China: a capitalist society with a communist core

Federico Germani

Federico Germani

Federico is a geneticist and molecular biologist at the University of Zurich, Switzerland. He grew up in Senago, a town near Milano, Italy. Because of his interest in geopolitics, geography and social sciences, he studied International Relations at the University of London. He is a former swimmer and swimming instructor. He believes that sports educates people in thinking critically.

Although China is a state founded on a strong communist ideology, its political system has traits resembling those of capitalist states. This article analyses how China reduced its citizens’ poverty and became a world leading powerhouse by adapting its communist ideology to a dynamic political system that enables its ruling class to maintain control over the Chinese society.

China has an ancient and rich history, and it is difficult to summarise it in just a few sentences. For the purpose of this article we will focus on the recent history of the People’s Republic of China (PRC), proclaimed by Mao Zedong in 1949 after the end of the Chinese Civil War.
The newly formed Chinese state was founded on a strong communist idea of society. Mao pushed for the process of “collectivisation” of lands (1), which brutally eliminated landowners. The Chinese society, at this point in history, was a very closed one with little to no conflicting interactions with its neighbours, including the communist and powerful Soviet Union.
The first steps towards a more open China were made under the leadership of Deng Xiaoping at the end of the ‘70s, with significant economic reforms and a progressively increasing open market, known as “market socialism”.
Within this frame, the Chinese society, and especially the younger generations, started to push for further reforms. This growing turmoil exploded with the Tiananmen Square protests in 1989, where the energetic winds of change were suffocated by strong repression.
However, these events made China visible to the eyes of the Western world, and the consequent pressure led to the ‘90s post-Tiananmen transition led by Jiang Zemin and Zhu Rongji. During this period, the People’s Republic greatly increased its annual GDP, joined the World Trade Organization and greatly reduced its people’s poverty.
In 2012, Xi Jinping became the leader of the Communist Party and of the PRC. He reinforced the party’s discipline through anti-corruption campaigns that also targeted members within the party. Among others, he pushed for a consolidation of internet censorship, believing this would be a way to protect the country from possible cyber-attacks to harm its sovereignty. Under his presidency, constitutional changes were made to override the pre-existing term limits for a president. However, Xi has always been a strong advocate of free trade and globalisation.

The PRC is, by definition and because of its history, a communist state. But reflecting on its recent history, is the PRC really one of the remaining communist societies, or has the PRC shifted its ideology to a capitalist one? How does Xi’s reinforcement of communist ideology reflect on his openness to use capitalistic tools for foreign policy?

Chinese flag and geography. Photo @ Pixabay.

To really understand this, we must first define what are the main features of capitalist and communist societies.
In a capitalist society, the state controls the political power but is reluctant to control the economic sphere, which is instead left in the hands of private investors and companies. A capitalist state is also willing to join the free market, which theoretically provides a win-win situation for all the countries that participate in it.
In a communist society the state controls the political and economic spheres. In theory, this aims to prevent the private elites from gaining control over remunerative public affairs.

The Chinese state is the only existing example of a state that functions using a dual communist-capitalist system; PRC controls the political and economic sphere within its borders, but purposely leaves Chinese companies free to participate in the open market.

Since the end of the Cold War and the collapse of the Soviet Union, many states marked by the communist ideology were afflicted by a drastic deterioration of their economy and of their political system: for instance in Romania the communist regime was violently overthrown, or in Yugoslavia the collapse of the communist party not only led the way to the independence of Croatia and Slovenia but also to the regional destabilisation that led to the wars of the ‘90s. Only two states – in addition to China – have maintained their communist political system after this historical turmoil: Cuba and North Korea. In these two countries, the political elites had a stronger control of the society, thus the ruling class could survive the fall of their powerful Soviet partner. However, their economies struggled for the following decade, causing poverty and famine. Up until now, for many aspects the situation has not improved.

Although China has maintained its communist core after the Tiananmen Protests, it took advantage of the internal progressive pushes that favoured the insurgence of a “cultural revolution”. After the initial repression of the protests, the ruling class realised that the change the Chinese youths were asking for could be used as a tool to maintain and strengthen its power. In other words, the post-Tiananmen transition period is the one and only example of a brilliant political strategy to maintain the ruling elite class in full power and control of its people, while drastically improving their living conditions. In simple words, the Chinese society could quickly benefit from China’s economic boom, and the society responded by building a strong support for the communist ruling party.

The Chinese model emerged as the new and only winning model to rise from an underdeveloped state to being the second largest economy of the world. Although the Western view of political freedom and individual rights are used to put pressure on China, its recent strong assertion and show of force in the South China Sea indicates that the PRC has reached a status where lesions of its sovereignty and power are almost impossible, especially because of the growing international reputation it has accumulated over the last two decades.
Instead of expanding through the political tools of realism and playing the game of who is stronger, China has climbed through the world ranks in two steps: firstly by winning a socio-cultural war and secondly by creating a newly functional political and economic system that challenges the merely capitalistic one “invented” by the United Kingdom in the 19th century and reinforced by the USA in the 20th century.

The PRC was able to do this by establishing a new political system: a capitalist communism. The latter constitutes the core, which allows the ruling class to freely operate manoeuvres of internal control and vigilance, limiting the potential dangers of political opposition. Instead, the capitalist component constitutes the shell, characterised by booming exports and Foreign Directed Investments outflow, particularly increasing to Africa. This capitalistic model does not simply reflect the one imposed by the USA and its allies after the Second World War; rather, it imposes an economic model based more on growth and less on political freedom.

The unexpected rise of China has dismantled the way developmental theorists thought about the subject for the last decades (2), and yet many results of this experiment need to be revealed. Whether this will be a winning model and applicable to other countries is yet to be determined, as some African states – unable to rise with the classical tools of capitalism – have started to look at the Chinese model (3).
China provides a unique successful example of political experimentation (L25). Yet, it is questionable whether this success will be long-lasting, as a possible economic slow-down will likely happen in the near future (4). This slow-down could cause discontent among the Chinese and a possible challenge for the communist government that gives little political freedom and supports the idea of communal, rather than individual, rights (5). Given the progressive nature of the Chinese political system, the PRC could try to further improve the system by guaranteeing political freedom. It is however disputable whether the core Chinese communist model is mutually exclusive with political freedom and individual rights or not.
On one hand, China’s recent “Big Brother” steps towards a scoring system for its citizens combined with a massive system of surveillance could pose a threat to the communist ruling elite if capital-driven Chinese economy will ease. On the other hand, China’s communist control of its society is taking a step further to impede the unfolding of a new Tiananmen. It does so by using a tool that capitalist hegemons have used to maintain their dominant position within the international realm: the concept of semiperiphery (6), but in this case it is applied within a society, rather than between societies.
According to Wallerstein, those states that control the world’s economy through capitalism (core states) are able to avoid revolutions from those underdeveloped and exploited states (periphery) because of the existence of a semiperiphery. Semiperiphery states are namely the states that wish and have the potential to become core states by utilising the current political system (6).
China is trying to apply this system within its own society. Assigning scores to people will distinguish “loyal/good” citizens from “bad” citizens and more importantly, identify the “intermediate” or “semi-peripheral” citizens who wish to become good citizens. This micro-capitalist system is another brilliant tool in the hands of the Chinese communist ruling party to maintain its power. We could define this as “Chinese intra-semiperiphery”.

As we have analysed, China is ideologically and politically a communist state, but it takes advantage of the winning aspects of capitalism to favour its private businesses and interests outside of China (7). The PRC is therefore a capitalist state with a communist core. In addition, China’s ruling class holds its power by controlling the Chinese society in a hierarchical and capitalistic manner by trying to establish a system that scores citizens. The scoring system resembles the concept of semiperiphery, a term introduced by Wallerstein to describe the interaction between states rather than within a state.
China is therefore not only a capitalist state with a communist ideology, but also with features of a capitalist society.
The PRC has learned from the mistakes of the Soviet Union of sticking to its stagnant communist ideology. From this lesson, China evolved and transformed its communism into a dynamic political entity that is able to assume multiple forms.


Federico Germani



  1. Kueh, Y.Y, “Mao and Agriculture in China’s Industrialization: Three Antitheses in a 50-Year Perspective”, The China Quarterly, 2006.
  2. Hays, D.G., “Dependency Theory: A Formalism and Some Observations”, Language, 1964.
  3. Davies, M., “China’s Developmental Model Comes to Africa”, Review of African Political Economy, 2008.
  4. Loke, B., “China’s economic slowdown: implications for Beijing’s institutional power and global governance role”, The Pacific Review, 2018.
  5. Fukuyama, F., “Confucianism and Democracy”, Journal of Democracy, 1995.
  6. Wallerstein, I., “Historical capitalism”, 1993.
  7. Karmel, S.M., “Emerging Securities Markets in China: Capitalism with Chinese Characteristics”, The China Quarterly, 1994.
Received: 25.01.19, Ready: 01.03.19, Editors: XZ, RG.


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