Skip to content
Subscriber Only
Noah Smith

China Has a Few Things to Teach the U.S. Economy

Fiscal austerity is a relic of the past. Time to spend.

China’s economic policies have boosted GDP in the pandemic.

China’s economic policies have boosted GDP in the pandemic.

Photographer: Bloomberg

Ever since China’s spectacular economic growth became apparent in the 2000s, people have wondered whether that country’s brand of authoritarian state capitalism has proven superior to the more liberal American model. Until recently, it was possible to dismiss those concerns, but Chinese successes and U.S. failures keep piling up. If the U.S. wants to maintain both its relative power and its prestige as a model for the world, it needs to make some big adjustments.

China’s rapid growth, by itself, was not an argument for the superiority of the Chinese system. Any country can grow briskly from a very low starting point, if it has the right policies. Whereas developed nations have to invent new technologies to grow, developing countries can copy existing ideas and build up their capital stock. Even after decades of hypergrowth, and despite having a huge economy in terms of total size, China was and is still much poorer than the U.S. on a per capita basis. The typical Chinese family has a smaller house, fewer cars and less opportunity for travel and entertainment than its American counterpart.