China’s marketisation has taken a hit, and pro-market economists blame Beijing interference
- Rising government intervention seen putting the brakes on China’s unfinished market-oriented reform, ‘despite remarkable progress in the past 23 years’
- Beijing has been cracking down on Big Tech, property developers, entertainment and tutoring, while also intervening in the commodities market and power industry
China’s marketisation – the increased exposure of industries to market forces rather than state intervention – has fallen, prompting domestic pro-market economists to criticise Beijing’s continued interference in the country’s economic activities.
A newly released marketisation index by the National Economic Research Institute (NERI) – providing a province-level marketisation breakdown that gauges the extent of pro-market reforms and measures the quality of market institutions, on a scale of zero to 10 – fell to 5.81 in 2019 from 5.99 in 2016, with 2019 being the latest estimate.
Nine of China’s 31 provincial jurisdictions – Tianjin, Jilin, Heilongjiang, Inner Mongolia, Gansu, Ningxia, Tibet, Hainan and Guangxi – reported a fall in their marketisation level in the 2016-19 period.
A fall in the index – which also measures government-market relations, non-state economic developments, product markets, factor markets and the legal environment – represents a smaller market role in China’s economy.
“We must realise that China’s market-oriented reform hasn’t yet been completed, despite remarkable progress in the past 23 years,” Wang Xiaolu, deputy director of the Beijing-based NERI, said at a symposium on Tuesday. “It needs to be pushed forward … the direction must not be changed.”