China Studies Diagnosing China's State-led Capitalism – Yasheng Huang
Apr 12, 2019
Yasheng Huang, a prominent political scientist from MIT, delves into the complexities of China's state-led capitalism, particularly in the context of its recent economic slowdown. He critiques the 'China Model,' highlighting the successes of private entrepreneurship in the 1980s. Huang raises concerns about rising debts and trade tensions, while examining the socio-economic divide between urban and rural China. The discussion also explores the implications of Xi Jinping's anti-corruption campaign and the potential need for deeper economic reforms amidst the challenges of a market transition.
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Private Entrepreneurship Drove Early Growth
- China's apparent success from the 1980s is better explained by grassroots private entrepreneurship than top-down state planning.
- Regions with less state control (e.g., Shenzhen) outperformed state-centered regions (e.g., Pudong/Shanghai) in innovation and growth.
Post-2008 Growth Was Debt-Fueled And Inefficient
- State-led investment since 2008 delivered GDP growth but with low efficiency and rising debt.
- That growth masks low returns and a banking time bomb of non-performing loans.
Rural Crisis And The Hu–Wen Response
- In the 1990s rural China faced a severe crisis as central policy squeezed rural entrepreneurs and credit access.
- Wen Jiabao and Hu Jintao later reversed that decline with tax cuts and health and education support.
