Will the Trade War with America change Chinese Economics?

Cate Pollini

 

China is a single party dominant system, controlled by the Communist Party of China, which was established by Mao Zedong. After Mao’s death, economic reforms were made to create “market socialism” by providing greater autonomy to farmers and privatizing firms by using free market techniques. Today, China faces problems with high levels of poverty in rural areas, pollution, and the legacy of the “one child” policy that creates problems with a rapidly aging population.

 

This upcoming week, China heads into an important round of negotiations with the US as they hash out the final plan regarding the ongoing trade war. The Chinese economy has fallen below a 6.5% growth rate. For years China has attempted to make its economy less manufacturing dependent and more focused on domestic services. However, since privatizing firms, companies are struggling to stay afloat and the trade war is killing off business as tariffs increase. In hopes to simulate its economy again, China has pledged to open itself to foreign capital, cut tariffs and buy more US goods.

 

Will China still be able to retain a fully communist style of governance if they want to stabilize and stimulate its economy from the ongoing trade war with the US?

If China were to open itself to foreign capital and investments they would be ignoring communism in its purest form. Yet, the country has already done this since the death of Mao with privatizing many firms. This is similar to democracies and factions. According to James Madison, the problem with factions is that not everyone will have the same opinion and if there is a majority it is not always democratic because the majority can be a faction. This would, in turn, dilute democracy in its purest form just as foreign capital and investments would alter the meaning of communism for China.

 

Citations:

  1. Tyler Dickovick and Jonathan Eastwood, Comparative Politics: Integrating Theories, Methods, and Cases, (New York, Oxford University Press, 2016), 412-420.
  2. Lingling Wei. “Trade Tensions Take a Toll on China’s Economy.” www.wsj.com. https://www.wsj.com/articles/trade-tensions-take-a-toll-on-chinas-economy-11546776001

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