What's Broken About China's Economy | Meg Rithmire

The Chinese Communist Party’s relationship with private enterprise follows a recurring cycle of accommodation and reprisal, forcing businesses to prioritize short-term political alignment over long-term productivity. This dynamic, coupled with the state’s shift from real estate-led growth to massive, often inefficient, industrial policy, has created a landscape of "zombie firms" that generate technological outputs without sustainable profits. While these systemic distortions fuel corruption and financial instability, they also produce highly competitive entities in sectors like electric vehicles and biotechnology. Rather than relying on binary choices between blanket bans or total market integration, U.S. policy should adopt a more nuanced regulatory framework. By mandating localized supply chains and rigorous monitoring, the U.S. can leverage Chinese technological expertise to bolster domestic industrial capacity while effectively managing national security concerns and mitigating the risks of unchecked economic entanglement.