Is China the most capitalist government in the world?
I mean this in a very specific way. They are clearly not a democratic or open government, and they preside over the largest socialist system in the world. The rulers still claim communism (at least, in name) as their guiding policy framework.
At the same time, though, China has more money and more foreign reserves than any other government. And they’re showing their desire to use this money in a very capitalistic way. A simple example: they were recently asked by an embarrassed European Union delegation to provide funds for an EU bailout. They declined.
Many diplomats tut-tutted about this, explaining that China continues to refuse to accept its “responsibilities” as “part of the international community”. I have a different view. China is waiting for the assets it was asked to buy to fall to even lower prices (as they surely will do in 2012), and then they’ll start buying them. Pure capitalism.
The same mindset governs when and how much American debt China is prepared to buy.
And a similar mindset governs the Chinese economic elite as they look around the world for investment opportunities. For example, Chinese investors are fuelling an unbelievable property boom in central London. This chart shows how prices have risen by 24% since November 2010. (Recession? What recession?).
When the recession in the West is over, I am pretty convinced that China will emerge as one of the big winners. Mainly because they did the most capitalist of things: buy low, so you can sell high.
So, I think my question is more than fair. At a time when America’s President is (unfairly and incorrectly) being accused (by some Republican presidential candidates) of turning America socialist, is China becoming the most truly, purely capitalist thinking government in the world?
It’s these sorts of subtle shifts that need to be watched if we don’t want to be surprised by change in the future.