The command economy model is a component of the Communist political system contrasting to that of a free market economy in a capitalist political system. In a comman

The command economy model is a component of the 

 political system contrasting to that of a free market economy in a capitalist political system. In a command economy model, there is always a central authority that decides the level of output to be produced, and the level of prices that are to be charged for goods and services. 

China maintained a command economy until 1978 when during Deng Xiaoping’s tenure, it began its transition to a model of mixed economy which accommodates both the communist as well as capitalist elements. 

But President Xi Jinping seems to be undoing the ‘Chinese Miracle’ which made it the second largest economy in the world. Most of Xi Jinping’s flagship policies have had a damaging effect on the economy.

 policy against the Covid outbreak hurt the consumer confidence and business reliability of the economy. There is a crisis in the housing market which constitutes around 30% of the economy and is a major source of jobs and wealth creation. Additionally, the youth unemployment rate in China is a staggering 20% and is an after-effect of the administration’s crackdown on fast-growing industries under the aegis of more responsible development.

The authorities came down hard on private companies in a major push to curb excessive borrowing by private companies in 2018. In stark contrast, the state-owned enterprises, called “an important pillar and strength for our party” by President Xi were left out of the regulatory loop of debt.

There are 3 reasons that can be attributed to such a change in policy.

 is convinced that the industries cross-haired for state support are too important to be left out to the unpredictable markets in a tumultuous international economic scenario.

Second, the change in policies could be motivated by insecurity and distrust in the concept of ‘integration with the global economy’, especially after a change of stance from Washington.

Lastly, it might be a dry run before the implementation of something that President Xi calls “dual circulation” splitting Beijing’s economic perspective twofold. Therefore,  hinting at intensified stress on strengthening the domestic economy against a potentially hostile environment on the contrary to fused domestic reform with globalisation back in the day.

President Xi's Command Model Economy

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