NO ANCIENT WISDOM, NO FOLLOWERS: The Challenges of Chinese Authoritarian Capitalism

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Easton Studio Press, LLC, Nov 6, 2012 - Business & Economics - 146 pages
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In the past three decades, China has risen from near collapse to a powerhouse -- upending nearly every convention on the world stage, whether policy or business. China is now the globe’s second largest economy, second largest exporter, a manufacturing machine that has lifted 500 million of its citizens from poverty while producing more than one million US dollar millionaires.

Then why do China’s leaders describe the nation’s economic model as “unstable and unsustainable”? Because it is.

James McGregor has spent 25 years in China as a businessman, journalist and author. In this, his latest highly readable book, he offers extensive new research that pulls back the curtain on China’s economic power. He describes the much-vaunted “China Model” as one of authoritarian capitalism, a unique system that, in its own way, is terminating itself. It is proving incompatible with global trade and business governance. It is threatening multinationals, which fear losing their business secrets and technology to China’s mammoth state-owned enterprises. It is fielding those SOEs – China’s “national champions” -- into a global order angered by heavily subsidized state capitalism. And it is relying on an outdated investment and export model that’s running out of steam.

What has worked in the past, won’t work in the future. The China Model must be radically overhauled if the country hopes to continue its march toward prosperity. The nation must consume more of what it makes. It must learn to innovate. It must unleash private enterprise.

And the Communist Party bosses? They must cede their pervasive and smothering hold on economic power to foster the growth, and thus social stability, that they can’t survive without. Government must step back, the state-owned economy must be brought to heel, and opportunity must be freed.

During the Tang Dynasty, an official in the imperial court observed: “No ancient wisdom, no followers.” He was lamenting that regime was headed alone into dangerous and uncharted waters without any precedent for guidance.

Again today – as McGregor makes clear – this is China’s greatest challenge.
 

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About the author (2012)

James McGregor is well known and respected in Chinese business, political, and media circles. A Mandarin speaker, he has served as a key adviser to both the U.S. and Chinese governments. As The Wall Street Journal's China bureau chief following the 1989 Tiananmen Massacre, the chief executive of Dow Jones' China business operations during much of the roaring 1990s, and a venture-capital investor during China's dotcom boom, McGregor has negotiated every avenue of the labyrinth that is business in China. He is also a former chairman and a decade-long governor of the American Chamber of Commerce in China. He is a senior counselor for APCO Worldwide, and is member of the Council on Foreign Relations; National Committee on US-China Relations; International Council of the Asia Society; and serves on a variety of China-related advisory boards. He and his family live in Beijing.

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