China’s Economy Is Rotting from the Head
With Xi Jinping securing an iron grip on China’s ruling party and political economy, longstanding debates about the sustainability of the country’s astonishing growth have returned to the fore. Mounting evidence of stagnation suggests that, after coming so far, China’s authoritarian model may not be so exceptional after all.
BOSTON – China highlights a long-debated question about economic development: Can a top-down autocracy outperform liberal market economies in terms of innovation and growth?
Between 1980 and 2019, China’s average annual GDP growth rate was over 8% – faster than any Western economy – and in the 2000s, its economic trajectory exceeded mere catch-up growth (using Western technologies). China started making its own technology investments, producing patents and academic publications, and spawning innovative companies such as Alibaba, Tencent, Baidu, and Huawei.
Some naysayers had thought this unlikely. While plenty of autocrats had presided over rapid economic expansions, never before had a non-democratic regime generated sustained, innovation-based growth. Some Westerners were mesmerized by Soviet scientific prowess in the 1950s and 1960s, but often they were channeling their own biases. By the 1970s, the Soviet Union was clearly falling behind and stagnating, owing to its inability to innovate across a broad range of sectors.