Current Political Economy Regime in China’s Mainland Combination of liberalization and...
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Transcript of Current Political Economy Regime in China’s Mainland Combination of liberalization and...
Current Political Economy Regime in China’s Mainland
Combination of liberalization and authoritarianism
Political economy regime
• Combination of economic liberalization and political authoritarianism
• regime of political economy– public policy profile
• market-oriented reforms and political grip
– political and economic institutions• strong reformist state retreats from economy
– socioeconomic coalition base• co-optation of newly-emerged social sectors
“Reforms & opening up”
• Deng Xiaoping’s reforms since 1978
• economic liberalization– break the monopoly of state sector– “socialist market economy”
• political authoritarianism– the “four basic principles”
• last one is the key: “leadership of the CCP”
– allow no organized opposition to the party
Deng’s handpicked successors
• First two– were selected as economic reformers– were purged for political liberalization
• Hu Yaobang– CCP General Secretary from 1978-87
• Zhao Ziyang– CCP General Secretary from 1987-89
Deng’s handpicked successors
• Last two– were selected as technocrats– politically “reliable”– economic reformers
• Jiang Zemin– CCP General Secretary 1989-2002
• Hu Jintao– CCP General Secretary 2002-2012
From Jiang Zemin to Hu Jintao
• CCP General Secretary (2002)– 16th National Party Congress– Hu Jintao replaced Jiang Zemin
• PRC State President (2003)– 10th National People’s Congress– Hu Jintao replace Jiang Zemin
• the first peaceful and orderly leadership succession in PRC history
Crack down political dissidents
• CCP has allowed no organized opposition to the Party leadership
• Waves of pro-democracy movements– late 1970s: “democracy wall” movement– late 1980s: Tian’anmen Square protests– late 1990s: China Democracy Party– late 2000s: Charter ’08 and Liu Xiaobo– each followed immediately by suppression
Broader programs of reform
• Separate Party from government– halted after 1989 Tian’anmen
• Separate state from economy– market mechanism– de facto privatization
Broader programs of reform
• Separate government from enterprises– reinforced after 2001 WTO– introduce competition– deregulate industries– increase role for law– limit corruption
Price adjusted by market
• Economic liberalization accelerated since 1990s
• in 2001, prices of another 107 kinds of commodities and service were deregulated
State management of economy
• break down bureaucratic interests that have fostered economic paternalism– 1998: industrial ministries were reorganized
as bureaus– 2000: industrial bureaus were eliminated– 2003: State Development Planning
Commission was reorganized as the State Development and Reforms Commission
State management of economy
• Further restructuring of state institutions– 2003: State Economic and Trade Commission
was eliminated– 2003: the Ministry of Foreign Trade and
Economic Cooperation and the Ministry of Internal Trade were merged into the new Ministry of Commerce
• foster professionalism within government
Competition and deregulation
• Introduction of competition into formerly monopolized industries– telecommunications industry– electric power industry– railway industry– airline industry
• break down bureaucratic interests that have fostered economic paternalism
State retreats from economy
• State sector continues to shrink– downsized, privatized, or go bankrupt
• non-state sector continues to grow
Potential challenges
• Potential challenges to the current regime of political economy– globalization– demographic changes– political instability
China Joined WTO in 2001
• Culmination of 15 years of the PRC government’s efforts
Impact of WTO
• Expansion of trade & foreign investment– trade volume $0.6 trillion for 2002
• 22% increase from 2001
– direct investment US$55 billion for 2002• 13% increase from 2001
• Economists estimate WTO membership would add 1.5% to China’s annual growth rate after 5 years
Impact on WTO
• weed out inefficient SOEs
• erode local protectionism
• curtail industrial monopolies
• urban-rural divide
• regional differences
• unemployment
• social unrest
International Covenants
• In October 1997, PRC government signed the International Covenant on Economic Social and Cultural Rights
• In October 1998, PRC government signed the International Covenant on Civil and Political Rights