Is China Back?
Over the past two months, China’s leadership has announced major policy reversals that have left global investors and other observers bullish about its economic future. But correcting past errors is no substitute for the reforms that are needed to deliver robust long-term growth.
WASHINGTON, DC – When President Joe Biden took office in 2021, his first message to the rest of the world was: “America is back.” Having assumed his third term as general secretary of the Communist Party of China (CPC) in October, President Xi Jinping appears to be issuing a similar proclamation.
Over the past two months, China’s leadership has announced or signaled a series of major policy reversals, abruptly ending nearly three years of severe zero-COVID restrictions, easing the crackdown on tech companies and the real-estate sector, reaffirming its commitment to economic growth, and extending an olive branch to the United States at the G20. With the world’s second-largest economy apparently re-opening its doors for business, investors are reacting with enthusiasm.
But, while China’s pro-business reset certainly bodes well for international trade and global peace and stability, putting the Chinese economy on the right track will require more than just a reversal of recent policies. What is really needed is bringing pragmatism and honest feedback back into the political system. As I showed in my book How China Escaped the Poverty Trap, these attributes defined China’s famously adaptive governance during the Deng Xiaoping era.