China’s "schizophrenic" economic policy

CHINA ADVISORY - Report 21 Jul 2023 by Andrew Collier

The People’s Daily on July 20 published a policy statement issued July 14 by the Party’s Central Committee calling for promotion of the private sector. The statement was entitled “Opinions of the Central Committee of the Communist Party of China and the State Council on promoting the development of private economy". This was a major notice by the top organ of control in China.

The equity markets barely reacted to the news because investors don’t believe the government is serious about changing the state business model. The document, however, does signal to lower Party officials that they should be more pro-business. It also suggests a degree of desperation in the Politburo with the dismal state of the economy.

A broader point is that China’s economic policies are schizophrenic. On one hand, the Politburo affirms support for the private sector and engagement with the West, through recent dialogues between China and European and U.S. officials. On the other hand, the leadership continues to focus on national security and support for the state system, while defunding the consumer and the private sector.

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