The difficulty the U.S. faces in its current attempts to damage China’s economy was analysed in detail in the article “The U.S. is trying to persuade China to commit suicide”. Reduced to essentials, the U.S. problem is that it possesses no external economic levers powerful enough to derail China’s economy. The U.S. has attempted tariffs, technology sanctions, political provocations over Taiwan, the actual or threatened banning of companies such as Huawei and Tik Tok etc. But, as always, “the proof of the pudding is in the eating.” Taking the latest period, during the three years following the beginning of the Covid pandemic, China’s economy has grown two and a half times as fast as the U.S. and six times as fast as the E.U..
Therefore, as the previous article put it, in the economy the U.S. cannot “murder” China—even although it can create short term problems. Furthermore, unlike with Gorbachev, whose illusions in the U.S. led to a centralised political collapse of the CPSU, the disintegration of the USSR, and an historical national catastrophe for Russia, the policies of Xi Jinping and the CPC are centrally protecting China and socialism. As the U.S. cannot pursue a course of “murder”, therefore it is forced to attempt an indirect route to get China to commit “suicide”—that is, to try to persuade China to adopt policies which will damage it.
Given that economic development underlies China’s success, one of the most central of all U.S. goals is to attempt to persuade China to adopt self-damaging economic policies. Enormous resources are therefore poured into spreading factually false propaganda regarding China’s economy. This also has the secondary goal of internationally attempting to persuade others not to learn from China’s economic success—because an understanding of the reality that China’s socialist economy is more efficient and successful than capitalism would be a devastating ideological blow to the U.S..
A crucial part of this false propaganda is to try to get accepted as “truth” claims about China’s economy which are entirely false—as basing policies on “facts” which are untrue would naturally lead to wrong policies. One of the most important of these false claims is that China’s socialist economy is “inefficient” compared to capitalism—or, more specifically, that investment in socialist China is inefficient in creating economic growth compared to capitalist America or in general compared to capitalist countries.
Naturally, socialism’s goal is not abstract economic efficiency, it is people’s well-being. But an inefficient economy, in the long term, would be incapable of maintaining the maximum well-being of the people. Therefore, how efficient an economy is constitutes an important issue in economic development. Claims that capitalism is more economically efficient than capitalism, usually put in the form of U.S. claims of the “inefficiency of socialism”, consequently has at least two purposes.
First, most immediately, to attempt to persuade China that as its investment is allegedly “inefficient” it should be reduced. As discussed in the earlier article, “The U.S. is trying to persuade China to commit suicide”, a key U.S. goal to get China to reduce its level of investment in GDP. This is because that same policy was successfully used earlier by the U.S. to derail its competitor economies of Germany, Japan and the Asian Tigers.
Second, more generally and ideologically, this claim that China’s investment is inefficient, and capitalism’s is efficient, is an attempt to undermine and discredit socialism and promote capitalism.
In summary, such propaganda is an attempt to spread two interrelated falsifications.
As will be systematically factually shown below, the exact reverse of these claims are true. Socialist China’s investment is much more efficient in creating growth than in capitalist countries such as the U.S.. As will be shown, this efficiency of China is integrally linked to the socialist character of its economy.
As usual the method will be used to use the wise Chinese dictum to “seek truth from facts”. The first section of the article will establish the facts showing the greater efficiency of China’s investment. The second section will demonstrate that the reasons for this lie in the socialist character of China’s economy.
Section 1—the high international efficiency of China’s capital investment