Discovering China’s State-Led Economy, Years Late

Derek Scissors / August 31, 2010

The front page of The New York Times yesterday featured a very long story on the state displacing the market within the Chinese economy. Hats off to the Times for getting it right, but they’re late. Very late.

In fall 2002, a new Chinese government, led by current President Hu Jintao and current Premier Wen Jiabao, came to power. From the beginning, this government was bent on reversing market-oriented economic reform and started immediately by sharply expanding state-orchestrated lending and investment.

Indications of the reversal were plain by September 2003—seven years ago. By 2006, state dominance in nearly every major sector of the economy had been re-ratified, either formally, as in energy or on the ground, as in banking. (more…)