After the Chinese invasion and takeover of Tibet in the 1950s, China became a practitioner of panda diplomacy where it would send those cuddly bears to zoos around the world to improve relations with various countries. But back then, China was still something of a sleepy economic backwater. Napoleon once opined “Let China sleep, for when she wakes she will shake the world” – an admonition that has become a prediction. In recent times, China has emerged as the most dynamic country on the planet: Shanghai has long replaced New York and Chicago as the place for daring sky-scraper architecture, the Chinese economy is the second largest in the world, the Silk Road project extends from Beijing across Asia and into Europe itself. Indeed, considerable Silk Road investment in Northern Italy in industries like leather goods and fashion has brought tens of thousands of Chinese workers (many illegally) to the Bel Paese to make luxury goods with the label “Made In Italy”; this has led to scheduled direct flights from Milan Bergamo Airport (BGY) to Wuhan Airport (WUH) – the root cause of the virulence of the corona virus outbreak in Northern Italy.

Indeed, China is the center of a new kind of capitalist system, state controlled capitalism where the government is the principal actor. But the government of China is run by the Chinese Communist Party, the organization founded by Mao Zedong and others in the 1920s to combat the gangster capitalism of the era – for deep background, there is the campy movie classic Shanghai Express (Marlene Dietrich: “It took more than one man to change my name to Shanghai Lily”). So has the party of the people lost its bearings or is something else going on? Mystère.

The Maoist era in China saw the economy mismanaged, saw educated cadres and scientists exiled to rural areas to learn the joys of farming, saw the Great Leap Forward lead to the deaths of millions. Following Mao’s own death in 1976, Deng Xiaoping emerged as “paramount leader” of the Communist Party and began the dramatic transformation of the country into the economic behemoth it is today.

Deng’s modernization program took on new urgency in the early 1990s when the fall of the Soviet Union made Western capitalism a yet more formidable opponent. However, the idea that capitalist economic practices were going to prove necessary on the road to Communism was not new, far from it. Marx himself wrote that further scientific and industrial progress under capitalism was going to be necessary to have the tools in place for the transition to communism. Then too there was the example of Lenin who thought the Russia inherited from the Czars was too backward for socialism; in 1918 he wrote

    “Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science.”

Accordingly Lenin resorted to market based incentives with the New Economic Policy in the 1920s in the USSR. So, there is nothing new here: in China, Communism is alive and well – just taking a deep breath, getting its bearings.

Normally we associate capitalism with agile democracies like the US and the UK rather than autocratic monoliths like China. But capitalism has worked its wonders before in autocratic societies: prior to the World Wars of the 20th century, there was a thriving capitalist system in Europe in the imperial countries of Germany and Austria-Hungary which created the society that brought us the internal combustion engine and the Diesel engine, Quantum Mechanics and the Theory of Relativity, Wagner and Mahler, Freud and Nietzsche. All of which bodes well for the new China – to some libertarian thinkers, democracy just inhibits capitalism.

The US formally recognized the People’s Republic of China in 1979, a few years after Nixon’s legendary visit and the gift of pandas Ling-Ling and Hsing-Hsing to the Washington DC zoo. Deng’s policies were bolstered too by events in the capitalist world itself. There was the return of Japan and Germany to dominant positions in high-end manufacturing by the 1970s: machine tools, automobiles, microwave ovens, cameras, and so on – with Korea, Taiwan and Singapore following close behind. Concomitantly, the UK and the US turned from industrial capitalism to financial capitalism in the era of Margaret Thatcher and Ronald Reagan. Industrial production was de-emphasized as more money could be made in financing things than in making them. This created a vacuum and China was poised to fill the void – rural populations were uprooted to work in manufacturing plants in often brutal conditions, ironically creating in China itself the kind of social upheaval and exploitation of labor that Marx and Engels denounced in the 19th century. But the resulting boom in the Chinese economy led to membership in the World Trade Organization in 2001!

The displaced rural populations were crammed into ever more crowded cities. This exacerbated the serious problems China has long had with transmission of animal viruses to humans – Asian Flu, Hong Kong Flu, Bird Flu, SARS and now COVID-19. The fact that China is no longer isolated as it once was but a huge exporter and importer of goods and services from all over the world has made these virus transmissions a frightening global menace.

The corona pandemic is raging as the world finds itself in a situation eerily like that of August 1914 in Europe: two powerful opposing capitalist systems – one led by democracies, the other by an autocratic central government. The idea of a full-scale war between nuclear powers is unthinkable. Instead, there is hope that this latest virus crisis will be for China and the West what William James called “the moral equivalent of war,” leading to joint mobilization and cooperation to make the world a safer place; hopefully, in the process, military posturing will be transformed into healthy economic competition so that the interests of humanity as a whole are served in a kinder gentler world. Hope springs eternal, perhaps naively – but consider the alternative.