… is from pages 223-224 of Johan Norberg’s marvelous 2023 book, The Capitalist Manifesto:
The more economic power the [Chinese] Communist Party takes, the more knowledge and outside initiative is lost. The difference between the popular image of China and what research actually shows about it could hardly be greater. Our politicians and media paint horrifying images of China’s brilliant strategic planning, but in the vast literature on China’s economy there is hardly a single study that even attempts to argue that a specific industrial policy has created real commercial success.
The Westerners who now assume we need an active industrial policy in order to compete with China thus choose not to imitate the Chinese policy that created the country’s successes but the post-2010 policy that involves enormous risk-taking. To the extent that the new policy has achieved any results, they are negative. Capital has been transferred to less productive state-owned companies. Despite the fact that they only account for around a quarter of the country’s GDP, they get about 80 per cent of the banks’ lending. Growth per capita, which in the 1990s and 2000s was around an incredible 10 per cent annually, declined to 5 per cent before the pandemic (and some observers believe this was an exaggeration). Under the current economic model, China finds it hard to squeeze any growth out of the economy.
