Is China Communist or Capitalist? Perhaps Neither

August 25, 2016
Often best described as a socialist market economy, the Chinese model retains radical elements of its communist origins. Ideologically though, is China communist or capitalist or something else entirely? Let's have a look at the influence of pragmatism in Chinese tradition to get a better idea of what Chinese politicians really are after.

After many discussions with Chinese intellectuals, I've finally decided to write this story. It stems mainly from a conversation I had with a Chinese historian back when I was living in Shanghai (plus a couple more conversations since then with other researchers). Some of his books were censored – he told me proudly. 

And it’s easy to understand why. The long answer as to whether China is a communist or a capitalist country is so much more interesting than the short one (socialist market economy, authoritarian capitalism, state-sponsored capitalism and so on).

The goal behind this historian's books? To highlight a fundamental, and yet often forgotten trait of Chinese culture: pragmatism. A strong sense of pragmatism that would imply that China isn’t so bothered with ideologies after all. It's what they want out of them that matters.

As the “Century of Humiliation” went on - during which foreign countries interfered with and occupied parts of the country - some activists and revolutionaries were looking for support, ideologies and systems that could help them restore China’s international status (and honour).

In unstable times, people follow extreme ideologies. But what China really wanted was to be at the top of the world again. And Social-Darwinism – perhaps the most influential ideology ever exported to East Asia (affecting Japan and South Korea too) – had them think that it was now their turn to be number one again.

Chinese pragmatism & ideologies

It doesn’t matter if the cat is black or white, so long as it catches mice - Deng Xiaoping (1960)
"It doesn’t matter if the cat is black or white, so long as it catches mice", Deng Xiaoping (1960). He was responsible for launching the process to open up China in 1979.

With this quote (in Chinese: 不管白猫、黑猫,逮住老鼠就是好猫) former prime minister Deng Xiaoping highlights here how his very pragmatic policies clashed with Chairman Mao’s rather whimsical campaigns since 1960.

As the two factions constantly fought for power for decades, we’ve seen that whenever the pragmatists where in charge, they weren’t so interested in ideology. Their main focus was to develop the country step by step, building the infrastructure and capacity of the country’s economy (receiving lots of support and training from soviet experts).

Mao vs the pragmatists

Communism wasn’t not quite the best system as it eventually led the country to go nearly bankrupt. But if anything the transfer of skills under the Soviet system really helped bringing about a generation of Chinese experts that transformed the country.

Whenever Mao was in charge, his radical ideas – from the Great Leap Forward to the Cultural Revolution - would make the economy slump almost systematically and create the seriously dividing social tensions that turned specific social classes into the “enemy of the people” (teachers, intellectuals, etc). 

There's a reason why in the end, not so many people actually turned up for Mao’s funeral, compared to Deng Xiaoping’s. Deng's was spontaneously packed.

A cat is a cat is a cat

In hindsight, it’s fairly easy to understand Deng Xiaoping’s quote as something like “it doesn’t matter whether China is communist or capitalist, so long as it can become a great nation again”. If not number one.

The best thing in this story is that Mao himself seems to be saying the same thing at one point:

“In general, what succeeds is right and what fails is wrong”, (Mao Zedong / Mao Tse Tung)

Of course Mao probably wasn’t suggesting back then what we’re suggesting here. However, in hindsight we can see that as soon as communism started failing seriously – and nearly all state-owned enterprises were being run at a loss – they were ready to switch to a better system.

Capitalist or communist? It doesn't actually matter

It might not be perfect, but this theory explains too many things not to contain an element of truth.

Reviewing Chinese modern history back to the 1920s under this prism proves insightful, starting with Sun Yat-Sen’s obvious opportunism, seeking support from both capitalists and communists – basically anyone willing to support his cause with money and weapons.

It also explains why the government didn't go full-on capitalist from 1979, but rather experimented with it for 20-30 years. Being careful (just so I stop using the word “pragmatic”), Deng Xiaoping made many compromises to open up his country’s economy - which ultimately have greatly reduced poverty in China in the 1990s:

  • Opening up a few test cities along the coast where capitalism was experimented in the 1980s. These were key strategic locations for export.
  • De-collectivising the land (i.e. returning it from state-owned back to private owners)
  • Legalising small private businesses step-by-step
  • Privatising small loss making state-owned companies and reforming large ones (energy companies, banks, transports etc)

All of this took over 20 years and it is still an ongoing process today. 

Mao Zedong and Khrouchtchev in 1958 - China and USSR both allies and enemies
Mao Zedong and Khrouchtchev in 1958 - international allies in public, ideological enemies in private

Our lack of understanding of China's history

In fact we could even argue that pragmatism has been a somewhat underground movement since the mid-19th century, when a faction of the imperial government wanted to adopt “what works and leave what doesn’t” from Western technology and techniques.

Today, the Western media love to indulge in a fair bit of China-bashing, mocking both its communist and capitalist excesses. And in return this creates a fair bit of a resentment in Chinese media.

This may reassure governments and their population in this era of profound changes and uncertainty. But I find it a bit insulting to not explain where they come from and how Western governments have had a profound impact on China for decades.

Black or white?

We all like to simplify things. Seeing people, countries, situations in black in white, communist or capitalist, good or evil. But when you start talking to people, you realise the myriad of inner contradictions that are so typical of human beings and the systems they create.

In that sense, the Chinese government has built a country with fifty shades of grey, and not just because of the pollution! But regardless of whether the cat is black or white, what counts is what you intend to get out of it.

What matters is that it hunts mice and improves your environment, doesn’t it?

Becoming a great nation again, at all costs

Is China communist or capitalist? Deng Xiaoping meets Jimmy Carter China-US Relations
Deng Xiaoping meets Jimmy Carter in 1979

To many people across the world in the 1920s and 1930s, no one really knew who was going to win the battle of ideologies and economic systems. The soviet revolution in the old Russia sent ripples across the world and new communist cells started popping up everywhere.

They posed as the ideology of the future. As the next big step in the advancement of humanity and they had a very evolved ideology to support that. Communism was posing as the successor of capitalism, taming its excesses and putting humans at the centre of society again.

What the Chinese politicians, intellectuals and revolutionaries really wanted after all was to be one step ahead of everyone else again.

But by the end of the 1970s, after realising their system wasn’t working too well for the country, they hopped on the train going in the exact opposite direction. Not that it happened without any hesitations, extreme cautiousness or negotiations.

As Deng Xiaoping put it back then, the plan was to “cross the river by touching the stones (one by one)”

From traditional thinking to modern crisis

If we look at the philosophical foundation of the Chinese civilisation – Confucianism – we’ll find that it turns respect of tradition and rituals into something close to a religion.

That’s it aimed at becoming a social system in itself (not unlike religions). In the troubled times that Confucianism was formulated, taking this respect of rituals to an extreme level was supposed to cure society of all evils, from “harvests to curing deafness” (Audrey Topping, 1971).

This means that whichever model you want to follow; you have to go all the way. Do everything by the book, which might explain why they so zealously applied communism and now capitalism.

Big segments of China’s market economy are still very much protected by the government and state-owned companies, but not unlike Western markets before World War II.

They are protecting burgeoning businesses and key industries just like we used to. And as many world-renown economists argue (from Kim HaJoon to Joseph Stiglitz), that’s exactly how the world’s largest economies started out. Learning from the best…? How pragmatic.

实事求是 deng xiaoping seek truth from facts quote
"Seek truth from facts" - another famous quote from Deng Xiaoping (实事求是)

Tip-toeing, from debate to debate

Today China has reached a point where its society displays a colourful mishmash of free enterprise and political authoritarianism. A “bureaucratic dictatorship”, that is often positively viewed in academic debates trying to compare how well democracies and authoritarian regimes fare.

Of course it’s in the CCP’s (Chinese Communist Party) very own interest to put forward the benefits of its own regime. It suffers from a serious crisis of legitimacy, given that its structures date back from the soviet system and do not perform their original functions anymore.

Not everything is pragmatism, the political classes want to protect their jobs and positions of power. Being a member of the CCP is still, like before, a huge advantage to anyone. Between the networking opportunities, financial and commercial authority it gives you (corruption, licenses, etc), provided you’re influential enough it’s a bit like the permission to print money…

That might be a bit of an exaggeration, but not that much.

This causes constant social unrest (nearly 90,000 demonstrations per year) as inequalities are on the rise and child labour remains an issue.

What the future holds

Tensions within the CCP are obvious, even as the current president does his best to secure power and get rid of his opponents. 

Political regimes are often publicly discussed in China, and even the former prime minister was censored several times on national TV (and never really sanctioned) for saying things deemed too liberal or "pro-democracy".

Despite frequent talks about the need for political reform, the government surely will keep an opaque structure for a while longer because it’s their legacy. It is after all the system that allowed China to regain its independence and pride.

 It’s the system that sent the first Chinese into space. These are things that matter to people when they want to become one of the greatest nation again. It’s a system that has worked so far for them, but they know huge challenges already await to keep the country and its economy afloat.

Even as the current regime is becoming more authoritarian, hopefully China will keep tip-toeing forward. History does show that not everything goes forward and sometimes we take a few steps back before venturing a bit further out. Let’s hope that happens again soon. Certain steps back can last hundreds of years.

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Dario Berrebi

Digital strategist, researcher & filmmaker. 

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