Since Chinese President Xi Jinping (習近平) took office in late 2012, the nature of China’s political and economic system, in which the one-party state monopolizes the country’s resources, has not only continued, but intensified. While the centralized power of the Chinese Communist Party (CCP) and the state’s control over the private sector bolster the system, they stifle the vigor and economic vitality of China’s business community.
Over the past few decades, the CCP’s authoritarian control has helped the country to tide over many difficulties and achieve economic success, but at the core of its political model are state-owned enterprises that allow the party to manage strategic industries, such as energy, raw materials, transportation, finance and telecommunications. By keeping a tight grip on pricing, resource allocation, information and logistics, the CCP controls the country’s entire economy.
While the CCP has encouraged innovation in China’s private sector, sometimes even encouraging companies to develop and experiment without restriction, the party has retaken control and withdrawn the freedom to innovate in markets where companies have grown to a size that could threaten its authority. This has happened in the financial technology and e-commerce sectors — to Ant Group last year, and Alibaba Group Holding and Didi Global this year.
The CCP’s campaign to impose tougher controls on the country’s tech firms started in November last year when it suspended Ant’s US$35 billion dual listing on the Hong Kong and Shanghai exchanges.
In March, Chinese regulators fined companies — including Tencent Holdings, ByteDance and Baidu — for not seeking prior government approval for acquisitions and investments. In April, they hit Alibaba with a record 18.2 billion yuan (US$2.81 billion) fine over what they claimed was abuse due to the e-commerce firm’s dominant market position.
Early this month, just days after Didi’s US$4.4 billion initial public offering in New York, Chinese Internet regulators told the ride-hailing company that it was being investigated for posing cybersecurity risks.
Such moves have shown that Chinese authorities have not only cracked down on the country’s tech giants over anti-trust concerns — especially those that dominate their markets and control big data — but also continued its agenda of expanding the government’s influence over the private sector. The CCP’s aim is to maintain power in politics, the economy and society, while facilitating a rapid resurgence of the state sector at the cost of weakening the private sector.
Since the late 1970s, when China launched its “reform and opening up” policy, the export industry in Guangdong Province has grown, and, since the 1980s, small businesses have flourished in Zhejiang Province. More recently, the Internet and artificial intelligence sectors have rapidly expanded. However, a series of innovations in the private sector, not the CCP, was behind most of China’s new and vital industries.
Unfortunately, at a time when China needs to stimulate innovation to upgrade its economy, its model of authoritarian capitalism might be the greatest obstacle.
Centralized power is a double-edged sword. While Xi and his CCP elites might believe that a top-down, authoritarian model — rather than a bottom-up, liberalized approach — is needed to purge the party of corruption and conflicts of interest, which have the country’s economy and society increasingly spinning out of control, the model is likely to smother innovation and the vitality of the private sector.
While no one knows how long this situation might last, it is clear that change is unlikely to happen as long as Xi remains in power.
The Chinese government on March 29 sent shock waves through the Tibetan Buddhist community by announcing the untimely death of one of its most revered spiritual figures, Hungkar Dorje Rinpoche. His sudden passing in Vietnam raised widespread suspicion and concern among his followers, who demanded an investigation. International human rights organization Human Rights Watch joined their call and urged a thorough investigation into his death, highlighting the potential involvement of the Chinese government. At just 56 years old, Rinpoche was influential not only as a spiritual leader, but also for his steadfast efforts to preserve and promote Tibetan identity and cultural
Former minister of culture Lung Ying-tai (龍應台) has long wielded influence through the power of words. Her articles once served as a moral compass for a society in transition. However, as her April 1 guest article in the New York Times, “The Clock Is Ticking for Taiwan,” makes all too clear, even celebrated prose can mislead when romanticism clouds political judgement. Lung crafts a narrative that is less an analysis of Taiwan’s geopolitical reality than an exercise in wistful nostalgia. As political scientists and international relations academics, we believe it is crucial to correct the misconceptions embedded in her article,
Sung Chien-liang (宋建樑), the leader of the Chinese Nationalist Party’s (KMT) efforts to recall Democratic Progressive Party (DPP) Legislator Lee Kun-cheng (李坤城), caused a national outrage and drew diplomatic condemnation on Tuesday after he arrived at the New Taipei City District Prosecutors’ Office dressed in a Nazi uniform. Sung performed a Nazi salute and carried a copy of Adolf Hitler’s Mein Kampf as he arrived to be questioned over allegations of signature forgery in the recall petition. The KMT’s response to the incident has shown a striking lack of contrition and decency. Rather than apologizing and distancing itself from Sung’s actions,
US President Trump weighed into the state of America’s semiconductor manufacturing when he declared, “They [Taiwan] stole it from us. They took it from us, and I don’t blame them. I give them credit.” At a prior White House event President Trump hosted TSMC chairman C.C. Wei (魏哲家), head of the world’s largest and most advanced chip manufacturer, to announce a commitment to invest US$100 billion in America. The president then shifted his previously critical rhetoric on Taiwan and put off tariffs on its chips. Now we learn that the Trump Administration is conducting a “trade investigation” on semiconductors which
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