China’s ‘Social Capitalism’

The GDP of China, the US, and the West all grew by leaps and bounds before the coming of the storm. But China’s GDP grew tenfold. The income of the middle class in China grew by leaps and bounds, whereas for the middle class in the US and the West ,it was shrinking and stagnating. Where did the money flow? Who gets the lion’s share and who gets the crumbs? This is the magic question we will try to answer in this article.

In this article, we will attempt to analyze the phenomenal growth of China as compared to the US and the West, and dwell on the key catalysts for growth in China and decline in the US and the West. We focus on the Middle Class as the key catalyst for growth in China and for decline in the US and the West.

Eric Li is a “Chinese venture capitalist and political scientist” whose writings gained attention in Western Media for criticizing liberal democracy and extolling the “Chinese meritocratic system.” His credentials include UC Berkeley, Stanford U, and Fudan University.

He is genetically Chinese but raised in both Western and Eastern academe. We can perhaps call him a hybrid of East and West eco-political thought. He received his doctorate in Political Science at Fudan, which makes Eastern thought predominant in his mindset, while at the same time playing devil’s advocate to Western mindsets. (Wikipedia).

He is a proponent of what this author labels as “Social Capitalism,” where the State is above capital democracy, which is the opposite of Western Capitalism, which gives primacy to Capital as the ultimate eco-political god, the old concept of “unbridled free enterprise.”

For Li, the State is needed as the regulatory body for economic growth, to avoid the abuses of rogue corporations and investors in the private sector.

Li argues that under “Social Capitalism,” China’s GDP “grew more than tenfold and raised median income eightfold.” In contrast, the US and Western economies also grew, but Middle Class Income shrank and stagnated. In China, the Middle Class has the central role of being the essential backbone for unprecedented growth. Labor, not capital, is the Chinese engine for growth, the essence of “Social Capitalism.”

“China’s success stems not from conforming to the liberal global order but from rejecting it, offering a model of ‘globalization without globalism,’ the primacy of ‘national sovereignty, cultural integrity, and infrastructure-led development.’”

The Silk Road drive sent a message to the world that trade, not Trump’s tariff wars, was the key to growth for all nations, not just for China or the US. Li argues that China navigated through crises that would have derailed growth and transitioned towards “higher-value industries amid structural challenges.” Whereas the Western nations, faced with “internal discontent and elite backlash,” were seen to be dismantling the very global institutions they once championed.

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