"Who Killed the Chinese Economy?" - by CWP alum Zongyuan Zoe Liu

In “The End of China’s Economic Miracle” (September/October 2023), Adam Posen describes China’s recent economic challenges as a case of “economic long COVID.” Chinese President Xi Jinping’s “extreme response to the pandemic,” he posits, triggered “the general public’s immune response” and “produced a less dynamic economy.” Posen’s analogy is creative and insightful. But his diagnosis misses the chronic diseases that afflicted China’s economy well before the COVID-19 pandemic: an exhausted growth model, stunted population growth thanks to the “one-child policy,” and, most notably, Xi’s failures of leadership.

Xi is not to blame for the Chinese economy’s deepest structural problems. He is, however, responsible for the government’s failure to deal with them. In 1978, Deng Xiaoping initiated sweeping economic reforms after the end of the Cultural Revolution. Standing apart from previous Chinese Communist Party (CCP) leaders, particularly Mao Zedong, Deng took an open and pragmatic approach toward economic development. He rebooted China’s relationship with the United States, observing in 1979 that “all countries that fostered good relations with the United States have become rich.” When China’s economy faltered after the government’s crackdown on the 1989 Tiananmen Square protests, he headed off a downward spiral by clearly reiterating the party’s commitment to economic reforms, especially during an influential 1992 tour of southern China.

The Contested Causes of Stagnation By Zongyuan Zoe Liu; Michael Pettis; Adam S. Posen October 3, 2023 - https://www.foreignaffairs.com/responses/who-killed-chinese-economy

ZONGYUAN ZOE LIU is Maurice R. Greenberg Fellow for China Studies at the Council on Foreign Relations and the author of Sovereign Funds: How the Communist Party of China Finances Its Global Ambitions.

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