By late 2016, the world economy appeared to be at a crossroads, in the sense that economists were celebrating the fact that for nearly thirty years the amount of people living in extreme poverty kept falling — but the world economy was overall moving sideways .
The case of China represents this dilemma. The scale of China’s economic achievements over the last 30 years has been a miracle — since 800 million Chinese people have been lifted from poverty since the early 1980s, but the economy has begun to show signs of stagnation.
China is no longer averaging 10% growth rates per year, it only grew 6.9% in 2015, proving that many countries in the world economy are in fact moving sideways.
The Washington Consensus postulates that under-development is due to the domestic failings of under-developed countries. For instance, China is feeling pressure from global financial institutions such as the IMF to embrace economic reforms; since China is reliant on state capitalism.
The dilemma is that state owned companies employ half the county’s work force — which is costly for local governments. The IMF solution to this problem would be to minimize state ownership of the economy and nourish the non-public sector.
Amartya Sen presciently emphasizes the importance of free markets and interchange and how they paved the way for new freedoms in China . As Sen postulates, development is freedom; and China’s state-owned companies shrinking from being 80% of the gross domestic product in 1978 to just 18% in 2012 perfectly proves this thesis.
The rise of free markets creates conversations between people that yield innovations and reduce poverty substantially.
Sources  Green, December, and Laura Luehrmann. Comparative Politics of the Global South: Linking Concepts and Cases. Lynne Rienner Publishers, Incorporated, 2017.  Sen, Amartya. Development as freedom. Oxford Paperbacks, 2001