Newsweek / Everything You Know About China Is Wrong

COMMENT: China is a communist country that has capitalistic tendencies. It is important to remember that it has only been over the past 10 to 20 years that the Chinese government has moved towards capitalism. The central government still manages the economy. As a centrally planned, command economy it is in China’s best interest to keep the economy growing. Recently this meant a large federal stimulus package. To the extent that this stimulus money finds its way to more speculative assets such as real estate and equity markets, China may be in the midst of a bubble. Should more of this money find its way into productive uses such as infrastructure it may help to write another chapter in China’s phenomenal growth story. In many western capitalistic democracies it is argued that the government should intervene as little as possible, yet many look at China, a country that is centrally planned, and seem not to question this aspect of their growth.

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