NRPLUS MEMBER ARTICLE I n recent weeks, Xi Jinping has authorized a campaign to restore the confidence of both domestic and foreign investors in their opportunities in China. Why the about-face, after he spent years aggressively reining in private business activity and trying to replace it with state-owned enterprises? Because the fruits of that policy are now manifest. Coming out of China’s unparalleled Covid-19 restrictions, the economic recovery has been anemic at best, and youth unemployment in particular is breaking records. Supposedly the opportunity to make a lot of money, so obvious in the 1990s and 2000s yet absent under Xi, is now back — or so the messaging has it.

Should businesses believe him? History suggests not. Shortly after China’s Communist revolution, the new regime sought to persuade Western businesses to remain in the country, as it needed their knowledge. But within a few years, it decided it needed Maoist madness more. The Chinese Communist Party (CCP) crushed foreign businesses through increasingly onerous taxes and employment rules. It even forbade many executives from leaving the country until they had satisfied their arbitrarily determined obligations to the CCP. By the end of this “hostage capitalism” phase, foreign businesses would pay any price to get out.

In considering whether to continue or even increase business activity, investors at home and abroad must keep in mind the sheer political opportunism of campaigns like the current one. During Xi’s reign, the CCP has alternated in its praise of its two paramount political figures, Mao Zedong and Deng Xiaoping. Xi trots out Mao when the population needs to be cowed into obedience and he has enemies to purge, and Deng when the economy is performing badly. Xi’s intermittent lionizing of Mao is unusual, since he was downplayed in CCP propaganda for over 30 years after his death in 1976. Indeed, under former presidents Hu Jintao and Wen Jiabao, there was even discussion over whether his image should be prominently featured in national-day celebrations.

But when Xi took power, the economy had developed enough, it was thought, and so now the task was to restore political control. As Xi was bringing the growing private sector to heel in the 2010s, Maoism loomed large. But now that the economy is so clearly struggling, he feels it necessary to invoke the supposedly key role of private firms, foreign and domestic, in the country’s future. So Deng Xiaoping is back.

Deng was hardly a Western-style liberal. The CCP is a totalitarian organization, interested only in reinforcing its power. When Deng was coming to power in the late 1970s, China was one of the poorest countries in the world, and desperate times called for desperate measures. Still, the simple act of the CCP partly getting out of the Chinese people’s way led to over three decades of transformative economic growth.

But this growth led to Chinese people demanding protection of their hard-won gains from a corrupt and rapacious government — that is, they sought the rule of law. And China’s economic and social dynamism threatened the CCP monopoly on power. So the CCP cracked down on many of the country’s leading industries, and Xi called up the ghost of Mao to support his campaign against them.

Several years of this crackdown on entrepreneurship and ingenuity, in conjunction with the illusion of the power to control nature that begat several years of harsh Covid lockdowns, has brought the Chinese people much lower than they were a few years ago — not just much less economic growth, but growing isolation from the Western world.

In response, the CCP now proclaims that private businesses are welcome. But this attitude does not arise from any genuine change in its posture toward business, the CCP’s once and future enemy within. Instead, the change is a strategic response to the failure of the CCP’s economic policies, which now generates, as they see it, threats to CCP rule. For foreign and domestic entrepreneurs, intelligent management requires watching what the CCP does and not what it says.

As both foreign and domestic business leaders think about how much stock to place in Xi’s pronouncement of a new attitude toward business freedom, they should remember that while their activity may generate win–win situations for a time — profits for businesses, bribe income and greater political stability generated by higher economic growth for the CCP — in the end, businesses are in China not to serve their customers, shareholders, and workers. They are there to serve the CCP, which worries above all about preserving its power. Therefore, anything — extortionate technology transfer, installation of CCP secants at the highest levels of management, even ultimately the imprisonment of “anti-Chinese” businesspeople — is always on the table. What is given today can be more than taken away tomorrow.

Jianli Yang is the founder and president of Citizen Power Initiatives for China and the author of It’s Time for a Values-Based “Economic NATO.” Evan Osborne is a professor of economics at Wright State University and the author of Reasonably Simple Economics: Why the World Works the Way it Does (2013) and The Rise of the Anti-Corporate Movement: Corporations and the People Who Hate Them (2007).