Communism and Capitalism in China and Vietnam; An Unlikely Fairytale? by Anouska Jha

Can a country successfully remove itself from a powerful system that has controlled its laws, behaviours and ideologies for decades? Often not, but this is where China and Vietnam differ. An epoch of communism and hard-line socialism characterized these two nations, making them the main target of western foreign policy in the 20th century. For 20th century political thinkers, the fall of china to communism in 1949 and the ruling of the CPV in Vietnam since 1954, had almost set in stone the notion that political ideology is in fact a ‘dogmatic’ and unchangeable concept, however, this has since been reversed. The death of China’s leader Mao Zedong in 1976 and the unthinkable trauma and destruction of the Vietnam War after 1975 marked one of the most significant turning points in global history- not least because it initiated the inevitable timeline towards Soviet implosion in 1989. More significantly, the new policies that began to emerge in China and Vietnam from 1978-1995 and onwards, demonstrate that ‘ideology’ is perhaps not just the will of the stronger imposed on one’s subjects, but a fallible concept that can be moulded in the hands of the multitude, to create long-lasting global security. Both China and Vietnam remain in the hands of communist authority, yet their elevation to the position of two of the world’s most influential economic resources is fascinating. Does this revolutionary example mean that Capitalism and Communism can finally reside in harmony, or is the myth of ‘red capitalism’ an unsustainable, illusory prospect that will inescapably experience its downfall in the near future?

The accession of Dien Xinping after Mao Zedong’s death in 1976 was followed by some of the most decisive moments in modern history. The destruction caused to communities and businesses by the Cultural Revolution led Xinping to aspire to ‘liberate thinking’ in the Chinese economy, creating economic reforms in the 1980s which had, by the end of the decade lifted ½ billion people out of poverty. Additionally, new Special Economic Zones were created, wherein around 40 firms with preferential tax treatment were able to carry out production in designated industrial parks, to attract foreign capital in a self-contained bubble. Quartz Magazine has described this new economic revolution as an example of China’s ‘unleashed pent up capitalist energy’.

This fascinating view reveals a new side to conventional views about political-economic policy. The stagnation experienced by China under Mao resulted in an intense urge to experience freedom in the form of limited government and globalisation, to which Mao can be compared to the tight lid that trapped such sentiment into a corner. After 1978, the grassroots capitalists that existed under Mao were finally diffused into the new air of capitalist hope provided by Deng, who embedded China, albeit gradually, into the world’s economic stage. For example, families were permitted to sell a portion of their leased farmland at their own price, and the opening of stock markets in the 1980s symbolised the new power of private shareholders who now held the levers to their own economic fate. Fast-forward to the 21st century, China is now not only the world’s biggest foreign export nation, but its industrial growth has been described as ‘phenomenal’, particularly as the country remains under a communist political stronghold. From 1996-2016, China overtook the USA by 50% in its construction 6 of highway systems, and now has more high-speed rail tracks (12000 miles) than any other country combined. Although not an extensive list of China’s economic achievements, it is evident that the free-market economy's official proclamations in the 1992 Congress of the CCP indeed represented the replacement of the ‘red hats’ with the ‘red capitalists’. Since then, large-scale success, conveyed by the unprecedented growth of private enterprises that outperformed the US growth rate in 2007, discloses a new thesis in traditional political thought. Where once such policies had divided and at times threatened global stability, now the merging of capitalist intellectuals with a possibly limited communist government has proved to be paramount in the nation’s rapid growth.

A similar success story is found in Vietnam. Once being one of the world’s poorest countries after the war, Vietnam remains under the communist rule of Ngyuen Phu but has grown to become part of the new ‘Fourth Industrial Revolution’ trajectory, with many new firms to engage in international trade to attract foreign investment. Like China, after Deng's accession in 1978 and the subsequent reforms in the 1980s, Vietnam’s leader in 1986, Nguyễn Văn Linh, established the Doi Moi reforms, which set Vietnam in motion to become a thriving example of a ‘red capitalist’ nation. Since this set of policies, its growth is demonstrated by a phenomenal number of achievements. The Law on Foreign investment was created in 1986, and according to a 2016 report by Baker and Mckenzie, the law has been adapted continuously to engage with more pro-investor reforms. Vietnam has also become part of a trans-Pacific partnership since joining the ASEAN free-trade area in 1995, opening its economic borders to the waves of global capitalism. This is part of what the leading 10 political scientists such as Shapiro explain as the outcome of key processes such as Gradualism; In the Soviet Union, the communist system had imploded rapidly, forcing the government to replace a communist system with capitalism essentially. Contrastingly in Vietnam, the reforms allowed for a more gradual up-scaling, starting with joint ventures with foreign firms and the growth of certain sectors. V. Thu Anh of Fulbright University has compared Vietnam’s growth to an analogy of an eagle, where one wing bears the internal economic reforms, and the other the openness of Vietnam to foreign trade. From this, it is perhaps inarguable that Vietnam’s politicians' social engineering has lifted it from the nest of authoritarianism into the limitless skies of capitalist ventures, making Vietnam the perfect fusion of a capitalist economy with a communist rule.

But this unlikely fairytale seems perhaps too idealistic. It calls into question the nature of policy, ideology, and the difficulty of a country removing itself from its historical reputations.

Despite China’s unrivalled growth, particularly in the manufacturing and export sector, there is convincing evidence of increasing state control since 2013, and as of 2018, the state contributes to ⅔ of GDP. The optimistic claim of Zhang Weiying, a Chinese economist that China owes its success ‘not because of the state, but in spite of the state’ is therefore somewhat unconvincing, as the age of State-Owned Enterprises (SOEs) is stronger than before. Moreover, the Made In China 2025 plan (MIC 2025), which targets the growth of 10 technological sectors under the guidance of the state, highlights the entrenched self-interest of communist politics in the global economy. Along with the disputes caused by the US-China trade wars, the Trump Administration also argued that MIC 2025 favours domestic firms, creating an imbalance in the foreign exchange strategies of both countries and violating the World Trade Organisation agreements. This is not a fusion of two opposing ideologies. Rather, it is friction.

Likewise, in Vietnam, the fundamental power structures are still largely unscathed, leaving the country open to frequent injustice by the state. For example, surveillance of citizens and oppression of press freedom is not uncommon in Vietnam, challenging to what extent capitalist sentiment is truly absorbed into the government’s machine. It does not stop at moral injustice, however. Even in the economic sector, Vietnam struggles to keep its head above the unpredictable waters of communism, with rising debts in the banking sector, and, like China, increasing state control of physical assets. Vietnam has also accumulated a huge reliance on global supply chains, which has several consequences; Firstly, it limits the entrepreneurial opportunities of local chains, leading to what M.Busch has termed ‘the missing middle’. This is where there is a lack of a productive domestic sector, and much of its competition is based on low labour costs and taxes. It appears that the higher Vietnam integrates itself economically on the global scale, the lower its domestic value and welfare. Is this truly a harmony?

Discussing these policies from a historical perspective truly reveals the somewhat fleeting nature of a capitalist economy's consensus with a communist rule. Now it is the duty of political scientists, leaders, and historians to uncover such ‘capitalist authoritarian’ systems' potential sustainability. What must be considered is whether the insubstantial emphasis on domestic stability will result in political dissent and whether it is possible to maintain an equilibrium between foreign policy and national doctrinal ideology. The Chinese leader Xi Jinping's claim on the 40th Anniversary of the revolutionary Chinese reforms in 2020, that ‘No-one is in the position to dictate the Chinese people’ is therefore pertinent. Until a true reform that dismembers the manacles of authoritarian rule emerges, 18 China and Vietnam will continue to live in this politically liminal state, where the fraying fabrics of its societies will be wrenched on one side by the apparent illusions capitalist dream, and on the other by communist loyalty.