China’s Economic Reckoning
The Price of Failed Reforms
By Daniel H. Rosen
July/August 2021
Many observers look at China and see its leadership playing a masterful game. They see China refusing to bend its policies to fit global norms and successfully going its own way. The reality is that Beijing has tried to bend repeatedly under President Xi Jinping but has almost broken each time and has had to fall back on its old ways—which are not succeeding. The quantity and the quality of China’s growth (looking past the anomalies of the pandemic period) have both deteriorated. And unless the leadership of the Chinese Communist Party finds its way back to the path of economic liberalization, China’s future will look very different from the rosy picture the CCP paints.
The urgency of reform is a happy result of China’s rise to middle-income status from the extreme poverty it experienced just a few decades ago. It is nothing to be ashamed of. But the applause that China has earned for its economic successes will subside if Xi fails to tolerate policy debate and accept more constrained political ambitions that admit the limits of the CCP’s capabilities.
An honest assessment of recent setbacks suggests that time is running out. Investors and businesses in China and abroad, as well as other governments, have so far gone along with the pretense that China is either succeeding at reform or understandably choosing to defer it; few have been willing to conclude that China has tried to reform but failed. Xi may believe that he has another decade to tinker with the country’s economic model. Taking stock of the many major policy plans that the CCP has launched but then abandoned indicates otherwise: there are at most a few years to act before growth runs out. If China’s leaders wait until the last minute, it will be too late.
The Price of Failed Reforms
By Daniel H. Rosen
July/August 2021
Many observers look at China and see its leadership playing a masterful game. They see China refusing to bend its policies to fit global norms and successfully going its own way. The reality is that Beijing has tried to bend repeatedly under President Xi Jinping but has almost broken each time and has had to fall back on its old ways—which are not succeeding. The quantity and the quality of China’s growth (looking past the anomalies of the pandemic period) have both deteriorated. And unless the leadership of the Chinese Communist Party finds its way back to the path of economic liberalization, China’s future will look very different from the rosy picture the CCP paints.
The urgency of reform is a happy result of China’s rise to middle-income status from the extreme poverty it experienced just a few decades ago. It is nothing to be ashamed of. But the applause that China has earned for its economic successes will subside if Xi fails to tolerate policy debate and accept more constrained political ambitions that admit the limits of the CCP’s capabilities.
An honest assessment of recent setbacks suggests that time is running out. Investors and businesses in China and abroad, as well as other governments, have so far gone along with the pretense that China is either succeeding at reform or understandably choosing to defer it; few have been willing to conclude that China has tried to reform but failed. Xi may believe that he has another decade to tinker with the country’s economic model. Taking stock of the many major policy plans that the CCP has launched but then abandoned indicates otherwise: there are at most a few years to act before growth runs out. If China’s leaders wait until the last minute, it will be too late.
China’s Economic Reckoning
The Price of Failed Reforms
By Daniel H. Rosen
July/August 2021
Many observers look at China and see its leadership playing a masterful game. They see China refusing to bend its policies to fit global norms and successfully going its own way. The reality is that Beijing has tried to bend repeatedly under President Xi Jinping but has almost broken each time and has had to fall back on its old ways—which are not succeeding. The quantity and the quality of China’s growth (looking past the anomalies of the pandemic period) have both deteriorated. And unless the leadership of the Chinese Communist Party finds its way back to the path of economic liberalization, China’s future will look very different from the rosy picture the CCP paints.
The urgency of reform is a happy result of China’s rise to middle-income status from the extreme poverty it experienced just a few decades ago. It is nothing to be ashamed of. But the applause that China has earned for its economic successes will subside if Xi fails to tolerate policy debate and accept more constrained political ambitions that admit the limits of the CCP’s capabilities.
An honest assessment of recent setbacks suggests that time is running out. Investors and businesses in China and abroad, as well as other governments, have so far gone along with the pretense that China is either succeeding at reform or understandably choosing to defer it; few have been willing to conclude that China has tried to reform but failed. Xi may believe that he has another decade to tinker with the country’s economic model. Taking stock of the many major policy plans that the CCP has launched but then abandoned indicates otherwise: there are at most a few years to act before growth runs out. If China’s leaders wait until the last minute, it will be too late.
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