Red Herrings: The CCP Needs Economic Reform, Not Revolution
The People’s Bank of China Headquarters in Beijing. Photo courtesy of the Max12Max (Wikipedia Commons).
In the last decade, China’s economy has faced an array of challenges, from geopolitical tensions to the real estate crisis, resulting in a clear stagnation in the growth of GDP per capita. To counter these economic woes, Beijing recently unveiled a major stimulus to revive the Chinese market. The People’s Bank of China (PBOC) has cut interest rates and lowered reserve requirements to increase liquidity and stimulate business and consumer activity. The central goal of this strategy is to enhance investor sentiment and create market momentum to address public concerns.
Liu Shijin, former deputy director of the State Council’s Development Research Center, has emphasized structural reform over the stimulus-based solution. However, debates over Beijing’s fiscal policy and an evaluation of the stimulus are incomplete without also considering the political and social ideals of the Chinese Communist Party (CCP).
The CCP is fundamentally a government that pursues revolutionary ideals politically and ideologically in order to align radicalism with public sentiment for growth and stability. The aggressive package is indicative of the CCP’s appetite for “permanent revolution,” the Maoist systemic ideology permeating all areas of Chinese life, and ultimately undermining economic success. Permanent revolution maintains that a persistent revolutionary fervor is essential for advancing toward utopian communism. In “Carry On the Revolution Through to the End,” Mao commands a dedication to “unswervingly persist in overthrowing bureaucrat-capitalism,” referring to the market, bureaucratic power-holders, and societal elites.
The CCP’s economic framework has been shaped by its revolutionary ethos, as its political strategies as a communist state with radical market influence must inherently also correspond to its economic policies. While President Xi Jinping's idea of revolution seemed to differ from pre-existing Maoist ideologies, it in fact mirrors a revival of permanent revolution with the centralization of the Chinese state and a reassertion of radicalism. Despite appearing as a revival of the Chinese economy, the stimulus passed by the PBOC is in fact a red herring and the latest indicator of Xi’s continuation of permanent revolution. The stimulus distracts from China’s dwindling economy, burdened by debt-driven growth, a struggling real estate sector, and a history of drastic policy shifts—from former CCP Chairman Mao Zedong’s Five-Year Plans to Deng Xiaoping’s market reforms and now Xi Jingping’s crackdown on private enterprise.
Though the economy appears to be working, continual reliance on rapid measures taken by the CCP, like its recent stimulus package, results in fiscal unsustainability and underscores the state’s inefficacy in addressing structural problems. In a country where living standards have only improved within the past 30 years, Beijing’s strategies are likely to remain widely supported and unchallenged. As long as citizens see tangible benefits, the government’s revolutionary policies remain appealing. However, below the surface, China’s economy shows cracks in its foundation, with middle-class families facing lasting post-pandemic insecurity. Despite the Chinese government’s pursuit of growth, its economy under Xi remains tethered to the ideology of permanent revolution—a framework that fails to calm the pressures of a rapidly evolving global and domestic landscape.
Though former Chairman Deng’s pragmatism spurred market reforms, marking a shift away from Maoist revolutionary policy, Xi promotes globalizing China’s socialism, integrating market-oriented practices to engage with the international economy, demonstrating his inclination to radicalism. Xi’s anti-corruption campaigns against members of the CCP and crackdowns against capitalists exemplify the survival of permanent revolution. Additionally, while Xi pursues economic power overseas, China is domestically marked by an ideological struggle for dominance. The Chinese president continues to “purge” (the practice of expulsion from the CCP to suppress political and ideological dissent) bureaucratic elites and critics of Chinese socialism, mirroring the political purges and radicalism of Mao’s era. The notion of a permanent revolution itself is dangerous, suggesting a constant state of aggressive overturn and radicalization in the name of innovation, and this surviving ideology directly translates into the CCP’s economic policies.
A constantly revolutionary economic policy means that China has a battered economic foundation that will be risky for building long-term growth. In order to be sustained, growth must build upon itself, rather than replace past developments with new ones—a process that destroys stability. The CCP’s stimulus package emphasizes revolutionary rhetoric to sustain public sentiment and confidence. Its reliance on state-led investment instead of change to market foundations means the stimulus acts as a bandaid to conceal the visual offense of a festering wound. To the CCP, the appearance that the economy is faring well is more important than curing the ailment.
While the stimulus may involve genuine, though short-sighted efforts to stave off recession, its ultimate function is to serve as a distraction; the CCP cannot afford for the public to see any cracks in its foundation. If public confidence in the Party’s ability to generate economic growth declines, the ideology of the Party as a self-proclaimed “vanguard” could be doubted. The success of the revolution is critical to the Party’s very legitimacy. Thus, the CCP actively works to provide short-term remedies and growth without the necessary long-term foundations for economic success. Consequently, policies such as the current stimulus are intentional distractions from a collapsing house of cards and part of a larger revolutionary wave under Xi to centralize control.
However, cracks are beginning to show in increasingly distressing ways. Disposable income growth has slowed down to 6.1%, in comparison to the 2000s when it grew almost 300% on average. The impressive growth achieved in the 1990s to 2010s can be considered a mirage precisely due to the fragile foundation of excessive and unequally distributed debt, property bubbles, and cheap labor exploitation—unsustainable strategies propelled by a government that has always been radical at its core. Beijing’s short-term approach is inherently unsustainable due to its heavy reliance on investment, an already-exhausted source of growth from the state, as well as the volatility of market and investor sentiment. Investment as a strategy calls upon generating momentum, which can be slowed or reversed based on external factors outside the control of the CCP. China's stimulus-driven growth, long reliant on short-term remedies, is hitting its limits with rising debt and diminishing returns as it nears parity with the West. Beijing’s recent stimulus package serves as a distraction from these systemic flaws and highlights the CCP’s pursuit of permanent revolution to maintain public support for the regime. The longer the CCP enables the illusion of sustainable growth, aligned with the idea of revolution, the more severe the burst of the bubble will be.
China holds huge significance on the global stage as an economic powerhouse, and more importantly as a communist government. Beijing’s radical approach impacts domestic education, civil repression, the tech sector, and international trade amid growing globalization and interdependence. When China’s economy succumbs to its systemic flaws, there is a high risk of international contagion through the global supply chain. The stimulus package, while presented as a solution to economic stagnation, is more so an illusion of revolutionary growth, underscoring the CCP’s exhausted reliance on state-driven intervention rather than systemic reforms to push dynamism and entrepreneurship in the private sector to provide more organic sources of growth. China desperately needs long-term, incremental policy, not a failing pursuit of the idea of eternal revolution.
Kaixi Catherine Zhang (BC ’27) is a staff writer at CPR studying political science and economics. She has a keen interest in U.S.-China relations and earth law, with aspirations to attend law school.