China’s Economy Based On Communism Or Capitalism?

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Under the leadership of Deng Xiaoping, in 1978 China witnessed the process of reformation of the state planned socialist economy. Though the objective was to bolster the socialist economic system, in execution liberalization of the economy was frequently ahead of the state’s official policy.

Because of formal political recognition of private property, the acceptance of business owners in the communist party, and rapid and substantial amalgamation into the international economy made many observers and scholars of the opinion that China’s economic policy is capitalist even though the political control continued to be with the communist party. 

Deng Xiaoping was a political ruler who believed in capitalist economic policy while a staunch follower of communism when it came to politics and party rule. He has the exceptional bequest of having rigorous economic policy reform which helped to bring more people out of poverty than anyone in the world so far. He was a leader who was always intrigued by the results than the principles.

China has reformed itself in many ways to become a market capitalist economy. It freed the market for foreign investment. Chinese organizations participated internationally and make foreign investments. Chinese entrepreneurs for instance like Jack Ma (CEO Alibaba) have managed to get recognition internationally. There is a stock exchange and capital markets that play a huge role in routine economic life however farmers do not have full-fledged ownership rights.

 However, under president Ji, the economic policy has changed and in a way is opposite to the of Deng Xiaoping. In Ji’s leadership, the business decisions are taken only after discussing with the Communist Party. Deng’s policies were based on decentralization in the economy and it’s contrary to Ji’s policy.

With the changing time, economic problems also are changed compared to Deng’s era. For instance, stabilizing the economy by changing focus from investment to consumption, producing to services, and from exporting to consumption both domestic and imported products. There also exists a grave yet persisting issue of enormous environmental damage is to a certain extent is tried to being resolved but it enforces extensive costs.

Concerns are being raised that China could move towards the stage of stagnation or might even crash instead of orderly stabilizing. In the current scenario, several big and successful Chinese entities are state-owned and a handful of important private firms like Huawei, Ali Baba, Lenovo have close ties with the government. Banking, energy, and telecom sectors are dominated by government enterprises.

Nonetheless, China’s story of the economic reforms is considered as of the greatest and most successful stories across the globe. In the future, whether China graces communism or tilts towards capitalism will rely on China’s handling of the economic crisis which will have an impact on the future growth in the standard of living of the people.