For much of the last decade, the idea that Communist China would eventually overtake the United States was not a controversial belief. This remains the prevailing opinion in sophisticated circles in Western academia and European political capitals, where it informs efforts to scratch out a foreign policy more independent from Washington’s. After all, straight-line projections into the future have suggested that China’s rise is all but inevitable.
But those straight-line projections are burdened with faulty assumptions. Those who have made such projections assumed that China would continue to absorb the disaggregating and disorienting aspects of the capitalist enterprise in observance of the system’s manifest rewards. They supposed that the country would emphasize technocratic efficiency over ideological rigidity. They imagined that this authoritarian state would avoid transitioning back into a totalitarian state—the bitter experience of China’s Maoist past would see to that. These assumptions, it turns out, were flawed.
At an August meeting of the Chinese Communist Party, People’s Republic President Xi Jinping expanded on an ongoing project to which he had committed the country. The CCP’s goal is no longer to promote rapid economic growth. Now, the Party’s goal is to produce “common prosperity.” Toward that end, the state is obliged to “regulate excessively high incomes,” and “encourage high-income people and enterprises to return more to society.” These anodyne expressions of economic egalitarianism mask the state’s true designs, which appear to be aimed at ensuring that no individual or institution amasses enough influence to challenge the state.
China’s regulatory crackdown has taken many forms, some of which appear to be designed to address the anti-competitive practices of the country’s largest companies. But by no means entirely. For example, China’s efforts to rein in the e-commerce company Alibaba was as much a means of curbing its business practices as punishing its founder, Jack Ma. He had spoken out against China’s regulatory regime when he attracted the ire of China’s regulatory apparatus. Now, Ma’s assets are under siege, and he is rarely seen in public. This act of vengeance disguised as economic hygiene has shed hundreds of billions of dollars in market value from his firms.
The China-based social media company Tencent suffered billions in losses after Chinese regulators blocked a planned merger following the revelation that it had failed to provide regulatory agencies with proper reporting on its past deals. But the company is also in the crosshairs of China’s social engineers, who are cracking down on this business and others in a nationwide effort to curb video-game addiction among minors. Chinese regulators “urged” Tencent and similar firms “to break from the solitary focus of pursuing profit or attracting players and fans,” and sacrifice its fiduciary responsibilities in favor of Chinese socialism.
Meituan, a China-based food-delivery firm, was the subject of an antitrust probe this spring that promoted a sell-off of its shares. That probe, however, followed the news that the company’s billionaire chief executive, Wang Xing, posted a thousand-year-old poem to social media that was perceived as criticism of President Xi. Xing has since changed his tune. He’s now a full-throated advocate of wealth redistributionism and the pursuit of “common prosperity.”
Meanwhile, government-controlled entities and public-private partnerships are rising in the place of the private enterprises that are being sidelined by Beijing. In the process, market efficiency is being replaced with central planning, to say nothing of the familiar corruption, lethargy, and incompetence that accompanies that economic system.
“The Chinese President is not just trying to rein in a few big tech and other companies and show who is boss in China,” the Wall Street Journal’s Lingling Wei reported this week. “He is trying to roll back China’s decades-long evolution toward Western-style capitalism and put the country on a different path entirely…” In short, Xi hopes to reverse the progress that began under Deng Xiaoping, which decoupled the economy from the suffocating Soviet-style state apparatus that put undue downward pressure on economic growth. Beijing’s objective is to restore the tenets of proletarian socialism to their proper place at the center of Chinese society, even if prosperity suffers as a result.
That project has already taken a form familiar to students of socialist regimes: repressive paranoia and a crippling obsession with state sovereignty.
Western firms with a rapacious eye turned toward the Chinese market know the concessions they’re expected to make to remain in the CCP’s good graces. Their ability to access Chinese capital is often predicated on their willingness to kowtow to Beijing’s irrational suspicions. The NBA forces its players to keep quiet about China’s suffocation of democracy in Hong Kong (or, worse, to justify Beijing’s actions). The Walt Disney Company feels compelled to include China’s “nine-dash line” in its animated features, functionally annexing the whole of the South China Sea into the People’s Republic. Mercedes-Benz apologizes for quoting the Dalai Lama, and the hotelier Marriott feels it must fire an employee who did nothing more than click “like” on a social-media post that offends China’s nationalists. Western firms are increasingly asked to share proprietary information and user data with Chinese officials. The expectation is that Beijing’s demands will become more onerous (and more forceful) as the state lurches toward Marxism.
Abhorrent as they are, these are all sacrifices Western capitalists are willing to make so long as they see a return on their investment. But the re-Sovietization of the Chinese economy jeopardizes that bargain.