China’s state-centered development model and its role

in international relations

UvA-IDS lecture series11 November 2010

Dr Frans-Paul van der PuttenClingendael Institute

I. China’s development trajectory

China’s economic development approach since 1978

• Domestic dimension: agricultural lease system, township and village enterprises, labour surplus, migration to coastal cities

• International dimension: special economic zones, foreign direct investment, manufacture of consumer goods, export-based economic growth, upgrade to higher value-added, build-up of foreign exchange reserves, emergence of domestic consumer market

Context

• China became a centralized state in 221 BC• Continuity in political thought and bureaucracy• China has always been the country with the

world’s largest population• Until the late 19th century, dominant power in East

Asia• Important preconditions for economic

development put in place before 1978• China became the world’s second economy in 2009

II. Lessons for development

Peter Ho: Chinese lessons in pragmatism

• Country-drivenness: China is a state-dominated economy; state carves out its own trajectory; country retains autonomy towards donors

• Chinese pragmatism: – Credibility: institutions should fulfil their functions

in the eyes of the stakeholders– Gradualism: step-by-step approach, based on

institutional innovation at the grassroots

Sarah Cook: what is there to learn?

• China’s development model: pragmatism, experimentation and gradualism

• China’s experience offers insights but not specific guidance for other countries

• China is itself becoming a major actor in international development, its motives and interests should be studied by development researchers and practitioners

III. Is there a China model?

Ross Garnaut: China’s success

• China itself did not use a model; having no blueprint was a virtue because any theoretical model would have been inappropriate

• Each society must develop its own economics• Countries cannot adopt formula’s developed

for other economies

Pan Wei: the uniqueness of the Chinese model

• The China model is based on elements that are unique to China (social organization, economic development, government, outlook on the world)

• China does not want to convert others to its belief system

• China is ideologically neutral, believes that each country should have its own political values, different countries should live with each other not try to change each other

• Chinese communist party cannot be understood from Western perspective

Johan Lagerkvist: limits of the China model

• China is not unique: economic modernisation leads to pluralism, it just takes longer than the West would like

• China’s leadership will be challenged by middle class expectations and environmental degradation; leadership uses nationalism and economic growth to stay in power

• China is offers only general lessons, is not interested in exporting its model

• No ideological war with democratic capitalist world, no Beijing Consensus

IV. What is the Beijing Consensus?

• Washington Consensus: – deregulation, privatization of state enterprises,

liberalization of trade and inward investment

• Beijing Consensus:– Alternative to Washington Consensus– No clear definition: China as a model? China as a

leader? Anything other than the Washington Consensus?

The Beijing Consensus (BJC)

• Joshua Cooper Ramo: – BJC is a new paradigm for development, after

collapse of Washington Consensus– Three theorems: leap-frog old technologies,

measure by sustainability and income equality, self-determination as security doctrine

– BJC is a security revolution, every nation can achieve self-determination

– China wants to project its model abroad; is both example and the tool to implement this example

The Beijing Consensus (BJC)

• Arif Dirlik:– BJC is not an alternative to Washington Consensus, but

a method to moderate its consequences– Only in one regard does BJC offer a real alternative: in

reshaping the global political environment that is the context for development

– New global order, founded on economic relationships, recognition of political and regional differences

– Because of its economic AND political experience China is qualified to lead formation of the new order

– China’s model is only for China, BJC is for the world

The China Model1) China’s development trajectory cannot be copied2) It remains unclear whether China eventually will be forced

to reform politically to become a more open, liberal society3) But China did introduce a new development paradigm:

away from focus on an ideal end state toward focus on less-than-perfect pragmatic solutions that can deliver at present

4) Also unclear is whether China actively promotes itself as a model

5) But China does openly promote a political principle: countries should be free to choose their own development path

• Washington Consensus rephrased: – Developed countries must exert influence on developing

countries to help them develop according to the Western model

• Beijing Consensus rephrased:– Developing countries must be free to establish their own

development trajectory; focus should not be on the end state but on whatever works now; political diversity should therefore be the basis of the global order; China leads the way toward this order

V. China and the relationship between the West and the Rest

Fareed Zakaria: Rise of the Rest

• 2008: The Post-American World• The great story of our times is the Rise of

the Rest• Because of economic development, the

non-West is becoming stronger in relation to the West

• This is the main challenge for the US (and the West as a whole)

Stefan Halper: market authoritarianism

• China exports the basic idea of market-authoritarianism

• Going capitalist and staying autocratic

• Clash of governing models: liberalism versus authoritarianism

• China model appeals to developing countries

• Threatens the West

Ian Bremmer: threat to free markets• Chinese leaders use the China model

to ensure that markets do not threaten their political power

• China is stable, West has economic difficulties

• China model imitated by developing world

• Western companies in developing world disadvantaged towards Chinese state-owned companies

• China supports authoritarian regimes

Halper and Bremmer

• China is undermining Western influence in the developing world and expanding itself

• This makes China stronger economically and diplomatically, while the liberal values of the West are threatened

• Because of the China, political diversity is strengthened

• Main problem: the role of the state

China and the role of the State

• Party controls state, state dominates economy and society

• State allows no challenge to the power of the Party

• Constant experiments with economic and social and administrative change, openness to foreign influence

• State dominates external economic relations, also with developing world

Is the role of the state a problem?

• China is not just another competitor for the West, it challenges the Western liberal-economic principles: Western firms and economies find it difficult to compete with China

• The influence of the Chinese state in developing countries forces Western countries to be more pragmatic and less normative

• A good or a bad development?

VI. China and the Netherlands as an actor in international development

• Context: weakening economic position• New government approach, based on WRR report: less poverty reduction,

more economic development• Effect of China’s rise #1: pressure towards more pragmatism, less ideology• Effect #2: smaller role for NL in multilateral institutions • Effect #3: global governance less dominated by West and Western values,

more diverse and ideologically neutral; Dutch influence further decreased

Scientific Council for Government Policy: ‘Less Pretention, More Ambition’

• There is no real alternative to the Western model: development means by definition a transition towards becoming in economic-political terms similar to what Western countries are already since the 19th century

• All elements in the Beijing Consensus are fully compatible with this notion, including the emphasis on national autonomy

• Emphasis within trajectory may be different, but ever country moves towards the same end state