What type of economy does China have?

China's economy has radically transformed over the past several decades

China is the greatest economic rival to the U.S. — and China's economy has grown more and more similar to the U.S. system as the developing nation turned into a global power player.

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China's political leaders still retain power over the country's economic system, but it has transformed from centrally planned to consumer-driven since the 1970s.

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"The consumption of people in day-to-day interactions drives a lot of China’s economic growth," Heritage Foundation policy analyst Riley Walters, who focuses on Asian economies and tech, told FOX Business. "That doesn't happen without capitalism."

"There’s still a large section of the economy and industry that has this state factor," Walters said. "At the end of the day, if politicians in Beijing or provincial governments ever want to influence the local economy or national economy, they certainly have the power to do that."

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China's GDP lags behind the U.S.', roughly $14 trillion compared to roughly $22 trillion, according to 2019 International Monetary Fund data. Japan takes a distant third with a GDP of roughly $5 trillion.

Myanmar's President Win Myint, right, and Chinese President Xi Jinping inspect an honor guard during a welcome ceremony at the Presidential Palace in Naypyitaw, Myanmar, Friday, Jan. 17, 2020. (AP Photo/Aung Shine Oo)

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"Where China's economy is today versus 10 years ago, there's been significant change," Arthur Dong of Georgetown University's McDonough School of Business told FOX Business. "You could say their economy is slowing down as a result of the trade war, but it has been slowing down every year since 2010."

That slowdown can be attributed to the Great Recession, which meant fewer countries were buying goods from China, which is an export-driven economy.

China's economy grew by 6.1 percent, down from 2018’s 6.6 percent, already the lowest since 1990, government data showed in January.

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Growth in the three months ending in December held steady at the previous quarter’s level of 6 percent over a year earlier.

The R&D building of Huawei Headquarters in Longgang District of Shenzhen city, Guangdong Province, China. A multinational networking and telecommunications equipment and services company.

The World Bank considers China an upper-middle-income economy but highlights that its citizens still face major income inequality, in part because much of its rise has relied on low-paying manufacturing jobs for its citizens.

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The Associated Press contributed to this report.