A Government That Mistakes Control for Power

Beijing has become extraordinarily good at stopping things. That does not mean it has become equally good at making things happen.

There is a peculiar way of measuring state power that becomes almost irresistible when looking at authoritarian systems: count the things the government can prevent.

Can it make an article disappear? Can it stop money from crossing a border? Can it make a technology company abandon a product, prevent a television station from discussing an embarrassing subject, make a celebrity vanish from public view, discourage a wealthy family from moving assets abroad, or compel an industry to reorganize itself after a regulatory order?

Measured this way, Beijing appears immensely powerful, because the Chinese party-state possesses an unusually dense collection of administrative, financial, technological, and coercive instruments through which it can narrow the choices available to individuals and institutions.

Yet this definition quietly confuses two very different political capacities. The ability to prevent an unwanted action is not the same as the ability to produce a desired outcome, and the difference between those two abilities may be one of the most important facts about contemporary China.

A government can make it difficult to move money abroad without making domestic assets attractive. It can make pessimistic discussion dangerous without making people optimistic. It can make divorce, abortion, tutoring, gaming, speculation, criticism, or capital flight more expensive without making people marry, have children, study harder, consume more, trust institutions, take entrepreneurial risks, or invest their savings for the next twenty years.

The first category is control. The second is something much closer to power.

And China increasingly reveals what happens when a political system becomes so obsessed with the first that it begins to damage the second.

The Asymmetry of the Command

Stopping an action is often much easier than creating the conditions under which millions of people voluntarily choose another one.

If a government dislikes a website, it can block the website. If it dislikes a financial transaction, it can regulate the bank processing it. If it dislikes a public argument, it can censor the vocabulary through which that argument spreads. These interventions may require formidable bureaucratic infrastructure, but the objective itself remains relatively narrow: identify a channel, place authority over it, and impose friction or prohibition.

Consider instead the problem of convincing a thirty-year-old couple to have a second child.

There is no equivalent switch.

The government can subsidize childbirth, alter tax rules, construct nurseries, modify maternity leave, discourage certain forms of reproductive autonomy, or flood the media with favorable representations of family life. None of these measures can command the couple’s private assessment of the next twenty years: whether their jobs will survive, whether housing will remain affordable, whether education will become more expensive, whether grandparents can provide care, whether one parent will sacrifice a career, whether the political environment will become more restrictive, and whether raising another child feels like a rational commitment to a future they actually want to inhabit.

China recorded only 7.92 million births in 2025, down from 9.54 million in 2024, while its total population declined by 3.39 million. Those numbers do not by themselves establish why individual families made their decisions, but they illustrate the larger limitation beautifully: a state that can regulate extraordinarily intimate dimensions of life still cannot simply order optimism into existence. (National Bureau of Statistics)

The same asymmetry appears almost everywhere.

A government can prevent capital from leaving more easily than it can persuade capital to stay. It can pressure banks to lend more easily than it can manufacture good borrowers. It can instruct local governments to support housing more easily than it can make a family believe that an apartment purchased today will preserve its value fifteen years from now. It can announce a strategic industry more easily than it can generate the decentralized experimentation from which genuinely unexpected industries emerge.

The authoritarian temptation is to interpret every problem through the first category because the instruments of the first category are visible to the ruler. Orders are issued, meetings are held, accounts are suspended, regulations are published, statistics are collected, officials report completion, and something observable happens.

The second category is maddeningly different because much of it takes place inside human expectations.

And expectations do not obey ministries.

You Can Stop the Seller. You Cannot Create the Buyer.

The distinction becomes particularly obvious in property.

For years, housing functioned not merely as shelter in China but as a central repository of household wealth, a source of local-government finance, an engine of construction activity, and an implicit promise that participation in the existing economic order would be rewarded by appreciating assets. Once that promise weakened, Beijing acquired a problem fundamentally different from the administrative problems at which the system excels.

The state can alter mortgage rules, adjust purchase restrictions, influence credit conditions, support developers, reorganize financing arrangements, and tell local governments to stabilize their markets. What it cannot directly manufacture is the belief inside millions of households that buying property now is preferable to waiting.

By the end of 2025, China’s own statistics showed real-estate development investment falling 17.2 percent during the year, new commercial housing sales area falling 8.7 percent, and second-hand home prices declining year-on-year in all seventy major cities covered by the official survey. Private investment overall fell 6.4 percent. (National Bureau of Statistics)

These numbers matter less as a scoreboard than as evidence of the distinction itself. A government may possess enormous authority over the institutions surrounding a market while possessing far less authority over the expectations that actually constitute the market.

A buyer can be subsidized but cannot be forced to believe.

An entrepreneur can be prevented from transferring assets abroad but cannot be forced to regard the domestic return on investment as attractive. A corporation can be instructed to participate in an industrial policy but cannot be commanded to discover the next commercially transformative technology. A bank can be told to extend credit, but neither the bank nor the borrower can be ordered to encounter a profitable opportunity merely because the planning document requires one.

This is where the vocabulary of authoritarian strength becomes deceptive. The same political system may look extraordinarily strong when observed from the perspective of the dissident whose account has just disappeared and surprisingly limited when observed from the perspective of the economic planner trying to make 500 million households feel confident about tomorrow.

Both observations can be true simultaneously.

Fear Produces Compliance More Reliably Than Confidence

The reason is not mysterious. Coercion and confidence operate through almost opposite mechanisms.

Compliance requires the target to believe that disobedience carries a cost. Confidence requires the target to believe that voluntary action carries an opportunity.

The first belief can often be manufactured from above because the government itself controls much of the punishment. The second cannot, because opportunity depends on a sprawling collection of future conditions that no ministry controls completely: consumer demand, technological change, property rights, demographics, international markets, regulatory predictability, individual creativity, social trust and, above all, the expectation that today’s rules will remain sufficiently intelligible tomorrow.

This produces a dangerous political illusion. Because compliance generates immediate visible results, while confidence emerges slowly and diffusely, an authoritarian bureaucracy can repeatedly conclude that coercive instruments are the instruments that “work.”

A platform removes the prohibited material: success.

A bank blocks the prohibited transfer: success.

A company cancels an activity after receiving regulatory pressure: success.

An official silences a protest before it spreads: success.

Every individual intervention demonstrates that the command system retains impressive reach. Yet none answers the more difficult questions confronting the country: whether families will spend rather than save defensively, whether entrepreneurs will commit capital rather than preserve optionality, whether young adults will construct their lives around an expanding future rather than a shrinking one, or whether an economy can continuously generate productive activities that were not already specified in somebody’s industrial plan.

Indeed, excessive reliance on control can begin to alter the answer to those questions in the wrong direction.

When Control Consumes Power

Imagine an entrepreneur deciding whether to commit ten years and most of his capital to a new business. The important variable is not merely today’s tax rate or today’s subsidy. He must form an opinion about an unknowable political future: whether the activity will remain legal, whether success will attract unwanted attention, whether capital can eventually be moved, whether contracts will remain enforceable, whether a regulatory campaign could abruptly rewrite the economics of the industry, and whether the political priorities governing his company five years from now will resemble those governing it today.

Every additional instrument of discretionary control changes that calculation.

This does not mean regulation automatically destroys investment, nor that governments should possess no capacity to regulate markets. The deeper problem arises when political discretion itself becomes one of the largest uncertainties facing economic actors. At that point, the machinery designed to make society more governable can make long-term commitments less attractive.

The government responds to capital flight by tightening control over capital, which may reduce particular channels of flight while simultaneously reminding investors why liquidity and geographic diversification are valuable. It responds to pessimistic speech by restricting pessimistic speech, which can reduce visible pessimism while making public information less trustworthy. It responds to weak entrepreneurship with subsidies and political campaigns, which can increase activity in favored sectors while encouraging businesses to optimize for government priorities rather than discover opportunities the government failed to imagine.

The paradox is that every intervention can succeed locally while the system deteriorates globally.

A door is successfully locked, yet fewer people want to remain inside the building.

This is why the distinction between control and power is not semantic. It describes two fundamentally different relationships between a state and society.

Control asks: How many choices can the state remove?

Power asks: How much future can the society create?

The State That Can Say No

The Leninist political tradition was exceptionally good at one particular form of organization: identifying centers of autonomous power and subordinating them to a political hierarchy. Independent organizations, uncontrolled media, private concentrations of capital, religious institutions, intellectual networks, labor movements, regional authorities and eventually even factions within the ruling organization itself could all become problems precisely because they possessed the ability to act without permission.

A system built around that fear naturally develops extraordinary competence in saying no.

No independent political organization. No uncontrolled media platform. No unrestricted movement of capital. No public challenge to certain historical narratives. No institution large enough to become politically autonomous.

But a modern economy cannot be built entirely from permission.

The most valuable company of 2040 may depend on an idea that no ministry in 2026 considers strategically important. The most productive allocation of capital may contradict the priorities of the current industrial plan. The cultural product that transforms an industry may initially look frivolous. The scientific hypothesis that produces an important technology may begin as an intellectual dead end. The entrepreneur who creates a new market may first appear to be wasting money.

Creation therefore requires something that control systems find psychologically difficult: allowing enormous quantities of activity whose usefulness cannot be known in advance.

This is not romanticism about markets. Markets waste staggering amounts of money. Entrepreneurs make absurd decisions. Investors finance nonsense. Scientists pursue useless ideas. Most experiments fail.

But failure is part of the information system.

A government that wants the product of experimentation without tolerating the disorder of experimentation faces a structural contradiction. It wants innovation while minimizing unpredictability, entrepreneurship while minimizing autonomy, private investment while maximizing political discretion, global capital while restricting the freedom of capital, and citizens confident enough to make thirty-year commitments while reminding them continuously that the state reserves the right to rewrite the environment in which those commitments operate.

Those objectives cannot always be reconciled by better administration.

The Dashboard Problem

This also explains why highly centralized governments can become fascinated with measurable proxies for things they cannot directly produce.

If confidence cannot be commanded, measure loans. If innovation cannot be commanded, measure patents. If entrepreneurship cannot be commanded, count newly registered companies. If family optimism cannot be commanded, announce fertility subsidies and count marriages. If economic vitality cannot be commanded, set targets for investment, production and strategic industries.

The metrics are not necessarily false. The mistake is subtler: the measurable output of an administrative intervention becomes confused with the underlying social condition the intervention was intended to create.

A government can therefore accumulate increasingly sophisticated dashboards while losing contact with the expectations underneath them.

This is one reason the current Chinese economy can simultaneously display genuine industrial strength and conspicuous weakness elsewhere. Recent data still show expansion in advanced manufacturing and sectors such as industrial robots and batteries, even as domestic demand and property investment remain weak. That combination is not contradictory; it is precisely what one would expect from a system capable of concentrating resources extremely effectively in designated areas while struggling to manufacture broad confidence throughout society. (Reuters)

The mistake would be to look at either half and imagine it describes the entire state.

China is neither administratively helpless nor omnipotent. It possesses formidable capacity in some domains, particularly those involving concentration, coordination, infrastructure and restriction. The more revealing question is whether those capabilities can solve problems whose decisive variable is voluntary belief.

That is a much harder test.

The Most Difficult Form of Power

Perhaps the deepest form of political power is not the ability to make people afraid to leave, but to create a society in which enough people independently decide that staying is worthwhile.

It is not the ability to prevent money from crossing the border, but to create opportunities attractive enough that capital voluntarily competes to enter. It is not the ability to suppress bad news about housing, but to establish institutions credible enough that households are willing to risk decades of savings. It is not the ability to tell citizens that children are desirable, but to create a future in which millions of couples reach that conclusion without needing to be instructed. It is not the ability to designate the industries of tomorrow, but to maintain an environment in which people repeatedly discover industries that the government did not know it needed.

This kind of power looks weaker because it issues fewer commands.

In reality, it is harder to build.

Beijing’s danger is therefore not simply that it exercises too much control. The more consequential possibility is that decades of expanding administrative control have encouraged the political system to misunderstand what control can accomplish, until the ability to restrict behavior begins to masquerade as evidence of the ability to generate outcomes.

A censorship order can remove a sentence.

A regulation can close a financial channel.

A police apparatus can prevent an organization from forming.

These are real capabilities, and pretending otherwise would make any analysis of the Chinese state unserious. But none of them can order a society to trust tomorrow.

The distinction becomes increasingly important precisely when a country enters a difficult period, because the problems of expansion and the problems of stagnation demand different forms of power. During expansion, administrative control can ride on top of optimism generated elsewhere; businesses invest because returns are high, households buy because assets appreciate, young people tolerate uncertainty because the future appears larger than the present, and officials can easily mistake all of this voluntary motion for evidence that the state itself created the motion.

When the direction changes, the illusion becomes visible.

The government discovers that it still possesses nearly all of the switches, yet pulling them produces less and less of what it actually wants. It can constrain the exit, censor the complaint, subsidize the purchase, instruct the bank and announce the next industry, while the private calculations occurring underneath the administrative surface continue moving according to a logic that cannot be commanded into reverse.

A state can become extraordinarily capable of controlling the present while gradually losing its ability to persuade people to invest in the future.

That is not the absence of power.

It is a particular kind of power, mistaken for the whole thing.