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Crisis - Tax - China

The crisis is global

Farid Abdi argues that the developing world's growth rates show that they have escaped the crisis and are in fact enjoying an economic boom (Feedback, Socialist Review , December 2010).

This argument echoes the boosters of "decoupling" who, as the New York Times points out, believe that emerging markets "no longer depend on the United States for growth, leaving them insulated from a severe slowdown there, even a fully fledged recession".

Of course, it is true that global patterns of production and consumption are changing as industrialisation in the developing world creates new markets for consumer goods in the Global South. But to imagine this protects these economies from the recession seriously underplays the interconnectedness of global capitalism.

Fundamental to the growth of emerging markets is China. The Chinese stimulus package amounted to 4.8 percent of its 2008 GDP. Cheap credit and capital investment in infrastructure dragged the emerging economies that have oriented on supplying China with manufactured goods and raw materials into growth.

This is not restricted to the developing world - Germany posted record breaking second quarter growth as Chinese demand for high-end manufactured goods boosted German exports.

The three examples of capital investment growth that Abdi mentions - Nigeria, Indonesia and Vietnam - are all major suppliers of oil and raw materials to China. So the continued growth of the emerging markets is intrinsically linked to the health of the Chinese economy.

But there are huge questions over the sustainability of China's policy. The stimulus has led to inflation and a property bubble in China. Chinese exports will struggle to find markets in the North, where austerity and stagnation depress demand, or the South, where wages are low. This is why the entire global economy is indeed on a precipice. There are no regional solutions to the crisis of capitalism.

Jonny Jones
London


Tax doesn't have to be taxing

How much is the government failing to collect in taxes? This is a crucial political question for us when we argue that the cuts are unnecessary and that money is available for public services.

But we seem to be relying on two different, and somewhat contradictory, figures. The PCS union's estimate - based on research by Tax Research UK - suggests a total figure of £123 billion (comprising £28 billion unpaid, £70 billion evaded and £25 billion avoided).

But Joseph Choonara (Frontlines, Socialist Review, November 2010) uses HM Revenue and Customs' substantially lower figure of £42 billion.

Which of these is more accurate?

There has been considerable debate over the discrepancy in parliament, and the government are clearly embarrassed by the issue. Their response to the report, and a reply from the authors, can be found at www.taxresearch.org.uk (the associated blog is also useful).

The recent protests at Vodafone and Topshop stores over unpaid taxes have shown the potential for the "tax gap" to act as a lightning rod for people's anger about the crisis. But we have to be clear and consistent with our own figures if we are to intervene in this argument effectively.

Ben Windsor
London


No friend of the working class

We should be careful about supporting Chinese dissident Liu Xiaobo (Feature, Socialist Review, December 2010). While socialists should obviously not support his imprisonment and should be willing to fight alongside all those who are committed to the expansion of democratic rights in China, Liu is far from a friend of the Chinese working class.

Charter 08, of which Liu is a leading signatory, makes explicit its commitment to eliminating the few remaining gains of China's revolution. Under the section "What we advocate", it has as point 14 a declaration in favour of "the right to private property" as well as "the transfer of state owned enterprises to private ownership" and "a land reform that promotes private ownership of land".

The last of these is especially important as the fact that land is currently not offered for sale but is tied to households means that migrant workers at least have something to fall back on when they are fired at short notice, which is a regular occurrence.

Liu is also on record as having supported the imperialist wars in Iraq and Afghanistan. In these respects, he is on the same page as David Cameron. Why doesn't Socialist Review draw attention to the case of Zhao Dongmin, who is also imprisoned but is an actual labour activist?

Chen Duxiu
Via email