Martin Jacques, a China expert, Marxist, and Camden Conference keynote speaker, noted that China shows no indication of including military expansion as it expands trade. Other experts saw China as opportunistic.
Martin Jacques, a China expert, Marxist, and Camden Conference keynote speaker, noted that China shows no indication of including military expansion as it expands trade. Other experts saw China as opportunistic.
Ever wonder just how the Chinese economic model differs from the American model? Camden Conference speakers provided the fuel to think it through. Here’s one way: get in your car and head on down for an ice cream cone.

Detroit was once the automobile giant of the world. That’s history now, but Americans love their cars. They particularly like their big SUVs, so car companies keep rolling them out.

Capitalism is more complicated than that, but at essence it is simple supply and demand in the private sector.

If Americans get concerned enough about the pollution coming out of the tailpipes of their SUVs, they go to the polls and elect officials who support laws to limit emissions. If the democratic machinery is working as it’s supposed to, our system allows people like you and me to vote for who we think best represents our interests — or we can run for office and try our hand at representing the rest of us.

Now, Chinese drivers like big SUVs, too. They can drive them down to the local ice cream shop to get their favorite vanilla cone with chocolate and peanuts, too. The ice cream company and the shop itself are likely privately owned and operate much the same as they do in the U.S., as do most service, retail and simple manufacturing businesses in China. Whether it’s fudge ripple or green-and-red-bean ice cream, Chinese producers likely pretty much follow the competitive marketplace model.

In fact, China has had elements of both capitalism and democracy since 1978 when Chinese premier Deng Xiaoping made sweeping internal reforms in China and opened up the Middle Kingdom to global markets.

Deng’s democratic-style reforms included putting partial limits on one-man rule. He rejected the personality cult. There would be no more Mao-style statues of leaders, there would be no more presidents-for-a-lifetime, and officials would have mandatory retirements.

Officials would also be held accountable for what they produced, not for being loyal to the leader. Under Deng, local officials got report cards on their economic results that were made public. The increased transparency resulted in increased competition among companies and helped hold local officials accountable.

This was all done without the multiparty democratic system and right to free speech that is so much a part of American democracy.

“Democratic characteristics do not include a system of checks and balances or competitive elections or a free press,” said Yuen Yuen Ang, who spoke at the 2019 Camden Conference. “China rejected these.”

So, China remains an autocracy with one man directing a huge bureaucracy with about 50 million employees, or about 40 times the population of the state of Maine.

But while much private enterprise operates relatively independently, China has a strong central leader behind the wheel who is deciding which turns to take — and he, as the leader of the country, is in charge of the big economic drivers in the Chinese economy: the banks, the construction of all infrastructure projects and the energy sector are all state controlled.

The current leader, Xi Jinping, embodies that control, especially since he scaled back Deng’s reforms, including doing away with presidential term limits last year. He can basically stay in office as long as he likes.

Xi does not make every regulation in China. Instead he states a vision and a goal and tasks the vast army of skilled bureaucrats with figuring out how to implement the changes. One of those visions is the Made In China 2025 plan, which emphasizes Chinese control over 10 key sectors, including electric cars.

Xi is concerned about pollution, the country’s dependence on foreign oil, and the destabilizing influence of both. That’s no small worry in a country with one fifth of the world’s population that is geographically sprawled across Asia.

As the leader of a country with one-man rule, Xi has the power to incentivize Chinese car companies to produce more electric cars, to direct government-owned companies to put in charging stations around the country to fuel those cars, and to provide both carrots and sticks to car buyers.

In Beijing, those carrots and sticks are in the form of a lottery for a license to operate a gas-fueled car, according to a Bloomberg report. That can take years, or may never happen at all. Shanghai restricts gas-fueled cars by auctioning off licenses, which can go for as high as $14,000, according to Bloomberg. As for the carrot, licenses for electric vehicles are free.

In directing these changes, Xi is in the planning process of single-handedly changing the global electric automobile industry and turning China into the Detroit of electric vehicles, according to Bloomberg.

There is also this difference: Chinese entrepreneurs do not tend to have the same fear of failure as U.S. entrepreneurs. A Camden Conference attendee noted that he had been at the Beijing auto show last year and saw 350 Chinese electric car startups. How does the Chinese economic system support most of these startups failing, he asked.

“That is the Chinese system,” said George Yip, a Camden Conference speaker who addressed technological innovation in China. “It’s a huge amount of free competition and a small number of survivors. I refer to it as the coliseum of competition.”

“These entrepreneurs go try something else,” said Yip. The Chinese buyer of Volvo didn’t have a license to make cars when he first acquired Volvo, said Yip, by way of an example. “He made cars illegally, but he was protected by the local government. Finally, when he succeeded, he then went and got the national license.”

Like cars, ice cream is about as American as it gets — about 96 percent of Americans eat it and in larger quantities than any other nationality in the world.

Or is it American?

It turns out the Chinese invented ice cream about 1,500 years ago. And now the Chinese have come full circle: not only has the Chinese appetite for ice cream continued to rise by about 20 percent per year, reflecting the more luxurious tastes of a growing middle class that is now larger than the entire population of the U.S., but now the Chinese company Haier has designed a refrigerator with three cooling compartments: a refrigerated compartment, a freezer, and one in the middle for ice cream so it will be just the right temperature and consistency when you take it out of the fridge, according to Yip.

“Oh, that fridge?,” said Yip. “It’s for the American market. Everyone knows Americans hate to wait.”

The Chinse model is not a Western economic model, but it is a successful one, said Yuen. The success hinges, she believes, on the flexibility allowed by the democratic characteristics that Deng Xiaoping brought to the table.

Whether that flexibility will continue under Xi’s increasingly authoritarian rule remains to be seen, said Yuen. If rigidity prevails, it could slow China’s global rise.