AmCham China and the Carnegie-Tsinghua Center for Global Policy on Sept. 19 hosted Nicholas Lardy from the Peterson Institute for International Economics for a lunchtime presentation to discuss his newest book, Markets over Mao: The Rise of the Private Sector in China. The book traces the increasing role of market forces and refutes the widely acknowledged argument that Chinese economic progress rests on the government's control of the economy's commanding heights.
- Lardy argues that contrary to the conventional wisdom, every dimension of China's economic success over the last 30 years can be attributed to private markets and private business. This of course runs contrary to the common wisdom that China’s form of state capitalism is what led to China's rise.
- The significance of the private sector and its ability to produce goods and create jobs is underestimated.
- The basic story of the rise of the private sector is that they have higher return on assets, higher retained assets, they invest more efficiently, and they grow faster than SOEs.
- It is a misconception to think that the state dominates everything.
- Moving forward, it is imperative that the market plays a more decisive role in the allocation of resources in the Chinese economy.