Could coronavirus threaten China’s shift towards market economy?

Could coronavirus threaten China’s shift towards market economy?

The Chinese state’s increased role in economic activity in the wake of the Covid-19 pandemic is threatening the country’s move towards a market-oriented economy, a government adviser has warned.

Peng Sen, a former deputy head at the National Development and Reform Commission, told a forum hosted by Renmin University in Beijing that China is only halfway to creating a market-based economic system, adding that the coronavirus and tensions with the United States are pushing the government back towards a command economy.

Peng said China’s use of state directives to mobilise resources has increased the perception that “the state’s hand is more effective, more powerful and more reliable [than the market]”.

“As a result, government intervention in economic activities has been enhanced, there are myths about the advantages of a ‘whole country’ approach and the market system has been belittled,” Peng, who is now the president of the China Society of Economic Reform think tank, said.