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Current Affairs

As China shows, liberal capitalism is not the only path

Much of the Western debate about China begins with a category error. “Communism” is often treated as synonymous with a monolithic command economy, limited private…

By Samantha Johnson / August 20, 2026

Much of the Western debate about China begins with a category error. “Communism” is often treated as synonymous with a monolithic command economy, limited private enterprise and bureaucratic control over every commercial decision. Modern China does not fit that model.

It is better understood as a mixed, state-led system in which private enterprise, foreign investment and fiercely competitive markets coexist alongside public ownership and state control in strategic sectors. This is more than semantics. Western commentary often treats the state and the market as opposites; China does not.

The state has not sought to replace markets. It allows competition and entrepreneurship, but within political boundaries. It also retains control over strategic assets and channels capital towards long-term priorities: infrastructure, technology, employment and social stability. That combination looks contradictory only if one assumes capitalism and public purpose must be in conflict.

China’s experience suggests a more complex reality. It has built large private companies and globally competitive industries without accepting that private wealth should determine the national interest.

For decades, Western commentary saw this contradiction as temporary. The expectation was that market reform, World Trade Organization membership and the emergence of a prosperous middle class would eventually draw China towards an American-style political and economic settlement. It did not happen.

China took a different route. It gave markets, entrepreneurs and foreign investors room to operate, but never allowed the market to become the state’s organising principle. Competition was encouraged, but mainly where it advanced China’s industrial goals.

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