The China model: Pragmatism, flexibility and gradualism

There are a lot of theoretical discussions about which development model is able to explain the Chinese capitalism, but all without success. For example Chen (2002) pointed out a lot of contradictions among capitalism theories and the reality of Chinese capitalism, which sometimes is classified as non-capitalist, because its socialism system as economic foundation and other issues.

One the main theories predict that capitalism produces a middle class and a bourgeoisie independent of the state power, pressuring to democracy, as it had occurred in western, liberal democracy grew out automatically of capitalism system. But also in the case of China this theory failed. The Chinese system receive the manes of socialist market economy, since one important feature is that it include market forces and a central political elite, but with preferences for the political domain.

Of course there some differences between Chinese capitalism and western capitalism, for example it is pointed out that for the former, the private sector suffer from state discrimination policy, such as of bank loans or taxation. There are not certainly answer about Who are the beneficiaries of these policies? How unfair is this situation of unequal market competition environment?

Even for some Asian economies with similar cultures to China, such as Taiwan and Korea, it is known that after a short time of capitalism, political control by an one-party were eroded, emerging political opposition, multiparty system and autonomous civil society. Yet, in the case of China it is said that CCP never tolerate any strong group of entrepreneurs as bourgeoisie emergence out of the market.

This kind of “Chinese capitalism” could be seen deeper at the local level. Where, the CCP had not sought other sociopolitical forces than its bureaucracy, and where the implementation of the market reform had created a kind of patron-client relationship between local governments and private business. Being state dominance worse than at the central level.

The situation is ambiguous, because although CCP had rejected a return to central planning of the past, also they no tend to go toward a true economic liberalism, even less to democracy Chen (2002). Besides, there still a flagrantly unfair offering state resources and opportunities to the Children and relative of official and cadres.

For some scholar, the Chinese entrepreneurs still very suspicions about the commitment of the CCP with capitalism, since remaining anti-capitalism practice, ranging from the registration of a company to the sale of products, which always required governmental approval, pretty different of a capitalist society where these approvals is based on explicit rules and regulation.

For a healthy capitalism, clear legal institutions is desired much more than the current party-state capacity of manipulation of the market. Unfortunately, according to Chen (2002), China’s private business must rely heavily upon arbitrary political power of the CCP in order to survive and prosper.

As Zheng (1994) pointed out, although Chinese leaders realized the importance of democracy, they consider economic growth as the priority, and it is thought that authoritarian system is better than democratic to assure economic growth.

Also, there is an important cultural dimension in China, about masses’ strong identification with the state. This necessarily strengthen the state’s commanding position and weaken social forces, while the relation state-society still not institutionalized Zheng (1994).

The fact that theories cannot fit the Chinese capitalism, does not mean that China is not capitalism economy, because it has specific characteristics and genuine process of gradual capitalism. Some scholars classified it as pragmatism, which involve the keep of legitimacy and the fulfillment of goals of development.

Theoretically, a typical authoritarian regime do not need and ideological justification to apply its policies, however in China, the CCP need to use a socialism discourse to keep legitimacy of its regime, being its most important policies the economic reform and the open policy, which obviously are pro-capitalism policies.

Since the Russian experience of democratization and capitalism had been perceived as a disastrous, it is now an important reference for the CCP and big concern. Consequently, for Chinese leaders, some mistakes in the democratization and liberalization process could mean political chaos, economic breakdown, mafia, and other social evils.

Many scholars point out the real perception of some Chinese leaders that democratization and free elections mean endless street demonstration, mass rallies, and basically make the government please the poor majorities. And probably the most determine into CCP policy, it would make China an easy victim of external aggression by other powers.

All these concerns explain clear why the CCP’s preferences of its policies. Thus, Oksenberg (2001) consider acceptable that Chinese leaders opt for making pragmatic and incremental institutional adjustment to solve problems as they arise, in both economic and political areas. He agrees with the using of the metaphor of China’s leaders about to “cross the river stone by stone”.

For Yang (2006) the supposed incessant effort to enhance political central power and sometimes eroding regulatory institutions can be understood as a necessity of stability in an uncertain and rapidly changing external environment. Since CCP is also guided by the idea that potential social tension and big low educated population justify a slow and gradual movement to political reform.

Actually, after the private sector in China became a powerful economic growth engine, the CCP have a accommodating itself to neutralize potential opposition to this growth. In different Congress the regime use to highlight the importance of the private sector for the Chinese development. Even at the local levels, private economy enjoy amiable treatment by the government.

Although in China still a large number of SOEs, and an agenda to rescue them as a priority of the macroeconomic policy, justly the lack of success for recuing money-losing SOEs made private sector more indispensable, especially in terms of employment and government revenue, one interesting example is the ability and explicit proposal made by private business to reemploy laid-off state.

Specifically, at the local areas, the main objective of governmental approvals, which we mentioned previously, would be a rationality of rent seeking rather than following any ideology. For some scholars local officials are not bothered by ideology, they are more practical, since no obstruct privatization, when there is a great enthusiasm for profitability. Actually some local officials have their own private companies.

For some scholar the economic growth experimented by China in so long has given strong incentives for institutionalization in order to assure investment. Even though there is a predominance of the CCP as central power, the political relationship between the center and the local levels is more in favor of a kind of market-preserving federalism Yang (2006).

But this kind of capitalism path followed by CCP, also is shared for other sectors. Thus, the lack interest for democracy would be the real desires of the “Chinese civil society”. As is showed by Chen (2002), who interviewed successful entrepreneurs, nearly half of them prefer the “rule of law” than democracy, just looking for a institutionalized free market order.

Actually, the middleclass share the same idea of the necessary repressive and control over the big poor population and potential demands for egalitarian policies in order to protect their wealth and social statues. Chen (2002) find out of his survey that the most important variable for the middle class is “Social Stability”.

Concerning Chen (2002) also entrepreneurs is resisting democratization because they see some threats such as political reversal and popular anger due to the “unjustifiable” economic inequalities. Where, the “rule of law” would be a legal protection. Thus, in case of emergency such as the 1989 Tiananmen Square the “rule of law” may provide a legal framework for maintaining social order and to keep the state machine functioning normally.

As a consequence, basically there is a middle class agenda for institutionalization of capitalism in order to make their business and capitalism way safe, which has obviously lack of democratic objectives, even being considered pressure on the CCP for fundamental economic-political changes. Therefore, there are also trends of constraining party power over the market.

It is clear that both the State and the entrepreneurs are agreed in maintaining most aspects of the Chinese capitalism. Where, both the importance private sector and the ability of the State, but there pending issues such as the civil society, worker and peasants. The pragmatism of the Chinese leaders suggest that other social demands could be satisfied, if are within the frame of social stability, peaceful development and the improving of standard of life.

The Chinese process could classified slow, gradual or different, but not necessarily contrary to freedom and democracy. The process really not only rely on leaders, the rest sector also are inter-acting. In the case of the poorest, the lack of claim could be explained by a strong collective mentality of the population, which trust on authorities for choosing the most appropriate way for the society.

Finally, It is widely known the important role of state for industrial policy and sustainable economic growth, as had been highlighted for the cases of Japan, Taiwan , Korea, Singapore and so on. In the case of China, given all the circumstance and particularities, the Pragmatism applied, although no perfect, could be positive and the appropriate development model, long as development goals are met, which are more important than classification.



Bibliography
Chen An (2002), “Capitalism Development, Entrepreneurial Class, and Democratization in China”, Political Science Quarterly, Volume 117, Number 3.
Yang, Dali L. (2006), “Economic transformation and its political discontents in China: Authoritarianism, unequal growth, and the dilemmas of political development”, Annu. Rev. Polit. Sci. 2006. 9:143–64 doi: 10.1146/annurev.polisci.9.062404.170624, Copyright_c 2006 by Annual Reviews. All rights reserved First published online as a Review in Advance on Jan. 16, 2006.
Zheng, Yong Nian (1994), “Development and democracy: Are they compatible in China”, Political Science Quaterly; Summer 1994; 109, 2; ABI/INFORM Global.
Oksenberg, Michel (2001), “China’s political system: Challenges of the twenty-first century”, The China Journal, No 45, January 2001.
Shirk, Susan L. (2007), “China: fragile superpower”, Oxford University.