5
Neoliberalism ‘with Chinese
Characteristics’
In December 1978, faced with the dual di
fficulties of political
uncertainty in the wake of Mao’s death in 1976 and several years of
economic stagnation, the Chinese leadership under Deng Xiaop-
ing announced a programme of economic reform. We may never
know for sure whether Deng was all along a secret ‘capitalist
roader’ (as Mao had claimed during the Cultural Revolution) or
whether the reforms were simply a desperate move to ensure
China’s economic security and bolster its prestige in the face of the
rising tide of capitalist development in the rest of East and South-
East Asia. The reforms just happened to coincide –– and it is very
hard to consider this as anything other than a conjunctural acci-
dent of world-historical signi
ficance––with the turn to neoliberal
solutions in Britain and the United States. The outcome in China
has been the construction of a particular kind of market economy
that increasingly incorporates neoliberal elements interdigitated
with authoritarian centralized control. Elsewhere, as in Chile,
South Korea, Taiwan, and Singapore, the compatability between
authoritarianism and the capitalist market had already been clearly
established.
While egalitarianism as a long-term goal for China was not
abandoned, Deng argued that individual and local initiative had to
be unleashed in order to increase productivity and spark economic
growth. The corollary, that certain levels of inequality would
inevitably arise, was well understood as something that would need
to be tolerated. Under the slogan of
xiaokang –– the concept of an
ideal society that provides well for all its citizens –– Deng focused
on ‘four modernizations’: in agriculture, industry, education, and
science and defence. The reforms strove to bring market forces to
bear internally within the Chinese economy. The idea was to
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stimulate competition between state-owned
firms and thereby
spark, it was hoped, innovation and growth. Market pricing was
introduced, but this was probably far less signi
ficant than the rapid
devolution of political-economic power to the regions and to the
localities. This last move proved particularly astute. Confrontation
with traditional power centres in Beijing was avoided and local
initiatives could pioneer the way to a new social order. Innovations
that failed could simply be ignored. To supplement this e
ffort,
China was also opened up, albeit under strict state supervision, to
foreign
trade and foreign investment, thus ending China’s isolation
from the world market. Experimentation was initially limited,
mainly to Guangdong province close to Hong Kong, conveniently
remote from Beijing. One aim of this opening to the outside was to
procure technology transfers (hence the emphasis on joint ven-
tures between foreign capital and Chinese partners). The other
was to gain enough foreign reserves to buy in the necessary means
to support a stronger internal dynamic of economic growth.
1
These reforms would not have assumed the signi
ficance we now
accord to them, nor would China’s extraordinary subsequent eco-
nomic evolution have taken the path and registered the achieve-
ments it did, had there not been signi
ficant and seemingly
unrelated parallel shifts in the advanced capitalist world with
respect to how the world market worked. The gathering strength
of neoliberal policies on international trade during the 1980s
opened up the whole world to transformative market and
financial
forces. In so doing it opened up a space for China’s tumultuous
entry and incorporation into the world market in ways that would
not have been possible under the Bretton Woods system. The spec-
tacular emergence of China as a global economic power after 1980
was in part an unintended consequence of the neoliberal turn in
the advanced capitalist world.