In his latest book The State Strikes Back: The End of Economic Reform in China, Nicholas Lardy argues that China's leadership under Xi Jinping is undertaking a sizable and globally significant shift away from market reforms and towards a stronger system of state capitalism — with important implications for Asia and the rest of the global economy.
China’s extraordinarily rapid economic growth since 1978 has set world records and has been sustained, despite repeated predictions of an inevitable slowdown or even crisis. As Lardy argued in his previous book, Markets over Mao, this ongoing success was due to the continuing rise of the Chinese private sector driven by market-oriented reforms.
In The State Strikes Back, Lardy claims that China’s trend growth is now declining meaningfully for the first time since reforms were launched. Resurgent state dominance, driven from the top, has begun to diminish the vital role of the market and private firms in China’s economy. Lardy, the finest analyst of China’s economy outside China, believes that China’s future could be equally bright as its recent past but that policy choices by China’s leadership are preventing that continued success, and contributing instead to the current downturn.