Open China Open China Competitive China Official China One world The China Strategy

Official China

The role of the Communist Party is shifting rapidly.  The government has managed the liberalization of many parts of the economy, but it has maintained control over its strategic heights by retaining ownership of the core group of state-owned enterprises in the finance, communications, energy, resources, and media sectors.

Contrary to the hopes of many foreign investors, Official China has no intention of letting go of these companies, and it will maintain tight control over those parts of the economy that it wishes to manage.

 

China’s product market freedom matrix
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But as it faces the challenges of internal complexity and external engagement, it will evolve toward a nondemocratic but market-driven form of rule that, arguably, has never been seen on the world
stage before.

One certainty is that economic liberalization will continue. There is a deep commitment within the government to continuing down the path China has followed for nearly thirty years. Part of the reason is that economic growth is a key generator of legitimacy for China’s government, and a major guarantee of political and social stability.

Further, there is a deep belief that economic liberalization will raise China’s position in the world, not just economically but in terms of global leadership, reputation, and respect.

Many Chinese officials have internalized this aspiration. They have taken on responsibilities beyond their job descriptions, acting as the guiding hand in the creation of a world-leading nation. Their interests extend beyond self-enrichment to the creation of national wealth.

On a practical level, this means ensuring that the infrastructure necessary to economic development is built. It also means a long-term commitment to incremental economic development, as well as a willingness to experiment and collaborate across government agencies and with the private sector.

Evidence of this approach can be seen in the commitment to developing and running the large number of significant economic zones that dot the country, especially along the coast. It is also visible in official attempts to prevent the emergence of an oligarchical tycoon class—such as that which dominated Russia for a time—with a power base of its own separate from the Communist Party.

And it can be seen in the government’s new level of external engagement. Starting in the 1950s, Mao cut China off from most of the world. Deng, when he launched China’s economic reforms in the early 1990s, deliberately downplayed foreign relations, stressing that it was more important to focus on internal challenges.

But the export-driven nature of China’s growth means it must have trade relations with almost every country. The need for resources to fuel China’s growth means its companies must source energy and raw materials from  wherever they can find them. The Chinese government, like its citizens, has no choice but to reach out to the rest of the world.