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China could grow at roughly 8 percent a year for another 5 or 10 years if its leadership continues the economic reform process of reducing the role of state-dominated industries, according to Nicholas R. Lardy of the Peterson Institute for International Economics. Discussing his book Markets over Mao: The Rise of Private Business in China in a video [link] posted by Chatham House, Lardy explained that while the private sector is the major source of growth in China, state sectors remain dominant in such sectors as oil and gas, finance and telecommunications.
The anti-corruption campaign led by President Xi Jinping can be seen in part as an effort go after the protected, oligopolistic state firms, Lardy says. Should that campaign succeed in opening up state-protected sectors to further competition, the potential for rapid economic growth based on improved efficiencies and productivity gains remains high in China. Lardy explains that the anti-corruption campaign is directed at weakening vested interests that protect the state-dominated sector. He said he does not subscribe to the pessimistic camp holding that China’s remarkable record of growth of the last decade or more is bound to subside. But he said that if economic reform efforts are blocked or reversed, the risk is that China’s economic performance will lag.
