Report: China – Communist or Capitalist?
Introduction
Many observers ask whether China’s burgeoning growth and prosperity in recent times demonstrates the success of a communist regime, or is it instead the result of China adopting capitalist principles as its privatized and competitive businesses flood the West with manufactured goods? If the latter is the case, can China still be considered as a truly Communist state, or is it becoming a Capitalist nation ruled by a Communist government? This report examines the current situation, to answer these questions.
The Research
A special report by Simon Cox (May 28, 2012) in the Economist, entitled “Pedalling prosperity” discusses features of China’s growth in the last century. He notes that whereas China was once a nation of bicycles (more bikes than any other country in the world), cars are becoming more common on the roads than previously. Cox describes that as “one obvious sign of China’s rapid development.” He relates China’s growing economy to overloaded bicycles: “stable as long as they keep moving.” Cox describes how from 1990 to 2008, the number of people in the Chinese workforce increased by circa 145 millions, and productivity in that period grew by more than 9 percent annually. A measure of that productivity improvement is that what 100 people could produce in 1990 needed less than 20 people in 2008. Because of that, annual growth of between 8 and 10 percent has become essential to keep the economy on track.
This takes us back to the question in the title of this report; i.e. whether China is still a communist country, or has become a nation based on capitalist principles. The question was posed about a year ago on the online Yahoo answers forum under the heading: “Is china communist or capitalist?” The answer selected as the best was from a Professor Snow (2011), who averred: “The Chinese still call themselves communists, but now they’re also capitalists”. Professor Snow claimed that China is currently the global leader in the league of “dynamic capitalist nations” and in the year 2005 was labelled as the “world’s fastest-growing major economy”. He also called China the world’s manufacturing hub and noted how it is rapidly embracing high technology. As examples, Snow reported that China has more computer engineering graduates each year than the U.S., first class airports and deep water seaports, the latest research and development facilities and late model cars using modern highways.
However, communist ideology would suggest that all Chinese would be sharing in this new found growth and prosperity. According to Professor Snow, the opposite is true. He claimed that while those privileged Chinese leading this boom live in luxurious homes, eat in expensive restaurants and enjoy holidays in the best hotels and resorts, the poor of China are becoming even poorer. In Snow’s opinion, the only true Communists in China these days are members of the government. He reminded us that China is a one-party state (the Communist Party) and that Chinese citizens do not enjoy “freedom of speech or freedom of the press”. Dissent is simply not tolerated; anyone perceived to be a threat to stability of the state can be arrested and possibly subjected to brutal treatment. Snow also commented that civil liberty does not exist, nor do trade unions. Snow concluded by suggesting that China demonstrates that in economic terms it is not communism and capitalism that divide the world’s countries, because in fact capitalism has triumphed. In his view the dividing line is political, not economic. Snow sees China as “a capitalist economy with an authoritarian government”.
Offering a slightly different perspective, an article in Lebanon’s Daily Star by Ian Buruma (May 8, 2012) is entitled: “China’s Communist Party is protecting its brand of capitalism.” Buruma opened the article by discussing the recent trial of the wife of a prominent Chinese Communist Party (CCP) official – Bo Xilai – who had been accused of involvement in the murder of her British business partner. Buruma commented that even though these events were extensively reported in the media, we actually know very little about them. Buruma suggested that Bo Xilai, formerly a powerful and influential man, and the leader of the CCP in Chongqing, had fallen out of favour with the Party. The situation involving his wife and the British businessman was, according to Buruma, typical of the way people in Chinese politics may be removed from power by being made a public spectacle, because there is no way in China of ousting such people through elections – there aren’t any! Whilst he was in power, Bo promoted Maoist ethics and criticized the new Chinese capitalism. It is thought that his more liberal-minded colleagues in the leadership of the CCP therefore decided he had to go. Buruma offered the thought that Bo’s demise may lead to more liberalism in China. However, he also cautioned that the wealth gap within China may lead to more protests, which in turn may bring stronger repression of dissidents, which he believes is a policy intended to protect the “Chinese Communist Party’s brand of capitalism”.
Yet another insight into modern day China is seen in “The Chinese Communist Party’s Capitalist Elite” – the title of a piece by Michael Forsythe (March 1st 2012) published in Bloomberg Businessweek. He opened with a staggering statistic: “The richest 70 members of China’s legislature added more to their wealth last year than the combined net worth of all 535 members of the U.S. Congress, the president, his cabinet, and the entire Supreme Court”. The 70 he referred to are National People’s Congress members. According to Forsythe’s article, their actual shared net wealth reportedly rose in 2011 to the equivalent of $89.8 billion, compared to the figure of $7.5 billion shared by all 660 top members of the U.S. administration. However, these figures serve only to emphasize the wealth gap in today’s China. Forsythe reports the comparative per capita incomes for 2010 as $2,425 in China and $37,527 in the United States. It seems that corruption and illegal compulsory acquisitions of land by the government there are also causes of increasing social unrest. Along with other observers, Forsythe comments on the astonishing growth that China has achieved. China’s average annual growth of 10.1 percent in the last 30 years compares with a figure of 2.7 percent over the same timescale for the United States.
That phenomenal growth means that China now has a huge surplus that it needs to invest. Sahit Muja (7 February 2012), a highly successful and much travelled New York-based businessman, described that situation in an article published online at examiner.com. The article is entitled: “China has become capitalist nation aimed investments in US and EU.” According to Muja, China’s Central Bank intends to invest circa $300 billion in the private sector in both the United States and Europe. He claims that China needs to invest overseas to increase returns on a claimed surplus of $3.2 trillion and that countries rich in resources that have already been the subject of many billions of dollars of investment from China include African states, South American nations, Iran, Iraq, Afghanistan, Russia, Canada, Australia and India. Muja indicates that by making these many investments in numerous fields including agriculture, energy resources and minerals, China is securing the long-term future supply of its expanding needs. Muja also notes that following on these overseas investment programmes, many Chinese now live in those countries. For example, he reports that around a million Chinese live in Africa – a continent which borrows more money from China than from the World Bank. Muja concludes his article by stating that “By having so much invested in EU and US the Chinese will become more of a capitalist nation”.
Echoing that overseas investment angle, Michael Bristow (10 January 2012) published an article on the BBC News Asia website entitled: “Chinese communist paper seeks capitalist investors”. Reporting from Beijing, Bristow stated that The People’s Daily (described by Bristow as “the mouthpiece of China’s ruling Communist Party”) wants to list its website on the Shanghai stock exchange to raise over $80 million. It is said that the money will allow them to upgrade their technology and online services to become more competitive.
Another slant on today’s China is taken by Christopher Beam (July 26, 2010), writing in Slate magazine. His article is entitled: “How Communist Is China? They sure buy a lot of cars for a society built on collective ownership”. He reports that in the first six months of 2010, General Motors’ car sales in China exceeded those at home in the U.S. and that sales to China represent 25 percent of General Motors global sales, and that suggests “a lot of capitalism for a country that calls itself communist”. Beam notes that although “just about everything is at least partly privatized” the major aspects of the economy and Chinese society are still controlled by the government. For example, nearly all Chinese Banks and the media are owned by the state. Also, ALL land in China is owned by the government, even though houses and other property can be privately-owned. In terms of political power, Beam states that “China is as Communist as ever”. China is ruled centrally by the Communist Party, but at regional level (city or province), there are two sets of officials: those in local government and officials of the Communist Party. Beam notes an ironical situation that because regional officials are evaluated annually on the growth achieved in their region, this results in a system that encourages capitalist goals, leading inevitably to corruption, as those powerful officials at the local level expect and receive bribes for helping particular businesses.
Conclusions
References
Beam, Christopher. (July 26, 2010). “How Communist Is China? They sure buy a lot of cars for a society built on collective ownership”. Slate magazine [online]. Available at:
Bristow, Michael. (10 January 2012). “Chinese communist paper seeks capitalist investors”. BBC News Asia [online]. Available at:
Buruma, Ian. (May 8, 2012). “China’s Communist Party is protecting its brand of capitalism.” Daily Star (Lebanon) [online]. Available at:
Cox, Simon. (May 26, 2012). “Pedalling prosperity”. The Economist [online]. Available at:
Muja, Sahit. (7 February 2012). “China has become capitalist nation aimed investments in US and EU.” examiner.com [online]. Available at:
Snow, Professor. (2011). “Is china communist or capitalist?” Yahoo! Answers [online]. Available at:
