For many years, a conventional wisdom reigned among international relations scholars, economists, and policymakers who were observing China’s spectacular economic rise: China’s growth would inevitably stop. Sustained economic growth requires innovation—and China woudn’t be able to innovate. Authoritarian regimes, the argument went, are structurally incapable of fostering innovation, so could not become technological leaders. They repress information, stifle creativity, engage in rampant corruption, and throttle the civil society that contributes to the development and diffusion of ideas in democratic economies. China might be the world’s factory floor, but the United States, and the rest of the free world, would always be the cutting edge of technology.
That consensus was wrong — and my new book, Autocracy 2.0: How China’s Rise Reinvented Tyranny (Cornell University Press, 2025), explains why.
The King’s Dilemma — and How China Escaped It
The skeptical case rested on impressive intellectual foundations. A Nobel Prize-winning economics literature has demonstrated a strong correlation between liberal institutions and economic growth and argued that “inclusive institutions” — the kind found in democracies — are essential for sustained growth and innovation.
Political scientist Samuel Huntington identified a structural trap he called the “King’s Dilemma”: autocrats could tighten regime control: strangling economic dynamism and seeing their country fall behind more liberal societies. Or, leaders might permit greater freedoms in order to foster growth and innovation—but risk being overthrown. Innovation, in this view, demanded freedoms that prudent authoritarian regimes could not allow.
China’s Communist Party found a way around the King’s Dilemma. In Autocracy 2.0, I call their approach “smart authoritarianism”: a model that combines firm political control with selective economic openness. Rather than choosing between freedom and repression, China’s leaders engineered a careful, constantly recalibrated balance between the two.
Seeds of Innovation
Innovation scholars identify several conditions and inputs that are important to foster innovation. Innovation, they argue, requires property rights (to incentivize inventors and entrepreneurs); it requires a great deal of capital. Innovation also demands a high-quality workforce (educated people). Innovation relies on openness and connectivity, so scientists, scholars, and businesspeople can collaborate and exchange ideas. A vibrant civil society promotes information exchange and diffusion: it also helps identify and broker the extensive societal reforms that economic growth requires.
Typically, however, these conditions were decidedly not associated with authoritarian rule. For example, authoritarians are known to tamp down on civil society; they’re known for high consumption (which fuels inflation, thus disincentivizing capital investment); they’re known to expropriate rather than protect property rights. Hence the skepticism about the potential for innovation in China and other authoritarian societies.
China’s Smart Authoritarianism
The late twentieth century, however, was a time of profound adaptation among some authoritarian regimes. Starting in the 1960s, Asia’s authoritarian “miracle” economies (e.g., Singapore, South Korea, Taiwan) startled the world by not behaving like typical authoritarians—instead following prudent economic policies that produced staggering economic growth. But of those countries, only Singapore – considered an odd outlier – has been able to sustain authoritarian rule and generate the innovation necessary for rising into the high-income category, as South Korea and Taiwan both liberalized along the way. (Autocracy 2.0 includes a chapter exploring smart authoritarianism in Singapore.)
Studying at the knee of Singaporean President Lee Kuan Yew, Chinese leader Deng Xiaoping and the CCP followed those examples. China’s smart authoritarian government invested massively in human capital — building a world-class base of engineers, scientists, and researchers, and allowing its professionals to circulate through global networks of universities and laboratories.
The CCP maintained stable macroeconomic conditions to attract foreign direct investment. FDI also became a critical vector for technology transfer into China’s industrial ecosystem. And of course the CCP itself dumped huge amounts of capital investment into innovation.
The CCP tolerated a bounded pluralism: a thriving private sector, an independent-seeming media, and increasingly prestigious universities — all operating under party oversight, but allowed enough room to breathe that ideas could circulate and combine.
Meanwhile, the party pioneered new methods of political control designed to inflict minimal economic damage. Rather than blunt censorship and mass repression, the CCP shifted toward low-intensity, targeted, and preemptive coercion. It employed what scholar Margaret Roberts calls “friction” and “flooding”: subtle tactics that slow access to dissenting information, drown it in noise, and desensitize the public to pervasive surveillance. With artificial intelligence and facial recognition, the party increasingly governs through algorithms rather than through force.
Smart authoritarianism is dynamic. When China’s leaders perceive that openness has begun to threaten the regime, they tighten the chain. When they feel secure enough to loosen it, they do. The crackdown on the tech sector in 2020 — which erased over a trillion dollars in market value — followed by Xi Jinping’s outreach to technology executives in early 2025, is a textbook illustration of this rhythm. These episodes look like policy chaos from the outside; from inside the model, they are calibrations.
The Results are Unmistakable
The results of this strategy are now undeniable. Across a range of metrics used to measure national innovation performance – patenting, highly cited science and technology research articles, value-added manufacturing – China has steadily risen to join the ranks of the world’s most innovative countries. This year, China placed in the top ten of the Global Innovation Index, overtaking France, Germany, and Japan.
Chinese firms have achieved commercial dominance in several high-tech sectors, such as electric vehicles, EV batteries, commercial drones, and solar panels. Companies like BYD, Huawei, ByteDance, and Alibaba are global household names. China is competing with the United States for supremacy in artificial intelligence, quantum computing, telecommunications infrastructure, and supercomputing.
A decade ago, asking whether the United States could keep pace with China technologically would have seemed like an odd joke. Today, journalists and policymakers ask that question in complete earnest.
Why This Matters Beyond China
The implications of China’s success extend well beyond the US-China rivalry. For decades, the democratic world operated under the comforting assumption that (because of the King’s Dilemma), free societies had an inherent, structural advantage in the competition for technological and economic leadership. That assumption underwrote foreign policy, shaped development aid, and informed predictions about the eventual liberalization of authoritarian states. China’s rise has shattered it.
Having imported the smart authoritarian model from East Asia’s developmental autocracies, China is now exporting it to other regimes eager to maintain tight control while enhancing their competitiveness in the global economy: e.g., Ethiopia, Morocco, Saudia Arabia, the United Arab Emirates. The implications for the global contest between democracy and authoritarianism are profound: the “democratic advantage” in innovation cannot be assumed. It must be earned.
The global economy has been transformed, too: previously technology flowed from Europe and the United States to China, and now the direction of technology flows has shifted. Europeans are taking a page from the CCP’s book: trying to lure Chinese firms to invest in Europe in order to transfer technology to Europe’s lagging firms.
China’s economic future remains genuinely uncertain. The country faces serious challenges — demographic decline, high debt levels, a troubled property sector — and no one can say with confidence how effectively the CCP will manage them. But whatever happens next, the past three decades have already accomplished something that most serious observers considered impossible: an authoritarian state became a technological superpower. Understanding how that happened is not merely an academic exercise. It is essential preparation for navigating a new technological, and geopolitical, era.
Interesting argument! There was indeed a debate in China in the 1980s about embracing soft authoritarianism à la Singapore. But this debate was quashed. How is smart authoritarianism different from soft authoritarianism? Also, Lee Kuan Yew was Prime Minister, not President of Singapore.
very insightful, thx.