Contrary to prevailing Western perceptions, China exhibits a greater degree of market capitalism than the United States.
While it’s commonly assumed that China is a communist state, this is a misconception.
In reality, only about 25% of China’s GDP is generated by the government, with the remaining 75% coming from the private sector and foreign enterprises. This challenges the narrative held by both Anglo-American socialists and conservatives, who often attribute China’s economic success to central planning and, in some cases, slave labour.
However, if central planning were the key to economic prosperity, then why did the Soviet Union and Maoist China fail to outperform the West?
To understand China’s economic model, it’s essential to dispel several myths that persist, largely due to Western antagonism and propaganda.
These myths include:
- the notion that China has a centrally managed economy,
- that it is a communist state, and
- that its government is synonymous with the Communist Party of China.
Additionally, there are misconceptions about China’s social credit system and its approach to free speech and Covid™ response, which are often portrayed as more draconian than they actually are.
In 2020, China overtook the United States as the world’s largest recipient of foreign direct investment, which is a testament to its increasingly liberalised economy since the late 1970s.
Scott is an American economist who has worked and lived in Shanghai for many years. Our conversation is based on content from the excellent Substack, Austrian China, to which he is a contributor.
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