On Chinese Socialism

For businesses looking at aspects of what is aimed at in the recent “China for 2035, the New Era” policy, the emergence of the new China follows the transition of the ongoing reform and opening up, originally put in place in the 1980’s by Deng Xiaoping. It comes under the banner of Socialism with Chinese Characteristics, or ‘Chinese Socialism’.

It is a very modernized form of Socialism and characterized by the deep traditions of China over some 3000 years. There are indications that some of the changing features of China are as common to Western nations, and developing nations, as they are to Chinese Socialism.

Marxism was connected to Communism emerging from Socialism, which followed Capitalism and Feudalism. A lot of isms. China’s development model has used raw Capitalism in part but moved largely from Feudalism – a country comprising a population of 90% peasants as recently as 1978 – to being a nation of working people.

Those who work in Agriculture, Manufacturing and the Service industries in China are “Working People”. In China today that would now be over 80% of the available population. Who is not a working person? Owners of businesses , large medium and small, who obtain their income from their shares in their business.

Staying with the Working People concept, the Central Government also works to provide a developing lifestyle for the Working People – where several issues reorientate.

Dictatorship of the Proletariat disappears, to be replaced by the Party and the Government containing Working People working to make the country positive for the working people. A real alignment replaces the previous Dictatorship of the Proletariat, which now hardly exists in today’s China – even as Western media often suggest otherwise.

China’s owner/managers today are not so far away from the managers of Western businesses who earn the vast majority of their personal income from their business income. The small businesses in towns and villages earn their income from their salaries more than from the profits.

This alignment of interests makes China, along with countries such as Germany, more aligned in defining who the Governments represent.

As part of their duty the Governments in these nations – hitherto defined as capitalist or social capitalist and socialist – are working to enable the companies of the nation prosper, both domestically and overseas, but for the benefit of the employees and the nation.

Chinese Socialism is becoming more closely aligned between SOE’s and Medium and Large Private Sector companies, where mixed ownership is increasingly moving them closer together as models, their managers being working people, even when managing, and their company ownership models contributing to employee welfare and national welfare. Both produce dividends to their owners – who are increasingly stabilizing institutions such as pension funds, insurance companies, and health providers.

The process of distribution of wealth is moving from taxation to income and dividend flows. I suspect that Chinese Socialism has more in common with Social capitalism of Northern Europe than the outdated class models of the early 19th Century.

The Communist Party of China has been reconfiguring the relationship of work to government and distribution of wealth in a way that gives it relevance to Capitalist nations, where business owners are a myriad of owners, and whose managers and employees are working people gaining most of their income from their salaries. The importance of the company is to stay at the leading edge of global development, and to provide profit to pay for healthy welfare for its employees, and dividends for its institutional shareholders.

China’s private sector and SOE shareholders are moving more to the redistribution of profits model for welfare and education and so on rather than in the UK and USA, where shareholders are increasingly hedge funds, private equity, and wealth management funds.

It is worth reflecting on how most of the West and the new East are now really close to each other in this regard. And how China has persisted to make SOE’s successful and share owned companies a close part of the national plan, and aligned with the SOE’s in different formats, but increasingly aligned formats.

The solutions to Western Governments challenges may be increasingly found in China. They have spent over 50 years studying Western government models and many more aspects of the West, such as health, education and the tax system, and have come up with prototypes that are working, and are based on western experiences – good and bad.

If China has innovated from the West – then surely the reverse is also true?

Best regards;

Chris Devonshire-Ellis 
Chairman, Dezan Shira & Associates
Publisher, Asia Briefing 

E: editor@asiabriefing.com
W: www.dezshira.com


Any views or opinions represented in this blog are personal commentary, belong solely to the contributor and do not necessarily represent the views of Asia Briefing Limited or Dezan Shira & Associates.

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