What Is The Difference Between Chinese And American Economic System

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The Difference between Chinese and American Economic Systems
While the United States and China are the two leading world’s economies growth is mainly driven by antagonistic economic engines that tend to provide selective advantages and challenges in global scale. Since the beginning of 1980s, the Chinese government under the Communist Party has relied on the socialist economic system to fuel its economic growth (Naughton 3). While China’s economy is largely subject to a host of market forces, such as capitalists partly involved in its system, the Party has never been of the opinion that capitalists have a place in running the country’s economy. Critics in the United States have often claimed that capitalist influence accounts for a larger percentage of Chinese economic growth compared to that in the U.S. While some Americans may speak unsympathetically of socialism in some European economies, they paradoxically attribute the same system to the growth of United States economy. There has been a common belief that socialism economic system does not spur growth and Americans are never inclined to credit the system for the rapid growth of Chinese economy, but the Communist Party in China believes that the system has exercised an effective control over the economic engine of the country.
China recognizes that it is to the interest of the country to embrace socialism system that does not isolate the nation from the rest of the world economically. Beyond bilateral and multilateral trade, the late Den Xiaoping, the leader of the People’s Republic of China welcomed foreign investors in Chinese industries. He led the country through ambitious market-economy reforms between 1978 and 1989 and ensured ownership of Chinese industries by foreigners and Chinese citizens would co-exist alongside those owned by the state (Naughton 3). Chinese view the country’s economy to be functioning in the best interest of the people instead of individual gains of entrepreneurs (Morrison np). While Chinese have a perception that investors in local industries are doing business for profit, they do so within the control of the state or the people.
In Chinese economic system, the state has the controlling power of the economy in the country, but the private sector is primarily involved in production. This is a stark contrast in the United States especially in the banking sector. In China bank credit and lending is controlled by the state and the government can direct banks to hold back credit to prevent the creation of the credit bubble. Contrary, in the United States, especially in 2009, the state advised banks to increase lending but financial institutions were reluctant to take the initiative. In the U.S., banks are largely government by their individual interest, although regulations are also in control. China’s largest corporations seek government’s direction when appointing their CEOs and in case of a financial crisis, the government bails out the enterprises.
Marxism has been around for more than a century, but the Chinese Communist Party still perceives socialism market economy as the most intellectually mature economic engine predica...