Can Chinese Authoritarianism Stay Smart?

Xi was formally taking office for the third time, after altering the Chinese Constitution to make it possible. The move was a striking rejection of Chinese Communist Party (CCP) norms that had been designed to protect China from the personalism associated with Mao Zedong’s rule. The political and economic reforms of the post-Mao era supported China’s stunning economic rise from poverty to the world’s second-largest economy and succeeded in fostering innovation.

Many observers argue that autocracies are unable to cultivate innovation, which is essential for sustaining growth. But by pursuing what I call “smart authoritarianism,” China’s leaders, influenced by the experience of Singapore, adapted their tools of authoritarian control for a globalized information age. Recognizing the tension between political control and the conditions needed to encourage innovation, the CCP governed with more inclusive economic policies and low-intensity repression.

China’s smart authoritarianism, alongside a massive innovation push, led to its rapid rise from technology copycat to leading innovator. The 2025 Global Innovation Index put China within the world’s top 10 most innovative countries, past France, Germany, and Japan. Chinese innovation is translating to meaningful commercial success, even dominance, in a number of high-tech sectors. And it is also shaping the military balance vis-à-vis the United States—particularly in artificial intelligence, telecommunications, supercomputing, and quantum communications.

But when Xi stood before that giant gold hammer and sickle, many experts argued that by flouting term limits, centralizing power, and doubling down on statist economic policies, he was moving away from smart authoritarianism toward policies that would stifle innovation. Some economists, such as Nicholas Lardy and C. Fred Bergsten, were cautiously optimistic, believing that China could still experience growth. But many other observers expressed deep skepticism about the country’s future economic growth and great-power status, anticipating Chinese decline.

The skeptics are correct that China’s economy faces real challenges to future growth—and that a “neo-authoritarian” turn may be one of them. Indeed, China’s ability to remain a superpower depends on its continued ability to compete at the technological frontier—which depends on the CCP’s continued management of the tensions between authoritarian control and the freedoms and openness of a modern, globalized economy.

As China faces its headwinds, the question is whether its economic growth will continue even at these much-reduced levels. In some respects, leaders have positioned the country well by investing heavily in human capital, which economists find key for successful transitions to innovation-based growth. The CCP has also weathered numerous challenges that skeptics predicted would weaken the regime or harm the economy. The party, analyst Jonathan Czin argues, “has demonstrated itself to be an incredibly effective learning institution.”

To compete against the United States, China needs neither to surpass the U.S. economy nor even to reach high-income status. Historically—notably in the case of the Soviet Union—great powers often have only a fraction of the leading state’s economic might yet nonetheless can engage it in a dangerous security competition. But to compete effectively, China must remain at the global technological frontier. This will require the CCP to continue managing the tensions between staying in power and providing the conditions that foster innovation—a feat that many skeptics doubt the regime can perform.

China in the early 2000s is remembered as being flush with energy and exploring new freedoms and openness. “Individual Chinese,” George Gilboy and Eric Heginbotham observed in 2001, are able to travel abroad; they “are now free to create their own lifestyles: they can move about the country, start their own businesses, and express themselves on a wide range of issues.” Later, however, beginning under President Hu Jintao, the CCP tightened state control over the economy, civil society, and personal freedoms. “The space for pop culture, high culture, and spontaneous interaction has narrowed to a pinhole,” journalist Evan Osnos wrote in 2023. “Chinese social media, which once was a chaotic hive, has been tamed, as powerful voices are silenced and discussions closed.”

Holding onto power while creating a highly educated populace, allowing a dynamic civil society, and actively engaging with the world is a challenging feat for an authoritarian regime. Indeed, many observers warn that Xi is tightening up because of the Soviet cautionary tale and the dangers of perestroika: the risks that allowing too much freedom will ultimately topple the regime. Such fears are leading Xi to “overreach” in the opposite direction toward stultifying control, as political scientist Susan Shirk has argued.

Some observers have wondered whether China is following the path of the Soviet Union. As Osnos wrote, “To spend time in China at the end of Xi’s first decade is to witness a nation slipping from motion to stagnation and, for the first time in a generation, questioning whether a Communist superpower can escape the contradictions that doomed the Soviet Union.” But China doesn’t have to go down this path.

Xi has indeed tightened CCP control over China’s state, economy, and society. Adopting Maoist language, he proclaimed at the 19th Plenum, “It doesn’t matter whether it is the government, the military, the people, or the schools east, west, north, south, or the center, the party rules everything.” Since the 2008 financial crisis, the CCP has moved to penetrate all of Chinese society, aiming to create party offices within all organizations. This includes private-sector firms (including foreign ones), NGOs, and universities. The CCP has taken direct ownership in private firms and passed a host of regulatory reforms to control their behavior. The United Front Department, which also monitors civil society organizations, now meets with business owners to convey CCP expectations and make sure that businesspeople “identify politically, intellectually and emotionally” with the party.

Observers argued that the Xi government’s efforts to crack down on the technology sector in particular would stifle Chinese innovation. They point to the CCP’s smacking of the ride-hailing app Didi after the company disobeyed government diktat to delay its initial public offering. Most famously, the CCP brought the hammer down on Alibaba Group’s CEO, self-made billionaire Jack Ma, abruptly canceling the $37 billion IPO for Alibaba affiliate Ant Group after a notorious speech in which Ma publicly criticized the government. The superstar CEO was forced into retirement and faded from prominence. As journalist Li Yuan argued in the New York Times, through its crackdown on tech, “Beijing tamed the industry’s ambition and blunted its innovative edge.”

The reversal of the tech crackdown, and China’s continued competitiveness in the sector, suggest such criticism is overstated. Accounts of the tech crackdown frequently neglect the many sound reasons, related to concerns about data protection and the risk of financial crises, motivating the CCP to impose greater regulatory control. (Indeed, the U.S. government has similar concerns.) Furthermore, critics registered the tightening but not the loosening; the CCP has since shifted its policy, welcomed Ma back into the fold, ended its probe of Ant Group, and reissued firms’ licenses to engage in the gaming industry. Critics also ignore sectoral variation; regulations in the AI sector have been kept deliberately lax in order to encourage innovation.

In this interpretation, Xi’s crackdown on the tech sector was not an inexplicable own goal committed by an uninformed or irrational leader; rather, it adheres to a smart authoritarian logic of allowing freedoms when you can and imposing controls when you must. “Loosening causes chaos; tightening up causes death,” Angela Huyue Zhang quotes in her book about the tech crackdown. Smart authoritarianism is all about striking a balance in order to avoid either bad outcome.

China’s shift toward a heavier hand for the state is also lamented as misguided. But government involvement need not quash innovation. As political scientist Linda Weiss has argued, Washington’s funding and leadership played a crucial role in the creation of Silicon Valley and in encouraging the developments of key consumer sectors and military technologies. Importantly, she notes that the U.S. government delegated innovation to universities and private firms. The U.S. “techno-security state,” describes China analyst Tai Ming Cheung, was “highly pluralistic and decentralized.” In other words, state intervention is not necessarily a bad thing—what matters is the way that the government intervenes, and China’s success depends on whether it can continue to develop a healthy innovation ecosystem.

That said, the lingering influence of China’s state firms risks dampening Chinese innovation. The private sector accounts for the majority of China’s innovation and almost all of its high-tech exports. The state sector, however, continues to hoover up most of the capital; state firms benefit from preferential treatment in terms of government loans and unfair barriers to entry that shut out private firms. A failure to reform the state sector will undermine China’s technological competitiveness.

Scholars also argue that as the CCP attempts greater control over the Chinese economy, greater personalism is diminishing the quality of governance. Shirk has commented that “the system appears to be reverting to dictatorial rule”: Xi, Shirk argues, is “scrapping the institutional norms and precedents that the party has built around its collective leadership since 1979.” These served as a Chinese version of checks and balances—which Xi appears to be unraveling.

A return to personalism could indeed undermine Chinese innovation. If cadres are selected, promoted, and assigned on the basis of political loyalty rather than competence, this violates one of the key attributes of smart authoritarian rule. At a time when the CCP is increasing the level of state involvement in innovation, assigning loyalist toadies to key economic roles in the bureaucracy would be disastrous for innovation and the economy more broadly.

Furthermore, the success of the smart authoritarian model depends on leaders having reliable information. Although the government censors external media, the CCP relies on an internal media for a frank presentation of challenges facing the country. If personalism leads analysts to be afraid to present accurate information to Chinese government officials, this could also undermine China’s smart authoritarianism—and, ultimately, innovation.

This view may be proven correct, but a few caveats are in order before liberalism can declare victory. First, China shows us that authoritarian regimes can in fact generate innovation. Even if smart authoritarianism is just an interlude, it can be a long and consequential one. Singapore’s “interlude” has lasted 60 years. In China’s case, if smart authoritarianism lasts only about 50 years, a lot has happened during that time: China returned to the great-power ranks, ended the unipolar era, made itself a contender for regional dominance in East Asia, and transformed the national security policies of the United States and other countries. Furthermore, through the appeal of its smart authoritarian model, its leadership in technologies of authoritarian control, and its relationship with Russia and other autocratic regimes, China is supporting a trend of democratic reversals around the world.

Second, this may not be an interregnum. In the smart authoritarian view, the CCP’s move toward greater control, which many observers interpret as bafflingly misguided, was a tactical response to years of more relaxed policies. Indeed, an ongoing topic among party leaders and intellectuals is the balance between democracy and authoritarianism, and the need, after periods of reform, for a neo-authoritarian turn to correct for problems that arise during liberalization. Scholar Xiao Gong Qing characterizes Xi’s policy shifts not as regression to Mao, but as a prudent response to excessive liberalization. “If Deng Xiaoping developed the 1.0 version of neo-authoritarianism,” Xiao argues, “Xi is now developing the 2.0 version. Xi wants to use an enhanced version of neo-authoritarianism to achieve Deng’s stated goals.”

In other words, the smart authoritarian view holds that the CCP’s neo-authoritarian turn was calculated and necessary; it will enable the party to retain power while permitting enough innovation and growth for China to compete effectively.

Still, China could fail at smart authoritarianism in one of two ways. First, as many experts predict, the CCP might tack too far toward stultifying overreach, inserting government control and corruption into what had been thriving and innovative sectors, as well as isolating China from key markets, technology partners, and research and educational networks. The second failure mode is perestroika: the result of tacking too far toward freedom and openness, with the CCP losing power as a result.

Some scholars may argue that herein lies the democratic advantage: that autocrats face inherent tensions between their ability to stay in power and their ability to compete in a modern, globalized economy. But democracies struggle with tensions too: preventing factions and interest groups from capturing public policy, as well as balancing free-market economic policies that maximize economic growth against the egalitarian and redistributive impulses that will frequently result from majoritarian politics. And democracies struggle to maintain order in societies that are founded on principles of limited government and individual rights. A failure to manage such tensions have caused significant domestic political instability and social division in the United States and other liberal countries.

Today, the CCP finds itself in uncharted territory. “We are watching a kind of petri dish in which an experiment of extraordinary importance to the world is being carried out,” China expert Orville Schell has observed. “Whether you can bring together a one-party state with an innovative sector—both economically and technologically innovative—that’s something we thought could not coexist.”

We are also in uncharted territory with respect to the methods used by autocratic regimes to stay in power. The CCP fields unprecedented tools of control, relying on facial recognition data analyzed by AI; spyware installed on cell phones to track dissidents at home and exiles abroad; and, increasingly, the exploitation of wearable technologies and the Internet of Things, including biometric data and emotional detection technology. “Digital authoritarians” may be able to exert powerful control in ways that do not undermine innovation.

Smart authoritarianism relies on a regime’s calibrations between control and freedom. When leaders fear that their grip on power is slipping, they will tactically rein in freedoms; at other times, regimes will allow greater freedoms to encourage growth and innovation. Some regimes fail to find this balance and are ousted—as shown by the experiences of the shah of Iran and former Soviet leader Mikhail Gorbachev. Other authoritarian regimes, such as South Korea and Taiwan, liberalized. But some smart authoritarians stay in power a long time, and—in defiance of skeptics—can cultivate innovation. It’s an open question whether the CCP can effectively manage the challenges facing China’s economy. But the lens of smart authoritarianism explains how China got where it is today: to a place many observers said it could never reach.