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The Bird in the Cage

Reconciling the Liberal Market Economy with

Communist/Socialist Governing Structures in China

The Chinese Economy Antecedents

- One of the largest economies in the world for the last two millennia- Nonparticipant in the industrial revolution- Regress enhanced and promoted through Maos disastrous reform policies: Cultural Revolution, Great

Leap Forward, Collectivization

The Chinese Economy Reforms

- Deng Xiaoping commonly recognized as godfather of Chinese economic reforms- Formal initiation of reforms in 1978by the Third Plenary Session of the Eleventh Central Committee

of the Chinese Communist Party with the goals ofReadjustment, Reform and Consolidation

- Reforms began in the agricultural sector, primarily due to the rising threat of food shortage. Amongthe initial steps were:

o Decollectivizationo

Household-Responsibility System

o Retention of income from production, after tribute was paid to the state- Reform of agricultural sector met with initial great success as 80% of the population was still

employed within it

- Private enterprises were allowed to resume operation- Introduction of a dual price system; Surplus output could be sold; Sales were allowed to take place

both at plan and market prices

- Removal of longtime conservative leaders which allows for increased radicalization of reforms by mid-90s

- Final large scale privatization of remaining state firms occurred in 1997/1998- China joins the WTO in 2001 upon guaranteeing the elimination of price controls and export subsidies

on agricultural products

- China surpasses Japan as worlds second largest economy in 2010The Chinese Political Economy

- Many names for the Chinese brand of capitalism: Capitalism with Chinese characteristics ORSocialism with Chinese Characteristics OR Socialist Market Economy

- China as a special case in economic reform:o Economic systems and structures do not just emerge on their own but are constructed to

serve specific ends.

o Emerging economic systems in transitional states are politically, historically, socially andculturally embedded.

- Three Pillars devised by Xiaoping leadership: Ideology, Performance, Stabilityo Ideology: No longer based on radicalization, but rather constructed primarily around the

creation of a national interest, which then must be defended.

o Performance: Understood primarily as economic performance a political need to ensureaccumulation of capital.

o Stability: Political stability and personal safety to be guaranteed by continued CCP rule. Thestability provided by the CCP seen as a prerequisite for continued economic growth

- The Three Pillars clearly portray how the continued political success of the CCP is predicated uponChinas economic trajectory, and that CCP leadership is cognizant of this.

- Leads to the formation of an unwritten social contract between the CCP and the people: CCP Rulemust remain unchallenged, and the Party will tolerate no questioning of its hegemony. The CCP in

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turn calculates that the vast majority of people will accept this so long as their economic well -being is

provided for. The people will not compete with the party for political power as long as the party looks

after their economic fortunes.

Understanding Modernization Theory

- Francis Fukuyamao Fukuyamas essential question: Have we in fact reached the end of history? Are there, in

other words, any fundamental contradictions in human life that cannot be resolved in the

context of modern liberalism that would be resolvable by an alternative economic

structure?

o The Universal Homogenous State The stage in history where all prior contradictions are resolved and all human needs

satisfied. There is no struggle or conflict over large issues, and consequently no

need for generals or statesmen; what remains is primarily economic activity.

- Modernization Theory predict[s] that such developments as economic growth, the spread of scienceand technology, the acceleration and spread of communications, and the establishment of

educational systems [would] all contribute to political change

o Modernization Theory assumes that traditional societies can be modernized byreplicating certain societal conditions

o Heavily criticized on the basis of its broad assumptions and particularly because of itsEurocentric worldview

o The so-called Modernization Myth: All people desire to modernize and it is necessarybeneficial.

Research Questions & Outlook for Final Paper

- How precisely have economic reforms been implemented without jeopardizing the communist tilt ofthe political system?

- What factors still separate China from other true liberal market economies?- How can transition/modernization theory explain Chinas contemporary political-economic climate?- What predictions can be made within the framework of transition/modernization theory concerning

the hold on power of the Chinese political elites?

Literature

BRESLIN, Shaun: Capitalism with Chinese Characteristics: the Public, the Private and the International, Warwick University, Working Paper

No. 104, June 2004

WEI, Lin &CHAO, Arnold: Chinas Economic Reforms, University of Pennsylvania Press, 1982

SHIRK, Susan L.: The Political Logic of Economic Reform in China. University of California Press, 1993

FUKUYAMA, Francis: The EndOfHistory. The National Interest, Summer 1989

PYE, Lucian W.: Political Science And the Crisis of Authoritarianism,American Political Science Review, Vol. 84 No. 1, March 1990

CHAI, Jospeh C. H.: China: Transition to a Market Economy. Oxford University Press, New York. 1997