From time to time, I still hear people referring to China as a communist country. However, this could not be more misleading. In effect, there is no doubt that the Chinese communists have successfully managed away the communist ideology, as well as the communist economy, through the past 30 years of reforms. Communism is essentially gone in China.
About thirty years ago when China started the post-Mao economic reform, the Chinese leadership was open to anything but the following: the market economy replacing the planned economy, loss of the communist ideology, or decline of the one-party rule. China did not plan a transition away from communism.
Nonetheless, economic reforms in the 1980s reduced the relevance of the communist ideology or policies in China. The reforms minimized the central planning, opened China to the world, brought in capitalist practice to China, started market competition, and offered the freedom to develop the private sector first in the rural areas. Decentralization reforms then kept the remaining communist ideologues from micromanaging the economy. Economic reforms in the 1990s privatized the state-owned enterprises and created the market economy. From the mid-1990s to the mid-2000s, the private sector expanded 33 times.
During the last three years of the 1990s, over 50 percent of the state companies were privatized. At the turn of the century, the state sector only held 21 percent of the national gross industrial output. During the same period of time, China changed its ideology. Deng Xiaoping first disconnected China from Marxism by calling for “socialism with Chinese characteristics.” His successor stopped life employment and eliminated job guarantee for the population. There have been village-level direct elections since 1988. The constitution then started to protect private properties.
The party has also changed fundamentally and began to recruit capitalists or private business owners as party members. The biggest change came in 2000 after the party leadership started to campaign for a new theory of “three representations.” In a literal translation, the theory called on the party to “always represent the developmental requirement of China’s advanced productive forces, represent the developing orientation of China’s advanced culture, and represent the fundamental interests of the overwhelming majority of the Chinese people.” In reality, it transformed the party of proletariats into a “catch-all” party, like any pragmatic party in the West, which is devoted to developing the national economy and feeding a population of 1.3 billion people.
All this has reduced the power of the party, although the government still manages to maintain a certain level of control over the economy. However, it is a mis-perception to view this control as communistic. Some have argued that China is of state capitalism, a form of capitalist system with a strong government leadership. Others even argue that China is now perhaps more capitalistic and more business-friendly than the United States.
There is no doubt that the government is still very important in China in business promotion and economic development, but the ideology is not.