China’s economic ascent was once welcomed in the west. Since the financial crisis, however, China is increasingly viewed as pursuing a domestic policy of government domination and an international policy driven by beggar-thy-neighbour mercantilism. There is evidence to support these fears but they do not add up to a conscious decision to embark on a more aggressive model. And if the west misinterprets Chinese changes, it will only make matters worse. It is true that China’s economy is moving in a statist direction. Recovery from the crisis was helped with a large stimulus. Local spending added to this, leading to local government-backed debts of close to $1,000bn. Changes in industrial policy can cause concern too: state plans to boost technological development up to 2020 have raised worries among western companies that government support will give Chinese groups an unfair advantage. China has also yet to join the World Trade Organisation’s government procurement agreement, which guarantees equal access for foreign and domestic companies.
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