Foreign firms across the world have thus been allowed the opportunity for competing in the world's most populous nation, that it implies a huge consumer potential not only today, but for years to come. Though China has joined the WTO, and opened up its markets for foreign firms to compete in areas such as capital goods, and retail sales such as petroleum products, it is still far from the commitments made during and after the joining the WTO. As the country is facing a growing demand of oil, even though the nation's energy requirements are primarily met through production and consumption of coal that still enjoys a dominant status in fuels. A brief view at the Chinese economy shows that it has been a mixture of both state owned enterprises and private firms, yet the role of state owned enterprises have enjoyed a dominant status, and it was only in the 1980s that the country opened up its frontiers through the creation of special economic zones.
China at the Crossroad - Capitalism or Socialism
Socialist?
The continued existence of a strong state sector does not make China socialist. In the past, many capitalist countries have had a significant sector of state-owned enterprises. Most of these have been privatized since the rise of neo liberalism. (Australian examples include the Commonwealth Bank, Telstra, Qantas.) The global financial crisis seems to have brought the privatization drive to a halt in China for the time being. There have even been some instances of private companies being replaced by state enterprises. It is observed that the countries that we came to know as eastern block countries practiced state capitalism, as all the nation's capital was owned by the state including agricultural, industrial capital. The fact that they were run and administered by the Communist Party resulted in the totalitarian state with neither private economy nor private institutions. Whereas the western democracies, there existed the concept and practice of private ownership of both capital and market economy.
Conclusion:
The Chinese government has already begun a program of helping the ailing state enterprises, by allowing bank to lend them money, a strategy that was practically banned. In addition the state owned enterprises are also being privatized along with the housing sector, though with a slow pace, so as not to invite unrest amongst the majority of the population.
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