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“Common Prosperity” and Rethinking Chinese Capitalism

Along with the regulatory crackdown on private technology platforms that has rocked financial markets this summer, there is growing criticism in Beijing targeting China’s services sector-driven growth. These critiques are driven by both elite and public concerns about the concentration of financial resources and power in technology firms, the financial industry, and the property sector. Some voices in Beijing argue that China is still pursuing a US-style growth model that will not fare well given China’s looming demographic pressures. These concerns have driven government rhetoric calling for “common prosperity” and have fueled a broader debate about China’s future development path. These discussions are very inchoate, but official commentaries have begun highlighting the benefits of a German-style high-tech manufacturing sector.

Clients have frequently asked over the past several weeks about what Beijing is trying to achieve with the new regulatory tightening campaign targeting the private sector. In this note, we attempt to provide some of the background related to the current critiques of China’s economic model that seem to be gaining salience in Beijing. But in our view, there is little agreement on what comes next, or what sectors will remain “safe” from future regulatory restrictions.

Posted August 30, 2021
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