A long read this week on how Xi is remaking China's economy. Conventional wisdom is that he's reverting to a statist model at the private sector's expense: a sure-fire recipe for problems. But it's more nuanced and more dynamic than that. (1/x) https://www.economist.com/briefing/2020/08/15/xi-jinping-is-trying-to-remake-the-chinese-economy

We argue that he's trying to build a more muscular state capitalism: more market discipline for state-owned firms & more party discipline for private firms, yoking them together on national missions. A project full of contradictions. But progress is evident in some areas. (2/x)

Many reject the idea that there is real pro-market reform going on. They talk of promise fatigue. And that's true if you interpret market reform as pure liberalisation. But when Mr Xi talks about reform, it is order that he is after -- and that matters for markets. (3/x)

What do Xi-style market reforms look like? A clearer legal framework for businesses, even as law is used as a tool of oppression in the political sphere. A dramatic increase in court cases to resolve economic disputes, from patent protection to bankruptcies. (4/x)

More restraints have also been applied on the financial system, which had, for a time, looked increasingly like the Wild West. China has not solved its debt problems, but the shape of liabilities in the system is safer and clearer than a few years ago. (5/x)

Meanwhile, on the state side, there is a recognition that industrial policy in the past was far too scattershot. There is more focus now on the choke-hold products that, if blocked by America, would hurt China. (6/x)

A big question is how Party sway over private sector plays out. A standard assumption, entirely reasonable, is that this will smother the entrepreneurial drive that made China what it is. Startling to see how many firms now cite "Xi Jinping Thought" in their annual reports. (7/x)

But there is an alternative take: that as big private firms don the "party hat", they will be able to compete more on the same turf as state firms. So they'll face a paradox of more blocks externally (all firms seen as part of China Inc) but more space domestically. (8/x)

Finally, our leader to go with the long read:
"The hope for confrontation followed by capitulation is misguided. America & its allies must prepare for a far longer contest between open societies and China’s state capitalism. Containment won’t work." (8/8) https://www.economist.com/leaders/2020/08/13/xi-jinping-is-reinventing-state-capitalism-dont-underestimate-it