(MENAFN- Asia Times)
It has become fashionable among Western commentators to predict the decline of China's economic“miracle.”
Slowing growth, a troubled Real estate sector and demographic shifts are regularly cited as evidence of the malaise. Tensions with the United States – especially under the past two administrations – have further fueled this narrative.
Yet the picture is far more nuanced. Under President Donald Trump, Washington has so far avoided the most sweeping tariffs and measures that his campaign rhetoric suggested were a done deal.
However, three days before his inauguration, trump remarked:“I anticipate that we will address numerous issues together, starting right away. We talked about trade balance, Fentanyl, TikTok, and various other topics. President Xi and I will do everything we can to make the world more peaceful and secure.”
These comments suggest an implicit recognition that China's economy is evolving, not collapsing – and that the United States, despite its rhetoric, understands Beijing's structural shifts.
State-led growth to private-sector dynamism China's early success was indeed driven by export-led manufacturing and state-owned heavy industry. Today, more than 65 of the 69 Chinese companies on the Fortune Global 500 are state-owned.
In recent years, Beijing has pushed for SOE mergers to bolster“national champions,” especially in strategic sectors. At a glance, such actions might reinforce the narrative of state dominance.
Yet the ground is clearly shifting. In the late 1990s, state-owned enterprises (SOEs) accounted for more than half of China's industrial output. Today, they produce roughly 30%. Private firms have become the economy's engine of job creation and efficiency gains.
Private companies now contribute more than 50% of tax revenue and over 60% of GDP. Consumption, long overshadowed by investment and exports, has risen in importance – from 35% of GDP a decade ago to nearly 55% by 2023.
New policies bolster private players by offering greater access to scientific infrastructure and improved financing channels. The objective is clear: preserve strategic state oversight while harnessing the dynamism of the private sector.
DeepSeek: innovation with Chinese characteristics An exemplar of this private-sector dynamism is DeepSeek, founded by hedge fund manager Liang Wenfeng. The company recently unveiled its R1 large language model (LLM), a groundbreaking AI system developed on a relatively modest budget.
DeepSeek's trajectory challenges the notion that Chinese firms rely solely on state-driven innovation. Its story instead highlights the private sector's capacity to overcome domestic hurdles and external restrictions alike.
Lessons from early US-led AI breakthroughs steered DeepSeek toward an innovative path that diverges sharply from Western norms: the company developed novel training methods and“pure reasoning capabilities” without any supervised data, all while rejecting the typical model of massive resource investment seen in America.
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