Amplified State Capitalism in China: Overproduction, Industrial Policy and Statist Controversies

Abstract

As China has emerged as a great economic power in the 21st century, comparativists and China scholars have sought to explore the characteristics of China's statist development model. Most accounts, however, have not taken seriously the policy implications of China's macroeconomic imbalance and its tendency to overproduction since the mid-1990s. This article examines China's industrial-policy-centred responses to waves of overproduction crises from the late 1990s to the 2010s. China's expansive industrial policy incorporates demand-side macroeconomic policy and long-term planning for upgrading. This policy framework, designed to preserve the status quo, has been inherently lopsided, and has only served to reproduce China's macroeconomic imbalance. In the context of this persistent imbalance, China's industrial-policy-centred responses have contributed to periodic investment expansion of the state sector relative to the private sector, deepening ambitions around upgrading, and growing controversies regarding its statist model. In short, the statist features of China's economy have been periodically amplified by its particular responses to overproduction. This research shows that far from a statist shift engineered by President Xi Jinping, China's recent statist tendency has deeper historical and structural-macroeconomic roots. This implies that the Chinese state adjusted and intensified its state interventions just as it underwent a profound process of marketization in the late 1990s.