Not so long ago, predictions for 21st century geopolitics pretty much all looked like this: the rise and rise of China.
In recent times, the increasingly authoritarian approach of Xi Jinping, not to mention the country’s treatment of the Uyghurs, have led some to reconsider whether Western businesses should be embracing China, but the general line of thought in business was ‘you can stay out of China, but you’ll be missing out on a lot of opportunities’.
But now Xi seems to be taking the country that he can now rule for the rest of his life down a different path. As the Wall Street Journal reported this week:
He is trying to roll back China’s decadeslong evolution toward Western-style capitalism and put the country on a different path entirely, a close examination of Mr. Xi’s writings and his discussions with party officials, and interviews with people involved in policy making, show….
Mr. Xi isn’t planning to eradicate market forces, the Journal examination indicates. But he appears to want a state in which the party does more to steer flows of money, sets tighter parameters for entrepreneurs and investors and their ability to make profits, and exercises even more control over the economy than now.
Barry Naughton, an academic specialising in the Chinese economy described Xi’s system to the WSJ as “a government-steered economy.”
This has already been devastating for some big Chinese tech companies, who have had to cancel US IPOs and scale back expansion plans where the government thought they were going too far. Just this week, the Chinese version of TikTok introduced a 40-minute daily usage limit
for children, as part of a government push to cut kids’ use of technology.
And if you want to know what effect all this might have on the Chinese economy, good luck. The Financial Times reported last week on a crackdown on financial news reporting
in the country, which some worry could lead to businesses and investors making big mistakes, as they simply don’t understand the bigger picture. Just look at Evergrande Real Estate
for how things can go wrong.
We’ll have to see whether all of this affects Chinese entrepreneurs’ willingness to innovate and keep pushing the country’s edge in the technology world forward. As for international companies looking to do business in China, they should be wary about how much they’ll be allowed to do there in the future.
No matter how bullish
the likes of ad industry titan Martin Sorrell might be about future investments in China, who’s to say the government will keep letting him do business?
So while China’s economy may still overtake the US to become the world’s biggest, the idea that Western businesses will definitely want a piece of its pie could need a rethink. And if they do get involved, they’ll have to be ready for a very different form of business than they (or anyone) is used to right now.