Is the Beijing Consensus collapsing?

From my latest Bloomberg column:

The more dramatic developments have come from China itself. China did effectively wield state power to build infrastructure, manage its cities and boost economic growth. And most advocates of the Washington Consensus underestimated how well that process would go.

But along the way, China became addicted to state power. Whenever there was a problem in Chinese society, the government ran to the rescue. The most dramatic example was the extreme use of fiscal policy to forestall the 2008 financial crisis from spreading to China.

Yet this general application of state power, even if successful in a particular instance, brought a great danger: The Chinese were left with overdeveloped state-capacity muscles and underdeveloped civil-society capabilities. Over the last several years the Chinese government has done much to restrict civil society, free speech and religion within China. Now much of the world, including but not limited to China’s neighbors, is afraid of Chinese state power.

Now, because state power has its limits, it is difficult for China to solve many of its most fundamental problems. Chinese leaders are worried about the country’s low birth rate, for instance, but lifting restrictions on the number of children has not yet helped increase the birth rate. In many societies, it is religious families that have more children, but promoting religion is not a remedy that comes easily to China today.

And how will China deal with the pending spread of the omicron variant of Covid-19? The Communist Party staked its legitimacy on the claim that it could control Covid while the U.S. could not. Soon Chinese citizens may be in for a rude awakening, especially if the Chinese vaccines are not so effective.

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