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Why is China's Command Economy So Awful?

By Charles Payne, CEO & Principal Analyst

China’s central planners have adjusted their economic goals for 2019, and many are calling it a comeuppance for President Xi and a knock against the so-called state capitalism.

  • GDP growth as low as 60% would be the lowest in 30 years
  • 11 million job created down from 13.6 million last year
  • Deficit spending 2.8% of GDP up from 2.6% in 2018

The country will lend more to small and private businesses as well as allowing local governments to issue $320 billion in special interest bonds, which as not counted as official debt.

There will be a cut in defense spending, and officials didn’t mention “Made in China 2025.”

Despite this “bad” news, one is left to wonder if there are merits to state capitalist that have advantages over America’s free market system.

Sure, we hear about all that debt and legendary ghost cities that amount to 65 million empty apartments.  In the years after the great recession, there was enormous building as part of a bold stimulus plan that was even greater than in the United States.

The largess resulted in sky high prices for many commodities and helped regional economies, including Australia, pull out of recession, but it came at a major cost.

Still a Juggernaut

But China’s economy has become a juggernaut second only to the United States, growing through government subsides, massive trade tariffs and other interference that would never be considered in our economy.

But since 1990, China’s economy has been gangbusters in China.

  • GDP $361 billion to $12.2 trillion in 2017, $13.0 trillion this year
  • GDP per capita $703 year to $7,325 in 2017


China is the world’s largest market for cars and luxury items, and you’ll find more Chinese tourist in Rome today than Americans.

Robert Lighthizer has expressed concerns about state capitalism that goes beyond the unfair nature in global trade, and many think America should adopt some of their tactics.

Charles Payne
Wall Street Strategies


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