When Xi assumed leadership of China, he declared that inequality could not be allowed to increase further. Inequality is perhaps the major Kryptonite factor of the American economy which China wasted no time in matching as the economy roared with market reforms. While still problematic, inequality, as measured by the Gini coefficient, has steadily fallen since 2010 largely as a result of massive investment in urbanization, pushing people into cities and pushing cities up the tiering ladder. Today, it would not be strange to consider Chengdu, Chongqing and Hanzhou first-tier cities and peers of Beijing, Shanghai, Guangzhou and Shenzhen. Tier-two cities like Xiamen, Kunming and Suzhou are often considered more livable and trendy in their own quirky ways. Dark-horse cities like Hefei and Ningbo have exploded out of nowhere to become rising tier-two stars. With the installation of high speed rail, tier-three cities like Dali, Lishui and Zibo compete to become the next “it” tourist destination. China also poured resources into stamping out last-mile poverty. While most poverty alleviation in China was through economic growth, recalcitrant extremely poverty could only be eradicated by concentrated marshaling of resources, from relocating entire villages to weekly visits by social workers.

In 2015, journalist Chai Jing produced the documentary Under the Dome and released it online. The documentary, in the style of Al Gore’s Inconvenient Truth, was a polemic against China’s ghastly air pollution. The impact was seismic. Fortunately for the rest of China, Beijing’s geography, a basin surrounded by mountains, is notorious for trapping smog. Out of sight, out of mind was never going to work – senior leadership got to enjoy some of the most polluted air in China. Since peaking in 2012, air pollution in Beijing has been cut by over 60%, with Shanghai falling over 50%. China, which used to dominate the list of most polluted cities, now only claims one spot in the top 20. None of this came cheap, from installing scrubbers in smoke stacks to increasing renewables to moving heavy industry to strict emissions regulations for cars.

During the Great Leap Forward and Cultural Revolution, economic planners theorized that ideological fervor could substitute for material inputs like labor and capital. It worked better in theory. In recent decades, as ideology took a back seat to economic growth, long-brewing problems became existential. Before Hu Jintao handed the reins to Xi, Hu warned delegates to the 18th Party Congress in 2012 that “[corruption] could prove fatal to the party… and [cause] the fall of the state.” The popular opinion in the West is that Xi ended China’s highly successful reform era because of an ideological bent. This is off the mark. Xi was brought in to clean house as the wheels were coming off from excesses of the reform era. Throughout Xi’s decade in office, there has been no letup in his anti-corruption campaign. In 2022, a record 638,000 officials were punished for corruption. While there haven’t been any large scale ideological appeals to the public, it’s a different story within the 98-million-member party. During this time, free market capitalism and liberal democracies also faced their own existential tests. Success or failure going forward will depend on whether liberal institutions remain intact in the West and whether party discipline can be maintained in China.

What the PRC has had since 1949 is a governing party with the political autonomy to play mad scientist. In comic book world, whenever mad scientists try to create the ultimate superhero, things tend to go awry. Deadpool isn’t exactly what his creators had in mind. Serpentor turned out to be a bust. The only success, which we attribute to wartime propaganda, appears to the be Captain America. Of course we live in the real world, not a comic-book world. The question in the real world has always been whether the economy can be engineered by mad scientists from the top down or is it best left to the invisible hand of the market? The conventional wisdom on this has been problematic. The standard economic opinion – against all evidence – is that China was economically stagnant before Deng’s market reforms. The thinking on this for the American economys is undergoing a transformation in egghead land – just how has neoliberal economics benefitted the American people over the past few decades?

In a Q&A exchange at a conference in Malaysia, Eric Li, the barbed-tongued venture capitalist, was asked, “Do you think top-down directives are sustainable in the long run?” To which he replied, “It’s the only thing that’s sustainable.… That’s why America is failing today.” After World War II, Li said, the Americans “lost the ability to do top-down design.”