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In general, China has definitely become capitalist. In comparing China to its former self, it most certainly has become more capitalist and surprisingly, it did so quickly than other ex-Communist states. While Vietnam only began capitalizing after 1986 and Russia followed suit in the late 80s and early 90s, China beat both these iconic communist nations by a decade or more.

The change began around 1978 officially, but in actuality, the idea of moving to a free-market system sprouted earlier. The history of Communist Chinese leadership can be divided somewhat into two movements - those like Chairman Mao followed a 'utopian' or 'scientific' movement (and ironically, these hardline leaders often made decisions that decidedly were neither utopian nor scientific.) On the other hand were leaders like Deng Xiaoping who approached communism with a more pragmatic approach to economics. Pre-1978 China's economic development was so stunted precisely because of the the decisions of the utopian movement that sponsored and supported both the disastrous Great Leap Forward and Cultural Revolution.

Mao's death in 1976 and Deng Xiaoping's creep into the forefront in 1978 shifted the economic paradigm slowly (that is, pragmatically) with new ideas. Between Special Economic Zones which offered great tax relief to foreign corporations to invest in them, the household responsibility system that gave farmers residual ownership to land and profit after they met state quotas, and the town and village enterprises which allowed towns to do a similar thing with manufactured goods, China has had a capitalist spirit based on price signals take hold ever since. Now, economic incentives and not the plan of the government fuel the label that people across the world can appreciate: "Made in China." Economically, it makes sense too; entrepreneurs have recognized that there is profit to be made from China's comparative advantage (1+ billion people) in labor.

Of course, everything is not wonderful with China's capitalist system, of course. After all, most economies borrow SOME concepts from planned economic systems (like government product regulation) to safeguard the economy. China's system still has some 'bad' planned economy concepts while lacking some of the 'good' regulation. For example, property rights (or anything regarding stable rule of law) is still developing in China's system. Furthermore, China lacks the governmental standards that organizations such as the Food and Drug Administrations provide in the U.S. (which explains why frequently, the news covers the rampant piracy or the harmful products that come from China.)

Secondly, China's capitalist economy says little about its governmental standing, which shows little sign of liberalizing and opening up politically.

So, is China capitalist? Of course! However, are they as developed in their system as the US is? Maybe in the future this will be true, but capitalism, like Rome, wasn't built in a day.

Learn more about this author, Andrew Spriggs.
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