinson, 2004). Transnational historic bloc (or globalist bloc) is also constituted as a cohesive group that is made up of the globally oriented political elite, the leading cultural elite, and TCC (Robinson and Harris, 2000; Carroll, 2010). Facing the global economic crisis generated by the collapse of finance-led accumulation in the U.S. through the subprime lending problem and Lehman shock,4 the Japanese transnational capitalists fell on a predicament. That was because, as sales in the U.S. market dropped, Japan’s economic growth stagnated, and a legitimacy crisis of neoliberalism occurred in Japan. As a result, the Liberal Democratic Party (LDP), which supported neoliberal globalization in Japan (especially under Prime Minister Jyunichiro Koizumi), was defeated in the 2009 national election and soon left office.5 Throughout the changing political atmosphere, the FTAAP has been supported by Japanese transnational capitalists, because it can help develop and absorb dynamic capitalist development in the Asia–Pacific to profit transnational capital. Against this background, this paper recognizes FTAAP as the emerging accumulation strategy supported by Japanese transnational capitalists under the hegemony of a transnational, productive (industrial) capital fraction.6 According to Jessop, an “accumulation strategy” defines a specific economic “growth model” complete with its various extra-economic preconditions and also outlines a general strategy appropriate to its realization. To succeed, such a model must unify the different moments in the circuit of capital (money or banking capital, industrial capital, commercial capital) under the hegemony of one fraction (whose composition will vary inter alia with the stage of capitalist development). (1990: 198–199) In this chapter, capital fractions are groups of capital based on functional division (money capital, productive (industrial) capital, commercial capital) and geographical division (national and transnational). As van Apeldoorn stated, abstractly, “productive capital is more concerned with principle of social protection than money capital, and national capital is more so than transnational capital” (2002: 29). This is because money capital represents capital in its most general form and is abstracted from the production process, and productive capital tends to be oriented towards the principle of social protection, aiming at the conservation

42  Hisanao Takase of man and nature concerning productive process. Commercial capital mediates money capital and productive capital. Also, national capital tends to be oriented to the shelter of the nation–state, while transnational capital tends to oppose protectionism and favor a regime of global free trade and investment. The following discussion is divided into three parts. The first part outlines the rise of Japanese transnational productive capital via foreign direct investment (FDI) and formation of global production network centered on the Asia–Pacific after the Plaza Accord. The second part focuses on concrete policies to realize FTAAP as the accumulation strategy for transnational productive capital, and suggests that transnational productive capital owns hegemony within Japanese capital fractions. The third part points out limits and contradictions concerning the FTAAP.

Rise of Japanese transnational productive capital in the Asia–Pacific Increase of FDI After being defeated by the Allies in the Second World War, Japan signed the security treaty with the U.S. in the context of the Cold War, and achieved high-rate economic growth and rapid catch-up in the period between the 1950s and early 1970s. From the 1970s through to the 1980s, Japan formed an export-driven economy. Increased exports from Japan generated trade conflicts with Europe and especially the U.S. (Gordon, 2013). Against this, the Plaza Accord in 1985 forced changes upon Japan’s export-driven economy. That was the major turning point in the heightened rise of TNCs based in Japan.7 After the Plaza Accord, Japanese corporations in export-sensitive industries like automobile and electrical engineering entered, via FDI, the trilateral regions of global capitalism: North America, Europe, and Asia. In 2008, Japan’s cumulative FDI in the U.S. reached $226.6 billion, amounting to 33.1 percent of total Japanese FDI. North America, including U.S. and Canada, has become the largest recipient of Japanese FDI. Of course, large Japanese companies have entered other regions and promoted transnationalization of production worldwide. Europe accounted for 23.6 percent, followed by Asia, occupying 23.3 percent of total Japanese FDI in 2008 (JETRO, 2009: 394). Even after the global economic crisis, total Japanese FDI has increased worldwide. Japan’s cumulative FDI was $683.8 billion in 2008, $740.3 billion in 2009, $830.4 billion in 2010, and $964.6 billion in 2011.8 In North America, cumulative FDI was $286.1 billion, amounting to 29.7 percent of total Japanese FDI in 2011. Asia accounted for 26.7 percent, followed by Europe, occupying 23.9 percent (JETRO, 2012: 117). In recent years, the Asian weight has increased gradually, as Table 3.1 shows. The significance of North America and the increasing weight of Asia within Japanese TNCs lead to the framework of the Asia–Pacific region. Japan’s cumulative FDI in 16 APEC economies (Australia, Canada, China, Hong Kong,

Japanese transnational capitalists  43 Table 3.1  Trend of Japanese cumulative FDI per year

Cumulative FDI (2008) (2009) (2010) (2011)

North America

Europe

Asia

Total

33.1%

23.6%

23.3%

$683.8 billion

32.4% 31.6% 29.7%

24.1% 23.3% 23.9%

23.6% 25.6% 26.7%

$740.3 billion $830.4 billion $964.6 billion

Sources: JETRO, 2009: 394; JETRO, 2011: 115; JETRO, 2012: 117

Indonesia, South Korea, Malaysia, Mexico, New Zealand, the Philippines, Russia, Singapore, Chinese Taipei, Thailand, the United States, and Vietnam) accounted for 61.3 percent of total FDI in 2010 (JETRO, 2011: 115). This means that Japan’s cumulative FDI has reached more than $500 billion in the Asia–Pacific.

Formation of global production network centered on the Asia–Pacific Japan’s TNCs have been driven outward by pressures of high-yen and limited market at home since the 1980s, and so they have formed production networks worldwide. The Asia–Pacific region is part and parcel of the global production network. The most representative corporation is Toyota. Toyota has constructed factories worldwide. In 2003, Toyota had 46 production bases in more than 26 countries and regions: Czech Republic, France, Poland, Portugal, UK, Bangladesh, India, Pakistan, Turkey, Kenya, South Africa, China, Indonesia, Malaysia, the Philippines, Chinese Taipei, Thailand, Vietnam, Australia, Canada, U.S., Mexico, Argentina, Brazil, Columbia, and Venezuela. Among them, the Asia–Pacific countries were very important. 29 production bases were positioned there (Okumura, et al, 2006: 165). For Toyota, the U.S. market is the most important foreign one. To enter the U.S., Toyota established a joint factory (NUNMI) with GM in 1984. In 1995, Toyota President Hiroshi Okuda negotiated with the Office of the U.S. Trade Representative to avert trade conflict with the U.S. automobile industry and promised to purchase more auto parts from the U.S. In 2004, Toyota had at least eight factories and directly employed more than 20,000 workers (Okumura, et al, 2006: 165). According to Harris, Toyota has $17.4 billion in direct US investments spending $30 million annually with US suppliers. They have ten production facilities in seven states, operations that include research, development, design and engineering in 40 states and hold 1,502 dealerships. Toyota directly employs 35,838 people and claims indirect employment of 1,117,511. (2010)

44  Hisanao Takase Asian countries have become more and more significant. Toyota has paid attention to China, and even had seven production bases there in 2003. Since 2004, Toyota has produced the Innovative International Multipurpose Vehicle (IMV) through production networks in Asian countries such as Indonesia, India, the Philippines, Malaysia, Thailand, and Vietnam. IMV has been exported to more than 140 developing countries in the Asian, Middle and South American, and African regions. Toyota President Akio Toyoda said, “it is the most global project in Toyota’s history, and the first attempt in the history of automobile industry” (Okumura, et al, 2006: 197; Yamazawa, et al, 2012: 85–86). In Australia, Toyota has a production company. It has been a powerful player in the market and provided auto parts to the Asian region. Toyota’s overseas production bases have continued to increase. According to the website at the end of December 2012, “Toyota conducts its business worldwide with 52 overseas manufacturing companies in 27 countries and regions. Toyota’s vehicles are sold in more than 160 countries and regions.” In addition to Toyota, other large corporations like Nissan, Honda, Sony, Panasonic, Toshiba, Takeda, and so on have formed global production networks. As represented by Toyota, Japanese corporations have formed global production networks centered on the Asia–Pacific for about three decades. To “lock in” and promote the emerging networks, they have supported the WTO and FTAs.

FTAAP as accumulation strategy of Japanese transnational capital Stalemate of WTO negotiation and increase of FTAs In 1995 the WTO was established, but the Doha Development Agenda (DDA) negotiation came to a halt, because of conflicts between developed countries and developing ones. While DDA negotiation has been protracted and unresolved, bilateral and regional FTAs have flourished worldwide. Meanwhile, the government of Japan has concluded FTAs and economic partnership agreements (EPA)9 with Singapore in 2002 (in effect), Mexico in 2005, Malaysia in 2006, Chile in 2007, Thailand in 2007, Indonesia in 2008, Brunei in 2008, ASEAN in 2008, the Philippines in 2008, Switzerland in 2009, Vietnam in 2009, India in 2011, and Peru in 2012. The Japanese political elite and economic elite who represent TNCs have focused many economic strategies on developing countries centered around the Asia–Pacific.10 Based on these achievements, they are now trying to conclude FTAs with the U.S., Korea, and China. This leads to the Free Trade Area of the Asia–Pacific (FTAAP) as the accumulation strategy, supported by Japanese business associations.

The Japan Business Federation’s support for FTAAP The most powerful Japanese business association is Nippon Keidanren (Japan Business Federation). The membership covers most important sectors, such as

Japanese transnational capitalists  45 automobile, electrical engineering, steel, electricity, and bank, and TNCs, such as Toyota, Nissan, Honda, Sony, Toshiba, Panasonic, Hitachi, Canon, Komatsu, Mitsubishi, Mitsui, Sumitomo, Mitsubishi Tokyo UFJ bank, Mitsui Sumitomo Financial group, and so on.11 Several foreign companies such as Goldman Sachs, JPMorgan, IBM, Boeing, Coca-Cola, Siemens, BASF, Bosh, BNP Paribas, and Samsung Electronics are also members of Keidanren. The chairman of Keidanren, Hiromasa Yonekura from Sumitomo Group, also serves as chairman of Japan–U.S. Business Council and Japanese chairman of EU–Japan Business Roundtable. The chairman of Toyota is a vice chairman of Keidanren. Keidanren has sent the representatives to the policy board of Kan administration, Noda administration, and Abe administration from 2010 to 2013.12 In Abe administration, a vice chairman of Nippon Keidanren from Toshiba is a member of the Council on Economic and Fiscal Policy, which decides strategic policy directions for economic growth under the leadership of the prime minister. In June 2010, Keidanren formulated the policy statement titled Asia Taiheiyo Chiiki no Jizokutekiseityo wo Mezasite (Towards Sustainable Growth in the Asia–Pacific Region) (Nippon Keidanren, 2010). The statement supported FTAAP as the emerging accumulation strategy for transnational productive capital fraction and persuaded Japan’s administration to realize the project. It had six chapters. The first chapter is named “The Asia–Pacific Position Today.” The Asia–Pacific region accounted for 54 percent of world GDP, 52 percent of global trade by value, and 41 percent of world population. In spite of diversity within APEC economies, the intraregional trade was about 65 percent, comparable to the EU (67 percent). The average applied tariffs reduced from 16 percent in 1989 to 5.5 percent in 2004. The regional economy was still relatively robust, even after the global economic crisis. Sustainable growth in the Asia–Pacific region was essential to sustainable growth of the Japanese and global economies. The second chapter of the Keidanren policy statement is titled “The Significance of the Asia–Pacific Region for Japanese Companies.” Japanese enterprises’ global supply chains extended beyond Asia to include Europe and North America as areas of final consumption. Among them, ensuring connectivity with the U.S. was especially vital, since it was the world’s largest economy. Compared to the supply chains, there was still a lack of systematic trade infrastructure covering the Asia–Pacific as a whole, although numerous FTAs existed in the region. Japan’s network so far was basically confined to Asia. A Japan–China–Korea FTA, ASEAN+6, and other broader economic partnerships were still at the research and discussion phase. No progress was being made on a framework that included U.S. The U.S., however, regarded the Trans-Pacific Partnership (TPP) Agreement13 as the key step toward achieving a Free Trade Area of the Asia–Pacific (FTAAP), and was participating in negotiations. The third chapter was “Strategy for Achieving Sustainable Growth.” Core strategy was to utilize strengths of diversity/complementarity and existing FTAs to promote regional economic integration, which would serve as trade system infrastructure covering the Asia–Pacific region as a whole. At the same

46  Hisanao Takase time, there was a need to build economic, industrial, and social infrastructure within the region and create a secure environment for economic activity. The answer was FTAAP. Through a network of FTAs and EPAs, pressure has built toward economic integration throughout the Asia–Pacific, to be further achieved by the FTAAP by 2020. This network of FTAs and EPAs has consisted of the ASEAN Free Trade Area (AFTA), Japan–Korea EPA, Japan–China–Korea FTA, ASEAN+3, Japan–India EPA, Japan–Australia EPA, ASEAN+6, Japan–U.S. EPA and TPP. The fourth chapter was “Cooperative Efforts Aimed at Achieving Regional Economic Integration.” Important topics in achieving FTAAP were people, goods, capital, services, knowledge/information, and business environment. The fifth chapter was “APEC as a Forum for Cooperation.” Having been active in the region for 20 years, APEC was the most appropriate forum for actually advancing a growth strategy with regional economic integration at its core. There was a need to reassess APEC’s activities from the perspective of promoting regional economic integration and to take a more unified and strategic approach. The Keidanren policy statement adds: “we expect Japan to take the initiative.” The sixth chapter was “Expectation for Japan’s Economic Diplomacy.” It stated, “Japan should strategically utilize regional cooperation, multilateral negotiations, bilateral agreements, and ODA (Official Development Aid) in a multi-layered approach to resolve the issues faced by its companies.” Prime Minister Naoto Kan from DPJ was persuaded by the statement and formulated the 2010 APEC Leaders Declaration. The declaration stated, as previously mentioned: we will take concrete steps toward realization of a Free Trade Area of the Asia-Pacific (FTAAP) which is a major instrument to further APEC’s regional economic integration agenda. An FTAAP should be pursued as a comprehensive free trade agreement by developing and building on going regional undertakings, such as ASEAN+3, ASEAN+6, and the Trans-PacificPartnership, among others.

TPP, Japan–China–Korea FTA, ASEAN+6 FTA Keidanren supports FTAAP, while recognizing that it is imperative to maintain confidence in the WTO on which multilateral free trade is built.14 Therefore, Keidanren has formulated policy statements (2011; 2012; 2013a): Asia Taiheiyo Chiiki niokeru Keizaitogo no Suishin wo Motomeru (Call for Economic Integration in the Asia–Pacific: Towards FTAAP in 2020) (Nippon Keidanren, 2011), TPP (Urgent Proposal; “For Promotion of Economic Partnership by Leveraged by TPP”- For Prompt Decision on Participation in the TPP Negotiations) (Nippon Keidanren, 2012), and Proposals for Redefining of Trade Strategy – Towards a Proactive New Trade Strategy that Takes the Initiative to Establish Global Rues (Nippon Keidanren, 2013a). Those statements have supported Japan-ChinaKorea FTA, ASEAN+6 FTA (Regional Comprehensive Economic Partnership [RCEP]), TPP, FTAAP, Japan–EU EPA, WTO, and so on.

Japanese transnational capitalists  47 In April 2013, Prime Minister Shinzo Abe accepted the request from Keidanren. He announced Japan’s participation in the TPP negotiations as part and parcel of his strategies for economic growth.15 Of course, Keidanren Chairman Yonekura praised the decision: “I praise Prime Minister Abe’s leadership and dedicated efforts by ministers concerned” (Nippon Keidanren, 2013b). All 11 TPP countries agreed to Japan’s joining the negotiations. The key was the approval offered by the Obama administration. This reflected the interest of U.S. transnational capitalists. Of course, there exist partial conflicts: the U.S. automobile industry has requested a few conditions in opening the North American market, while sharing the interests with the Japanese counterpart in maintaining a global system where transnational capital can develop. Reflecting this, the Japanese government agreed that the U.S. could phase out its auto tariffs – 2.5 percent on cars and 25 percent on trucks – over the longest period possible in the future TPP deal. Additionally, the U.S. requested the Japanese government to focus on a number of regulatory and nontariff barriers believed to keep U.S. autos out of the Japanese market. We should not overlook, however, that most U.S.-based TNCs and banks have shared interests with their Japanese counterparts in promoting the TPP and FTAAP to expand opportunities for transnational capital. For example, the U.S. Business Coalition for TPP supported Japan’s joining the TPP negotiation (U.S. Business Coalition for TPP, 2013).16 In the news release, titled Statement on the Announcement that Japan seeks to Join the TPP Negotiations, Devry Boughner Vorwerk, director of international business relations at Cargill, Incorporated, observed, the Coalition welcomes Japan’s participation, with the understanding that the Japanese Government embraces the common vision of TPP Leaders to establish a comprehensive, high-standard regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges. Among the Japanese business leaders, Yasuchika Hasegawa, president of Takeda Pharmaceutical Company, chairman of TC’s Asia–Pacific Group, former Keidanren’s committee chairman on U.S. affairs, member of Abe administration’s Council for Industrial Competitiveness, and chairman of Keizai Doyukai (Japan Association of Corporate Executives), also supported the TPP. He stated, the preparatory negotiations between Japan and the United States for Japan’s participation in the Trans-Pacific Partnership (TPP) reached an agreement today. I welcome this achievement as a significant step toward Japan’s participation as a full member of the TPP negotiations. (Keizai Doyukai, 2013) Supported by business associations and the government, Japanese representatives have joined the TPP negotiations since July 2013. The Abe administration also started to negotiate Japan–China–Korea FTA in March 2013, and ASEAN+6 (RCEP) in May 2013.

48  Hisanao Takase FTAAP, as the emerging accumulation strategy led in Japan by transnational (productive) capital, seems to be pressing forward. There do exist, however, contradictions and limits concerning the TPP and FTAAP: conflict between Japanese transnational capitalists and local farmers, contradictions between transnational capitalists and working people, and historical rivalry between China and the Japan–U.S. alliance.

Contradictions and limits of the TPP and FTAAP Conflict between Japanese transnational capitalists and local farmers Most of Japan’s farmers had supported the Liberal Democratic Party (LDP), which protected them against foreign corporations in postwar Japan. In recent years, however, farmers have continually opposed opening the Japanese agricultural markets pursued by LDP, because it would profit only TNCs, at the expense of local farms (Watanabe, 2009). So Japan Agriculture (JA), which represents most of them, has opposed the TPP. Pushed by the pressure, in the national election even Prime Minister Abe expressed his LDP’s opinion that its public pledge made regarding the TPP was to oppose joining the negotiations as long as a precondition was the abolition of customer tariffs without considering any areas to be off-limits. The statement implied that Abe’s LDP would try to protect such sensitive agricultural markets as rice and sugar as much as possible.

Contradiction between transnational capitalists and working people Contradictions exist between transnational capitalists and working people. Transnational capital has formed global production networks while exploiting working people through low-wage, nonregular, and more flexible employment. This has led to the increase of poverty among working people. Because of this, counterhegemonic movements have developed around the working people in cities, as represented by the Occupy Wall Street movement that espoused “we are the 99 percent.”17 In this context, Japanese transnational capitalists have formed global production networks, supported the TPP and FTAAP, and employed working people with low wages. So movements against, or imposing limits on, the TPP, supported by working people, NGOs, conscientious professionals, local farmers, and so on, have been organized in recent years. For example, in the United States, the organization Public Citizen, supporting the Occupy Wall Street movement, also opposed the TPP.18 The movement has communicated with TPP Soshi Kokuminkaigi (National Congress against TPP), which is supported by some members of Japan’s Diet (the country’s bicameral legislature) as well as groups of local farmers, doctors, economists, lawyers, and so on – who are advised by former Prime Minister Yukio Hatoyama.19 Among Japanese labor unions, the Japanese Trade Union Confederation is made up of around seven million workers, most of whose leaders have supported the Democratic Party of Japan and have accepted

Japanese transnational capitalists  49 the TPP. Yet, the National Confederation of Trade Unions, made up of about one million workers, most of whose leaders have supported the Japan Communist Party, has been against the TPP. In opposing the TPP, the National Confederation of Trade Unions is also cooperating with Japan Agriculture (JA) and members of the TPP Soshi Kokuminkaigi (National Congress against TPP). Among North American unions, the largest trade union, the AFL–CIO (American Federation of Labor and Congress of Industrial Organizations), has urged caution. It has pointed out that Mexico and Canada have been invited to join negotiations for the TPP and that this shows that the TPP will deepen policies enshrined by NAFTA that have been harmful to workers. Yet, the strength of labor unions in the U.S. has declined in recent history, and the AFL–CIO’s leadership often goes along with policies of the U.S. state, with which it is aligned and has various connections. Nonetheless, the AFL–CIO has released a joint statement with the CLC (Canadian Labor Congress) and UNT (Union Nacional de Trabajadores), explaining: to have a positive impact on working families in the US, Canada, and Mexico, the TPP must break from NAFTA (North American Free Trade Agreement), which imposed a destructive economic model that expands the rights and privileges of multinational corporations at the expense of working families, communities, and the environment. The model of globalization enshrined by NAFTA promotes a race to the bottom in terms of wages, labor rights, environmental protection, and public interest regulation. By suppressing demand, this model became a leading cause of the current global recession. (AFL–CIO, 2012)

Rivalry between China and the Japan–U.S. alliance Rivalry between China and the Japan–U.S. alliance has retained some economic and geopolitical dimensions, even as economic interdependence and dialogue have been maintained or strengthened.20 On one hand, the U.S. and Japan have supported the TPP and FTAAP to liberalize, develop, and absorb capitalist development in the Asia–Pacific area, including China, for transnational capital. Yet they have also strengthened the Japan–U.S. alliance to protect opportunities for transnational capital, paying attention to Chinese military expansion into the sea. For example, Joseph Nye, former assistant secretary of defense for international security affairs in the Clinton administration and chairman of TC’s North American committee, and Richard Armitage, former deputy secretary of state in the Bush administration, have formulated American strategies concerning Japan–U.S. relations in 2007 and 2012 (Armitage and Nye, 2007, 2012). In the introduction of the recent report, they write: this report on the U.S.-Japan alliance comes at a time of drift in the relationship . . . Together, we face the re-rise of China and its attendant uncertainties . . . and the promise of Asia’s dynamism . . . A stronger and more equal alliance is required to adequately address these and other great issues of the day. (Armitage and Nye, 2012: 1)

50  Hisanao Takase In conclusion, the report raised recommendations for the Japan–U.S. alliance, realizing the TPP, developing capabilities to respond to China’s rise, strengthening natural resource alliance, and so on (Armitage and Nye, 2012: 16–18). In Japan, transnational capitalists and state elites supported the TPP and FTAAP. Japan’s Ministry of Defense implied developing capabilities and policies to respond to China’s rise in the policy report (Japan’s Ministry of Defense, 2013). It mentioned China’s lack of transparency in its broad and rapid military modernization, as well as rapid expansion and intensification of maritime activities. On the other hand, China has rapidly realized economic development and catch-up through introduction of market forces, opening of markets to foreign capital, and the integration of Chinese economy into global economy under the state elite’s initiative, diverting the pressure toward liberalization for transnational capital to some extent (van der Pijl, 2006, 2012).21 China has also increased the military budget dramatically, expanded the activity in the South China Sea and the East China Sea, and supported ASEAN+3, which may lead to formation of a relative sphere of interest for Chinese state-led economy in Asia (Yamazawa, et al, 2012). In this situation, it is unclear whether China’s state elite will accept the TPP and FTAAP, which may prioritize interests of Japanese and American transnational capitalists at the expense of Chinese state initiative.

Conclusion In summary, the following points need to be recognized: first, as Toyota’s global activities and Keidanren’s membership and policy statements show, transnational productive capital has risen and formed hegemony within Japanese capital fractions. Second, the Japanese transnational capitalists have supported and pursued the accumulation strategy of FTAAP, and gained access to decision making of state policies under DPJ (Kan administration and Noda administration) and LDP (Abe administration). Even after the crisis of neoliberal globalization, Japan’s cumulative FDI has increased, and transnational productive capital has been a driving force of the economic integration in the Asia–Pacific. As a result, third, the Japanese transnational capitalists share an interest, for the most part, with American counterparts in promoting the economic integration of the Asia–Pacific through FTAAP and the TPP – although partial conflicts exist, as shown in American requests of TPP negotiations concerning automobile industry. And fourth, it will not be easy to bring about the full implementation of the TPP and FTAAP because of its own limits and contradictions for transnational capitalists. Finally, the future directions depend on the balance of social forces and the geopolitical context between China and the Japan–U.S. alliance.

Acknowledgments The author would like to thank the organizing committee (William I. Robinson, Jeb Sprague, Jason Struna, Jerry Harris, Leslie Sklair, William K. Carroll, Jane

Japanese transnational capitalists  51 Kenway, Anthony van Fossen, David Peetz, and Georgina Murray) of the second conference held by the “Network for Critical Studies of Global Capitalism” at Griffith University in Brisbane, Australia in June 2013 for giving me the opportunity to present and consider my research.

Notes   1 For more on APEC, see Yamazawa (2012).   2 While APEC is a regional organization of 21 economies located in the Asia–Pacific region, ASEAN (Association of Southeast Asian Nations) is a regional organization of 10 countries located in Southeast Asia: Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. ASEAN+3 include ASEAN countries, China, Korea, and Japan. ASEAN+6 include ASEAN countries, India, Australia, New Zealand, China, Korea, and Japan.   3 TC was established through an initiative by David Rockefeller, chairman of the Council of Foreign Relations and Chase Manhattan Bank in 1973, making up trilateral partnership between Japan, Europe, and North America. The stated aim is to foster international cooperation by bringing together leaders in the private sector. See Gill (1990).  4 On the American elite in recent years, see van Apeldoorn and Graaff (2011, 2012), Staples (2012), Domhoff (2009), and Robinson and Barerra (2012).   5 After the 2009 election, the Democratic Party of Japan (DPJ) had become the ruling party in the Diet until 2012.   6 While the Japanese transnational capitalists support FTAAP, they also supported the EU–Japan EPA (or EIA, the Economic Integration Agreement). This is because they have developed trilateral cooperation, represented by organizations such as G7/OECD/Trilateral Commission, and trilateral accumulation strategy through FDI to Europe, North America, and Asia since the 1980s. According to Gill (1990), Sklair (2001), Robinson (2004), and Harris (2006), Japanese transnational capitalists have been involved in transnational class formation in the era of neoliberal globalization, especially with their European and North American counterparts. Van der Pijl (2006, 2010) and Carroll (2010, 2012) argue that the core of transnational class formation, however, has been positioned in the (North) Atlantic area. In this area, the Transatlantic Free Trade Area and Transatlantic Trade and Investment Partnership proposals are now being negotiated by the U.S. and EU, although their future is uncertain.   7 For an overview of Japanese capitalism after 1945, see Takase (2014).   8 Cross-border merger and acquisitions (M&As) associated with FDI from Japan was $59.7 billion in 2008, $20.6 billion in 2009, $34.4 billion in 2010, and $66.4 billion in 2011 (JETRO, 2012: 110).   9 Most of Japan’s FTAs have been called EPAs, because they include not only liberalization of trade but also liberalization of investment, business environment, and so on. 10 While Japanese elites have supported FTAs, they have also supported the WTO as the main framework to maintain a global system for transnational capital. We may estimate that many leading political elites have become transnationally oriented on foreign economic policies. This does not deny, however, their using nationalism and exclusionism in integrating the nation. 11 Until the 1980s the Japanese steel industry was representative of national capital. Since the 1990s, however, steel industry has accepted neoliberal globalization gradually. This is because the automobile industry, as the main customer for the steel industry, has promoted the transnationalization of production, and foreign

52  Hisanao Takase investors in the U.S. and EU have increased portfolio investments into the Japanese stock market (Asahi, 2005: 115–118). 12 The Hatoyama administration (2009–2010), based on DPJ, Social Democratic Party, and People’s New Party, didn’t invite representatives of Keidanren to the policy board. That was a reflection of the public opinion of local farmers and working people against neoliberalism after the Lehman shock. 13 The origin of the TPP was an EPA signed by Singapore, New Zealand, Chile, and Brunei that came into effect in 2006. In November 2009, President Obama announced in a speech in Tokyo that the U.S. would engage with the TPP. The first round of negotiations for a wider agreement was held in March 2010. Then, 11 countries participated in the negotiations: the U.S., Australia, Peru, Vietnam, Malaysia, Mexico, and Canada, in addition to the original members Singapore, New Zealand, Chile, and Brunei. 14 According to Staples (2012: 116), Keidanren founded a group to lobby the WTO with the Business Roundtable (U.S.), the Business Council of Australia, the Canadian Council of Chief Executives, the Consejo Mexican de Hombres de Negocios (Mexico), and the European Round Table of Industrialists. 15 In the 2012 general election, the DPJ was defeated and the LDP, with Abe’s leadership, regained control of the government. 16 See also Armitage and Nye (2012). 17 On counterhegemonic movements in cities, see Harvey (2012). Additionally, see Carroll (2013), Murray (2012), van der Pijl (2007), Robinson (2004), and Gill (2003). 18 On Public Citizen, see the following website at http://www.citizen.org/Page. aspx?pid=183 (accessed 6 September 2013). 19 For critical reports on the TPP from Japan see the website: http://tpp.main.jp/ home/ (accessed 8 November 2013). 20 On economic interdependence between U.S. and China, see Panitch and Gindin (2012). 21 The most impressive feature is seen in the central role of the Chinese Communist Party and state in promoting a global development strategy. Researchers who emphasize economic interdependence between U.S. and China also recognize this. According to Panitch and Gindin, “despite China’s having consented under the WTO agreement to open its domestic banking sector to foreigners by 2007, the financial system remained dominated by five large-state-owned commercial banks primarily engaged in lending to SOEs (state-owned enterprises), while interest rates were administered by the central bank with the primary goal of avoiding upward pressures on the exchange rate. . . . This uneven pattern of China’s integration into global capitalism reflected the party-state’s development strategy” (2012: 292–300). According to Harris, “China has 14300 government owned enterprises. Among these are 129 world-class conglomerates that answer to the central government, with one-half of their chairmen or chairwomen appointed by the central department of the Party . . . and many of the CEOs sit on the Party’s Central Committee” (2012: 233–234).

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Japanese transnational capitalists  53 APEC (2010), ‘2010 Leaders’ Declaration, The Yokohama Vision-Bogor and Beyond’, available at http://www.apec.org/Meeting-Papers/ Leaders-Declarations/2010/2010_aelm.aspx (accessed 15 November 2013). Armitage, R. L. and Nye, J. S. (2007), The US-Japan Alliance, Washington, DC: Center for Strategic and International Studies (CSIS). Armitage, R. L. and Nye, J. S. (2012), The US-Japan Alliance, Washington, DC: CSIS. Asahi, S. K. (2005), Nichibei Doumei Keizai (Japan-U.S. Economic Alliance), Japan: Asahi Bunko. Carroll, W. K. (2010), The Making of a Transnational Capitalist Class, London: Zed Books. Carroll, W. K. (2012), ‘Capital Relations and Directorate Interlocking: The Global Network in 2007’, in G. Murray and J. Scott (eds) Financial Elites and Transnational Business: Who Rules the World?, Cheltenham: Edward Elgar Publishing. Carroll, W. K. (2013), ‘Networks of Cognitive Praxis: Transnational Class formation from Below?’, Globalizations, 10(5), 691–700. Domhoff, W. (2009), Who Rules America?: Challenges to Corporate and Class Dominance (6th ed.), New York: McGraw-Hill Humanities. Gill, S. (1990), American Hegemony and the Trilateral Commission, Cambridge: Cambridge University Press. Gill, S. (2003), Power and Resistance in the New World Order, Basingstoke: Palgrave Macmillan. Gordon, A. (2013), A Modern History of Japan: From Tokugawa Times to the Present (3rd ed.), New York: Oxford University Press. Harris, J. (2006), Dialectics of Globalization, Newcastle: Cambridge Scholars Publishing. Harris, J. (2010), ‘The World Economic Crisis and Transnational Corporations’, Science & Society, 74(3), available at http://netglobalcapitalism.wordpress.com/ articles/ (accessed 15 November 2013). Harris, J. (2012), ‘Outward Bound: Transnational Capitalism in China’, in G. Murray and J. Scott (eds) Financial Elites and Transnational Business: Who Rules the World?, Cheltenham: Edward Elgar Publishing. Hartman, M. (2007), The Sociology of Elites, London: Routledge. Harvey, D. (2012), Rebel Cities, London: Verso. Japan’s Ministry of Defense (2013), ‘Defense Posture Review Interim Report’, available at http://www.mod.go.jp/j/approach/agenda/guideline/2013_chukan/ gaiyou_e.pdf#search=‘Defense+Posture+Review+Interim+Report’ (accessed 15 November 2013). Jessop, B. (1990), State Theory: Putting Capitalist State in its Place, Cambridge: Polity Press. JETRO (2009), JETRO Boueki Toushi Hakusyo (Annual Report on Trade and Investment), Tokyo: JETRO. JETRO (2011), JETRO Sekai Boueki Toushi Houkoku (Global Trade and Investment Report), Tokyo: JETRO. JETRO (2012), JETRO Sekai Boueki Toushi Houkoku (Global Trade and Investment Report), Tokyo: JETRO. Keizai Doyukai (2013), ‘Statement by Yasuchila Haseagwa, Chairman of Keizai Doyukai’, available at http://www.doyukai.or.jp/en/chairmansmsg/articles/ yhasegawa/130412a.html (accessed 15 November 2013).

54  Hisanao Takase Murray, G. (2012), ‘Corporate Futures and the Consequences from the Top End of Town’, in J. Scott and G. Murray (eds) Financial Elites and Transnational Business, Cheltenham: Edward Elgar Publishing. Nippon Keidanren (2010), Asia Taiheiyo Chiiki no Jizokutekiseityo wo Mezasite (Towards Sustainable Growth in the Asia-Pacific Region), Japan: Nippon Keidanren. Nippon Keidanren (2011), Asia Taiheiyo Chiiki niokeru Keizaitogo no Suishin wo Motomeru (Call for Economic Integration in the Asia-Pacific: Towards FTAAP in 2020), Japan: Nippon Keidanren. Nippon Keidanren (2012), TPP (Urgent Proposal; “For Promotion of Economic Partnership by Leveraged by TPP”- For Prompt decision on Participation in the TPP Negotiations), Japan: Nippon Keidanren. Nippon Keidanren (2013a), Proposals for Redefining of Trade Strategy – Towards a Proactive New Trade Strategy that Takes the Initiative to Establish Global Rues, Japan: Nippon Keidanren. Nippon Keidanren (2013b), ‘Chairman Yonekura’s Comments at Press Conference’, available at http://www.keidanren.or.jp/en/speech/kaiken/2013/0422.html (accessed 15 November 2013). Okumura K., Natsume, K. and Ueda, S. (eds) (2006), Text Takokusekikigyo Ron (The Theory of Multinational Corporations), Kyoto: Minerva Shobo. Panitch, L. and Gindin, S. (2012), The Making of Global Capitalism: The Political Economy of American Empire, London: Verso. Robinson, W. (2004), A Theory of Global Capitalism, Baltimore: Johns Hopkins University Press. Robinson, W. and Barrera, M. (2012), ‘Global Capitalism and the Twenty-First Century Fascism: A US Case Study’, Race & Class, 53(3), 4–29. Robinson, W. and Harris, J. (2000), ‘Towards A Global Ruling Class? Globalization and the Transnational Capitalist Class’, Science & Society, 64(1), 11–54. Sklair, L. (2001), The Transnational Capitalist Class, Oxford: Basil Blackwell. Staples, C. L. (2012), ‘The Business Roundtable and the Transnational Capitalist Class’, in G. Murray and J. Scott (eds) Financial Elites and Transnational Business: Who Rules the World?, Cheltenham: Edward Elgar Publishing. Takase, H. (2014), ‘The transnational capitalist class, the trilateral commission and the case of japan: Rhetorics and realities’, Socialist Studies, 10(1), 86–110. U.S. Business Coalition for TPP (2013), ‘Statement on the Announcement that Japan Seeks to Join the TPP Negotiations’, available at http://www.tppcoalition.org/documents/Press%20Statement%20of%20the%20U.S.%20Business%20 Coalition%20for%20TPP%20on%20the%20Announcement%20that%20Japan%20 Seeks%20to%20Join%20the%20TPP%20Negotiations%2003.15.13.pdf#search=‘S tatement+on+the+Announcement+that+Japan+seeks+to+Join+the+TPP+Negotia tions’ (accessed 15 November 2013). van Apeldoorn, B. (2002), Transnational Capitalism and the Struggle over European Integration, London: Routledge. van Apeldoorn, B. and de Graaff, N. (2011), ‘Varieties of US Post-Cold War Imperialism: Anatomy of a Failed Hegemonic Project and Future of US Geopolitics’, Critical Sociology, 37(4), 403–427. van Apeldoorn, B. and de Graaff, N. (2012), ‘Corporate Elite Networks and US Post-Cold War Grand Strategies from Clinton to Obama’, European Journal of International Relations, (June 22). doi: 10.1177/1354066111433895. van der Pijl, K. (2006), Global Rivalries from the Cold War to Iraq, London: Pluto.

Japanese transnational capitalists  55 van der Pijl, K. (2007), Nomads, Empires, States, London: Pluto. van der Pijl, K. (2010), ‘Western Hegemony and Transnational Capital’, in A. Anievas (ed) Marxism and World Politics, London: Routledge. van der Pijl, K. (2012), ‘Is the East Still Red? Contender State and Class Struggles in China’, Globalizations, 9(4), 503–516. Watanabe, M. (2009), Kaikyu Seiji! (Class Politics in Postwar Japan), Kyoto: Showado. Yamazawa, I. (2012), APEC: New Agenda in Its Third Decade, Singapore: Institute of Southeast Asian Studies. Yamazawa, I., Umada, K., and Kokusai Boueki, T. K. (eds) (2012), Tsusho Seisaku no Tyoryu to Nihon (Japanese Trade Policy: FTA Strategy and TPP), Tokyo: Keiso Shobo.

4 The rise of China and India and the formation of a transnational capitalist class in the Asia/Oceania region Jenny Chesters Drawing on world systems theory and global capitalism school theories, this chapter examines the consequences of the rapid economic growth in China and India. Until the mid-2000s, China and India were ranked amongst the least prosperous nations in the world. The expansion of these two economies is linked to their transition from centrally planned economies to market economies and has resulted in a redistribution of wealth, both within the Asia/Oceania region and within several nations located in the region, creating a regional transnational capitalist class. Billionaires in Australia, India, China, and Hong Kong are becoming increasingly codependent, focusing on global rather than national circuits of accumulation.

World systems theory World systems theory is a hierarchical classification of nations based on an axial division of labor that divides the world into three interdependent zones: the core, the periphery, and the semiperiphery (Wallerstein, 2004). The core consists of the wealthiest, most powerful nations, in which a relatively large percentage of economic activities generate high returns. The periphery consists of the poorest, least powerful nations, in which a relatively high proportion of economic activities generate low returns (Chase-Dunn, 1989). The semiperiphery is located between these two extremes. As the capitalist world economy expands, levels of exploitation increase, and wealth becomes increasingly concentrated within the core (Wallerstein, 2004) as wealthy core nations exploit poorer semiperipheral and peripheral nations. Initially, wealth from Asia, South America, and Africa was transferred to the European core via colonization. Using their political and military power, European nations were able to “plunder the wealth of non-capitalist nations” (Harvey, 2010: 109). In many cases, although the colonies gained political independence, economic exploitation continued via the unequal exchange of raw materials for processed goods (vertical trade) and the repatriation of pro fits from foreign investment (Chase-Dunn and Grimes, 1995; Clark, 2010; Lee et al., 2007). Movement between the zones is possible, with nations moving up or down the hierarchy in accordance with their relative wealth and power (Anderson and

The rise of China and India’s TCC  57 Chase-Dunn, 2005). China and India experienced upward mobility, moving from the periphery to the semiperiphery during the past few decades. World Bank (2013) gross domestic product per capita (GDP/capita) figures, adjusted for inflation, confirm that both India and China experienced rapid economic growth between 1975 and 2011, with India’s GDP/capita increasing from US$160 to US$450 between 1975 and 2000 and then to US$1,509 in 2011, and China’s GDP/capita increasing from US$175 to US$949 between 1975 and 2000 and then to US$5,445 in 2011. World GDP/capita was US$1,428 in 1975, US$5,284 in 2000, and US$10,040 in 2011, indicating that both China and India lagged well behind average levels of economic activity in the latter part of the 20th century and made up substantial ground during the first decade of the 21st century. In the world capitalist economy, the semiperiphery is the most volatile zone, with nations moving up and down within the zone more frequently than moving into or out of the zone. The social structure of semiperipheral nations is relatively fluid, and this flexibility allows them to adapt to changes within the capitalist world economy (Terlow, 1993). For example, they may be able to improve their position within the hierarchy during periods of stagnation inherent within the capitalist economic cycle (Wallerstein, 1975). Located within this intermediate zone, semiperipheral nations display various combinations of core-like and peripheral-like characteristics: some have stable political regimes, some have military power, and some have highly industrialized economies (Chase-Dunn and Grimes, 1995). Although semiperipheral nations exercise control over exchanges with the periphery, they are also at risk of exploitation due to their dependence on the core for capital investment and advanced technology (Chase-Dunn and Grimes, 1995; Peacock et al., 1988). The relatively stable political and economic systems of semiperipheral nations provide safer opportunities for investment by the core than the less stable peripheral nations (Peacock et al., 1988), further widening the gap between nations in the periphery and nations in the semiperiphery. From the approach of world systems theory the majority of nations in the Asia/Oceania region are semiperipheral nations, such as Australia, China, India, Korea, Singapore, and Malaysia. The region is home to one core nation, Japan, and a few peripheral nations, including Cambodia and Bangladesh. Although semiperipheral nations are located throughout Europe, Asia, the Americas, and Africa, the concentration of semiperipheral nations in the Asia/Oceania region provides a unique opportunity to examine links between neighboring semiperipheral nations during a period of rapid economic expansion within the world capitalist economy.

Global capitalism school theories Researchers aligned with the “global capitalism school” have focused, in part, on the development of the transnational capitalist class (TCC) and how its class fractions manipulate local economies to serve the global economy (Harris, 2012; Robinson, 2010, 2011; Sklair, 1997, 2005). The deregulation of national

58  Jenny Chesters banking and finance systems in the 1980s facilitated the mobility of capital and the development of the TCC. According to global capitalism school scholars, now that production and labor processes are no longer constrained by geographical boundaries, the concept of the core dominating the periphery is “outdated” (Robinson, 2011). Global production processes transcend national boundaries, transferring jobs between nations to maximize the accumulation of capital at a global rather than national level (Robinson, 2010). The global integration of production, investments, and finance (Harris, 2012) is pursued by exercising economic control in workplaces, political control in domestic and international politics, and cultural control through the media (Sklair, 2005). TCC fractions play an increasingly leading role over more nationally oriented capital and elites, ensuring that the interests of global capital are served even when they may appear in apparent contradiction with national interests. Sklair (1997) identifies four main fractions within the TCC, each of which aligns with a different but related form of capital: executives of transnational corporations (TNCs) (money capital), globalizing bureaucrats (intellectual capital), globalizing politicians and professionals (political capital), and consumerist elites (symbolic capital) (Sprague, 2009). Members may belong to more than one fraction and may transfer between fractions. For example, governments may employ former executives of TNCs to give advice on workplace relations policies. These fractions work together to further the interests of global capital, implementing policies that facilitate the development and advancement of global production. Closer integration of global production and financial markets ensures that governments focus on developing global policies and convincing their citizens that “thinking globally” is in the national interest. Although Sklair and Robinson link the emergence of the TCC with the fracturing of capitalist classes within nations, their views of how and why the TCC developed differ somewhat. For Robinson (2010), national-based capitalists who made the transition to transnational capitalists now increasingly control both national and global production processes and circuits of accumulation. Robinson and Harris regard Sklair’s consumerist, political, and bureaucratic TCC fractions as “transnational elites” rather than members of the TCC, as these fractions are not direct owners of the means of production (Sprague, 2009).

Economic growth within the Asia/Oceania region Deploying world systems theory alongside global capitalism school theories, I argue later that the rapid economic growth in semiperipheral China and India is fundamentally linked to the exacerbation of wealth inequality in Australia and Asia, increasing the wealth of the super wealthy at a rate much faster than the wealth of the poorest 20 percent. During the past decade, there has been a dramatic increase in the number of billionaires located in the Asia/Oceania region. Drawing on data published by Forbes magazine, this chapter examines the distribution of billionaires in this region, paying particular attention to the links between billionaires in Australia and those in Asia. The rapid urbanization of

The rise of China and India’s TCC  59 70000

2011 US Dollars

60000 50000

Australia

40000

China

30000 20000 10000

Hong Kong India Japan World

0

Figure 4.1  Trends in GDP/capita in selected nations, 2001–2011 Source: Author’s calculations based on figures published by the World Bank (2013).

China and India created new billionaires from property development and speculation, for example. Such processes can be seen as part of the development of transnational capitalist class fractions that are focused on exploiting opportunities for capital accumulation worldwide, and especially within semiperipheral regions of the globalizing world economy. Between 2001 and 2011, GDP/capita on a global level doubled from US$5,188 to US$10,040. During that decade, GDP/capita increased fivefold in China, from US$1,042 to US$5,445, and tripled from US$460 to US$1,509 in India (see Table A.1 in the Appendix). GDP/capita in the region’s largest semiperipheral economy, Australia, also tripled from US$19,541 to US$61,789. The graph in Figure 4.1 charts the trends over time in GDP/capita for the world and selected nations in the Asia/Oceania region. In China, much of this economic growth is linked to the rapid privatization of state assets, particularly land. Since the 1980s, almost 180 million Chinese have been removed from their land to allow for the development of mega cities and manufacturing hubs (Harvey, 2010). Consequently, property developers have amassed great fortunes by acquiring land from farmers at very little cost and very little effort, due to the inability of farmers to resist their demands. Local officials have the power to evict farmers with little compensation and then sell the land to developers at a considerable profit. For example, land in the village of Dawu, purchased by the Loudi city government in 2007 for 38,000 yuan per mu (equivalent to one sixth of an acre), was sold to developers for 600,000 yuan per mu in 2008, who subsequently sold it for 1.2 million yuan per mu in 2011 (SMH, 2011). With property prices increasing by 140 percent, on average, since 1998, it is unlikely that these displaced farmers will have any chance of buying into the new housing developments that are replacing their farms (SMH, 2011). After losing their homes and their livelihoods, the farmers were forced to migrate

60  Jenny Chesters to urban areas in search of employment, thus creating a vast army of cheap labor that is currently being exploited to produce manufactured goods for export. India transitioned from a centrally planned economy after the severe economic crisis it encountered in 1991. After gaining independence from the UK in 1947, successive democratically elected governments held a tight grip on economic development through their control over private economic activity (Krueger, 2002). Government-owned monopolies controlled the finance sector, including insurance and all banks (after they were nationalized in 1969), telecommunications, the import of certain goods, such as petroleum, and the export of some commodities, such as sugar (Krueger and Chinoy, 2002). The importing and exporting of goods was highly regulated by a licensing system, and tariffs and import quotas ensured that local manufacturers were shielded from competition. After 1991, the government reduced tariffs, eased restrictions on foreign direct investment, devalued the currency, and removed controls over exports (except for agricultural products). Between 1999 and 2001, the telecommunications sector was opened to competition, and new investors were encouraged to apply for licenses; trade barriers were further relaxed, lifting the controls over the importation of consumer goods, and the insurance industry was opened up to competition (Krueger and Chinoy, 2002; Zhao, 2003). Government-owned technology parks were set up in a “privileged sphere” as “an extension of the global information economy” (Upadhya, 2004: 5148), with special arrangements designed to boost foreign investment and generate income from information technology–related services. The software industry was nurtured by supportive labor and tax laws, such as having to pay no tax for the first five to eight years (OECD, 2007). The transition from planned economies to market economies of the two most populous nations in the world, China and India, resulted in a rapid expansion of the world economy and provided opportunities for increased capital accumulation and wealth concentration. Although both India and China provide cheap labor for global production chains, they do not directly compete with each other. China provides cheap labor for manufacturing, and India provides cheap labor for the software and information technology industries. Entrepreneurs in both nations have benefitted from their ability to exploit their nation’s human resources, becoming exceptionally wealthy in a relatively short period of time.

Wealth inequality Wealth inequality can be measured in a variety of ways; however, it is difficult to track trends over time due to a lack of comparable data. Some attempts have been made to provide comprehensive measures of wealth inequality at various points in time. For example, Davies et al. (2009) estimated the wealth Gini1 coefficients – one measure of within-nation inequality – for 140 nations at the turn of the century. According to their estimations, the world wealth Gini coefficient in the year 2000 was 0.804, indicating a high level of inequality on a global level. The level of inequality within nations in the Asia/ Oceania region varied from 0.547 for Japan to 0.764 for Indonesia (see Table A.2 in the Appendix). Davies

The rise of China and India’s TCC  61 Table 4.1  Measures of within-nation inequality Nation

2000 wealth Gini coefficient

Percent of total wealth held by wealthiest 10 percent

Percent of total wealth held by poorest 10 percent

Ratio of median to mean wealth/adult

Japan China Australia India Indonesia

0.547 0.550 0.622 0.669 0.764

39.3 41.4 44.9 52.9 65.4

0.5 0.7 -0.1 0.2 0

0.59 0.55 0.59 0.40 0.28

Source: Author’s calculations based on figures published by Davies et al. (2009).

et al. (2009) also estimated the percentage of total household wealth held by the wealthiest 10 percent of households and the poorest 10 percent of households for several nations, including Australia, Japan, China, India, and Indonesia. Table 4.1 lists the wealth Gini coefficient and the percentage share of total wealth held by the wealthiest 10 percent of households and the poorest 10 percent of households in selected nations at the turn of the century. Another indication of the distribution of wealth within a nation is the comparison of median wealth/ adult to mean wealth/adult. The closer the ratio is to one, the less skewed the distribution. Using the estimations of median wealth/adult and mean wealth/ adult measured using purchasing power parity (PPP) exchange rates by Davies et al. (2009), it is possible to calculate the ratio of median wealth/adult to mean wealth/adult for Australia, Japan, China, India, and Indonesia at the turn of the century. More recently, Keating et al. (2012) estimated the median wealth/adult and mean wealth/adult in 2012 U.S. dollars for several nations, including Australia, Japan, China, India, and Indonesia, allowing for a comparison of trends over time for these nations. Table 4.2 lists the mean wealth/adult, median wealth/adult, and the ratio of median to mean wealth. In Australia, mean wealth/adult was US$354,986 and median wealth/adult was US$193,653. The ratio of median wealth/adult to mean wealth/adult was 0.55. The ratio of median wealth/adult to mean wealth/adult was 0.52 in Japan, 0.39 in Korea, 0.37 in Singapore, 0.37 in China, 0.22 in India, and 0.21 in Indonesia. Taken together these ratios indicate that wealth inequality has increased over time, with the ratio declining from 0.59 to 0.55 in Australia, from 0.55 to 0.37 in China, and from 0.4 to 0.22 in India. These results confirm trends identified in previous research. For example, Brenner estimated that in 1988 the wealth Gini coefficient for China was 0.30 (McKinley and Brenner, 1999). According to the estimations of Li and Zhao (2007: 14), wealth Gini coefficient was 0.40 in 1995 and 0.55 in 2002, indicating that there was a rapid increase in wealth inequality in China in the latter part of the 20th century. Li and Zhao (2009: 106) also found that the percentage

62  Jenny Chesters Table 4.2  Comparison of wealth/adult and median wealth/adult of selected nations in 2012

Australia Japan Singapore Korea China Indonesia India

Mean wealth/adult

Median wealth/adult

Ratio

$US 354,986 269,708 258,117 69,646 20,452 10,842 4,250

$US 193,653 141,410 95,542 27,080 7,536 2,293 938

0.55 0.52 0.37 0.39 0.37 0.21 0.22

Source: Author’s calculations based on figures published by Keating et al. (2012).

of total wealth held by the wealthiest 10 percent increased from 31 percent to 41 percent between 1995 and 2002, and the percentage share of total wealth held by the poorest 20 percent declined from 5.8 percent to 2.8 percent. Li and Zhao attribute this rapid increase in wealth inequality to the increasing wealth gap between rural and urban households in China. As property prices in the cities increased, land values in rural areas decreased.

Billionaires in the Asia/Oceania region Forbes has published lists of the wealthiest individuals on an annual basis since 1987, providing data on the wealth holdings of billionaires located in the Asia/ Oceania region. These lists are compiled by journalists; therefore, their validity is linked to the extent that the wealth holdings are public knowledge (Atkinson, 2006: 6). Due to the reluctance of national governments to routinely collect data on the wealth holdings of individuals, these lists provide the only comparable data on the wealth holdings of wealthy individuals. Wealth is defined as the current value of all marketable assets, less the current value of debts. The values are converted to U.S. dollars using the exchange rate current at the time each list is compiled. Consequently, the wealth of individuals residing outside of the U.S. is determined to some extent by the exchange rate between the U.S. dollar and the currency of the country in which they reside and/or hold investments at the time each list is compiled. In this chapter, I use data on net worth, country of residence, and source of wealth. The total net worth variable is a continuous measure ranging from US$1 billion. The values are adjusted to account for inflation using the annual yearly consumer price index (CPI) published by the U.S. Bureau of Labor Statistics (2012). I convert the values for each year into 2011 U.S. dollars by multiplying the value by the CPI for 2011 and then dividing that figure by the CPI for the relevant year. For example, to convert the 2001 value into 2011 dollars, I multiply the 2001 value by 224.9 (the CPI for 2011) and then divide that figure

The rise of China and India’s TCC  63 by 177.1 (the CPI for 2001). In 2001, Forbes included information on country, but did not specify whether this pertains to country of residence or country of citizenship, and in 2002 only country of citizenship is listed. I used the information from later years where possible to code country of residence in these years. If the individual was only listed in these years, I used the country/country of citizenship information for country of residence. I restrict my analyses to billionaires located in the Asia/Oceania region. Between 2001 and 2011, the number of billionaires located in the Asia/ Oceania region increased from 76 to 333, and billionaire wealth increased from US$204 billion to US$978 billion. Table 4.3 lists the number of billionaires in each nation, with at least one billionaire between 2001 and 2011. The number of billionaires residing in each nation, except Japan, increased between 2001 and 2011. In 2001, 29 of the 76 billionaires located in this region were residents of Japan, and in 2011, 27 of the 333 billionaires located in this region were residents of Japan. China experienced the most dramatic increase in the number of billionaire residents, increasing from one in 2001 to 120 in 2011. The number of billionaires located in India increased from four to 51 between 2001 and 2011. The graph in Figure 4.2, derived from Table A.3 in the Appendix, charts the trends over time in the distribution of billionaires located in selected nations in the Asia/Oceania region, providing evidence of the redistribution of billionaire wealth within the region. The percentage of regional billionaires located in China increased from 1  percent to 36 percent, whereas the percentage of regional

Table 4.3  Distribution of billionaires in Asia/Oceania region: 2001–2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Australia 3 China 1 Hong Kong 14 India 4 Indonesia 2 Japan 29 Malaysia 4 New Zealand 1 Pakistan 0 Philippines 3 Singapore 6 South Korea 2 Taiwan 5 Thailand 2 Total 76

3 1 12 5 1 25 5 0 0 4 5 2 5 2 70

3 0 12 6 1 19 3 0 0 2 5 2 5 2 60

5 0 17 8 1 22 4 0 0 2 6 2 10 2 79

6 2 18 9 2 24 5 0 0 3 5 3 7 3 87

6 10 14 11 11 17 8 19 46 30 71 120 21 28 32 21 29 39 19 33 50 21 47 51 2 2 3 3 5 11 27 25 25 17 23 27 7 8 7 5 8 8 2 3 3 3 3 3 0 0 0 0 1 0 3 3 2 2 2 4 5 5 8 4 7 9 4 8 11 4 10 15 5 8 7 5 15 25 3 3 3 3 3 4 112 155 211 129 235 333

Note: Although Hong Kong is now part of China, Forbes continues to list the billionaires residing in Hong Kong separately. Source: Author’s calculations based on data published by Forbes, selected issues (2001–2011).

64  Jenny Chesters

Percent

Distribuon of Asia Oceania billionaires 2001 2011 45 40 35 30 25 20 15 10 5 0

Australia China Hong Kong India Japan other

Figure 4.2  Distribution of billionaires within the Asia/Oceania region: 2001–2011 Source: Author’s calculations based on data published by Forbes, selected issues (2001–2011).

Table 4.4  Distribution of billionaire wealth in Asia/Oceania region: 2001–2011

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Australia

China

Hong Kong

India

Japan

Other

Total wealth

% 3 3 4 5 5 4 5 6 6 4 5

%

% 25 24 26 27 27 27 25 20 22 19 18

%

% 44 35 34 30 29 20 13 9 14 10 8

% 21 29 25 27 25 24 21 16 19 19 22

$US 2011 204 170.2 142.3 218 261.1 332.5 507.2 757.3 342.2 706.5 978

1 1 0 0 1 3 5 12 13 20 25

7 8 11 12 13 20 30 38 25 27 22

Source: Author’s calculations based on data published by Forbes, selected issues (2001–2011).

billionaires located in Japan decreased from 38 percent to 8 percent between 2001 and 2011. Although the number of billionaires located in Hong Kong increased from 14 to 39, the percentage of regional billionaires located in Hong Kong declined from 18 percent to 12 percent. India accounted for a greater share of regional billionaires in 2011 with 15 percent, compared to just 5 percent in 2001. Table 4.4 lists the total wealth held by billionaires in the Asia/Oceania region and the percentage share of billionaire wealth held by billionaires located in selected nations for the years between 2001 and 2011 (refer to Table A.4 in the Appendix for the actual dollar amounts). In 2001, billionaires located in Japan held 44 percent of total billionaire wealth (US$204 billion) and billionaires located in Hong Kong

The rise of China and India’s TCC  65 held 25 percent of total billionaire wealth. In 2011, billionaires located in Japan held just 8 percent of total billionaire wealth. The percentage share held by billionaires located in Hong Kong declined to 18 percent. However, the percentage share of total billionaire wealth held by billionaires located in China and India increased between 2001 and 2011: from 1 percent to 25 percent in China and from 7 percent to 22 percent in India. Summing up, between 2001 and 2011, Japan’s share of billionaires declined from 38 to 8 percent, and its share of billionaire wealth declined from 44 to 8 percent. Hong Kong’s share of billionaires declined from 18 to 12 percent, and its share of billionaire wealth declined from 25 to 18 percent. China’s share of billionaires increased from 1 to 36 percent, and its share of billionaire wealth increased from 1 to 25 percent. India’s share of billionaires increased from 5 to 15 percent, and its share of billionaire wealth increased from 7 to 22 percent. In 2011, the wealth of the 120 billionaires residing in China averaged out at US$2.02 billion, and the wealth of the 39 billionaires residing in Hong Kong averaged out at US$4.5 billion, indicating that billionaires residing in China were less wealthy than those residing in Hong Kong.

Source of wealth Using data on the source of wealth and the comments compiled by the Forbes (2011) team of journalists, it is possible to examine the links between billionaires within the Asia/Oceania region. The rapid growth of China, particularly during the past decade, spawned a huge increase in the number of billionaires within China and in the surrounding region. Rapid economic growth requires resources, and those with control over scarce resources were able to acquire large fortunes in less than a decade. An examination of the source of wealth data provided by Forbes (2011) shows that 19 of the 120 billionaires located in China in 2011 were involved in real estate development. For example, Wu Yajun’s net worth of US$5.5 billion in 2011 was principally derived from listing her real estate development company, Longfor Properties, which develops properties in profitable, first-tier cities, on the Hong Kong stock exchange. Hui Ka Yan, with a net worth of US$5.1 billion in 2011, founded Evergrande Real Estate, which is now listed on the Hong Kong stock exchange. Evergrande develops real estate in 60 cities located throughout China. Wang Jianlin, chairman of the Dalian Wanda Group, was worth US$4.6 billion in 2011. The Dalian Wanda Group owns commercial properties such as shopping malls and hotels. Yang Huiyan, worth an estimated US$4.1 billion in 2011, is the main shareholder of Country Garden Holdings, one of China’s largest property developers. Apart from land, property development requires construction materials such as steel. Liang Wengen, worth an estimated US$8 billion in 2011, is the chairman and main shareholder of the Sany Group, one of China’s largest construction equipment manufacturers. His three partners in the Sany Group are also billionaires – Tang Xiuguo (US$1.2 billion), Mao Zhongwu (US$1.1 billion), and Xiang Wenbo (US$1.1 billion). Li San Yim, worth an estimated US$2.1 billion in 2011, is the chairman of Lonking, a manufacturer of construction

66  Jenny Chesters equipment. The fortune of He Xiangjian, estimated to be US$5.5 billion in 2011, is also linked to property development. He Xiangjian’s Midea Group is one of the world’s largest electronic and home appliance makers (washing machines, refrigerators, and air conditioners). Zhang Jindong is the chairman of Suning Appliances, China’s largest electrical appliance retailer, and was worth around US$5 billion in 2011. Summing up, the rapid urbanization of China has created vast fortunes for a relatively select group of individuals involved in property development and in supplying materials for the construction and habitation of housing stock. Although Hong Kong is now part of China, Forbes continues to list billionaires in the province separately. As Harris (2012) notes, this is the standard practice of international business journals. The links between billionaires in Hong Kong and China are tightening as capitalists in Hong Kong become more integrated with China (Harris, 2012). Li Ka-Shing, worth an estimated US$26 billion in 2011, owns Cheung Kong and Hutchinson Whampoa, the world’s largest operator of container terminals. Among other things, he is also the major supplier of electricity in Hong Kong and is a real estate developer in China. Lee Shau Kee, worth an estimated US$19 billion in 2011, is one of Hong Kong’s largest property developers. He also has stakes in government-controlled energy companies PetroChina and China Gas. Hui Wing Mau, worth US$3.3 billion in 2011, was a pioneer of the real estate industry in China in the 1990s, developing property in Shanghai and other cities. Or Wei Sheun is a property investor and developer worth around US$2 billion, with projects in Hong Kong, Macau, and mainland China. The fortune of Australia’s richest person, Gina Rinehart, is closely linked to rapid economic growth in China. Rising exports, coupled with high iron ore prices, have seen her wealth increase from AU$1.8 billion (Australian dollars) in 2006 to AU$22 billion in 2013 (BRW, 2013). Rinehart’s father, Lang Hancock, and his business partner, Peter Wright, discovered large iron ore deposits in the Pilbara region of Western Australia in the 1950s. The cost of developing mines and transporting the iron ore delayed the full exploitation of the deposits until recently. Higher prices for resources, due to the expansion of the Chinese and Indian economies, have resulted in a flurry of activity in the mining sector in Australia, providing super profits to a handful of mining magnates, including Rinehart, Andrew Forrest, Chris Wallin, Clive Palmer, and Angela Bennett (the daughter of the late Peter Wright). Media magnate and owner of the Caterpillar franchise, which supplies earthmoving and construction equipment in Australia and China, Kerry Stokes has also benefitted from China’s rapid urbanization and the mining boom. Rinehart’s wealth increased by 600 percent between 2001 and 2006, and by a further 1,000 percent between 2006 and 2013 (see Table A.5 in the Appendix). Between 2006 and 2013, Forrest’s wealth increased by 650 percent, Bennett’s wealth increased by 195 percent and Stokes’s wealth increased by 180 percent. Palmer and Wallin were not listed in the BRW Richest 200 Australians list in 2006, but were worth AU$2.2billion and AU$2.8billion in 2013, respectively. In many cases, Australian billionaires have partnered with Chinese companies to develop resources in Australia – for example, Clive Palmer’s rocky partnership

The rise of China and India’s TCC  67 with the Chinese government–backed conglomerate CITIC Pacific to develop a AU$7 billion iron ore mine in the Pilbara (BRW, 2013). Gina Rinehart sold 30 percent of one of her iron ore mines, Roy Hill 1, to Japanese and Korean companies for US$3.2 billion in 2012. She also has a joint venture with GVK, based in India, to develop coal mines in Queensland (Ferguson, 2012).

Asia/Oceania transnational capitalist class Although Sklair (2005) identifies four fractions of the transnational capitalist class (TCC), the fortunes and behavior of global billionaires suggest that perhaps they form a fifth fraction within the TCC, or align more closely to the more exclusive definition of the TCC proposed by global capitalism school scholars. Global billionaires are not necessarily executives of TNCs, they are not globalizing bureaucrats, and they are not globalizing politicians, professionals, or consumerist elites. Yet they focus on global rather than local circuits of capital accumulation (Robinson, 2010) and lobby governments to adopt policies that protect global rather than local interests. Australian billionaires are increasingly integrating into this TCC, realizing that their fortunes are reliant on their relationships with other regional billionaires, particularly those in China and India. According to media reports, Gina Rinehart, Australia’s richest person, invited several Australian politicians to accompany her to the wedding of the granddaughter of G.V. Krishna Reddy, her business partner and the founder of GVK, one of India’s largest energy and infrastructure companies (Robertson and Swan, 2013). The politicians, now members of the government, cited their attendance at the wedding as an opportunity to further the economic links between Australia and India. Interestingly, the Australian government is currently negotiating an agreement to sell uranium to India, despite the fact that India is not a signatory to the nuclear nonproliferation treaty (March, 2013). The rapid economic growth in China, coupled with the uncertainty created by marketizing the economy without democratizing the political system, has encouraged many wealthy Chinese citizens to relocate to neighboring nations such as Australia. With uncertainty surrounding the political, social, and economic future of China, some Chinese billionaires see an Australian passport as an astute investment, providing protection from the volatile and at times dangerous business conditions (Andrews, 2013). Given the rapid pace of economic growth and development, the lack of a strong regulatory regime overseeing business and market operations has created uncertainty about the legitimacy of wealth amassed by the billionaires; therefore, having a “stay out of China” card is almost a necessity to securing their wealth (Andrews, 2013). Data published in the BRW Rich 200 list show that, in 2013, three Chinese property developers held Australian citizenship: Hui Wing Mau, Ye Lipei, and Chau Chak Wing. Hui Wing Mau was born in China, migrated to Hong Kong in the late 1970s, and is now an Australian citizen. Ye Lipei was born in Shanghai and moved to Australia in 1980, but invested heavily in Shenzen’s property market. He returned to China in 1989 with an Australian passport. Since the 1990s,

68  Jenny Chesters Ye’s companies have concentrated on developing large-scale projects in Shanghai. Ye has an estimated net worth of AU$600 million and is currently based in Shanghai. Chau Chak Wing was born in Guangdong, China and became an Australian citizen in the 1990s before relocating to Hong Kong. He is a property developer in the southern Chinese city of Guangzhou and has an estimated net worth of AU$1.05 billion.

Conclusion This chapter provides evidence that rapid economic expansion in China and India resulted in a redistribution of wealth, both within the Asia/Oceania region and within nations located in the region. Between 2001 and 2011, GDP/capita increased by 500 percent in China and 300 percent in both India and Australia. Between 2000 and 2012, the ratio of median wealth/adult to mean wealth/adult declined from 0.59 to 0.55 in Australia, from 0.55 to 0.37 in China, and from 0.40 to 0.22 in India, indicating that the distribution of wealth became increasingly skewed towards the top as average wealth moved further away from median wealth. The rapidly expanding economies generated new wealth and increased the number of billionaires in the region from 76 in 2001 to 333 in 2011. Although evidence of the development of a regional transnational capitalist class comprised of billionaires located in Australia, China, and India appears to support global capitalism school theories, the existence, or otherwise, of Sklair’s other TCC fractions, or what Robinson and Harris describe as transnationally oriented elites, was not examined in this paper and provides an avenue for future research.

Acknowledgments The data used for this chapter come from the global inequality data set compiled by Jenny Chesters, University of Canberra, Jesper Roine, Stockholm School of Economics, and Daniel Waldenstrom, Uppsala University.

Appendix Table A.1  GDP/capita (2001–2011), selected nations for Figure 4.1

Australia China Hong Kong India Japan World

2001

2003

2005

2007

2009

2011

Change 01/11

19541 1042 25230 460 32716 5188

23446 1274 23977 558 33691 5919

33945 1731 26650 732 35781 7030

40461 2651 30552 1055 34095 8386

42333 3749 30562 1131 39473 8502

61789 5445 35156 1509 45903 10040

3.16 5.23 1.39 3.28 1.40 1.94

Source: World Bank (2013)

Table A.2  Wealth Gini coefficients for Asia/Oceania nations in 2000 Nation

2000 wealth Gini coefficient

Nation

2000 wealth Gini coefficient

Japan China Korea Australia New Zealand Taiwan Bangladesh Sri Lanka India Viet Nam

0.547 0.550 0.579 0.622 0.651 0.655 0.660 0.665 0.669 0.682

Singapore Pakistan Fiji Thailand Cambodia Philippines Malaysia Hong Kong Indonesia World

0.689 0.698 0.709 0.710 0.714 0.717 0.733 0.740 0.764 0.804

Source: Davies et al. (2009)

Table A.3  Distribution of billionaires (2001–2011) for Figure 4.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Australia

China

Hong Kong

India

Japan

other

Total

% 4 4 5 6 7 5 6 7 9 5 5

% 1 1 0 0 2 7 12 22 23 30 36

% 18 17 20 22 21 19 18 15 16 12 12

%  5  7 10 10 10 17 21 24 16 20 15

% 38 36 32 28 28 24 16 12 13 10  8

% 33 34 33 34 32 28 26 21 22 23 24

n=  76  70  60  79  87 112 155 211 129 235 333

Source: Forbes billionaires lists (2001–2011)

Table A.4  Billionaire wealth of selected nations

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total

Australia

China

Hong Kong

India

Japan

Other

204 170.2 142.3 218 261.1 332.5 507.2 757.3 342.2 706.5 978

6 5.6 5.4 10.6 14.2 14.8 23.4 41.8 20.7 29.6 53.3

1.3 1 0 0 3.1 11.3 27.8 93.6 46 143.9 242.2

50.6 40.5 36.6 58 71.4 90.4 128.7 151.7 75.8 136.5 175.5

14.2 14 15.2 25.7 33.4 67.7 153.6 284.4 85.5 190 211.1

89.3 59.2 48.9 65.4 74.9 66.9 66.1 68 48.5 70.1 77.7

42.6 49.9 36.2 58.3 64.1 81.4 107.6 117.8 65.7 136.4 218.2

Source: Forbes billionaires lists (2001–2011)

70  Jenny Chesters Table A.5  Wealth of Australian billionaires associated with mining: 2001–2013

Rinehart Forrest Palmer Wallin Bennett Stokes

2001

2006

2013

Percent change 2001/06

Percent change 2006/13

AU$2013 billion

AU$2013 billion

AU$2013 billion

%

%

0.35