CHANG-TAI HSIEH
Over the last two years, China has cracked down on some of its most successful companies, including Alibaba, Tencent, Didi, and Meituan-Dianping. Starting in 2018, the authorities have also restructured many of China’s largest conglomerates such as the Wanda and Evergrande groups. The conclusion many have drawn is that China’s decades long embrace of markets and private enterprise is coming to an end. Yet over the same period, China has also quietly enacted a large number of business-friendly reforms, aimed at reducing red tape for small- and medium-sized firms, making it easier for them to raise capital, and smoothing their access to the country’s legal dispute resolution processes. This apparent contradiction in China’s policy direction — an ongoing crackdown on the largest Chinese firms combined with strong support for smaller private firms — in fact reflects the Communist Party’s dual objectives: retaining total control while still allowing the private sector to
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