mandag 30. september 2019

Breakingviews - China turns 70, to forced applause

The People’s Republic of China turns 70 on Tuesday. President Xi Jinping has bought compliance and crushed resistance. His cowing of internal critics, however, is becoming a risk to economic resilience.

China in 2019, with a $14 trillion economy, is vastly different from the impoverished wreck that emerged from civil war in 1949. The Chinese Communist Party has changed too. It has warmed to foreign trade and private property, allowed more freedoms and raised a generation of pro-growth technocrats to build infrastructure, schools and financial markets. These pragmatists convinced foreigners to plough an accumulated $1.6 trillion into a still-communist country, helping propel domestic companies up the value chain.

Some officials proved a little too pragmatic, exploiting positions for personal profit. When Xi Jinping took power in 2012, he cleaned house, consolidating his personal power along the way. Economist Andy Xie estimated corruption was costing around 10% of annual GDP. Yet the purge of hundreds of thousands of officials scarred the state.