Chinese Business: Why Beijing Consensus Has Become An Attractive Political Economy Paradigm Essay

Introduction

During the past three decades China has quickly risen to become one of the key players in the global arena. Unlike thirty years ago, being the second largest economy in the world today has put China at the centre of major global issues, including economy and politics (Carmody and Owusu, 2007).

As will be seen in this paper, China’s power is attributable to a strategic plan aimed at dominating all the worth-controlling resources in the world. This strategy is based on a mutual partnership between China and its economic partners and has been referred to as the Beijing Consensus (BJC), usually contrasted from the Washington Consensus (WAC) as the US’s/the West’s economic plan for the developing world.

Although the term Beijing Consensus has been used to generally describe China’s economic development model, there’s hardly an agreement as to what it really entails. This is because it does not exactly set out clear goals for economic development. Instead it operates on three primary principles.

These will be discussed in the paper later. Equally, many have analyzed it by watching its manifestations as both an economic plan and a foreign economic policy. For instance, contrary to the Western strategy of democratic capitalism, the Beijing Consensus is generally characterized with notably “distinct attitudes toward development, politics and the balance of power” (Ramo, 2004).

This strategy is a combination of China’s internal economic policies, such as policy toolkit and corporate allegiance, and long-term plans, including control over large resources and China’s relation with the outside world, especially those countries that have something to offer towards its economic plan.

One study by Ramo (2004) observes that China “is marked with a ruthless affinity for innovation, emphasis on China’s belief in multilateralism and sovereignty, and ‘asymmetric projection of power”. The last two components have fostered and furthered good relations between China and the developing world.

China’s approach is explicitly marked by a refusal to meddle with the issues of other countries. An article by the The Economist aptly says that the “Beijing consensus is to keep quiet/shut up” (2010).

Through this good international relations China safeguards a peaceful environment and itself against the possibility of the US politics to turn it into a global outcast. Thus, in the aftermath of what is perceived as the collapse of the WAC, the BJC offers better hope of prosperity to the developing world (Ramo, 2004).

Already, China’s popularity in the world, especially in the developing countries, has been growing. A survey carried out by the Pew Research Centre in 2009 found that China was not only viewed favorably in Nigeria than the other major economies, but also found that its popularity has been growing.

For instance, the survey showed that “85 percent of Nigerians favored China; this was up from 79 percent in 2008” (The Economist, 2010). Also, China was viewed favorably by “50 percent of Americans and 26 percent of Japanese, up from 39 percent and 14 percent in 2008 respectively” (The Economist, 2010).

This paper will take a detailed look at two main issues. Explicitly, it will study the differences between these two approaches and explain how and why the BJC is viewed more favorably than the WAC.

Implicit within the latter will be the two ways in which the BJC is appealing to the developing world: one, as a better platform for economic partnership, and two, as a better alternative economic plan when compared to the WAC. As one study states, the BJC is not only an alternative development model/philosophy, but also a gauge for changing the international environment” (Turin, 2010).

Washington Consensus versus Beijing Consensus

The term Western Consensus was coined by the economist John Williamson to refer to a given set of policy and economic recommendations. Initially it was accepted as the best and most effective model to spur growth in developing nations. It embraced the ideals of democratic capitalism characterized by a free-market.

These included policies for open trade, deregulation and privatization (Turin, 2010). The last three are mainly in line with the neoliberal ideology, otherwise known as “market fundamentalism”, which embraces free-market capitalism as its central principle (Serra and Stiglitz, 2008).

However, the WAC has mixed outcomes; for instance, it led to many currency crises, economic stagnation and recession, especially during the 1990s financial turmoil (Harris, 2008). As a result, the economic systems of several nations collapsed. The recent recession that took place in 2007 is partly a remnant of its failures. This has made people even less confident in it and the general neoliberal economic model of the West.

In the developing world the WAC has been interpreted as “a new imperialism aimed at bashing the developing world, or that GDP is the only economic aspect that matters” (Williamson, 2004).

The development aid that has always been pegged at such financial aid has come to be seen as a way of holding the recipient countries at a ransom, and as a tactic to demand loyalty. The developing world has therefore come to develop great disdain for the WAC, seeing it as a tactic through which the developed West took advantage of them.

Much criticism has been directed at the IMF and the World Bank, the two world’s prime economic institutions, for adopting the WAC and imposing its policies on the developing world as a condition for fiscal aid (Serra and Stiglitz, 2008). These institutions are largely credited with a number of policies that in the end proved detrimental to many developing countries.

The effects of the Structural Development Plans (SAP) in Africa, as well as the case of Argentina are some of the most perennial examples. Argentina, for instance, strictly followed the advice of the IMF. However, the economy began to surge in the early 1990s, before it lost momentum and eventually collapsed completely by 2001 (Oniz, 2004). Serra and Stiglitz (2008) observe “from the early 1990s, a seven-year run of strong economic growth in Latin America suffered another seven-year run of economic stagnation and recession.

The failures of the WAC have been attributed, first and foremost, to the general assumption that the same economic policies could work in all parts of the world. Whereas the WAC insisted on applying the same rigid and homogenous reform policies to all developing nations, the BJC on the other hand acknowledges the unique challenges of every country, and seeks to tap into such peculiarities.

The BJC approaches other countries as partners, which is a deviation from the US’s big-brother approach. This approach ensures mutual benefit between the two countries. Unlike the west, China manages to evade the stigma commonly suffered by ‘the supplicant’ at the hand of ‘the donor’. China opts not to lend or give money to the beneficiary countries upfront since “the deals are mostly quasi-barter” (Mckinnon, 2010).This means that China always opted for give-and-take deal. Contrary to fears, this has not been a discouraging factor for the developing world. It turns out that they prefer a mutual partnership rather than aid for which they end up paying anyway.

The BJC is based on three ideals that generally suggest “how to organize the place of a developing nation in the world” (Ramo, 2004). These three principles are: Innovation, Pursuit of Dynamic Objectives alongside Rejection of Per Capita GDP, and Self-Determination (Ramo, 2004).

The Innovation principle emphasizes the need to actively innovate as a counter attack against challenging circumstances as caused by perpetually changing social and economic environment (Ramo 2004). Leonard (2006) refers to this as a commitment to “perpetual tinkering and change, and an acknowledgement that different situations demand different strategies.

To achieve this goal, China aims at gaining understanding on what the people in the partner countries want. Towards this end the Chinese government “carries out public opinion surveys to find out the public attitude toward itself” (Ogden, 2002). Then it uses this knowledge to actively promote the popularity and impact of its policies. It is a tricky way for getting what they want by offering what the other countries need.

In a nutshell, China does not wish to offend. As a result of this, China has been criticized for some of its policies; for instance, its policy of non-interference with the internal non-economic issues in their partner countries. This has been criticized for standing in the way of promoting democracy and human rights. In spite of the criticism, the developing nations prefer this approach and more than that, it has worked for China.

The second principle, Pursuit of Dynamic Goals/Rejection of Per Capita GDP, is the second biggest idea of the BJC. Unlike the case of the western nations, it rejects the notion that the GDP is the ‘only measure of economic development’ (Leonard, 2006). Instead, it increases focus on other measures such as individual equity and quality of life (Ramo, 2004).

Qualitatively, the Human Development Index (HDI) forwarded by the United Nations Development Program (UNDP) is so far the most accurate method to measure the quality-of-life: “These standards”, writes Ogden, “provide an alternative means by which to measure economic development and growth, and helps one understand that poverty is actually ‘the lack of basic needs and not merely having low income” (2002).

Viewing development this way emphasizes the realization of discredits and substantive outcomes, such as the contexts in which income growth favors only a few of the whole population.

The key argument is that emphasizing on the GDP undervalues other substantive achievements. The BJC therefore emphasizes the need to pursue more different goals simultaneously.

As Wen Jiabao, China’s Premier, puts it, the BJC “puts people first and promotes reform and innovation in line with what he calls the ‘five balances’: balancing rural and urban development, development among regions, social and economic development, man and nature, and domestic and foreign development” (Yusuf and Nabeshima, 2006).

The BJC recognizes that emphasizing the GDP does not take care of basic problems of relevance in the daily lives of the people.

The Self-Determination principle emphasizes the need for the developing nations to actively seek and assert their independence and sovereignty from outside pressure as imposed on them by ‘hegemonic powers’, led by the US (Ramo, 2004). Of course this is notably an extension of China’s traditional loath of foreign interference.

China has always refused to submit to pressure from outside, instead, it has always fore grounded its own priorities. Gresh (2008) describes this policy as “valuing independence, sovereignty, self-determination, and rejecting the efforts of the western powers to impose their will”. The policy further insists that “each country can plan its own development” (Gresh, 2008), and not have to let unfavorable policies shoved down its throat.

This approach has won interest in the developing world, especially in Africa. Africa has a long history of invasion and exploitation by the western countries. As such, the idea of self-determination as an important aspect of development that China proposes is appealing. This good reception is seen in the increasing role of China in the continent.

On behalf of the Council on Foreign Relations, Princeton Lyman writes: “Africa finds China’s investments attractive because they do not come with any fiscal probity, governance and other conditions usually made by the Western donors” (Lyman, 2005).

Conclusion

One of the most notable characteristics of the BJC is its malleability. It does not dictate any finite number of rigid policy points. WAC clearly sets out ten recommendations, which are relatively unambiguous. The BJC is essentially formulated around three ideas which are not as tangible as the WAC policies, but are more subjective (Turin, 2010).

Dirlik (2006) who is a China expert does not view the BJC as a model. Instead, he sees it as a notion. Still, he appreciates the BJC’s broad nature; that is, the fact that it is not specific. Although he points out that the BJC has not been flawless, he still recognizes its importance in certain areas.

This policy, through its emphasis on autonomy and self-determination, gives global relationship a multilateralism approach. This sharply contrasts with the U.S’s increasingly unilateralist approach to economic and foreign policy. This relationship seeks to open a leeway for a new global balance of power and order based on economic partnership based on recognizing cultural, political, national and regional differences within a shared global framework (Dirlik, 2006).

Surely, the Beijing ‘consensus’ is not to be viewed in the same terms as the WAC. That is not an ‘ideal’ model for development; instead, it should be seen as a new perspective for viewing the global structure of power. It proves the workability of alternative methods that deviate from dominant ideology (Turin, 2010).

In a number of ways, the BJC is a manifestation of a growing Chinese ‘soft-power’ allover the globe, especially in regions such as the Middle East and Africa (Turin, 2010). This furthermore stands in sharp contrast to the never-ending ‘hard-power’ employed by the U.S and other Western powers.

China, having spent a century in its revolutionary search for and assertion of autonomy, now basks in economic success. With China leading the pack of the countries that have embraced their uniqueness to achieve success, the BJC looks set to be an alternative global model for economic development. Indeed, the BJC will shape future development plans in the world.

Having been an underdog itself, and now standing at the top, China is a better example and partner for other underdogs.

References

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Gresh, A. 2008, Understanding the Beijing Consensus. Web.

Harris, H. 2008, ‘The Washington Consensus Reconsidered: Towards A New Global Governance’, Journal of International Affairs, Vol. 62, No. 1, pp. 27-38.

Leonard, A. 2006,No consensus on the Beijing Consensus. Web.

Lyman, P. 2005, China’s Rising Role in Africa. Web.

McKinnon, R. 2010, A Reply to Krugman. Web.

Ogden, S. 2002, Inklings of democracy in China, Harvard University Asia Center, New York.

Oniz, Z. 2004, Argentina, the IMF, and the limits of neo-liberal globalization: a comparative perspective. Web.

Ramo, J. 2004, The Beijing Consensus, The Foreign Policy Centre, London.

Serra, N. & Stiglitz, J. 2008, The Washington Consensus reconsidered: towards a new global governance, Oxford University Press, Oxford.

The Economist, The Beijing consensus is to keep quiet, 2010. Web.

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Williamson, J. 2004, A Short History of the Washington Consensus. Web.

Yusuf, S. & Nabeshima, K. 2006, China’s Development Priorities, The World Bank, Washington, DC.