China is an economic superpower today which before 1989 was a growing but largely an agrarian one trying to wake up and march through the gates of an industrial economic system. The state was more ideological than production driven.

That changed as a new pragmatic non -ideological leadership under Deng Tsao Ping took over. Now China sits at the top of the economic layer. GDP grew from roughly $350 billion in 1989 to over $17 trillion today. Basically it's the world's number two economy after the US who are now discussed more as a political than an economic state and seen in some quarters as a power in decline.

The Tiananmen Square incident of 1989 which ended the hold over China by the radical communist faction, then called the "Gang of Four" meant the liberal economic policies of China's Deng Tsao Ping continued.

From holding a minor back seat in the global trade market it's the world's leading exporter of goods and a central hub for global manufacturing and supply chains today.

China joined the WTO in 2001, something previous rulers saw as bowing to global capitalism. Today it's now part of the capitalist global market-ironically its strongest voice.

Transition or inevitability? The rise of the private sector

Before 1989, a vast majority of the Chinese population lived in rural poverty with limited consumer choices. Today, China boasts a massive middle class with high rates of domestic consumer spending.

Most of China's population was rural then. Today, over 65% of China's population lives in cities, anchored by massive metropolitan hubs and high-speed rail networks.

In 1989 when the Gang of Four fell, market reforms were in their infancy and state-owned enterprises dominated an inefficient economic system. Today, China uses a state-capitalist model where massive private tech and manufacturing giants (like Tencent, Alibaba, and BYD) thrive but are watched by the official state apparatus.

It has switched from basic, labour-intensive manufacturing to advanced technologies, including electric vehicles (EVs), renewable energy, 5G, and artificial intelligence.

Political pressure of reform and development

The post Mao China knew that political survival meant delivering economic success. It meant the powers that be that it had to ensure policies that led to higher living standards and economic opportunity for most. Otherwise political unrest could rise.

The challenges were and are many to this objective. Once upward momentum of early market experimentation was an issue as it had less management experience but now, ensuring a high growth rate, mature-market challenges, including a slowing post-pandemic growth rate, high local government debt, a rapidly aging workforce, and real estate sector struggles have all added to it.

But the shift from ideological control to maximising production and output is very established now.

The state realises that to maintain power, it doesn't need to micromanage every factory; it just needs to control the strategic levers of the economy. Or at least for now.

The private sector

Because the state has a continuous state issue, it tries to balance ideology with economic objectives. The once "illegitimate "private sector is where economic action is now. There is intense, competition among private companies and they operate just like any other performance-based outfits elsewhere. Ideology is not an operational need.

However, companies can innovate and produce freely, as long as their corporate goals line up with national goals which are non-ideological like becoming dominant in green energy or microchips. And none challenges the political party-state. But then why should they if the party makes life easier for them and is not a hindrance?

An example will suffice. Regional party and political authorities are recognised not for political loyalty but their role in helping the local economy grow.

State control: more strategic than ideological

The State is very much there but is more pragmatic than ever before. So, its focus is on implementing strategic policy issues. For example, it sets loan priorities that are aligned with the national policy. Thus, if the Government wants to push a certain sector, be it electronic or electric vehicles, bank policies follow suit. While this seems controlling to some western critics, it's common in all Southern economies.

The State controls the critical sectors of the economy-energy, telecommunications, aviation and banking but the private sector runs them. While party cells do exist in most large outfits, they don't interfere in its running. It's much better than what is in South Asia where banks and companies have trade unions loyal to the party in power and play loan brokers and other dubious roles.

In short, it is a pragmatic fusion: capitalist incentives drive the production engine, while the State decides the destination.

China has pioneered an unusual economic structure. Its highly functional, private sector-based state-led market economy. It uses standard capitalist machinery-corporate competition, venture capital, stock markets, and performance-based consumer metrics-but control is with the state but economic oligarchs as in the west.

It is driven by the market, but the market's boundaries, grand strategy, and foundational infrastructure are not set by profit makers but national economic policy.

It not only signals the fallacy that only the Western economic model can lead to prosperity but also Marxist socialist doctrine which prescribed state control and the private sector as enemies that can never create prosperity for the majority.