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China’s economic model Research Paper

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Updated: Dec 10th, 2019

Thesis statement

Nowadays, it became a commonplace practice among people in Western countries, to believe that democracy is a foremost key to ensuring the economic prosperity of just about any nation (Davenport & Armstrong, 2004). This point of view, however, can no longer be referred to as such that represents an indisputable truth-value.

After all, it does not account for much of a secret that, despite having practiced the democratic form of a political governing for centuries; many countries (such as Haiti) nevertheless could not escape being proclaimed ‘failed states’. On the other hand, there are a number of instances of formally authoritarian countries having been able to ensure the thoroughly effective functioning of their economies, which in turn resulted in the substantial improvement of ordinary citizens’ living standards.

The validity of this suggestion can be well illustrated in regards to China, which took only thirty years (1978-2008) to be transformed from essentially a poor agricultural country into nothing short of the world’s major super-power. It is specifically because, while implementing economic reforms, China’s leaders relied on thoroughly totalitarian methods of doing it, which created objective prerequisites for the Chinese ‘economic miracle’ to occur, in the first place. In my paper, I will aim to explore the legitimacy of this suggestion at length.

Main part

During the course of the late seventies, the Chinese Communist Party’s top officials, headed by Den Xiaoping, started to grow increasingly aware of the fact that the functioning of the country’s planned economy had to be reformed, as the realities of the late 20th century’s living were exposing the Marxist economic ideologeme increasingly outdated.

Nineteen seventy-eight was the year that marked the initial phase of China starting to part away with the economic conventions of orthodox Marxism. As Shaozhi (1991) noted, “In 1978, the Third Plenary Session of the 11th Central Committee of the CCP… set forth the tasks of reforming the government and Party in different fields, and established guiding principles for the opening of the economy to the outside world and revitalizing it domestically” (p. 11).

Nevertheless, as opposed to what was the strategy of implementing market-oriented reforms in the USSR, during the course of the late eighties, which eventually resulted in this country being wiped of the world map, Den Xiaoping’s strategy of economic reforms never ceased being observant of the Chinese society’s geopolitical, demographic and cultural specifics.

Apparently, Xiaoping proved himself wise enough to understand the simple fact that, in order for the implementation of free-market economic reforms to be successful, they can never be ideologically driven. Instead, they should be concerned with establishing preconditions for the country’s economic potential to be exploited in the most effective manner.

During the course of the late seventies, China’s leaders concluded that the country had three dialectically predetermined economic advantages, which had to be put in the practical use: an abundance of cheap labor, a commercially advantageous geographical location, and the fact that Chinese immigrants played an important role in the functioning of neighboring countries’ economies.

This alone suggests the thoroughly pragmatic roots of what will later become known as the China’s ‘economic miracle’ and the fact that, if Xiaoping decided to implement economic reforms along with advancing the cause of ‘democracy’, they would be doomed to fail.

The reason for this is quite apparent – the demographic fabric of Chinese society in 1978 made it impossible for the successful implementation of reforms to proceed in any other but in a thoroughly controlled (authoritarian) manner. It is important to understand that, as of this year, 80% of China’s population of 975 million accounted for rural-dwellers, which were organized in ‘agricultural communes’.

Nevertheless, the effectiveness of these communes’ functioning lacked from the fact that, while taking care of their agricultural duties in full accordance with the Marxist economic paradigm, peasants have not been provided with an objective rationale to do it efficiently.

At the same time, the enormous population of peasants could well ensure the successfulness of the process of China being set on the path of industrialization. This is because, throughout the course of history, the peasantry has traditionally been referred to as the industrialization’s ‘fuel’.

In its turn, this has led Xiaoping to conclude that the implementation of economic reforms had to begin with the effort being applied to increase the efficiency of the economy’s agricultural sector. In its turn, this would result in both: ensuring the agricultural communes’ economic self-sustainability and providing the representatives of at least a half of China’s peasantry with incentives to consider becoming industrial workers.

According to Yuhai (2006), “An important characteristic of China’s industrialization was its promo­tion of local, small-scale industrial pro­duction in coordination with agriculture” (p. 2206). In this respect, the fact that throughout the course of Xiaoping reforms’ implementation, China remained a totalitarian state came in particularly handy.

This is because this particular form of governing makes possible the most effective utilization of human resources. After all, even today, despite the fact that country’s Constitution declares citizens being absolutely equal, this is not the actual de facto state of affairs, because according to the country’s bylaws, peasants are supposed to apply for a special permit, in order to be able to relocate to live in the city.

Given the fact that the obtainment of this permit most commonly proves impossible, it does not come as a particular surprise that at least 40% of every Chinese city’s population account for ‘illegal’ peasants from the countryside. While understanding perfectly well that they are not supposed to live in cities, in the first place, these people have no option but to agree to work for a fraction of what their native-born urban counterparts are being paid.

Consequently, this establishes the prerequisites for more and more Western companies to consider relocating their production lines to China, as a country where there is a plenty of cheap laborers, who are being more than happy to work, while paid as little as $5 per day.

As an ultimate consequence, during the course of recent decades, the Chinese citizens’ living standards continued being improved gradually but consistently, which can be illustrated in regards to the fact that, throughout this period, people’s average lifespan in China has increased from 55 to 70 years.

In other words, it is specifically the fact that, while implementing free-market reforms, the Chinese government never ceased being in a full control of the demographic dynamics in the country, which contributed rather substantially to these reforms’ successfulness, reflected by the fact that through the years 1978-2007, China was able to increase its GNP by 15 times.

As of 2004, the country’s foreign-exchange reserve has reached staggering $ 2.4 trillion (Zhu, 2007). It is needless to mention, of course, that had China been a ‘democracy’, in the classical sense of this word, this could hardly prove possible.

Another factor that contributed to the phenomenon of China’s economic miracle is the fact that, while remaining in a full control of implementing economic reforms, the governmental officials never ceased paying a particularly close attention to what accounts for the culturally defined specifics of Chinese people’s mentality.

According to Bower (2000), “In a variety of reasoning tasks, East Asians take a ‘holistic’ approach. They make little use of categories and formal logic and instead focus on relations among objects and the context in which they interact” (p. 57). As opposed to what it happened to be the case with the majority of Westerners, the majority of Chinese citizens professes the values of a communal living and hard-workiness, which in turn can be partially explained by the cultural legacy of Confucianism.

This is the reason why Chinese people have been traditionally known for their tendency to exist in an essentially ‘networking’ manner, when the principle of an interpersonal solidarity defines the way in which they tackle life’s challenges. Therefore, there is nothing too odd about the fact that even today; the Communist ideology continues to enjoy much of a popular support among Chinese citizens.

As Beech (2001) noted, “By the end of last year, 65 million Chinese were party members, and nearly half of them were under the age of 45. Recruitment has been particularly successful on university campuses” (para. 1)

Apparently, it is specifically their adherence to the virtue of a communal solidarity, which causes many Chinese citizens to consider themselves Communists, and not the strength of their ideological commitment to Marxist dogmas. This is exactly the reason why Xiaoping considered it fully appropriate to ‘deviate’ from the Communism’s ideological conventions, as a mean of helping citizens to get out of poverty.

Unfortunately, people’s adherence to the values of a communal living also makes them prone to corruption. This is the reason why the principle of guanxi, which Yeung and Tung (1996) define as “The establishment of a connection between two independent individuals to enable a bilateral flow of personal or social transactions” (p. 55), had always characterized the essence of social dynamics in China.

What it means is that had Xiaoping’s reforms been accompanied by the process of ‘democratization’, as it was the case in the USSR, during the course of the late eighties, these reforms would only result in plunging China in the chaos of a ‘primeval capitalism’, when favoritism would become the main principle of a country’s political/economic life.

Therefore, it was a matter of a crucial importance for Xiaoping to ensure that the implementation of economic reforms would always be thoroughly supervised, so that the corrupted governmental officials would never be able to take over the whole country, as it happened in Gorbachev’s USSR – much to a joy of the representatives of the International Monetary Fund.

Even today, it represents a commonplace practice for the China’s top-ranking bureaucrats to be punished by death for committing a vast number of even seemingly ‘innocent’ economic crimes.

This, however, is not due to the China’s Communist government being particularly ‘bloodthirsty’ – the very specifics of implementing economic reforms in this country require officials in charge of the process to be strongly intolerable towards even the smallest outbreaks of corruption. We can only imagine what would happen to China, had Xiaoping allowed Western advisors to take an active part in the process of the country’s economy being reformed.

Apparently, while pursuing with the reform-policy, Xiaoping remained thoroughly aware of three major purposes of just about every country’s existence – economic/geopolitical expansion, protection of internal stability, impairment of the internal stability of competing countries.

This is exactly the reason why he strongly opposed the perspective on China being set on the path of ‘democratization’. After all, while waging the so-called Opium Wars on China in the 19th century, with the actual purpose of these wars having been the preservation of China’s quasi-colonial status, Western countries were justifying their military intervention by pointing out to the fact that Chinese citizens simply needed to be introduced to the ‘values of civilization (democracy)’.

In comparatively recent times, Western politicians have used the pretext of ‘protection of democracy’, while they were sending military planes to bomb innocent civilians in Yugoslavia, Iraq and Afghanistan.

Being a truly remarkable politician, Xiaoping did not allow his country to become a pawn in the geopolitical confrontation between the superpowers of the USA and USSR. Quite on the opposite, Xiaoping was able to take advantage of this confrontation, while anticipating the time when due to the demise of either of two earlier mentioned geopolitical competitors (which happened to be USSR), China would take its place.

After President Nixon terminated gold/dollar convertibility in 1971, billions of U.S. Dollars in the domestic and international circulation have ceased to represent any objective worth, while being turned into essentially the tons of a devalued green paper (Strange, 1972). In order to prevent its economic system from collapsing, America had to ‘invest’ this green paper abroad.

With the world’s largest population, consisting of particularly hard-working people, China came in particularly handy, in this respect. This explains why ever since 1973, China became one of the America’s most important economic partners.

Nevertheless, after having gotten rid of billions of devalued dollars, by the mean of investing them in China, the U.S. acquired another problem – the fact that it was only the matter of time, before China would rise to the position of competing with America economically and even challenging the ‘beacon of democracy’ geopolitically.

This is exactly the reason why China had to be destroyed from within by ‘internal’ forces – just as it happened with the USSR in 1991 (Chou, 2005). Hence, the true significance of the 1989 Tiananmen Square protests, orchestrated by the agents of foreign influence (just as was the case with the ‘orange’ revolutions of more recent times), in order to prevent China from growing ever more powerful.

While believing that China was lagging behind USSR on the way of ‘democratization’, protesting students demanded the banning of the Communist Party, a complete privatization of the economy, an abandonment of the Socialist form of governing, and the country’s federalization.

If they succeeded, China would have been destroyed within a matter of a few years. The example of what happened to the USSR in 1991 leaves very little doubt, as to the full legitimacy of this suggestion. After all, the earlier mentioned demands were well consistent with how the Soviet first and last President Gorbachev proceeded with ‘modernizing’ the USSR.

This once again substantiates the validity of the initial suggestion that the foremost reason why market-oriented economic reforms in China proved amazingly effective is that they were well thought-through and that the officials, in charge of their implementation, never had any illusions, as to the actual implications of ‘democracy’, as the tool of geopolitically strong countries’ destruction.

Therefore, it is quite impossible to disagree with how Chinese official newspapers of the time used to reflect upon the actual significance of the 1989 protests, “If we are tolerant or conniving with this turmoil and let it go unchecked… Then the improvement of the economic environment and the rectification of the economic order, construction, and development; the control over prices; the improvement of our living standards… will all become empty hopes” (Ogden, 1992, p. 117).

Had China been a ‘democracy’ in the year 1989, its governmental officials would never be able to adequately address the danger of their country being plunged into the chaos of ‘democratization’, which would consequently unable the continuation of economic reforms.

Therefore, the Chinese government’s decision to use a military force, in order to disperse protesters, appears fully appropriate. Of course, this decision resulted in a number of casualties among protesters. At the same time, however, it allowed China to remain on the course of a continual progress, and consequently resulted in the creation of preconditions for the 21st century’s China to acquire the status of the world’s second most powerful and economically advanced country.

This, of course, once again exposes the sheer fallaciousness of the assumption that democracy is a key to just about every country’s economic prosperity. To believe in this assumption is to continue remaining endowed with euro-centric prejudices, as to the non-Westerners’ presumed inability to maintain a civilization of their own.

Conclusion

The earlier provided line of argumentation, in defense of the suggestion that it was specifically China’s unwillingness to embrace the values of ‘democracy’, which ensured the effectiveness of economic reforms in this country, suggest that the implications of this political paradigm should be thoroughly revised – especially when culturally rich non-Western nations are being concerned.

Apparently, there can be no ‘progressive’ and ‘wicked’ forms of a political governing but only effective and ineffective ones. As it was illustrated earlier, the initial reason why during the course of recent decades China had attained a status of the world’s major manufacturer of industrial goods, was thoroughly objective. After all, even today this country’s main economic asset continues to be an abundance of cheap laborers.

Nowadays, however, this asset is not being merely discussed in terms of quantity but also in terms of quality. The reason for this is quite apparent – China (along with Japan and Korea) features the world’s highest rate of IQ among citizens (Lynn & Vanhanen, 2002). What it means is that there is indeed a good rationale in expecting China to continue becoming richer and stronger.

After all, the realities of a post-industrial living point out to the fact that people’s intellect can be well referred to as such that represent a thoroughly objective economic value.

And, it matters very little whether intellectually advanced people profess the values of democracy or not – for as long as their endowment with high intellectual powers allow them to generate a ‘surplus product’, they will be in a position to enjoy a high-quality living. Those who enjoy such a living, however, are being concerned with trying to lead ‘politically conscious’ lifestyles the least. I believe that this conclusion fully correlates with the paper’s initial thesis.

References

Beech, H. (2001). Made in China: Communism rules. Time, Retrieved from <>

Bower, B. (2000). Cultures of reason. Science News, 157 (4), 56-58.

Chou, H. (2005). Zhao Ziyang: A CIA agent? Chinascope, 5, 36-38.

Davenport, C. & Armstrong, D. (2004) Democracy and the violation of human rights. American Journal of Political Science 48 (3), 538–554.

Lynn, R. & Vanhanen, T. (2002). IQ and the wealth of nations. Westport: Greenwood Publishing Group.

Ogden, S. (1992). China’s search for democracy: The student and mass movement of 1989. New York: M.E. Sharpe.

Shaozhi, S. (1991). Rethinking Socialism in the light of China’s reforms. China Information, 6 (1), 10-21.

Strange, S. (1972). The Dollar crisis 1971. International Affairs, 48 (2), 191-216.

Yuhai, H. (2006). Assessing China’s reforms. Economic and Political Weekly, 41 (22), 2206-2212.

Zhu, Z. (2007). Reform without a theory: Why does it work in China? Organization Studies, 28 (10), 1503-1522.

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IvyPanda. 2019. "China's economic model." December 10, 2019. https://ivypanda.com/essays/chinas-economic-model/.

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IvyPanda. (2019) 'China's economic model'. 10 December.

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