He's back! (Visual China Group via Getty)
In his glory days, Jack Ma, billionaire founder of Alibaba, was hailed as the embodiment of Chinese innovation. The young and online christened him “Daddy Ma”, and dreamed of emulating his rags-to-riches life story — from a humble English teacher to a self-made tycoon. He was a symbol of all that could be achieved within China’s emerging private sector.
Then, in 2020, everything changed. The outspoken CEO criticised aspects of the Chinese Communist Party’s policy during a speech in Shanghai. Soon after, he disappeared from public view, in the 21st-century equivalent of the Cultural Revolution’s practice of sending big-headed officials to farms in remote provinces. It was all part of Xi Jinping’s “Common Prosperity” drive, which was intended to check the mushrooming powers of China’s tech oligarchs.
But last week, to the surprise of many, Jack Ma re-surfaced at a business summit hosted by Xi. There he was, clapping away, after five years of exile. The summit itself was the first of its kind in six years, and included more tech entrepreneurs than the previous one. Although the star of the show was DeepSeek founder Liang Wenfeng, Ma’s reappearance seemed to indicate that the chill was over, and that the Party was willing to play with the oligarchs once more. After Xi reminded them that they were to “actively fulfil social responsibilities” and “promote common prosperity”, reports in official media suggested that the government wanted to support the private sector’s expansion.
For years China has been in a slump. Ever since the government-engineered deflation of the real estate sector hit households hard, most Chinese have reined in their spending. This has slowed down its rapid convergence with the US economy, with some suggesting that the country may never catch up. Western analysts tend to conclude that the Chinese economy is saddled with structural deficiencies that may block it from ever becoming a global powerhouse.
But perhaps they’ve misjudged the CCP’s motives, failing to see that the setbacks may not result from policy errors but from deliberate plans. Puncturing the real estate bubble — painful though that has proven to be, since property remains the main savings vehicle for Chinese households — formed part of Xi’s strategy to reallocate resources towards “high-quality” growth, in particular in emerging tech sectors like AI and renewable energy. The Chinese leadership appears to have traded quantity of economic output for quality, with the idea that re-orienting resources to emerging sectors will serve the country better in the long run.
Judging from recent activity in the markets, the strategy may well be working. Although structural problems continue to beset the Chinese economy — including a deflated property market, weak consumption and an excessive reliance on manufactured exports — reports suggest that it may now be turning a corner. Over the New Year holiday, train travel and movie attendance set new records. And while real estate prices are still stagnating well below their 2020 peaks, the market may now have bottomed with activity in Shanghai starting to heat up again.
Meanwhile, the global winds may now be blowing in China’s favour. Since the DeepSeek breakthrough, money has begun flowing out of the US. The Magnificent Seven, which had previously powered the US stock market to a record share of total capitalisation, have now started to slide, and the US market as a whole has hit a plateau. In place of the Magnificent Seven are China’s “Terrific Ten” tech stocks, which since DeepSeek’s “Sputnik moment” have powered the Hang Seng index to a double-digit surge. If this continues, Chinese households may soon feel they can afford to finally loosen their purse-strings.
Arguably, Donald Trump’s policy turns are inadvertently strengthening China’s momentum. Having abandoned Joe Biden’s plans for a renewable energy transition, Trump’s administration has left one of the world’s fastest-growing sectors to Chinese producers. Its renewable energy and EV companies are aggressively expanding sales in almost all markets, most significantly in rapidly growing developing-country markets, and the effect is already showing in their share prices.
With sales slumping, Tesla had pinned all its hopes on its forthcoming automated driving feature. Then, out of the blue, China’s BYD introduced its ‘’God’s Eye” driver-assistance feature for free in all its cars. If the competition between these two auto giants is anything to go by, the global centre of technological dynamism appears to be shifting. Whereas Tesla’s stock is down some 16% in the last month, BYD’s has risen by more than 40%.
It appears the Chinese leadership is now trying to sail into these tailwinds, with the rehabilitation of Jack Ma being a powerful symbol of its new openness to business, and particularly to tech entrepreneurs. Following last week’s summit, the central bank announced it would be implementing measures to make it easier for Chinese firms to obtain capital. And China has for months been talking of some major stimulus for the economy. But while there have been some tentative steps in this direction, we’re still awaiting a big announcement.
A key moment will probably come next week, when China holds its “Two Sessions” meeting of both the National People’s Congress and the Chinese People’s Consultative Congress, at which the government is expected to elaborate on the stimulus measures it announced late last year. If the Communist leadership is serious about supporting business, this would be the obvious moment to make it clear.
While China is aggressively expanding its trade ties and diplomatic presence around the world, the US is pulling up the drawbridge. Crucially, America is aping the old Chinese model in a manner that could prove self-destructive. Traditionally, China has been considered less investable than the US because it’s run by a party that can clamp down on business at any moment, unlike the free-market and institutionally-stable West. However, the US is now run by a fickle oligarch who changes policy on a dime. At least in China one can discern a strategy — namely, the survival of the Communist regime — whereas in the US, it’s unclear whether Trump has an actual plan, or whether he’s motivated entirely by whims and Tweets.
The apparent Chinese approach of engineering a downturn to weed out low-quality activity and then re-orient resources to dynamic sectors is hardly groundbreaking. Although the dominant neoclassical theory of economics generally regards any fall in output as a sign of economic ill-health, less orthodox schools such as the Austrians have always seen recessions as necessary to the process of renewal – a moment of creative destruction. In fact, one could argue that’s precisely what Elon Musk is trying to do with his DOGE experiment: induce a recession by dramatically cutting government demand, in the hope a more innovative private sector will then be free to pick up the slack.
Yet the similarities between the Chinese and American approaches probably end there. The Trump and Musk approach, which focuses on deregulation and tax cuts, will probably lead to greater capital concentration. Already, it’s entrenching the power of oligarchs, particularly those from the tech sector. China, by contrast, has reminded its oligarchs who is boss.
In the Seventies, there was an arcane Marxist debate about the character of the state in capitalist societies. The instrumentalists believed the state was controlled by the capitalist class which used it to advance its business interests, while the structuralists argued the state ruled in the best interests of the class when it had the relative autonomy to implement policies which, if harmful to individual businesses, were good for the economy. China might just be the archetypal autonomous state presiding over a pastiche capitalist economy, whereas the US is now run by businessmen using the state as an instrument to advance their version of capitalism. Which model is superior remains to be seen. But investors, previously all in on America, are now hedging their bets.
John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a religion (Simon & Schuster, 2017).
jarapley 
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
SubscribeJack Ma…Michael Jackson impersonator?
“Trump’s administration has left one of the world’s fastest-growing sectors to Chinese producers”
Does China have domestic demand for EVs?
The West is running out of wealthy virtue signallers. The only thing that has propped up the “renewable” sector is government incentives.
If Trump pulls the plug on those, and European leaders follow suit, Western manufacturers can pivot back to combustion vehicles, where they still have the advantage.
China’s batteries, motors and turbines could rapidly become as undesirable as compact fluorescent lightbulbs.
Much hinges on which corporate interests matter most to Trump. Clearly he won’t want to upset Musk, but the government could throw a few hundred billion in the direction of his other companies.
Interesting times.
Does China have domestic demand for EVs?
China’s electric vehicle (EV) sales increased by over 40% in 2024, reaching 11 million vehicles. This made EVs more than 40% of all new car sales in China.
China’s EV industry is the largest in the world, accounting for around 58% of global EV production in 2023.
https://think.ing.com/articles/global-car-market-in-slow-lane-china-soars-ahead-west-electrification/#:~:text=China%20continues%20to%20outpace%20the,also%20deal%20with%20excess%20capacity.
Meanwhile, Tesla sales in Europe – already struggling before the US election- have slumped even further since, no doubt in some kind of protest against Musk.
Why? Perhaps a government edict to avoid oil imports?
Yes, it’s better for China to burn their own coal to produce the Electricity for EVs, than import oil/gas from unreliable foreigners.
And if they could persuade the West to unnecessarily do the same, importing Chinese EVs, it would be a military gain, as well as having a good laugh at the West’s expense.
Aye. China has strategic reasons for preferring EVs to gasoline powered vehicles because they have no domestic production capacity for oil. The US Navy could theoretically block oil shipments to China by maintaining a perimeter outside the range of most of China’s missile systems and cripple the Chinese transportation sector if it were dependent on foreign oil. They’re increasingly transitioning to Russian gas and oil but the infrastructure isn’t there and it will take years to build it. The US has rather a lot of domestic oil, and therefore less strategic reason to transition. What this author misses is that this is less about economics and more about geopolitical rivalry at this point. Both sides are trying to reduce dependency and strategic vulnerability in the event of a conflict. It may or may not rise to the level of all out war, but there is likely to be a more serious escalation of the conflict that breaks the two economies apart forcefully at some point. Any nation or investor that isn’t planning for that outcome is either in denial or plain stupid.
That’s a very good reason NEVER to buy an EV.
I could be completely wrong, but I suspect that Musk knows perfectly well what is Trump’s position on EV mandates. Even when the US pulls the plug on most such mandates and subsidies, and if the Europeans more or less follow suit, if there are trade barriers to Chinese EVs (as there almost certainly will be) Tesla will do OK. It’s tech is superior to other non-Chinese EV makers, and while sans mandates and subsidies EVs may be a niche market, it will be a pretty big niche with Tesla the dominant player. That environment may even be, on net, beneficial for Tesla as it will dominate the EV niche, and that niche will be so constrained as to discourage potential competitors from making the investment and taking the risk to compete in it. Owning a stable 80% of 20% of the total market does not sound like a bad place for Tesla to be. A nice, steady business that is too small to attract anti-trust investigations but big enough and technologically advanced enough to discourage new entrants into a smallish sub-market.
And, he has Tesla well-positioned to compete in autonomous vehicles, which will be a big growth market over the next 15 years, in any case. Musk has said as much.
Aye. Musk is a strategic thinker, and he’s considering the whole picture, which includes the political reality that the US/China conflict is going to get worse before, and if, it gets better, and that the economies will eventually decouple almost completely. There will be barriers between the US sphere, whatever that ends up being, and the Chinese sphere, whatever that ends up being. Musk understands that this is the future and he’s planning for it. In that respect, he’s way out in front of most of Wall Street and corporate America, who are still trying to cling to the hope that somehow against all evidence to the contrary China will suddenly stop being antagonistic and exploiting the global market or that populist sentiment that drives much of the anti-China narrative will magically evaporate for no good reason.
The question is ‘why’ is it one of the world’s fastest growing sectors. Does the demand for EVs come from consumers, or is it driven by climate change rules implemented by governments. If it’s the former, then the line you quoted is valid. If it’s the latter, wouldn’t the growth be contingent on continued government interference in the free market? In the US, domestic vehicle manufacturers can’t sell the EVs they’re producing. The US/China conflict is no longer about economics. It’s more fundamental than that, like the struggle of communism vs. capitalism. Do we have a free market or not? Does demand come from consumers or does the government tell us what we can and can’t buy and own? Barring the discovery of an inexpensive alternative to fossil fuel energy, controlling climate change will require the latter approach, and in democratic states that means securing popular support. If not enough people will buy into the need to personally sacrifice, or they perceive that the burden is borne unevenly by the lower classes, climate change policy won’t be politically sustainable, thus the demand will eventually plateau or crater and those who invested heavily in said market will have overbuilt production capacity to a level of demand that doesn’t actually exist. The author can’t seem to get beyond the Wall Street angle of finance, stock prices, and market shares, but that’s been typical for decades now. Wall Street has an entire newspaper shilling for their interests and plenty of shills in the rest of the media also. So does the CCP. It’s possible this author falls into one or both of these categories.
Some confirmation of the writer’s observations: from Today’s Caixin
Holiday spending gives Chinese consumption a needed boost
The biggest highlight of the recent Lunar New Year holiday was undoubtedly the animated blockbuster “Ne Zha 2,” which has become China’s highest-grossing film ever and Asia’s first to break into the top 10 of the global box office charts.
As of Friday afternoon, the film had raked in nearly 12.8 billion yuan, ($1.7 billion) in ticket sales, according to box office trackers Dengta and Maoyan. It already surpassed “Jurassic World” and “Inside Out 2” earlier this week to claim the eighth spot on the list of highest-grossing films worldwide. “Ne Zha 2” is also the first non-Hollywood production to cross the $1 billion mark and has become the highest-grossing animated film ever.
Tourism
China’s tourism spending and box office sales hit new highs during the Lunar New Year holiday, showing signs of a much-needed rebound in domestic consumption. But whether the growth can maintain momentum or fades with the festive cheer is uncertain.
Overall domestic tourism spending during the eight-day holiday, which ended Tuesday, rose 7% year-on-year to 677 billion yuan ($93 billion), state media reported, citing data from the Ministry of Culture and Tourism. Tourists also made 501 million trips, up 5.9% from last year. Both figures set record highs, the report said.
Both of the above ‘success’ stories have come about because of the great number of people in China compared to other western countries. If you talked about numbers of people visiting China as tourists, that would be different.
Well there’s 1,4 billion of them so I guess in one sense you’re correct but In 2023, on average, one in two urban households and one in three rural households in China owned a car. Altogether, there were 49.7 cars for every 100 Chinese households. This figure has increased more than two times in the last decade.
As for foreign tourists:
In 2023, approximately 34.3 million foreign tourists visited mainland China and stayed overnight, marking a significant increase compared to the pandemic lows but still considerably lower than pre-pandemic numbers. Roughly 65 million international travellers China visited in 2019.
Compared to say India there is very little to see in China.
Because they built in wood and brick rather than in stone very little has survived. In short it is in historical terms an ‘architectural desert’.
Oh dear me how I’ll informed you are
China is a treasure trove of Architectural artefacts of great.
Historical importance and listed as such by the UN
There would have been far more of very significant importance
Were it not for the failed attempts by Britain and France’s failed military adventures to colonise
One major ancient City and it’s environs has been left and preserved for all to see British and
French
Colonialism actually entails
One of those sites has just been granted special status by
The UN extraordinary for what is none other than a pile of rubble
Wrong Wrong Wrong
Go check the facts about foreign visitors
Greatly increasing as China relaxes Visa requirements
Also whilst at fact checking
Go investigate Chinese Students going to US universities
And how the numbers remains
In the US upon graduation
As 2024 numbers now clearly shows a massive decrease in those electing to stay and work in the US
As the Numbers returning to China climbing rapidly
Once more data paints a 1000
Picture’s
I amazed the Number of commentators on here just simply close their minds as they hit the keyboards
I am reliably informed that ‘Ne Zha 2’ is a cartoon, is that correct?
Yes I believe that’s the case although I’ve only seen a couple of publicity photos.
Thank you, I have to rely on great grandchildren these days for topical info!
It has become a chauvinist endeavor to break box office record with this cartoon, with reports of individuals buying up all the tickets and bussing in villagers to fill the theaters. But in general the movie industry is in a deep slump just like the rest of the economy here.
Thanks, I hadn’t realised that.
Free membership to the Flat Earth Society is on its way to you
Correct but little resemblance
To what Disney produces
In that much to be learned from
The Chinese one that’s important
Here’s a phrase commonly used by Xi, Senior officials and Business leaders used often to explain
CCP policies
Socialist Capitalism with special
Chinese Characteristics
Work out what that means for yourselves
97 % of all enterprises in China are in the Private sector
The Author of this article has more Savvy with regards China than his Western counterparts
However by far one is wise to go and look at the Key Independent Academic data which compare Nations
Start by looking at IPO ( patents )
Particularly in AI and Computing
Then
Trade deficit /Import
Then again for Export surplus
Next STEM graduates/ head of Population
Then the % of those graduates who end up employed in their relevant
Industries
Next R & D institute’s and facilities
Concentrate on the key relevant areas that are absolutely vital for
Economic success
Next. How the State sets up assistance for new emerging key
Developments
Should you do so then the Answer as to the direction of Travel is going with regards Western and China’s fortunes .
So I’ll give you all just one tiny abstract from the Myriad of data
I’ve pointed you in the Direction off
Remember all the Data is produced
By Professional Academia who have no axes too grind
Sir Keith Stammers recent policy announcements regarding making the UK in AI and being a world leader , best in the world along with being a booming economic powerhouses in such matters
So please explain to me HOW
Whilst for 2023 The UK held 0.18 %
Of the global total of IPO patents in AI
The EU 1 .16 %
China 62.8 %
These figures not only paint a picture but importantly upon such matters NEVER lie
The road map and signs are so obviously pointing who’s going where and their final destinations
“Which model is superior remains to be seen.”
Yes. It’s a mystery. Do we need democracy at all? Is there really any downside in having a one party state? Can’t we just rely on the wisdom of a great leader such as Xi Jinping? Who knows?
I know right. It’s unbelievably sad that we’ve come to a point that media voices are un-ironically questioning whether a totalitarian state has a ‘superior’ political system. Then again, there were people in the US in the 1930s who thought Hitler had some good ideas too. At some point, people seem to have forgotten that the government doesn’t exist to sustain the stock market or the banking system, but to govern the people according to the people’s will. If the people value their freedom more highly than their wealth or personal standard of living then no amount of economic success or even total victory will ever make the Chinese system better. Choosing the Chinese system over the American is like breaking into prison just to have food and a roof over your head. One can understand the rationale, but that’s about the opposite of what America has traditionally stood for. Americans are either people who did the exact opposite, traded a secure place in an oppressive civilization for an uncertain future in an unknown land, or the descendants of those people. American culture will accept the decline of its global power and wealth before it will accept the loss of personal freedom that is required. Even if the entire world went the other direction and isolated America, I suspect Americans would just live freely with what they had and ignore the rest of the world.
If green is China’s holy grail, good luck to them. Renewables are not a strategy; they are a talking point. The world runs on oil, with a healthy side order of natural gas. The Chinese know this which is why they keep building coal fired power plants.
As to the superior model, free markets – even somewhat free – have always bested centralized control.
“Having abandoned Joe Biden’s plans for a renewable energy transition, Trump’s administration has left one of the world’s fastest-growing sectors to Chinese producers.”
This is tendentious. Wind farms in the US predominantly use Mitsubishi turbines, manufactured in Japan. Biden’s bribes, sorry subsidies, might have induced Mitsubishi and other to set up manufacturing plants in the US but at what cost? In any case, China controls the processing capacity for 90% of the minerals necessary for the renewables revolution, so would always be able to undercut US production in world markets, just as it is now doing with EVs.
This article is a good counter to those who have written China’s obituary with no reason to do so. China has its problems but it is in it for the long haul. Despite the occasional disruption, its leadership is intelligent and committed to advancing their country’s wealth, prestige, and power in the world, in contrast to the “leadership” in most of the West, which is committed to weakening their societies while enriching themselves–Trump and a small handful of others excepted.
OTOH, as usual, the non-American elitist observer (“divides his time between London, Johannesburg, and Ottawa”) does not have a hint of a clue what makes Trump tick or what America is all about, but dangerously thinks he knows. As Mark Twain wrote, “It Ain’t What You Don’t Know That Gets You Into Trouble. It’s What You Know for Sure That Just Ain’t So.”
After a decade of being wrong about Trump at every turn, foreigners who get their news and opinions about America from The Economist and the Financial Times and the New York Times, and who think that speaking with colleagues from the same rarefied levels of other countries gives them insight into the opinions of the majority, would do well to ponder what Twain wrote.
How would Trump have fared campaigning on a platform of “I’m going to let Elon here slash government spending to start a little recession so we can replace things the government used to do with ones that Elon, Jeff, Sam, Tim Apple and the rest of our friends do?”