Daily Times

“Dynasties begin with the very virtuous and noble founder, and then they continue through a series of rulers until they come to a bad last ruler, and he is so morally depraved that he is overthrown.” These are the famous words of Famous grand Chinese historian Sima Qian. After, British colonization China suffered from opium epidemic until the Communist revolution in 1949, when Mao Zedong banned Opium and annihilated opium edicts. Back then China was the most backward and agrarian country in Asia. With revolution, then Chinese leader Mao Zedong forged a “Great leap forward Policy” to modernize the Chinese economy based on soviet model. The Great leap forward plan staunchly failed and Chinese economy failed to get stable in accordance with communist policies. With the death of Chairman Mao, his prime minister, Deng Xiaoping became new ruler of China and initiated new economic reforms by opening Chinese market to western companies. The west celebrated Deng Xiaoping reforms as a hope for capitalist revolution in china while ordinary Chinese celebrated these reforms as the end to poverty and economic marginalization. But with the ascension of Xi Jinping to Chinese throne, it seems that the end of Chinese economic prosperity has begun.

According to western commentators, the Chinese economic growth has slowed down since Xi Jinping came to power in China. According to some analysts, Mr. Xi ignored the advice of Deng Xiaoping “Hide your Capabilities and bide your time” by showing off his plans of vision China 2025, that attracted the attention of the western economies. Because, with Deng’s economic reforms, the most backward nation has uplifted itself to the global stage as economic giant. Since 1980, the economic growth has been 10% and more than quarter half of the Chinese population lifted themselves out of poverty.

But with ascension of Xi Jinping, the private sector has been stifled and the state has tightened its control over business and market. The state regulators are now interfering both in stock market and in the banking sector, where the flow of money is tightly regulated. The loans offered by the Chinese banks have reached a record high and investment has slowed down in the last five years. Moreover, the Chinese working population is gradually shrinking and the performance of inefficient firms have slowed down the productivity growth leaving debt at a record high too.

China, which became the global center of the world economy in 2000, is now suffering from recession and the trade war with US can be blamed for the turbulence. And, now it seems that the glorious years of Deng’s era are coming to an end because under Xi Jinping, the state has gained the upper hand both in business and economy. Mr. Xi’s slogan “socialism with Chinese characteristics” is bringing back the tumultuous days of the Maoist era in China. To be more precise, it can be said that the shadow of old communism is again returning to China.

Though, during China’s early prosperous economic years, scholars deemed the 21st century as Chinese century but with a gradual slow economic growth and decline of Capitalism in China, they shifted their discussion towards economic recession. Moreover, the fact cannot be denied that since 2000, Chinese economic model was an alternative to western Capitalism but now, this model is crumbling. There are four factors in this model, that have contributed largely to China’s economic growth.

China, which became the global center of the world economy in 2000, is now suffering from recession and the trade war with US can be blamed for the turbulence. And, now it seems that the glorious years of Deng’s era are coming to an end because under Xi Jinping, the state has gained the upper hand both in business and economy

Firstly, land, which is state owned, that puts all the assets at the disposal of local officials and these officials on cheap rents attract businesses. Secondly, Cronyism, the few influential figures within the Communist party are controlling every affair of the economy. Perhaps, they have a firm hold over sales and purchases. Thus, the vibrant cronyism built a nexus between government and business. The third major feature of Chinese economic model is the model of debt. The state-owned companies are borrowing the money from the state-controlled banks for large-scale construction projects, that increases the burden of debt. Lastly, the fourth major characteristics of Chinese model is strict regulation-the Chinese government strictly regulates the Chinese economy that gives the government an upper hand to control the economy.

But it is a fact that under Xi Jinping’s rule, the old days of Maoism are returning, though he himself is a victim of cultural revolution but is still an admirer of the Maoist era. With this admiration Xi Jinping has launched his own version of culture revolution in the form of anti-graft crackdown through which he is purging political opposition within his own party. When Deng Xiaoping came to power, he embraced the Keynesian economic model by allowing the interest rate to flow into the economy. For Keynes, the interest rate has another role-its task is to persuade people to part with money and hold fewer liquid assets.

On the other hand, what Keynes understood was that sometimes-purchasing power with differing decisions can bring chaos in terms of spending and investment. As, we can see the size of Chinese middle class differs from 100 million to 600 million and so does their purchasing power. And, for Keynes, if the private entrepreneurs would not invest heavily to maintain high employment and production then government must take responsibility. But, in case of China, this remedy has not been followed because entrepreneurs are suffering from stiff regulation, while government has tightened its hold instead of filling the gap.

In contrast, it is likely to assume that by gradual tightening hold over the private businesses, purging on opposition, and by suppressing free voices, Mr. Xi Jinping is reviving Maoist version of communism in China-he seems the last bad ruler.

The writer is a postgraduate student of Politics and International studies, and a freelance writer

Published in Daily Times, March 7^th 2019.