China's economic reforms will go forward rather than backward

Comments on Peter Drysdale "Back to the future in managing the Chinese economy?" 24/08/2015

China is unlikely to go backward in terms of it economic system and management, although its approach to its political situation may be very different with tighter control along the its way to a destiny that is unknown at this stage.

China has benefited enormously from its economic reforms from a command economy to a market economy and through its opening to the outside world through economic integration with the international economy.

Its leadership team, no matter what some of their personal thinking, is unlikely to risk its legitimacy in governing the country by going back to the command economic system. The stakes are too high and the price would be too greater not only for the ordinary Chinese, but also much more for the leadership to do that. China is irrevocably integrated with the international economies and there is no possibility of return to its pre-reform era economic system, irrespective what the productivity of the previous era.

That, however, does not mean that China’s institutions will move in the direction of the US’s of any time soon, particularly its political system.

The interventions in its stock markets and the reactions to the fall of Chinese currency or more than 3% indicate the immaturity of the Chinese authorities in managing financial markets and exchange rate regime rather than a return to a command economic system.

Notwithstanding that, the general trend of economic liberalisation to market driven is clear and there is no point to go back and no point for people both inside and outside China to worry about a potential return to the previous economic system.