China economy critic sees ‘turning point’ that could level playing field between private sector and state
- American researcher Nicholas Lardy sees ‘encouraging’ signs due to the support shown by President Xi Jinping
- Speech at Peking University came at a time when academic exchanges between China and the United States are haunted by increasingly hostile bilateral relations
A staunch critic of the influence of the state in China’s economy believes there has now been a “turning point” in the treatment of private businesses, arguing a level playing field between state and private firms could emerge in the world’s second largest economy.
Nicholas Lardy, senior researcher at the Peterson Institute of International Economics, sees “encouraging” signs due to the support shown by President Xi Jinping from last year after China had initially taken a backwards step on market reforms.
“It is encouraging that last year Xi met with private entrepreneurs, underscoring how important they are to the private economy, and did a lot to boost them up psychologically,” said Lardy, in a speech at Peking University in Beijing, on Tuesday.
“There were a whole series of efforts from regulators to try to improve credit to private firms. So maybe when we look back at this period in two or three years, we’ll see this is the turning point, in which that shortcoming of state firms becomes more obvious, and private firms will be able to compete with them on a more neutral basis.”
Lardy is a veteran watcher of China’s economic liberalisation and author of the recent book The State Strikes Back – Is China’s Market Reform Ended?, which outlines his views that China has moved backwards on its market reforms in recent years. The central thesis of the book is that inefficient state firms have been given all the tools to succeed, while the private sector retreated as a result.