TO SAY THAT China’s economy has been hurt by covid-19 is putting it mildly. The 6.8% year-on-year fall in GDP in the first quarter ended a 28-year stretch of continuous, mostly rapid growth. The Communist Party, which derives legitimacy from rising living standards, is keen to put the slump behind it. President Xi Jinping is reversing a harsh lockdown and propping up state firms. But the world’s second-biggest economy will not heal by Mr Xi’s fiat alone.
For a collectivist state, China is remarkably reliant on private enterprise. As it ages, and its economy shifts from manufacturing for export to domestic services, the entrepreneurial class should grow in stature. Right now, though, the corona-crisis and, under Mr Xi, a more hands-on, inward-looking regime are testing private-sector resilience like never before.
The People’s Republic recognised its first private business in 1980, when a 19-year-old street hawker named Zhang Huamei registered her stall selling buttons and toys in the port city of Wenzhou. Since then the party has developed its own form of “economic gardening”—the notion, popularised in America in the 1980s, that grassroots entrepreneurs drive growth. It told business folk what not to do—certain industries, such as tobacco, were out of bounds—but otherwise let them grow unimpeded. As Jonathan...
Read the full article here.
This content was originally published by The Economist: Business. Original publishers retain all rights. It appears here for a limited time before automated archiving. By The Economist: Business