reasons why China is turning away from socialism and accepting capitalism

Expert Solution

China has socialism feature. It means all sorts of economic and business activities are controlled by the country’s government. There is no absolute privatization; but may joint ownership or absolute ownership by the government.

The economy of the country is growing fast; and it is the 2^nd largest (after the US) in the world. It has a growth rate of 10% in terms of GDP.

All these happen although staying in the socialism character; but still the country is accepting capitalism because of the following reason:

1) The country wants to increase the growth rate further, somewhere near to 18% to 20%. It requires the foreign direct investment (FDI), which is a feature of capitalism and can’t be performed by staying in socialism.

2) The government creates so many economic zones within the country, like export processing zone, 100% EOU, etc. These require foreign participation, like skilled labor, technical know-how, foreign market, etc. Socialism can’t fulfill all these; therefore, the capitalism requires.

Rahul Sunny answered 1 year ago

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