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China’s capitalist roaders

In 1957, Mao Zedong set the term “Capitalist Roaders” to describe communist officials who attempt to restore capitalism while pretending to endorse socialism. These Capitalist Roaders are alive today and are the reason for China’s rise as an economic superpower.

China emerged from an impoverished peasant society, where famine had killed 50 Million people to the number two economic power of the world soon to be number one;
One of the most astonishing economic transformations of the century.

Arguably, China’s path to democracy started in the 70’s when starving peasants started private enterprises and farming for themselves; inhabitants without a job in the state sector set up the first private businesses in Chinese cities; some cities operated outside the boundary of socialism, empowering entrepreneurs and giving them a chance to get rich. Competition and laissez-faire worked and soon afterward it started to spread to more and more cities.


Under the leadership of Deng Xiaoping, who after Mao’s death led his country towards a market economy, China made clear economic and infrastructure improvements and it started its ascent to become an economic superpower.

In the 1990s, the privatization of state owned enterprises accelerated, the lifting of price controls continued and regulations started to contract. The country was growing at an astonishing rate.

Before 1978, state-owned enterprises represented 80% of China’s economy. By 2005, the private sector had grown to represent 70 percent of China GDP.

Jean Claude Van Dame might have done an epic split for Volvo, but China made an epic split from communism.

Indeed in its Third Plenum meeting in November 2013, the Chinese government announced a series of reforms.

The plans include reducing the power of state-owned companies, continuing the decrease of price controls and moving towards yuan convertibility.
They are also lessening the one-child policy, abolishing the “re-education” labor camps and introducing steps toward an independent judiciary system.
The aim is to transition China to a more free-market consumer economy with fewer controls and less centralization.

The One child policy reform is intended to decrease the burden of future generation who will have to sustain an aging population. The Welfare system reform is intended to allow free movement of labor and stimulate urbanization. With the farm reform, farmers will be able to possess, use and sell their land for personal profit and move to cities and consume more. Financial reforms will help entrepreneurs raise capital and increase the number of IPOs. State owned enterprise reforms will allow private firms to play an even greater role in the economy.

The Chinese are truly long-term visionaries!

With these reforms that are intended to decentralize power and give more responsibilities to states and municipalities, it is clear that China is moving toward a capitalist system. The Communist party might still hold political power but it is no longer an ideology it is only communist by name.

Plato wrote that the natural progression of governments was from tyranny to oligarchy to democracy, and then comes chaos and a dictator emerges to save the day. China is currently running toward democracy.

History has not been kind to empires, each one crumbling after the other. Spain was the greatest economic power of the sixteenth century; French was the language to speak in the eighteenth century; the nineteenth century belonged to Britain; and the twentieth century was the American century. The twenty-first century will be called the Chinese century.

Georges Boustany


Chanos on Shorting (Video)