Is China Capitalist or Communist?

Watch a video recording of this article here: https://youtu.be/MSb1DXw8_Os

Many people ask me a lot of question on things they don’t understand about China. I do my best to answer them in replies and through my tweets. Of course, there’s the legal issues and the freedom issues and these do get answered, if you want to know and haven’t seen the answer you’re looking for, scroll through the channel and hover over some of the earlier videos. If you can’t find what you’re looking for, ask me and I’ll do my best to answer either through a reply or making a video.

I’m definitely not an economist but I can clearly see that China is not on the verge, or in fact, anywhere near to a collapse. The recent May Day holiday demonstrated that with record numbers of people travelling around the country spending record amounts of money.

We don’t see people doing that in countries that are suffering economic woes. So, if there’s a collapse coming, China is doing a great job of keeping it from the people, we certainly can’t see any evidence of it here on the ground inside China.

What we do see, as I’ve said before, are massive investments in infrastructure, not just in ports and transportation but in communication, health and most importantly, education. China is getting smarter, richer, more comfortable and easier to get around.

One of the most common questions I’m asked because of this, is: how is it that China is getting so rich, and still claims to be a Communist country; the answer to that is very simple. Who said communists need to be poor?

That’s a simple and true response but of course, the real answer is a lot more complicated

If there’s to be equality, as communism likes, then surely everyone would be equal but it’s not possible for everyone to be wealthy. China has many wealthy people, according to Forbes the number of billionaires is 607. China has the second highest and more than 20% of all the worlds billionaires, with 20% of all the world’s people — if that’s not equality, then what is?

However, the situation is changing. China’s number of billionaires grew by over 60% in just two years and, in a couple more, it’s likely to be higher than the USA. Meaning the rich in China are going to be richer than the rich in the USA.

When that happens, we can expect some in the USA will scoff at China and tell the world they aren’t communist at all, they’re capitalist.

They’d be wrong, on both counts: China isn’t communist and it isn’t capitalist — it’s Chinese

But economists and accountants with western training can’t get it, journalists and politicians parroting what the economist say, have even less chance of getting it.

If we look at a spreadsheet and say: there needs to be a return on investment or a price earnings ratio for a project to proceed then we’ll never really understand China

A Chinese economist looks at the figures, of course they want profit and return, and asks: what’s the benefit to the people affected by it?

China has a long history, US has a short history, China has patience, US wants instant gratification in every respect — there are huge differences in the two cultures and these two differences are seen in the way their economists look at, and predict, things. Quarterly reports cause share prices to go up or down, bonuses are based on 12 months profits. Margins are set at 20–30% or much higher in many companies, especially those that do business with western governments; but that doesn’t happen here in China.

Let me give you an example of what happens here: 12 years ago, I was with a group of friends who took me, on a cold and wet, miserable day to a beautiful mountain village, it was 10 kilometres uphill on a muddy, slippery mountain track and when we arrived at the village we parked the van outside and walked in to take photographs, the organiser of the trip was a professional photographer, the environment there was stunning but the place was steeped in poverty. We spent a few hours there and then slithered down the mountain to the nearest town to get some lunch. There was nowhere to get lunch in that village.

This year, I had the great fortune to go back there. What I saw was a four-lane highway with a car park and bus parking bays at the village entry, there was a huge shop where locally made products were sold, inside the village was a stone-stepped path up to the top and on either side were café’s restaurants and bed and breakfast and a hotel. Locals dressed in their minority outfits and we were welcomed with a glass of free rice wine.

A great example there of how poverty alleviation works but a better example of how money is spent to better people’s lives — the four-lane tarmac road up the mountain would have cost millions, the training and even the infrastructure to get proper accommodation and sanitation into the homes there would have cost millions more but it was done

Now the village has a future, other than subsistence farming. The people can get in and out by vehicle rather than donkeys. The cost was…

Well, the cost doesn’t matter, because now, everyone in that village can make an income, improve their lives, their children can go down the hill to school and the future is better. I’m certain not every government in the world would spend that sort of money to help the 20 or 30 families that live in that one small village. In that respect, China is socialist for sure.

But what happens now is what makes China capitalist: rich people drive their luxury cars to the top of that mountain, they can eat fresh delicious food, stay overnight lots of money goes from their pockets into the pockets of poorer people.

When I’m asked: is China capitalist the answer is both yes and no

When I’m asked: is China really communist, the answer is both yes and no

The truth of the matter is: China is Chinese — the people like it, the government delivers what people like and, to be honest, I really don’t think they care if they are pigeonholed into an ideology.

What Socialism with Chinese characteristics actually means is that China does what’s best for China and if that includes allowing a bit of capitalism into their socialism, or even some socialism into their capitalism to help spread the wealth, then so be it.