The Wall Street Journal's Greg Ip observes America under Trump becoming more like China under Xi

The U.S. Marches Toward State Capitalism With American Characteristics: President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy

 Greg Ip Aug. 11, 2025 at 10:16 am

Recent examples include President Trump’s demand that Intel’s chief executive resign; the 15% of certain chip sales to China that Nvidia and Advanced Micro Devices will share with Washington; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises. 

China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France. So call this variant “state capitalism with American characteristics.” It is still a sea change from the free market ethos the U.S. once embodied.

We wouldn’t be dabbling with state capitalism if not for the public’s and both parties’ belief that free-market capitalism wasn’t working. That system encouraged profit-maximizing CEOs to move production abroad. The result was a shrunken manufacturing workforce, dependence on China for vital products such as critical minerals, and underinvestment in the industries of the future such as clean energy and semiconductors.

The federal government has often waded into the corporate world. It commandeered production during World War II and, under the Defense Production Act, emergencies such as the Covid-19 pandemic. It bailed out banks and car companies during the 2007-09 financial crisis. Those, however, were temporary expedients.

Former President Joe Biden went further, seeking to shape the actual structure of industry. His Inflation Reduction Act authorized $400 billion in clean-energy loans. The Chips and Science Act earmarked $39 billion in subsidies for domestic semiconductor manufacturing. Of that, $8.5 billion went to Intel, giving Trump leverage to demand the removal of its CEO over past ties to China. (Intel so far has refused.)

Biden overrode U.S. Steel’s management and shareholders to block Nippon Steel’s takeover, though his staff saw no national-security risk. Trump reversed that veto while extracting the “golden share” that he can use to influence the company’s decisions. In design and name it mimics the golden shares that private Chinese companies must issue to the CCP.

Biden officials had mulled a sovereign-wealth fund to finance strategically important but commercially risky projects such as in critical minerals, which China dominates. Last month, Trump’s Department of Defense said it would take a 15% stake in MP Materials, a miner of critical minerals.

Many in the West admire China for its ability to turbocharge growth through massive feats of infrastructure building, scientific advance and promotion of favored industries. American efforts are often bogged down amid the checks, balances and compromises of pluralistic democracy.

In his forthcoming book, “Breakneck: China’s Quest to Engineer the Future,” author Dan Wang writes: “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.”

To admirers, Trump’s appeal is his willingness to bulldoze those lawyerly obstacles. He has imposed tariffs on an array of countries and sectors, seizing authority that is supposed to belong to Congress. He extracted $1.5 trillion in investment pledges from Japan, the European Union and South Korea that he claims he will personally direct, though no legal mechanism for doing so appears to exist. (Those pledges are already in dispute.)

There are reasons state capitalism never caught on before. The state can’t allocate capital more efficiently than private markets. Distortions, waste and cronyism typically follow. Russia, Brazil and France have grown much more slowly than the U.S.

Chinese state capitalism isn’t the success story it seems. Barry Naughton of the University of California, San Diego has documented how China’s rapid growth since 1979 has come from market sources, not the state. As Chinese leader Xi Jinping has reimposed state control, growth has slowed. China is awash with savings, but the state wastes much of it. From steel to vehicles, excess capacity leads to plummeting prices and profits.

The U.S. hasn’t fared any better. Interventions made in the name of national security or kick-starting infant industries lead to boondoggles like Foxconn’s promised factory in Wisconsin or Tesla’s solar-panel factory in Buffalo, N.Y.

State capitalism is an all-of-society affair in China, directed from Beijing via millions of cadres in local governments and company boardrooms. In the U.S., it consists largely of Oval Office announcements lacking any policy or institutional framework. “The core characteristic of China’s state capitalism is discipline, and Trump is the complete opposite of that,” Wang said in an interview.

State capitalism is a means of political, not just economic, control. Xi ruthlessly deploys economic levers to crush any challenge to party primacy. In 2020, Alibaba co-founder Jack Ma, arguably the country’s most famous business leader, criticized Chinese regulators for stifling financial innovation. Retaliation was swift. Regulators canceled the initial public offering of Ma’s financial company, Ant Group, and eventually fined it $2.8 billion for anticompetitive behavior. Ma briefly disappeared from public view.

Trump has similarly deployed executive orders and regulatory powers against media companies, banks, law firms and other companies he believes oppose him, while rewarding executives who align themselves with his priorities.

In Trump’s first term, CEOs routinely spoke out when they disagreed with his policies such as on immigration and trade. Now, they shower him with donations and praise, or are mostly silent.

Trump is also seeking political control over agencies that have long operated at arm’s length from the White House, such as the Bureau of Labor Statistics and the Federal Reserve. That, too, has echoes of China where the bureaucracy is fully subordinate to the ruling party.

Trump has long admired the control Xi exercises over his country, but there are, in theory, limits to how far he can emulate him.

American democracy constrains the state through an independent judiciary, free speech, due process and the diffusion of power among multiple levels and branches of government. How far state capitalism ultimately displaces free-market capitalism in the U.S. depends on how well those checks and balances hold up.

Federal employment is 1.1% of civilian population in April 2025: This is the swamp billionaires want to drain

 The worst it ever got was 2.4% in December 1952 while Truman was still president.

The leisure class of state capitalism has to have something to complain about. 

 

C'mon man, we're supposed to fear a coming Trump dictatorship while Joe Biden threatens to seize drug patents as we speak

 The soft fascism of public-private partnership becomes hard fascism:

“When drug companies won’t sell taxpayer-funded drugs at reasonable prices, we will be prepared to allow other companies to provide those drugs for less,” White House National Economic Advisor Lael Brainard said during a call with reporters Wednesday. 

More.

Hard or soft, this is state capitalism.

Joel Kotkin has come around, now calls it what it is: Global fascism

In 2018, Kotkin was still tip-toeing around the obvious, but not anymore:

Mussolini’s notion of fascism has become increasingly dominant in much of the world . . .

Mussolini, a one-time radical socialist, viewed himself as a “revolutionary” transforming society by turning the state into “the moving centre of economic life”. In Italy and, to a greater extent, Germany, fascism also brought with it, at least initially, an expanded highly populist welfare state much as we see today.

Mussolini’s idea of a an economy controlled from above, with generous benefits but dominated by large business interests, is gradually supplanting the old liberal capitalist model. ...

fascism — in its corporate sense — relies on concentrated economic power to achieve its essential and ideological goals. ...

China, in many aspects the model fascist state of our times, follows Il Duce’s model of cementing the corporate elite into the power structure. ...

But in the battle between the two emergent fascist systems, China possesses powerful advantages. Communist Party cadres at least offer more than a moralising agenda; they can point to the country’s massive reduction of extreme poverty and a huge growth in monthly wages, up almost five-fold since 2006. At a time when the middle class is shrinking in the West, China’s middle class increased enormously from 1980 to 2000, although its growth appears to have slowed in recent years.

Like Mussolini, who linked his regime to that of Ancient Rome, China’s rulers look to Han supremacy and the glories of China’s Imperial past. “The very purpose of the [Chinese Communist] Party in leading the people in revolution and development,” Xi Jinping told party cadres a decade ago, “is to make the people prosperous, the country strong, and [to] rejuvenate the Chinese nation.”

Kotkin recognizes at least that American right-wing libertarianism is part of the problem, not part of the solution:

the consolidation of oligarchic power is supported by massive lobbying operations and dispersals of cash, including to some Right-wing libertarians, who doggedly justify censorship and oligopoly on private property grounds.

Regrettably, however, Kotkin still does not connect this failure of the old liberal order in the West with the failure of the old moral order which gave it birth and on which it depended. This is because Kotkin still sees things in primarily materialistic terms.

Kotkin is oddly politically correct when he denounces possible recourse to nativism, which blinds him to the nativism which is at the heart of Chinese state capitalism and gives it much of its appeal and strength. He calls for "a re-awakening of the spirit of resistance to authority" in the West, not realizing that it was Protestantism which made that even possible in the first place.

The problem of the West is spiritual, and Catholicism will never be able to rise to the occasion of refounding it as long as globo-homo defines Rome. The whole idea is inimical to the notion of founding a nation "for our posterity".

LOL, what a shock: Chicom state capitalism has produced the most severe income inequality in the world, enriching The Party

Story.

According to the Proceedings of the National Academy of Sciences of the United States, China has the world’s highest Gini coefficient, a measurement of inequality. The institute found the gap stemmed from structural problems with China’s political system. State capitalism has been effective in fueling growth in the economy, but worsened inequality because of its inefficient distribution. The downside of China’s state capitalism has been exposed. 

Did Billy Cunningham mention the Trumpster's lousy February jobs number last night?

If he did I must have missed it.

20,000 jobs in February, worst performance in 9 years, but Billy Cunningham blathered on about how socialism fails and how Americans enjoy a high standard of living because of great companies like Kroger, Amazon and Walmart. No mention of this huge anomaly in the Trumpster's so-called economic boom.

I can remember when Walmart was widely perceived as the enemy by wide swaths of America because it destroyed mom and pop stores wherever it decided to leave its giant footprint. Walmart defended itself against this opposition with its "Buy American" policy, but those days are long gone now. Walmart and Amazon are now storefronts for Communist China and the globalism which took away America's best jobs for ordinary folks. And the tax breaks generally provided by state and local governments these days to get big businesses to locate where they are is hardly capitalism, but favoritism, state capitalism and fascism. Too much of American life is now the people vs. government and business allied together against them.

But more to the point is that Billy Cunningham's idea of a great America is an America that consumes, whereas the Protestant ethic which truly made America great was the one where people saved, invested and consumed beneath their means. I guess that ethic is not part of the Sunday homily at Billy's church.

It has been because of losing touch with this real meaning and practice of capitalism which has produced the moribund economic conditions where socialism now appears more attractive to growing numbers of Americans for whom capitalism-light has failed to deliver.

Too bad Billy doesn't really get it.  

Trump as state capitalist: Once was a one-off, twice is a Freudian slip

Trump's brain has no room for the individual qua individual, only for the individual as representative of a brand. The higher reality, the organizing principle of society is the group and the corporation, without which the individual doesn't exist. In that sense he's a good Aristotelian:

Tim Cook is Tim Apple, Marillyn Hewson is Marillyn Lockheed.

Much smaller than first thought to be, the gig economy lies prostrate before the great wall of state capitalism

"The Gig Economy Increasingly Defines Late-Stage Capitalism

Annie Lowrey, Atlantic" 

 

is how Real Clear Markets links to:

The Truth About the Gig Economy

Uber and similar companies aren’t driving huge changes in the way that Americans make a living.

 

Real Clear Markets' libertarian headline writer completely missed the point of the article, which is that the gig economy is as much as 80% smaller than we first thought. A capitalism disintegrating into a chaos of millions of small holders in risky circumstances, careening into the ditch, is a complete myth. The leftists who still long for this resemble no one so much as the Christian millenarians.

Clearly Marxism-light thoroughly infects economic thinking at the popular level in more places than just The Atlantic, blinding us to where we really are, which is in the golden age of fascism. Here tax reform for the individual is an afterthought, a necessary piece of propaganda in the big scheme of things having to do with state capitalism and its myriad forms of corporate welfare. What really matters is the relationship between government and business, protecting their mutual interests.

The West's version is little different from China's. China exercises top down control through the corrupt Communist Party, but we increasingly have the same thing from the bottom up through the unjust hand of Political Correctness, populated through the right schools and the revolving door of Washington where the regulators become the richly rewarded regulated.

The extension and consolidation of control by this globalist fascist system since the Reagan Revolution is responsible for all the failure lately attributed to capitalism by the coddled generations of children of the post-war Baby Boom. It couldn't be otherwise in a world where everything has been organized to feed the corporation through the glorification of the job. You must go to school, you must get good grades, you must get a college degree in order to get hired, you'll need loans to make this happen, and for the car to get to work, and good credit, and . . .. And then they've got you. It's called preying on human nature.

The declarations of independence of our former youth often used to take the form of getting out of Dodge as soon as they turned eighteen. Now those declarations are a mere shadow of their former selves, taking the form of tattoos on that creature that still lives in your basement in his twenties . . . or thirties.

The risk-taking of capitalism has been expunged, and the consequences of rebelling against the new rigidity have been amplified. Stenosis has set in, and if the barbarians finally do overtake us they will find that the bones break easily.     

State capitalism means rewarding bankrupt Sears executives with $25 million in bonuses

As the flipside version of Chinese state capitalism, it is fitting that fascist America have a show trial now and again

Like just about everyone else on the left, Joel Kotkin continues to twist himself in pretzels to avoid calling our system what it already is

State capitalism.

It is the socialism of the right, despite what names people may give it. The fascist model in which business and government cooperate now more, now less was not defeated in World War II. The superior American version simply defeated the German one, and eventually also the left's inherently weaker version in Russia.

It has triumphed globally, brought to the fore in America by the libertarian resurgence under Ronald Reagan, imitated by the jealous Euro project, and notably exported to China, where it was eagerly embraced as no threat to Marxism. To the genuine Marxist, remember, free-trade is welcome because it hastens the global revolution. Belt and Road participants, take note.

The experiential groundwork for global state capitalism was laid long ago by the King and Bank of England in their joint enterprise known as the Thirteen Colonies. Everyone imitates this now in principle if not always in particulars. But everywhere it flourishes it is facilitated by the same thing, the central banking systems which coordinate their activities through rules administered under Basel III. The contemporary exemplars of state capitalism fancy that they are substantively a world away from Hitler's Germany, because, well, the Jews. We don't kill Jews, insist these experts at mass abortion and Uyghur mass re-education. 

It's the historical resonances which bother the left in using the phrase, but the underlying facts aren't different in substance. Materialism today means not having to say you're sorry for treating people like depreciated or unappreciated assets. Older workers in the West are routinely tossed aside for being too costly. Potential younger competitors are hamstrung by a culture of costly credentialing prerequisites. When such people become worthless enough, it isn't unlikely that in some places they could stop being considered people altogether (typically where atheism reigns) so that they could be slaughtered wholesale with the same relative efficiency already applied to the unborn. The tech already exists to do this. The only question is when will the people exist who are possessed of enough nerve.   

Here's Kotkin on this so-called "new, innovative approach" which looks like nothing so much as the old Soviet Union, with its hostility centered on the middle class, its dreary blocks of drab apartment buildings, the dim pall of surveillance and conformity lurking everywhere, complete with its own privileged new class in service to the party .01 percent:

Oligarchal socialism allows for the current, ever-growing concentration of wealth and power in a few hands — notably tech and financial moguls — while seeking ways to ameliorate the reality of growing poverty, slowing social mobility and indebtedness. This will be achieved not by breaking up or targeting the oligarchs, which they would fight to the bitter end, but through the massive increase in state taxpayer support. ... [T]he tech oligarchy — the people who run the five most capitalized firms on Wall Street — have [sic] a far less egalitarian vision. ... [T]hey see government spending as a means of keeping the populist pitchforks away. ... Handouts, including housing subsidies, could guarantee for the next generation a future not of owned houses, but rented small, modest apartments. ...  They appeal to progressives by advocating politically correct views . . .. Faced with limited future prospects, more millennials already prefer socialism to capitalism and generally renounce constitutionally sanctioned free speech . . .. [I]ncreased income guarantees, nationalized health care, housing subsidies, rent control and free education could also help firms maintain a gig-oriented [slave] economy since these employers do not provide the basic benefits often offered by more traditional “evil” corporations . . ..  [T]he oligarchy, representing basically the top .01 percent of the population, are primarily interested not in lower taxes but in protecting their market shares and capital. ... The losers here will be our once-protean middle class. Unlike the owners of corporations in the past, oligarchs have no interest in their workers become homeowners or moving up the class ladder. Their agenda instead is forever-denser, super-expensive rental housing for their primarily young, and often short-term, employees. ... The tech moguls get to remain wealthy beyond the most extreme dreams of avarice, while their allies in progressive circles and the media, which they increasingly own, continue to hector everyone else about giving up their own aspirations. All the middle and upwardly mobile working class gets is the right to pay ever more taxes, while they watch many of their children devolve into serfs, dependent on alms and subsidies for their survival.

Martin Wolf for The Financial Times likes business historian Adam Tooze's important new book CRASHED: HOW A DECADE OF FINANCIAL CRISES CHANGED THE WORLD

See Martin Wolf, What really went wrong in the 2008 financial crisis?

Tooze has been making the rounds at places like Bloomberg (and especially here) and CNBC promoting the theses of the new book, and was notably interviewed yesterday on Bob Brinker's radio program "Money Talk" (the dismissive summary of the interview provided here is notably blind to Tooze's importance, weakly observing how Tooze maintains that "money has no tangible underpinning", which is about all that grabs the attention of libertarian fundamentalists).

Those more popular presentations give only a tantalizing hint of the narrative power this trained historian brings to the story of the 2008 panic.

To see that in action there is an important lecture available here which Tooze gave at the American Academy in Berlin earlier this year, on March 13th.

"Conservatives" will doubtlessly recoil at Tooze's characterizations of the role played by them during the financial crisis. That those conservatives are really the GOP's libertarians is a distinction the significance of which seems lost on Tooze.

That said, the value of Tooze's perspective goes far beyond the subject of the warring factions of libertarian fundamentalism and neoliberalism, however important those are for understanding our times.

For one thing, Tooze is almost unique in describing in such vivid detail the dominating role now played by the "dollar" in the global economy (American analyst Jeffrey Snider being the notable but obscure exception). It takes an historian. This is, of course, the eurodollar, the proper understanding of which permits Tooze to show how the financial crisis in the United States centered in the mortgage market was globalized via international banking through London and Frankfurt independently of the wishes of the state actors. It also reveals to him that the most important global economic relationship has not been the US with China but the US with London.

Same as it ever was. The king and his colonies still rule the world, with a little help from the Bank of England.

For another, Tooze's work shows the degree to which the global economy has been captured by the bankers in providing these eurodollars, who acted unilaterally behind the scenes, first in the US (Ben Bernanke) and regrettably only later in Europe (Mario "whatever it takes" Draghi), to provide liquidity swaps in the trillions of dollars during the financial crisis while politicians argued about how states should deploy mere billions.

One inescapable conclusion ten years after the financial crisis is that citizens of states are in larger measure no longer masters of their own destinies, and haven't been for a very long time. They are today really ruled by technocrats in charge of central banks who work now more, now less in concert with their host governments to manage economic flows. The danger of this global state capitalism is that it might one day slip back into the outright fascism it so closely resembles.

To the millions of unemployed who were not bailed out in the crisis and who lost their homes and their hope in the United States and in the PIIGS, or to the hundreds of thousands of Muslims now in Chinese reeducation camps, it already has.

The crisis for neoliberalism does not come from capitalist fundamentalism. It comes from its growing list of victims.

Obama's fascist Larry Summers credits Chinese state capitalism for its advances instead of its thefts

Here:

“You ask me where China's technological progress is coming from. It's coming from terrific entrepreneurs who are getting the benefit of huge government investments in basic science. It's coming from an educational system that's privileging excellence, concentrating on science and technology,” said Summers, former Treasury secretary under Bill Clinton and an ex-economic advisor to Barack Obama. “That's where their leadership is coming from, not from taking a stake in some U.S. company.”

Our fearless leader has become the tool of Chinese state capitalism: "Too many jobs in China lost"

Obviously the real Donald Trump who in the past might have said "Not enough jobs in China lost!" has disappeared. Sad!

More proof that his body has been snatched.

The socialist backlash is coming

Rasmussen says 46% already favor government guaranteed jobs.

Hillary admits 41% of Democrats already are socialists.

All it will take for socialism to finally succeed is the onset of the depression the Feds keep intervening to prevent. One can intervene only so many times after which that doesn't work anymore. The problem is the interventions distort the course of capitalism so much that its natural mean-reverting ways will have to be by definition quite severe next time. Enter outright socialism because the young have been brainwashed against capitalism and will clamor for something other than capitalism or the Fed interventionism (aka state capitalism) which hasn't worked.

There will be blood.

State capitalist cronyism in Wisconsin smells to high heaven: The state will pay $3 billion for Foxconn jobs

The cost of reelection for Scott Walker, Paul Ryan and Donald Trump.

From the story here:

What will the State of Wisconsin be paying to lure Foxconn? A steep price. It adds up to $3 billion, including tax credits, training grants and infrastructure improvements. That comes to almost a quarter-million per job, which will pay an average of $54,000 per year. In other words, the people of Wisconsin will in effect be paying the plant’s entire workforce for about five years. And the construction jobs – which make up more than three-quarters of the total – will only last about four. ...

No one knows how long the Foxconn jobs in Kenosha will last. But we do know the company has publicly committed to automating away the vast majority of its current 1.2 million jobs, most of which are located in Asia. At one plant alone in China’s Guangdong province they have eliminated about 60,000 jobs. And they certainly aren’t stopping there. They have targeted to reach 30 percent automation by 2020, and their stated goal is to eliminate almost their entire human workforce, retaining only a minimal number of workers in production, logistics, and inspection.

P. J. O'Rourke discovers the limits of individualism, gets wet for (French) state capitalism

Arianespace.

Here.

When regular capitalism won't do, there's always the comparatively smaller French state capitalism:

"An individual could not build a rocket like these, no matter what his wealth or how much time he was allotted." 

Hey, P. J., would it be too much to ask you at least to admire our own?

Yes, it would be from a frog-licker.

"Racist" isn't working against Trump, so now they'll try "fascist"

Ross Douthat, here, where else?, in The New York Times, attempting to lay the groundwork from the right:

'Whether or not we want to call Trump a fascist outright, then, it seems fair to say that he’s closer to the “proto-fascist” zone on the political spectrum than either the average American conservative or his recent predecessors in right-wing populism.'

The critique is almost entirely non-economic and preoccupied with Trump's style, tone and passions, which makes sense since Americans of all political stripes are blind to the essential character of America as a form of state capitalism. Our politics left and right has stewed in that soup from the very beginning when the colonies were formed as corporate instrumentalities of the British Crown, financed by the Bank of England. We can hardly imagine any other economic arrangement. It only comes up momentarily in our politics when our/their cronies get exposed, and then quickly fizzles away when the truth becomes too difficult to face, restoring business as usual.

Just ask the bankers.

Trump denounces Chinese state capitalism, throws down gauntlet committing the USA to a policy of containment

In The Wall Street Journal, today:

"China’s economy is controlled by the government. Any notion that their economy is based on a free-market system is simply not true. ... On day one of a Trump administration, the U.S. Treasury Department will designate China a currency manipulator. ... To ensure the security of the nation and our investments, we will build the military we need to contain China’s overreach in the Pacific Rim and the South China Sea."

Read the whole thing here.

The Ignorant Statement Of The Day Comes From Jeff Immelt, Chairman Of GE

The ignorant statement of the day comes from Jeff Immelt, chairman of GE, here:

"The one thing that actually works, state run communism a bit– may not be your cup of tea, but their [Chinese] government works."

Communism is nothing if not "state-run", as in, run by the Communist Party. As it stands, the statement is meaningless.

Actually China's Communist Party practices a form of state capitalism, just like we do, which in the good old days was called fascism. And it only works until it doesn't, at the price of human repression, which goes unreported in the west. You know, like how many abortions were performed this week in Peoria or Shanghai. Still, I don't see a lot of people flocking to China. I see Chinese who have gotten rich trying to get out.

And whereas we build things that actually get used, using fiat currency, China builds things using fiat currency which don't get used, including massive numbers of buildings and highways. Of course, the grandmothers of Bolshevism in our country do the same thing as the Chinese. They build massive numbers of churches which are for the most part vacant all week.

You say socialism, I say national socialism, but let's call the whole thing off.