CHINA: THE ECONOMIC MIRACLE!

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1 CHINA: THE ECONOMIC MIRACLE MASTER THESIS IN DEVELOPMENT & INTERNATIONAL RELATIONS MARIA THORNGREN SVANHEDE JULY 29, 2016 KEY STROKES INCL. SPACES: SUPERVISOR: JOHANNES DRAGSBÆK SCHMIDT

2 Abstract(( Sincethetransformationfromplannedeconomytosocialisticmarketeconomy,theChinese economyhas,withinjustthreedecades,grownfarbeyondanythingeverseen.thisthesis, China: Theeconomicmiracle,setsouttoanalysewhichfactorshavecontributedtothehigheconomic growthinchinasince1978andifgoodgovernancewasoneofthem. Theframeworkforthisthesis analysisofthehigheconomicgrowthisbasedonthetheoryofthe CapitalisticDevelopmentalState,firstcoinedin1982bytheAmericanauthorandprofessor ChalmersJohnson.Later,itwasfurtherdevelopedbypoliticaleconomyanddevelopmentscholars andtheoristssuchas;robertwade,aliceamsdenandadrianleftwichonthecapitalistic DevelopmentalStatesinJapan,TaiwanandSouthKorea.Thesewerecountrieswhoallwithina shorttimeframeexperiencedarapideconomicgrowthandwherethestatehasplayedan importantroleinthegrowth.todaytherapideconomicgrowthseenwithinthesecountriesare oftenreferredtoastheeastasianmiracle. Thisthesis; China:Theeconomicmiracle,analysesthroughtheuseofsixcomponents;A developmentalelite,relativeautonomy,economicbureaucracy,aweakandsubordinatedcivil society,effectivemanagementofnonqstateeconomicinterestsandrepression,legitimacyand performance,coinedfromthetheoryofthecapitalistdevelopmentalstate,thefactorsthathave contributedtothehigheconomicgrowthinchinasince1978.furthermore,thethesisdiscusses thepresenceandroleofgoodgovernanceasafactorinthehigheconomicgrowth,byrefereeing to The%Five%Good%Governance%Principles %createdbygraham,amos&plumptre,butfoundedon theprinciplesandconceptsenunciatesbytheunitednationsdevelopmentprogramme. ThethesisconcludesthattheChinesestateplayedaveryimportantroleinthehigheconomic growth,furthermoretherepressionofaweakcivilsociety,relativeautonomyandthelegitimation throughimprovedlivingstandardswerekeyfactorstothegrowth.thestatecontrolstheprivate sectorandforeigndirectinvestments,hashelpedtoadaptthetransformationwithintheseareas totheneedofthechinesemarketandthedecadeslongcontinuingmonopolyonpowerbythe

3 CCP,withoutmuchopposition,hasonlystrengthenedthestatedecidedstrategyandfuture directionforthecountry.thisthesisfurthermoreconcludesthatgoodgovernancehasnotbeen muchofafactorthathascontributedtothehigheconomicgrowthinchinasince1978,thisisdue tothelackoftransparencyandaccountability,thehighamountofcorruption,lackofseparation ofpowerswithintheruleoflawandaverylimitedandcontrolledamountoffreedomofspeech, thepressandassembly. Key%Words:%China;HighEconomicGrowth;CapitalistDevelopmentalState;GoodGovernance.

4 Table&of&Contents& Chapter(One:(Introduction( 2 The$History$of$High$Economic$Growth$in$China$ 2 The$role$of$Good$Governance$in$Economic$Growth$ 3 Problem$Formulation$ 5 Chapter(Two:(Method( 6 Theory$Selection$ 6 Source$of$Data$ 7 Research$Design$ 8 Chapter(Three:(Theory( 10 The$Capitalist$Developmental$State$Theory$ 12 TheDevelopmentalElite 13 RelativeAutonomy 14 EconomicBureaucracy 15 WeakandSubordinatedCivilSociety 17 EffectiveManagementofNonFStateEconomicInterests 18 Repression,LegitimacyandPerformance 19 The$Theory$of$Good$Governance$ 19 LegitimacyandVoice 20 Direction 20 Performance 20 Accountability 21 Fairness 21 TheoreticalImplications 21 Chapter(Four:(Analysis( 23 China$ $The$Capitalist$Developmental$State$ 23 TheDevelopmentalElite:DengXiaopingandthePolitburoStandingCommittee 23 RelativeAutonomy:StatePowerandSOEs 25 EconomicBureaucracy:NDRCandtheState 28 WeakandSubordinatedCivilSociety:Freedomofspeech,thepressandassembly 29 EffectiveManagementofNonFStateEconomicInterests:PrivateSectorandFDI 33 Repression,LegitimacyandPerformance:SocialContractandCorruption 36 Subsidiary$Conclusion:$The$factors$that$Contributed$to$the$High$Economic$Growth$ 40 Chapter(Five:(Discussion( 44 The$Role$of$Good$Governance$in$the$High$Economic$Growth$in$China$ 44 Chapter(Six:(Conclusion( 47 Bibliography( 50 (

5 Chapter&One:&Introduction&& Sincetheintroductionofthefirsteconomicreformsin1978,Chinahasbecomethesecondlargest economyintheworld,onlyoutdonebytheunitedstatesofamerica.itsgdprateinaveragewithin thelastdecadesisamongthehighestmeasuredintheworldandthenumberofpeoplelivingin absoluteandrelativepovertyhavedecreasedimpressively.chinahasshiftedfromamainlyagrarian societytoanindustrialpowerhouse. The&History&of&High&Economic&Growth&in&China & Intheearly1950 splaneconomywasintroducedinchina.inspiredbythesovietunionmodel,mao ZedongexcludedChinafromtheoutworld,byseverelylimitingtheimportandexportofgoods. During 1950 s and 1960 s, campaigns such as the Great Leap Forward and movements like the CulturalRevolutiontookplaceandfurtherisolatedChina.AfterthedeadofMaoZedongin1976, thenewchineseleadership,withdengxiaopingasitsparamountleader,emphasizedtheneedfor politicalandeconomicconsolidationandin1978the reformandopening policywasintroduced, toincreaseeconomicgrowthandstrengthenthepowerofthechinesecommunistparty(ccp).at thethirdplenumofthe11thcentralcommittee,indecember1978,dengxiaopingintroducedthe FourModernisations,goalstostrengthentheareaswithinagriculture,nationaldefence,industry and science and technology (Chow, 2002 p. 128). Even though planned economy was fully intergradedatthetimeofthe reformandopening in1978,thepublicsectorremainedrelatively limited.initialdistortionsandstructuraldeficienciesaffectedthegrowth,buttheeconomicreforms and the Four Modernisations benefited from the large rural workforce, that facilitated the recruitment of cheap labour, which was the foundation for the emerging industrial sector (Bertelsmann Stiftung, China,$ 2016, p. 3). During the period after 1978 and up until today, the ChineseleadershiphasexperimentedwitheconomicreformsFanddecentralisation.Ithasallowed someeconomicreforminitiativesfromloweradministrativelevelstobeimplementedlocally;ifthey aresuccessful,theselocalinitiativesareattimesadoptednationally(bertelsmannstiftung,china,$ 2016,p.4).TheChineseeconomicsystemistodayknownasasocialistmarketeconomy.Thishas proventobeveryimportantinmaintainingtheeconomicstabilityinchinasince1978.duringthe reformsinchinathedefactoeconomicimportanceandthepoliticalappreciationofthecontinuing growingprivatesectorshaveincreasedsteadily.theeconomicreformshavebeenaccompaniedby 2

6 anaverageyearlygdpgrowthrateofabout10%betweentheyears1978f2010,whichisoneofthe fastestsustainedexpansionbyalargeeconomyinhistory(bertelsmannstiftung,china,2016,p.3f 4),farsurpassingotherBRICScountries,suchasIndiaandBrazil.By2015,Chinahadreachedallof theeightmillenniumdevelopmentgoals,setoutbytheunitednationsmemberstatesin2000 (WorldBank,2016).Since1978,thenumberofabsolutepoorhasdecreasedbyover300millionand numbersfromtheworldbanksuggestthattheeconomicgrowthhashelpliftedmorethan800 millionpeopleoutofrelativepoverty(worldbank,2016).asaresult,thegenerallivingstandards havesignificantlyimproved(bertelsmannstiftung,china,$2016,p.4)however,duringtheperiodof high economic growth and as a consequence of it, problems with for example corruption and inequalityhaveincreasedseverely.todaychinaisranked83outof167countriesinthecorruption Perceptions Index (Transparency International, 2016), which compared to the other BRICS countries,exceptfromrussia,isnegative(transparencyinternational,2016).furthermore,china scored 42,1, (0.421 point) in the incomeginicoefficient, which measures the deviation of the distributionofincomeamonghouseholdsorindividualsonascalefrom0(absoluteequality)to100 (absoluteinequality)(undp,2013).whichisworsethanbothindiaandrussia(undp,2013).the movefromplannedeconomytosocialisticmarketeconomy,ledtoachange,thattoday,notonly can be seen in China, but also globally. Especially after the accession to the World Trade Organisation(WTO),thelargecountryintheeaststartedtobecamethemajorinternationalplayer it is today. But what was the main power behind the transition in China? Which factors have contributedtothehigheconomicgrowth? The&role&of&Good&Governance&in&Economic&Growth&& In1989,theWashingtonConsensuswascoinedbytheeconomistJohnWilliamson,withsupport from the International Monetary Fund and the World Bank, as a reform package to developing countries,especiallyinlatinamerica.itconsistsofteneconomicpolicyprescriptionstoeconomic growthandisoftencloselyassociatedwithneoliberalism,duetoitsfocusonforexamplefreetrade, minimum involvement from the state and privatization. Especially during the 1990 s, the Washington Consensus was a synonym to the western and especially the American way of promoting economic growth(marangos, 2008 p. 197). However, the success of the Washington Consensuswaslimited,oneofthereasonsforthatseemedtobetheweakinstitutionsindeveloping 3

7 states.inthe1990 s,theinternationaldonorcommunityhadtoalargeextendavoidedthestate andinsteadfocusedondecentralisationandthestrengtheningofnonfstateactors(santiso,2001p. 15).IntheWorld$Development$Reportfrom1997,publishedbytheWorldBank,thefocusonthe role of the state, started to slowly lead to a change in the international donor community. The importantroleofthestate,notonthemarket,butintheeconomicmanagement;appropriatelegal andfinancialinstitutions,contractenforcement,establishingoversightsbodiesandguaranteeing propertyrights,meantthatastrengtheningofgovernancewasneededandasaresponsetothe badgovernancethathadtakenplacebefore,goodgovernancewasintroducedascorecountries answertostrongerinstitutionsandbetterdevelopmentinperipheryandsemifperipherycountries (Santiso,2001p.15). GoodGovernancestartedtoemergewiththesupportfrominternationalorganisations,suchas; UnitedNations,theWorldBankandtheInternationalMonetaryFund(IMF).Itisaboutthebest possibleinstitutionsandprocessesformakingandimplementingdecisions,conductingpublicaffairs andmanagingpublicresources.theconcept,thatisconsideredakeyfactortodevelopmentand economicgrowthbymanyinternationalorganisations,stateleadersandngo sworldwide,focuses onaspectssuchas;theruleoflaw,transparency,accountability,antifcorruptionandparticipatory. However, the relationship between Good Governance and economic growth has been and continuestobewidelydiscussedtoday.somescholarsandorganisationsstresstheimportanceof thepresenceofgoodgovernance,whileothershavequestionedthenecessityofitindevelopment andeconomicgrowth.in1996,theboardofgovernorsoftheimf spolicymakingcommitteein theirdeclaration$on$partnership$for$sustainable$global$growthstressedtheimportanceof; Promoting$good$governance$in$all$its$aspects,$including$by$ensuring$the$rule$of$law, $ $improving$ the$ efficiency$ and$ accountability$ of$ the$ public$ sector,$ and$ tackling$ $ corruption,$as$essential$elements$of$a$framework$within$which$economies$can$ $ $prosper. $(International$Monetary$Fund,$1997)$$ $ TheBoardofGovernorsoftheIMF spolicymakingcommittee,directlypointedtogoodgovernance as an essential element within which an economy can prosper. Therefore, if that is true, Good 4

8 Governance should be an essential factor that has contributed to the high economic growth in China.In1998,formerUNSecretaryFGeneralKofiAnnanwasquotedsaying; $ Good$governance$is$perhaps$the$single$most$important$factor$in$eradicating$poverty $ $and$promoting$development.$(united$nations,$1998)$ If Good Governance is the single most important factor in eradicating poverty and promoting development,askofiannannotesinhisquote,itindirectlyindicates,thatitisanimportantfactor intheeconomicgrowthinchina,sincethenumberofpeoplelivinginabsoluteandrelativepoverty hasdecreasedmassivelysincethefirstreformsin1978,essentiallyduetothehigheconomicgrowth inthecountry.butwhatistheroleofgoodgovernanceinthechineseeconomicgrowth?isita factorthathascontributedtoitsince1978? Problem&Formulation& Theproblemformulationforthisthesiswillonthebasisoftheabovewrittenbe; $ Which$factors$have$contributed$to$the$high$economic$growth$in$China$since$1978?$$$ Is$Good$Governance$one$of$them? $$ ThisthesisseekstofindoutwhichfactorshavecontributedtothehigheconomicgrowthinChina since1978.itseekstoanalysethesefactors,throughtheuseofthecapitalistdevelopmentalstate theory(cdstheory).thisthesisdoesnotseektoidentifythegeneralrelationshipbetweengood Governance and Economic Growth, it only seeks to identify the role and presence of Good GovernanceinChina shigheconomicgrowthandtrytoanswerifitisafactorthathascontributed totheeconomictransformationandgrowth,asthequotesfromtheimfandunsecretaryfgeneral KofiAnnanindirectlysuggests? 5

9 Chapter&Two:&Method&& Theory&Selection& In order to answer the problem formulation, this thesis will use the CDS theory as the overall frameworktoanalysewhichfactorshavecontributedtothehigheconomicgrowthinchinasince 1978.ThedevelopmentalElite,Relativeautonomy,Economicbureaucracy,Weakandsubordinated civilsociety,effectivemanagementofnonfstateeconomicinterestsandrepression,legitimacyand performance,willposeasthesixcomponentsintheanalysis.thecapitalistdevelopmentalstate (CDS)isknownforitseconomicgrowth,JapanandSouthKoreaareexamplesofcountriesthatby havingadevelopmentalelite,relativeautonomyetc.haveexperiencedahigheconomicgrowthand rapid development. China has outdone both Japan and South Korea, when it comes to high economicgrowth,thecountryhastodaythesecondlargesteconomyintheworldonlysurpassed bytheunitedstates.thecdstheoryhasbeenchosenasthemaintheoryinthisthesis,becausethe transformationinchinatoalargeextendissimilartothatofjapanandsouthkoreaintermsofa rapidandhigheconomicgrowth. The second part of the problem formulation for this thesis, focuses on the question of Good GovernanceasafactorthathascontributedtothehigheconomicgrowthinChinasince1978.The theory of Good Governance has been chosen because it is associated will the quotes made in respectively, 1997 and 1998, by the International Monetary Fond and former United Nations SecretaryFGeneral Kofi Annan. It can therefore serve not only as a guidance to understand the meaningbehindit,butalsoasameasureinstalmenttoanalysethepresenceandroleofitasafactor inchina shigheconomicgrowthsince1978.thetheoryofgoodgovernancewillservemainlyas thefoundationforthediscussionoftheroleandpresenceofitinchina.however,throughoutthe analysis,severaloftheconceptswithinthetheoryofgoodgovernancewillbeusedinparallelwith thecdstheorytoanalysewhichfactorshavecontributedtothehigheconomicgrowthinchina. ThemajorityoftheconceptswithinthetheoryofGoodGovernance,whichinthisthesisisbasedon conceptsenunciatedbytheunitednationsdevelopmentprogram,butgroupedunderfivebroader termsandrefereedtoas The$Five$Principles$of$Good$Governance,$byGraham,Amos&Plumptre (2003,p.3),willbetheonesusedbothintheanalysisanddiscussiontoanswerthesecondpartof theproblemformulation. 6

10 Source&of&Data&& The data and sources used in this thesis are found in books, academic articles, acknowledge websites and through recognised organisations and institutions. The references used in Chapter three, on the CDS theory are all from books and academic articles written by theorists such as ChalmersJohnson,thefirsttoreallyattestthestrongroleofthestateandtherebycointheCDS theoryasknowntoday.referencessuchasadrianleftwich,aliceamsdenandrobertwade,known fortheirworkondevelopmentalstateslike;southkoreaandtaiwanarealsoincludedtogether withtheworkofothertheoristswhoarespecialisedinthefieldoftheroleofcdss.allofthesources inthetheoreticalsectionofthisthesisonthecdstheoryhavebeenchosenbecausethey rewritten by acknowledge theorists and pioneers within the field of developmental states and economic growth, which gives the work done in the books and academic articles a strong reliability and validity. The sources used in the section on the theory of Good Governance are based on the conceptsenunciatedbytheunitednationsdevelopmentprogramme,thisisdonebecausethese concepts,sometimeswithasmallvariation,appearinawiderangeoflitterateurandthereforecan bearguedtohaveaclaimtouniversalrecognition. Thereferencesintheanalysisarefoundinvariousbooks,academicarticles,acknowledgewebsites and through recognised organisations. Sources such as the World Bank and Transparency Internationalwho sstatisticsareusedinthisthesisonforexamplecorruption,fdiandgdphave beenchosenbecausetheyarehugeinternationalrenownedorganisations,who sworkbymany expertsandscholarsareconsideredtobeatscientificstandards,whichlegitimisestheirworkand therebythenumbersusedinthisthesis.theuseofliteraturefromscholarslikedaniela.bell,that throughmanyyearsoflivinginchinaandteachingatthetsinghuauniversityinbeijinghasobtained a wide knowledge on the transformation of China and sources from institutes such as the Pew Research Center and The Jamestown Foundation that are known for their nonpartisan and reliability,hasgiventheanalysisanddiscussioninthisthesisvalidationanddepth. Allofthesourcesandreferencesusedthroughoutthethesishavebeencarefullychosentoensure that both the theory, analysis, discussion and conclusion have a strong credibility and are a reflection of a wide reach of theorists, scholars, opinionholders, organisations and institutions 7

11 work,sothatthethesisdoesnotappearsubjective,butembracesamoreobjectiveviewonthe topicofthefactorsthathavecontributedtothehigheconomicgrowthinchinasince1978. Research&Design& Thethesiswillstartwithanintroductionanddescriptionofthetwochosentheories;TheCDS theory,whichwillserveasthemaintheoryandframeworkinthethesisandthetheoryofgood Governancewhichwillbeincludedintheanalysisandbethefoundationforthediscussiononthe roleandpresenceofitinthehigheconomicgrowthinchinasince1978.followingthesectionon theories,thethesisstartstheanalysis,whichwillfocusonthesixcomponentsmentionedearlier. Thefirstsectionoftheanalysisfocusesonthedevelopmentaleliteanditsroleinthetransition fromplaneconomytosocialistmarkedeconomyandthehigheconomicgrowthwithinchina followingtheintroductionofthefirstreformsin1978.thesecondsectionlooksattherelative autonomyofthechinesestateandtherelationshipbetweenthestate,stateownedenterprises andforeigninvestors.thethirdsectionfocusesontheeconomicbureaucracy,byanalysingthe roleofthenationaldevelopmentandreformcommissioninchina shigheconomicgrowth,this sectionwillfurthermorefocusontherelationshipbetweenthenationaldevelopmentandreform Commissionandthestate,plusthehardcompetitionforenteringpositionswithintheeconomic bureaucracies.thefourthsectionintheanalysisofthethesisfocusesontheweakand subordinatedcivilsocietythatoftencharacterisescdss.thissectionlooksintocivilandpolitical rightssuchasthefreedomofspeech,pressandassociationinchinaandanalysewhichaffectthe lackofithashadonthehigheconomicgrowth.thefifthsectionwillfocusontheeffective managementofnonfstateeconomicinterests,thissectionanalysesthechinesestate spowerin managingtheprivatesectorandforeigndirectinvestments.thesixandfinalsectionofthe analysisfocusesonrepression,legitimacyandperformance,oneofthemorenegativefeatures oftensharedbycdss.thissectionwilllookatthesocialcontractmadebetweenthechinese populationandthestateandfurthermorelookintotheconceptcorruption,theremergeof ConfucianismandtheHumanDevelopmentIndex.Ashortsubsidiaryconclusionfollowsthelast sectionoftheanalysistosumupthepointsmadeinit.astheintroductionofthisthesishas shown,internationalorganisationssuchastheinternationalmonetaryfundandunitednations havepointedtotheimportanceofgoodgovernanceasafactorwithinwhicheconomiescan prosperandpovertyeradicated.thesecondpartoftheproblemformulationforthisthesis 8

12 focusesonthat;goodgovernanceasafactorintheeconomicgrowthinchina.throughoutthe analysisconceptsassociatedwiththetheoryofgoodgovernanceisincluded,suchas;corruption, theruleoflawandparticipation.these,togetherwithotherconceptsareusedinadiscussionon theroleandpresenceofgoodgovernanceinchinaandtohelpanswerthesecondpartofthe problemformulation; Is$Good$Governance$one$of$the$factors$that$has$contributed$to$the$high$ economic$growth$in$china$since$1978.$thethesisendswithaconclusionthatanswerstheproblem formulationonthemainfactorsthathavecontributedtothehigheconomicgrowthinchinaand thepresenceandroleofgoodgovernance.theconclusionisbasedonboththeanalysisand discussion. & 9

13 Chapter&Three:&Theory&&& Theideathatthestateplaysaleadingroleineconomicgrowthisnotnew,noristheideaoffree market liberalisation as a necessity for the same growth a recent phenomenon. For decades, scholars and international organisation have argued for and against state involvement and free marketliberalisminfacilitatingeconomicgrowth.alreadyinthemiddleofthetwentiethcentury some development economists argued that an active state, that is involved and supportive in creatingandregulatingtheeconomicenvironmentisimportantforsustainableeconomicgrowth andindustrialisation.however,in1993,theworldbankpublished The$East$Asian$Miracle $Rapport, whichwasanattempttoexplaineastasia scontinuingrapideconomicgrowth.intherapport,the World Bank acknowledged that East Asian governments have intervened in the development of their countries knowledgefintensive industries and capital, but the rapport is critical towards a causallinkbetweeneconomicgrowthandgovernmentinterventionandatthesametimeraisesthe questionifotherdevelopingcountriescouldimplementthesamesystemandpoliciesasseenfor exampleinsouthkoreaandtaiwanandbesuccessfulindoingso(worldbank,1993).therapport fromtheworldbankhadaneofclassicalapproachtotherapideconomicgrowthineastasia,by arguing that the high performing states in Asia, in order to secure high economic growth, had adoptedmarketfriendlypoliciesandonlyintervenedincasesofmarketfailure. CounterviewschallengingtheneoFclassicalorneoliberaltheoryoffreemarketliberalisminEastAsia camewiththeoristssuchaschalmersjohnson,aliceamsdenandrobertwade,expertsandwriters on the developmental states in Japan, South Korea and Taiwan (Abe, 2006 p. 9). Their Statist ApproachtoexplaintherapideconomicgrowthinEastAsiagaveadifferentviewonthefactors contributing to it. Unlike the rapport from the World Bank, which had focused on the role and importance of the market in initiating economic growth, both Johnson, Amsden and Wade attributedfactorsbehindtherapideconomicgrowthinjapan,southkoreaandtaiwantobestatef initiatedratherthanmarketfdriven.johnsonsawfouressentialfeaturesofthedevelopmentalstate; Theexistenceofasmallelitebureaucracy,apoliticalsystemwherethebureaucracyhastherightto take the initiative and operate effectively and efficient, the perfection of market conforming methodsofstateinterventionataneconomiclevelandapilotagency(jones,2001p.344).because theseeastasianstateswerelatedeveloperstheycouldlearnabouteffectivelysocialsystemsand 10

14 technologyfromwesternearlierdevelopers.however,thegapbetweentheearlydevelopersinthe westernworldandthelatedevelopersineastasiameantthatstrategicplanningandahugeamount ofcapitalwereneeded,whichthelocalcapitals/marketswerenotreadyfor,thereforethestates hadtodirectthedevelopment.furthermore,manyofthestateswereformattedunderantagonistic relationships with neighbouring states. Some of the today strong Asian states like; Japan, South Korea,TaiwanandSingaporewerebornoutoftheneedforsurvivalandtheybecameanationalistic projecttosecuretheirpoliticalandculturalidentityandvoiceintheworld.thesestateswayof regainingcontrol,afterbeingoccupied,defeatedandexpelled,camethroughindustrialisationand economicgrowth(abe,2006pp.7f8).thestatistapproachtoexplaintherapideconomicgrowthin EastAsiadefinestheCDSasastatewhereapoliticaleliteaimatincreasingtheeconomicgrowth, bothtodevelopnationally,butalsotobecomecompetitiveintheworldeconomy,bygivingpower and authority to pilot agencies, with highly qualified teams, to formulate, plan and implement efficient polices. It is a state where close institutionalised links are created between the elite, institutions,bureaucraciesandprivatesector,butalsowherethestateintervenesinthemarket, butleavesspaceforactivitiesofprivateenterprises(öniş,1991p.111).johnson,amsdenandwade sawintheiranalysisofcdss,thestatesasgovernorsofthemarketratherthanlaissezfaireand passive, and unlike the World Bank rapport from 1993, both Johnson, Amsden and Wade acknowledgedthecausallinkbetweenstateinterventionandeconomicgrowthintheeastasian CDSs(Abe,2006p.9). As a more critical approach to the CDS, Adrian Leftwich, in his work, beside the elements; developmental elite, strong pilot agencies etc. which is also featured in the works of Johnson, AmsdenandWade,focusesmoreonweakandsubordinatedcivilsocietiesandsoftauthoritarianism asessentialpartsofcdss(lauridsen,1995pp.29f30).leftwichseestheexistenceofanimbalance withinsocietyinthecds.ononesidethereisapowerfulstate,withapowerfulbureaucracy,while thereontheothersideisaweakcivilsocietywhichdoesnothaveanyeffectiveinfluenceorpower overthestateandthereforeissubordinated;unabletoofferconcertedresistancetotheriseofthe strongstate(bolesta,2012p.28).unlikeforexamplejohnsonthatrelatesthemainsuccessofthe CDS on development policies and market regulation, Leftwich in his work attributes politics dominance as the main factor behind successful developmental states(mathebula, 2016 p. 49). 11

15 Johnson in his work developed an almost institutionalist approach to understand the CDS. He debated that economic growth can be fruitful without a completely free market, when it is supported and guided by the state, which differentiates his belief from that of a neofliberalists. Wadeproposesalmostthesame;a guidedmarketapproach,wherethestate sinterventioninthe marketisnotunimportant,butwherebothmarket sdynamicsandstate spoliciescanpositively affecttheeconomicgrowth,whileleftwichgoesfurtherthanjohnsonandwade,byarguingforthe primacyofpoliticsovereconomics,(law,2009p.259). ( TheanalysisinthisthesisincludesthemorecriticalapproachtotheCDSwheretherewillbefocused onpoliticsdominanceandsoftauthoritarianism.howeveraspreviouslymentioned;cdsstheorists suchasleftwich,amsden,wadeandjohnsonagreeonnumerousfactorsassociatedwiththecds, suchaspowerful,competentandprofessionaleconomicbureaucracies,relativeautonomyanda developmental elite, the statist approach will therefore naturally be dominant throughout the analysis. The&Capitalist&Developmental&State&Theory& The CDS theory is based on the role of the state in facilitating the structural transition from a primitive to modern society. The CDS is the social engineering role, that promotes longfterm industrialdevelopment.oftentheaccelerationofeconomicgrowth,whichisthepreconditionfor structural transition, is founded on the emergence of an agricultural surplus, that then can be transferredandusedintheemergingmodernsector. Thetheory,asknowntoday,originatedin1982,whenChalmersJohnsonattestedthestrongroleof thestateintheeconomicgrowthofjapan.sincethen,thetheoryhasspreadacrossespeciallyeast andsoutheastasia.inhiswork,johnsondistinguishedthe planrational statefromthe regulatory orientation state(typicalliberalfdemocraticorsocialfdemocraticstates).the planrational state, thecds,isknownfortheintimacyofitsrelationshipwiththeprivatesector,andtheintensityofits involvementinthemarket(johnson,1981p.9f10).thecdsispreeminentinsettingupsubstantive socialandeconomicgoals,whichitrequirestheprivatesectortomeet,whereasthe regulatory state,liberalfdemocraticorsocialdemocraticstates,establishestheframeworkforcomponentsof thesectortosettheirowngoals.furthermore,thecdsisknownforthepowerandautonomyofits 12

16 elitebureaucracy,thatratherthanthepoliticoflegislativeelitemakesthemainagreedpolicygoals, inkeyministries(johnson,1981p.12). Today,thereisnoagreementoverwhatispreciselymeantwiththeCDS.Therehavebeenvaluable interpretationsofthecds,bytheoristssuchas;johnson,evans,wadeandamsden.however,in 1995,AdrianLeftwich,inordertocreateamodeloftheCDS,generalisedacrossdifferentcountries andcdstheorists,andidentifiedsixmajorcomponents,thatoftencharacterisesthesecdssthat are known for their high economic growth. The sixcomponents will be the foundation for the analysisofwhichfactorscontributedtothehigheconomicgrowthinchina. ThefollowingpartofthethesisdescribestheCDS ssixcomponentsindepth; The&Developmental&Elite&& CDSs are more than often distinguished by their developmental elites. The core elite is often associatedwithasmallgroupofdevelopmentallydeterminedseniorpoliticiansandbureaucrats, withacloserelationshiptotheexecutiveheadofgovernment,whoisinstrumentalinestablishing the developmental regime and its culture. The core policy circles around the leadership is often quitesmall,thisisdonetomaintainthecoherenceofthecoalitionsupportingtheelite,whichis crucialforthecontinuityofthesedevelopmentalstates(leftwich,1995p.405). A striking feature of these elites in CDSs are the intimacy and linkage of their bureaucratic and politicalcomponents.densetrafficbetweenthehighpoliticalofficeandseniorlevelsoftheciviland military bureaucracy is particularly known in CDSs. Which means that the bureaucracy has an authoritativeandpivotalinfluenceinmakingdevelopmentalpolicy.developmentalelitesarenot monolithicentities;theyareoftenshiftingcoalitionsofdiverseinterests.sociofeconomicchange hasdiversifiedthestructureofinterests,ideas,societiesandinstitutionsandallcdssexperiences intrafelitepoliticalandpolicyconflicts(leftwich,1995p.405f406;ascitedinjohnson,1981p.44f 48). 13

17 Corruption is difficult to identify, define and measure comparatively, but according to the CDS theory,cdssarenotimmunefromit.wheneconomiesgrowthrapidly,thewealthgenerateshuge temptations,andincountrieswheretheroleofthestateintheeconomiclifeisdeeplyembedded, thetemptationmightbeevenbigger.cdsssuchasthailandandindonesiaareexampleofcountries thathaveexperiencedahighlevelofcorruption,however,generally,developmentalstateelites havebeenrelativelynonfcorruptcomparedtootherdevelopingcountries.cdsshavenotexhibited the sultanism of many African countries, nor do they manifest the pervasive and corrosive patrimonialismofnonfcdss,oftencharacterisedbychronicpoliticalinstability,endemicpoverty andeconomicstagnation(leftwich,1995p.407). Relative&Autonomy&& Another aspect of the CDS is the relative autonomy of the state institutions and elites (ReuschemeyerandEvens,1985,p.48F49).Therelativestateautonomyvariesfromstatetostate, butitiscommoninallcdss(mackie,1988p.295).autonomyisdefinedaswhenthestatehas achievedrelativeindependenceorinsulationfromspecialinterestsanditoverridestheseinterests intheputativenationalinterest(nordlinger,1987p.361).itdoesnotmeanthatspecialinterests do not benefit from developmental strategies pursued by the state and in some CDSs, such as ThailandandIndonesia,thestatehasbeenlessautonomousandmoreopentopressurefromvested interests,thanothercdss,likesouthkoreaorsingapore(leftwich,1995p.408ascitedin;crouch, 1984;Cone,1988pp.252F268).Autonomy,inthecontextofCDSsdoesnotmeanisolation,butmore embeddedautonomy,meaningthatdespitethepowerandautonomyofthestatebureaucracies, theyareembeddedinaprogressivelydensewebofties,includingnonfstateandotherinternaland external state actors, through which the state is able to coordinate both the economy and implementdevelopmentalobjectives(leftwich,1995p.408ascitedin;johnson,1981p.13;evans, 1989pp.575F81;Öniş,1991pp.123F124;WeissandHobson,1994,Ch.1).CommonlyforCDSsare alsotheprimordialassociationbetweenthedevelopmentofmilitarycapacityandtheautonomy andpowerofthecds(burmeister,1986p.122),thishastodowiththestatesneedtoresponseto regionalcompetitionandexternalthreats(leftwich,1995p.408ascitedin;migdal,1988p.269f 277)anexampleofthisisSouthKoreasfiercelynationalisticandcompletivestruggleswithNorth Korea(McVey,1992p.28). 14

18 InstatesthatareorwereknownasnonFdemocraticCDSs,thesinglemajorpoliticalsourceofrelative state autonomy is the seizure of state power, either from below or above, by a modernising developmentalelite.insouthkoreathiswasgeneralparkchunghee scoupin1961.manyofthese takeovers or seizure of state power have been followed by the, often brutal, elimination, marginalisationorsubordinationofpoliticalgroups,organisationsorsociofeconomicclasses,who have previously enjoyed wealth and power, but are now seen as a threat to sabotage the new regimeanditsdevelopmentalpurposes.thiswasforexampleseeninindonesiabetweenoctober 1965andJanuary1966,whereover supportersoftheIndonesianCommunistPartywere physicallyannihilated,bythearmy(leftwich,1995p.409ascitedin;anderson,1983;1993p.5).in theprocessyouth,labour,studentandpeasantorganisationsweresuppressed,restrictedorcof opted as functional elements of the ruling party GOLKAR (Leftwich, 1995 p. 410 as cited in; Emmerson, 1978 p. 90F100; Robinson, 1985). In CDSs, such as Malaysia and Singapore, the autonomyontheotherhandappearsinlargemeasuretohavebeenafunctionofthedominance ofasingleparty.inmalaysia,theumnohasbeenthecontrollingdominantinthebarisannasional. Theparty scommitmenttosecuremalayhegemonyinthestateandtopromotemalayinteresthas beenthebasisofitsdominance.thishas,tothisday,giventheleadershipofthepartyumnoand thebarisannasionalboththepowerandautonomytotakeallmajorpolicydecisionsinconjunction withseniorlevelsofthepredominantlymalaybureaucracy,whichhaslefttheparliamentandpublic debatewithoutanysignificantrole(leftwich,1995p.410ascitedin;means,1976pp.441f443; Puthucheary,1978pp.40F44;Ahmad,1989). Insomeofthesestatestheinternalautonomyhasbeenstrengthenedfurthermore,becauseofthe inflowoflargeamountsofstatefdirectedprivateinvestmentcapital,foreignaidandloans,which hasreducedgovernmentsdependenceonlocalgeneratedrevenuecapital,thishasbeenseenin bothsouthkorea,thailandandindonesia(leftwich,1995p.411). Economic&Bureaucracy&& CDSseconomiccoordinationanddevelopmentaremanagedbyspecificinstitutions,whosemain jobaretoorganisethecriticalinteractionsbetweenthestateandeconomy,beyondwhatatypical economic or finance institution does. Great examples of this are the Japanese Ministry of InternationaltradeandthethreekeyagenciesinTaiwan;TheCouncilforEconomicPlanningand 15

19 Development, the Industrial Development Bureau and the Council for Agricultural Planning and development(wade,1990p.196).theeconomicbureaucraciesarethecorecentresofthestrategic economicdirectionsincdss,johnsonin1982,describedtheseas pilotagencies (Johnson,1982p. 26).ThedifferencebetweentheeconomichighcommandsthatareseeninCDSsandtheplanning institutions in many other developing countries are their real power, technical competence, authority and insulation in shaping development policy. Some of these economic bureaucracies havenotorarenotaccountabletoparliament,butarehighlypoliticallysupported,especiallyin onefparty states, where they have been central in shaping development policy and thereby managinggrowth.forexample,thisisseeninsingaporewherethecoreeconomicbureaucracy,the EconomicDevelopmentBoard,whichwasestablishedin1961,isnotaccountabletoparliament,but continues to be very central in shaping the developing and growth that is seen In Singapore (Haggard,1990pp.113F114).InsomeCDSs,suchasIndonesiaandThailand,thecompactness,unity, efficacyandpoweroftheeconomicbureaucraciesseemtohavebeenless,inthisrespect,both countriesdistancethemselvesfromthepuremodelofthecds.oneofthereasonsforthefailure todevelopedthesamestrongeconomicbureaucracyinthailand,asseeninothercdsshasbeen competingbureaucraticbusinessfactions,popularpressure,divisionsinthemilitaryandalternating civilianandmilitaryrules(leftwich,1995p.413ascitedin;couch1984;cone,1988pp252f268). An important feature of these essential bureaucracies are their technical competence(leftwich, 1995p.413ascitedin;Amsden,1985p.83;Johnson,1987p.152;Evans,1989p.p.573F574;Wade, 1990pp.217F224;Öniş,1991p.114;Charlton,1991p.82).Manyoftheofficialsintheseinstitutions, incdss,forexampleinthailand,havereceivedadvancedtraininginforeigncountries(girling,1981 p. 82). Many of these well educated people have a large influence in shaping the modernising objectivesofthepoliticalleadershipinthecdssandhave,therefore,hadanactivepartindefining thedevelopmentalconsensusovertime.thecompetitiontoenterpositionswithintheseministries andinstitutionsarehardandonlythebesteducatedandloyalonesarechosen,whichgivesgreat prospectsforafuturecareerforthecandidates,bothinsideandlateroutsidethebureaucracies (Johnson,1982p.21). 16

20 Weak&and&Subordinated&Civil&Society&& CDSs are known for not leaving space for organisations such as labour unions, nonfprofit organisations,independentmediaetc.theygenerallyoperateinsocialcontextswherecivilsociety, privatelyorganisedinterestsandgroups,abovefamilylevel,andbelowstatelevel,arecrushedor weakespeciallyintheformativeyears(rueschemeyeretal.,1992p.6).morethanoftencdssare strong states, with much infrastructural power, which they can use to penetrate and centrally coordinatetheactivitiesofcivilsociety(mann,1986p.114),theyarestatesthatarenotthreatened byother rulefmaking organisations,thattriestoclaimcontrolovercertaingroupsandchallenges theprefeminenceofthestate(migdal,1987p.401).tobolsteringthestateandcontrolcivilsociety, theuseofinternalsecuritylegislationandagencies,partyorganisationsandsecretpoliceareoften standard practice. It is common that mass media and labour organisations are being strictly controlled.theweakcivilsocietythatcdssareknownfor,especiallyintheformativeyears,are oftenaresultofadirectattackuponit,likeitwasseeninindonesiabetweenoctober1965and January1966,wheretheoppositionpartieswereeffectivelyeliminated(Cotton,1992p.523F524). SocioFeconomic class formation and differentiation is the typical medium for the growth and emergenceofanactivecivilsociety.generally,thisislimited,especiallyintheearlyyearsofcdss, whereitisnotabnormalthatcertainorganisationsareignoredinfavourofnewones,sponsored andsupportedbythestate.insouthkorea,theweaknessofthesocialclasswastheconditionfor theemergenceofthecds.heretheworkingclasswassmall,thearistocracyhadbeendissolvedby landreformandthecapitalistclasswasheavydependentonthestate(amsden,1989p.52). Thegeneralweaknessandcontrolofcivilsocietyareageneralconditionfortheconstitutionand continuityofcdss.however,theeconomicsuccessofthecdsshaspromotedtherefemergence and growth of a potentially active civil society. Expanding educational provision, rising levels of consumption, participation in modern economic life, strengthening of the organisations of both labourandcapitaletc.haveallbeenachievementsofthecds.thesuccessofthecdshasmeant thatdemandsfromcivilsocietyhasemergedandinsomecdsshelpedstimulatethedemandfor greaterindividualliberty,theestablishmentorextensionofdemocracyanddecentraliseddecisionf making.manycdss,suchassouthkorea,indonesiaandthailandareatdifferentlevelsofthese 17

21 demandsatthemoment,butitgrowsthequestionofthefutureofthecdsandtheroleofcivil societyinit(leftwich,1995p.416). Effective&Management&of&NonJState&Economic&Interests& CDSs are often actively influence their trade balance; with measures such as bans on import of specificgoodsorforeigntravel.furthermore,cdss,atleastintheirfirstyears,exerciseagreatdeal ofcontroloverforeigninvestments.thisissometimesreferredtoas economicnationalism.thisis akeypointforcdss,thestatepowerandautonomyareconsolidatedbeforenationalorforeign capitalbecomesinfluential.intheformativeyearsofthecds,privateeconomicinterestsareoften eithersuppressedorpoliticallyweak,relativetostatepower.wherelandedpowerexists,especially in the formative years, it is destroyed through direct political attacks and programmes of land reforms.insomecdss,suchasmalaysiaandsingapore,localbourgeoisclassesandprivateforeign capital existed, but it was cautious and weak, relative to the state, that was the most powerful (Leftwich,1995p.416F417).Theexclusionoflocalbourgeoisclassesandprivateforeigncapitalin the formative years positioned the East Asian CDSs in a position where they themselves could determinetheroletransnationalcapitalshouldhaveintheindustrialdivisionoflabour(evans,1987 p.215).manyofthecdsshavesatupabatteryofpolicyinstruments;screeningandmonitoringof foreigncapital,jointenterprises,localcontentrequirementsetc.tocontrolthetransnationalcapital (Johnson,1987p.163).Thishasattractedforeigncapital,thatservesthestate sdomesticeconomic developmental priorities(leftwich, 1995 p. 417 as cited in; Haggard and Cheng, 1987; Amsden, 1989; Mardon, 1990 p. 111F138; Stallings, 1990). Even more, CDSs have had a major role in encouraging the emerge and growth of private economic institutions, while at the same time controlling their shape, scope and focus of activity. An example could be South Korea, that has actively been promoting, persuading, bullying and pushing these institutions and interests in a direction that conform to the country s development strategy (Leftwich, 1995 p. 417; Amsden, 1989).ThepatternsthathavebeenseeninCDSs,withanintimateandintensestateFprivatesector relationshiphasledtoasituation,wherethe leadership roleofthecdsisfarmoreimportantthan its followership role(wade,1990p.295).becauseofthat,manycdsshaveacloserelationship betweentheemergingprivatesectorandthestate(leftwich,1995p.417ascitedin;evans,1989 pp.561f587;öniş,1991pp.109f126). 18

22 Repression,&Legitimacy&and&Performance& OneofthemorenegativefeaturesharedbyCDSsistheirsometimesruthlesssuppressionofcivil rights, their generally sustained performance in delivering developmental goods and their apparentlywidemeasureoflegitimacy(leftwich,1995p.418).itisatendencythatcdsssupress civil liberties and protect their own political power. In countries that are nonfdemocratic, this is oftendonethroughoutrightrepression.indemocraticcountriesittakesasubtlerapproachwitha mixtureofrepressionandlegitimacy,wherecdsgovernmentsretaintheirlegitimacyandpopularity throughtheireconomicsuccessorthepositiveimpacttheyhaveonlargepartsofthepopulation, byforexampleinvestinginhumancapital,throughvariousforms,suchas,supportingeducationor public investments in healthcare. The Human development index rates in the CDSs in east and southeastasiahaveincreased.generally,thesecdsshavebeeneffectiveandseriousinbringing, roads,publichousing,healthcentres,schoolsandotherfacilitiestoanincreasingcircleofpeople. Thishashadapositiveeffectonlifeexpectancyandlivingconditions,howeverinequalityisstillan issueinmanycdsstoday,especiallybetweenregionalandurbanareas(leftwich,1995p.418f420). Generally,CDSsarenotatthebottomofthelistofcountriesneglectingtheirpopulationshuman rights,butsomeofthemhaveappallinghumanrightsrecords,atleastsetagainstliberalstandards (Leftwich,1995p.418). & The&Theory&of&Good&Governance ThereisnosingledefinitionofthetheoryGoodGovernance,noristhereadelimitation.Thetheory isveryflexible,whichcanbebothanadvantageanddisadvantageatoperationallevel.thetheory, isnotalaw,but unwritten normsandethicsoncorrectgovernance.itarosebecauseoftheuseof badgovernance,meaningunaccountableprocesses,disrespectofhumanrightsandhighcorruption inespeciallydevelopingcountries(caluserandsalagean,2007p.13).goodgovernancebecamea responsetothebadgovernanceandtodaycertaintermshavebecomecloselyassociatedwiththe theory, for example: Transparent and accountable processes and institutions, political empowerment of the people, antifcorruption, access to knowledge, equality, information and education,theruleoflaw,politicalpluralism,legitimacy,effectiveparticipation,sustainability,full respectofhumanrightsandattitudesandvaluesthatfosterresponsibility,solidarityandtolerance (UNHR,2015). 19

23 UnitedNationsDevelopmentProgrammehascreatedsomeprinciplesandconceptsassociatedto thetheoryofgoodgovernance,$whichbygraham,amos&plumptre(2003,p.3)aregroupedunder fivebroadertermsandrefereedtoas The$Five$Principles$of$Good$Governance.Thefiveprinciples are:legitimacyandvoice,direction,performance,accountabilityandfairness.thefollowingpart ofthisthesiselaboratesthemainconceptswithin The$Five$Good$Governance$Principles,whichis usedintheanalysisanddiscussiontoaccountforthepresenceandroleofgoodgovernanceasa factorinthehigheconomicgrowthinchinasince1978. $ Thefollowingpartofthisthesiselaborates The$Five$Good$Governance$Principles ; & Legitimacy&and&Voice& Participation:( All humans should be heard in decisionfmaking processes, directly or through legitimate intermediate institutions that have the ability to represent their intention. The participationisbuildonfreedomofassociationandspeech. Consensus$orientation:GoodGovernancefacilitatesdifferingintereststoreachaboardagreement onwhatisinthebestinterestofthegroupand,whereitispossible,onproceduresandpolicies (Graham,Amos&Plumptre,2003p.3). & Direction&& Strategic$vision:ThepublicandleadershaveacomprehensiveandlongFtermperspectiveonhuman developmentandgoodgovernance,combinedwithastrongsenseofwhatisneedtoachieveit. There is also, in the strategic vision, a good understanding of the social, cultural and historical complexitiesinwhichthatperspectiveisgrounded(graham,amos&plumptre,2003p.3). Performance& Responsiveness:Processesandinstitutionstry,totheirbestability,toserveallstakeholders. Effectiveness$and$efficiency:Institutionsandprocessesputtheirbesteffortintoproducingresults thatmeettheneedofthepopulation,whilemakingthebestuseofresources(graham,amos& Plumptre,2003,p.3). 20

24 Accountability& Accountability:DecisionFmakersnotonlyinthegovernment,butalsoincivilsocietyorganisations andtheprivatesectorareaccountabletothepublicandtoinstitutionalstakeholders.$ Transparency:Theremustbeafreeflowofinformation.Institutions,informationandprocessesare directlyaccessibletothoseconcernedwiththem,andenoughinformationshouldbeprovidedto monitor and understand them. Policies to limit corruption must be put in place and actively managed(graham,amos&plumptre,2003p.3) Fairness& Equality:AllwomanandmenhaveequalopportunitiestomaintainorimprovetheirwellFbeing. Rule$of$Law:Thelegalframeworkofthestateshouldbefairandenforcedimpartially,especiallythe lawsonhumanrights(graham,amos&plumptre,2003p.3). Internationalorganisationsandinstitutes,liketheUnitedNations,EuropeanUnionandWorldBank together with liberal economists, who helped constitute the mainstream consensus on Good Governance,advocatethatitiscrucialforastate,seekingdevelopmentandeconomicgrowth,to havegoodgovernance.thatincludesalegalsystem,withagoodruleoflaw,minimalrentseekingf and corruption and an accountable and transparent government (Khan, 2007 p. 3). These organisationsandinstitutionsallseegoodgovernanceasanimportantfactorindevelopmentand growth. Projects by the World Bank and multilateral developments banks on Good Governance oftenfocusonpublicsectormanagementandeconomicinstitutions,whileorganisationssuchas theoecdandunitednationsmoretendtohighlighthumanrightsanddemocraticgovernancein theirwork(unu,2012). Theoretical&Implications& TheanalysisusestheCDStheory,whichservesastheprimarytheoryandoverallframeworkofthe analysis.thesixdifferentcomponentsareusedintheanalysisofthefactorscontributingtothehigh economicgrowthinchinasince1978.thesixcomponentsespeciallyfocusonthestate sroleasa factorinthehigheconomicgrowthandtheactionstakenbythestatetosecureit. 21

25 GoodGovernanceservesasthesecondarytheorytoanalyseanddiscussthepresenceandroleof Good Governance as a factor in the high economic growth in China. A majority of the concepts withinthetheorywillindirectlyanddirectlybeincludedintheanalysisandusedasthefoundation foradiscussiononthepresenceandroleofgoodgovernanceasafactorinthehigheconomic growthinchina. & & & & 22

26 Chapter&Four:&Analysis&& China& &The&Capitalist&Developmental&State& ThefollowingpartofthethesiswillbyusingtheCDStheoryastheoverallframework,analysethe factorsthathavecontributedtothehigheconomicgrowthinchina.allsixcomponentswillbeused, astheyeachcontributewithmaterialthatconcludestheirroleinthehigheconomicgrowthinchina. The&Developmental&Elite:&Deng&Xiaoping&and&the&Politburo&Standing&Committee& AccordingtotheCDStheory,CDSsaremorethanoftendistinguishedbytheirdevelopmentalelites, whichisoftencharacterisedbyasmallgroupofdevelopmentallydeterminedseniorpoliticiansand bureaucrats,withacloserelationshiptotheexecutiveheadofgovernment(leftwich,1995p.405). After the death of Mao Zedong, a reordering of objectives was made in China, from political to economic;itcanbeverywellarguedthatthenewparamountleaderdengxiaoping,becameto China s transformation from plan economy to socialistic market economy and its high economic growth,whatprimeministerleekuanyewinsingapore(theeconomistii,2015)andpresidentpark ChungHeeinSouthKorea(Denney,2015)weretotheirs.Astrongdeterminateleader,committed and willing to sacrifice the short term welfare of the population, in order to develop a modern economy,throughaperiodofrapidindustrialisation.tostrengthenthepoweroftheparty,deng Xiaoping restored the Politburo Standing Committee, the highest committee within the party, consisting of the top leadership. During the period of Mao Zedong, the committee had for long periodsbeenleftoutofthepoliticalcentreandreplacedwiththeculturalrevolutiongroupasthe mainpowerbehindpolitics((miller,2015pp.1f2).today,almost40yearsaftertheintroductionof thereforms,thepolitburostandingcommitteeunofficiallycontinuestobethesupremedecision makingbodywithinchina(thenationalpeople scongressistheformallyhighestorganofpower). Itconsistsofsevenhighrankingpartymembersandleaderssuchas,XiJinping,Presidentofthe People'sRepublicofChina,HeadoftheCCPandchairmanofChina'sCentralMilitaryCommission, LiKeqiang,PremieroftheStateCouncil,andZhangDejiang,ChairmanoftheStandingCommittee ofthenationalpeople'scongress(worldtime,2012). ThenewChineseleadershipwithparamountleaderDengXiaopinginfrontembarkedoneconomic growthastheirmaingoal,aboveallelseitwassetoneconomicreforms(muni&yong,2012p.149). 23

27 Thefourmodernizations,firstsetforthin1963,byZhouEnlaiandlaterenactedin1978byDeng Xiaopingandthenewleadership,werekeyideastostrengthenthefieldsofindustry,scienceand technology, agriculture and national defence, to rejuvenating the Chinese economy (Oxford Reference,2007).Fragmentationatthetopofthestate,especiallybetween1978and1993were the number of Veto players made it difficult to agree, affected the process(knight, 2012, p. 6). AccordingtotheCDStheory,theSocioFeconomicchangediversifiesthestructureofinterests,ideas, societiesandinstitutionsanditisthereforenormalforacds,toexperienceintrafelitepoliticaland policyconflict(leftwich,1995p.405f406;ascitedinjohnson,1981p.44f48).however,thedeadof manyoftheelderrevolutionaryleaders,whoseideasofeconomicreformsdifferentiatedfromthose ofthe newer generation s,madethedecisionmakingprocesseasierovertime(knight,2012,p.6). TheoverallunitedgoaloftheChineseleadership,in1978,toembarkoneconomicgrowth,came firstandforemost,fromastrongdesiretoearnbackthepoliticallegitimacythatwaslostduringthe years of economic stagnation; the Great Leap Forward and the Culture revolution. The new leadershipbelievedeconomicdevelopmenttobenecessary,iffailingtodoso,itcouldleadtosocial tension and political decline. Through the improvement of living standards, the new leadership believedthat,inreturn,thepopulationwouldrestoreandsolidifytheirpoliticalsupportfortheccp. Thesecondreasonforthedesireofeconomicreformswastheawarenessoftheprosperityofthe WestandtheeconomicsuccessofotherEastAsiancountries,suchasJapanandSouthKorea.The newleadershipbelievedthatchinacouldachievehigheconomicgrowthbyharnessingthemarket and more open economic polies. Third, the cultural revolution had undermined the capacity for central planning. The new leadership focused on a reform of the state and party, greater professionalism, through educational qualifications, training and a system that rewarded achievementoftheobjectivessetoutbythestate,whichaccordingtothecdstheoryisanatural stepforthecdstotake(leftwich,1995p.413ascitedin;amsden,1985p.83;johnson,1987p. 152;Evans,1989p.p.573F574;Wade,1990pp.217F224;Öniş,1991p.114;Charlton,1991p.82). Furthermore,themanagersofStateOwnedEnterpriseswereformedtomeettheobjectivessetout bytheccp,whichwereamajorpartoftheachievementofhigheconomicgrowth(knight,2012,p. 3F4). 24