Idea in Brief

The Problem

Politicians and business leaders continue to misread China’s strategy and politics.

Why It Happens

They make three plausible but false assumptions: Democracy is an inevitable consequence of economic development; authoritarian regimes are never seen as legitimate; and the Chinese think, behave, and invest much like anyone in the West.

The Solution

Accept that economic development in China will not inevitably lead to democracy; acknowledge that the Chinese regard their government as both legitimate and effective; and recognize that while Chinese consumers have short-term horizons, their rulers are focused on the country’s long-term security.

When we first traveled to China, in the early 1990s, it was very different from what we see today. Even in Beijing many people wore Mao suits and cycled everywhere; only senior Chinese Communist Party (CCP) officials used cars. In the countryside life retained many of its traditional elements. But over the next 30 years, thanks to policies aimed at developing the economy and increasing capital investment, China emerged as a global power, with the second-largest economy in the world and a burgeoning middle class eager to spend.

A version of this article appeared in the May–June 2021 issue of Harvard Business Review.