Is China Socialist or Capitalist? (With 8 Examples)

china's forme socialist leader chairman mao

China is more socialist than capitalist. Only certain areas of the economy are privately owned.

This indicates that socialism has an overarching impact on China with a limited influence of capitalism. This system is often referred to as “socialist market economy.”

The Chinese Communist Party (CCP) is the ruling socialist party in China. The party supports the centralisation of services.

China is a country heavily influenced by socialist ideology and is ranked as the 116th most free economy in the world by the Economic Freedom World Index.

Socialism vs. Capitalism

A variety of financial systems are included in the far-left to left-wing economic theory and movement known as socialism.

Socialism is distinguished by the supremacy of social ownership over private ownership of the means of production.

It alludes to the political, social, and economic philosophies and movements that favour the adoption of such systems. Social ownership, for instance, can be collective, cooperative, or public.

In contrast, private individuals or businesses own the capital goods in a capitalist system.

Business owners employ the labour force, which does not own the means of production but merely uses them on behalf of the capital owners (capitalists).

The most fundamental form of capitalism is the free market or laissez-faire. Here, private individuals can behave anyway they like. They have the freedom to decide where to invest, what to produce or sell, and how much to spend on products and services.

The open market operates without constraints or prohibitions.

Is China Socialist? (Socialism in China)

China has a lot of socialist policies in place making it one of the most pro-socialist countries in the world. Below are four of the most prominent examples:

1. Universal Healthcare

China has publicly financed basic medical insurance, which has helped the country reach nearly universal coverage.

Urban employed people are required to sign up for an employment-based programme, which is primarily supported by payroll taxes paid by both employers and employees.

Urban-Rural Resident Basic Medical Insurance, which is primarily funded by federal, state, and municipal governments through individual premium subsidies, is an option for additional residents to freely participate in.

Public and private health care organisations are arranged for service delivery by local health commissions.

The main, specialised, hospital, and mental health services, as well as prescription medications and traditional Chinese medicine, are all covered by the basic medical insurance policies.

There are applicable deductibles, copayments, and reimbursement caps. There is no yearly limit on personal expenditures. Private health insurance that is complementary can help with cost-sharing and coverage omissions.

2. Free Education

The Ministry of Education is responsible for overseeing the majority of the state-run public education system in China.

All citizens are required to complete nine years of government-funded compulsory education, sometimes known as nine-year obligatory education.

Six years of elementary school are normally required, typically beginning at age six and ending at age twelve. This is followed by three years of junior secondary education. After three years of high school, secondary education is over.

Middle school comes next. The Regulation on Academic Degrees, the Compulsory Education Law, the Teachers Law, the Education Law, the Law on Vocational Education, and the Law on Higher Education are among the laws of China that govern the educational system.

3. Nationalized Railways

In China, long-distance transportation via rail is significant. The nation’s railway network, which had more than 150,000 kilometres (93,206 mi) as of 2021, was the second-longest in the entire world.

The longest High-Speed Railways (HSR) network in the world, more than 40,000 kilometres (24,855 miles) of it, is in China.

The China State Railway Group Company, Limited, a state-owned organisation formed in March 2013 (as China Railway Corporation) following the abolition of the Ministry of Railways, manages almost all rail operations.

In June 2019, it was changed into a joint-stock company and given to the Ministry of Finance.

Like Russia’s nationalized railways and Spain’s Renfe railway, the railway system is mostly managed by the government, thereby demonstrating one of the most socialist policies in China.

4. The Police

The People’s Police is the People’s Republic of China’s national civilian police force. Police in China undertake both political and a range of other duties in addition to upholding the law.

In this way, policing in China goes beyond merely upholding the law to also serve a variety of other purposes. The Ministry of Public Security is in charge of the majority of national police units (MPS).

Police services are financed through tax income. Thus, it is guaranteed that every Chinese will have access to police protection and will always be able to report crimes or ask for protection.

This is a prime example of China’s socialism because there is no market competition among police forces. The industry is under the authority of a single police department.

The Police are therefore exempt from having to turn a profit or compete with other services to provide the least expensive or most efficient services.

Is China Capitalist? (Capitalism in China)

China has various instances of capitalism. The following illustrations show how some of the portions of the Chinese economy are governed by free market forces.

1. Foreign Investments

China has made significant progress toward becoming a market-capitalist nation. It now accepts outside investment.

Its businesses compete globally and make investments abroad. A key tech competitor is Japan, which is a more capitalist society than China.

In addition, They have backed private businesses for many years by providing them with affordable land as well as various subsidies, tax incentives, and loans to promote investment.

Some Chinese business people, like Jack Ma, are well-known internationally.

Therefore, the facilitation of foreign investments and the offering of subsidies and tax incentives to open private companies is one of the demonstrations of capitalist policies in China.

2. Buying and Selling Houses

China allows foreigners to buy real estate. The primary prerequisite is that you must have held a valid residence visa for at least a year while you studied or worked in China.

Only one residential property may be owned by foreigners for residential purposes.

Although the Government is the owner of the real estate assets, they allow anyone to buy and sell homes in China which is a display of capitalism in China.

3. Banking System

There are 19 private banks that are now authorised to conduct business in mainland China. As part of broader reforms to the state-dominated banking system, China began testing the creation and operation of private banks in 2014.

China has also allowed foreign banks to open branches in the country.

The opening of private banks and the shift from a state controlled economy to a market controlled economy is a major display of the shift towards capitalism in China.

4. Privatization of Airports

The air traffic has rapidly increased since the last few decades with the establishment of China as a financial hub.

In order to develop the airports to handle the air traffic and the installation of facilities, the shares of the airports were sold out to private companies in the early 2000s.

The airports are jointly owned by the Chinese government as well as the private and foreign investors.

Private equity had been included into China’s aviation industry by 2005. In 2002, Copenhagen Airport funded $66 million in Haikou Meilan International Airport, and Lufthansa contributed $6.4 million to establish food courts at Guangzhou Baiyun International Airport and purchase a 50% stake in the cargo terminal at Shenzhen International Airport.

The Hong Kong International Airport Authority established a joint venture with Hangzhou Xiaoshan International Airport in December 2006, taking a 35% equity stake.

Individuals and foreign companies are allowed to hold shares and invest in the development of airports, thereby making it one of the displays of capitalist policies in China.


Both market and non-market influences are influencing different areas of the Chinese economy. A significant amount of the economy is state held, even though there are few capitalist influences especially in terms of businesses.

The increased regulations for private and foreign business owners prove that the Chinese Government supports the state-owned economy. However, capitalism generates employment for locals, this promotes economic growth.

In recent years, there has been a significant shift towards a capitalist economy. However, there are still worries that capitalism will lead to more inequality in Chinese society.

In general, China is a socialist society, but the country is opening up certain sectors to private ownership.

Website | + posts

Dr. Chris Drew is the founder of the Helpful Professor. He holds a PhD in education and has published over 20 articles in scholarly journals. He is the former editor of the Journal of Learning Development in Higher Education. [Image Descriptor: Photo of Chris]

Leave a Comment

Your email address will not be published. Required fields are marked *