China’s economic strategy put to the test amid mounting domestic problems

Beijing, VIVA – As the problems facing China’s economy mount, the focus is shifting from surface symptoms to the root causes of the problem. Analysts believe the root of China’s economic problems lies in the limitations of its authoritarian government, which may limit the country’s ability to achieve sustainable growth and innovation.

China has a long history of innovation and contributions that have shaped the world, from the invention of the compass to the creation of paper money. However, after the Maoist revolution, the creative forces of the people were often directed elsewhere under the strict control of communist governments. The Chinese Communist Party (CCP) prioritized maintaining control, sometimes at the expense of developing the kind of innovation that characterized earlier periods of Chinese history.

As etruth reported on Friday, September 20, 2024, rather than proposing new ideas, the CCP has developed sophisticated population control mechanisms, such as the controversial re-education camps. This diversification of creativity underscores the broader impact of authoritarian rule on human progress.

The economic implications of this approach become clearer when compared to the trajectory of Taiwan, a country that, despite its smaller size and geopolitical pressures, has fostered a culture of creativity and innovation. Taiwan has become a world leader in industries such as semiconductor manufacturing, an important sector for the modern economy.

The contrast between Taiwan’s achievements and the Chinese Communist Party’s model of “socialism with Chinese characteristics” raises questions about the long-term viability of China’s economic strategy.

The root of China’s economic problems is the CCP’s emphasis on collectivism and state control. This approach prioritizes coherence and order over creativity and innovation, critical components of economic growth in today’s global economy.

The consequences of this approach are evident in China’s reliance on large loans and an overdeveloped real estate sector. The growth of “ghost towns,” where all developments remain uninhabited, is symbolic of the inefficiencies that can arise from an economy driven more by state direction than by market demand.

The COVID-19 pandemic further exposes the limitations of centralized governance and From top to bottom in China. As the virus spread, Beijing’s strict guidelines often overshadowed local initiatives and creative solutions. This centralized approach not only fueled the initial backlash, but also highlighted the dangers of intellectual dependence on the state.

Ultimately, China’s vaccine development, while a remarkable achievement, has struggled to match the speed and efficiency of Western alternatives, illustrating the difficulty of innovating in a system that limits intellectual freedom.

China’s economic strategy also shows a strong focus on the material aspects of development, such as infrastructure development, production quotas and GDP targets, often at the expense of the cultural and intellectual freedoms that underpin long-term economic success.

This emphasis on “hardware” over “software” stands in stark contrast to the approach seen in the United States, where economic success is based on individual rights, freedom of expression, and innovation. The protection of human rights and individual liberties by the U.S. Constitution has created an environment in which new ideas can flourish, promoting technological progress and economic stability.

This fundamental difference in management philosophy explains why the United States leads the world in innovation, while China often struggles to overcome problems of imitation and intellectual property disputes. As China attempts to transition from a manufacturing economy to one based on technology and services, this challenge becomes increasingly apparent.

In addition, China’s approach to international trade and intellectual property has raised concerns around the world. Practices such as intellectual property theft and economic coercion have worsened relations with key trading partners and threatened China’s standing in the international community.

While these tactics may bring short-term economic gains, they threaten China’s credibility and long-term prospects, especially at a time when trust and cooperation are critical to economic success.

As China grapples with its current economic challenges, including a bursting property bubble and rising youth unemployment, the limitations of its economic model are becoming harder to ignore. Traditional methods of economic stimulus, such as infrastructure spending and monetary policy, appear increasingly inadequate to address deep structural problems.

Analysts believe that without a transition to a governance model that embraces greater individual freedom and intellectual independence, China could struggle to achieve the long-term prosperity it seeks.

The path to sustainable economic success, as other world powers have claimed, lies not in strict government controls or elaborate five-year plans, but in adopting principles that have proven effective elsewhere.

These principles include the protection of property rights, freedom of thought and expression, and the rule of law. However, adopting such a model would require major changes to China’s current governance structure – an unlikely prospect given the CCP’s keen interest in maintaining its control over society.

Without this change, China risks falling into a cycle of diminishing returns, where the potential for innovation and growth is continually stifled by the constraints of authoritarian governments. Current economic problems, from the collapse of the property market to rising youth discontent, serve as a reminder that the CCP model may have reached its limits. The situation facing China is clear evidence of the broader challenges posed by authoritarian governments in the modern world.