China’s economists are divided – some say ‘red economy’ isolationism is going too far

Online discourse finds support for both sides, as prominent experts debate how best to pull China out of its economic downturn

With the 20th party congress just over two weeks away, it’s a sensitive time to discuss political issues, and outspoken economists have been silenced for not towing the party line

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Economists Xiang Songzuo (left) and Wen Tiejun have opposing ideas about the development of China’s economy. Photo: SCMP Pictures

Published: 8:00am, 30 Sep 2022

A high-stakes debate has broken out between two prominent economists on the development direction of the Chinese economy, two weeks ahead of the leadership-reshuffling 20th party congress that is meant to lay out a road map for China’s development in the coming five years.

The online clash between Wen Tiejun and Xiang Songzuo, who both once worked for the prestigious Renmin University in Beijing, is garnering attention from across the country, as in essence they are arguing over the fate of China’s open-door policy, its private sector and the economy at large.

Their disagreement also comes at a delicate time. Foreign investors and private entrepreneurs – all hit hard by nearly three years of strict pandemic policies – are anxiously anticipating what sort of policies Beijing will turn to next as it copes with deteriorating international relations, pushes for common prosperity, and tries to reinvigorate its economic engine.

The 71-year-old Wen, a well-known expert on rural and agricultural policies, raised eyebrows with a three-minute video clip in which he promoted a “people-oriented” economy – economically autonomous, with more emphasis placed on state-owned economies, and able to meet all of its people’s demands with local resources – as opposed to globalisation.

“We call those with [economic] sovereignty, independent development and patriotism ‘people-oriented economies’,” he said in an interview made several months ago but which became viral this week.

It is not the first time that Wen promoted such a concept – he already advocated a “red economy” with similar characteristics at an academic meeting in July 2021.

Similar comments have put investors and the pro-reform camp on edge, as the business environment and economy have been disturbed by the rigid zero-Covid controls and worsening external environment – including the Russia-Ukraine war; tension with Western countries over Xinjiang, Hong Kong and Taiwan; and the global financial turbulence driven by the US Federal Reserve’s aggressive interest rate increases.