The transformation of the People’s Republic of China from being a Third World country up to 1978, to being a First World country within 47 years has inspired awe in the Global South and consternation in the Western democracies.
China is the first avowedly Communist country to display a scale of development, technological advancement and prosperity matching Western capitalistic democracies. It has succeeded where the Soviet Union (and Russia later) failed.
President Xi Jinping has described the Chinese model as “Socialism with Chinese Characteristics” and is presenting it as an alternative to the Western model.
The concept of Socialism with Chinese characteristics is explained by London School of Economics professor Keyu Jin in her publication The New China Playbook: Beyond Socialism and Capitalism (Penguin Ramdom House, 2023). A critique of it is provided by Prof. Pranab Bardhan of the University of California, Berkeley in his articles in Project Syndicate and elsewhere.
According to Prof. Keyu Jin, a basic distinction between the Chinese and the Western models is that the market economy of the West is made up of consumers and enterprises connected through a financial system in which the State plays a minor role. But in China, the confluence of consumers, enterprises and the State results in a hybrid economy where market forces work under strict State-control.
Unlike the Western State, the Chinese State has powerful instruments of control, but it also has a big and a wide mandate. It uses its power to implement its mandates.
Decentralisation
However, the mandates are implemented at lower levels. Lower level authorities are given a lot of elbow room for innovation. They are encouraged to be ambitious and creative. Possession of these attributes secures more funds from the top echelons. But the freedom given to the local authorities is not absolute. Missteps, corruption or negligence are investigated and the guilty punished, removed, denied promotion or even jailed. Thus, China is at once centralised and de-centralised.
In China, political centralisation is paired with economic decentralisation. Prof. Keyu Jin describes this as “Mayors’ Economy”. The term “Mayor” refers to grassroots level officials.
Mayors are allowed to support good private companies, build industrial clusters, increase GDP, create jobs, and raise taxes. These goals enable Mayors to extend a “helping hand” rather than a “grabbing hand”, Keyu Jin says. “There is a unique marriage between local officials and intrepid entrepreneurs which has led to reform and innovation,” she says.
The desirable qualities become the yardsticks for promotion in the bureaucratic and the political ladder. In China, these two ladders merge as every key official is a party member too.
Prof. Keyu Jin said that institutions are still weak in China despite a high degree of modernisation in the technological and organisational spheres. A former Chinese Ambassador to Sri Lanka who had served in Germany earlier, said that in Germany one could leave one’s bicycle unlocked outside the house without any fear of it being stolen, but in China, one was not assured of that. China, he added, was not yet a fully modernised nation.
Because institutions are still weak, the Chinese State has vested itself with gargantuan powers. In the absence of independent institutions which characterise the West, Chinese entrepreneurs are dependent on the State to regulate and control and are happy if it does so. Tragically, many countries in the Global South lack both institutions and a strong State, which explains the mess they are in.
In a capitalist economy, the individual is the main agent. He determines what to do or produce. But in China, it is the family that makes decisions. This sense of “collectivism” enables entrepreneurs to accommodate the goals of the State, both local and Central, as the State is seen as an extended family.
Compliance to State diktats is, therefore, natural, not forced. This attitude also empowers the State to act without opposition, which of course, has its ill-effects too.
However, it is not the case that the Chinese State has the freedom of the wild ass. There is internal opposition which may checkmate moves, and the social media is very strong. While at the all-China level, data could be fudged, there is a plethora of local level data which are accurate, Prof. Jin says. An accurate broad picture could be deduced from local data.
The “World Values Survey” done in 100 countries found that 93 percent of Chinese value “security” more than “freedom”. In the US, it is only 28 percent. This is because paternalism is deep rooted in China. It goes back to Confucian times.
The concern for security also makes the Chinese State cautious about experimentation. The former Soviet Republics reformed totally after liberation and this led to the collapse of the system. From the ashes of the rigidly controlled system arose oligarchs as well as impoverished masses. China avoided this situation by being measured in its moves in the post-Mao era.
According to the Harvard Kennedy School, support for the State had grown in China: It was 86 percent in 2003; 96 percent in 2009; 93 percent in 2015 and 2016; 95 percent between 2017 and 2020 compared to 33 percent in the US and 45 percent in all the West put together. In 2022, it was 92 percent in China and 39 percent in the US.
Chinese citizens expect the State to take on large roles, unlike in the West where the motto is: “The best Government is one which governs the least.”
Downside
China’s model is by no means squeaky clean, says Prof. Pranab Bardhan of the University of California, Berkeley. For years, China was marked by below market wages and low returns on savings. There had been a mismatch between exports and domestic consumption. Ancient towns were drowned to build dams. Degrading of the environment had taken place. People with good connections prospered leaving others behind. Technology was stolen from the West. There has been over production too.
Bardhan does not think that China can be a model for the developing world. True, China has lifted hundreds of millions out of poverty. But its authoritarianism cannot be a model for the world, the Indian economist says. China’s East Asian neighbours, Japan, South Korea, and Taiwan had started off with authoritarianism but eventually became democratic and prospered under it, he said.
“To be sure, democracy is exasperatingly slow and often contentious. But its deliberative and electoral processes help mitigate conflicts, especially in heterogeneous and conflict-ridden societies,” Bardhan contends.
In China, the absence of open public discourse has created problems in Tibet and Xinjiang. Without a strong civil society or an independent judiciary to check Government power, Chinese leaders have, on many occasions, made catastrophic errors in judgment. Look no further than Mao Zedong’s Great Leap Forward or the Cultural Revolution, Bardhan says.
Elite at local level
Bardhan then talks about local elites capturing power to the exclusion of others.
“Officials and intermediaries divert benefits and resources to non-target groups rather than to the target groups. In India, there is plenty of evidence of landed interests undermining decentralised welfare programs for the poor, apart from State political administration and legislators hampering devolution of power to the village or Municipal authorities. China’s more egalitarian land use rights distribution after de-collectivisation may have prevented the rise of a landed oligarchy. But in recent decades, Chinese decentralisation has not been able to avoid the problem of serious local elite capture.”
“Chinese local business in collusion with local officials has been at the root of problems of arbitrary land acquisition, toxic pollution, and violation of safety standards in food and in work in factories and mines. Such collusion is much more rampant in China than, say, in India, primarily because China has fewer checks at local levels on abuse of power,” Bardhan says.
The Indian economist said that Chinese coalmine death rates are reported to be 15 times higher than those in India.
“Decentralisation has made collusion between official regulators and commercial firms more likely, leading to rise in coalmine fatality rates. Firms in China have higher rates of workplace fatalities, based on firm-level data collected from different industries between 2008 and 2011,” Bardhan said.
