China s Political Economy: Sino-Capitalism in the Xi Jinping Era. Christopher A. McNally Chaminade University and East-West Center

Transcription

1 China s Political Economy: Sino-Capitalism in the Xi Jinping Era Christopher A. McNally Chaminade University and East-West Center

2 Argument 1: The monumental changes taking place in China can be seen as associated with the same historical dynamic that catapulted Meiji Japan and Bismarck s Germany to international prominence the development of a capitalist political economy (classical late developer)

3 Chinese Communist Party (CCP) says NO!!! China is a socialist market economy with Chinese characteristics But the vast majority of analysts and scholars agree that China s present political economy has all the hallmarks of CAPITALISM: Relentless search for profits Substantial private sector and private property rights Market competition and incipient market society Internationalized economy, especially in manufacturing

4 1. State-Centric Capitalism: Y.S. Huang; Ian Bremmer; Minxin Pei 2. Bottom-Up Network Capitalism: Guanxi Capitalism Opper & Nee; K. Tsai; McNally 3. Neo-Liberal Elements from the Global System: Chu & So State Neo-liberalism 4. Outside-In (Networks): You-tien Hsing; D. Zweig; Ed Steinfeld ( Playing Our Game ) Capitalist facilitator / key component of global value chains

5 All agree that China is developing a capitalist political economy (Fligstein and Zhang 2011; Peck and Zhang 2013) BUT the empirical literature provides cases that appear to fit all of the alternative views In turn, this reflects the limits of empirical study and the lack of systematic, overarching theoretical thinking (Fligstein and Zhang 2011: 41)

6 China is not a mirror image of the West. Rather it is an independent vision of how a society can be put together, and must be understood in its own terms. Cross-cultural comparisons are an important means to fashion such independent understandings, but... the concepts and the theories of analysis should take their meaning from China s historical experience (Hamilton 1985: 207).

7 Argument 2: The form of capitalism China is developing differs from Anglo-American capitalisms (and coordinated capitalisms in EU, chiefly Germany) in important respects China s economic reemergence is generating Sino-capitalism a capitalist system that is already global in reach, but based on China s historical background

8 So, what is Sino- Capitalism?

9 Sino-capitalism is conceived of as based on three interrelated/co-dependent institutional spheres: 1) State capitalism 2) Network capitalism 3) Globalized capitalism The interaction of these three spheres creates Sinocapitalism s master logic or raison d'être: 1) Gradualism and experimental work-around solutions keeping state control intact while undertaking economic liberalization 2) Development planning top-down combined with multiple policy trials and experiments leading to institutional hybridization and learning 3) The unique dialectic of Sino-capitalism

10 Primary dialectic of institutional spheres Refurbished State Capitalism /-/ Network (+Globalized) Capitalism

11 Unique dialectic: a compensatory institutional structure whereby state capitalist features are balanced by vibrant entrepreneurial private capital accumulation and influences from the global capitalist system! Successful institutional hybridization has allowed two dissimilar types of capital accumulation to co-exist and become co-dependent The top-down, bottom-up dynamic is at times in tension and characterized by incongruence / inefficiencies But it is also in symbiosis, creating compensatory institutional complementarities that balance each other and foster a stable dynamic of institutional upgrading

12 Three primary interrelated institutional spheres under Sino-capitalism: 1) State capitalism 2) Network capitalism 3) Global capitalism

13 Sino-capitalism assigns the Chinese state a leading role in fostering and guiding capitalist accumulation The Chinese state itself has played a key role in accumulating capital, while effectively guiding capital accumulation by private forces

14 Top-down Leninist party-state incentives State control over the largest firms the commanding heights Wide array of regulatory tools State control over the financial system These all have played crucial roles in producing China s capitalist transformation

15 Production clusters based on highly entrepreneurial and flexibly networked systems of small- and medium-sized firms have driven China s capitalist development to a considerable extent bottom-up Network Capitalism

16 Sino-capitalism is therefore not pure state capitalism Its bottom-up network character imbues it with a highly flexible entrepreneurial element Network capitalism also effectively integrates Sino-capitalism into global production and knowledge networks

17 Neoliberal globalization since 1980 prodded the Chinese government toward developing one of the highest absorption capacities for global capital among developing economies China, however, also has followed its Asian predecessors by using programs of subsidized investment in strategic industries and, most prominently, exchange rate controls to maintain an under-valued currency to foster export performance

18 There are historical parallels to China s imperial political economy during the late Song to Qing dynasties Dominant state // subservient capital and middle classes No separate sphere of the economy

19 Tributary State Small-scale Merchant Capital

20 Capitalist System: China (abstract) State Capital Market Society (Civil Society)

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22 1. Anti-corruption campaign 2. Party-state refurbishment 3. Legal rule 4. Economic reform 5. Social reform 6. International Chinese renaissance THE CHINA DREAM

23 Anti-corruption campaign most forceful and longest lasting ever seen in CCP history Major institutional changes, especially regarding the Central Discipline Inspection Commission (CDIC) and its local branches (increase in manpower, funding, higher bureaucratic status, and new tools to fight corruption) Stunning impact on Chinese society, especially for government employees

24 Major efforts to strengthen party control over all realms of society, including thought control and propaganda Use of the nomenklatura system and Organization Department to improve the governance capability of cadres and their effectiveness in upholding the rule of law

25 Legal reforms have been highlighted during the fourth plenum in the fall of 2014 Split courts from local administration (as with CDIC) not to be confused with legal autonomy Accountability and transparency of government officials to be improved a lifelong liability accounting system for major decisions and a retrospective mechanism to hold people accountable for wrong decisions

26 Seek to allow prosecutors to file public interest litigation cases (consumer protection/env.) Emphasis on the importance of China s constitution (ironic!) Greater central integration of court system & greater professionalism to strengthen the rule of law. BUT this does not mean a decrease in CCP authority The Party remains above the law and the constitution. The rule of law remains a mechanism for asserting central authority

27 Chuangxin - 创新 of governance from exercising authority to providing services and fertile ground for entrepreneurship (Shanghai is the major experimental site for this since May 2015) Also the fostering of mega-urban regional development as with Jing-Jin-Ji (Northern China Plain) and in the Sichuan Basin (Chengdu and Chongqing)

28 The XJP Reforms The Economy Some essentially liberal policy measures are being implemented But the main policy thrust is one of centralization, standardization, and regulation under state guidance Use government in a more effective and concentrated manner Aim is to revamp, restructure, and, ultimately, strengthen the state

29 The XJP Reforms The Economy However, interests within the state (especially in large state firms and social service providers) most likely to oppose certain reform measures The CCP stands at the center of this reform effort, since its incentive and control systems can make or break efforts to rebalance China s political economy

30 Present system extremely inefficient and bad for the environment since no incentive to buy power from alternative energy producers Biggest obstacles are the two large grid corporations in China (both huge SOEs) Two experiments (Shenzhen and Inner Mongolia) to allow market forces to decide electricity rates Grid providers only earn a service fee for providing grid services Tricky reforms, since things can go really wrong (cf. California; HECO s travails) gradual experimental approach!

31 China s emergent political economy represents a reconstituted and refurbished form of state capitalism, including indicative planning and state sector dominance (though with a vibrant, entrepreneurial, and globally networked private sector) Now, the Chinese party-state is undertaking a new endeavor to rebalance and reform This is a CCP initiated and led project a statist strategy to restore better government control over social service provision and co-opt social interests into supporting the party-state (cf. Singapore)

32 The XJP reforms both in the political and economic realm express the basic logic of Sino-capitalism While part of the policy package includes limited liberalization and marketization, this is balanced by concerted efforts to establish better state capacity to govern the political economy Combination of top-down state-centric modes of governance juxtaposed with bottom-up entrepreneurial networked modes of governance remain at the center of China s political economy

33 The XJP reform package is clearly aimed at strengthening both markets and state power; both state capital and private capital; and both the CCP party-state and society A Leninist Confucian hybrid is emerging that employs a Listian mercantilist strategy under 21 st Century conditions of globalization This poses a challenge to our understanding of what constitutes the key to successful and sustainable economic development certainly does not fit Western narratives of what are possible paths to successful development

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35 Renaissance of the Chinese nation dependent on revamping the connection between the Party and the people The CCP has to establish effective governance and boost its image / legitimacy Only a powerful party with a powerful leader can guide China into the future Only in this manner (so goes the narrative) can China regain its preeminent great power status ( 富国强国 - fuguo qiangguo) among all nations (but for now especially in Asia)

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37 New policies are aimed at globalizing China s political economy Sino-capitalism deeply shapes these policies This is not a Beijing Consensus in the sense of a state capitalist alternative to the Washington Consensus A messy multi-polar system whose precepts hark back to the embedded liberalism of the post-world War II period is more likely to emerge than an epic struggle between two systems The Sino-Capitalism Consensus : Markets paired with a compensating state, creating more stable economies!? Global production networks (Global Value Chains) paired with massive state infrastructural support, creating economies of scale, open trade, and innovative capacities

38 Examples of this Sino-capitalist strategy of globalizing China are beginning to become more apparent: Asian Infrastructure Investment Bank (AIIB) New Development Bank BRICS Bank (and other BRICS initiatives) One belt, one road (Silk Road Initiatives) Massive global investments in infrastructure, such as in Latin America, Russia, and Pakistan

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40 NOT ALL OF THESE INITIATIVES WILL NECESSARILY BE SUCCESSFUL BUT TOGETHER THEY WILL RESHAPE THE GLOBAL POLITICAL ECONOMY! China s rapidly expanding footprint here (Latin America) speaks volumes about the changing world order, as Beijing surges forward and Washington gradually loses ground... With the center of financial gravity shifting, China is aggressively asserting its economic clout to win diplomatic allies, invest its vast wealth, promote its currency and secure muchneeded natural resources. (NYT July 24, 2015)

41 Thank You! 谢谢!