Since China's economic reforms of 1978, policymakers have managed to strike a balance between accountability and innovation. However, the current government seems to be intent on making all companies and organisations much more accountable to the centre—without providing any rewards for successful innovation—this could have profound implications for China's growth prospects.
This article by Zhang Jun, writing for Project Syndicate, makes the following points:
- In January, China forecasted its economy to grow by 5.5% in 2022.
- By the second quarter of 2022, however, the spread of COVID-19 had forced the government to implement emergency containment measures in its most economically dynamic cities.
- Even if foreign and Chinese investors still have faith in the Chinese economy’s long-run prospects, many have become cautious about doing business there.
- Due to the fear of the consequences of failure, many local government officials have failed to adopt innovative pandemic-related policies.
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