China’s Self-Inflicted Economic Wounds (TAKATOSHI ITO, 11/21/23, Project Syndicate)
[X]i’s obsession with control continues to pose a serious threat to China’s prospects. Not only does it hamper innovation by domestic firms; it also discourages foreign investment.
Already, foreign companies, such as the polling and consultancy group Gallup, are fleeing the country. This can be partly explained by China’s economic slowdown, which has reduced the availability of high-return investment opportunities and, together with demographic trends, promises to shrink the Chinese market over time. But, with China still targeting 5% growth, there is clearly more going on.
In fact, foreign companies worry about becoming the target of spurious antitrust investigations, and fear that the newly expanded, but deliberately vague counter-espionage law could result in them being punished for normal business activities. Of course, US restrictions on high-tech exports to and investment in China are not helping matters.
China today shares many features with Japan in the 1980s. But the biggest risks to its economic prospects are all homegrown. By prioritizing security and stability – through surveillance, control, and coercion – over economic dynamism, China’s leaders are abandoning some of the policies and principles that underpinned the country’s “economic miracle.”
You can’t have a Clash of Civilizations when there is only one.