For Beijing, the tycoon class can never rise above the party

China is already the world’s second-largest economy. Though it is slowing, GDP growth over the past three decades has outpaced that of South Korea, Japan or Taiwan at their prime. In fact, some analysts believe per capita income in China today, relative to developed-world levels, is equal to where South Korea was, economically, relative to the US in the mid-1990s. So the figures speak for themselves – but repeated stimulus packages also mean corporations and local governments in China have become heavily indebted well before their country can hop above the middle-income trap.

How politics will decide whether China becomes a high-income economy

Was success achieved by embracing freewheeling private-sector entrepreneurship, or precisely because the government has kept the private sector at arm’s length? The answer depends on the scale of observation. Until Xi Jinping’s (習近平) accession to power, Chinese market reformers actively portrayed China as a market-friendly country. Cold-war-era ideological labelling was deliberately avoided, and a host of far-reaching free trade agreements were clinched. Indeed, as late as 2008, one of China’s top economists, Justin Lin Yifu, proclaimed that his country did not follow any economic model at all in its business dealings with the outside world.

Paradoxically, globalisation has enhanced the Communist Party’s governance capacities at home. The party leadership insists communism is still relevant, but has, since the enshrinement of the “Three Represents”, celebrated private enterprise. In fact, there are reportedly more billionaires in the National People’s Congress than there are on Capitol Hill. So much so that America’s most flamboyant entrepreneur, presidential hopeful Donald Trump, has not once pointed to Beijing as a deregulators’ heaven.

Leftists die hard, but Xi Jinping’s blessing for China’s private sector has positive message for economy

Pop-culture heroes in China nowadays are less likely to be loyal party cadres in remote provinces or army generals. Alibaba founder Jack Ma, athlete-turned-businessman Li Ning ( 李寧 ) and self-made automotive tycoon Wei Jianjun (魏 建军) are arguably the new role models. Nevertheless, it is becoming increasingly harder for China to navigate the contradictions between authoritarianism and freewheeling capitalism.

Indeed, Western observers could not help but note how vehemently the Communist Party press turned against several local and foreign tycoons, from Li Ka-shing and George Soros to Ren Zhiqiang (任志强). Their alleged misdemeanour was a misunderstanding of where the buck ultimately stops in China. In the party’s view, the difference between the US and China boils down to the fact that tycoons and lobbyists own the White House. Far from controlling the party, in China, private wealth comes courtesy of the party, so the argument runs.

While some facets of the Chinese economic miracle might bear similarity to high-income Japan, South Korea, Taiwan or Singapore – in terms of the government’s guidance of the private sector or in incipient basic welfare provision – none of these countries comes close to China historically when it comes to the latter’s huge state-owned enterprises.

Will the Chinese variant of the so-called East Asian developmental state model therefore chart a different path to high-income prosperity? And if so, what would the balance between individual freedoms, welfare, employability and free markets be therein?