America Should Not Cause Trouble with State Capitalism

Recently, public officials and academics in the U.S. and other developed Western countries have been heavily discussing the topic of “state capitalism.” They claim that certain states lack transparency and credibility while implementing state capitalism, presenting an economic and strategic challenge to the West. The U.S. is currently investigating how to respond and preparing to release related reports. The object of such a theory is quite clear, but it is nevertheless a groundless accusation.

First, China’s unique socialist path is not that of so-called state capitalism. Although in the process of development, we instituted a market economy that combined planning and market regulation. We learned and made use of capitalism to a certain extent. We must recognize that this was only adopted as a means and used as a reference for the development and unfettering of our productive capacity, not as a foundation or end goal. The precondition that was set was to maintain a base of publicly-owned manufacturing and uphold the four cardinal principles [of Deng Xiaoping], with the aim being the sharing the fruits of the common prosperity and societal development. This is intrinsically different than the private ownership of property maintained in capitalist states, which exists to preserve the rule of the capitalist class.

China has long viewed the promotion of peace and development among humanity as its mission and has closely tied its own development to that of the world at large. China advocates cooperation for mutual benefit; works to improve the strength, sustainability and balanced growth of the global economy; strives to shrink the gap between North and South; and supports developing countries in augmenting their ability to develop autonomously. While pursuing its own interests, it does not ignore the reasonable concerns of other states, and while seeking its own development, it stimulates the collective development of every country. This stands in stark contrast to the winner-take-all, every man for himself state capitalism of certain Western countries.

Second, the U.S., which has always taken free capitalism as dogma, is actually a barefaced practitioner of state capitalism. That is precisely what they are doing when they use taxpayer money to heavily subsidize specially designated industries or pay the bill for financial institutions and oil companies. That is precisely what they are doing with their unrestricted quantitative easing and putting pressure on other countries’ currencies to appreciate, sullying others with their mess. That is precisely what they are doing when they are protectionist and use national security as a reason to restrict ordinary investments from foreign firms. And that is precisely what they are doing when the U.S. pushes for a Trans-Pacific Strategic Economic Partnership Agreement and both entices and pressures other countries to open up their markets. The actions of the U.S. have been met with widespread criticism both internally and externally, but the U.S. is now even making accusations of others without a thought to how ludicrous it appears.

Finally, the U.S. should recognize that its greatest challenge comes from within. In recent years, the U.S. has constantly claimed that China is manipulating its currency, causing an imbalance in trade between the two countries. However, the facts are that since exchange rate reforms in 2005, the renminbi has appreciated over 30 percent [of its value] against the dollar, but the trade deficit between the U.S. and China remains extremely broad. Clearly, the problem originates within the U.S. itself. Objectively speaking, its outward belligerence, insufficient domestic investment, deceptions, fabrications, political stagnation and growing internal discord are the real reasons why the competitiveness of the U.S. has fallen. The U.S. government must reflect deeply and rectify its mistakes rather than vent its frustration on others.

The U.S. is attempting to label China and other emerging economies as practitioners of state capitalism, with the objective being none other than the following items. First, as the crisis steadily deepens and domestic resentment rises, it wishes to shake off responsibility for the crisis and shift its internal pressure by unloading it onto to emerging economies. Second, it proclaims the superiority and “orthodoxy” of American free capitalism, suggesting that the path along which emerging economies have developed is an “imitation” of capitalism or “another type” of capitalism, using this as a defense of the capitalist system. Third, it labels and classifies developing countries, spreads discord and directly threatens the “bellwether.” Fourth, it lays the groundwork for adopting protectionist measures against foreign firms.

We must be aware of American attempts to use state capitalism to upset the global community’s normal means of managing the crisis, as well as attempts to distort the discourse in affected countries.

For more than three decades as China has implemented reforms, its accomplishments have shocked the world. As a large tree must fight the wind, so does the emergence of a little suspicion and criticism come as no surprise. China’s unique socialist path that we today choose–both the system and the theory–is an achievement that we have forged and gathered through a long struggle. It is one that fits with China’s specific circumstances and flows with the tide of this era. So long as we remain firm and confident, insist on our principles and never cease to develop, we can eliminate any interference, endure any test and realize with greater speed and stability the dreams of building a middle class society and revitalizing the Chinese people.