During much of America’s protracted post-2007 recession and sluggish recovery, a dramatically different economic model appeared to be on the rise. “Capitalism with Chinese characteristics,” as Beijing’s ruling party styles it, is (and remains) to a large extent a classic command economy: a national policy narrowly focused on growth, centrally directed by officials unburdened by the need to win popular elections, administered on a day-to-day basis by a handpicked class of authoritarian technocrats, and rigorously imposed on the gigantic state-owned enterprises that dominate China’s key industrial, commercial, and financial sectors. And to a great many observers, at least until quite recently, it seemed to be working.
But not so much anymore. Hardly a day now goes by without another major report or independent assessment warning that China’s economy is in very deep trouble. Highly questionable, universally mistrusted official GDP figures; mounting debt; wasted investment on such a scale that it can no longer be ignored; serious production over-capacity; stock indices in free fall—so much uninterrupted bad news, in fact, that even at home, the economic stewardship of China’s Communist Party is suddenly being openly questioned and criticized.
All economies go through their ups and downs, of course. So the question becomes: Are we merely witnessing a temporary or cyclical slowdown in China after a long period of rapid growth? Or do current alarms signal and reveal a deeper, structural, and enduring problem with the country’s basic system of political economy? Is “capitalism with Chinese characteristics” still a plausible and attractive model for other developing countries? Or has it permanently (and justifiably) lost its allure as an alternative to more liberal systems of economic policy and general governance?
On March 21, Hudson Institute hosted a discussion about the near- and long-term viability of this authoritarian economic model with two leading experts on China’s political-economy: Leland Miller, president of China Beige Book International, and Hudson Senior Fellow Dr. John Lee. Hudson Senior Fellow Eric Brown moderated the discussion.