Continuities of State and Capital in 21st Century China

At the beginning of the 2009 school year the Chinese newspaper Southern Metropolis Daily conducted a series of interviews with primary school students in Guangzhou for a televised report. From among the respondents the most provocative answer undoubtedly came from a 6-year-old girl, who when asked what she wanted to be when she grew up explained in a very sincere tone that her dream was “to become a corrupt official (tanguan)” because “they receive a lot of gifts.”1 The girl had most likely heard the term tanguan used in the news but she obviously showed no understanding of the profoundly negative connotations associated with it — for her it was simply an attractive occupation, like a firefighter or an astronaut. When the video of her interview began circulating around the online community of China observers, responses to it ranged from moral outrage at the girl’s educators to humor at how candid children can be, though obviously her remark says more about the state of social mobility in China than anything about her personally. It primarily shows how tanguan is by now a household word in China, itself telling. It might also be indicative of a broader feature of contemporary Chinese society: that bureaucratic privilege has not diminished throughout the decades-long process of economic liberalization in China. It could further be suggested that this girl’s response offers a guileless commentary on how capital and the state relate in the 21st century.

Aside from the above incident there is mounting evidence that the Chinese Communist Party is successfully directing the market reforms undertaken since the late 1970s while maintaining its single-party state hegemony. This goes contrary to the predictions of modernization theorists and many commentators in the 1990s who assumed that state Communism is incompatible with capitalism. Instead, China may represent a new paradigm of bureaucratic capitalism. Keeping in view the rise of the Chinese economy in the coming decades, the consequences of its political-economy may be integral to how the world system functions in the 21st century. In this essay I will look at the Chinese state in relation to capitalist development, what this dynamic means with respect to a history of the People’s Republic of China that stresses its continuity between the Mao era and the post-reform period in both developmentalism and socialism, and how theories about the history and development of capital have been inadequate for understanding the Chinese case. We will begin by looking at the relationship of state and economy in China in order to establish the case for viewing China as a form of bureaucratic capitalism. Then we will look at some ways in which China’s bureaucratic capitalism highlights some inaccurate assumptions prevalent in two analyses of Chinese political-economy: modernization theory and Arrighian “market socialism”. As the world’s largest country by population, with an economy that is growing rapidly, China is becoming an unavoidable presence on the world political scene. Thus its internal political-economy may indeed have a profound impact on the rest of the world. With this understanding, this essay takes the form of a critique in order to offer a modest contribution to the necessary task of formulating an appropriate framework for analyzing the state and capital in China.

1

The Chinese Communist Party, which has maintained its hegemony inside China since the establishment of the People’s Republic of China in 1949, is today overseeing the transformation of an economic system that has no clear historical analog. It has gone from one of the most egalitarian societies in the world (circa the 1960s) to one of the most stratified today. Per capita GDP has risen precipitously in the past two decades, though the intense stratification noted above has assuredly made the gains of increased GDP uneven. Another noticeable feature of this change is the shifting rural and urban demographic ratios as millions of migrant workers arrive in the nation’s wealthy eastern cities from the hinterland. Comparisons have been made to 19th century England, yet these fail to grasp the immensity of the impact both on the 1.3 billion Chinese and the world population become increasingly affected by market shifts caused by Chinese industrial production. The qualitative differences of the Chinese case are striking as well, since China has accomplished this transformation while effectively remaining a one-party state.

Thus, though China has shifted from a command economy towards a market-oriented economy in the post-Mao era (1976-onwards), it is important to affirm that a developmentalist logic leading towards the state accumulation of capital is not new, but has been an operative philosophy in the Chinese economy throughout the twentieth century. Indeed, the Mao era actually saw incredible growth. Excluding the years of the Great Leap Forward and the Cultural Revolution, China increased its industrial output by 10% per year throughout the Mao era. By 1976, China had the sixth largest industrial output in the world. Moreover, this was premised on the accumulation of capital through incorporating increasing amounts of labor-power into industrial and mechanized agricultural production. This is frequently ignored in cold war caricatures of state socialism. As the biases of mid-century historiography crumble, there is a compelling case to resituate state socialism as a form of state-mediated capitalist developmentalism.

Developmentalism, or the ideology of a political system whose legitimacy is determined by sustained economic growth, can be observed historically in China. After the People’s Republic of China was established in 1949, the Communist Party began to orient itself away from a form of war communism that had prevailed in the Yen’an base area to one of consolidated political dominance over the entire Chinese state. Once in control of the country, the Party was able to institute radical reforms in the economy. The definitive element of this program was land reform. Rural collectivization followed thereafter. But this policy was not separated from capital. In the 1930s and 40s, rural policy had been a decisive feature of the communist political strategy and thus in the post-49 period the leadership believed it would be in their best interest to have it continue. But there is an even more fundamental dynamic at work. The communists saw land reform and rural collectivization as steps along the way of industrialization. Indeed, collectivization was not intended to be a final stage in the process of creating socialism; it was the initial stage of industrial development. Following the Leninist model of development, as early as 1953 the five-year plans in China clearly prioritized heavy industry over collectivization.2 Thus, it was never clear that developmentalism was limited to the nominally democratic or capitalist countries. Further, this reveals that developmentalism is a significant continuity between the Mao and post-Mao eras.

This is not to say that the CCP has proceeded unchanged. Surely, the transformation of its economy in the post-Mao period has shown how instrumental party reform has been in China. This is shown most clearly in the utter inappropriateness of Hua Guofeng’s leadership of the CCP as Chairman after Mao’s death. From 1976 to 1978 Hua attempted to extend the Maoist style of ideology-driven politics so much so that he shaved his pate to physically resemble Mao Zedong for the purpose of party propaganda. He maintained a strict party line and opposed drastic reform. His main rival, Deng Xiaoping, on the other hand, emerged as an advocate of market reform starting in 1976. Though Hua held multiple major titles within the party, he was unable to withstand a challenge from Deng, and by 1978 was forced into early retirement. Deng’s rise to power was a signal of reform both for the economy and for the party, though there are observable and significant continuities.

At the time Deng Xiaoping began the campaign of “reform and opening” (gaige kaifeng) in 1978, China resembled a typical state socialist country with a command economy. The government controlled all above-ground industry, maintained ownership over all economic organizations (State-owned Enterprises—SOEs), allocated wages, controlled the labor market, and redistributed finance across the economy. In 1978 the Chinese government began pursuing a series of economic reforms (“socialist modernization” – shehui zhuyi xiandaihua jianshe) that have had the dual effects of drastically altering domestic society and forced China into what is becoming a new configuration of the global world system. The model identified with these post-1978 reforms is known as “socialism with Chinese characteristics” (Zhongguo tese shehui zhuyi). Deng Xiaoping argued that Chinese modernization must be premised on “Four Basic Principles”. These four were: 1) to uphold the socialist road; 2) to uphold the dictatorship of the proletariat; 3) to uphold the leadership of the communist party; and 4) to uphold Marxism-Leninism and Mao Zedong Thought.3 The ambiguities present in China’s quest to represent itself as socialist in spite of its avowedly positive stance towards capital accumulation, Fordist models of production, and an expanding and quickening sphere of circulation do not lead to convenient categorization if state socialism is not understood as a specific state mediation of capital. As implied above, the Chinese economic reform should not be seen as a break from state socialism and an affirmation of capitalism, though it is a shift from a command to a market form of circulation and distribution.

Indeed, “reform and opening” have had profound effects on China. Since Deng came to power, China has moved through the 1980s, 1990s, and the 2000s as a series of stages, beginning with the transference of SOEs to private hands, to the establishment of Special Economic Zones (SEZs), and the de-collectivization in certain industries. A recent change has been the privatization of land that has enabled residents of rural areas to sell agricultural land. Major consequences of these moves by the state have been the expansion of the labor market and the profound migratory dynamics thus entailed. The transformation of China has been very effective in increasing the performance of China’s economy.

In the first phase of management reform, which we can date from 1978 to 1984, the SOEs were the testing grounds of marketization. This phase began in Sichuan province in 1978, where a group of enterprises were enrolled in a pilot program that was designed to test the effects of the profit motive on financial performance. According to the China Labor Bulletin, this experiment worked by allowing enterprises,

to keep a proportion of their profits, and when they produced more than the state-set quota, they were free to use that profit to re-invest in production and technical innovation, provide workers and staff with individual bonuses and collective welfare, or to use the profit to maintain a reserve fund…. By the end of 1979, about 4,200 enterprises nationwide were selected for this new programme. In 1980, the experiment expanded to include 6,600 large- and medium-sized SOEs, which accounted for 60 percent of the national budgeted industrial output and 70 percent of national industrial profits.”4

The success of this experiment did not so much revise existing notions of developmentalism as it signaled the appropriateness of economic liberalization to developmentalist ends. The second phase, from 1984 to 1992, was the institution of the “dual track” or “plan and market” system. In essence it allowed for market forces to determine certain personnel and management choices within an enterprise, though the ability to recruit, terminate, and promote were not ensured without state supervision. Instead of returning all profits to the state, as it had conventionally been under the pre-reform SOEs, a profit-tax was levied.

While 1978 marked the initiation of reforms in the Chinese economy, 1992 was another signal year of economic restructuring. In this year many of the SEZs were promoted as exemplary models for how foreign investment could interface with the dominant state sector of the economy. The most notable of these is Shenzhen in the Pearl River Delta, which has grown from a small fishing village in the pre-reform period into a sprawling industrial core of production today. The SEZs like Shenzhen are one of the secrets behind China’s current economic growth. Since their establishment, they have contributed to the fact that both GDP and GNP have more than doubled in the past decade.5 It may not need to be overemphasized, but China is becoming one of, if not the, major economies in the world.

2

The real and imagined ramifications of “China’s rise” over the past decade have preoccupied a large and growing community of scholars as well as the public at large. As China continues to see double-digit economic growth into the second decade of the twentieth century, many speculate about its role in a new hegemonic regime. The questions related to this include: Could it eventually surpass America, the current hegemon, as world leader? And if so, would this shift in the balance of world power be beneficial or detrimental to world peace and prosperity? As Beijing continues to frame China’s growing economic power as a “peaceful and harmonious rise”, while developing “soft power” relations overseas, it is important to ask if China might take on this role as a democratic regime or as a communist power. The rise of China forces us to ask questions about the shifting composition of the world system, and the history of capitalism itself.

There are two theories that we will look at which come from different ends of the political spectrum yet share similar concerns about the ramifications of China’s political-economic transformation. The first is modernization theory’s democratic transition hypothesis, which applies an inductive logic about how economic liberalization (capitalism) leads inexorably to political liberalization (democracy) based on the perceived experiences of the fall of authoritarian regimes in other countries. The second is the world systems approach of Giovanni Arrighi, which is optimistic about the prospects for a market socialist alternative to capitalism. When analyzing China, it seems that neither of these interpretations are based on a solid predictive model. In the first case, there is an error in that economic liberalization and political liberalization are underdetermined concepts and basically serve as substitutes for American or Western-style political ideals that have never found a perfected form in practice. Conversely, Arrighi’s ideal type of market socialism assumes a false distinction between capital and the market. Rather, we argue that China’s economic reforms should not be interpreted within a classic liberalization framework, that China’s economic reforms should instead be contextualized within the historic development of capital in China that predates the reform period, that the market socialism alternative offered by the CCP is nothing more than a form of state-mediated capital, and that the economy operates in a specific relationship to the state in China contingent upon the Chinese Communist Party’s hegemony over the nation based not on socialism but on the effective management of capital.

China’s political economy in the twentieth and twenty-first century may coincide with the general trend noticed by political scientists and political sociologists—that economic liberalization correlates to political liberalization—but it is not clear that political liberalization should be identified with Western-style democracy. On this latter point, it is necessary to assert that “liberalization can exist without democratization.”6 The CCP may reform itself and transition the economy from a command to market, “liberalized” economy, but this does not mean it faces challenges to its political authority nor does it mean it is transforming into a democratic regime. One reason for this is the fact that elites like the CCP are sometimes put in the position of gaining significantly from reforms. According to the World Bank, this works because these incumbent elites “can convert their existing control over state assets into substantial gains.” The methods of reaping these benefits include “rent seeking, arbitrage, and asset stripping.”7 This has led in recent years to studies that demonstrate how a low threshold of regime change is compatible with market transitions.

Andrew Walder, a sociologist who has modeled transitional economies in a comparative context, uses his theory to explode the assumption of modernization theory that market transition entails regime change.8 Walder points out that economic reform in China has been slow and gradual, allowing cadre elites a certain level of opportunities for asset appropriation as the state sector is privatized yet without offering them a chance to constitute a threat to the party itself. Thus, unlike the Russian, Hungarian, and Czech Republic cases where the communist parties have all lost power as the percentage of the private sector that accounts for GNP rocketed to 70-80% in the 1990s alone, by 1999 the public sector in China still accounted for 45% of the GNP.9 This brings us to an interesting debate among political scientists and sociologists. To what degree does economic liberalization correlate to political liberalization? According to modernization theory the correlation is nigh teleological.

In the 1990s, poltical scientists who modeled per capita GDP in relation to regime type show a strong correlation between high per capita GDP and democratic regimes. Of the 679 regimes earning with per capita GDP in the highest bracket ($7,001+), 94.8% are democratic. Conversely, of the 2,016 regimes in the lowest bracket ($0-$2,000), 83.8% are non-democratic.10 Many believe this lends credence to the assumption within modernization theory that economic liberalization anticipates (if not causes) political liberalization.11

This modernization theory view was encapsulated in 1959 when Seymour Lipset pronounced the now famous aphorism: “…the more well-to-do a nation, the greater the chances it will sustain democracy.”12 It has been repeated by popular commentators but it survives in scholarship as well. Victor Nee, a sociologist who has written extensively on democratic transition, summarizes his early findings as indicating a connection between the shift in distribution methods—central planning to market coordination—and the interests in certain social classes who then have political power because of new opportunities for socioeconomic advancement. Practically speaking, this refers to state socialism as the central planning form of distribution, capitalism as the market coordination, and democratization as the increased political power of non-state groups. His theory of market transition thus entails new “incentives for direct producers, [stimulation in the] growth of private markets, and [for entrepreneurs] an alternative path for socioeconomic ability.”13 In the market transition theory, then, capitalism leads towards a consolidated democracy. A consolidated democracy is a democratic state with minimized risks to political stability. The conventional definition of democracy put forward by Lipset and Lakin applies here. In their book, The Democratic Century, they define it as: “an institutional arrangement in which all adult individuals have the power to vote, through free and fair competitive elections, for their chief executive and national legislature.”14 This assumes the liberal democratic state and its democratic processes that ensure political stability through consolidation.

One of the characteristic features of consolidated democracies is the presence of an active civil society, defined as:

The realm of organized social life that is voluntary, self-generating, (largely) self-supporting, autonomous from the state, and bound by a legal order or set of shared rules. It is distinct from “society” in general in that it involves citizens acting collectively in a public sphere to express their interest, passions, and ideas, exchange information, achieve mutual goals, make demands on the state, and hold state officials accountable. Civil society is an intermediary entity, standing between the private sphere and the state.15

Below is a chart that shows the growth of the Chinese economy in terms of Gross National Product (GNP), Gross Domestic Product (GDP), and Per Capita GDP.

YEAR GNP %* % GNP Growth † GDP %* % GDP growth † per capita GDP‡
2000 750.6 10.76 759.9 08.42 1,150.71
2001 811.1 10.27 823.0 08.30 1,262.58
2002 888.5 10.20 897.8 09.09 1,376.22
2003 983.1 13.50 987.8 10.02 1,543.74
2004 1,085.4 18.06 1,087.4 10.08 1,806.45
2005 1,216.1 16.43 1,210.4 11.31 2,077.22
2006 1,371.4 17.07 1,363.8 12.67 2,416.22
2007 1,568.4 23.10 1,557.0 14.17 2,953.50
2008 1,718.8 18.10 1,707.0 09.63 3,471.74
2009 1,866.5 06.67 1,855.7 08.71 3,688.47 (06.24% growth annually; 20.54% by decade)

Indexed to 1978 = 100%

† From previous year

‡ USD $ at rate of 1 USD = 6.82885 CNY (current as of 31 May 2010)

At the current rate of per capita GDP growth (06.24% for the 2008-2009 year; 20.54% for 2000-2009 decade), China’s GDP will reach the $7001 per capita GDP bracket by the year 2034. According to mainstream estimates this growth will continue. The IMF in its World Economic Outlook predicts 10% GDP growth for 2010 in China and 9.9% for 2011.16 It is also not unheard of for a country to sustain double-digit growth for a few decades’ time. Japan saw similar figures from the mid-1950s through 1990. Similarly, Korea and Taiwan both averaged around 10% GDP growth from the mid-1960s to the 1990s. Does this mean China is likely to become a democracy by the second quarter of this century? For reasons to be outlined below it seems unlikely, though modernization theory would predict such an outcome. Thus, the above table is not intended to be totally accurate and should not be relied upon to predict any future political scenario.17 Rather, it simply illustrates the profound economic growth occurring in the Chinese economy.

Though China’s growth has been rapid, seen in the historical context dating to Deng’s ascendancy in the party leadership, reform has been gradual and deliberate. A core theme of the 1978 Third Plenum of the 11th National Congress was the simultaneous strengthening of democracy and strengthening party leadership. It argued that “socialist modernization requires centralized leadership….”18 The CCP, as the world’s largest political party with over 70 million members, has placed itself in a position to consolidate power in a single-party state while remaining nominally democratic. This is very different from the fate of formerly communist countries in Eastern Europe that reformed rapidly. In these countries, market reform correlated to immediate regime change as civil society became more powerful.

However, in China the expansion of civil society and oppositional political parties is precluded from both economic-institutional and political angles. The rise of a civil society powerful enough to put pressure on the state typically arises in the context of economic liberalization, which China arguably has. Yet, the segments of Chinese society in a position to take advantage of new opportunities for capital accumulation are similarly those who are cadres of the Chinese Communist Party. These are not just the tanguan referenced in the first paragraph since much of this activity is legally sanctioned. Also, contrary to popular opinion, there are other active political parties in the People’s Republic of China, though these have never and don’t for the time being seem to confront the CCP in any way.

In the Chinese context, economic liberalization was accomplished not as a diminution of the state’s involvement in the economy, but as a new formulation for state and elite mediation of the market. Indeed, during the 13th Party Congress of 1987, the Party’s decision making apparatus was revised to promote a more technocratic and pragmatic (rather than ideological or theoretical) approach to economic issues.19 In the initial stages of economic reform it was stated very clearly that reform was undertaken to increase efficiency in Chinese industry without transferring ownership. Even in the cases where ownership was transferred, according to Walder, “state agencies and public firms may engage in a form of asset conversion in which they transfer public assets to private entities that are undert their own organizational control.” In such an arrangement, “incumbent officials may extract larger incomes [through informal control of the asset’s profits, though] they do not assume ownership of these… assets.”20 Yet, this CCP mediation of the market has not affected growth. Rather, it has encouraged the economy to grow at a breakneck pace.

3

The question of China’s democratic transition has broad implications for the history of capital more generally. That China is undergoing accelerated industrial production, that it has a reconfigured labor market and a growing consumer base, and that formal relations of ownership in the country are changing forces all but the most ideological supporters and critics of the country to accept the analysis that although China is still nominally communist, capitalism has fundamentally become established in Chinese society. Yet China is not showing the characteristic features of a liberal democracy. What it looks like instead is a form of authoritarian capitalism. What can this mean for the dominant modernization paradigm which assumes that economic liberalization leads to political liberalization?

Victor Nee first published his thesis on market transition in 1989, as it was obvious that China had begun a dramatic new era of market transition. By Nee’s theory, China would be increasingly more democratic as non-state actors had increased socioeconomic mobility. However, this is the same year that witnessed one of the signal events of China’s new state strategy for dealing with oppositional movements: the Tiananmen Square protests. The Tiananmen Square affair, which happened within a year of the dissolution of the USSR, highlighted a key difference between China and its former communist ally. Where in the Soviet Union, pressure from civil society groups had forced the communists out of power, in China these same forces were quelled through violent suppression. The 1989 Tiananmen Square events are indicative of how China has pursued a different path than other transitional economies. As noted by Chinese intellectuals Li Minqi and Wang Chaohua, the CCP succeeded in forestalling popular opposition to its rule, not only through violence. Li Minqi confirms that “from the mid-1980s onwards there developed an enthusiastic consensus among Chinese intellectuals in favor of free-market capitalism”, though Wang Chaohua adds that in the aftermath of Tiananmen there “has been a strengthening of the existing political regime and a widespread turn away from ideal questions to a pursuit of consumerism.”21 By offering to reform the economy along market lines while simultaneously maintaining political stability, the CCP’s China resists easy classification.

There are some who celebrate this model. Besides the transitional democracy model, a predominant description of Chinese political-economy on the Left follows Deng Xiaoping’s call for “socialism with Chinese characteristics”, or “market socialism”. Lin Chun, a political scientist, and Giovanni Arrighi both affirm this model, believing, as Lin writes, that “China is at the epicenter of a global transformation” that offers an “alternative to capitalist integration”.22 They predict that a communist China at the helm of a powerful economy can usher in a new era of humane development. It can also challenge American hegemony. Giovanni Arrighi, basing his predictions on a theory of systemic patterns pioneered in The Long Twentieth Century, foresees in Adam Smith in Beijing that the next century will proceed under the regime of Chinese dominance.23 This is based on a revisionist reading of Adam Smith, emphasizing the progressive aspects of the market—as opposed to capitalism—and America’s “Hegemony Unraveling”.

However, one of the causes of the distorted assessment of Chinese socialism is what I argue is a misunderstanding of the fundamental characteristic of capital. This is a feature of both the modernization paradigm and market socialism hypothesis. Though not explicitly Marxist, they resemble the type of Traditional Marxism that Moishe Postone defines as a theory that “analyze[s] capitalism from the standpoint of labor and characterize[s] that society essentially in terms of class relations, structured by private ownership of the means of production and a market-regulated economy.”24 This schema preserves the cold war differentiation between capitalism and communism without interrogating the way in which social relations in both take on a similar, capitalist aspect. Along with Postone, I argue that capital is not defined by exploitation, class stratification, or public versus private ownership, though these affect social relations structured by capital. Instead capital is defined by its ability to render human productive behavior and the products of that behavior equivalent. State mediation of the mode of distribution appears in different forms in the capitalist democracies and the so-called socialist countries, but the modernization theorists and Arrighi seem to miss the point since these minor differences in how the mode of distribution works does not seem to affect the fact that the mode of production is structured by capital in all development-oriented systems.

Another objection to Arrighi’s concept of market socialism comes from Marx. As is well known, in the first volume of Capital, Marx identified capital with a circuit of commodities and money, M-C-M’, in which money facilitates the exchange of commodities with the goal of exchange for increased value.25 Arrighi’s concept of socialism is based on the circuit of C-M-C, where the goal of exchange is consumption. We find a similar endorsement of market socialism in Lin’s book, where she writes that what differentiates socialist development from capitalist is that “production is for people, not profit.”26 This is a misreading of Marx because in Capital Marx argues that one circuit (C-M-C) cannot happen without the other (M-C-M’). The commodity form structures social relations in such a way that money is not simply a means, but always becomes an ends itself. Capital is a society predicated on universal exchange, but exchange is not central to capital, it is value and the commodity form. Socialist developmentalism has not escaped this dynamic.

An additional point of clarification could now be offered. The terms we are using to debate China’s political form are nebulous, especially democracy,liberalization, and capitalism. Each has a range of uses, though what is of interest here is how in the realm of formal political science or political theory these formal usages may be consistent internal to the field yet become misconstrued as the concepts are applied in other contexts. As Raymond Williams points out, the meaning of democracy is different in a socialist and a liberal context. As he writes, “In the socialist tradition, democracy [means] popular power: a state in which the interests of the majority of the people were paramount and in which these interests were practically exercised and controlled by the majority.” While in a liberal context, democracy means “open elections of representatives and certain conditions (democratic rights such as free speech) which maintained the openness of election and political argument.”27 This evidenced clearly by the fact that most Chinese feel proud to live in a socialist country28 and yet the most popular definition of democracy is that “democracy is guided by the center.”29 This divergence of meanings has distorted how many liberal commentators have appreciated socialist democracy.30 For Williams, “liberalism is a doctrine based on individualist theories of man and society and is thus in fundamental conflict not only with socialist but with most strictly social theories…. Liberalism is then a doctrine of certain necessary kinds of freedom but also, and essentially, a doctrine of possessive individualism.”31

Having established the contours of contemporary Chinese political-economy, it is worthwhile to establish a framework from which to analyze it. Here we could follow a Marxist definition of capitalism as form of society structured by capital, or the value form. To briefly rely on Marxist categories, economic liberalization refers to the privatization of the means of production (land, factories, and stores) that were previously state owned. According to conventional economic theory this happens either because non-state sectors of the population have accumulated sufficient capital to purchase these assets, or the state voluntarily releases its control over them.

Conclusion

In summary, the Chinese state has been successful at integrating or eliminating what would otherwise be oppositional social elements into its institutional arrangement. It is not at all clear that economic shifts always determine political institutional arrangements. We should also add that the democratic transitions of the former soviet bloc countries, Taiwan, and Korea should not be treated as ontological givens, but should be seen as products of contestation and political contingency. China has not followed an identical path to any of these powers, showing that capitalism can function outside of a liberal democratic context. It might even be that the idea of liberal democracy has exhausted its ability to appeal to the residents of developing countries.

China’s transformation should also be analyzed alongside China’s rise. China’s rise refers to a related phenomenon in which China’s economic growth has consequences for global capital. Trade between China and other major national economies has shifted political relations. Now, China has a seat in the United Nations and is a major source of security in Northeast Asia and globally. It has recently overtaken Germany as the world’s leading exporter. The rise of China forces us to ask questions about the shifting composition of the world system, and the history of capitalism itself. For some questions it will be impossible to make accurate predictions. For others, like the relation between economic policy and political regime, China appears to have revealed an alternative, if perplexing path.

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1廣州六歲小學生開學《我的志願》:做貪官收很多禮物!, September 02, 2009, http://www.youtube.com/watch?v=_sZ0P_R2LIo&feature=youtube_gdata.

2Ji Yun, “How China Proceeds with the Task of Industrialization” in People’s Daily, May 23, 1953. Found in De bary, ed., 456.

3Deng Xiaoping, “Uphold the Four Basic Principles”, a speech given on March 30, 1979. Found in William De Bary, ed. Sources of Chinese Tradition, vol. 2, 2nd ed. (New York: Columbia University Press, 2000), 492.

4China Labour Bulletin, “Reform of State-owned Enterprises in China,” China Labour Bulletin, December 19, 2007, http://www.china-labour.org.hk/en/node/100153.

5http://chinadataonline.org.proxy.uchicago.edu/member/macroy/macroytshow.asp?code=A0102

6Guillermo A. O’Donnell and Philippe C. Schmitter, Transitions from Authoritarian Rule. Tentative Conclusions About Uncertain Democracies (Baltimore: Johns Hopkins University Press, 1986), 10.

7Pradeep Mitra, Marcelo Selowsky, and World Bank, Transition, the First Ten Years Analysis and Lessons for Eastern Europe and the Former Soviet Union(Washington, D.C.: World Bank, 2002), 92-93.

8Andrew G. Walder, “Elite Opportunity in Transitional Economies,” American Sociological Review 68, no. 6 (December 2003): 899-916.

9Walder, 902.

10Adam Przeworski and Fernando Limongi, “Modernization: Theories and Facts,” World Politics 49, no. 2 (January 1997), 162.

11Carles Boix and Susan C. Stokes, “Endogenous Democratization,” World Politics 55, no. 4 (July 2003), 525.

12Seymour Martin Lipset, “Some Social Requisites of Democracy: Economic Development and Political Legitimacy,” The American Political Science Review 53, no. 1 (March 1959), 75.

13Victor Nee, “A Theory of Market Transition: From Redistribution to Markets in State Socialism,” American Sociological Review 54, no. 5 (October 1989). 663.

14Seymour Martin Lipset and Jason M. Lakin, The Democratic Century (Norman: University of Oklahoma Press, 2004), 19.

15Larry Diamond, “Rethinking Civil Society: Toward Democratic Consolidation,” Journal of Democracy 5:3 (July 1994), 5.

16International Monetary Fund, Regional Economic Outlook: Asia and Pacific: Leading the Global Recovery: Rebalancing for the Medium Term, World Economic and Financial Surveys (Washington, D.C.: International Monetary Fund, 2010), 29.

17If a measurement of economic performance was intended to be accurate it would have to factor in the qualitative changes in the economy that do not affect GDP, and compensate for the fact that not all contributions to GDP reflect growth – the now empty airports and office buildings in China attest to this last phenomenon. Fundamentally, GDP is at best a limited indicator of economic performance.

18“Communique of the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China, December 22, 1978”. Found in William De Bary, ed., Sources of Chinese Tradition, vol. 2, 2nd ed. (New York: Columbia University Press, 2000), 488.

19Yaodong Bi, “Recent Developments in China’s Policymaking Establishment,” Asian Affairs 15, no. 3 (Fall 1988): 171-183.

20Walder, 903.

21Wang Dan et al., “A Dialogue on the Future of China,” in One China, Many Paths (New York: Verso, 2005), 314.

22Lin Chun, The Transformation of Chinese Socialism (Durham: Duke University Press, 2006), 1.

23Giovanni Arrighi, The Long Twentieth Century: Money, Power, and the Origins of Our Times (London: New York: Verso, 1994). Giovanni Arrighi, Adam Smith in Beijing: Lineages of the Twenty-First Century (London: Verso, 2007).

24Moishe Postone, Time, Labor, and Social Domination: A Reinterpretation of Marx’s Critical Theory (New York: Cambridge University Press, 1993), 7.

25Karl Marx, Capital: A Critique of Political Economy, trans. Ben Fowkes, vol. 1, 3 vols. (New York: Vintage Books, 1977).

26Lin, 286.

27Raymond Williams, Keywords: A Vocabulary of Culture and Society (New York: Oxford University Press, 1985), 96.

28Yijiang Ding, Chinese Democracy After Tiananmen (New York: Columbia University Press, 2001), 109.

29Ding, 111.

30Of course these two meanings have little to do with radical or anarchist definitions of democracy. See Williams, 37.

31Williams, 181.

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