25 September 2021

The Wall Street Journal: “Xi Jinping aims to rein in Chinese Capitalism, hew to Mao’s Socialist Vision”

For most of the 40 years after Deng Xiaoping first unleashed economic reforms in China, Communist Party leaders gave market forces wider room to flourish. That opening helped lift hundreds of millions of people out of poverty and created trillions of dollars in wealth, but also led to rampant corruption and eroded the ideological basis for continued Communist rule.

In Mr. Xi’s opinion, private capital now has been allowed to run amok, menacing the party’s legitimacy, officials familiar with his priorities say. The Wall Street Journal examination shows he is trying forcefully to get China back to the vision of Mao Zedong, who saw capitalism as a transitory phase on the road to socialism.

Mr. Xi isn’t planning to eradicate market forces, the Journal examination indicates. But he appears to want a state in which the party does more to steer flows of money, sets tighter parameters for entrepreneurs and investors and their ability to make profits, and exercises even more control over the economy than now. In essence, this suggests that he aims to rewrite the rules of business in what could someday be the world’s biggest economy.

Lingling Wei

Not entirely surprising, considering recent trends and Mr. Xi’s increasing desire for top-down control and ideological purity. I doubt anyone would have foreseen at the turn of the century that the Cold War divide between capitalism and communism would reemerge, with the Unites States and China as primary actors this time around.

Xi Jinping addressing the nation on July 1 at a ceremony marking the 100th anniversary of the ruling Communist Party
Xi Jinping, the most powerful Chinese leader in recent decades, addressed the nation on July 1 at a ceremony marking the 100th anniversary of the ruling Communist Party. Photo: Xie Huanchi/Xinhua/Zuma Press

The conditions are somewhat different of course, given how globalization has increased economic ties between nations. China is now both the most important supplier of manufactured goods, and potentially the largest market for other countries. I doubt it will be as easy as Mr. Xi expects to untangle China from these partnerships, or to convince the Chinese public to tone down their aspirations for prosperity and improved living standards in the name of ideology. Despite his grand proclamations about a new economic model, what he is advocation is plain old communist state control, which has failed spectacularly in the Soviet Union, and doesn’t seem to deliver better results for China so far. Will improved economic modeling on modern fast computers be enough to manage an entire economy from the top? Can citizens be kept compliant through a mix of rewards and threats delivered by state-wide surveillance? It seems more likely that the system would collapse under the first major stress.

Mr. Liu, who faces retirement next year, had to offer a Mao-style self-criticism for not having stopped Didi from launching a $4.4 billion New York initial public offering in late June, according to people with knowledge of the matter. Self-criticism, traditionally used by the party to discipline members, is a practice Mao borrowed from Stalin and remains alive and well in Mr. Xi’s China.

Speaking of stress, some signs point to a major economic crisis triggered by the real-estate developer Evergrande Group. As the central government appears unwilling to intervene to prevent its default, the crash may have wider repercussions throughout the Chinese economy – and beyond.

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