Economics & Finance / Macroeconomics / Economic Development & Transition

China has significantly deviated from its early market-oriented reform path, entering an era of

The State Strikes Back: The End of Economic Reform in China

Nicholas R. Lardy

The State Strikes Back: The End of Economic Reform in China (Nicholas Lardy) The core argument of this book is that since 2012, China has significantly deviated from its early market-oriented reform path, entering an era of "state counterattack"—a period dominated by the state and characterized by resources being tilted towards less efficient state-owned enterprises. Author Nicholas Lardy, through detailed data analysis, points out that while the private sector was once the core driver of growth, the current leadership, through industrial policies, national industrial funds, and biased financial systems, has allowed state power to regain dominance in resource allocation, leading to capital misallocation and a slowdown in economic growth. The book emphasizes that this shift towards "making state-owned enterprises bigger and stronger" not only suppresses the vitality of private enterprises but also drags down overall economic potential due to low returns on state-owned assets. The author ultimately argues that if China wants to regain high-speed growth and alleviate external trade tensions, it must restart institutional reforms, empower the market, and ensure that the private sector can compete fairly with state-owned enterprises.