China's Economy Dances Between Communism and Capitalism Halaman 1

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Warren Rizzi
China's Economy Dances Between Warren recently finished a

Communism and Capitalism year long fellowship, teaching

Warren Rizzi in World, Asia 7 months ago
9 2
and studying at a university in
northeast China. During his
time in China, he gained c...
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China is a country of extremes. European TODAY'S MOST MIC'D STORIES

cars swerve through traffic barely missing
battered Soviet-era motorcycles laden with Civil Liberties and
1
bounties of plastic and metal the TSA : Fewer
recyclables. College students carrying iPads Body Scanners This
Holiday Season is a
walk past street vendors selling 15 Win For Liberty
cent eggs in various states of 17 Mics
decomposition. While this clear dichotomy
is understandable considering the rapid 2 Why The Efficiency
growth of modern Chinas economy over a of The Free Market
Chinas Economy Dances Between Communism and
is a Myth
Capitalism relatively short time period, it is no less
10 Mics
startling. And nowhere is this coexistence
of extremes more apparent than in Chinas official economic policy: a socialist market
economy with Chinese characteristics. 3
You Think You
Know Somalia ?
Washington Post columnist Eugene Robinson instantly recognized the contrast between the Meet Somaliland
socialist assertions and the hyper-capitalist feelings that exist today in China. 9 Mics

Robinson notes, for example, how the famous portrait of Mao Zedong in Tiananmen Square
seems dated in the shadow of the swirling business atmosphere of Beijing. Since the Chinese Walmart Strike:
Strike :
Gambar
4
economy opened up to allow private enterprise in 1978, businesses and companies have Black Friday Labor
sprung up and found considerable success amidst the fierce competition that exists in many Protests Could Help
Unions Make a
strata of society. Private businesses have to compete constantly to fight for market share, both
Comeback
internationally and domestically, with little concern about government intervention. These 8 Mics
businesses realize that their competitors will gladly leave them behind as the economy
develops. Stark Trek Into
5
Darkness : Spock
On the other hand, the Communist Party of China (CPC) carefully directs the countrys Actor Zachary
growth. Buttressed by government subsidies, state-owned enterprises (SOEs) maintain a Quinto Will Only
dominating presence in the domestic market largely in the banking, transportation, Star in One More
telecommunication and energy sectors and often prevent competition. In all, the public Film
7 Mics
sector accounts for approximately 30% of Chinas economy. Government presence in the
market is apparent in its regulation of the RMB and reserve requirements for banks. Though
Watch the PolicyMic Video
regulations for the latter have been loosening steadily in an effort to encourage loan
availability, SOEs usually receive preferential treatment.

However, many Chinese are quick to rebuff indiscriminate claims that Chinas economic
system is inferior to those in the West. While deficiencies have been noted in a coauthored
report by the World Bank and the Development Research Center of Chinas State Council, the
system does have its benefits. One oft cited example is the governments careful direction that
helped the Chinese economy weather the global economic crisis. China experienced double-
digit GDP growth from 2003 to 2007hitting a high of 13%. Then in 2008, the government
launched a $586 billion stimulus plan. Mr. Cheng Siwei, a prominent Chinese economist and
Chairman of Chinas International Finance Forum, posited that this strong-arm approach
helped insulate China from instability abroad and protected a 9.2% growth, when it could

http://www.policymic.com/articles/7356/china-s-economy-dances-between-communism-and-capitalism 26/11/2012 9:15:54

China's Economy Dances Between Communism and Capitalism Halaman 2
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have dropped as low as 2.4%. The centrally controlled market economy allowed the
government to disperse the funding quickly with acute oversight and influence as the
investments were financed by state backed enterprises.

The southwest city of Chongqing provides an interesting example of the advantages and
disadvantages of this capitalist-socialist- system. Chongqing has lead news stories in recent
weeks as its former party chief, Bo Xilai, was recently deposed amidst a high profile political
scandal. However, before this upheaval, Chongqings GDP experienced rapid progress with
16.4% growth from 2010 to 2011. Many foreign analysts dismiss this rate as dependent on the
municipalitys aggressive government spending, mostly on infrastructure and affordable
housing, which has increased the citys debt. Some analysts also question Chongqing's long-
term sustainable growth. But, Bos economic implementations did not solely focus on public
projects and social housing. Rather, as he did in the 1990's serving as mayor of Dalian, a
prominent coastal city in northeast China, Bo successfully encouraged a sizable presence of
foreign technological companies in Chongqing. The government directed but emphasized
business expansion, and cultivated high-tech development. Closely following the tenets of a
state directed economy, Chongqing quickly developed into an economic hub while also
staying mindful of the lower class.

There is a pride in the benefits that this socialism with Chinese characteristics provided
lifting millions out of poverty, navigating the financial crisis in 2008, and establishing China
as the worlds second largest economic power. Still, with these successes in mind, many
predict that the government seems to be heading towards greater free market reform, as the
World Bank and China State Council report recommends. Premier Wen Jiabo recently voiced
a similar desire in a speech he gave in March, calling for increased political and economic
reforms. But while change might be in Chinas future, people are hesitant to forget the
accomplishments of their past and present, and the conversation in the West would be wise to
recognize this pride.
Picture Credit: cqgxq.gov.cn

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The Discussion

John Johnson 7 months ago

Socialism is not what lifted millions out of property. Allowing people to own businesses
and reap the rewards of their hard work is what lifted millions out of poverty.

2 REPLIES
Max Alexander 7 months ago John Johnson 7 months ago I wouldn't
say that they have ...
What lifted millions of people out of poverty in China was their adoption of Capitalism.

"Since the Chinese economy opened up to allow private enterprise in 1978, businesses
and companies have sprung up and found considerable success."

Please compare the poverty rate prior to and after 1978. After adopting Capitalism, the
poverty rate in less than 30 years dropped from over 30% down to 3%.

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http://www.policymic.com/articles/7356/china-s-economy-dances-between-communism-and-capitalism 26/11/2012 9:15:54