Emerging Markets

Chinese-Style Capitalism - A Personal Perspective

Rainer Zitelmann 14 January 2020


The author of this article argues that in some respects China is arguably more committed to free enterprise capitalism than is the case in the West. (Much depends, of course, on how one defines "capitalism".) What is indisputable is that China now mints a lot of high net worth and ultra-HNW individuals.

A regular commentator for this publication, and a Germany-based entrepreneur and academic, is Rainer Zitelmann. He has written about subjects such as envy of the wealthy and attitudes to money. Here, he shares some observations about a recent trip to mainland China and how he sees local people's sttitude to business and enterprise. The following account generates some surprises.

The editors are pleased to share these attitudes; the usual disclaimers apply. Readers who want to jump into the debate are most welcome to do so. Contact tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com

The coastal province of Guangdong, with its capital Guangzhou, has traditionally been a pioneer of market reforms in China. Guangdong has a humid subtropical climate, which means that the weather varies from warm to hot all year round. It is also China’s most populous province, home to more than 110 million people, and is famous for its unique spirit of innovation and entrepreneurship. 

Deng Xiaoping, the chief architect of China’s economic reforms, visited the Shenzhen Special Economic Zone on the central coast of southern Guangdong province in January 1992. The interviews he gave attracted attention throughout China. He spent five days in Shenzhen and was amazed to see just how much the city had changed since his last visit in 1984. He was impressed by grand boulevards, glass skyscrapers, bustling shopping streets, and an endless number of factories. 

People were dressed in the latest fashions, wore fancy wristwatches, had the latest cameras and other more expensive consumer goods. Incomes in Shenzhen were three times higher than in the rest of China. Deng’s demonstrative Southern Tour went down in history and generated a huge amount of coverage in the Chinese media, which eagerly reported Deng’s uncompromising criticism of internal opposition against his reform policies. One day before Deng’s return to Beijing, the People’s Daily ran a widely acclaimed editorial under the headline “Be Bolder In Reform.”

“Hardly anyone still believes in Karl Marx”
My Chinese publisher, who has published four of my books in China, invited me to visit Guangdong in December. This was the first time I had been back to the province since August 2018. During this trip, I was able to speak with representatives of a  private think tank. The head of the think tank is a professor, who does not belong to the Communist Party or any of the other eight political ‘parties’ in China. “Perhaps we will be the last defenders of capitalism,” he observed at one point. He is just as bemused that socialist ideas are experiencing a renaissance in Europe and the United States as he is by the climate hysteria that is sweeping Germany: “Here in China, hardly anyone still believes in Karl Marx’s ideas.”

Land of contrasts
At no point during my ten days in China did I hear anyone talk about climate change, with the exception of a 21-year-old student who is vegan because she wants to do her bit for animal welfare and make a stance against climate change. Being a vegetarian myself, I was surprised by the large number of exceptional vegetarian restaurants, some of which have even been awarded coveted Michelin stars. There is no climate hysteria here, but there are more electric cars and electric scooters than I have ever seen in any city in Germany. As a pedestrian, this swarm of completely silent scooters can take some getting used to. You can easily find yourself in a dangerous situation if you are used to being alerted to fast moving vehicles by engine noises.

China is full of contradictions: I visited an Innovation and Entrepreneur Hub in Shenzhen, where young entrepreneurs work on cutting-edge robots and other state-of-the-art technologies, financed by venture capital firms and supported by the state. As you walk into the hub, you are greeted by the question “What’s Next” rendered in huge letters - a callback to the company Steve Jobs founded after leaving Apple. The hub’s lobby features an exhibition of films and photos as testament to the modern entrepreneurial spirit, along with a photo of Karl Marx and the Communist Manifesto.

I was deeply impressed by the vibrant entrepreneurial spirit and hunger to advance and accumulate wealth that I encountered in China. On one occasion, I was invited to speak at Peking University HSBC Business School in Shenzhen. The timetabling of my talk was less than ideal: Friday evening at 7:30 pm. Nevertheless, the room was full to bursting with over 800 students (the school has a total of 1,000 students enrolled). Some members of the audience even had to stand or perch on windowsills around the lecture hall because the seats were all taken. My talk was on the subject of The Seven Most Important Factors In Getting Rich. How many students at Western universities would spend almost three hours on a Friday evening at a talk on how to get rich? I suspect that universities in Europe and the US would be more enthusiastic about organising lectures on the evils of capitalism, a topic that would, in turn, seem so quixotic to their Chinese peers.

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