The future of the Chinese Miracle: Will neo-statist SOEs persist in China's development model?

Development theorists have long debated the economic role of the state. With regard to contemporary China, this debate has been manifested in the opposition between neo-liberal and neo-statist paradigms, in particular the role of state-owned enterprises (SOEs) in the Chinese economic ‘miracle’. Neo-liberals, especially the Western financial media, have portrayed these enterprises as dinosaurs, restricting rather than contributing to economic development. However, the success of the state policies of zhua da, fang xiao (‘grasp the large, let go of the small’) and the move to ‘Go Global’, as well as the successful resistance to both the Asian Financial Crisis and the recent Global Financial Crisis, means that state-owned industry has remained central to China’s ‘miracle’ growth and trade policy. Though more nuanced than popularly presented, the issue remains: will these SOEs survive China’s future transition to demographic deficit and slower economic growth? We predict that they will.