China’s state- centered development model and its role in international relations

1. China’s state-centered development model and its role in international relations UvA-IDSlecture series 11 November 2010 Dr Frans-Paul van der Putten ClingendaelInstitute

2. I. China’sdevelopmenttrajectory

3. 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

4. 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

5. II. Lessons for development

6. 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

7. 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

8. III. Is there a China model?

9. 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

10. 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

11. Johan Lagerkvist: limitsof 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

12. IV. What is the Beijing Consensus?

13. 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?

14. 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

15. The Beijing Consensus (BJC) • ArifDirlik: • 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

16. The China Model • China’s development trajectory cannot be copied • It remains unclear whether China eventually will be forced to reform politically to become a more open, liberal society • ButChina 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 • Also unclear is whether China actively promotes itself as a model • But China does openly promote a political principle: countries should be free to choose their own development path

17. 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

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

19. FareedZakaria: 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)

20. 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

21. 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

22. 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

23. 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

24. 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?

25. 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

26. 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