by Pranab Bardhan
This is the 40th anniversary of the onset of economic ‘reform and opening-up’ (gaige kaifang) in China under the leadership of Deng Xiaoping, which eventually led to a dramatic transformation of its economy and global status. It is, however, remarkable that China’s current supreme leader, Xi Jinping, marked the anniversary in a speech in the Great Hall of People in Beijing mainly emphasizing the Party’s pervasive control. It is also remarkable that in recent years this leadership seems to have forsaken Deng’s earlier advice of tao guang yang hui (“keep a low profile”). In the flush of Chinese nationalist glory, Xi explicitly stated in the 19th Party Congress that China has now entered a “new era”, when its model “offers a new option for other countries and nations who want to speed up their development while preserving their independence”. Many people both in rich and poor countries seem to be already awe-struck by this model.
What are the special characteristics of the Chinese development model? Briefly, it’s a model of essentially capitalist development under authoritarian leadership and purposive governance, with a vertical production structure where basic capital goods are produced in monopoly state-owned enterprises and the much-larger rest of the economy is under private ownership, with a state-guided nationalist industrial policy and finance, with subsidized access to land and credit for state-favored business and repression of labor rights, massive investments in infrastructure funded by a very high national savings rate (particularly on account of large undistributed profits of companies), with rural industrialization in a decentralized framework of jurisdictional competition, and openness to foreign trade and acquisition and learning of foreign technology. It has produced a rapid pace of economic growth over the last three decades and lifted hundreds of millions of people above the poverty line—undoubtedly a spectacular historic feat for any developing country. The recent slowing of the growth rate does not tarnish the long-term shining performance so far.
I have discussed some of these features of Chinese development, particularly in a comparative assessment with Indian development, in my book Awakening Giants, Feet of Clay (Princeton, 2013)—incidentally, I should mention here that when a Chinese translation of this book came out in Beijing, the translator thought it fit or prudential to take out, without my permission, some of the passages in the book that criticized Chinese policy, while those critical of Indian policy remained.
I believe the Chinese governance system is a crucial part of the China development model, and in this article I shall concentrate on its special features, both positive and negative, which tend to be overlooked in the simplistic discussion on authoritarianism vs. democracy that tends to dominate the usual observations on the system. Authoritarianism is neither necessary nor sufficient for some of those special features. In many ways these features undergirding the Chinese polity and economy are quite distinctive, and their roots go long back in history. I shall focus here on the aspects of governance that affect economic development and less on their clearly repressive police-state aspects and gross abuse of basic human rights. Read more »