Is China better at capitalism than America?

Conventional wisdom holds that Uncle Sam's free-market model is the best in the world. But China's growing clout is causing economists to think twice

High-speed rail in China
(Image credit: Imaginechina/Corbis)

The 1991 collapse of the Soviet Union seemingly put to rest any doubts about the supremacy of America's capitalist system. Guided by the magic hand of the market, the U.S. had created more prosperity than any other country in history, while the Soviet system crumbled under the weight of its creaky, bureaucratic machine. But the subsequent rise of China, whose economy combines aspects of capitalism and central planning, has thrust the U.S. model under new scrutiny. While Uncle Sam continues to limp his way out of the Great Recession, China has hardly broken its stride. Is China's brand of capitalism simply better than America's?

Yes. China is winning the future: China is smoking us, says Zachary Karabell at The Daily Beast. Both the U.S. and China engage in a lot of government spending, but China puts its money into infrastructure, transportation, alternate energy, and housing, all of which "will yield long-term benefits for the Chinese economy." The U.S., on the other hand, spends on "consumption, safety nets, and the military," which comprise a shakier foundation for economic growth. The "sclerotic inability" of the U.S. government to "productively invest for the common future" is the reason why its "form of capitalism has ceased to fulfill hopes, dreams, and needs of far too many people."

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