Introduction

The world situation today remains marked by a comprehensive multi-dimensional crisis- economic, social, food—related and ecological. That is seriously shaking the capitalist world.

Despite the discourses on the "end of recession" or "exit, the reality of the world economy remains determined by major contradictions that lead to "depression" in the crisis, mass unemployment, a considerable increase in poverty (more than 1 billion people live under the poverty threshold) and an ever growing risk of ecological disaster.

What is certain is the speed of global economic crisis from one spread recession with negative growth rates (3-4% in the U.S. and Europe and l-1.5% globally). In Asia, the growth rates increased 7% even if it is with a series of contradictions which contrasts with the “soft" growth of l.5% in the U.S. and the very low growth of euro zone at 0.3%.

In the US and Europe, these small recoveries represent in fact a slowdown of the crisis. But this is above all the results of massive interventions by the states which refloated the international banking system (thus allowed the resumption of the expansion of the speculative bubble). Moreover, the effects of what are called "social stabilizers" which are all the public devices of assistance and social security especially in Western Europe also widely contributed to the slowdown of the global economic catastrophe.

These massive and partially coordinated interventions by the states explain the big difference of "why" and “how" of the crisis of the 1930s.

The US still retains a dominant position but what should also be noted is the rise of power of the economies of Brazil, Russia, India and China (BRIC). China’s share in world GDP continues to grow with growth rates of 6% when the rest of the world was in recession and more than 10% when the world economy experience phases of expansion. Despite this, China has not yet replaced the US as the world’s biggest economy.

Main Points

1. The systematic causes of the current economic crisis

Our contemporary history can be described on that of the conquest of the world by an even smaller of huge conglomerates organized into multinational corporations. These corporations have been engaged in a permanent war with one another to control markets with the shared aim of subordinating all human endeavours to the logic of private profit.

The processes of capital accumulation and concentration have long been with us but in recent times they have been dramatically accelerated as a result of a number of technological upheavals e.g. transformations of data storage, processing and transmission techniques, etc.

The propagation and massive influences of the dominant ideology of the world’s ruling class (big multinational corporations)- the neoliberal have been made possible by these multi-media technology.

The programs of deregularization and privatization have been implemented by the states and govemments and made then eventually as non- functional and their role as elected legitimate official null and void.

There has been continuing attempt to submit the whole of human activity to the market order and the rule of profits. No sphere can escape this process, neither the protection of privacy, nor the right to breathe unpolluted air nor the use of human genes. Everything can become a commodity, including spirituality and enter the circuits of capital in order to be made profitable.

For the neo—liberal framework, political model is that of market democracy in which the legitimacy of government obtained through universal suffrage is subordinated to the sovereignty of markets, always at the ready to punish elected governments. As spaces for the peaceful resolution of social conflicts, political institutions have been reduced to shells of their former selves. They are more window dressing, keeping up the democratic illusion in governments that are less and less so. Behind this facade of virtual democracy, even more sophisticated techniques of surveillance and social control are developed and given into the hands of those holding the reigns of capitalist power. And as we might have already known, networks of computerized files obtained social networking can be accessible to all for a cheap price or even for free today, encircle personal and professional lines.

2. The neo-liberal globalization framework for capitalist development has failed.

The greed of the world capitalist- economic warlords cannot be moderated. lt has gone to the extent that they even use fictitious capital (virtual capital) to extract profits more and more profits from the global poor. And the speculative bubble had burst.

One can see that this kind of crisis have spared no one from the central to peripheral states and countries. There are outright drops (or stoppage) in production and consumption as well as nosediving trend of their rate of growth. The global capitalists have shifted to forcing the governments or states

of countries in the world to assume responsibility of their capitalist mess-socializing the debt and privatizing the profits.

The direct results of this failure has been massive unemployment and disappearance of social benefits because the governments of even the advanced capitalist countries have to obey the austerity policies of the multilateral bodies like the International Monetary Fund (IMF) or the World Bank. Most of these governments can’t even pay their loans and even have to restructure them e.g Greece and Portugal in Europe and the US which is the epicenter of this crisis. There is a big problem now with President Barrack Obama and the Republican Party to increase the loan ceiling from $l3.4 trillion.

This situation does not even stop the creditors or banks to make loans from the multi-lateral bodies with low interest rates and have these governments in crisis make loans from them with much higher interest rates.

3. The impact of the crisis on the Asia economy and the place of Asian capitalism in the world system in general

The impact of the crisis to Asia has been limited since Asian banks were not much engaged in subprime loans and toxic products like the European and US banks. With the exception of South Korea, Asian

countries did not rely on short-term capital and bank loans for financing their economies. And here, they were able to avoid or escape debt trap like Eastern Europe or Greece. Asia, especially China have accumulated huge amount of currency reserves.

Asia countries were hit by the fall of their export because of the slump in demand from North America and Europe. As a general rule, the recessive impact has been stronger in the most open Asian countries whose efforts were concentrated on manufacturing and where the US was an importer.

For example:

Exports of manufactured product represent around:

70%- Malaysia

40%- Thailand and Cambodia

30%- China, S. Korea, Philippines and Vietnam

l0- India and Pakistan

The three biggest and most populated countries in Asia (China, India and Indonesia) have not experienced a single quarter of recession between 2008 and 2009.

4. The role of China in geopolitics and world economy

China is the biggest trade partner of many Asian countries and the central hub of international and regional production networks. lt is the country where rebalancing growth is of the outmost importance. It combines the most blatant imbalances. It is a country where surplus and its corollary, foreign reserves are massive, where savings as a proportion of GDP are the highest and the households’ consumption the lowest. For instance in 2007, the share of households consumption in the GDP had reached a historical low point of 35 percent. The share investment was very high with 40% of the GDP and the current account surplus registered a record level of 10% of the GDP.

China had resisted to the 2008 international crisis because of secure plan combined huge public spending, low interest rate and consumption subsidies. lts growth in 2009 was 9% and 10.3% the following year. It has maintained unemployment to a sustainable level. Furthermore, it has overtaken Japan in 2010 in terms of GDP and is closing the gap with the US (2015?).

The country has debt to GDP ratio of 19% which means it could expand its public spending RmB 4,000 B allocated for public spending where RmB 1,180 B was actually financed by central budget (2008-9009).

It had invested RmB 20,000 B to real estates and infrastructure operated by state companies. These have perverse effects:

a. It fueled speculations in real estate and housing which is 25% of the investment growth in 2009 came from real estates which prices had soared by 24% in 2009 and 11% in the first five months of 2011.

b. It has created a vast amount of potential non-performing loans since many projects are not profitable at all. Banks which financed 90% of the investments are getting fragile.

c. It had increased public debt. The consolidation of local authorities "debt" into the rational public debt lead to a debt to GDP ratio of7l% in 2009.

The problem is that once a speculative bubble has been formed, it is very difficult to deflate it without creating damage and local authorities depend on real estate for around 20% of these fiscal reserves.

d. In mid 2010, Chinese workers did not accept anymore to be exploited and strikes spread out in the summer of that year. The workers fight for wage increase, improvement of working conditions and struggle to organize and to bargain.

The government’s reactions to all these were carefully managed because inflation was on the rise (food products in mid-2010). lt fears that the waves of discontent were going to spread out and could not be controlled and scenario of Tunisia and Egypt would unfold.

e. Re-balancing Asian growth can only be achieved by a concentrated wage increase and the establishment of a social security system in Asian countries, although China is powerful enough to do it on its own. These moves should pave the way for a more self-centered economy at the regional levels which would be less dependent on export and therefore less sensitive to international crisis.

They should be measures for social justice for Chinese and specifically and Asian workers in general who have suffered for decades from low wages, dirty and dangerous jobs for the sake of export competitions and capitalist profits.