There's a peculiar habit among American communists who insist that the United States represents everything wrong with capitalism while praising China as an example of what communism can accomplish.
Ask them what makes American capitalism so terrible, and you'll often hear about corporate subsidies, bailouts, government favoritism, politically connected billionaires, and politicians directing public resources toward handpicked businesses.
And on those complaints, we can find considerable common ground.
Government favoritism is an injustice. Politicians have no business taking money from taxpayers to reward favored corporations, protect politically connected businesses from competition, or determine which companies deserve to succeed.
But there's a rather inconvenient question for those who condemn these practices as capitalism while praising Communist Party-ruled China.
Have you ever looked into Huawei?
The $75 Billion Elephant in the Room
In 2019, The Wall Street Journal published an investigation estimating that Huawei had benefited from access to as much as $75 billion in Chinese state support over approximately 25 years.
The estimated assistance included:
$46 billion in state-backed lending and credit facilities.
$25 billion in estimated tax savings.
$2 billion in discounted land purchases.
$1.6 billion in direct government grants.
These figures represent different forms of assistance, including access to financing rather than simply cash handed over by the government. Huawei disputed the characterization that it received special treatment.
Nevertheless, the scale and variety of state involvement deserve examination.
And the financial assistance is only the beginning.
When the Government Is Your Banker, Customer, and Business Partner
Consider the additional advantages available to Huawei within China's state-directed economy.
State-backed international financing. Chinese policy banks have supported telecommunications projects abroad, including financing arrangements that helped foreign customers purchase Chinese equipment.
State-controlled customers. In 2021, China Mobile, itself a state-owned enterprise, awarded Huawei approximately 60% of its 5G base-station contracts in a major procurement round. That percentage alone doesn't prove an unfair award, but it illustrates the enormous commercial importance of government-controlled customers.
Government procurement preferences. Chinese policies have encouraged domestic technology purchasing and the development of national technology champions.
Semiconductor industrial policy. State-backed investment funds, research initiatives, tax incentives, and industrial support have helped develop China's domestic semiconductor ecosystem, including suppliers relevant to Huawei.
Protection from foreign competition. China's telecommunications market operates under extensive state regulation, licensing requirements, and restrictions on foreign participation.
International diplomatic support. Chinese officials have actively defended Huawei's interests abroad, including opposing foreign restrictions on its telecommunications equipment.
The HONOR transaction. In 2020, Huawei sold its HONOR smartphone business to a consortium that included state-backed entities. The transaction was reportedly valued at approximately $15 billion, although it should be distinguished from a direct subsidy.
Huawei is a privately held company, but it operates within an economy where the government possesses extraordinary power over credit, procurement, investment, regulation, and market access.
If those relationships are objectionable when they occur in America, why would they become admirable when they occur in China?
The Convenient Definition of Capitalism
Here's where the argument becomes especially revealing.
When an American corporation receives government assistance, we're told this demonstrates how capitalism works in the real world.
Apparently, adding those three words is sufficient to dispense with the need to define capitalism.
Never mind that laissez-faire capitalism rests on private property rights, voluntary exchange, competition, and the separation of government from economic favoritism.
A government forcibly collecting money from one person to subsidize another is exercising political power over economic resources.
That action contradicts laissez-faire capitalist principles.
Yet somehow, the same people who insist that every American government intervention should be attributed to capitalism can look at China's far more extensive state direction and describe it as a vindication of communism.
The standard changes with the flag.
And this is precisely why definitions matter.
Capitalism, socialism, and communism are economic and political concepts with identifiable principles. Their meanings cannot reasonably change every time someone wants to praise one government or condemn another.
What China Actually Demonstrates
China isn't a pure communist economy. It combines extensive private enterprise and markets with state ownership, Communist Party authority, industrial planning, and substantial government direction of economic activity.
Nor does socialism necessarily require subsidizing privately owned corporations. Socialist traditions differ considerably, including over whether markets should exist.
But state-directed allocation of resources is entirely compatible with important forms of socialist economic planning. It is fundamentally at odds with laissez-faire capitalism when imposed through coercive political favoritism.
This creates an uncomfortable problem for those who use government intervention as their principal indictment of capitalism.
If subsidies demonstrate the failure of capitalism, what do China's subsidies demonstrate?
If politically connected corporations prove that America is corrupt, what does Huawei's relationship with the Chinese state prove?
If government interference prevents American markets from serving consumers properly, why should even greater government interference be celebrated elsewhere?
You cannot answer these questions by repeatedly saying real-world capitalism.
You have to identify the principles you're judging and apply them consistently.
The Morality of Political Favoritism
The problem with corporate favoritism goes deeper than the amount of money involved.
It concerns the authority being exercised.
When a government subsidizes a business, it substitutes political judgment for the voluntary decisions of consumers, investors, and producers.
People who never agreed to finance that enterprise are compelled to contribute. Competitors who receive no equivalent assistance must operate against a business whose resources have been supplemented through political power.
Success becomes partly dependent on convincing politicians to direct other people's resources toward you.
And the incentives follow.
Businesses gain reasons to lobby rather than compete. Politicians gain opportunities to reward allies. Economic decisions become increasingly dependent on political relationships.
The more extensively the state controls economic resources, the greater the opportunities for political favoritism.
This is why the principle matters more than the nationality of the beneficiaries.
An American corporation has no greater moral claim to taxpayer subsidies than a Chinese corporation.
Neither does a government acquire the moral authority to redistribute private wealth merely by calling itself socialist, communist, democratic, or capitalist.
Political favoritism remains political favoritism, regardless of the ideology used to justify it.
The Standard That Exposes the Contradiction
Suppose we accepted the argument that capitalism should be judged by everything the American government does.
Would communism then have to be judged by everything the Chinese Communist Party does?
Its censorship? Its restrictions on private enterprise? Its political control of banking? Its industrial favoritism? Its suppression of independent political opposition?
Or would we suddenly be informed that these things don't represent real communism?
That's the convenience of refusing to define economic systems by their principles.
Capitalism becomes responsible for every government action its critics dislike, while communism becomes an idealized collection of outcomes its advocates hope to achieve.
One system is judged by its alleged failures, including policies that contradict its principles.
The other is judged by its promises, even when its actual institutions contradict those promises.
That isn't a serious method of economic analysis.
It's an exercise in selective attribution.
Conclusion: Apply Your Own Standard
If you object to corporate subsidies, oppose corporate subsidies.
If you object to government favoritism, oppose government favoritism.
If you believe political connections should not determine which businesses succeed, apply that principle to Huawei just as readily as you would to Amazon, Boeing, or General Motors.
But don't condemn American government intervention as capitalism and then celebrate Chinese government intervention as communism.
The same standard must apply to both.
And if your definition of capitalism is simply whatever the American government does, while your definition of communism is whatever you wish the Chinese government represented, perhaps your first problem isn't with economics.
Perhaps it's that you've never bothered to define the words you're using.
Sources and further reading
The Wall Street Journal, December 25, 2019: “State Support Helped Fuel Huawei's Global Rise.” Investigation of approximately $75 billion in estimated Chinese government support.
Congressional Research Service, China's New Semiconductor Policies: Issues for Congress, January 2022. Analysis of China's industrial policies and semiconductor incentives.
MERICS, research on Huawei's role in China's semiconductor supply chain.
Huawei annual reports, for company-disclosed government grants and financial information.
Contemporary reporting on China Mobile's 2021 5G procurement and Huawei's 2020 sale of HONOR.
The financial estimates cited above describe historical support and should not be interpreted as current annual subsidy totals.
