Can China’s Rise Continue?

Some Chinese scholars have argued recently that Russia handled the transition to a market economy the right way – doing it quickly – while China has hesitated to fully embrace privatization and liberalization. Some analysts, inside and outside of China, have warned that unless China now removes the remaining restraints on market activity and gives up its remaining state owned enterprises, China’s rise will soon turn into stagnation or decline. While China’s remarkable 35 years of rapid development does indeed face serious problems today, in my view the foregoing diagnosis is wrong. If it is followed, it would reverse, not sustain, China’s rapid development.