Private Companies Are Driving China's Growth
But here's a quiz: What share of China's gross industrial output will come from state enterprises this year? I have tried this question on friends, even knowledgeable economists, and the responses I hear fall between 50 percent and 75 percent. The correct answer is only about 25 percent, a big drop from more than 75 percent in 1978.
In his important new book, "Markets over Mao: The Rise of Private Business in China," Nicholas Lardy of the Peterson Institute for International Economics assembles statistics like this to demonstrate that our image of state capitalism in China is dated and wrong. Lardy's central thesis is that "private firms have become the main source of economic growth, the sole source of increasing employment, and the major contributor to China's growing and now large role as a global trader." (Disclosure: I am on the board at the Peterson Institute.)
Lardy is a careful, soft-spoken scholar of China, not given to overstating his arguments in the hope that strength of conviction can make up for lack of evidence. But he pulls no punches in attacking prevailing assumptions about the Chinese economy.
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