[National Review] The Chinese Communist Party (CCP) has re-awoken to a profound truth: Rich, secure capitalists are the natural enemies of authoritarian regimes. In a hybrid autocratic-capitalist model, capitalism is the means to generate wealth, but power is the end goal. Successful capitalists naturally begin to demand that their personal and property rights be protected from authoritarian fiat. Capital in the hands of entrepreneurs is a political resource; it poses a threat to the implementation of centralized plans.Realizing this, the CCP has begun to assert control over the private sector by "installing . . . Party officials inside private firms" and having state-backed firms invest in private enterprises. In the absence of civil rights or an independent judiciary, "private" companies have no real independence from the government in China. Dissent and demands for civil rights are a threat to the regime and will be crushed.
China’s shift from encouraging external investment and internal market competition toward treating capitalism as a threat has an obvious historical precedent. From 1921—1928, the Soviet Union instituted a policy of economic liberalization, which allowed for the privatization of agriculture, retail trade, and light industry. This partial and temporary return to a controlled and limited capitalism, known as the New Economic Policy (NEP), saved the Soviet economy from collapse and enabled Russia to modernize. But, in 1928, Stalin suddenly reversed course: He collectivized agriculture and liquidated the most prosperous farmers, thereby necessitating the frequent resort to grain imports, notably from the United States.
Political loyalty, rather than innovation, entrepreneurship, and profit. "This time we'll do it right" comes to mind