Our Capitalism is subsidized by Communism
China’s Communism is Subsidizing Our Capitalism
For decades, Western capitalists have spent an incredible amount of time, effort, and money making sure that we fear “China” and “communism.” It’s the ultimate boogeyman - used as a political tool to justify aggressive foreign policy, economic sanctions, and military spending. We’re told that China is an existential threat to democracy and free markets, a looming specter that must be contained at all costs.
But here’s the irony: Western capitalism, in its current form, couldn’t survive without China. I’d argue that China’s form of state-controlled communism has been propping up Western capitalism for decades. Without it, we’d likely see the entire system crumble.
Let’s break down why I think this is the case.
Cheap Labour and the Illusion of Affordable Goods
One of the most significant ways China supports Western capitalism is through its massive manufacturing sector. Western businesses rely heavily on China’s cheap labour to produce goods at rock-bottom costs, keeping consumer prices low and corporate profits high.
Think about it: If every smartphone, television, or piece of clothing were manufactured in North America or Europe, prices would skyrocket. Many politicians like to tout the idea of “bringing jobs back home,” but the reality is that Western consumers have become addicted to cheap goods. Without China’s labour force, those goods wouldn’t be affordable.
China’s ability to mass-produce goods at a fraction of the cost isn’t just about cheap wages - it’s about infrastructure. China has invested heavily in logistics, supply chains, and industrial zones, creating a manufacturing ecosystem that Western countries can no longer compete with.
This isn’t just about clothing or electronics; it extends to pharmaceuticals, steel, solar panels, and countless other industries. Western businesses are deeply embedded in Chinese supply chains, meaning that without China, entire industries would face collapse or unsustainable price hikes.
Additionally, China’s ability to meet rapid global demand is unparalleled. While Western countries struggle with supply chain disruptions, China’s efficiency in production and distribution keeps consumer markets stable. Whether it's the latest iPhone, auto parts, or medical supplies, China’s manufacturing sector ensures that shelves remain stocked and economies continue functioning.
State Subsidies and Artificially Low Prices
Another way China props up Western capitalism is through its government subsidies. The Chinese government provides massive financial support to key industries - everything from steel production to green energy - to keep costs artificially low. This means that Western businesses can buy Chinese goods and materials at prices far below what they would cost if produced in a purely free market system.
Consider solar panels. The Chinese government heavily subsidizes its solar manufacturing sector, making solar energy more affordable for Western buyers. The same goes for electric vehicles, lithium batteries, and countless other products. While Western governments preach free markets, they’re happy to take advantage of China’s subsidies when they benefit them.
Without these subsidies, many industries in the West would struggle to transition to renewable energy or maintain their current production levels. Again, China is quietly supporting capitalism while being painted as its biggest enemy.
Moreover, the influx of inexpensive Chinese goods has allowed Western economies to maintain a standard of living that might otherwise be unsustainable. While wages in many Western countries have stagnated, the affordability of consumer goods - thanks mainly to China - has kept households afloat. Without these low-cost imports, inflation would be even more crushing, and the illusion of economic stability would begin to crack.
Capitalism’s Reliance on Externalized Costs
Capitalism is a system that demands perpetual growth. For profits to keep rising, costs must continually be cut. But at this late stage of capitalism (or, as I like to call it, end-stage capitalism), we’re running out of places to cut costs domestically. That’s why so many businesses are shifting more and more production to China.
This isn’t just about cheap wages - it’s about externalizing costs. Western capitalism cannot function without shifting the real costs of production onto someone else. China absorbs massive amounts of pollution, labor exploitation, and human rights concerns while Western businesses maintain an ethical facade. Without China absorbing these externalized costs, Western capitalism would have to confront its own unsustainable practices.
Beyond environmental and labor issues, intellectual property and technological advancements also factor into this dynamic. Western firms often partner with Chinese manufacturers to produce cutting-edge technology at scale, benefiting from China’s technical expertise while expressing concerns about intellectual property theft. This contradictory approach - vilifying China while profiting from its innovation - is yet another example of the hypocrisy embedded in modern capitalism.
The Limits of This Argument: Where I Might Be Wrong
Of course, no argument is airtight. While I believe China’s economic policies have supported Western capitalism, there are counterpoints worth considering.
China’s Economy Isn’t Purely Communist
China doesn’t operate under a purely communist model. Instead, it’s a hybrid - a state-controlled economy that incorporates market-driven mechanisms. Private businesses thrive in China, and capitalist practices exist within the framework of state oversight.
So, is communism really propping up capitalism? Or is it a highly controlled form of state capitalism that allows for strategic economic advantages? China has been pragmatic in its economic policies, borrowing elements from capitalism while maintaining state control over critical industries.
Economic Competition Is Growing
China isn’t the only game in town anymore. Other developing nations - India, Brazil, and Indonesia - are emerging as major economic players. Many Western companies are looking for alternative manufacturing hubs to reduce their reliance on China.
Apple, for example, has been shifting some of its production to India. Vietnam has become a manufacturing hotspot, particularly for electronics. Mexico is benefiting from companies looking to “nearshore” their production to be closer to North American markets.
Even if China’s economy faltered or became less accessible, Western capitalism would likely pivot to these emerging economies rather than collapse outright.
Diversification of Supply Chains
With rising geopolitical tensions between the West and China, many businesses are actively diversifying their supply chains. The COVID-19 pandemic exposed how fragile our reliance on China-made goods was, leading many companies to explore other options.
The “China+1” strategy - where businesses invest in China and build manufacturing capabilities in other countries - is gaining traction. This shift reduces Western dependence on China while maintaining access to affordable production.
So, while China has played a significant role in supporting Western capitalism, the West is also taking steps to reduce that dependency. That doesn’t mean we’re suddenly self-sufficient, but it does mean that capitalism’s survival might not be entirely tied to China’s economic policies.
The Takeaway
The irony of modern capitalism is that it vilifies the very system that allows it to thrive. China, the so-called enemy of the free market, has been instrumental in keeping Western capitalism alive by providing cheap labor, subsidized goods, and an easy way to externalize costs.
At the end of the day, capitalism isn’t as self-sufficient as its proponents like to pretend. It has always relied on cheap labor, environmental exploitation, and government intervention - whether from China or elsewhere. The real question isn’t whether China is propping up capitalism, but whether capitalism, in its current form, is even sustainable in the long run.
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