Is China Heading to a 1930s-Style Crash?

That is the question looked at in this post at Gatestone Institute by Gordon G. Chang.

Since coming to power as China's leader, Xi has been reversing Deng Xiaoping's policy of "reform and opening up." He has, for instance, been closing off the Chinese market to foreigners, recombining already large state enterprises back into formal monopolies, increasing state ownership of enterprises, and shoveling more state subsidies to favored market participants.

Xi has also strangled his country's financial markets in order to keep share prices high and currency values elevated. For example, this summer his government restricted stock-index futures because it considered these derivatives a source of downward pressure on stock prices, but the restrictions killed activity. China's stock-index futures market, the world's largest in mid-June when the slide began, was devastated, with transactions down 99% by September.

Even when Beijing has summoned the gumption to announce reforms, there has been more show than substance. For instance, late last month the People's Bank of China, the central bank, announced it was eliminating the caps on deposit rates, but officials are now informally dictating to commercial banks the deposit rates they may offer.

Let us not be surprised by the end of liberalization in China. Xi Jinping's signature initiative, encapsulated by the phrase "Chinese dream," contemplates a strong state, and a strong state does not sit easy with the notion of market-oriented reform. Unfortunately for Xi, also the Communist Party's general secretary, there are no solutions that are possible within the political framework he will not change.

Read more here.