Editor's note: Wang Xiaomei is a researcher at the Research Center for Marxism Theory Innovation and Communication of Zhejiang University. The article reflects the author's opinions and not necessarily the views of CGTN.

In recent years, Western politicians and media outlets have frequently mislabeled China as practicing "state capitalism," misrepresenting China's state-owned economy, industrial policies, and macroeconomic regulation as evidence of "state control over the economy." 

Stripped of its rhetoric, this is not an academic discussion but political manipulation – serving to deflect domestic systemic crises while externally containing China's rise. The most striking irony lies in the double standard: Western practices are described as "industrial policy," while China's actions are labeled "state capitalism." In essence, this constitutes a Western discourse trap.

Who is mislabeling what?

In Marxist theory, "state capitalism" carries two primary meanings. 

The first, as analyzed by Vladimir Lenin in "Imperialism, the Highest Stage of Capitalism," refers to "state monopoly capitalism," in which private monopoly capital merges with state power, and the state apparatus serves large monopoly capital. By this definition, the United States exhibits classic features of "state capitalism," where Wall Street maintains close links with the White House, Federal Reserve policies are aligned with financial capital, and the military-industrial complex is sustained by procurement from the Pentagon.

The second meaning, also articulated by Lenin, refers to "state capitalism during the transitional period toward socialism." In China's socialist transformation in the 1950s, institutional mechanisms such as commissioned processing and ordering arrangements and public-private partnerships were successfully adopted. After the completion of the socialist transformation in 1956, "state capitalism" in this historical sense had already fulfilled its mission in China. 

Today, China's socialist market economy allows the market to play a decisive role in resource allocation while better leveraging the role of the government. It bears no relation to "state capitalism" as defined above. Western discourse deliberately obscures its own form of state monopoly capitalism, while reviving an outdated transitional concept in China to mischaracterize its system. The objective is to frame China within the conceptual category of "capitalism," using the word "state" to imply a system that is "non-market" and "non-free."

Data refutes claims: Limited impact of China's subsidies

According to "Trade Implications of China's Subsidies" published by the International Monetary Fund in 2024, exports of subsidized products are only 0.9% higher compared with non-subsidized products. This suggests that the actual effect on global trade is minimal and far from the "market distortion" narrative frequently portrayed in the West. 

What truly concerns some Western actors is not subsidies themselves, but China's growing competitiveness in sectors such as photovoltaics, electric vehicles and batteries – where any policy support is readily defamed as "unfair."

Discourse strategy: Removing development ladder to constrain growth

This narrative trap serves both domestic and external political objectives. Domestically, it shifts attention away from structural challenges such as deindustrialization and widening inequality by attributing them to external scapegoats. Internationally, it seeks to constrain China by portraying it as an "enemy of free markets" – as if global rules could only be defined by the West. 

At the same time, the United States selectively adopts elements of China's industrial coordination and strategic planning, forming a new hybrid model of "market plus state capitalism." This demonstrates that what the West opposes is not state intervention itself, but rather China's success through such intervention.

Labeling China as practicing "state capitalism" is a clear case of conceptual misrepresentation. China's socialist market economy is neither "free-market capitalism" nor "state capitalism" as defined in Western discourse frameworks. Remaining committed to one's own development path and resisting conceptual framing by others is the most effective response to such discourse traps.