Comment

December 18, 2018,marked the fortieth anniversary of the Third Plenary Session of the Eleventh Central Committee of the Chinese Communist Party (CCP), at which Deng Xiaoping launched China on its remarkable recent trajectory of economic growth. By giving greater play over time to market forces, Deng’s reform and opening initiative spurred rapid income convergence. But it did so while preserving the CCP’s political monopoly. As figure 1 shows, China’s real gross domestic product (GDP) growth (insofar as the official data are accurate) has been high on average although anything but smooth. Moreover, it has declined markedly since the last year of double-digit growth in 2010 and even more so since the heady precrisis peak. China’s politics have not evolved monotonically either. The year 2019 marked the thirtieth anniversary of the Tiananmen protests, sparked by the (vain) hope that China’s economic evolution would encourage a commensurate political evolution. Chinese politics—and, I argue, economics— have only regressed under the more authoritarian rule of President Xiaoping Xi. In this paper, Chong-en Bai, Chang-Tai Hsieh, and Zheng Song likewise link China’s falling growth rate over the past decade to political factors, but I emphasize a set of factors different from the one that they highlight. What mechanism linking politics to growth do the authors emphasize? In his speech commemorating the fortieth anniversary of Deng’s reforms, President Xi stated that “we will resolutely reform what should and can be reformed, and make no change where there should not and cannot be any reform.” An alternative title for this paper could have been “Chinese Cronyism: Can It Be Changed? Should It Be Changed?” The authors’mainmessage is that cronyism is deeply ingrained inChina’smode