Can Someone Please Help Me Understand China's Communistic Economic System???

I wasn't sure where to start this thread...sorry Mods if its in the wrong place.

The reason for this thread is that I admit that when i comes to China's Economic System I am completely ignorant. I thank my World History teachers because they didn't teach anything about Communism except that it was bad. nuff said, right? NO!!! I would like anyone who has an understanding of how it works please let us all know. I understand that Communism is a system where everyone is considered an equal and the government employees everyone because the govt. owns all of the businesses...right? I don't even know!

What I don't understand... Communism is a type of Economic System and not a type of Government... so therefore their economy must be very different than ours... but they have a stock market and a lot of American's are currently investing in Chinese Corporations... but aren't these companies owned by the Chinese Govt?

Another Question I have is... if everyone is considered EQUAL in wealth... then you are saying that a doctor and a lawyer get paid the same amount as a fast food delivery boy or a waitress? Correct me if i am wrong, please, but isn't Communism supposed to be the way to destroy the Wealth Class system that Capitalism favors?

I really don't understand Communism... is it an economic system ... or is it just a Politcal System that came to power by talking about now wealth classes and equality....

I am in desperate need. Can you help me to Understand...please!

I would'nt say that China has a Communist Economic system....just a poor economic system. For the most, people make what they earn. Educated people get paid more than high school dropouts, just like most countries.

-The average person makes 70USD per month.
[as reported in the January issue MAXIM magazine]

In the city (Chengdu) people make a bit more, 150-350USD, but the cost of living is more expensive. That may not seem like much, but it goes a long ways.

-There's ALOT of people, so to make up for it companies and even small businesses hire way more people than they need and pay them cheap. Why in the hell do you need 7 people working in a DVD store at the same time

I guess it's good that way, better to have a billion below average (in comparison to the states) income people than to have half a billion average and half a billion dirt piss poor people roming the streets.

-EVERYTHING is cheap. From Haircuts to taxi rides to DVD's. The only thing that really cost alot is the no knock off real deal electronics and name brand clothes.....like an IPOD or Adidas, which cost more in China than in he states.

[edit on 13/2/2006 by SportyMB]

thank you, that helps a little.


Can anyone please go into more detail about the way of life in China... what are these people like. Their civilization is VERY different from Western Society.

Anything you know will be of great help.

Like I heard that China is going to devalue its own currency... what does that mean for the Dollar? What affect does it have at all?

Please help the ignorant!


What do you know about China?

Originally posted by Where2Hide2006
What I don't understand... Communism is a type of Economic System and not a type of Government... so therefore their economy must be very different than ours... but they have a stock market and a lot of American's are currently investing in Chinese Corporations... but aren't these companies owned by the Chinese Govt?

China is more Fascistic now, they merely keep Communistic rhetoric as a facade. More and more Chinese peasants are seeing through it however, and they've increasingly had to put down rural unrest by force.

Originally posted by Where2Hide2006
Another Question I have is... if everyone is considered EQUAL in wealth... then you are saying that a doctor and a lawyer get paid the same amount as a fast food delivery boy or a waitress?

In an alternative reality where the laws of economics don't apply, and Marx's ideas could actually be put into practice without devasting effects, that's how it would be.

Originally posted by Where2Hide2006
Correct me if i am wrong, please, but isn't Communism supposed to be the way to destroy the Wealth Class system that Capitalism favors?

I really don't understand Communism... is it an economic system ... or is it just a Politcal System that came to power by talking about now wealth classes and equality....

Communism is when the ruling class use the power of the state to confiscate all the wealth of the nation. The middle class in particular is decimated, the poor become even poorer, and the ruling class (even if it is a ruling class that came to power by wiping out a previous, relatively benign in retrospect, ruling class) has it better than any time in the nation's history, having access to the entire nation's wealth in the name of the state. Once the populace begins to realize that this is what Communism really is, some begin to resist, actively or passively, thus the tens of millions murdered or starved to death by Stalin, Mao, Pol Pot, etc. However, since the middle class has always been the engine for the creation of new wealth, Communism never works in the long term, which is why JFK's father said we should do nothing to prevent nations from going Communistic, because the competitive advantage of the USA always strengthens relative to any newly Communistic nation.

For further reading see Orwell's Animal Farm.

[edit on 14-2-2006 by Paul of Nisbis]

This will be good revision for me... I'm a second year Accounting and Applied Finance student, I've never studied communism directly, but I've done units in economics... they were entirely focused on the capitalist market system, and largely based on the Keyensian school of thought.

I'm not sure if anything I'm about to explain can really be applied to China, but I can explain the basic theory of communism by explaining how it differs from the capitalist system.


Alright, under capitalism you've got what you call markets. Markets operate by the forces of supply and demand. Where supply meets demand... that is, where they are both equal, that is the point known as market equilibrium. Now the way it works is, the forces of supply and demand always operate in a way so that over the long run all markets will return to their equilibrium point. This is known as market clearing.

Think about it in a practical way... say you want to buy an ice cream... you go to the ice cream shop or whatever, and the guy behind the counter says it'll cost you $50 US to buy an ice cream...

You say, "Get #ed!", and you take your business elsewhere. What has happened here is that, at the price of $50... the shops supply exceeds your demand. That is... at the price of $50, you aren't interested in buying an ice cream. And neither is anyone else at a price that expensive.

So, if the shop wants to sell any ice creams, it has to drop its price drastrically. Say he drops the price to $2 US, and you buy the ice cream... you can assume that would be near the 'market clearing' price. Remember- the price at which supply meets demand (market equilibrium)... both sellers and buyers are happy to make a transaction at that price.

Now imagine this is happening in every ice cream shop all over the country. This is the competititive nature of capitalism. Ideally from your point of view, you'd get the ice cream for free... ideally from the shops point of view, they'd charge a fortune for an ice cream... so in order for both people to be satisfied, and for the system to work, both parties have to negotiate a selling price they are both happy with.

Because everyone is competing for profit, there is always competition, if one shop sells ice creams that are too expensive, another shop will be happy to steal their business by undercutting them... all this ensures that the markets will 'clear' over the long run.

Under a pure capitalist system, markets decide everything. This is a 'monetarist' point of view... ultimate faith in the operation of markets to take care of everything, with little or no government regulation.

Communism can be seen as the exact opposite of this- the total abolishion the market system. Markets do not exist at all under a communist system. Instead, under pure communism, a central body, such as the government would distribute the wealth equally amongst the populus, and there would be no free enterprise, and therefore no competition. You could think of it as 100% government regulation. Everything is decided by the government, who ideally would represent the people. Products aren't manufactured by companies, they're manufactured by the government, and belongings are distributed equally. There is no room for economic competition.

In my opinion, this is why communism fails... because it doesn't allow for the natural greed of people. People will always compete and human greed is ever present.

Now take a look at the countries who have adopted communism in the past and ask yourself why they adopted it. For all cases you'll find that they were poor, peasant filled countries. The idea of equally distributed wealth is very appealling to those who live in the third world, right?

Communism is a system doomed to fail. Capitalism is the path to wealth. Capitalism allows vast competition, and therefore promotes growth and innovation and variety. It might seem like a greedy system, but it works, and importantly, it allows freedom of choice and the competitive nature of civilisation to flourish.

Take a look at poor old Russia, it could be a very wealthy country today, but it sold vast amounts of its natural resources to other communist countries in the cold war at discounted prices because those poor communist countries couldn't afford to pay higher prices for those resources. It has paid the price for its past ideals.

Now how much of this applied to China in reality, well, I can't tell you that exactly, except to say that China obviously isn't a 'pure' communist country. The existence of free enterprise marks a definite shift towards a more capitalist system.

What you hear about China revaluing it's dollar is due to the fact that China still has a set exchange rate. Set by who? The government.

When you watch the news at night, you'll see the business section, and you'll see exchange rates fluctuating daily for many countries, because those countries have opened up their economies to international investment. The fluctuating exchange rates are caused by *supply and demand* for those countries currency. If you want to buy something from another country, you need to pay for it in their currency, therefore you will be demanding some of their currency in order to pay for their products. Currency is also subject to supply and demand. Most countries let these two forces decide their exchange rate and also use their 'federal reserve banks' to buy and sell huge amounts of foreign currency in order to keep the exchange rate around where they want it.

China on the other hand, they're still opening up to the capitalist system, so they "set" their exchange, they sell and buy foreign currency to "lock-in" the price at one set level. The effect is that they stop the market from deciding the "market equilibrium price"- that is, they don't let the market clear. Instead they set a price they think is good for their economy, and all trade takes place at that exchange rate. In the near future I expect they will open up their exchange rates and allow the international money market to decide the "market equilibrium price".

Also in the future, you can expect China to be a huge economic force in the world. They have over a billion consumers, and as they industrialise and start to manufacture even more cheap consumer products to export, you can expect to see a lot of money flowing there in the future.

Just how the US will stay competitive in the distant future is yet to be seen. Maybe more immigration will be allowed in order to keep the economy growing. A world ruled by a Chinese super-power is a scary thought... the US is evil enough, but not that evil.

And as someone said, the whole communism thing is kind of just a facade. China has been rapidly moving towards capitalism over the past few decades, maybe not politically, but definetly economically.

Anyway, if I've made any errors let me know. As I said, I've explained it as I understand it, but I'm only human. Hope it helps and isn't too boring.

I wouldn't call China a Communist Economic system anymore, they are becoming more Laissez Faire then the US in alot of respects while their Social systems are more of an Authoritarian Dictatorship then Marxist Communist. As for them being Fascist I dunno bout that maybe in the Beligerant Nationlist respect you can call them that.

[edit on 15-2-2006 by sardion2000]

As a Chinese living in north america for few years, I would say currently China is a blending of communism and capitalism in economic.

Most of the biggest companies in China, like carrier/power/steel/oil/automobile/highway/railway/subway/TV companies are owned by China government. In additional, the military/space/laser R&D is fully sponsored by gov too. It forms a stable infrastructure for all other industries. On the contrary, most Manufacturing/Computer Software/Computer Hardware/Service/Shopping/Websites are owned by person which keep the economic booming.

In my opinion, the economic system of China tries to absorb the advantage of western countries and abandom the disadvange. Also China learns lots of lessons from the fall down of russia.

To be honestly I am really proud of the economic miracle of China since 1979. And this miracle looks will last for a long time. A good evidence is that monthly average family income of my hometown was around 100 USD in 1990 and now increases to around 800-1000 USD. Considering the living cost it is not bad.
I am quite sure if you visit any big cities in China you will think they are as modern as NewYork, LA and Paris.

What I expect is that China should be more democratic and introduce the two-parties system. Anyway it is another story and I will end up here..

Btw, I suggest you have a tour in China cause there can be no knowledge apart from practice.

Originally posted by Where2Hide2006
I wasn't sure where to start this thread...sorry Mods if its in the wrong place.

The reason for this thread is that I admit that when i comes to China's Economic System I am completely ignorant. I thank my World History teachers because they didn't teach anything about Communism except that it was bad. nuff said, right? NO!!! I would like anyone who has an understanding of how it works please let us all know. I understand that Communism is a system where everyone is considered an equal and the government employees everyone because the govt. owns all of the businesses...right? I don't even know!

What I don't understand... Communism is a type of Economic System and not a type of Government... so therefore their economy must be very different than ours... but they have a stock market and a lot of American's are currently investing in Chinese Corporations... but aren't these companies owned by the Chinese Govt?

Another Question I have is... if everyone is considered EQUAL in wealth... then you are saying that a doctor and a lawyer get paid the same amount as a fast food delivery boy or a waitress? Correct me if i am wrong, please, but isn't Communism supposed to be the way to destroy the Wealth Class system that Capitalism favors?

I really don't understand Communism... is it an economic system ... or is it just a Politcal System that came to power by talking about now wealth classes and equality....

I am in desperate need. Can you help me to Understand...please!

[edit on 15-2-2006 by google_abcd]

[edit on 15-2-2006 by google_abcd]

I expect in the next 10-20 years there will be a mass privatization effort which they will in turn pump into their military to modernize it some more. They don't want to do it to soon, they want to sell it when it's max profit potential is reached. Of course its all IMHO.

[edit on 15-2-2006 by sardion2000]

Originally posted by Where2Hide2006
I wasn't sure where to start this thread...sorry Mods if its in the wrong place.

The reason for this thread is that I admit that when i comes to China's Economic System I am completely ignorant. I thank my World History teachers because they didn't teach anything about Communism except that it was bad. nuff said, right? NO!!! I would like anyone who has an understanding of how it works please let us all know. I understand that Communism is a system where everyone is considered an equal and the government employees everyone because the govt. owns all of the businesses...right? I don't even know!

What I don't understand... Communism is a type of Economic System and not a type of Government... so therefore their economy must be very different than ours... but they have a stock market and a lot of American's are currently investing in Chinese Corporations... but aren't these companies owned by the Chinese Govt?

Another Question I have is... if everyone is considered EQUAL in wealth... then you are saying that a doctor and a lawyer get paid the same amount as a fast food delivery boy or a waitress? Correct me if i am wrong, please, but isn't Communism supposed to be the way to destroy the Wealth Class system that Capitalism favors?

I really don't understand Communism... is it an economic system ... or is it just a Politcal System that came to power by talking about now wealth classes and equality....

I am in desperate need. Can you help me to Understand...please!

Okay, I'll just begin with more global definition of communism, according to everything I read and learned as of yet, and then I'll tell you how it does'nt even fit with China.

First off, communism is both... THe "dictatorship of the proletariat", or the sole dictatorship of the worling class. An economical system based upon State tyranny. Just as in USSR, all economical processes are regulated and controlled by government authority and all aspects of processes concerning survival, education and health are placed solely in the hands of the bureaucracy. All collective or private organisations and unions are therefore abolished and taken down, as they are a contradiction with the ruling State.
BUT, take note that this is a stricly historical and political definition of communism, since the basic ideal of communism is the abolishion of all political and economical contradictions within society and of private property as well. It is the very idea of an industrial, modern society based in the principles of free collective management and sharing of all resources without the tyranny of Law (thus, State) and private ownership (that is essentially based upon Law and use of force).

But the problem, historically with communist political movements is that they were actually trying to use State power and structure in order to fulfill the communist ideal. Enters Lenin and Mao Tsedung. While Marx an Engels also pointed at the necessity of government-controlled social revolution, they also stated that the communist State should be a "suicidal" kind of State, as it would set up the essential conditions and then dissolve from itself for leaving all its power and rule to the people. Obviously, NO State would ever do that... as one of the main purpose of the government is to justify its very existence as well as its tyranny over the people. The government is MADE to rule and survive to society, not to destroy itself.

This should be misunderstood with what is called anarco-communism, or "libertarian communism", which is fundamentally different conception of social organisation, based on collective management and direct democracy OUTSIDE of any State or government body and aimed at making revolution in a direct and constructive manner rather than representative and coercicive manner as in with State communism.

Now for China. China's communistic economy is a MYTH propagated through western media and authorities. THe crap you can read in the Economist is one tiny example of that. China is by far the biggest global target of corporate outsourcing, as hundreds, if not thousands, of capitalistic businesses form highly-capitalistic countries are sharing the country's resources, land, and workforce with the Chinese government, and this very fact is very contradictory with the definition of communism.

China has a government that, upon some communistic ideology and principles, impose law and order in a very bureaucratic and repressive manner, and gives little or no place at all to political opposition, but all of this while for decades, there's been big capitalistic businesses from Western countries and Japan who have been investing there and savagely exploiting resources and workforce, all this with the agreement and even the complicity of this government, by giving them priviledged access to land and allowing deregulation of labor and production (and that includes, among others, a lack of regulation of environmental practices into production).

It is a tyrannical State, YES. If it's more tyrannical than countries like USA, Canada, Russia, Brasil, France and Italy... this can be discussed (although I'd say that it isn't), but it surely is NOT a communist regime with an economy controlled by State under communistic principles!

[edit on 15/2/06 by Echtelion]

The government owns the businesses. The people staff them. You patronize them via Walmart and other purveyors of the cheapest crap, and their financial windfall funds the basis of our duck and cover drills while we have less and less money to go around.

The less money we have to go around, the more we have to rely upon the junk we can afford. The more our currency is devalued, the less theirs is. The less theirs is, the more dangerous the technology which they can purchase...

It's cyclical.



[edit on 15-2-2006 by pdo3]

To understand the things in China, please read here:
ninecommentaries.com...

The website contains the message one needs to know clearly of China, CCP and Chinese people, of course its economy.

At first I have to say you know more about communism than any other western people in this forum.

I just want to correct some points in your article
1. Do you know why CCP or China will give priviledged rights to foreign companies and allows them to make money in China? Because it will do good to China's economic. Plus, Chinese can learn lots of knowlege in technology, management areas from these foreign companies investing in China.

2. The life of Chinese people are getting much better than before, which means the current CCP/China ploicy is still correct and is suitable for China.

Actually most Chinese currently believe China is a mix of communist and capitalism. Believe it or not, nowdays China's newpapaer and media seldom(no longer) discuss about communist and capitalism while these things are still always mentioned in western media. Because we find out our own rules: If a policy/law is good for China'a economic development then we should
use it, no matter it belongs to communist or capitalism.

China was/is using land, environment and cheap labor to exchange the chance to catch up with the world. But sooner or later we will get what we lost in the past one day.

Originally posted by Echtelion

Originally posted by Where2Hide2006
China has a government that, upon some communistic ideology and principles, impose law and order in a very bureaucratic and repressive manner, and gives little or no place at all to political opposition, but all of this while for decades, there's been big capitalistic businesses from Western countries and Japan who have been investing there and savagely exploiting resources and workforce, all this with the agreement and even the complicity of this government, by giving them priviledged access to land and allowing deregulation of labor and production (and that includes, among others, a lack of regulation of environmental practices into production).
It is a tyrannical State, YES. If it's more tyrannical than countries like USA, Canada, Russia, Brasil, France and Italy... this can be discussed (although I'd say that it isn't), but it surely is NOT a communist regime with an economy controlled by State under communistic principles!
[edit on 15/2/06 by Echtelion]