60 second summary

  • China’s approach to organizing the way products and services are created by its economy is different, as I’ve previously suggested.
  • This offers the Chinese government a number of benefits that (more) Capitalist approaches won’t get.

Below : Reddit meme makes the same point as I am specifically referencing the building of a hospital in Wuhan, China, to support those infected with the Coronavirus.

China built a hospital for victims of the Corona virus.
When China wants to move quickly, it does. In Wuhan, they built a hospital with specialist facilities to minimize the risk of infection to health workers, in just over a week.

Benefits to China & Chinese companies of their unique mixed approach

The Chinese economy is comprised mostly by companies owned by the Chinese government. These entities often behave just like Capitalist companies, however. They are also centrally coordinated on occasion. The speed with which China’s economy is growing would seem to suggest that this is an effective way of managing an economy.

The goal of the Chinese government is simply to make china the most successful country when it comes to the creation and manufacture of the new technology we rely on. They are achieving this in many ways

  • Coordinated longer term thinking and strategies with longer time frames :
    China has a longer term approach (derived in some ways from a culture which has been around for thousands of years) and is happy to take considered steps towards a long term goal. This is especially true in important areas like Artificial Intelligence (AI). In the West, 85% of ‘Capitalist’ CFOs would sacrifice long term growth to hit a quarterly earnings target. Behaving in this way means there’s less likelihood they will be deposed by angry shareholders. China’s government can direct companies to behave more sensibly, sacrificing short term results for long term advantage.
  • State favoritism for ‘members of their own family’.
    The Chinese government tends to support it’s own version of a technology solution. For example, China has deliberately slowed down the performance of Gmail and WhatsApp to degrade the quality of the user experience. As if that wasn’t enough, it has outright banned Facebook in the country. There is little doubt that the Chinese state undertook these steps to eliminate US competitors in favor of their domestic industries, allowing, for example, ‘WeChat’ to replace WhatsApp by slowing and then stopping the latter service.
  • Private companies get access to government data more easily :
    And the other way around. The Chinese government also gives their own companies easy access to the data these companies hold on Chinese citizens to assist in product development. Sometimes, they secure private data sets to assist with internal surveillance of their own citizens.
  • Cooperation between competing companies :
    The Chinese government shares ideas and research between companies which wouldn’t happen in a Capitalist economy. (Unless, perhaps, someone conducted Industrial Espionage.) In China, the state sometimes insists on it. Huawei is a great example. Ostensibly a private company, its purported links with the ruling party in China means it is obliged to share the data it captures with the government, scaring the security services and causing discord between the ‘5 Eyes’ international intelligence co-operation group.

Conclusion – It’s Different but is it better?

China can build a hospital in a week because it ignores many of the constraints that equivalent Western governments would have. They can ignore environmental and safety standards, work their teams around the clock and don’t have to explain their decision making process to the population in the same way that Western Governments might.

In the next article, I’ll consider the most important question – does the Chinese economy actually work better as a result of these differences? Is it generating wealth for it’s citizens faster than alternative ‘mixed’ economies?