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China in a hard pivot to more supply-side reforms

Ten years ago, when China’s leader first took power, Xi Jinping pledged to let market forces play a “decisive” role in economic policy and financial regulation. At the time, and since, foreign investors assumed that meant the government would set the private sector free.

Yet a decade on, Xi is now making an argument few saw coming: the key to making China more resilient and productive via bold supply-side reforms isn’t less Communist Party control – it’s more.

It’s not what international investors expected at this week’s National People’s Congress, but might it just work?

Michael Pettis, finance professor at Peking University, wonders if Xi’s pivot might be a gamble in which the end result of greater central control could justify the means.

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