China has billionaires and stock markets. Is it still socialist?

Transcript

Hello and welcome.

In 1989, Deng Xiaoping met with Julius Nyerere, the Tanzanian president, and told him: “So long as socialism does not collapse in China, it will always hold its ground in the world.”

The implication was that the fate of socialism as a global project – the project of a world without exploitation, poverty or imperialism – was bound up with the fate of socialism in China. The reverse is also true. If socialism has collapsed in China – if the world’s largest socialist experiment has quietly dissolved itself into just another capitalist power – then the implications for the left everywhere are pretty bleak.

The question, then, is whether China is still socialist? After nearly half a century of market reforms, of billionaires and stock exchanges and branches of McDonald’s in every major city – can the People’s Republic seriously still be described as a socialist country?

It is a serious question, asked in good faith by many people on the left. Any convincing answer has to acknowledge what the sceptics get right, identify what they miss, and establish what actually determines whether a country is socialist.

The case against

If you’re a socialist in Britain, the United States, or the West in general, there’s a lot about modern China that doesn’t feel like the world we’re trying to build.

China has been carrying out market-oriented reforms since 1978 – that’s coming up on half a century. It has several hundred billionaires and significant inequality – between rich and poor, between the coastal cities and the inland countryside. It has globally famous private brands: Huawei, Alibaba, Tencent, BYD. It has stock exchanges in Shanghai and Shenzhen. It has a market economy in which private capital operates, in which the profit motive operates, and in which – let’s say it plainly – the exploitation of labour takes place. Wage workers in private enterprises produce surplus value, and a portion of that surplus value is appropriated by capitalists.

None of that sounds like the socialism we signed up for. The world we’re fighting for is a world without exploitation, without poverty, without billionaires: a world based on planning, public ownership, solidarity and the common good. And when we reach for real-world reference points, we tend to think of the Soviet Union – a society that essentially did away with private capital altogether.

On the other hand…

On the other hand, there are things about China that do feel decidedly socialist.

Start with the most basic measure of any society: what happens to ordinary people’s lives. In 1949, life expectancy in China was around 35 years. Today it’s over 79 – higher than in the United States, the richest country in the history of the world. Literacy in 1949 stood at perhaps 15 percent; today it’s essentially universal.

China’s score on the UN’s Human Development Index rose from around 0.4 in 1980 to 0.797 on the latest internationally comparable data – putting it in the “high human development” category and on the threshold of “very high”.

It’s the only country in history to jump from low human development to high human development in a single generation.

Per capita GDP in 1978 was roughly 200 dollars – one of the lowest figures in the world. Today it’s around 13,000 dollars. Consumer goods that were once unimaginable luxuries – refrigerators, washing machines, air conditioning – are now in almost every home. And the position of women has been transformed out of all recognition compared with the old society, in which foot-binding, child marriage and the sale of women were commonplace.

What about poverty alleviation. From the moment the People’s Republic was founded, ending poverty has been at the centre of its mission – land reform, universal education, the “iron rice bowl”. And in 2021, China announced the elimination of extreme rural poverty under its national poverty standard. The targeted campaign from 2013 lifted the final 100 million rural residents out of absolute poverty, with guarantees covering food, clothing, safe housing, education, healthcare, clean water and modern energy.

This was the largest-scale poverty alleviation programme in history. Over the course of the campaign, three million cadres – party members, government workers, students – were despatched to live in poor villages, staying, sometimes for years, until every household in their charge was raised out of poverty. According to the World Bank, China accounts for something like three-quarters of the entire global reduction in extreme poverty over the last four decades.

No other country has carried out a poverty alleviation programme on this scale. India became independent two years before the Chinese Revolution, starting from broadly comparable conditions, and it remains home to hundreds of millions of people in desperate poverty. Meanwhile in the richest societies on earth – in Britain, in the United States – poverty is growing. Millions of families use food banks in Britain. Vast homeless encampments stand in the wealthiest cities of the US. The most powerful capitalist states in history cannot solve, at home, with all their wealth, the problem China has solved with a fraction of it.

Third: the environment. China has become the world’s first green-energy superpower. Its combined operating wind and solar capacity passed 1.6 terawatts in 2025 – three times the combined capacity of the United States and India – and it hosts roughly half of all the large-scale wind and solar now under construction anywhere on earth.

Its cities run on electric buses; more than half of new cars sold in China are electric or hybrid; and Chinese production is what has made solar panels, batteries and EVs affordable for the whole world, particularly the Global South.

China plants forests at a scale no other country approaches – its forest coverage has roughly doubled since the beginning of the reform period – and it has undertaken the world’s most ambitious programmes of afforestation, desert reclamation and biodiversity protection.

Coal remains a real challenge, no question – but coal’s share of the energy mix is falling steadily, from over 80 percent at the start of the century to under 50 percent now, and the available evidence indicates that China’s emissions have already peaked, years ahead of schedule.

And then there’s China’s role in the world. China is the core of the multipolar trajectory – the leading force in BRICS and the Shanghai Cooperation Organisation, the author of the Belt and Road Initiative and the four global initiatives on development, security, civilisation and governance. It’s the lead trading partner of some two-thirds of the world’s countries, and a crucial source of investment, infrastructure and technology for the Global South – ports, railways, power stations, hospitals – on terms, incidentally, far better than anything on offer from the IMF.

And China has been rising peacefully. It hasn’t fought a war for nearly fifty years. It has not constructed anything resembling the US system of hundreds of overseas bases, regime-change wars, coups and unilateral sanctions. Its rise has overwhelmingly proceeded through trade, infrastructure, diplomacy and development cooperation rather than military expansion. Compare that with the record of the United States over the same period, and the contrast could hardly be more stark.

If all this is a function of capitalism, why haven’t other countries achieved anything like it?

What makes it all possible

The point is that it’s very specifically China’s socialist system that makes all of this possible.

China’s definition of its own system goes something like this: China remains on the path to socialism, with a mixed economy in which the commanding heights are publicly owned; the economy is highly regulated and managed on the basis of five-year plans; the state is led by a Marxist-Leninist party; and the capitalist class is denied the right to organise in its own political interests.

Every element of that matters. But perhaps the most important is the political component – and this is the piece that most Western commentary, left and right alike, simply never engages with.

The crucial question is: which class holds state power? The state, as Marx, Engels and Lenin explained, is never a neutral referee. Under capitalism, “the executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie”. The decisive question about China, then, is not simply “are there markets?” or “are there rich people?” The decisive question is whether the capitalist class is the ruling class.

Chinese capitalists exist; some of them are extremely rich. They can even join the Communist Party as individuals. What they cannot do is build an autonomous political bloc through parties, elections and lobbying. In the United States, capital sets the limits of what politics is allowed to attempt. In China, billionaires answer to the state. They’re tolerated to the degree that their activity serves the national development strategy – and disciplined when it doesn’t, through regulation, anti-monopoly action and, when necessary, measures like the cancellation of what would have been the largest stock market flotation in history.

And this is not merely an informal arrangement. It’s constitutionally anchored in the Four Cardinal Principles that Deng Xiaoping laid down in 1979, at the very start of the reform process, as the non-negotiable framework within which all reform would take place: keep to the socialist road; uphold the people’s democratic dictatorship; uphold the leadership of the Communist Party; uphold Marxism-Leninism and Mao Zedong Thought. Markets were let in. Power was not put up for sale.

If the capitalist class were the ruling class in China, national priorities would shift towards the defence of its interests – low taxes, weak labour protections, privatised services, wars for markets and resources. Programmes on the scale of China’s poverty alleviation, green transition and infrastructure construction require a state capable of overriding private profitability and directing vast resources towards use values rather than exchange values over decades.

Then there’s the economic component. China has an enormous private sector, accounting for a majority of employment and much of its output. China also privatised, closed or restructured many smaller state enterprises during the “grasp the large, let go of the small” reforms of the 1990s. But it did not auction off the commanding heights in the manner of Russia’s shock therapy. Energy, finance, transport, communications and heavy industry remain overwhelmingly in public hands, and the total stock of public assets has continued to grow.

Finance is dominated by state-owned banks operating on the basis of strategic priorities set by the state. Land was never privatised: urban land belongs to the state and rural land to the village collective. The economy is coordinated through five-year plans – we’re now in the fifteenth – combining binding and indicative targets, while regulation, procurement and state finance help align private activity with public goals. The relevant question is not whether private enterprise exists. It is whether private capital controls the economy’s strategic levers. It does not.

What, then, are the markets for? China’s answer is found in the concept of the primary stage of socialism: a prolonged period in which diverse forms of ownership and market mechanisms are used to build the material basis for a more advanced socialism, under Communist Party leadership and with public ownership playing the leading role.

This is not actually a new idea in the socialist tradition. There is an obvious analogy with Lenin’s New Economic Policy of 1921: using markets, private initiative and foreign investment to revive and develop a backward economy, while the working class holds state power and the state holds the commanding heights. Lenin put it bluntly: “We must not be afraid of the growth of the petty bourgeoisie and small capital. What we must fear is protracted starvation, want and food shortage.”

The analogy has limits, of course. The NEP lasted less than a decade; China’s reforms are far deeper and longer-lasting, and its private sector is vastly larger. China’s theory is not that it has been conducting a temporary retreat since 1978, but that markets form part of a distinct historical stage of socialist construction. Whether that formula remains socialist depends on who controls the process, whether the commanding heights remain public, and in which direction society is moving.

Deng’s reasoning was that the development of the productive forces is indispensable to socialism. “Socialism means eliminating poverty,” he said. “Pauperism is not socialism, still less communism.”

China in 1978 had made enormous social advances – life expectancy, literacy, public health, national independence, a basic industrial system – but productivity and consumption remained far below the level needed to meet the people’s aspirations. Reform was designed to solve that problem without surrendering political power.

Marx wrote in the third volume of Capital that the development of the productive forces is “capital’s historic mission and justification”, for “it unwittingly creates the material conditions for a higher form of production”. What the Chinese leadership did, in essence, was replace “unwittingly” with “purposefully” – harnessing capital to do consciously, under socialist state direction, what it otherwise does blindly.

And Deng was equally clear that the destination hadn’t changed. “We must keep to the socialist road,” he insisted. “Some people are now openly saying that socialism is inferior to capitalism. We must demolish this contention.”

The Xi Jinping era: which way is it moving?

The obvious objection is that this may have been the theory, but once capital is admitted, it will inexorably take over. Is China drifting, year by year, towards full capitalist restoration?

The best answer to that is to look at the actual direction of travel over the last decade and a half.

Since Xi Jinping became general secretary in 2012, there’s been the most far-reaching anti-corruption campaign in the Party’s history – millions of investigations, reaching to the very top, breaking the nexus between money and power that did so much to destroy the Soviet party.

There’s been the campaign of targeted poverty alleviation – the greatest single act of poverty eradication ever undertaken.

There’s been the turn to common prosperity: inequality reducing, sustained real wage growth, a massive expansion of social insurance, and a determined push to organise and protect workers in the newest sectors of the economy.

New rules are now being introduced for China’s 84 million workers in new forms of employment, covering algorithmic transparency, consultation over platform rules, social insurance and protection against unsafe delivery deadlines. This is still a work in progress, but the direction is the opposite of the Uber model in Britain and the US, where companies have spent fortunes in court to deny that their workers are workers at all.

There’s been the project of building an ecological civilisation – writing environmental protection into the constitution and making the green transition a defining national purpose.

And there’s been an unmistakable reaffirmation of Marxism as the guiding ideology – studied in every school and university, at the heart of the training of 100 million party members. Xi has been explicit: “Socialism with Chinese characteristics is socialism and nothing else. The basic principles of scientific socialism must not be abandoned; otherwise it is not socialism.” And: “The whole party should remember: what we are building is socialism with Chinese characteristics, not some other ism.”

None of this means China is without contradictions. There is real inequality and private-sector exploitation. Labour law is unevenly enforced. Local governments have developed dangerous dependencies on land sales and real estate. There are environmental problems, tensions between development and sustainability, and real dangers in having a wealthy capitalist layer of society.

The class struggle continues in China, and the leadership says as much. But a socialism with problems is not the same thing as no socialism at all. Indeed a socialism without problems is not something that the world has witnessed to date. As Michael Parenti observed, the “pure socialism” approach – measuring actually existing socialism against an imagined utopia rather than against the real alternatives available – “compares an ideal against an imperfect reality, and the reality comes off a poor second”. Its adherents, he said, “support every revolution except the ones that succeed”.

The real comparison isn’t between China and utopia. It’s between China and the other paths actually available to a huge, poor, blockaded, formerly semi-colonised country: the path of Bangladesh, of the Philippines, of the dozens of countries integrated into global capitalism on far harsher terms, where the exploitation is worse and no commensurate rise in living standards is on offer. Judged against the real alternatives – which is the only materialist way to judge anything – China’s record is actually one of profound steps forward for socialism.

Why it matters to us

Why, then, should socialists in the West care about all this?

First, because China’s successes are our successes. They are the successes of global socialism. China demonstrates that a planned economy under working-class state power can eliminate poverty, can become a green superpower, can reach the furthest technological frontiers. In so doing, it demolishes the central ideological claim of our ruling classes: that there is no alternative.

Second, because China is the target of an unrelenting propaganda war. This is the treatment every socialist project receives, from revolutionary Russia to Cuba to Vietnam, precisely because it is a socialist project. If we on the left echo that propaganda – if we conclude that China is just another capitalist power, unworthy of defence – we don’t get a better socialism as a reward. We simply hand ammunition to the war party.

And third, because in dark times we need proof that history hasn’t ended. Deng Xiaoping put it powerfully in 1992, in the shadow of the Soviet collapse, when the future of socialism looked bleaker than at any moment in a century:

“Some countries have suffered major setbacks, and socialism appears to have been weakened. But the people have been tempered by the setbacks and have drawn lessons from them, and that will make socialism develop in a healthier direction. So don’t panic, don’t think that Marxism has disappeared, that it’s not useful any more and that it has been defeated. Nothing of the sort! Feudalism replaced slavery, capitalism supplanted feudalism, and, after a long time, socialism will necessarily supersede capitalism. The road has many twists and turns.”

The road has many twists and turns. But China is still on it.

Thank you very much for watching. Please leave a comment if you’ve got something to say, and I look forward to seeing you next time.