The future of ‘communist capitalism’ in China

WHAT is the economic future of China? This question raises many specific issues, notably China’s persistent macroeconomic imbalances, the threat of population decline and worsening relations with important parts of the outside world, above all, an increasingly hostile US. But underneath all of these lies a deeper one: is “communist capitalism”, that seemingly self-contradicting invention of Deng Xiaoping, inexorably fading away under Xi Jinping? Will China’s regime ossify and, in the end, collapse, as the Soviet Union did?

I addressed some of these issues in a series of columns published last year. Last week, shortly after returning from my first week-long visit to Beijing and Shanghai since 2019, I re-examined China’s structural macroeconomic challenges and raised concerns about the possible re-emergence of destabilising global imbalances. This week, I intend to address that far bigger one: is Xi-ism killing Deng-ism? A number of informed people I met were extremely gloomy, especially about prospects for the private sector. But will such problems ultimately be solved, or not?

Much light on this issue is shed by China’s World View, a recently published book by David Daokui Li, a distinguished Harvard-trained professor of economics, who teaches at Tsinghua University. People interested in China, be they hawks or doves, should read Li’s valuable book carefully.