The Becker Friedman Institute for Economics (BFI), the Chicago Economics Society (CES), and the Booth Alumni Club of Washington, DC, welcomed Chang-Tai Hsieh, Phyllis and Irwin Winkelried Professor Of Economics, Chicago Booth School of Business, for cocktails and a conversation on Crony Capitalism with Chinese Characteristics. David Rank, former Deputy Chief of Mission and Charge’ d’Affaires at the U.S. Embassy in China, moderated a discussion following Professor Hsieh’s remarks.
Professor Hsieh discussed how China’s fast-paced growth over the past three decades is one of the most remarkable events in world economic history. This growth was fueled by the introduction of pro-market policies, especially in agriculture and trade. However, China’s national institutions continue to restrict property rights and hinder private business development, among other obstructive policies. To counter those forces, China has developed a system of crony capitalism at the local level that has allowed businesses to thrive. Political leaders benefit when local businesses succeed, so those leaders use their power to enhance certain businesses’ success. Local political leaders then compete with other cities for businesses, creating a competitive market that helps drive economic growth.