After joining the World Trade Organization (WTO), China has thrived for the second place of being one of the world’s largest economies, just behind the U.S. But there are apparent differences between the two. 

Take a look at the four primary characteristics of China’s economic rise :

  1. Low per capita value.
  2. The high degree of monopoly by the wealthy officials.
  3. The dependence of enterprises on the corrupted bureaucrats.
  4. The widening gap between the rich and poor 

When China’s economic reforms began

The development of China’s economy used to be regarded as the “world factory” on an international scale. China recovered faster than the U.S. and other developed European countries after the global economic crisis. The CPP took advantage of this chance to tout its economic rise like it had surpassed Germany and Japan to become the world’s second strongest country. In less than fifteen years, it would exceed the U.S. and become the world’s largest economy. Under such advocacy, the CCP has created an illusion that China’s crony capitalism is better than European and American free capitalism, and it is worth copying.

In fact, besides the GDP per capita, it is necessary to compare the per capita national income. However, there is an apparent paradox in all of the CCP’s boasting remarks, which is to compare China—with a population of more than 1.3 billion—to Germany, which has a population of 82 million, and Japan, which has a population of 127 million. If China’s GDP is calculated on its population’s average, China lags far behind Japan and Germany and is inferior to Fiji and Algeria.

It only makes sense to use the GPD per capita to compare

According to the latest figures from the National Bureau of Statistics, China’s total GDP in 2008 was RMB 314,044.5 billion (originally it was RMB 303,67 billion, then the number was revised and 33,37.5 billion was added), which is equivalent to 44,520 USD at the average exchange rate of RMB 6.94 in 2008 against the U.S. dollar, 200 million U.S. dollars. Vision Times reported that with an average population of 1,324 million, the per capita GDP is 3,362 U.S. dollars.

In October 2009, Xinhua News Agency reported the latest report of the National Bureau of Statistics that China’s per capita national income was US$2,770, which is equivalent to RMB 18,836. However, since China covers a large territory, the gaps between provinces and regions are quite large. For example, Shanghai is an affluent area with a per capita annual income of nearly 30,000 yuan, while Gansu has only 10,000 yuan.

GDP can only show the overall economic strength, and it does not reveal the actual living standard of a country. Therefore, instead of emphasizing GDP, it is better to emphasize national per capita income.

The above-mentioned per capita income can only be seen as a general figure, and it does not indicate the gap between the rich and the poor in the same area. In fact, within a specific province or city, some are rich, some are poor, and there are always more poor people than rich people.

Liu Zhenmin, China’s deputy representative to the United Nations, said in a speech at the UN in October last year on the issue of this transnational organization’s apportionment ratio: 

“If the World Bank’s per capita consumption is less than U.S. $1.25 per day, the total number of poor people in China is more than 250 million.” 

U.S. $1.25 a day is equivalent to U.S. $456.25 a year, about 3,100 yuan. It means that there are still more than 250 million people in China whose annual income is less than RMB 3,100. Their income is as low as only one-third of the per capita national income of Gansu Province, the poorest area listed by the National Bureau of Statistics.

The uber-rich government monopolizes the country’s resources and wealth

The per capita national income does not show the enormous gap between the rich and the poor in China. According to Hurun Report, there are 825,000 multi-millionaires and 51,000 billionaires across China, but just private capitalists alone. The rich and powerful hidden in state-owned enterprises and central enterprises were not mentioned, probably because it is taboo and violates “state secrets.”

It is the state-owned enterprises that control China’s wealth. Under the State-owned Assets Supervision and Administration Commission of the State Council, more than 180 large consortia are called central enterprises. These companies monopolize all major resources and their operations in the country, from heavy industries such as nuclear energy, aerospace, munitions, aviation, electric power, petroleum, minerals, electronics, automobiles, shipping, steel, machinery, etc., to light industries such as textiles, to agricultural products such as grain and oil.

In addition, the People’s Bank of China, as the central bank, a part of the State Council, controls several state-owned commercial banks and private banks and leads the country’s financial policies. The China Securities Regulatory Commission monitors stock market activity, while China Investment Corporation is engaged in foreign exchange fund management and investment.

Since the Chinese stock market has grown, a considerable number of central enterprises have been split or integrated, listed in China and Hong Kong, absorbing private funds, and at the same time, opening up opportunities for bureaucratic capitalists to become corporate shareholders.

The central enterprises have an advantage: they have the right to receive state financial appropriation support. They can obtain capital increase from financial appropriations or bank loans at any time, as long as the central government considers it necessary. Since the central government decided to implement the “going out” policy of outward expansion, some companies like petroleum and gas companies and rare metal ones have been able to carry out acquisitions and mergers to countries worldwide.

Chinese banks’ lending is affected by government policies and wealthy political forces. Therefore it cannot be absolutely autonomous, which leads to a high lousy debt rate. However, under the protection of the government, these banks are unlikely to face bankruptcy. Due to this situation, then- Prime Minister Zhu Rong Ji had no choice but to aim for a divestiture strategy. In 1999, he divested from four state-owned commercial banks and development banks about 134 billion yuan of non-performing loans. He placed them under the management of four asset management companies, hoping to update the bank’s management system.

During the Wen Jia Bao era, a second divestiture was carried out in 2004 and 2005. According to the standard of the typical western banking system, Chinese banks could have gone bankrupt multiple times.

Enterprises rely on the monopoly system lead to a “country forward, people backward” situation

China’s economic system is a command financial system that the government monopolizes. After exhausting the pains of the planned economy, this system has changed its course, implemented marketization, and is in line with the world market and world capital. The government’s behavior was renamed macro-control; thus, the political monopoly of power combined with the economic monopoly has formed power-money capitalism.

The CCP generously released more than 10 trillion yuan to stimulate investment, to offset the impact of the sharp decline in exports, and things temporarily stabilized. However, this large-scale stimulus did not stimulate domestic demand but only provoked frenzied speculation for a while. The consequences are the hidden dangers of the economy and inflation.

The global economic crisis has promoted the expansion of Chinese government-owned enterprises worldwide, but the government monopolizes the market economy. It is not a truly free market but rather a market economy based on government and business interests.

Therefore, private capital is greatly disturbed by the political power in such a market economy. All private enterprises, big or small, must be supported by bureaucrats for their existence and development; in most cases, vast amounts of benefits must be transferred to bureaucrats to survive. Such collaboration does pose a significant threat to enterprises. Once their backing-force failed in the political war within the CCP, they might follow the horror.

Huang Guangyu, who was the richest man on the Hurun Report in 2007, went to jail in 2008. From 1999 to 2009, Hurun 100 wealthiest people have dropped a total of 50 rich people; 19 of them were sentenced to jail or awaiting sentencing, including Zhou Zhengyi, the richest man in Shanghai.

Yang Bin, a Chinese Dutch chairman of Ouya Industrial, and Mou Qizhong, chairman of Nande Group, were sentenced to 18 years in prison. Greencool’s chairman Gu Chujun was sentenced to ten years. Yang Rong, chairman of Brilliance Auto, fled to the United States after the authorities confiscated his assets. Some people joked that the Hurun List is a “slaying pig list” and that you will be gone if you are on the list. This is a generalized portrayal of the tragedy of China’s private entrepreneurs.

The current Chinese economic system is a market economy monopolized by the powerful government. In this situation, most of the fruits of economic development and their benefits fall into the hands of the powerful political force, resulting in a great inequality in the distribution of social wealth. Such a society will never be a modern society, let alone modern civilization. The people will always be oppressed and enslaved, without freedom and equality.

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