Staunton, April 25 – Because of its mistaken beliefs about the success of the Chinese economy, Vladimir Putin and his regime have decided to copy Beijing’s approach to the economy as a means of coping with increasing sanctions, Yevgeny Gontmakher says; but the Kremlin is doing so as China is being forced to change them.
The Moscow economist and commentator says that despite some continuing debate, Moscow has decided to impose “harsh state control” over all strategic industries while allowing “small business” relative freedom, a policy that copies what China has been doing for some time (rosbalt.ru/business/2022/04/25/1954905.html).
But because of slowing growth, enormous structural problems, and “an extremely ineffective state sector” in the economy, Beijing is now confronted with the choice the USSR was at the end of NEP at the end of the 1920s with some Chinese favoring liberalization as Nikolay Bukharin did and others calling for expanded totalitarianism as Stalin favored.
Gontmakher says that both their own experience and the strength of private enterprise in China make it unlikely that Beijing will choose the Stalinist alternative. And if Putin goes ahead with copying China’s current approach, he may soon find himself to confront the same choice and even make the same decision.
Among the reasons for reaching that conclusion, the economist says, is that even with some freedom, small businesses in Russia are going to die because of collapsing consumer demand as personal income falls and because there is little prospect that the state will subsidize them as it does major enterprises.
Thus, Russia’s adoption of the Chinese model is unlikely to last very long, Gontmakher says; but whether the Kremlin will then choose what Bukharin recommended or what Stalin in the event imposed is something that at present “only God alone knows.”