In an international scenario marked by increasing instability, a moment in which the process of economic globalization reveals the intensity of its contradictions, China still maintains a path of relative stability. According to World Bank data, since the 2008 crisis China has been growing at an average of 8.3% per year, while the world economy has grown by an average of 2.2%. Although China’s Gross Domestic Product (GDP) growth rate has fallen from roughly 10% in the years immediately after 2008 to around 7%, its growth is still almost three times higher than the global one (6.9% vs. 2.4% in 2015). While in the West some analysts have coined the term “the new normal” to describe mediocre growth patterns which are unable to ensure social cohesion even in central countries, China, even at a slower pace, keeps being able to guarantee greater economic, social and political stability.
The resilience of the Chinese economy in a global context of difficulties is not adequately explained by macroeconomic variables only. Especially in the case of China, the political dimension is decisive. In this sense, understanding the dynamics of the Chinese economy depends on understanding the specific characteristics of the Chinese model, especially the relation between politics and economics, since much of this capacity for adaptation and growth is related to a political model of management of the economy. It is a model that, while granting a large space for the private initiative, favors competition among companies, is receptive to foreign investment and combines these characteristics with strong state intervention and long-term strategic planning. In this sense, the country’s economic management is directly oriented by the political priorities established by the State.
What is happening now is a deliberate movement to adapt the Chinese economy to a new international scenario, through actions to reorient the Chinese development model. This process began in the 2011-15 Five-Year Plan, which has already reflected a repositioning of the country in a world in crisis and which is consolidated in the resolutions of the Third Plenary Session of the XVIII Central Committee of the Communist Party of China. In this document, the Chinese leaders evaluate the results of this period and design a strategy for the coming years. Taking into account the peculiarities of the Chinese model, the reflections made there and the orientations elaborated in this process provide the basic guidelines for understanding China’s evolution in the next period.
To understand nowadays People’s Republic of China, one needs to take, as a starting point, the major transformations that were triggered by the reforms initiated by Deng Hsiao Ping in the late 1970s. At that moment, Chinese leaders broke with the policy of isolation and began a process of economic opening. The privatization of state companies and the controlled opening to international capital generated a dynamic business sector. The abundance of cheap labor ensured the international competitiveness of the Chinese products, and the focus on manufacturing production for the world market rapidly made China a global player, now the world’s second largest economy.
From the internal point of view, these policies have had deep impacts. Overcoming the limits of the previous model has created a rapid growth momentum that has transformed Chinese society very quickly and intensely. The influx of foreign capital and the new operating rules of local companies have promoted a process of continuous economic growth which has been observed for more than thirty years. This growth has generated, on the one hand, a thriving business sector that has played a leading role in transforming China into an economic power. On the other hand, growth has also created jobs that have enabled millions of farm workers to migrate to the cities in search of opportunities. In this process, a mechanism that has allowed China to take 600 million people out of poverty and misery was created. In addition, this process has also spawned a new middle class of professionals who now constitute a vibrant internal market.1 Thus, China is advancing in this turbulent economic international scenario by combining caution, flexibility and creativity in the management of its economy with firmness when planning a national development strategy.
Every innovation in terms of development policy is first implemented in a locality or region, as a test, and then, if approved, it is adopted in the whole country. In addition, all these measures are formulated in the light of a strictly planned long-term strategy. With thorough attention to the analysis of the scenarios that are open and taking into consideration changing trends in political, economic, local, regional and global terms, Chinese leaders have demonstrated a unique ability to cope with the turbulence of the conjuncture. This attitude has guided the recent changes that China has been making to face the international situation resulting from the financial crisis of 2008.
The core of this strategy is a transition from an export-led growth model to one based on the Chinese domestic market. The millions of citizens who have left poverty and the huge new middle class have become the basis for the sustainability of growth. This redirection of the economy is combined with a movement of internationalization of Chinese companies and a geopolitical expansion. Today, in addition to exporting goods, China exports capital — on the one hand, through the purchase of assets in central countries, mostly in Europe, and, on the other hand, through a growing presence of Chinese companies operating in the Asian, African and Latin American markets.
China’s repositioning movement operates in an articulated way internationally and domestically. At the international level, a set of economic and geopolitical initiatives operate to strengthen China’s position. Measures to reinforce the convertibility of the Chinese currency, the formation of the BRICS Development Bank, the strategic initiatives of the new “Silk Road” and a series of actions aimed at deepening the articulation of the Chinese economy in Central Asia, in partnership with Russia, India, Pakistan and other smaller countries, give sustainability to the country’s international projection.2
On the other hand, at the internal political level, the new orientation focuses on social cohesion. Three elements are viewed as central to this strategy: (a) consideration of the internal market as a vector for development; (B) support for innovation and technological development; and (c) confrontation of the internal contradictions that interfere with the country’s development. In all three cases, the management of economic processes is closely linked to the political dimensions that constitute the background of the Chinese development project.
In the case of the domestic market, Chinese leaders are fully aware that improving the social and economic conditions of the population tends to be the mainstay of the growth of Chinese economy. However, the governmental emphasis is not limited to the economic aspect of raising real wages as a tool to stimulate consumption. Chinese leaders are seeking a global improvement, which also implies strengthening social rights, with the expansion of social security mechanisms, labor rights and institutional arrangements for consumer protection. It aims “to pay more attention to the work, employment and income of the inhabitants, to social security and to the health of the people” (CENTRAL COMMITTEE OF THE COMMUNIST PARTY OF CHINA, p. 34). Thus, understanding that better income distribution and improvements in the quality of life is important for the sustainability of economic growth is central to the new model. In this sense, China is running counter to the global trend which is acting towards labor flexibility and/or cuts in social rights. On the contrary, the Chinese leaders are working precisely towards the institutional formalization of rights as an instrument to promote social inclusion and invigorate the economy.
In the technological field, China has gone from a period when its manufacturing products were basically copies of foreign merchandise to a moment in which the Chinese companies started to compete in markets based on technological development. The Chinese state invests heavily in research, in the expansion of higher education, in the training of skilled labor, and in the technical staff of world-class scientists and researchers. Thus, today Chinese companies are competing on an equal footing with high-tech companies worldwide. This process has resulted from large public investments of the Chinese state in science and technology, aimed at the qualification of the productive processes.
Finally, the third element of this Chinese repositioning demonstrates a great deal of self- awareness and critical thinking of the country’s leaders. The perception that the process experienced by the country since the reforms has brought — in addition to economic growth — problems that need to be addressed lies in the effort of strengthening social cohesion and ensuring political stability. Addressing the social inequalities created in the development process, combating the corruption and the environmental degradation brought about by accelerated growth are today’s political priorities.
In this respect, there lies the most important paradigm shift operated by Chinese leaders: the transition from a model that sought growth at any cost to a model focused on environmental sustainability. China is now among the countries which invest the most in environmental policies, explicitly including in its political guidelines the goal of building a “socialist ecological civilization” (CENTRAL COMMITTEE OF THE COMMUNIST PARTY OF CHINA, p. 4). All these movements have both a political and an economic dimension. China seeks to ensure that the development of its economy is an instrument for building a more harmonious society. In this model, growth is an instrument for social development and not an end in itself. With this, China sets the frameworks for stability and sustainable growth.
It is evident that this model is not exempt from contradictions. The increase of labor disputes in China reflects the concern of industrial workers over their wages and working conditions. Andreas Bieler and Chun-yi Lee, of the University of Norfolk, have recently analyzed the forms of resistance and organization of factory workers in China, showing the growth of workers’ mobilizations in the country. Similarly, Ruckus and Bartholl (2014) extensively assess the increase of labor disputes in China. Both studies show that labor relations and social inequalities may constitute a component of potential instability in the political situation of the country, and it is precisely the goal of neutralizing these conflicts that constitutes the efforts of Chinese leaders to reorient the country’s economic model. Building a strategy to combine economic growth with political stability and competitiveness in the world market is the central objective of the Chinese government in this new global context.
1POMAR, W. China: desfazendo mitos. São Paulo: Publisher Brasil, 2009.
2 CINTRA, M. A. A.; SILVA FILHO, E. B., COSTA PINTO, E. (Org.). China em transformação: dimensões econômicas e sociopolíticas. Rio de Janeiro: IPEA, 2015.