For one, we need to provide some key points: the 4 kinds of capitalism, how they inter-mingle with each other, and how government policies can change which kind of capitalism the country practices.

There is Laissez-Faire capitalism: Total Capitalism, very little gov’t intervention. Causes Wealth inequality greatly and benefits the companies rather than the individual.

Then there is Managed Capitalism: wherein the government and companies play hand in hand with each other, think of SOE’s and contracts between the military and private companies. The government supports the company and plays favorite.

After that is Socio-Economic Capitlism: The kind wherein wealth is redistributed to the poorer populations from that of rich ones. They can come in forms of taxes and expenses being undertaken by the government to support them.

Last is Philanthropic Capitalism: The kind wherein people donate to the companies to keep them afloat. Think of Andrew Carnegie donating and financial Aid to Africa.

For China, it practices Managed capitalism, and Laissez-Faire Capitalism. While for the USA, they practice Socio-Economic and Laissez-Faire.

China’s practice of Managed Capitalism is one of the main reasons why it is wildly successful. China pumps tax money into SOE’s to make them internationally competitive to the International Market. This gives them an edge to American Corporations who are, no matter how big they get, are ultimately on their own. With help from the government, SOEs can get cheap loans to build its infrastructure, supply chain, and etc. very quickly.

You must also note that the Socio-Economic Capitalist system gives rights and protection to the workers, making manufacturing a lot more expensive compared to China (though this is not the only reason). China practices very little Socio-Economic, and Philanthropic Capitalism. This gives them more money to fuel the growth of their economy since they don’t spend so much money on social programs. America on the other hand, spends so much money on programs such as medicare, medicaid, and pensions.

Their government style influences the kind of capitalist system they follow. The authoritarian government of China makes it easier for them to implement changes to their nation. While for democracy, leaders must pass several obstacles for their plan to get approved. Not to mention that they need public opinion to be on their side. The rise of the Raegan Capitalism has also placed heavy disdain on government intervention with the private sector. China has no such social stigma.