Pudong financial district, Shanghai 2019 © Connor Dorrell-Shepherd

A walk through the high streets of any tier one Chinese city seemingly confirms the notion of Chinese wealth. An abundance of designer brands barely seen in most western capitals, an impressive skyline and all the trappings and variety of a thriving market economy would give even the most cynical observer the impression of prosperity. Upon seeing Shanghai’s state-of-the-art skyscrapers lining newly built motorways, one would be forgiven for forgetting that just 30 years ago most of the city’s riverbanks were home to farmland and slums (seen in the photo below). As such, the rise of China as the leading global economy is often cited as assured. Now, as the rest of the world grapples with the economic fallout of the COVID-19 pandemic, and China begins to quietly assert itself as the main economic powerhouse on the world stage, the given impression is that China’s finances know no limits, and that their economic growth is unstoppable. However, China’s duel socialist-market economy is, by the admission of President Xi Jinping himself, “unsustainable” in its current state, with rising levels income disparity, debt and unemployment posing serious potential challenges to the country’s stability. Therefore, this raises the question, how long can China’s economic growth continue under communism?

Conversely to the bureaucratic divisions, economic troubles and failed reforms which produced the demise of the Soviet Union in 1989, China has enjoyed rapid economic growth since the late-1970s.

Revolutionary spirit and class-struggle may have been the Chinese Communist Party’s (CCP) focus during the tenure of Mao Zedong, but it was economic growth which became CCP main survival strategy after his death.

GDP growth became a “hard target”, and a growth rate of roughly 10% per annum became the norm until 2007, but, since the 2008 financial crash, this rate has greatly slowed. The growth of china’s market economy has come at a price, with both personal and business debt placing a serious burden on China’s banking system. A recent study conducted by the Institute of International Finance shows that China’s “government, corporate and household debt” exceeded 303% of GDP in 2019. Whilst this might not directly have an impact on the regime’s immediate credibility with the public, the effects of tackling this decline could provide a serious challenge to the party’s legitimacy.

26 Years of Growth: Shanghai Then and Now 1987–2013 © Reuters/Stringer, Carlos Barria

Roughly 65% of China’s debt is corporate, with around 75% of that belonging to state-owned enterprise. However, despite this, the private economy generates over half the country’s tax-income. As such, one major solution to China’s looming debt crisis would be to further privatise their economy by selling off unprofitable state enterprise to private investors or shutting them altogether. However, China’s planned economy has historically delivered high employment by maintaining state-run businesses which consistently run at a loss. Aside from the clear problems further privatisation would cause the Chinese government’s “communist” image, it would also greatly decrease China’s already shrinking employment rate, as private owners would undoubtedly introduce mass layoffs as a way of cutting costs.

China is at a global crossroads. A trade-war with the United States, border conflicts with India, and rising international tensions as a result of Hong Kong’s new security laws indicate that China intends to further isolate itself from international diplomacy. However, the international aid they have provided during the COVID-19 pandemic suggests that they continue to have ambitions of outstripping the US as the world’s number one superpower. To do this the government will need to maintain the economic growth which has kept them in power since the early 1940s. But, as the Chinese Communist Party enters its 72nd year in government, the reality of maintaining public confidence whilst also growing their economy, is proving difficult.


Dickson, B. J. (2017) ‘The survival strategy of the Chinese communist party’, Washington Quarterly. Taylor & Francis,

Wu, Y. and Zhu, J. (2011) ‘Corruption, anti-corruption, and inter-county income disparity in China’, Social Science Journal. Western Social Science Association, 48(3), pp. 435–448

Parton, C. (2020) ‘Foresight 2020: The Challenges Facing China’, RUSI Journal

Riotta, Christ (2020) ‘Coronavirus: China Investing millions in WHO to make up for Trump cuts and boost its influence, officials say’ The Independent Online, 24 April.

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Advocate of good meals, laughs and evidence. Everyone’s a poet. Not everyone is a good one.

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Connor Dorrell-Shepherd

Connor Dorrell-Shepherd

Advocate of good meals, laughs and evidence. Everyone’s a poet. Not everyone is a good one.

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