Many foreign managers, investors and government officials — who once thought that China would gradually emerge as a democratic, market economy — now fear the end of Chinese capitalism. Many sense a paradigm shift toward Maoist principles, guided by an authoritarian regime now more powerful than ever before.
But the truth is that this is not a paradigm change. The West is simply beginning to realize what China’s self-selected label of a “socialist market economy, Chinese style” is all about. China’s leaders, current and past, have at no point committed to Western-style capitalism. The government has always maintained a high degree of direct political control over the economy to secure the regime’s long-term survival. That control rules out a regulatory hands-off approach.
Of course, China’s high-tech entrepreneurs have long been aware of the delicate balance they had to strike to scale in their specific niche. Most of those who succeeded so far did so thanks to close business-government relations and active support of government priorities.