The Chinese Model of Capitalism
Perhaps the most popular definition of the economic system of today’s China is state capitalism as opposed to the Western-style liberal market economy with private companies at its core. It can hardly be denied that, at this point, compared to the West, in the Chinese economy there is more state, and, compared to China, in the Western economies there is more private entrepreneurship. Still, this conceptual framework is too simplistic—first of all because it underestimates the role of change.
The Need for a New Conceptual Framework
While retaining differences from Western economic systems, especially regarding the role of the state, China is accommodating more and more elements of conventional Western capitalism, first of all Anglo-Saxon capitalism as the latter’s classical model. This process of accommodation and the ability to accommodate are the sources of China’s economic strength. Remaining different, it is becoming more and more similar to the West in many important respects. China’s economic system appears to be a mix created by this dialectical game of similarities and differences.
The increase of its economic power is supported both by market incentives, which are becoming stronger and stronger (in some respects significantly stronger than in the West), and by large-scale government intervention. It is crucially important that, when intervening in the economy, the government remains promarket enough, or pragmatic enough, not to ...