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Sukarno, like many Indonesians, including the PKI, believed the creation of a Malaysian federation was unwarranted regional interference by the British to maintain their colonial dominance.

Like its US and Australian allies, Britain feared a communist Indonesia. The PKI had three million members and was close to Mao’s China. In Washington the fall of the Indonesia “domino” into the communist camp was seen as a greater threat than the potential loss of Vietnam.

Suharto, appointed supreme army commander on 14 October, used the rebellion to undermine and eventually overthrow Sukarno, and as what historian John Roosa has called a “pretext for mass murder”: the elimination of the PKI in a series of massacres across Indonesia that resulted in the deaths of hundreds of thousands of people.

British intelligence agencies and propaganda specialists were complicit, carrying out covert operations to undermine Sukarno’s regime and eliminate the PKI by blaming them for the Untung coup.

What Gilchrist wanted and what became the unit’s mission was the production of black propaganda, apparently produced by patriotic Indonesian émigrés abroad, to stir Indonesian anti-communists into action.The influential targets of a propaganda newsletter, according to a declassified report by Wynne, would eventually include “as many personages in the hierarchy of government, army and civil service as we can find”.To disguise the British origin of the newsletter it was sent into Indonesia via Asian cities including Hong Kong, Tokyo and Manila.

“No, we do not cry out for violence,” the IRD propagandists wrote, “but we demand in the name of all patriotic people that this communist cancer be cut out of the body of the state.” The PKI “is now a wounded snake”, they wrote: “Now is the time to kill it before it has a chance to recover.”

Detailed historical research has established that the mass killings of PKI party members and alleged supporters appear to have been triggered by local army commanders or the arrival of army special forces, about three weeks after the botched coup had been put down by Suharto.During that period the media in Indonesia was full of black propaganda against the PKI and its alleged atrocities, as the army whipped up popular anger against communists and legitimised what Roosa has described as its “already-planned moves against the PKI and President Sukarno”.

The newsletters were approved by IRD in London before dispatch. Copies sent to senior Foreign Office officials were destroyed after reading at IRD’s request.

“Anyone who was leftist was picked up. They were very systematic. They targeted all the leftist groups and not just PKI. People kept themselves to themselves and only talked in whispers.”

As the massacres progressed in the autumn of 1965, IRD’s unit in Singapore reassured their readers as to the necessity of the slaughter.In Newsletter 21 they wrote: “Unless we maintain a vigorous campaign to eradicate communism … the red menace will envelop us again.”The stakes were life and death. “We are fighting for our lives and the very existence of Indonesia and we must never forget that. THE CATS ARE WAITING TO POUNCE!”In Newsletter 23 Winchester Road’s propagandists praised “the fighting services and the police” for “doing an excellent job”. Sukarno, then trying to restrain the generals, was wrong: “Communism must be abolished in all its forms. The work started by the army must be carried on and intensified.” The authors finished by equating the PKI to Hitler and Genghis Khan.

Reddaway had served in the army during the second world war before joining the Foreign Office and playing a key role in the establishment of IRD. After the failed Untung coup he arrived to take charge of the British operation. His brief was simple. In an interview in 1996 with two of the authors, he said he’d been given a budget of £100,000 by the Foreign Office and was told “to do anything I could do to get rid of Sukarno”. Only now do we know what “anything” fully meant.

In the 1996 interviews Reddaway boasted of manipulating the British and other global media to take an anti- Sukarno and PKI line but insisted IRD only passed on true facts and did not use black propaganda.As ever with IRD, Reddaway told us a partial truth. According to a memo he had written: “The bludgeon was surprisingly effective because we were able … to supply publicists with information which they could not find from other sources because of Sukarno’s censorship.”

“GCHQ could break and read Indonesian codes without difficulty. The government was among many third world countries using equipment supplied by Swiss-based company Crypto AG. For over 50 years, Crypto AG supplied secretly sabotaged cypher machines, with built-in back doors to which the CIA and GCHQ had keys.”

The newsletters remained the core work of Ed Wynne and his colleagues in Winchester Road. A key theme was to encourage their influential readers to support the army’s campaign against the communists. They urged Indonesian patriots: “The PKI and all it stands for must be eliminated for all time.”We now know that to do that they included sensationalised lies. On 5 November the pro-military Jakarta Daily Mail claimed that on the day of the Untung coup 100 women from PKI’s Gerwani women’s organisation had tortured one of the generals using razor blades and knives to slash his genitals before he was shot.The story of the torture and mutilation of the generals by the Gerwani women became part of the founding myth of Suharto’s regime, used to justify the destruction of the PKI. It was also, according to Roosa, a pretext for murder. A lie propagated by the Indonesian army, regurgitated and repurposed to incite IRD’s influential readers.

The IRD was deliberately silent on the massacres. One document from December 1965 says they should “do nothing to embarrass the generals” and the newsletter carefully itemises accounts of isolated incidents of PKI brutality but makes no explicit mention of the army’s killings.

By early 1966 the mass murders in Indonesia, if not their scale, were well known.In January Robert F Kennedy compared the massacres to “inhuman slaughters perpetrated by the Nazis and the communists” and asked when people would “speak out … against the inhuman slaughter in Indonesia, where over 100,000 alleged communists have not been perpetrators, but victims?”

Wynne regarded the operation as a success. In his 1966 annual report he proudly says his operation was “fairly successful” because all his enemies (Konfrontasi, Sukarno, Subandrio and the PKI) were “destroyed”.

According to Prof Scott Lucas of the University of Birmingham, the declassified documents show that: “Britain was prepared to engage in dirty deeds which ran contrary to its purported values.” They reveal, he says, “how important black propaganda was to give the illusion that Britain could wield global power – even if many people might be killed for that illusion”.

In chapter 7 of Imperialism, the Highest Stage of Capitalism, Lenin defined the five “basic features” of imperialism: (1) the concentration of production and capital developed to such a high stage that it created monopolies which play a decisive role in economic life; (2) the merging of banking capital with industrial capital, and the creation, on the basis of this “finance capital,” of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed.8

Marxist theories of imperialism (or concepts of imperialism inspired by the Marxist tradition) that evolved after the mid–twentieth century typically defined imperialism as a relationship of economic exploitation leading to unequal distribution of wealth and power on a global scale.9

In chapter 8 of Imperialism, Lenin further argued that export of capital was “one of the most essential bases of imperialism” because it allowed the imperialist countries to “live by exploiting the labour of several overseas countries and colonies.” The superprofits exploited from the colonies in turn could be used to buy off the “upper stratum” of the working class who would become the social base of opportunism in the working-class movement: “Imperialism means the partition of the world, and the exploitation of other countries besides China, which means high monopoly profits for a handful of very rich countries, creating the economic possibility of corrupting the upper strata of the proletariat.”14

imperialism must be a system where a small minority of the world population exploits the great majority. It cannot possibly be a system in which the majority exploits the minority.

From 2004 to 2018, China’s total foreign assets increased from $929 billion to $7.32 trillion. During the same period, China’s total foreign liabilities (that is, total foreign investment in China) increased from $693 billion to $5.19 trillion.16 This means China had a net investment position of $2.13 trillion at the end of 2018. That is, China has not only accumulated trillions of dollars of overseas assets but also become a large net creditor in the global capital market. This seems to support the argument that China is now exporting massive amounts of capital and therefore qualifies as an imperialist country.

Rather than “exploiting” the developed capitalist countries, such capital flight in fact transfers resources from China to the core of the capitalist world system.

while foreign investment in China is dominated by direct investment, an investment form consistent with the foreign capitalist attempt to exploit China’s cheap labor and natural resources, reserve assets account for the largest component of China’s overseas assets.

the United States and other developed capitalist countries simply do not have the production capacity to produce within a reasonable period of time the extra goods and services that may correspond to the more than three trillion dollars of foreign exchange reserves held by China

From the U.S. point of view, China’s accumulation of foreign exchange reserves (mostly in dollar-denominated assets) has essentially allowed it to “purchase” trillions of dollars’ worth of Chinese goods largely by printing money without providing any material goods in return. China’s reserve assets, rather than being a part of China’s imperialist wealth, essentially constitute China’s informal tribute to U.S. imperialism by paying for the latter’s “seigniorage privilege.”

An average rate of return of about 3 percent on China’s overseas investment obviously does not constitute “superprofits.” Moreover, foreign capitalists in China are able to make about twice as much profit as Chinese capital can make in the rest of the world on a given amount of investment.

China’s total stock of direct investment abroad in 2017 was $1.81 trillion, including $1.14 trillion invested in Asia (63 percent), $43 billion invested in Africa (2.4 percent), $111 billion invested in Europe (6.1 percent), $387 billion invested in Latin America and the Caribbean (21 percent), $87 billion invested in North America (4.8 percent), and $42 billion invested in Australia and New Zealand (2.3 percent).

China’s massive investments in Hong Kong, Macao, Singapore, Cayman Islands, and British Virgin Islands (altogether $1.41 trillion or 78 percent of China’s direct investment abroad) are obviously not intended to exploit abundant natural resources or labor in these cities or islands.

Much of the Chinese investment in these places may simply have to do with money laundering and capital flight

the structure of China’s overseas assets is very different from the structure of foreign assets in China. Out of China’s total overseas assets in 2018, 43 percent consists of reserve assets, 26 percent is direct investment abroad, 7 percent is portfolio investment abroad, and 24 percent is other investment (currency and deposits, loans, trade credits, and so on). By comparison, out of total foreign investment in China in 2018, 53 percent is foreign direct investment, 21 percent is foreign portfolio investment, and 26 percent is other investment.

about $158 billion (8.7 percent of China’s total stock of direct investment abroad or 2.2 percent of China’s total overseas assets) invested in Africa, Latin America, and the rest of Asia. This part of Chinese investment no doubt exploits the peoples in Asia, Africa, and Latin America of their labor and natural resources. But it is a small fraction of China’s total overseas investment and an almost negligible part of the enormous total wealth that Chinese capitalists have accumulated

Marxist theorists of imperialism already realized that, in the postcolonial era, imperial exploitation of underdeveloped countries mainly took the form of unequal exchange. That is, underdeveloped countries (peripheral capitalist countries) typically export commodities that embody comparatively more labor than the labor embodied in commodities exported by developed capitalist countries (imperialist countries). In the twenty-first century, global outsourcing by transnational corporations based on the massive wage differentials between workers in imperialist and peripheral countries may be seen as a special form of unequal exchange.22

if a country receives substantially more surplus value from the rest of the world than it transfers, then the country clearly qualifies as an imperialist country in the sense of being an exploiter country in the capitalist world system. On the other hand, if a country transfers substantially more surplus value to the imperialist countries than it receives from the transfer of the rest of the world, the country would be either a peripheral or a semi-peripheral member of the capitalist world system (depending on further study of the country’s position relative to other peripheral and semi-peripheral countries).

even if in the unlikely event that China turns out to be extremely successful in its effort to promote electric cars, it would at best replace no more than one-tenth of China’s current oil consumption.

Being a leading imperialist country, the United States benefits from its “seigniorage privilege.” Because of the other countries’ need to hold massive amounts of foreign exchange reserves in the form of dollar-denominated assets, the United States can “purchase” trillions of dollars of goods simply by printing money without providing material goods in return. The labor embodied in the U.S. “trade deficits” therefore should be treated essentially as unilateral transfers from the rest of the world and included in the unequal exchange.

Sources: “World Development Indicators,” World Bank, accessed May 31, 2021. Net labor transfer is defined as the difference between the total labor embodied in a country’s imported goods and services and the total labor embodied in the country’s exported goods and services. If the difference is positive, it constitutes a net labor gain; if negative, it constitutes a net labor loss.

in the neoliberal era, Chinese capitalism has functioned as a crucial pillar for the global capitalist economy by transferring surplus value produced by tens of millions of workers to the imperialist countries. At its peak, China’s net labor loss equaled 48 percent of China’s industrial labor force in 2007

Had there not been unequal exchange, the massive amounts of material goods currently supplied to the United States by the rest of the world would have to be produced through domestic production to maintain existing levels of U.S. material consumption. About sixty million workers (38 percent of the total U.S. labor force) would have to be withdrawn from service sectors and transferred to material production sectors. This would result in a massive reduction of services output (by about two-fifths of U.S. GDP) without raising levels of material consumption.

By 2015–17, while it would still take about five units of Chinese labor to exchange for one unit of U.S. labor and four units of Chinese labor to exchange for one unit of labor from other high-income countries, China had clearly established exploitative positions in South Asia and sub-Saharan Africa. One unit of Chinese labor can now be exchanged for about two units of labor from sub-Saharan Africa or four units of labor from South Asia. One unit of Chinese labor is roughly on a par with one unit of labor from the low- and middle-income countries of Latin America, Caribbean, Middle East, North Africa, Eastern Europe, and Central Asia. In addition, China has also established a significant advantage relative to other East Asian low- and middle-income countries.

The core countries specialize in quasi-monopolistic, high-profit production processes, and the peripheral countries specialize in highly competitive, low-profit production processes. Surplus value is transferred from the peripheral producers to the core producers, resulting in unequal exchange and concentration of world wealth in the core. By comparison, semi-peripheral countries have “a relatively even mix” of core-like and periphery-like production processes.23

From 1870 to 1970, the share of the world population that lived in countries with per capita GDP greater than 75 percent of the imperial standard varied between 10 percent (in 1950) and 17 percent (in 1913). This is a range consistent with the population share of “a handful of exceptionally rich and powerful states” suggested by Lenin.

reasonable to use 75 percent of the imperial standard as the approximate threshold between the core of the capitalist world system and the semi-periphery. It is important to note that this is only an approximate threshold and other important characteristics (such as state strength, degree of political and economic independence, technological sophistication, and so on) also need to be considered when deciding whether a country is a member of the core or simply has a core-like income level. For example, in 1970, among the wealthiest countries were rich oil exporters such as Qatar, Kuwait, United Arab Emirates, and Venezuela that clearly do not qualify as core countries.

From 1870 to 1970, the share of the world population that lived in countries with per capita GDP less than 25 percent of the imperial standard increased from 57 percent to 66 percent, suggesting widening global inequalities. I use 25 percent of the imperial standard as the approximate threshold between the periphery and the semi-periphery.

by 2017, as China’s per capita GDP advanced to 31 percent of the imperial standard, the structure of world income distribution was radically transformed. The share of the population that lived in countries with per capita GDP less than 25 percent of the imperial standard fell to 50 percent (the lowest since 1870). The share of the population that lived in countries with per capita GDP higher than 75 percent of the imperial standard narrowed to 12 percent. At the same time, the share of the population that lived in countries with per capita GDP between 25 and 75 percent of the imperial standard expanded to 38 percent (almost double the historical semi-peripheral share of the world population).

Neither capitalism nor imperialism is compatible with an arrangement where the majority of the world population exploits the minority, or even with a situation where a large minority exploits the rest of the world. Given the size of the Chinese population (almost one-fifth of the world population), if China were to advance into the core, the total core population would have to rise to about one-third of the world population. Can the rest of the world afford to provide sufficient surplus value (in the form of labor embodied in commodities) as well as energy resources to support such a top-heavy capitalist world system?

South Asia has recently overtaken China to become the largest source of net labor transfer in the global capitalist economy. In 2017, South Asia suffered a net labor loss of 65 million worker-years. All the low- and middle-income countries combined provided a total net labor transfer of 184 million worker-years in 2017

Assuming that China’s average labor terms of trade rises from the current level of about 0.5 (one unit of Chinese labor exchanges for about half of a unit of foreign labor) to about 2 (one unit of Chinese labor exchanges for about two units of foreign labor, similar to the current average labor terms of trade of the non-U.S. high-income countries), then the total labor embodied in China’s imported goods and services would have to rise to about 180 million worker-years. Rather than providing a net labor transfer of nearly 50 million worker-years, China will have to extract 90 million worker-years from the rest of the world. The total shift of 140 million worker-years represents about three-quarters of the total surplus value currently received by the core and the upper-level semi-periphery from the rest of the world and is roughly comparable to the total net labor transfer currently provided by all the low- and middle-income countries (excluding China).

to replace China’s current annual car production by electric vehicles would require the consumption of 120,000 metric tons of lithium annually. World total lithium production in 2018 was only 62,000 metric tons. Therefore, even if China uses up the entire world’s lithium production, it would only be sufficient to replace about one-half of China’s conventional car production.27

China was a typical peripheral country in the 1990s. In the early 1990s, China’s labor terms of trade was about 0.05. That is, one unit of foreign labor could be exchanged for about twenty units of Chinese labor. Since then, China’s labor terms of trade has improved dramatically. By 2016–17, China’s labor terms of trade rose to about 0.5. That is, two units of Chinese labor could be exchanged for about one unit of foreign labor. On balance, China remains an economy exploited by the imperialist countries in the capitalist world system, although the degree of exploitation has declined rapidly in recent years.

The world population in 2018 was 7.59 billion. Using the more generous 1.4 trillion metric tons as the global emissions budget for the rest of the twenty-first century, an average person in the future is entitled to an average annual emissions budget of about 2.3 metric tons per person per year (1.4 trillion metric tons / 80 years / 7.6 billion people). By comparison, China’s per capita carbon dioxide emissions in 2018 were 6.77 metric tons and the U.S. per capita carbon dioxide emissions were 15.73 metric tons.

From 1990 to 2013, China’s per capita carbon dioxide emissions surged from 2.05 metric tons to 6.81 metric tons. If this trend were to continue, China’s per capita carbon dioxide emissions would rise to 12.85 metric tons when China’s per capita GDP rises to $37,734 (75 percent of the imperial standard). If every person in the world were to generate this level of emissions every year between now and the end of the century, global cumulative emissions over the last eight decades of this century would amount to 7.8 trillion metric tons, leading to 5.5 degrees Celsius of additional warming (using the approximate calculation that every one trillion tons of carbon dioxide emissions would bring about 0.7 degrees Celsius of additional warming).

China’s current per capita carbon dioxide emissions are substantially above what would be predicted by the cross-country regression given China’s current income level. Using the cross-country regression, if China’s per capita GDP were to rise to $37,734, China’s per capita carbon dioxide emissions should be 8.67 metric tons. If every person in the world were to generate emissions of 8.67 tons every year between now and the end of the century, global cumulative emissions over the last eight decades of this century would amount to 5.3 trillion metric tons, leading to 3.7 degrees Celsius of additional warming. As the global average temperature is already about one degree Celsius higher than the preindustrial level, global warming by the end of the century would be 4.7 degrees Celsius. This will lead to inevitable runaway global warming and reduce the areas suitable for human inhabitation to a small fraction of the earth’s land surface.

In other words, climate stabilization and global ecological sustainability can be accomplished if every country either accepts a massive reduction of per capita income to peripheral levels or stays with the peripheral levels.

The currently available evidence does not support the argument that China has become an imperialist country in the sense that China belongs to the privileged small minority that exploits the great majority of the world population. On the whole, China continues to have an exploited position in the global capitalist division of labor and transfers more surplus value to the core (historical imperialist countries) than it receives from the periphery. However, China’s per capita GDP has risen to levels substantially above the peripheral income levels and, in term of international labor transfer flows, China has established exploitative relations with nearly half of the world population (including Africa, South Asia, and parts of East Asia). Therefore, China is best considered a semi-peripheral country in the capitalist world system.

Given its enormous population, there is no way for China to become a core country without dramatically expanding the population share of the wealthy top layer of the world system. The implied labor extraction (or transfer of surplus value) demanded from the rest of the world would be so large that it is unlikely to be met by the remaining periphery reduced in population size. Moreover, the required energy resources (especially oil) associated with China’s expected core status cannot be realistically satisfied from either future growth of world oil production or conceivable technical change. In the unlikely event that China does advance into the core, the associated greenhouse gas emissions will contribute to rapid exhaustion of the world’s remaining emissions budget, making global warming by less than two degrees Celsius all but impossible.