Birdcage Economy: Who Holds the Strings of China’s Economy?

The growing tension between the CCPChinese Communist Party (CCP) and the Chinese private sectorPrivate sector, coupled with the CCP’s extensive economic intervention, has sparked concerns both within China and around the world. This chapter aims to unpack the origins of this enduring tension by examining China’s unique historical and geographical contexts. It argues that a primary cause of the tension stems from the deep-rooted mistrustMistrust (against the private sector) towards businessmenBusiness leaders/businessmen and capitalistsCapitalists, who are perceived as rivals to the state in competitionCompetition for power and the decision-makingDecision-making process of ‘who gets what, when, and how’. Consequently, the Chinese regime can only conditionally accept private sectorPrivate sector growth and the organic development of market conditions to the extent that it does not jeopardise political and social stabilitySocial stability. This chapter contributes to the ongoing debate on state interventionState/government intervention (economics) and state-owned enterprisesState-owned enterprises (SOEs) by offering an interpretation through the ancient Chinese concept of Yin-yangYin-yang (concept), emphasising the importance of incorporating negative feedback loopsNegative feedback loop to achieve equilibrium between opposing ideas, instead of prioritising and optimising one extreme, thereby averting any radical outcomes.