Skip to main content

center flag Hector Retamal/AFP via Getty Images

A Reckoning for the China Dream

Chinese policymakers may well have the wherewithal to prevent the crisis at Evergrande, the country’s second-largest property developer, from triggering a broader financial and economic meltdown. But whether they can successfully reorient China’s growth model is far less certain.

In this Big Picture, Columbia University’s Shang-Jin Wei urges the Chinese authorities to make it clear that they will do what is necessary to contain potential spillovers from an Evergrande default. But even if this reassures nervous financial markets, says Kenneth Rogoff of Harvard University, the larger challenge facing policymakers is to rebalance an economy that has depended for too long on a bloated real estate sector.

And on this front, China may be headed in the wrong direction. Stephen S. Roach of Yale University fears that President Xi Jinping’s regulatory clampdown and “common prosperity” campaign will subdue the entrepreneurial activity that has been key to China’s private-sector dynamism over the past four decades. The University of Chicago’s Raghuram G. Rajan agrees, warning that China’s lack of political checks and balances heightens the risk that Xi’s business crackdown may go too far.

Drawing parallels between today’s China and late-nineteenth-century America, Yuen Yuen Ang of the University of Michigan explains why Xi is determined to take China out of its current decadent Gilded Age and into its own era of progressive reform. But Northwestern University’s Nancy Qian recalls that while decisive political leadership has often served China’s progress, the consequences can easily prove calamitous when policymakers get it wrong.

Featured in this Big Picture

  1. Shang-Jin WeiShang-Jin Wei
  2. Kenneth RogoffKenneth Rogoff
  3. Stephen S. RoachStephen S. Roach
  4. Raghuram G. RajanRaghuram G. Rajan
  5. Yuen Yuen AngYuen Yuen Ang
  6. Nancy QianNancy Qian

To continue reading, register now.

Subscribe now for unlimited access to everything PS has to offer.


As a registered user, you can enjoy more PS content every month – for free.


Edit Newsletter Preferences

Set up Notification

To receive email updates regarding this {entity_type}, please enter your email below.

If you are not already registered, this will create a PS account for you. You should receive an activation email shortly.