By Yin Hua
China entered 2026 with little sense of renewal. Instead, the new year opened under the weight of a slowing economy and a growing loss of confidence. For decades, the so-called “China model” promised prosperity through relentless growth, homeownership, and hard work. That promise is now being questioned from within China’s own intellectual circles. Economist Zhang Weiying of Peking University has warned that the most difficult period for ordinary Chinese may still lie ahead.
A model built on authoritarian growth
Toronto Fang Lian, an overseas Chinese political commentator, has offered a detailed critique of the “China model” through the lens of political economy. In his analysis, what Beijing presents as a uniquely Chinese alternative to Western democracy is, in fact, a variation of what scholars describe as “developmental authoritarianism.”
This model first took shape in South Korea during the era of Park Chung-hee, when rapid industrialization produced what became known as the “Miracle on the Han River.” Its core logic is straightforward. Authoritarian rule is used to push industrial growth at any cost. Economic expansion is treated as both a policy goal and a source of political legitimacy.
Under this system, four priorities dominate: industrial output, GDP growth, export competitiveness, and regime security. Other considerations—labor rights, income distribution, and sectors such as culture or services—are consistently pushed aside.
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Toronto Fang Lian describes the structure as a closed loop. The state forces industrial development through administrative power. Industrial growth boosts exports. Exports inflate GDP figures. Rising GDP is then used to justify continued authoritarian rule. In its early stages, this arrangement produced striking results. Its success, however, did not come from any inherent efficiency of dictatorship. It came from turning repression and centralized control into economic tools.
One such tool is what Toronto Fang Lian calls a “low human rights advantage.” By suppressing unions, weakening labor protections, and holding wages down, authoritarian governments reduce production costs and gain an edge in global markets. South Korea under Park Chung-hee arrested tens of thousands of labor activists, and workweeks routinely exceeded 52 hours. China followed a similar path. Worker welfare and rest were sacrificed to make “Made in China” synonymous with low prices. The long hours that define factory life today reflect this logic, even as they deepen social strain.
Another pillar is financial concentration. Unlike market-driven democracies, authoritarian states maintain tight control over banks and capital flows. South Korea nationalized its commercial banks. China relies on its five major state-owned banks and land-based fiscal revenues. Investment is steered toward sectors that inflate GDP quickly, particularly heavy industry and infrastructure, while consumption and services are treated as secondary. This approach accelerated early industrialization but left little room for long-term balance.
China adapted this model to its own scale. Toronto Fang Lian points to two defining features. One was the country’s massive infrastructure push. High-speed rail, expressways, and logistics networks allowed cheap labor to move quickly and supported export-driven manufacturing. The other was a system of regional competition. By tying official promotion to GDP performance, Beijing effectively turned local leaders into growth-obsessed enforcers. Each became a small-scale version of Park Chung-hee, rewarded for squeezing resources and labor to meet targets.
For years, this system delivered remarkable growth. That phase is now ending. Toronto Fang Lian argues that two of the model’s three supporting pillars have already collapsed.
Infrastructure investment no longer delivers meaningful returns. Early projects paid off. Later ones do not. Data cited in his analysis show clear signs of overcapacity and declining efficiency after 2018. At the same time, the “low human rights dividend” is fading. China’s population is aging. Living costs are rising. Cheap labor is no longer cheap, and manufacturing competitiveness is slipping.
Efforts to upgrade industry have also faltered. Under Xi Jinping, capital was redirected from infrastructure to high-tech sectors. Toronto Fang Lian describes this strategy as subsidy-driven innovation that ignores market discipline. The result has been excess capacity, weak returns, and projects that exist on paper rather than in demand.
With two pillars broken, only one remains. According to Toronto Fang Lian, the system now relies on intensified labor exploitation to keep exports and GDP afloat. This, he argues, helps explain why overtime culture has become more severe rather than less. He points to South Korea’s later transition as a possible path forward, one based on rule of law, political reform, and fairer distribution, where growth is driven by consumption rather than coercion.
When beliefs begin to unravel
Similar concerns appear in recent remarks by Zhang Weiying, one of China’s most outspoken economists. In a widely circulated speech, Zhang examined how economic decline is reshaping social values, weakening the property market, and exposing the limits of state-owned enterprises. His conclusion was blunt. China faces only one viable option: institutional reform. Without it, he warned, the system leads nowhere.
Zhang grounded his argument in daily life. Long-held beliefs are quietly collapsing. Many people who once insisted that buying a home was non-negotiable now accept renting. Some even consider long-term hotel living, drawn by convenience, safety, and services. For years, homeownership was treated as a rigid necessity, tied to education, marriage, healthcare, and social status. Families stretched themselves thin to buy at peak prices. Within a few years, those assumptions have dissolved. The phrase “rigid demand” has largely disappeared from public conversation.
Real estate illustrates how quickly the shift occurred. In a country with a modern history of just seven decades, citizens were conditioned within thirty years to accept thirty-year mortgages as a prerequisite for security. As the economic cycle turned downward, official calls to boost consumption produced little response. Regulatory interventions often backfired, draining household spending power or creating dependency.
Zhang contrasted China’s situation with South Korea’s social policies, including generous childbirth subsidies and a four-and-a-half-day workweek. The gap remains wide. Still, he suggested that prolonged economic pressure could eventually force similar changes in China, from stricter enforcement of labor laws to wage growth, childcare support, and adjustments in income distribution. The key, he cautioned, is not to surrender remaining leverage too early.
He did not minimize the cost. Transition, in his view, will be painful. It may consume the well-being of an entire generation. Yet he framed this as a historical reality rather than a choice. The only hope lies in policy decisions that help society endure the strain.
State power and institutional paralysis
Zhang also challenged the belief that state-owned enterprises form the foundation of Communist Party rule. In his view, it was Party control that created state-owned enterprises, not the reverse. He pointed to the collapse of communist regimes in Eastern Europe and the Soviet Union, which occurred when the state maintained total control over industry. China’s relative resilience, he argued, came from three decades of private-sector growth. Without that space, the outcome could have been very different.
At the core of reform, Zhang emphasized a shift from privilege to rights. Chinese officials operate within a system of privilege without real protection. A single misstep can erase a career or worse. Politics has become an internal bureaucratic process, producing administrators rather than leaders.
He illustrated this through the promotion ladder. A university graduate climbs from one administrative post to another over decades. By the time someone reaches senior levels, initiative has been worn down. Those inclined to act are filtered out early. In the 1980s and 1990s, advancement rewarded results. Today, safety and compliance matter more. Those who work rarely rise. Those who rise rarely work.
Corruption, Zhang argued, functions like a bank run. When officials move their families and assets abroad, it signals a loss of confidence in the system’s future.
He criticized the dominance of state-owned enterprises, which account for roughly 35 to 40 percent of GDP while controlling key sectors. They hold more than 40 percent of industrial assets but generate far less output. Resources are concentrated without matching productivity, eroding fairness and social norms.
Reform, Zhang insisted, is not technically difficult. Public companies could gradually reduce state ownership, first to a controlling stake, then lower, allowing private capital to enter. Politically, he called for recognition of universal principles, including constitutional governance, rule of law, and democratic development. Such change would take decades. But over thirty years, he argued, it could place China on a better path.
A question of legitimacy
Together, these views point to a deeper problem. As economic momentum slows, the legitimacy of the China model itself is under strain. Longstanding beliefs—from homeownership to faith in hard work—are eroding. Reform of state-owned enterprises is no longer optional. Reducing their dominance and allowing private enterprise to grow is seen as essential to restoring fairness and confidence.
Without institutional change across political, economic, and legal systems, the foundations of governance will continue to weaken. For many inside and outside China, the hardship now unfolding may only be the beginning.
