Chinese Economics Thread

[HighGround]

China is not a meaningfully Marxist country in any way and arguably is hard to even call it socialist if your definition is strict. It's a mixed-capitalist economy with a structural tailwind towards private enterprise. And that's a good thing.

It doesn't matter if a cat is white or black.

Harmful market structures can manifest themselves in a variety of different forms.

There are contexts where having a national champion (a monopoly) is the best market outcome for everyone. The country, the people, and the capitalists.

There are also contexts where having a hyper-competitive market with dozens of companies competing in every sector is actually bad for the economy.

From what I've glimpsed when looking at major Chinese events like the Economic Work Conference, is that the Party is much more concerned with the actual lives of Chinese people, building a sustainable balance between demand, global markets, and its manufacturing base, and so on and so forth.

GDP is important for them, but so are other indicators that don't get the headlines. I think PIIE's obsession with the exact breakdown of private vs public and their veiled implication that there is an almost "moral" judgement to be made over this number is a perfect demonstration of how detached the Western economy has become from what actually matters, living standards.

The private sector's share of the top 100 listed Chinese companies by market value grew to 40.0 percent in the second half of 2025, driven by high-profile technology firms amid China's artificial intelligence (AI) boom. That share was up from 37.6 percent six months earlier and 33.5 percent at its mid-2024 low.

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These data in our tracker, updated twice a year, confirm that the three-year relative decline of the private sector's share between mid-2021 and mid-2024 did not mark a permanent reversal of its spectacular rise over the previous decade. Even so, the private sector's share today remains far below its 55.4 percent peak reached in mid-2021.

 

[abenomics12345]

I don’t think the issue is so much private vs state owned as whether the firms/companies can compete against one another. Monopolies are a much bigger threat.

This. Competitive neutrality is the key from a regulatory perspective. The important thing is to get rid of the narrative that the government is both the referee and the player in the markets, stepping on the scale in favor of SOEs at the expense of POEs.

 

[hereforsemithread]

View attachment 168684

China's private sector has had a good run recently. Xi's Big Tech crackdown began around the peak and subsided by 2023, and the recovery began after that. He may not be comfortable with the ever-increasing importance of the private sector, especially the tech companies, but they are the backbone of China's success. There's no turning back.

Should also put to rest two types who view China as a socialist country: the tankies with rose-tinted glasses and the "China Hawks" who don't pay attention to data and instead fixate on Mao outfits at military parades.

China is not a meaningfully Marxist country in any way and arguably is hard to even call it socialist if your definition is strict. It's a mixed-capitalist economy with a structural tailwind towards private enterprise. And that's a good thing.

This is market cap data, not share in actual value added in the economy. The two are basically unrelated. The SOE/private split in GDP has been stable at ~25/75 since the late Jiang period. Contrary to the sentiment of some the Xi era has not been one of increasing SOE share in GDP, nor decreasing for that matter. It has been continuous with prior periods, though major non-size-related reforms to the state sector have been done by the Xi admin to make it better at its functions.

 

[StraightEdge]

Minimum wage increased across many provinces:

https://twitter.com/i/web/status/2015556781766767047

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[siegecrossbow]

Minimum wage increased across many provinces:

https://twitter.com/i/web/status/2015556781766767047

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Good to see that the increase is higher percentage wise in the less developed parts of the country.

 

[sunnymaxi]

Exclusive: German companies' investments in China hit a four-year high in 2025, underscoring how President Trump's trade war is pushing industries and governments to boost business ties elsewhere.

investments in China rose to more than 7 billion euros ($8 billion) between January and November last year, up 55.5% from 4.5 billion euros in 2024 and 2023..

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[Hitomi]

This. Competitive neutrality is the key from a regulatory perspective. The important thing is to get rid of the narrative that the government is both the referee and the player in the markets, stepping on the scale in favor of SOEs at the expense of POEs.

I am genuinely curious if you have a solution for this but if a private sector company fails it can keep coming back in a different form but if an SOE is approaching failure and the government does not step in to prop it up, is it gone forever? Should the SOE go private? Because I have seen cases of enshitification of services by the SOE that go full and semi-private.

Should the government reorganise the SOE? But that would sometimes involve a bailout and it would not be market neutral anymore?

Should the government instead nationalize the leading private company to an SOE and cut the previous one loose?

In a market neutral government position, wouldn't the SOE be in a disadvantaged position versus the private sector?

Of course we can all say that a good government would not lead to the SOE being in that position in the first place but failures will occur on a long enough timeline.

So what should the SOE get in return if China wants to maintain an SOE to do government directed developments that private players sometimes will not do? Or should China just keep opening new SOEs when the last one runs itself into the ground because the alternative is just to do away with full SOEs.

BTW I don't think there is anything wrong with market neutrality but it sounds like a buzzword with a lot more nuance in reality.

 

[abenomics12345]

I am genuinely curious if you have a solution for this but if a private sector company fails it can keep coming back in a different form but if an SOE is approaching failure and the government does not step in to prop it up, is it gone forever? Should the SOE go private? Because I have seen cases of enshitification of services by the SOE that go full and semi-private.

That is the point of a market, that there are winners and losers picked by those who are most competitive at delivering value to its customers. So called enshitification is a function of poor regulation and lack of competition, and less so who owns the entity. Last time I checked, SOEs operating during the Cultural Revolution also provided shitty services.

Should the government reorganise the SOE? But that would sometimes involve a bailout and it would not be market neutral anymore?

We've seen cases of SOE bankruptcies in China. Throwing good money after bad is generally not a great value proposition. You have to recognize that the role of government as a *shareholder* is different from the role of government itself. Two separate set of goals/objectives and ideally run by different branches of government.

Should the government instead nationalize the leading private company to an SOE and cut the previous one loose?

Absolutely not. If the government did that what it would be implying is that property rights are nonexistent.

wouldn't the SOE be in a disadvantaged position versus the private sector?

How so? Regulations (say, food safety standards) should be consistent across all market entities - why would the SOE be disadvantaged?

So what should the SOE get in return if China wants to maintain an SOE to do government directed developments that private players sometimes will not do?

Any specific examples?