No such thing as ‘state capitalism’ in China

Edited and Translated by People's Daily Online

Certain Western officials and scholars have repeatedly criticized China for implementing “state capitalism,” claiming that China encourages its state-owned enterprises (SOEs) to monopolize resources and stifle the growth of foreign investment. Based on what they believe to be unfair competition practices, they have called for restrictions on overseas investment by Chinese SOEs. However, their claim is totally untenable.

First, China is marching on the road of socialism with Chinese characteristics, instead of implementing “state capitalism.” The country adheres to the basic economic system with the public sector remaining dominant and diverse sectors of the economy developing side by side as it suits the country’s development level and serves the interests of the Chinese people.

The Chinese government has carried out the SOE reform, made efforts to solve the financing problems facing small and medium-sized enterprises, and encouraged and guided private investment in sectors not prohibited by laws. The country has gradually deepened various reforms, which have yielded positive results. The market economy is growing to maturity in China, where the relationship between state-owned and private companies will become more harmonious, and the people’s welfare will be further improved.

Second, China does not support domestic companies’ pursuit of oligopolistic interests, and treats foreign and domestic companies equally. More and more multinational corporations are willing to set up their regional headquarters as well as research and development centers in China because the Chinese government has long been committed to creating an open, transparent, and fair market and legal environment and to strengthening the protection of intellectual property rights. The increasing openness of the huge Chinese market has become the primary determinant of multinational corporations’ investment in the country.