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David Harvey (2007) Chap 5 Neoliberalism with Chinese Characteristics



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

120

Harvey, D. (2007). A brief history of neoliberalism. Oxford University Press, Incorporated.

Created from monash on 2022-03-12 01:12:16.

Copyright © 2007. Oxford University Press, Incorporated. All rights reserved.




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.




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