ECONOMIC discourse in this country, especi­al­­ly with folks in governance circles, can throw up some very interesting — as well as disturbing — insights. A recent conversation brought up the int­e­­resting case of a preference for the ‘China model’.

What is their conception of this model? Briefly, the belief is in an all-powerful centre that forces its economic commands through long-term plans across the entire country, whips up economic growth through major government interventions, and leaves a limited role for the lower tiers (local) of governance. It is worth contemplating whether these views align with ground realities.

A good place to start is the recent paper by Fengming Lu and Xiao Ma, ‘The rise of China’s electric vehicle industry’, which helps demolish several myths. Champion EV firms like BYD and NIO are all private firms that did not get a single penny in state grants, which, instead, went to SOEs for EV research. Even more astonishing, these firms rose in cities the state apparatus did not identify for EV cluster development. How, then, did these firms accomplish this feat? The short answer: mayors of the cities that were left out teamed up with entrepreneurs, helping them usher in the latest achievement of China’s stellar development story.

Notice that city mayors have the authority to act as they please within their locality. In this case, their initiative and actions undermined the SOEs. Yet, the central government never intervened to prevent it, thus demolishing the myth of an all-powerful centre that micromanages everything and does not tolerate local authority.

The Chinese state mainly acts as a facilitator for........

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