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Not a Model

Obama’s inexplicable admiration for China’s infrastructure policy.

Mar 24, 2014, Vol. 19, No. 27 • By YING MA
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The broader irony is that Obama is expressing admiration for China’s state-directed government spending at a time when the Chinese leadership has pledged to undertake market-based reforms. In recent years, Beijing has repeatedly criticized its own growth model as overly dependent on exports and government investment, and has indicated an eagerness to tolerate slower growth in order to shift the economy to one that is based more on consumption.

Last November, the Chinese leadership clarified its intentions by issuing a communiqué and an agenda for reform after a major Communist party conclave. The documents emphasized the need to reduce the role of government and allow the market to play a “decisive role in allocating resources” in the economy.

Immediately afterwards, Chinese president Xi Jinping issued a long accompanying explanation in which he wrote, “Theory and practice have both showed that market allocation of resources is the most efficient.”

These pronouncements do not make the Chinese leadership free-market defenders or even liberal reformers keen to undertake further privatization of China’s powerful state-owned sector. In fact, in the reform documents issued last November, the Chinese Communist party could not actually bring itself to acknowledge the private sector by its proper name and instead repeatedly referred to it as the “non-public ownership economy.”

Yet as economist Barry Naughton of the University of California, San Diego, recently observed, “I think that Xi Jinping is not interested in privatization at all, but I do think that he accepts that private businesses are more efficient and will out-compete state firms in most parts of the economy.”

For President Obama and his domestic agenda, this narrative is not at all convenient. The president’s detractors have always found his enthusiasm for the free market to be limited and his love for the expansion of government unbounded. He would much rather paint a China story that suits his political purposes than recognize the nuanced reality of the second-largest economy in the world.

Extolling the market as the most efficient allocator of resources or calling for a reduction in the role of government in the economy is something that few would expect Obama to do. The president should not be surprised, then, that even though President Xi is the general secretary of the Chinese Communist party, Obama is the one more commonly known to his critics as a socialist.

Ying Ma is the author of Chinese Girl in the Ghetto, a politically incorrect memoir, and the host of China Takes Over the World, a radio show. 

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