Is China now more capitalist than the US?
posted at 8:27 am on December 11, 2008 by Ed Morrissey
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In response to the financial crisis of 2008, the United States has responded by nationalizing industries and electing a president who promised to raise taxes on entrepreneurial efforts. China, the nominally Communist nation, has responded by cutting business taxes to stimulate growth. Remind me which nation supposedly supports capitalism and free enterprise (via Q&O):
CHINA may soon cut business tax as part of its efforts to prop up the slowing economy amid the global financial crisis, state media reported on Tuesday.
The government is ‘very likely’ to soon cut the business tax for enterprises by one percentage point, the China Daily said, citing an unnamed source close to policymakers.
China’s current business tax varies from three to 20 per cent, boosting government revenue by 600 billion yuan (S$131 billion) last year, according to the paper.
The news follows other state press reports last week that Beijing was planning to cut business tax for commercial banks – possibly to three percent from the current five percent, to help improve their capital adequacy.
While China improves its business climate by lowering the burden of state confiscation, the US plans to increase it, and in some cases by a significant amount. Meanwhile, the House last night voted 237-170 to sink $15 billion into the American auto industry, with government officially owning part of three private auto makers in order to dictate to management how to run their businesses. Management welcomed the move, and in fact wanted Congress to buy an even bigger stake in these companies.
Which nation is capitalist? And which is Socialist? And which party is more of one than the other? It’s hard to tell, since 32 Republicans voted for partial nationalization, and 20 Democrats voted against it. Perhaps Senate Republicans can make the distinction a little more clear with a filibuster to block this new direction in American economics.
When one looks to Beijing for rational tax policies … well, that’s just a sad day for Americans, even if it does portend a brighter future for China.
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Hmmm…
SuperManGreenLantern on December 11, 2008 at 8:32 AM
Well since a policy of lower taxes is the most important government objective, maybe supply siders ought to move to China?
e-pirate on December 11, 2008 at 8:33 AM
With Dumb-O as our leader and a corrupt political class, along with a cretinous welfare state electorate, we deserve every miserable moment that we are going to experience.
Say “zaijin”, good ol’ USA!
TexasJew on December 11, 2008 at 8:37 AM
Future’s so bright, gotta where shades…….
Saltysam on December 11, 2008 at 8:39 AM
Yes. Yes, China is. And China even does not have icons raised for its leader.
rbj on December 11, 2008 at 8:39 AM
3-20% tax rates?! Our corp tax is 35%!
China has no regulation on business either. They have a lot more capitalism going on. They’re like the US in the 19th century.
lodge on December 11, 2008 at 8:40 AM
e-pirate on December 11, 2008 at 8:33 AM
A case in point, filed under both “cretinous” and “welfare state”.
TexasJew on December 11, 2008 at 8:40 AM
I believe God is disciplining or judging our nation.
We have the greatest Constitution on Earth, a rich heritage of heroes & statesmen, & a Bible in nearly every home, but ignorance (or ignoring) of all these is killing us.
jgapinoy on December 11, 2008 at 8:41 AM
What part of “secure the blessings of liberty” do you not understand?
Saltysam on December 11, 2008 at 8:42 AM
This is a temporary phenomenon based on very different domestic circumstances. In the long run, China can never really be capitalist. That requires a cultural determination that growth is most important goal. Chinese culture has always maintained that stability is the most important goal. China needs 8% growth to maintain stability, and that is what everything revolves around. The US is suffering from a passing phase of deep pussification, and, though that may go on for some years, it is truly unamerican and we will eventually be rid of it. Don’t let temporary measures of government activity obscure the nature of the underlying society, which is where the real distinction lay.
Or … we could have come to the end of our run.
progressoverpeace on December 11, 2008 at 8:43 AM
…or Hong Kong in the 20th.
Saltysam on December 11, 2008 at 8:45 AM
Gulp.
Once their middle class starts growing and their Christian population reaches the point where it can’t be kept underground I think you will see some serious reforms towards democracy. It’s a slow process, much like our creep towards socialism.
BadgerHawk on December 11, 2008 at 8:46 AM
It’s hard, if not impossible, for the reasons you say, for China to inherit the mantle of protector of Western Civ. The US must hold on longer. No one is waiting ready to assume the job.
JiangxiDad on December 11, 2008 at 8:48 AM
Also, I think China calls them SEZs (for Special Economic Zones). They’re specific blocks of China, designed to attract foreign business, that operate almost exclusively on capitalistic principles and have almost no Chinese govt regulation.
This was 4 or 5 years ago, so the SEZs may not still be around (or they may have expanded).
BadgerHawk on December 11, 2008 at 8:49 AM
Wasn’t it Donald Trump stating that the banks took $8 billion of the hand out money, and bought a Chinese bank?
right2bright on December 11, 2008 at 8:49 AM
I was hoping we’d move at the same pace, although in opposite directions. Right now, we’ve accelerated our decline.
JiangxiDad on December 11, 2008 at 8:50 AM
You are certainly correct about a spread of Christianity having that effect. But they are still fighting that very hard. The individualism of Christianity scares them greatly, I think, as it goes against their traditional collectivist/tribal values.
progressoverpeace on December 11, 2008 at 8:50 AM
Yes, into HUGE cities. But they’re still not ready to help.
JiangxiDad on December 11, 2008 at 8:51 AM
The Chinese are naturally entrepreneurial: just look at Taiwan and Hong Kong. Both places have (had) low corporate taxes, and both have flourishing small and medium businesses.
In general, corporate taxes are stupid, and distort investment. Let the recipients of dividends (or capital gains in lieu) pay the taxes.
mr.blacksheep on December 11, 2008 at 8:52 AM
China turning Capitalist and the US turning Socialist…who woulda’ thunk it?
SuperManGreenLantern on December 11, 2008 at 8:53 AM
Dittos on that.
The Chi-com’s already tried the Cult of personality thing and figured out that it’s a failure. Maybe they will figure out that Socialism is a complete failure as well.
Sadly we have to repeat those lessons.
Question is: Who will be leader of the “Free World” down the road?
FirstBrigade on December 11, 2008 at 8:54 AM
The cleansing events that must take place in order to purify the American marrow horrifies, though.
Neverthless, it is inevitable and necessary.
Saltysam on December 11, 2008 at 8:55 AM
I can guarantee you that O’Boingo is going to try as hard as he can to make sure it’s either Russia or China, but most of all not us.
mr.blacksheep on December 11, 2008 at 8:56 AM
Our lefties would like nothing better than to have China calling the shots around the globe.
It will pretty ironic to have to defend my home from the Chinese with my Norinco Mak-90.
Bishop on December 11, 2008 at 8:57 AM
Yes. At some point, the US will awake from its truly deep slumber, but I would still trust the Chinese to move Man forward, if at a slower pace than Western Civilization did. I’m still holding out for a great commercial race into space with the Chinese and the Russians. That would be great for everyone, and there’s enough wealth to be created in commercial space development that it would make our current deficits and debts look like nothing. We only need to hold on for that. And I think that Badger made a great point with Christianity and the effect it could have on the Chinese.
progressoverpeace on December 11, 2008 at 8:57 AM
As we used to have on the wall in the wrestling room, “No pain, No gain”.
progressoverpeace on December 11, 2008 at 8:58 AM
Good points.Let’s hope so.
JiangxiDad on December 11, 2008 at 9:01 AM
Not yet . . . but just wait a few years and it will be.
rplat on December 11, 2008 at 9:03 AM
Ed, China is capitalist just like Iran is democratic. They have the trappings, not the essence.
Phoenician on December 11, 2008 at 9:07 AM
Unfortunately, those that have endured much pain to gain are being told that they must suffer more pain so that those that haven’t won’t.
I find it an odd irony that Jefferson was adamant that there be public university (state funded …and speaking only for Virginia, of course) so that there was an educational mechanism to preserve liberty.
I wonder if he saw this far into it.
Saltysam on December 11, 2008 at 9:07 AM
In my ‘umble opinion, there is a heck of a lot more involved in a free society than capitalist fiscal policy. The Chinese are still light years away from relinquishing power to the people.
Mind you, given the mess that “the people” have made of the free world, maybe I should just shut up.
OldEnglish on December 11, 2008 at 9:07 AM
Mind you, given the mess that “the people” have made of the free world, maybe I should just shut up.
OldEnglish on December 11, 2008 at 9:07 AM
At least free people have the ability to take their nations back, just as we will have to do after the next four years.
The Chinese may have capitalist cladding, but the money is flowing to the politburo thugs and their lackeys; they have good reason to let it happen.
Bishop on December 11, 2008 at 9:14 AM
To answer the headline question, Yes. The bigger question is when the next great offshore movement begins… that of corporate headquarters to places like India and Singapore.
michaelo on December 11, 2008 at 9:14 AM
How interesting. I am currently in China now on a business trip. I lived in China for 2005-06.
The issue is to stimulate business. According to Monday’s China Daily – delivered to my hotel room on Thursday afternoon (talk about being on the ball), Industrial added value growth is currently at a 7-year seasonally adjusted low, Direct foreign invenstment is down 2% for October, and the CPI went up 4% in October. They are truly worried here.
And religion is not as important as some of you might think. Yes, it’s Christmas here as well, but it’s all decorations without the reasons as to why. As far as most Chinese are concerned Jesus was just a good philosopher – nothing more.
Make no mistake about it – they are becoming Capitalist – but other facets of the country are tightly controlled. The BIG story in China Daily – They are PISSED at Sarkozy for meeting with the Dalai Lama. Front page, Lead editorial and a major story about Tibet on the editorial page.
Most middle class Chinese are just trying to make a buck and a better life for themselves and thir families. Remember that over the past 15 years, China has brought roughly the equivalent of the entire US population out of desperate poverty. This will be their undoing in the long run.
Dr.K on December 11, 2008 at 9:14 AM
A good post by Ed, but one that left me sick to my stomach. Why can’t Pres. Bush just pardon a few crooks and filch a few WH knicknacks in his last days, like his predecessor did? It will take us years to recover from the damage he is doing in his final weeks, assuming we do recover.
james23 on December 11, 2008 at 9:16 AM
To Iraq, Incompetence and Illegals you can add: Insolvency. Legacy building.
james23 on December 11, 2008 at 9:18 AM
We need to get away from this contemporary mindset that capitalism is a fiscal “policy”.
It is that free markets are a natural result of individual freedom and liberty itself. Capitalism is a canary in the mine shaft, and we had better realize that.
To paraphrase a great economist, Walter E. Williams:
We’ve been headed in this direction for over fifty years.
Saltysam on December 11, 2008 at 9:20 AM
is there still a free world??
right4life on December 11, 2008 at 9:21 AM
That’s true. But the important point is when our government comes to the realization. We have been living for years with the idea that recessions were almost declared to be illegal. It’s no wonder that US companies are brittle and fall into near bankruptcy at the first hint of contraction, like an overgrown forest that no one ever let burn every once in a while. Recessions are important to have every so often, to get rid of the marginal companies that can’t stand economic downturns and to sweep the ashes away. Since we put off the smaller economic pains for a long time, we’ll just have to go through a big one. The longer we put it off, the worse/longer it will be. At some point we need, as a country, to bite the bullet and just do it.
I have to say, I’ve never liked Jefferson. Education has little effect on preserving liberty, in my mind. To me, liberty flows from private property rights more than anything.
progressoverpeace on December 11, 2008 at 9:23 AM
Grin. Of course it is. You can’t liberalize (in the old-fashioned way) a society and allow free enterprise, and not ultimately end up with the diseases that afflict liberalism. Democracy does indeed seem to be self-limiting. Nevertheless, China could have a very good 200 year run like England did, like we did, and like they’ve done before.
JiangxiDad on December 11, 2008 at 9:25 AM
I already did. Lower taxes, higher density of hot babes, decent beer costs less than potable water. The air quality sucks though.
DarkCurrent on December 11, 2008 at 9:29 AM
China still has one-party autocratic rule, with State controlled Media. They love Obama over there also…China is doing this out of desperation, they have huge Demographic problems.
that said, maybe we need a one-party, pro-business right wing benevolent dictator to cure our govt./union problems….heh
jp on December 11, 2008 at 9:33 AM
other problem for china, they are completely dependent on United States consumers, if we fall they are screwed.
jp on December 11, 2008 at 9:34 AM
If we fail there are a few billion people on Earth who are going to realize that their very existences were made possible only by the US economic engine and the great generosity of Americans they love to hate so much.
progressoverpeace on December 11, 2008 at 9:38 AM
Hey, maybe this is a good way to convince liberals that cutting taxes is a good idea.
“Hey, look! The communists are doing it! You love everything they do, right Kos?
jimmy the notable on December 11, 2008 at 9:39 AM
I think I read somewhere Christianity was the fastest growing religion in China, something like 30k a day were converting. I think Michelle has wrote abotu that
jp on December 11, 2008 at 9:39 AM
There sure are a lot of politburo thugs in designer clothes shopping at the mall where my office building is.
China is becoming capitalist. Granted it certainly still has a long way to go on the civil liberties side.
I first visited here 18 years ago. It was a broken down third-world mess, and still is outside the big cities and in pockets within them. Even so, it’s moved incredibly fast towards a capitalist economy in a short time. Of course the reason it’s allowed is to keep the single-party government stable by allowing the population to feel that things are getting better. Even so people’s economic lives at least are improving immensely. The other things may follow in time.
DarkCurrent on December 11, 2008 at 9:42 AM
Mind telling us which city you live in?
JiangxiDad on December 11, 2008 at 9:48 AM
alot of the chinese economy is based on Counterfeit goods, its rather amazing what all they counterfeit. Its easy to buy from them now too with the Internet and they have sorts of schemes and contacts to get it through Customs. The Chinese Govt. knows exactly what is going on too, they are walking a fine line.
jp on December 11, 2008 at 9:48 AM
Has been since Deng Xiao Ping. China is more like a Dickensian nightmare for the lower 95% than any thing like a “workers” state. pfftt!
abobo on December 11, 2008 at 9:52 AM
E-pirate has a valid point, Saltysam. It’s rather hard to enjoy the ‘blessings of liberty’ when your nation’s economy is falling apart at the seams. As an unemployed friend succinctly put it, “Free speech doesn’t pay the rent.”
LOL. We will NOT take our nation back after the next four years. Probably not even after the next eight for that matter. What we’ll do is vote in another dude in a suit with a D or R after his name who looks and sounds peachy keen – and maybe he’ll even have a sterling background. And once he actually gets elected, the best we can hope for is a slower rate of decline than the last time.
Unless of course we try something different…
Dark-Star on December 11, 2008 at 9:53 AM
Sadly, that’s another good question.
We were the last bastion, a place were the oppressed peoples of the world could take refuge.
Is that still True?????????
FirstBrigade on December 11, 2008 at 9:55 AM
Highly doubtful even now, and it promises to be an outright “No” before I turn 30.
Dark-Star on December 11, 2008 at 9:58 AM
Shanghai. Here is where I work. I can see my office window in this pic.
DarkCurrent on December 11, 2008 at 9:59 AM
It is. Something like an estiamated 60 million Christians in China. But it’s hard to know for sure because the only legal churches are state run, so a lot of Chinese worship secretly in house churches. China is the biggest market for Bible sales globally too.
BadgerHawk on December 11, 2008 at 10:01 AM
on Lew Rockwells blog a few months back, on his 20th Century “man of the century”.
heh, he just mascered a bunch of Chinese Students and yet Lew Rockwell claims to be a Civil Libertarian.
Reagan? No, Churchill, No….Deng from China, all because he opened up their economy some.
Currently, Chinese businessmen if they get caught counterfeiting in large quantities are arrested and tortured in best case scenario.
jp on December 11, 2008 at 10:01 AM
what type of business are you in?
jp on December 11, 2008 at 10:03 AM
Who is John Galt?
thomasaur on December 11, 2008 at 10:03 AM
From Karl Denninger, “Den of Liars,” posted today at http://market-ticker.denninger.net
This epiphany puts the auto bailouts in perspective. If the US automakers make, say, $2k off each unit, they’ll have to sell 7.5 million more cars just to break even. They must do that in an economy where car sales are way down due to the buyer’s inability to buy. Any increased sales contributes to GDP, but my guess is that if one subtracted the bailout money and the interest it will cost, the real change in GDP will be NEGATIVE.
shuzilla on December 11, 2008 at 10:03 AM
Software development.
DarkCurrent on December 11, 2008 at 10:05 AM
Know it. Been there a few times. Quite a city these days.
Really miss the Xiao Long Bao (Shanghai style steamed soup dumplings) YUM!
JiangxiDad on December 11, 2008 at 10:09 AM
You’re right, of course, it’s just that I have ceased to pine for true Capitalism, seeking, instead, a return to more responsible times. I very much doubt that we would ever return to the days before income and profit taxes, which turns Capitalism into a policy, rather than a natural state of affairs.
OldEnglish on December 11, 2008 at 10:11 AM
Don’t make me make excuses for other libertarians, we are weird bunch, admittedly…
abobo on December 11, 2008 at 10:12 AM
Indeed.
progressoverpeace on December 11, 2008 at 10:15 AM
there is a clique in that Rothbard-Anarchist crowd that Rockwell represents that are obsessed with China and think its the beacon of liberty in the world.
These same people claim to be ‘non-interventionist’(isolationist) and champions of “civil liberties” and at the same time think China is the way to go right now. rather amazing really, they hate the USA. I guess for interferring with the free market. I wonder sometimes if the US got rid of all business regulations and taxes if the Ron Paul clique would quit caring what the United States did to defend itself.
jp on December 11, 2008 at 10:16 AM
China’s capitalism will not be like American capitalism at all.
lexhamfox on December 11, 2008 at 10:19 AM
Well, if we call them ChiComs, are we now then, UNIComs? Or would it be AmeriComs?
juanito on December 11, 2008 at 10:19 AM
It is, and a huge transformation from my first visit in 90 or 91 (don’t remember exactly).
As for my comment above about “higher density of hot babes”, I should clarify that since I’m married and blind to those kind of observations anymore, I’m relying on the typical remarks from visitors from the US HQ. They do remark on it consistently however, so I assume it’s true.
DarkCurrent on December 11, 2008 at 10:20 AM
Are you sure your not talking about the US in the near future?
FirstBrigade on December 11, 2008 at 10:20 AM
Many of us would be too busy getting high and hawking imitation wares/fake memorabilia crap on ebay to worry about that, unfortunately…
abobo on December 11, 2008 at 10:21 AM
Americoms FTW!!! Sounds like a band of Transformers: The Americoms vs. the Decepticoms, awesome!
abobo on December 11, 2008 at 10:22 AM
we deserve every miserable moment that we are going to experience.
I believe God is disciplining or judging our nation.
We have the greatest Constitution on Earth, a rich heritage of heroes & statesmen, & a Bible in nearly every home, but ignorance (or ignoring) of all these is killing us.
jgapinoy on December 11, 2008 at 8:41 AM
Stop with the God stuff. This is a creation of man. Men (and women) who have voted, time and again, against our Constitution. Both Dems and Reps, believe it or not. Until we take control of our country from the socialists of both parties we’ll continue to see the results we’re currently seeing. Keep voting blindly for Republicans though, because Christ knows they’ve been the salvation.
RWLA on December 11, 2008 at 10:32 AM
Yes, of course, we do understand. :)
OldEnglish on December 11, 2008 at 10:33 AM
curious, what is their position on Intellectual Property(i.e. Counterfeiting of brand names)? It is one of China’s main industries, and there is an absolute Fortune to be made doing it, if only for the laws against it in the USA.
jp on December 11, 2008 at 10:34 AM
Don’t forget..
Barack thinks that China has a better infrastructure than we do..
DaveC on December 11, 2008 at 10:44 AM
LOL. Don’t you just hate it when a women is staring you right in the face just because you were simply staring at her breasts? Sheesh.
JiangxiDad on December 11, 2008 at 10:48 AM
China has regulation on its people. Laissez faire capitalism without freedom.
SilentWatcher on December 11, 2008 at 10:49 AM
But he doesn’t point out their lack of an enviromental lobby.
thomasaur on December 11, 2008 at 10:49 AM
Im seriously sick of people propping up the chinese whether it by how great their society is or how great their businesses are etc etc. Its all a facade. It wasnt long ago the biggest fear on the global economy was that the increased standard of living would lead to higher wages for its workers and it was feared that it would cause China to export its inflation back to the US. That was when its GDP was running at 10% its PPI was running at 10% but just in the last year the PPI has dropped to a 2% PPI so basically it is in a deflationary mode. ALL of which is post olympics. The fact is the olympics was used to prop up their society when the government brought the masses in from the country side to build and produce (see obamas New deal) but that is not sustainable. as you can see know in that it is over…
CaptainObvious on December 11, 2008 at 10:54 AM
Obama on China:
He’s already decided to recreate the WPA to bring our infrastructure
updown to China’s level, I wonder if he’ll get a clue about taxes?Kafir on December 11, 2008 at 10:55 AM
It doesn’t yet, but while we allow ours to slowly decay and waste huge sums building bike trails instead of roads, China is rapidly building their infrastructure.
We’re moving towards socialism and decay while China is moving towards capitalism and development. The US needs to wake up, realize the facts and reverse course immediately.
DarkCurrent on December 11, 2008 at 10:55 AM
Um, that’s not necessarily a good thing. Unless you like lead based toothpaste, toys, etc.
Mike Honcho on December 11, 2008 at 10:58 AM
As I said, I’m now blind to all that. I don’t know who’s looking at what, and I certainly can’t tell what may be randomly passing before my eyes.
DarkCurrent on December 11, 2008 at 11:02 AM
I just finished David McCullough’s “1776″ … 61.7 million of us should be ashamed.
ex-Democrat on December 11, 2008 at 11:04 AM
And if it had freedom with growing prosperity, how would you eat?
LevStrauss on December 11, 2008 at 11:05 AM
I’m surprised you could get through to Hotair…..not state-filtered?
ex-Democrat on December 11, 2008 at 11:09 AM
Great book. I gave my copy to my 12-year old son is reading it now.
I haven’t read John Adams by same author, but I got my mother to send me the HBO DVD series from the states. Highly recommended as well.
A week after I finished it, I was looking through the pirate DVDs being sold out of a cart near home (just looking, with my blind eyes). I was suprised to find the John Adams DVD set for sale.
In China you can now read Hotair online and find John Adams DVDs for open sale on the street…
DarkCurrent on December 11, 2008 at 11:11 AM
John Adams on my bedside table now. :)
Let’s roll.
ex-Democrat on December 11, 2008 at 11:16 AM
China has first hand experience with the loony left’s love-affair with Central Planning.
Nobody in the loony left has a clue.
All China has to do is emulate the U.S. from the 50’s through the 90’s. They don’t need to fight us to become the dominant country in the world. We have elected Harvard graduates to speed the process for them.
notagool on December 11, 2008 at 11:25 AM
No, it’s not. Contrary to common perception most of the internet is not actually filtered here. I’ve been reading HotAir from here for a few years and posting for a few months. So far I’ve never been blocked nor heard a knock at the door in the early morning hours.
Satellite TV is also supposedly illegal, but most of the apartment buildings sprout a forest of dishes.
DarkCurrent on December 11, 2008 at 11:27 AM
Maybe in business and infrastructure China is more capitalist.
But not on freedoms.
Kini on December 11, 2008 at 11:30 AM
The Chinese Century is taking shape sooner than I suspected. Sooner because we are doing our best to make sure they become the world’s economic leader.
If it weren’t for guys like Shelby the move to Socialism might already be complete — and this is under Bush! But even Shelby may not be able to stop Obama.
grdred944 on December 11, 2008 at 11:46 AM
China is certainly not nearly as free as the US in a general or political sense. However capitalism is an economic system, not a political one.
In terms of economic trends China is without doubt moving even more quickly towards capitalism than the US is towards socialism (which is to say very quickly).
DarkCurrent on December 11, 2008 at 11:49 AM
Despite the positive things I’ve said about recent developments in China, I remain very skeptical that China will displace the US as the dominant world power. China does have huge demographic and resource problems that are only going to get worse and actually seem almost unsolvable in the mid and long term.
I do expect the US will manage to maintain a lead, but not as comfortable and decisive a lead as it could with more clear thinking on the part of her citizens/voters.
DarkCurrent on December 11, 2008 at 11:55 AM
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