Chinese capitalism
There is a long running economic and political theory that capitalism cannot prosper without democracy. Rights, freedoms and laws that are democratically decided on and reliable are essential to business. China has been testing that theory for decades now but the jury is still out on whether it can prosper without freedom.
The latest clamp down on education and high tech businesses sent shares plunging, with the Communist Party announcing a new 5 year plan to control businesses and probably most importantly business leaders.
Like all authoritarian regimes China’s government does not fear profits but it is terrified of power. Power that is held by anyone else but it, is a threat to its very existence and must be crushed.
The Chinese economic miracle will not end as a result of this but it must to some degree by curbed. Which business leader will question the state? Who will invest ever more money in China? Why not spread the risk by investing abroad? Who will keep all their money in China? Who will prepare a bolt hole abroad? Who will try to second guess the next government restrictions? Which foreign investor will now think again about where their money is safe?
Capitalism does not work if you fear the government will steal your money, end your business model, arrest you and change the very rules of economics; in order to keep you down.
China’s attempts to become the world’s leading economic super power have clashed with the Communist Party’s obsession with controlling every lever of power.
The Communist Party is winning.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.