China’s Communist Collapse: Why Capitalism Is There To Stay

Socialism is a dying concept in China; gone are the days of Mao’s green jacket and the People’s Communes. Walk down Nanjing Road in Shanghai today, and you will see the Chinese people spending more money than their grandparents dreamed of. General Motors, Rolex, Gucci, and thousands of other Western brands have poured into China over the last 20 years. People have more disposable income than ever before, consumption is up to new heights, and the private sector is booming with foreign investment flowing through Shanghai and Hong Kong, especially with the Shanghai-Hong Kong stock exchange connect. Capitalism has arrived in China, and it’s there to stay.

To understand the changes that China continues to undergo, one must look at its recent past. 50 years ago, the People’s Republic of China was undergoing the worst period of its existence — The Cultural Revolution. Offices and schools were closed, factories shut down, millions of people executed and tortured, the economy left reeling from the effects of the Great Leap Forward, and famine was rampant across the land. A small group of powerful figures in the Communist Party, led by Deng Xiaoping and known as the Pragmatists, tried to check Mao’s power and institute economic and land reforms to stop famine and encourage economic growth. Mao didn’t like unrest in the party, and he had the Pragmatists purged and exiled. 11 years later, in 1976, Mao Zedong died, and the Cultural Revolution finally came to an end. Two years later, Deng Xiaoping had replaced his deceased rival as the leader of China, and true to his ‘Pragmatist’ nickname, began a series of huge reforms throughout the PRC.

Deng quickly decentralized trade, and the Chinese Communist Party began to promote microeconomics by breaking apart the massive people’s communes. Many of these monstrous and largely inefficient State Owned Enterprises (SOEs) were broken in Town and Village Enterprises (TVEs), which were considered by the party as a transition from socialism and nationalized industry to capitalism and privatized industry. Furthermore, Deng tackled the problem of famine and illegal farming by instituting the Responsibility System of 1978, which allowed peasants to privately cultivate land that was leased to them under contract by the government. While still a flawed and imperfect system, this allowed for food surpluses to be created throughout China and paved the way for economic growth. Throughout the 1980s and 90s, Deng and the CCP encouraged foreign investment in China. Even after Deng stepped down in 1992, the CCP still encouraged growth in the economy and passed the Tax Reform of 1994, granting more disposable income to the average person in China and creating the world’s largest consumer market. Finally, in 2001, China joined the World Trade Center. From 1978 to 2014, China’s GDP has grown from 168.5 billion USD annually to over 9000 billion USD annually. In 2015, Shanghai and Hong Kong opened a joint stock channel, allowing investors from Mainland Chinese Stock Exchanges to invest in the Hong Kong Stock Exchange and vice versa. Xi Jinping, the current President of China, is widely known for prosecuting CCP members for corruption, largely in an effort to make China safer for foreign investment banks and private equities. As of the modern age, China is a wholly capitalist nation.

This begs the question: If China is a capitalist society, why are its people still living under a brutal authoritarian regime? Shouldn’t the CCP come toppling down any day now? Won’t it be a grand and marvelous spectacle, with hundreds of thousands of people streaming down the avenues of Beijing, Shanghai, and Hong Kong, singing and clamoring about freedom and liberty?

While this may be the ideal outcome, unfortunately for China and its citizens, it simply won’t be the case. The fall of the Chinese Communist Party will most likely be preceded by a lengthy build-up, a continual weakening of the state until its final and rapid collapse. The outermost regions with the most minority unrest, such as Xinjiang, Tibet, and Inner Mongolia, will break off and form independent nations. Inevitably, there will be a period of instability, just as there was after the last dynasty fell to ruins in 1911. However, luckily for this long oppressed country, democracy is slowly but surely coming. As the Hong Kong Umbrella Revolution proved, the horrors of the Tiananmen Square Massacre should not and cannot be repeated. The next time the incensed people march for democracy, they will be successful in their mission. To quote the timelessly wise Chinese philosopher Confucius, “Only the wisest and stupidest of men never change.”

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