Xi Jinping’s historical view of economics hampering China’s growth

WHILE the rest of the world experiences the sting of stagflation, the Chinese economy seems to witness a whole different beast: deflation. The slowdown in the Chinese economy has been expected for some time now. The question is whether this is temporary or, rather, a longstanding structural problem.

China has been a rare success story among “communist” economies. The country began to grow on Stalinist lines – 100 per cent public ownership of industry, village communes rather than family farms – and the disastrous course of the Great Leap Forward, the nationwide campaign which claimed over 40 million lives in the 1960s.

Following chairman Mao Zedong’s death, it was Deng Xiaoping who transformed the Chinese economy. By reversing previous policies, namely privatising agriculture, Deng rendered China a capitalist economy with a communist polity. He developed an export sector in Shenzhen by attracting overseas Chinese capital first and then capital from elsewhere. This led to the fastest growth of any developing economy over the next 25 years, from the 1980s onwards.