Qualitative Aspects of China’s Socio-Economic Development

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As of today, it became a commonplace practice among many political observers to refer to China, as the second most powerful country in the world, which continues to affect the world’s geopolitical and economic developments to an ever-increased extent.

In its turn, this can be explained by the fact that the economic reforms, which began to be implemented by the Chinese government in the late seventies, proved thoroughly effective. As Wei-Wei pointed out, “China’s economic reform, with all its problems, is widely perceived as successful. China’s GDP has been growing at nearly 10 per cent and foreign trade at 15.5 per cent per annum over the past two decades.

The majority of China’s population has seen significant improvements in their standards of living” (1999, p. 2). In my paper, I will explore the validity of this suggestion at length, while elaborating upon what I consider contributed the most towards ensuring China’s continual socio-economic progress, over the course of the last few decades, and upon what appears to be the scope of possible lessons that could be drawn, in this respect.

The relevant empirical data, upon which I plan to rely mostly, while coming up with the intended line of argumentation, in regards to the discussed subject matter, are contained in the ‘China case study: analysis of national strategies for sustainable development’ by Simone Klawitter.

In order to provide more up-to-date information, as to the specifics of the China’s ongoing socio-economic development, I will also refer to more recent academic publications.

During the course of the late seventies, the Chinese Communist Party’s top officials, headed by Den Xiaoping, started to grow increasingly aware of the fact that the functioning of the country’s planned economy had to be reformed, as the realities of the late 20th century’s living were exposing Marxist economic paradigm utterly outdated.

Nineteen seventy-eighth was the year that marked the initial phase of China starting to part away with the economic conventions of orthodox Marxism.

The initial phase of China’s economic reforms was concerned with allowing citizens to indulge in a small-scaled commercial entrepreneurship, encouraging state-owned factories to provide workers with additional monetary incentives, as the way to increase the extent of their professional enthusiasm, and inviting foreign investors to acquire the ownership of economically stagnant Socialist enterprises. As White noted, “In 1980, 80% of enterprises were state-run. By 1992, the state’s share was less than 53%” (1993, p. 8).

The deployed strategy, towards the revitalization of the country’s economy, proved utterly successful. According to Klawitter, “The result (of the undertaken reforms) has been a quadrupling of GDP since 1978. In 2003, with its 1.3 billion people… China stood as the second-largest economy in the world after the US (measured on a purchasing power parity basis)” (2004, p. 2).

This allows us to formulate what can be considered Lesson 1, in regards to the qualitative aspects of China’s socio-economic development, during the course of the last thirty years – the fact that the very laws of history predetermine the effectiveness of specifically free-market economy.

In its turn, this can be well explained by the fact that this type of economy makes it possible for employees to take a personal interest in applying an additional effort into increasing the effectiveness of their professional performance, which is turn speeds up the generation of the so-called ‘surplus product’ – the actual source of citizens’ material well-being.

The main characteristic of how the government went about applying the earlier mentioned economic reforms is that, as opposed to what was the strategy of implementing free-market oriented reforms in the USSR, during the course of the late eighties, Den Xiaoping’s strategy of economic reforms never ceased being observant of the Chinese society’s geopolitical, demographic and cultural uniqueness (Berger 2005).

This is the reason why, despite the pro-Western essence of the undertaken economic reform, they were not accompanied with the political ones. As Pei noted, “Today, two decades after Deng started his reforms, most observers view the Deng era as a period of rapid economic reform without commensurate political – especially democratic – reform” (1998, p. 69).

Apparently, Xiaoping proved himself wise enough to understand the simple fact that, in order for the implementation of free-market oriented economic reforms to be successful, they can never be ideologically driven.

Instead, they should be concerned with establishing preconditions for the country’s economic potential to be exploited in the most efficient manner – regardless of whether this manner is being deemed ‘democratic’ or not.

Hence, Lesson 2 – when it comes to designing a reform-strategy, meant to be applied in a particular country, policy-makers must refrain from allowing the conventions of a specific ideology to affect the concerned decision-making process.

This, of course exposes the fallaciousness of the assumption that the notions of ‘democracy’ and ‘economic prosperity’ are synonymous.

Throughout the course of the eighties and nineties, China’s leaders concluded that their country had three dialectically predetermined economic advantages, which had to be put in the practical use: the abundance of cheap labor, the commercially advantageous geographical location, and the fact that Chinese immigrants played an important role in the functioning of the neighboring countries’ economies.

This alone suggests the thoroughly pragmatic roots of what will later become known as China’s ‘economic miracle’ – if Xiaoping decided to implement economic reforms along with advancing the cause of ‘democracy’, they would be doomed to fail.

The reason for this is quite apparent – the demographic fabric of the Chinese society in the early eighties made it impossible for the implementation of reforms to proceed in any other but in a thoroughly controlled (authoritarian) manner. It is important to understand that, as of 1978, 85% of China’s population of 975 million accounted for rural-dwellers, which were organized in ‘agricultural communes’.

Nevertheless, the effectiveness of these communes’ functioning suffered from the fact that, while taking care of their agricultural duties, peasants have not been provided with an objective rationale to do it efficiently.

At the same time, the enormous population of peasants could well ensure the successfulness of the process of China being set on the path of industrialization. This is because, throughout the course of history, peasantry has traditionally been referred to as the industrialization’s ‘fuel’.

In its turn, this has led Xiaoping to conclude that the implementation of economic reforms had to begin with the effort being applied to increase the efficiency of the economy’s agricultural sector, “An important characteristic of China’s reforms… was the promotion of local, small-scale industrial production in coordination with agriculture” (Yuhai 2006, p. 2206).

This would result in both: ensuring the agricultural communes’ economic self-sustainability and providing the representatives of at least a half of China’s rural population with incentives to consider becoming industrial workers. As Peng noted, “Rural reform freed the peasantry from tight collective control and turned it into potential wage labor.

This rural surplus labor had two possible outlets: it could either enter rural enterprises as peasant workers or peasant entrepreneurs or it could enter the city as “floating” migrants” (2007, p. 292). In this respect, the fact that throughout the course of the free-market reforms’ implementation, China remained a totalitarian state came in particularly handy.

This is because this specific form of governing makes possible the most effective exploitation of human resources. After all, even today, despite the fact that the country’s Constitution declares citizens being absolutely equal, this is not the actual state of affairs, because according to the country’s bylaws, peasants are supposed to apply for a special permit, in order to be able to relocate to live in cities.

Given the fact that the obtainment of this permit most commonly proves impossible, it does not come as a particular surprise that at least 40% of every Chinese city’s population account for ‘illegal’ peasants from the countryside.

While understanding perfectly well that they are not supposed to live in cities, in the first place, these people have no option but to agree to work for a fraction of what their native-born urban counterparts are being paid.

Consequently, this establishes certain prerequisites for more and more Western companies to consider relocating their production lines to China, as a country where there is a plenty of cheap laborers, who are being more than happy to work, while paid as little as $10 per day.

As an ultimate consequence, during the course of recent decades, the Chinese citizens’ living standards continued being improved gradually but consistently, which can be illustrated in regards to the fact that, throughout this period, people’s average lifespan in China has increased from 55 to 70 years (Klawitter 2004).

In other words, it is specifically the fact that, while instigating free-market reforms, the Chinese government never ceased being in a full control of the demographic dynamics in the country, which contributed rather substantially to these reforms’ success, reflected by the fact that through the years 1978-2008, China was able to increase its GNP by 15 times.

As of 2004, the country’s foreign-exchange reserve has reached staggering $2.4 trillion (Zhu, 2007). It is needless to mention, of course, that had China been ‘democracy’, in the classical sense of this word, this could hardly prove possible.

In its turn, this allows us to formulate what can be considered Lesson 3, with respect to the earlier provided line of argumentation – it is only the economic reforms that are being designed and led by the authoritarian (non-democratic) government, which have a chance of fulfilling their initial objectives.

The validity of this statement cannot only be illustrated, in regards to China, but also in regards to a number of other countries, which undertook free-market oriented economic reforms, while remaining de facto undemocratic, such as Chile (under Pinochet) and France (under Charles de Gaulle).

Another factor that contributed to the phenomenon of China’s economic miracle is the fact that, while remaining in a full control of implementing economic reforms, the governmental officials never ceased paying a particularly close attention to what accounts for the culturally defined specifics of Chinese people’s mentality. According to Bower, “In a variety of reasoning tasks, East Asians take a ‘holistic’ approach.

They make little use of categories and formal logic and instead focus on relations among objects and the context in which they interact” (2000, p. 57). As opposed to what it happened to be the case with the majority of Westerners, the majority of Chinese citizens professes the values of a communal living and hardworkingness, which in turn can be partially explained by the cultural legacy of Confucianism.

This is the reason why Chinese people have been traditionally known for their tendency to adopt ‘networking’ lifestyles, when the principle of an interpersonal solidarity defines the way in which they tackle life’s challenges (Shaozhi 1991). Therefore, there is nothing too odd about the fact that even today; Communist ideology continues to enjoy much of a popular support among Chinese citizens.

As Beech noted, “By the end of last year, 65 million Chinese were party members, and nearly half of them were under the age of 45.

Recruitment has been particularly successful on university campuses” (2001, p. 1) Apparently, it is specifically their adherence to the virtue of a communal solidarity, which causes many Chinese citizens to consider themselves Communists, and not the strength of their ideological commitment to Marxist dogmas.

This is exactly the reason why the country’s government considered it fully appropriate to ‘deviate’ from the Communism’s ideological conventions, as a mean of helping citizens to get out of poverty.

Unfortunately, people’s adherence to the values of a communal living also makes them prone to corruption. This is the reason why the principle of guanxi, which Yeung and Tung define as, “the establishment of a connection between two independent individuals to enable a bilateral flow of personal or social transactions” (1996, p. 55), had always characterized the essence of social dynamics in China.

What it means is that had Xiaoping’s reforms been accompanied by the process of ‘democratization’, as it was the case in the USSR, during the course of the late eighties, these reforms would only result in plunging China in the chaos of a ‘primeval capitalism’, when favoritism would become the main principle of the country’s political/economic life.

Therefore, it was the matter of a crucial importance for Xiaoping to ensure that the enactment of economic reforms would always be thoroughly supervised, so that the corrupted governmental officials would never be able to take over the whole country, as it happened in the Gorbachev’s USSR (Shu, Zhai and Wang 2013).

Even today, it represents a commonplace practice for the China’s top-ranking bureaucrats to be punished by death for committing a vast number of seemingly ‘innocent’ economic crimes.

This, however, is not due to the China’s Communist government being particularly ‘bloodthirsty’ – the very specifics of implementing economic reforms in this country require officials in charge of the process to be strongly intolerable towards even the smallest outbreaks of corruption.

Hence, Lesson 4 – while implementing economic reforms, those in charge of the process may never cease taking into consideration the culturally predetermined specifics of the potentially affected citizens’ mentality.

The example of China’s development, throughout the course of last thirty years, also suggests that, contrary to what many people assume, the implementation of economic reforms in a particular country can never be thought of in terms of this country’s ‘internal affair’ alone.

After all, despite the assumption that this world is becoming progressively more tolerant, the major purpose of just about every country’s existence remains unaffected by the currently predominant socio-cultural discourse – the economic/geopolitical expansion, the protection of its internal stability and the impairment of the internal stability of competing countries.

The earlier statement helps us to understand better the true significance of the 1989 Tiananmen Square protests, orchestrated by the agents of foreign influence, in order to prevent China from growing ever more powerful, due to the steady deployment of free-market oriented reforms (Chou 2005).

While believing that China was lagging behind the USSR on the way of ‘democratization’, protesting students demanded the disbandment of the Communist Party, the complete privatization of the economy, the abandonment of the Socialist form of governing, and the country’s federalization.

Had these protesters succeeded in 1989, China would have followed the footsteps of the Soviet Union, which was destroyed from within by supposedly ‘internal’ forces. Therefore, it is quite impossible to disagree with how Chinese official newspapers of the time used to reflect upon the actual significance of the 1989 protests, “If we are tolerant or conniving with this turmoil and let it go unchecked…

Then the improvement of the economic environment and the rectification of the economic order, construction, and development; the control over prices; the improvement of our living standards… will all become empty hopes” (Ogden 1992, p. 117).

This points out to what can be considered Lesson 5, in respect to the discussed subject matter – the governmental officials, in charge of designing and implementing the strategy of economic reforms, must be decisive enough to remain thoroughly committed to their reform-related agenda, regardless of what may account for the associated human costs.

In light of what has been said earlier, it will not be much of an exaggeration to suggest that the foremost key to China’s ‘economic miracle’ was the country leaders’ genuine willingness to improve the living standards of the ordinary Chinese and to ensure that China continues to remain a factually independent country.

This is the reason why, as opposed to what it was the case with the Soviet Union throughout the course of the late eighties, Western advisors were not allowed to play any active role, within the context of China remaining on the path of modernization (Davenport & Armstrong 2004).

This continues to be the situation even today. For example, even though that China had formally expressed many concerns about Iran developing its nuclear facilities, it (along with Russia) carries on supporting this country financially and militarily. After all, 65% of the Iranian oil is being exported to China.

Apparently, China’s leaders are thoroughly capable of prioritizing the interests of their country above the interests of the U.N. bureaucracy – the main precondition for China’s continual socio-economic and technological advancement.

Hence, Lesson 5 – it is only the de facto independent countries, where the implementation of free-market oriented reforms may prove beneficiary in the end. The same cannot be said about the countries that, despite their formally independent status, are in fact the West’s geopolitical puppets.

The earlier provided line of argumentation, as to what contributed to the sheer successfulness of China’s economic reforms, throughout the course of the last three decades, implies that contrary to what neo-liberal economists want people to believe, there are no dialectical links between the notions of ‘democracy’ and ‘economic prosperity.

This especially appears to be the case when culturally rich non-Western nations, such as China, are being concerned. Apparently, there can be no ‘progressive’ and ‘wicked’ forms of a political governing but only the effective and ineffective ones.

As it was illustrated earlier, the initial reason why during the course of recent decades China has attained the status of the world’s major manufacturer of industrial goods was thoroughly objective. After all, even today this country’s main economic asset continues to be an abundance of cheap laborers. Nowadays, however, this asset is not being merely discussed in terms of quantity but also in terms of quality.

The reason for this is quite apparent – China (along with Japan and Korea) features the world’s highest rate of IQ among citizens (Lynn & Vanhanen, 2002). What it means is that there is indeed a good rationale in expecting China to continue becoming ever richer and stronger.

After all, the realities of a post-industrial living point out to the fact that people’s intellect can be well referred to, as such that represent a thoroughly objective economic value.

It matters very little whether intellectually advanced people profess the virtue of democracy or not – for as long as their endowment with high intellectual powers allows them to generate a ‘surplus product’, they will be in a position to enjoy a high-quality living. I believe that this conclusion is fully consistent with the paper’s initial thesis.

References

Beech, H 2001, Made in China: Communism rules, Web.

Berger, Y 2005, ‘Deng Xiaoping and economic reform in China’, Far Eastern Affairs, vol. 33. no.1, pp. 47-56.

Bower, B 2000, ‘Cultures of reason’, Science News, vol. 157. no. 4, pp. 56-58.

Chou, H 2005, ‘Zhao Ziyang: a CIA agent?’, Chinascope, vol. 5, pp. 36-38.

Davenport, C and Armstrong, D 2004, Democracy and the violation of human rights’, American Journal of Political Science, vol. 48. No. 3, pp. 538–554.

Klawitter, S 2004, China case study: analysis of national strategies for sustainable development, Web.

Lynn, R and Vanhanen, T 2002, IQ and the wealth of nations. Greenwood Publishing Group, Westport.

Ogden, S 1992, China’s search for democracy: the student and mass movement of 1989, M.E. Sharpe, New York.

Pei, M 1998, ‘Is China democratizing?’, Foreign Affairs, vol. 77. no. 1, pp. 68-82.

Peng, Y 2007, ‘What has spilled over from Chinese cities into rural industry?’, Modern China, vol. 33. no. 3, pp. 287-319.

Shaozhi, S 1991, Rethinking Socialism in the light of China’s reforms. China Information, vol. 6. no.1, pp. 10-21.

Shu, Y, Zhai, Q and Wang, R 2013, ‘The great open-minded thinking by Deng Xiaoping and its contemporary significance’, Asian Social Science, vol. 9. no. 3, pp. 202-207.

Wei-Wei, Z 1999, Transforming China. Palgrave Macmillan, New York.

White, C 1993, ‘Open market – closed politics’, Canada & the World, vol. 58. no. 9, pp. 8-9.

Yeung, I and Tung, R 1996, ‘Achieving business success in Confucian societies: the importance of guanxi (connections)’, Organizational Dynamics, vol. 5. No. 1, pp. 54-65.

Yuhai, H 2006, ‘Assessing China’s reforms’, Economic and Political Weekly, vol. 41. no. 22, pp. 2206-2212.

Zhu, Z 2007, Reform without a theory: why does it work in China?’, Organization Studies, vol. 28. No. 10, pp. 1503-1522.

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Qualitative Aspects of China’s Socio-Economic Development

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