In fact, the most important reason that China can overcome these crisis is its socialist economic system based on public ownership of key industries.In the forty plus years of China's reform and opening era, China has withstood four severe system tests, about once a decade, and come out stronger each time:
- 1998 - Asia Financial Crisis. Chinese premier Zhu Rongji held the rmb exchange rate steady and launched domestic stimulus program to arrest the slide of the economy and countervail the negative external shocks.
- 2008 - Global Financial Crisis. China launched an aggressive economic stimulus program and accelerated the large-scale infrastructure build-out. China became the global growth engine to help support world economy.
- 2020 - COVID-19, the pandemic. China controlled the COVID-19 domestically with aggressive measures within a few months and emerged to be the only major economy to have positive economic growth in 2020.
First, public socialist economic system will not degenerate into periodic financial and economic crisis, which are inevitable in capitalist economies. There is true for all socialist economies, for example USSR never had periodic economic crisis, while USA had 15 in the past 100 years (the most recent ones being 2001 and 2008).
Second, public socialist economic system may effectively mobilize resources to overcome the shock of external economic crisis. For example in the 2008 crisis, the U.S. government gave U.S. private banks trillions of dollars, but they refused to lend to support economy fearing bad loans, while the Chinese state owned banks lent trillions of RMB to support the economy. Of course the state owned banks took hit because of bad loans, but the economy was roaring back.
Even in a non-economic crisis such as Covid19, the Chinese SOEs have played critical roles. For example, state construction companies were building the hospitals, a giant warship builder was developing and manufacturing mask making machines, and huge state chemical companies were producing mask materials, and state hospitals sent thousands of medical staffs to Wuhan and Hubei province.
As the capitalist private sector getting bigger in China, China has become more financially and economically unstable. The private sector hospitals were also infamously refused to send doctors to Wuhan during Covid19 emergency last year... The public sector is a foundation for PRC's future development, and that's why weakening Chinese SOEs is a key objective of the trade war.