The Wall Street Journal reports that Chinese president Xi Jinping has grown weary of capitalism and is waging a campaign to put the Chinese economy more firmly under the thumb of state control:
Xi Jinping’s campaign against private enterprise, it is increasingly clear, is far more ambitious than meets the eye....He is trying to roll back China’s decadeslong evolution toward Western-style capitalism and put the country on a different path entirely
....In Mr. Xi’s opinion, private capital now has been allowed to run amok, menacing the party’s legitimacy, officials familiar with his priorities say. The Wall Street Journal examination shows he is trying forcefully to get China back to the vision of Mao Zedong, who saw capitalism as a transitory phase on the road to socialism.
Mr. Xi isn’t planning to eradicate market forces, the Journal examination indicates. But he appears to want a state in which the party does more to steer flows of money, sets tighter parameters for entrepreneurs and investors and their ability to make profits, and exercises even more control over the economy than now.
....Industries that Mr. Xi views as being led astray by a capitalist spirit, including not only tech but also after-school tutoring, digital gaming and entertainment, are bearing the immediate brunt.
This is not a good sign for China. Free market capitalism may have its problems, but it delivers the goods when it comes to economic growth. Moving even further toward a state-directed economy is almost certain to be a self-destructive move.
It's a funny thing. Back during Cold War 1.0 I felt that right-wingers who hyped the Soviet threat were showing that they didn't have the courage of their economic convictions. The US practiced free market capitalism while the Soviets ran a heavily state-directed socialism. If you really believed in capitalism, you would also have believed that the US would inevitably crush the Soviets and eventually put them into bankruptcy if they tried to keep up (or pretended to).
This is why, aside from the nuclear threat, I was never much worried about the Soviet Union's global ambitions. I did believe in capitalism, and the Soviet Union seemed like a country that would fall further and further behind us until its influence in the world was all but gone.
Now we're stumbling into Cold War 2.0, and China is certainly a bigger economic competitor than the old Soviets ever were. Nevertheless, I still believe in capitalism. China is far behind us economically, and if they're actively backing away from free markets they're unlikely to ever make up the gap.
And that's not all. I'm no China expert, but I've long thought that China is likely to reach a point this decade where they start to have real challenges from both demographic decline and a difficult transition away from a low-wage economy. If they also choose this decade to strangle their economy their problems will only multiply.
I'm all in favor of keeping of keeping a gimlet eye on China. Our plan of engaging with them in hopes that they'd become a better actor on the world stage obviously didn't work, and over the last few years it's become increasingly obvious that they consider us their #1 adversary. That said, it would be wise on our part not to overestimate their capabilities or to panic every time they launch a new aircraft carrier. If the Journal is right about their economic direction, we will simply outgrow them, just as we outgrew the Soviet Union.
Have faith in capitalism, China hawks!
Anti-capitalism or anti-trust?
Antiwoke Fauxgressives on the Left & Fascists oppressed by Big Tech on the right don't care.
Expect a Jacobin/Claremont Joint Protocol in praise of True Leader Xi.
😉
China sure has changed policies lately, they used to be interested just in trade but now is it more about influence. Africa was wide open territory during Trump’s regime due to his racism and China has been going all in using bilateral projects trying to ensnare them just as they also has been trying to do with Montenegro to get a foothold in Europe. Montenegro is deeply in debt to China due to a totally failed project of building a highway, most expensive highway in the history of mankind and that road is ending in thin air
Chinese arrogance is monumental. The Chinese ambassador to my Sweden, Gui Congyou, has been openly threatening Swedish journalists for not reporting to his liking . He has even threatened both a Swedish minister and the MP who is chair of our Foreign Affairs Committee for being disrespectful
Gui Congyou has been summoned +40 times to our state department and being reprimanded for overstepping since he arrived in 2017 , probably a world record and several MP’s has requested him being expelled…. which of course is of no use since they will appoint a clone to him instead
China is of the opinion that Chinese jurisdictions can be applied worldwide. Swedish citizens Gui Minhai was abducted from his residence in Thailand and brought to China and has been kept in prison since.
His crime ?
Being of Chinese decent and publishing books not to the liking of the Chinese junta , they are claiming he isn’t a Swedish citizen simply because he is of Chinese ethnicity
Xi's foreign policy writ large, perceived anti-China hostility from the West amongst Chinese government officials, and shifts within the Chinese diplomatic bureaucracy have been cited as factors leading to its emergence. It is commonly known as "Wolf warrior diplomacy".
Racism??? Nope. Stupid globalist con man who rubs elbows behind the iron curtain, yup. When China throws out Western businesses and destroys the $ as reserve currency, maybe you will understand why Trump ignored Africa.
LOL
Lolz. Reality sucks.
The Emperor can't sit still when the polloi are having a good time. Good times are to be reserved for Princelings and their consorts. Since this will almost certainly derail China's rush into the future, those of us in the West should (quietly) applaud his foolishness.
Pretty sure if the WSJ says capitalism is under assault, it isn't.
They don't support their assertions, so why do you take them seriously? They say the same thing when we enact rules to keep some businesses from killing consumers and workers.
History tells us that capitalism delivers the goods in time of peace (all countries depend heavily on state direction in major wars), but that if left alone it will lead to increasingly wide boom-and-bust cycles. In particular unregulated financial markets tend to destroy themselves with excessive leverage. Presumably the Chinese leaders (not just Xi) want to be able to control some of the overall direction of the economy and to prevent overexpansion while taking advantage of the incentive structure of capitalism. Kevin, with his oversimplistic capitalism-good-socialism-bad attitude, has no ability to judge whether Xi will succeed in his objectives, whatever they are. Of course no one else has this ability either, and that attitude is largely the reigning one in the US.
The way things work now in the US is that big corporations control things to sell the hot products, for the ultimate benefit of their executives and shareholders. Anything that doesn't lead to immediate profit is neglected, and ultimate common harm is ignored. Things like providing health care at low cost and combating global warming just don't get done by capitalism - this is an empirical observation, not theory. It remains to be seen whether the Chinese system will work better. Kevin's attitude may be based more on American exceptionalism than evaluation of economics.
Free markets are an anathema to a true capitalist.
There is no reason to think that a perfectly competitive free market represents a state of equilibrium. In fact markets tend to evolve toward oligopoly and monopoly, and politically toward plutocracy and even aristocracy (although many people evidently like aristocracy). There must be inequality in capitalism, because there must be capitalists, whose judgement about where to direct investment based on how to maximize profit is supposed to be superior to the judgement of commissars based on the common good - and apparently is with respect to the immediate desires of consumers. So there must be powerful and wealthy private individuals, but their accumulation must limited to prevent paralyzing plutocracy. Could it be that Xi is better able to judge how to do this than the US Congress and Presidents like Donald Trump?
Sure, but it's pretty hard to decide it successfully.
I actually don't think it was capitalism that won the Cold War vs. state-directed economy.
I think it was just that the US had (and has) a more advantageous geopolitical position, and a state-directed economy in the US would have crushed a state-directed economy in the USSR just as well (and perhaps better, if that was the goal to begin with). I mean seriously - Russia was a relative economic backwater at the start of the 20th century, while the writing was already on the wall for the US to replace the British Empire as the global hegemonic power. When you're starting that far apart...
China is more akin to the US than to the USSR in this case (although obviously not the same).
" I actually don't think it was capitalism that won the Cold War"
I agree and it kind of helps that the U.S. is the world's reserve currency.
And what was it which positioned the United States to replace Britain? I would think it was the huge economic expansion which took place.
Meanwhile, as you push your cart down the aisles at the UberMart or scroll through the online product listings, keep in mind your purchase is tacit acceptance of the policies of the country where they are made.
There are more flavors to Capitalism than just conservative "free markets", liberal "strong regulatory frameworks", and union "protectionism".
Keep in mind it's the Wall Street Journal talking. The WSJ does generally get their facts straight; but in this article you have to cross a mountain of editorializing before you reach the promised land of actual concrete facts. And the facts are pretty boring.
For example, they claim Xi is "trying forcefully to get China back to the vision of Mao Zedong." This statement is not backed up with a quote from a Chinese official, nor even an independent analyst. It's just the WSJ's interpretation of Xi's actions.
In the very next graf, "Mr. Xi isn’t planning to eradicate market forces." Wait, what? Those two statements contradict each other. And neither is sourced to anyone, just to "the Wall Street Journal examination."
Get through all that bit, and you eventually find the actual policies in question, and they are... mostly aimed at breaking up concentrated capital and redistributing wealth. Granted, Xi isn't doing this out of the goodness of his heart--he's doing it to keep private entities from growing strong enough to threaten his totalitarian state. Still, it's far from abandoning capitalism wholesale.
There's no doubt that the China threat is massively overhyped. As you say, their economy is far behind ours; on top of that, they are in the process of toppling over a demographic cliff after decades of the "one-child policy." But neither are they going back to the days of Mao.
China is not rolling back capitalism. China is regulating its corporations to prevent future defaults by financial speculators to avoid market failure and bailouts.
Communism in China and the Soviet bloc was one of the best things to happen to the American and western working class, by keeping potential economic competitors under the yoke of stupid economic doctrines.
The years of Maoist control in China (1949 to 1976) coincide with the golden years of the American working class.
Xi and the party are afraid that alternate centers of powers are developing. They are taking steps to insure those powers don't happen.
Any other explanation is BS.
Lol, what alternative centers of power??? The indebted ones???? Those aren't centers of power, but debt bombs.
The Chinese look at our politics which are driven by money. The Uber Rich fund the US parties and call the shots. The Chinese take notice of that.
Exactly what I first thought when reading the Wall Street Journal thing. But: The capitalism that outcompeted the USSR was the capitalism of the 1950s and 1960s, where indeed all boats (or to be fair, a sufficient number of boats) were rising.
Reagan did away with that and we have since moved further away from it. If we want to "win" 2.0 we will need strong unions back urgently. All while dealing with climate change which has the potential to do damage on a magnitude that transcends the potency of capitalism.
I find it interesting in this context that during a war (a real war at home, not a colonial war at the other end of the world) even the most pro-market leaders resort to rationing essential goods like food and energy. Capitalism seems to work well in a situation of plenty. Situations of constrained vital resources are not the situations where it shines.
No, that capitalism was actually 2 tiered NEP light enhanced by not having war on on its soil. Economic growth of the 1950-73 era is not repeatable.
China is basically NEP. The Russian patriots Lenin and Bakurin were right.
Lolz, free market capitalism died in 2008. I guess WSJ doesn't realize that. Having the government bailout dead banks because the know, as any old leftist or post-leftist realize, that capitalism's rise is really a debt ponzi scheme driven by science, has ended. Basically a artifact of the industrial revolution. It doesn't really work long term. It never has. 2008 was the end. The end of dollar empire. Mass famine, deaths of 75% of small towns. Sports will be heavily reduced. The free market wants white children to die.
This is just the WSJ trying to attack China from another angle because China is in fact more Capitalistic than the United States.
Concur with dausuul and Goosedat above: this is more akin to regulation than to wholesale reformation.
Also something that the WSJ and others seem to overlook: "capitalism" in China is closely tied to the State, both formally and informally. Try to do business in China at anything more than small fab-shop level, and very quickly you run into State politics, "retired" State officials (in the past frequently military), Party officials, etc. The notion of a truly independent private sector is and always has been a myth.
This matches my experience in working for a vender to a major Chinese project. Those in charge on the Chinese side all too often got there because they had an uncle highly placed in the party, not because of any particular competence.
"This is not a good sign for China. Free market capitalism may have its problems, but it delivers the goods when it comes to economic growth. Moving even further toward a state-directed economy is almost certain to be a self-destructive move."
Preach, Brother Kevin!
Adding to above: let's also not forget the lessons of 19th-century capitalism, which included seriously destructive boom-bust cycles (not to mention appalling inequities in wealth). I wouldn't be at all surprised if Chinese officials are worried about the tendency of WSJ-style "pure" capitalists to charge headlong into both manias and panics, and about the effects that kind of (predictably) reckless behavior would have in an economy as large as China's.
One huge difference between China and the USSR is population. The USSR had only slightly more people than the US. China has four times as many. That meant that to match American economic weight, the USSR had to have a GDP per capita similar to that of the US, which they never came close to achieving. China can match the economic weight of the US with one-quarter of the per capita GDP, and that's probably achievable even if the government does manage to inhibit economic growth.
China has become more authoritarian and expansionist but it is, as you point out, also facing growing economic challenges. Aging demographics, inequality, certain types of debt issues and more. As I point out in my book, Challenging China, the most important thing the U.S. (and others) can do to deal with a more authoritarian, more expansionist China is to improve ourselves. There are, of course, some smart foreign policies we should adopt as well, but most importantly, to put it in your wording, is to outgrow them, and, I would add, to continue and improve upon a society that people would rather live in than China's.
And yet, economic engagement with China was supposed to be some continuous liberalizing force…
Maybe the Chinese thought it would be a force to encourage authoritarianism in America. So far, they're having the better of the exchange.
Authoritarianism AND nepotism?
They're doomed.
"And that's not all. I'm no China expert, but I've long thought that China is likely to reach a point this decade where they start to have real challenges from both demographic decline and a difficult transition away from a low-wage economy."
Kevin has hit the nail on the head, but, I think, not the right one. China is acutely conscious of the demographic trends and wants a larger share of younger people. But what they have found is that people are reluctant to have more children because of the increasing costs of housing, food, etc. They want to attack this problem by reducing income inequality, which seems to us as a retreat from capitalism. It's not. It's, as always with the Chinese, a more regulated form of capitalism. Whether it succeeds or not is a different matter, but Xi is trying.
That's because you are. America has been pursuing a policy of containment against China for 70 years. It has troops stationed in a ring of countries from Japan to Qatar for that purpose. Its intellectuals have openly opined for years that China is a rising threat to the USA, many even predicting that war is inevitable. The previous US president ranted endlessly about the threats from China. America has taken all sorts of steps to antagonize China, from putting sanctions on Huawei to accusing it of starting the COVID pandemic.
In short, America has been overtly hostile to China and Chinese interests for decades, for reasons which have often been based on little more than xenophobia whipped up by professional scaremongers. If America is China's "#1 adversary" it's not because Xi Jinping has taken an aggressive approach. It's because America has gone out of its way to create conflict.
the USA had free market capitalism at some point after 1917 ?? I must have missed that. Oligopolic capitalism for the win, apparently
I've said for years that it wasn't Reagan that caused the Soviet Union to collapse, they did it to themselves and the military build up, if anything, extended the life of the life of the USSR as buidling weapons was the only thing they were really good at. Meanwhile the Reagan build up threatened to cripple the US since it diverted money that could have been much more profitably spent. The USSR having more fractures just splintered first.
I don't give credence to anything the WSJ edit page says about China (or anything, for that matter). China is surely not "rolling back capitalism". It's facing a question, it sounds to me, of whether it's going to continue down the path of giant conglomerates which form semi-monopolies and survive mostly because of connections to the government, or whether it's going to change to a system -- and absorb, somehow, the shock from the change -- in which it prevents companies from getting so big. From the evidence so far -- publicity campaigns against "ostentatious" people in business or the arts, are the government's main tool, and I think that suggests they only want to deal with this on a superficial level -- I'd say they're trying to save the oligarchy, but feeling nervous about what's coming. We shall see.
Supply chain shortage is 100% due to capitalism. Who knows if its the better option?