Capitalist Development in China

Capitalist Development in China:

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Introduction

With one of the oldest civilizations in the country, China has been a key player in the political, social cultural and economic aspect of development. The country continues to dictate in all things business due to their policies that focus on relationships in the international and domestic forces. The economic system of a country plays a significant role in their growth and sustainability. Economic growth is essential for a country in that it provides better living conditions for its citizens. Countries thus have the responsibility to ensure a proper economic system that works of the country. There are several economic systems practiced by different countries across the globe. These systems are reflective of the cultural norms of the society. China prides itself with being a socialist/communist system of government which places emphasis on the wellbeing of the society as opposed to that of an individual. Most of their activities are centered on working towards the greater good of the country (Gambe, 2000).

The focus of this paper is to provide an analysis of an aspect of a specific national political economy that illustrates issues of salience for the study of international political economy as a whole. The paper looks at the political situation of China in this case due to its position as a one of the successful economies. The capitalist development of China is an ideal case in that the country identifies itself as a Socialist state. The look into the changing dynamics of the countries historical developments shows a different perspective of the country’s economy. The paper pays special attention to relations between domestic and international social forces and the states that have combined to create a contemporary situation. The analysis of the situation looks at the issue that the countries faces to date and the recommendations on the way forward. The paper later provides a summary on the content of the paper.

History of socialism in China

As stated earlier, China records a long history in terms of culture, politics and economics. These factors have placed the country in a strategic position that has acted as an advantage to their development. Despite this, it took the country centuries to unite to form a union amongst the many dynasties. 1949 was a pivotal time for the country in that it was officially declared the people’s republic of China. At the forefront of the leadership was Mao who played a significant role in the creation of the republic. One of the features of the newly created state was their system of government that was socialist in nature. The country was previously under the rule of dynasties that is responsible for the creation of the different social classes. The four groups consisted of the elite, the capitalists, the peasants and the workers. The peasants made up for the 90 percentage of the population recording the group with the highest numbers (Gambe, 2000).

All the groups had an allegiance to the CCP which had generated a considerable amount of income from the membership fee. The peasants took advantage of their high population rate becoming a key group in the activities of the party. Mao being the head of the party rallied for better treatment of the peasant majority. He managed to gain leadership of the country succeeding the previous ruler at the time. One of the agendas of the party was to align all the groups so as to create a united community. This entailed uplifting the status of the poor and reducing the authority of the influential society. Becoming a socialist country was thus the way to go for the country so as to meet these requirements. Socialism is defined by the unification of all the assets of the country under the management of the government. The people are encouraged to work to their fullest potential so as to contribute to the general income of the economy. Individuals are limited in regard to the number of investments to undertake (Parry, 2010).

Another essential factor of socialism is that it only recognizes the existence of a one party state as opposed to a multiparty state. Being a one party state places the leader of the republic with a colossal amount of authority. This in turn, gives rise to an autocratic state that gives the ruling party the provision to make all the laws. Socialism initially discourages the interaction between neighboring countries. This is enhanced to promote the unity of the members of the local community. It also improves the business environment in the country owing to the support of the economies businesses. This system of government has been in place for a considerable number of years (Gambe, 2000).

China maintained a rigid socialist system until the introduction of a number of factors that changed the dynamics of the country. One of the factors that influenced the countries approach on socialism was the growth of globalization. Globalization is one of the agents of capitalism due to the interaction between different countries. China is one of the countries that embraced globalization making it change slowly from a socialist state to a developing capitalist state (Tselichtchev, 2012).

Globalization as a factor of Capitalism

Globalization is the exchange of ideas which is brought about as a result of communication, trade, immigration and technology. Globalization involves the interaction of people from different parts of the world creating a globalised world. One of the main effects of globalization is the enhancement of international trade. International trade involves trading in an open market environment. Having an open market allows for countries to remove barriers and sanctions that slow the process of international trade. There are several factors that enhance globalization. One of the factors that have a significant contribution to globalization is capitalism. Capitalism differs from socialism in all aspects making the two opposing system of government. Capitalism encourages members of a community to invest in a variety of franchises in order to maximize on an economies output. This in turn, promotes the rate of development of the country in question. The interaction between different countries during trade requires for free trade to prevail. A country that therefore chooses to invest across the boarders has an aspect of capitalism (Parry, 2010).

Differences between socialism and capitalism

Socialism and capitalism are two opposing theories which differ in more than one element. The study of the two systems is thus ideal in order to understand the varying factors that they both present. It is essential to recognize that both systems share some qualities such as the growth and sustainability of an economy. This however varies in percentage depending on the quality of leadership portrayed. One of the factors that set socialism apart from capitalism is that it limits the activities of the individuals in the state. Persons are expected to work towards the growth of the society as a whole. This discourages individuals to own their own property and carry out large investments. Lastly, socialism disregards the provision of an open market which is essential for the trade between countries in different parts of the globe (Tselichtchev, 2012).

Capitalism is associated with countries located in North America and parts of Europe due to culture that they follow. The features of capitalism differ from that of socialist state which as a result affects the outcome of the economy’s performance. Capitalist states are less rigid with the forms of economic investments that their citizens can partake. The United States is one of the staunch supporters of the capitalist way of life. The system is complemented by the democratic system of government that allows the existence of more than one political party. Democracy thus gives rise to a multiparty state. Members of a democratic economy have the ability to exercise their rights and privileges. This ranges from selecting the type of leaders to represent them in office to the trading in an open market. Capitalism is associated with maximizing on the production so as to increase production. Production leads to the increase in the GDP of an economy which is reflective of living standards of the citizens. Capitalism also poses a number of disadvantages to the community making the system face a lot of criticism in present day. The main effect of capitalism is the creation of an unequal state in terms of distribution of resources. This forms a gap between the wealthy minority and the poor who make up the largest percentage of the population (Parry, 2010).

Implications of capitalism in China

China is arguably one of the most developed economies to date. This is credited to their no nonsense culture that reveres hard work. As stated earlier, the country follows the socialist system of government that discourages individual investment and personal economic gain. The country has managed to maintain their socialist laws while competing with the most aggressive economies in the world. Chinas situation has generated a number of controversy in that they pledge their allegiance to socialism while they exploit the advantages of capitalism. One of the features of China as a socialist state is individuals do not have the freedom to invest in any economy that they see fit. This situation immediately out rules the economy as a possible embracer of capitalism (Tselichtchev, 2012).

A close look at the progress of the country’s economy from the time of its inceptions begs to differ. China shows a high rate of growth that socialist countries do not record. The growth rate is brought about by the contribution of the entire population. This case is however different from the United States in that individuals work as a whole to produce a large amount of goods and services. The profit of the country is however distributed in a different way in that the majority of the profit does not go to one avenue. This does not take away from the fact that the country follows the same capitalist principle as their rivals (Parry, 2010).

One of the implications of capitalism is the marginalization of different social groups due to the lack of equal distribution of economic resources. Capitalist states are notorious for recording a high rate of inequity. A capitalist society encourages its citizens to take on individual investments so as to make a profit. This system is positive due to the increase in motivation it relays to the economy. One of the disadvantages that capitalism enhances is the marginalization of the society. This results in the lack of equal distribution of resources and finances in the local communities. Despite China’s improvement in the lifestyle of it citizens, the country continues to record high rates of unemployment and poverty (Tselichtchev, 2012).

Relationship between the domestic and international social forces and the state

China continues to maintain its position as the fastest rising country in the global economy. The country has managed to get this reputation through the number of business investments that have undertaken over the years. China’s success did not occur overnight as presumed by a number of people. The country’s economy was first recognized in 1978 when it recorded an increase in its performance by 9%. This is a considerably large percentage in terms of economic growth. The country managed to sustain the rate of development increasing their status as an economic super power. The country has since gone as a far as produce more than half of the exports to the rest of the world. China continues to increase the variety of the goods they produce due to their emphasis on specialization. These statistics show that the country is practicing policies that are capitalist in nature (Parry, 2010).

China’s development of a capitalist economic system is defined by the amount of foreign investment that the country received annually. This ranks the country second to the united states in regard to amount of foreign investors they generate. China has managed to overtake Japan as the second highest developed economy. These dynamics threaten the position of the United States which has had the privileged of being the world’s largest economy presently (Tselichtchev, 2012).

The growth of the economy is reflective of the living standards of the citizens. One of the factors that enhanced this particular growth was the reforms introduced by Deng who was the minister of finance at the time. The reforms ensured that the country invested in several countries across the globe. This placed the country in a strategic position in that it formed a vast number of economic alliances and mergers globally. The country also managed to offer loans to a variety of countries willing to invest in the economy. This gave the country an upper hand when determining the international trading laws. Giving loans to their neighbors places the country at an advantage owing to the rate of interest that China stand to receive in the future. It is thus safe to conclude that China has shifted from their socialist way of life to a capitalist way of life (Gambe, 2000).

Social forces are factors that shape or influence the features in both local and international grounds. Social forces are inevitable in that they are interrelated and affect each in one way or another. There are different types of social forces that contribute to the shift of the social, economic and political state of a country. The analysis of the factor is thus ideal so as to provide a better understanding of the issue at hand (Hodgson, 2001).

Trade

Trade is the exchange of goods and services for money. Trade has been ongoing from the time man was in existence. The exchange of money has developed over the years due to the change in the cultures of concerned parties. The early forms of trade were simple owing to the interaction between communities in the same location. The introduction of factors such as globalization enhanced trade to a different level as a whole. Societies became accustomed to travelling across borders to acquire goods that they did not have at their disposal. This inclined communities to invest in facilities that promoted this type of trade. International trade is defined as the trade between two different economies. This form of trade is more complex due to the availability of different laws that prohibit the practice of certain ideologies, transactions and cultural norms. An advantage of international trade is the improvement of the quality of goods and services as a result of specialization of services (Kim & Lim, 2007).

China plays a vital role in international trade as discussed earlier. The country has in place a large population that has the ability to produce a large amount of commodities. Citizens in the country are highly skilled making the competition between the nationals stiff. Employers can thus hire a vast number of employees to provide adequate and efficient services. The countries relationship with the rest of the world is an essential aspect for the sustainability of its trade. China along with countries such as Russia, Venezuela, Cuba and North Korea embrace the same system of governance. The country has over the years changed a number of their socialist policies placing it in a different category. The development of the country as a capitalist state is seen through the change in the international trade policies that limit its citizens to invest in other countries. Individuals presently have the ability to invest in their country of choice increasing the opportunities that come as a result. The government has introduced sanctions that assist investors during the trading process. This includes giving individuals or group’s loans so as to reduce the pressure that comes with investing (Parry, 2010).

Debt

Dept is defined as the accumulation of loans brought about by factors such as high interest rates, recurring losses and lack of production. Many countries are experiencing dept in a large scale due to the lack of planning by those in authority. The United States reports half of their population as subject to debt. Individuals who borrow beyond their means are thus said to be at risk of facing high levels of debt in the future. Some investments require a colossal amount of money to take place. This results in borrowing from available sources in exchange of payment with an interest. During the 1970s the Chinese government introduced policies that saw the government take on the responsibility as creditors to the rest of their neighbors (Tselichtchev, 2012).

China has accumulated a considerable amount of disposable income at this time making the country subject to lending. This strategy was introduced so as to form alliances with the countries that took loans. The countries in turn had to meet the requirements of payment which included paying the loan along with the accumulated interest. China acts as creditor to more than half of the countries in the globe currently. One of the economies that owe the country a large sum of money is the United States. Despite the United States position as the world’s largest economy, the country is highly reliant on China for various aspects of their development plans. This strategy has proved advantageous to the country due to the amount of money they have received from the increased interest rates. This however exposes China to bad debts which occur as a result of the inability of the debtor to complete the loan accumulated (Tselichtchev, 2012).

To address this issue, the country has come up with a plan that manages the debt crisis. The country has put in place avenues which assist companies in collecting their dept form international debtors. China can also use this situation to their merit by accumulating property from the country in question. This increases the assets of china in other countries making it a key figure in foreign investment. These factors do not display the socialist way of proving that china has advanced into a developing capitalist society (Hodgson, 2001).

Recession

Recession is marked by the depression, decline or collapse of an economy. The globe has experienced a significant amount of recessions owing to the mismanagement of the liquidity by the banks. The most recent recession was experience in 2008 as a result of the distribution of mortgage loans at unrealistically high interest rates. There is a close relationship between debt and recession. Bad debt gives rise to repossession of property and the loss of money by the banks. This results in a credit crunch that sees a large percentage of the population living in debt. The recession affected most of the leading economies owing to the immense investments they have undertaken. The cause of the recession is traced back to the banks in the United States. The banks opted to offer subdued loans that targeted middle and low income families. The interest rest of these loans were high leaving the home owners at the mercy of the banks. One of the options involved foreclosing a majority of the homes at half the price. The events did not only affect the United States but countries as far as Asia and Africa (Kim & Lim, 2007).

The recession was felt in all parts of the world making it a globalised event. China was one of the countries that were hit greatly by the recession. Most of their foreign investments were affected making the economy record a decrease in the economic growth rate. This example shows the influence of external social forces in the success of the China’s economy. Recession as a social force is a vital factor because of the number of countries that record losses. The low production of economies such as the United States, the UK and Australia affected China’s rate of distribution. The country continues to cut down on expenses due to the events that unfolded during the recession. The countries capitalist development is thus responsible for its involvement in some of the economic downtowns experienced (Kim & Lim, 2007).

Globalization

The analysis of globalization from a capitalist point of view acts as an introduction in regard to the role of globalization in a capitalist development. The look at globalization as social force paves way for a different point of view of China’s interaction with both local and foreign investors. China has broken the barriers that had linked its economies to an enclosed market. Despite this, the country maintains some of their socialist views to date. Chinas political system continues to dictate on most of the economic reforms and decisions the country sanctions. As stated earlier, China is a one party state and therefore operates in a different way from that of a democracy. The government dictates on all the local and international regulations when trading. China is referred to as a late capitalist developer due to their early adaptation of previous systems of government before developing capitalism. One of the factors that made this issue unavoidable is globalization. The enhancement of globalization influenced the country to get involved with other countries as opposed to investing in local premises alone. The country changed its approach in terms of the social and cultural interaction. This gave the citizens opportunities to exploit overseas markets. Globalization and capitalism go hand in hand in that one factor influences the other. Globalization in this case acts as a social force of the country’s political, social, economic and environmental aspects (Tselichtchev, 2012).

Contemporary issues that the country faces as a result

Contemporary issues arise from the existence of the social forces in relation to china’s development to a capitalist state. China’s embracing of the global market has served as an advantage which is seen in the increasing economic boom. China’s move from their communist form of government has generated the country a colossal amount of wealth making the move significant to the countries sustainability. Despite this positive feedback, the country has exposed its citizens to the disadvantage of an open market. These issues are inevitable making the country deal with the social, economic issues that other capitalist countries experience (Kim & Lim, 2007).

Marginalization/welfare

Open markets work against communist principles that gunner for the equal distribution of resources across the different communities and social classes. China still holds on to a portion of its socialist culture making the country debate on whether to fully convert to capitalism. The country remains the most populated in the world. This factor acts as a challenge to the government in that they have to cater for the needs of the entire society. The development of capitalism in the country has over the years worsened the situation due to the creation of the previously eradicated social classes. Venturing into a globalised market has created a class of powerful and influential individuals in all social aspects. This change of dynamics has created a new class of citizens who are highly reliant on the people in authority. The country thus records the rising rate of poverty, employment and lack of efficient welfare. The marginalization of a vast number of communities continues to spiral which as a result increases the vacuum between the rich and the poor. This is not about to change seeing as the government cannot overturn the capitalist policies that have led to the country’s economic success (Hodgson, 2001).

Pollution

Another contemporary issue that the country is experiencing is the depletion of the environment. The Chinese culture has high regard for the proper treatment of the environment. The introduction of a free market has affected the countries environment negatively as a result. China’s embracing of foreign investors has increased the rate of urbanization and industrialization. A majority of the locations and traditional settings have been renovated to suit the needs of the new investments. One of the factors responsible for the damage of the environment is the rising demand of fuel. The economy is one of the largest consumers of fuel after the United States. This has enhanced the use of nuclear energy which is unhealthy for the entire ecosystem. The nuclear debate continues to take central state with the capitalist countries refusing to reduce on manmade fuel. This is ironic owing to the fact that they are the most accountable for the depletion of the earth’s environment (Tselichtchev, 2012).

Uncertain future due to the shift from communism, to capitalism

China is caught between a rock and a hard place in regard to their stance in the systems of government. The government is divided in that some of the members do not support the communist ideologies. The other half however chooses to remain true to their traditional roots causing conflict between the two parties. The people who argue for the complete switch to capitalism state that the country is one of the most capitalized countries in the world. Ridding the country of its communist ways will move the country to the next stage of development. The proposers for communism maintain that the government should have control of a considerable number of national properties. Encouraging foreign investors limits the number of resources the country owns. Giving into the capitalist culture will change the political, social and economic way of life of the country as a whole (Hodgson, 2001).

Recommendations

As stated earlier, China has gained tremendously from their capitalist developments. The creation of the different industries has improved the status of the country as an industrial power. The country is therefore in a position to cater for the entire population present in the country. One of the ways that they can solve the issue of poverty and unemployment is by creating a welfare system that allows for the increase of the allocation of money to the impoverished states. The country is not ready to change their capitalist policies. The government should instead curb the rising poverty rates by maintaining some of the communist rules that seek to monitor the equity and distribution of resources (Tselichtchev, 2012).

The country has recognized the continued depletion of their environment due to the industrial activities. This is an essential step towards the improving the ecological situation faced presently. The government should consider the use of natural resources so as to limit the building of nuclear plants. The demand of fuel continues to rise by the hour owing to the increased rate of development, industrialization and technology. These social issues are unavoidable and are here to stay. The country should embrace the green way of life and business which constitutes monitoring the way the industries and families consume their fuel. This should however start from the government who come up with environmental policies (Tselichtchev, 2012).

It is not clear whether the country will make the next step towards capitalism. The government should ensure that they maximize on the merits that come with both capitalism and communism vice versa. This will improve the situation of the country until they political authorities come up with a system that works for the continued sustainability of the economy (Hodgson, 2001).

Conclusion

The China situation is one of the most complex in all aspects of their economic growth. The countries move from a communist culture to that of capitalism has changed the dynamics of the country’s political, social, economic and environmental factors. This is highly influenced by the social forces which are inevitable to any economy. The debate on whether China can sustain its economy through capitalism continues to prevail. It is left for the entire globe to observe the events that unfold due to the level of uncertainty that the country faces in the future.

References

Gambe, A. (2000). Overseas Chinese entrepreneurship and capitalist development in Southeast Asia. Münster ; Hamburg ; London: Lit.

Hodgson, G. M. (2001). Capitalism in evolution: Global contentions – East and West. Cheltenham [u.a.: Elgar.

Kim, K.-D., & Lim, H.-C. (2007). East meets west: Civilizational encounters and the spirit of capitalism in East Asia. Leiden [u.a.: Brill.

Parry, R. (2010). China’s new enterprise bankruptcy law: Context, interpretation and application. Farnham [u.a.: Ashgate.

Tselichtchev, I. (2012). China versus the West: The global power shift of the 21st century. Hoboken, N.J: Wiley