(3a) The restructuring of government institutions in the context of a reconfigured yet stable power elite and a rigid political environment contributed to a situation where the Chinese central government and its local counterparts were equipped with greater capacity than in other emerging countries to process the paradoxes of capitalist development. At the same time, however, the discrepancies in the country’s regional development and the multiscale government apparatus have created a social structure that is not free of conflict. The Chinese central government has only temporarily and partially succeeded in gaining control of the internal competition to attract business and investment. Associated with this are the high-risk growth and fiscal policies of the country’s subnational governments, and in the financial system and corporate sector. Hence, the steering capacity of the heterogeneous party-state cannot be hypostasized, and contradictory macroeconomic lines of development as well as limitations of political regulation can be discerned. I will therefore identify factors that have recently contributed to destabilization. In order to attenuate the effects of capitalist modernization, the Chinese central government has been pushing for a comprehensive restructuring of the economy and a reinforcement of domestic consumption. In normative terms, this is motivated by the objective of achieving a “harmonious society” (hexie shehui). As I will attempt to demonstrate, this endeavor is rather difficult to realize in practice, however, also under the Xi Jinping administration.
(3b) In addition to the paradoxical effects of market expansion and political macroregulation, the mechanisms of conflict resolution within the labor system are flawed. There are limitations to Chinese-style labor subordination, which puts the rule of the party-state under considerable strain.
The present work11 pursues two further objectives: first, my intention is to target readers with an interest in the social sciences and, at least to some degree, help them to decipher China’s path to a modernity, which is shaped by capitalism. My second aim is that the research framework developed here and some of the findings resulting from this study may also arouse interest in political economy considerations. For me, the optimal outcome would be for my account and explanations of the fundamental dynamics of China’s capitalist development to act as a preliminary work and an aid for further, more specialized empirical analyses of individual sectors of the economy or policy areas that could then substantiate more specific causalities.
At this juncture, I think it is important to comment on the limitations of this study. The present work does not examine all dimensions of China’s process of capitalist modernization. For example, it does not cover in any detail the emergence of a consumer society, the development of the welfare state, the evolution of new middle classes, or the agriculture issue. I also only sporadically refer to the valorization of the environment and the long-term costs of the exploitation of natural resources. The same applies to the colonization of the lifeworld and the development of gender relations. The study also tackles the global implications of the rise of China only to a limited degree and, with regard to the political system, only selectively discusses the role of the Chinese People’s Liberation Army (PLA) and the security apparatus. Finally, the role played by ideational orientation, motives for social upward mobility, and the question of normative integration and leadership legitimacy are also not adequately acknowledged.
Outline
In Chapter 1, I develop a research framework based on insights, gaps, and desiderata in China research and using theoretical tools from, inter alia, the fields of CPE and IPE. In order to avoid a state/market dualism, I combine insights from various disciplines and approaches that I feel benefit the analysis of China’s new capitalism. I refer here to the notion of a capitalist-driven modernity and an international variegated capitalist world system. To help me describe the unstable dynamics of China’s process of development, I draw on a global perspective, the notion of uneven, combined and interconnected development, and a concept of institutions that takes account of targeted human action. To operationalize the research framework, I introduce five dimensions of capitalist economies:
1. unstable dynamics of markets and enterprises;
2. types of industrial relations;
3. the financial system;
4. interaction between economic and political actors; and
5. the integration of political economies in global economic structures.
On the basis of these five areas, the main part of the study examines the characteristics of China’s socioeconomic order and its dynamics. Against this backdrop, Chapter 2 reconstructs the historically relevant processes that, because of the effect of the drivers of capitalism, mean we can plausibly refer to a capitalist development in China. Here, I describe how the reform process led to a new mixture of market, state, and other coordination mechanisms.
The first section in this chapter summarizes the period from 1949 to 1978. Here, I attempt to already address the phenomenon of the relative continuity of power elites after 1978. To do so I refer to the mechanisms of protocapitalism in classical Maoism, a change in the country’s social structure, and the embedding of the crisis of Maoism in the global crisis of the 1970s. The latter triggered a global wave of liberalization across a broad spectrum of different political systems. To demonstrate that this also took effect in China, albeit not in the same form as in the Western world, for example, I refer, inter alia, to the role model function of the East Asian developmental states.
Applying the analytical strategy developed as part of my research framework, I use the second section in Chapter 2 to reconstruct the emergence of a variegated state-permeated capitalism from the end of the 1970s to the era of Hu Jintao and Wen Jiabao in the 2000s. First, I analyze the domestic dynamics and outline two distinct phases of the reform of the country’s corporate sectors, of the political system of multilevel governance, of industrial relations, and of the financial system.12
I then extend the analysis to incorporate external factors, including China’s integration into the global capitalist system, the evolution of an export-oriented growth model in coastal regions, the role of the overseas Chinese, and the East Asian economic region, as well as transnational production networks and the overaccumulation of capital in the North. I demonstrate how the Chinese economy benefited considerably from a combination of favorable circumstances and was able to accelerate its catch-up development so much more than other emerging economies.
Chapter 3 focuses on the current lines of development in Chinese capitalism. Although I refer back to various historical events at certain junctures in this chapter, the focus is on the period between 2008 (the start of the momentous global economic slump) and 2016. Following the assumption that my analysis must refer to the role of and interplay between three groups of actors, this chapter is divided into three sections. In the first, I discuss the corporate sector and examine socioeconomic dynamics. On the one hand, I address the issue of unity in diversity, that is, the public-private organization of the economy against the backdrop of heterogeneous business forms and production regimes. On the other hand, I analyze socioeconomic dynamics including the challenges presented by the growth slowdown in the 2010s.
Whether the government leadership has been able to meet these challenges and effect a rebalancing of the economy is the subject of the second section of this chapter. First, I further develop the themes