AAS Annual Meeting

China and Inner Asia Session 35

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Session 35: Debating Future Trajectories of China’s Capitalist Evolution:Global, Comparative, and Interdisciplinary Perspectives

Organizer: Christopher A. McNally, East-West Center, USA

Chair: Ronald C. Brown, University of Hawaii, Manoa, USA

Discussants: Ronald C. Brown, University of Hawaii, Manoa, USA; Ivan Szelenyi, Independent Scholar, USA

In the wake of the global financial crisis, China emerged as a major “winner” of worldwide economic rebalancing. As the volatile nature of financial markets continues to impact the core economies of the advanced industrial nations, China’s rise seems to demonstrate the advantages of state-led capitalism. Now, China faces a transition from export- and investment-driven growth towards a more domestically centered model based on internal consumption, rising incomes, and environmental sustainability. However, the obstacles for a shift away from the old model appear tremendous, since power relationships created during China’s relatively successful transition to a market economy are locking the country into the growth model of recent decades. New cleavages between industries, regions, and various sectors of the population are thus likely to emerge, reinforcing already existing fault lines in the Chinese political economy. This panel proposes that a deeper understanding of the dynamics of change in China’s emergent capitalism requires a re-thinking of existing theoretical concepts. Indeed, the dualism of “market” vs. “state”, still prevalent in many scholarly debates, has to be transcended. This panel thus initiates interdisciplinary reflections on the nature of China’s emerging capitalism, including perspectives from Political Science, Law, Labor Sociology, and Comparative and International Political Economy. Our intention is to use short presentations to provide two mini-debates on possible future trajectories of China’s capitalism, especially how the rebalancing of China’s economy is occurring and how this will affect global economic imbalances. The mini-debates are meant to encourage a wide-ranging, intellectually creative “border-crossing” exchange on China’s emerging model of capitalism and its international implications.

State capitalism is dead! Long live state capitalism! The evolutionary dynamics of Sino-Capitalism
Christopher A. McNally, East-West Center, USA

To elucidate the implications of China’s rise for the global capitalist system, this paper puts forward the concept of Sino-capitalism – a new emergent system of capitalism centered on China. Bottom-up, Sino-capitalism encompasses highly networked and entrepreneurial systems of small- and medium-sized firms that are globally enmeshed. Top-down, however, Sino-capitalism assigns the Chinese state a leading role in fostering and guiding capitalist accumulation. Building on China’s distinct socialist and imperial legacies, Sino-capitalism represents a unique form of state capitalism in which the state uses the power of markets to increase political and geopolitical leverage. As a result, the Chinese state owns and controls the commanding heights of the economy and strategically uses markets and capital accumulation for political purposes. This brand of state capitalism has been highly successful in the past thirty years. Yet, it is by many in the West seen as fundamentally incompatible with a free market globalized system. This paper will argue that Sino-capitalism is here to stay. In fact, Chinese efforts to undertake a transition from export- and investment-driven growth towards consumption-driven growth are unlikely to rely on free market economic tools. The Chinese state is most likely to depend on continued centralized guidance to steer the economy towards a new growth path. Massive infrastructure investments, controlled rural migration to cities, public urban housing programs, and a state-guided revamping of social welfare systems are all part of this state capitalist solution to internal economic rebalancing. Ironically, China’s state capitalism might thus contribute to the diminishing of global economic imbalances, fostering sustainable free market globalization.

Industrial transformation and reform of labor policies: Insights from Guangdong province
Gaochao He, Sun Yat-Sen University, China

Guangdong province has been at the forefront of China’s economic, social, and political transformation of recent decades. Since the beginning of reform and opening, the province has grown into China’s most important base for export manufacturing. The province has developed a comprehensive manufacturing base in light industries, but also in technology intensive sectors such as electronics and automobile manufacturing. The workforce is overwhelmingly made up of migrant workers. Labor shortages, mass lay-offs during the recent crisis, and growing legal, economic, and political consciousness among migrant workers have made labor relations highly conflict-prone. Mounting social tensions are also pointing to the limits of the region’s traditional model of economic growth based on the combination of mass manufacturing and low-wage labor. This paper examines the relationship between the strategies of industrial upgrading put forward by the provincial and national governments in response to the global financial crisis of 2008-09 and the rapid changes in labor relations now taking place in Guangdong. The author will review the relevant academic and political debates in China and investigate possible linkages between changes in the model of economic growth and the upgrading of working conditions and labor standards, especially with regard to the situation of migrant workers. In particular, the recent labor conflicts in supplier firms of multinational automobile manufacturers and other industries will be discussed with regard to their implications for the reform of labor policies at the provincial and national level, as well as how this could affect China’s move towards a domestic consumption-driven model of growth.

The future of market-liberal state capitalism in China
Tobias ten Brink, Independent Scholar, Germany

For a better understanding of the Chinese system, the instruments that Comparative and International Political Economy provide us with can prove useful. They enable a characterization of China as a specific variant of capitalism – a market-liberal state capitalism. Although centrifugal forces are at work within the Chinese power elite, until now its relative homogeneity has provided enough scope for the initiation of new policies. The current global turbulences plus internal crises tendencies may nonetheless pose a threat to the stability of Chinese state capitalism. Thus, the paper analyses three dimensions of Chinese capitalism that contain contradictory dynamics: First, it looks at the problems facing the Chinese regime of “exportism” which is highly dependent upon the world market, global production networks, and Western consumer markets. Secondly, it explores benefits and weaknesses of the fragmented party-state and the closely interwoven relationships between party, government agencies, and companies. Thirdly, it asks whether the Chinese model of low wages can be maintained. While the world economy is still in trouble and foreign demand for Chinese products is still weak, decentralization of governance accelerates trends towards over-investment and doubling of capital expenditure. In addition, societal polarization endangers social stability and the growth of domestic consumption. Trapped in between public promises of social justice and the enduring belief in low wages as a competitive advantage, crises management oscillates between compensatory authoritativeness and disorganized despotism. Therefore, the paper asks whether what was until now recognized as the most important factor of success in China’s unique brand of state capitalism carries the seeds of its own destruction.

Regimes of production and industrial relations in China’s new capitalism
Boy Luthje, East-West Center, USA

The transformation of work and labor policies has been one of the most under-researched aspects of China’s political economy in recent decades. Western perceptions of Chinese workplaces are mostly informed by images of privatization and downsizing of traditional state-socialist enterprises, or by the infamous sweatshops serving the production networks of global brands. However, recent research reveals that labor politics in China have become highly diversified, in spite of the apparently centralized character of the political regime. At the same time, labor conflicts are on the rise across industries and regions. Workers are claiming a stake in the envisaged shift from economic growth driven by exports to one driven by domestic demand. This paper attempts a new approach to analyze labor relations at the level of companies, industries, and regions in China. The analysis refers to Western and Chinese labor sociology and industrial relations theory, applying the concept of “regimes of production” to the context of China’s emerging capitalism. The focus is on China’s modern core manufacturing industries, i.e., the steel, chemicals, auto, electronics, and textile and garment industries. The research explores regimes of production in major corporations and new forms of labor-management cooperation, the growing inequality and fragmentation of labor policies within the modern sectors of the Chinese economy, and the implications for further reform of labor standards, collective bargaining, and worker participation. The paper presents results from a research project carried out by the Frankfurt Institute of Social Research in cooperation with leading academic institutions in the field in China and support from the Hans-Böckler Foundation.