We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

Why China clings to state capitalism

20 0 2
14.01.2019

WASHINGTON - American officials traveled to China last week in an effort to end the bitter trade war between the two countries. The main obstacle to a settlement is natural rivalry: The United States is trying to protect its position as the most important superpower and China is serving notice that it covets that status for itself.

What further complicates matters is a clash of economic systems. China practices state capitalism; the government owns many large firms and decides which industries will receive subsidies, protected markets and favorable loans. In the U.S., private markets and firms mostly determine which companies grow or shrink.

The result is a stalemate. Many Chinese policies and practices (rules that coerce the transfer of new technologies or business plans to Chinese businesses, or that discriminate against foreign companies) make perfect sense in the context of state capitalism. But to Americans and other private investors, they violate the norms of open competition and fairness.

This makes negotiations exceedingly difficult. For China to abandon its policies would mean, in effect, scrapping its whole economic model. Politically, this would be hard to swallow. Similarly, for the U.S. to condone China’s........

© The Japan Times