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Role of government in the economy Examine whether authoritarian capitalism is a viable alternative to its Western liberal version to promote long term economic growth and development

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This vision of totalitarian capitalism borrows ideas about state funding and protection from the Japanese and Korean models and infuses them with strict currency controls and selective leveraging of capitalist ideas. Entrepreneurs now face increasing red tape, which has lead to a decrease in startup and innovation in Chinas major economic zones such as Shenzhen (The Economist, 2010). While the major corporations benefit from state protections and strong government ties, the most successful of them also benefit from access to Western-style capitalism. Lenovo is a major Chinese success story, but was controlled from Hong Kong; Wahaha and Haier have succeeded in part because they have been protected from government bureaucracy. State involvement in Huawei is at a very high level, indicating that other success stories are more the result of state control than of capitalism (The Economist, 2008)

In addition to firm-specific influences, totalitarian capitalism also relies on strong manipulation of the macroeconomy. Chinas famous currency manipulation has kept the value of the yuan artificially low, giving Chinese goods a competitive advantage overseas (Krugman, 2010). While Western capitalism does occasionally involve currency intervention, it also involves a free-floating currency, something that China does not have......