One of the key reasons for such confusion, I guess, is the pace of change that has taken place in the past twenty years. When I was growing up in shanghai, I was told that china was lead by a ruling party called the communists, who claimed themselves to represent the best interests of the working class, and who defined china as a socialist country. Yet after 1989, china opened up at an increasing pace and in many aspects showed more capitalistic color than any European country. Naturally the question is raised: so what is china really?
Maybe this is too big a question for me, and probably there is never a correct answer. But I find it helpful to try the following definition: china is at an infant stage of a capitalist society. The animal spirit has been unleashed, and the rule of fittest to survive has been widely accepted. Today’s china arguably resembles the period of industrial revolution of the great Britain: productivity is being largely improved accompanied by urbanization, while the benefit of growth is extremely unevenly distributed among the winners and the losers. Also due to the extremely fast pace of change, the development and implementation of social rules is too slow to catch up with the change.
By definition, such a society is dynamic, exciting, and chaotic.
Such is the reason why shanghai has many more skyscrapers than New York and London combined, with most of them only finished in the past ten years. Yet nobody queues to get into a lift of these skyscrapers any time. This is also why shanghai has a wide network of tubes as complicated as London, yet sometimes I find myself facing an empty track when the train arrives (the tube train was shorter than the length of the platform so not every door on the platform leads to a compartment).
If one has to find a closest form of capitalism to be comparable to today’s china, it has to be America. It is a much more cruel and raw form of Darwinism than those European or Japanese style of capitalism, but also more efficient. Here I think the communist party deserves some credit that has never been given seriously by the western media. For example, today it is highly encouraged to start a business in shanghai by the local governments. For those who studied abroad, the shanghai government welcomes them to go back to china and gives huge support, such as capital, tax break and free office space to those with only a business proposal. The high quality of labor force in china, with English trained college students abundantly available in most big cities, is also a big plus to productivity gains.
Because of the above positives, I am optimistic about the growth potential and sustainability of china’s continuous development. We are talking about a machine that has been put on a right track and has gained strong momentum. The trend is likely to continue if there is no strong interference from outside. Here the personalities of the politburo leaders come into the play. As long as there is no strong Putin like character showing up in Beijing who wants to change the historical course, the current momentum shall continue and it is just a matter of time for china to rival America with much more seriousness.