Takeaways

China’s rise has two sides: rapid, sustained growth + corruption, inequality, and financial bubbles

• The American analogy of a “Gilded Age” usefully captures the bright and dark side of China’s rise.
• It also reminds us that China is not unique.
• Growth is not absolute triumph & running into problems is not tantamount to collapse.

There is not one, but at least three different Chinas since 1949—Mao, Deng, and Xi.

• Deng’s capitalist revolution delivered the first Chinese Gilded Age.
• Xi inherited the Gilded Age, and Ang characterizes the last 10 years of his tenure as a “Red Progressive” platform—socially progressive policies carried out through commands and campaigns combined with increased political control.

Main References

• 2022. “Has China’s Economic Success Proven that Autocracy is Superior to Democracy?” In China Questions II: Critical Insights into US-China Relationship, Harvard University Press.

Secondary references

Economic take-off under Deng

• 2016. How China Escaped the Poverty Trap. Cornell University Press.

Xi takes over the Gilded Age

• 2020. China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption. Cambridge University Press.

Xi’s Red Progressive Platform

• 2022. “The Clash of Two Gilded Ages,” Noema, 31 August 2022.

Takeaways

• In reality, Deng launched political reforms with economic reforms, except his political reforms took the manner of bureaucratic reforms, rather than Western-style democracy.
• Through these bureaucratic reforms, Deng injected “democratic characteristics” of accountability, competition, and partial limits on power into a single-party autocracy.
• Thus, the real political foundation of China’s economic takeoff was “autocracy with democratic characteristics”—not simply authoritarianism.
• But Deng’s model was fragile and reversible. When Xi came to power in 2012, he steadily demolished many of Deng’s norms and checks, and concentrated personal power.
• We should not think of political liberalization or reforms narrowly as only elections. Profound political changes can happen without any changes in regime type.

Main reference

• 2018. “Autocracy with Chinese Characteristics: Beijing’s Behind-the-Scenes Reforms,” Foreign Affairs, May/June issue on “Is Democracy Dying?”, invited essay in a print issue.

“Since opening its markets in 1978, China has in fact pursued significant political reforms—just not in the manner that Western observers expected” (p. 39).

Secondary references

• 2022. “How Resilient Is the CCP?” Journal of Democracy, vol. 33 no. 3, 2022, p. 77-91.

“Xi’s authoritarian turn has shown that [Deng’s] process of partial liberalization is fragile and reversible” (p. 89).

• 2023. The Ezra Klein Show, The New York Times. (Interview with Ezra Klein) “There’s Been A Revolution in How China is Governed.” 24 Jan 2023. Link.

2019. Lecture at Camden Conference. “How the West (and Beijing) Got China Wrong.” Posted on Youtube, 16 April 2019. Link.

Takeaways

• What the “China Model is not:
  • The “China model” is not top-down planning and authoritarian control.
  • It is not a blueprint pre-planned and executed by leaders in Beijing.
  • China can seem to fit any particular model, depending on where and when you look.
• What the “China Model” really is:
  • If there is a model, it is best understood as “directed improvisation” (an adaptive system of governance that produces localized solutions)
  • Direction from top + improvisation from below = numerous “models” across China and over time
• China under Xi:
  • But, in the recent decade, as China has entered into a Gilded Age and faces policy trade-offs, It is harder for Xi’s leadership to give clear directions than before, when China was poor—and the only goal that mattered was GDP growth.

Main reference

• 2016. How China Escaped the Poverty Trap, Chapters 5 & 6

“China escaped the poverty trap by constructing a set of underlying conditions that fostered an adaptive, bottom-up search within the state for localized solutions” (17).

Secondary references

• 2018. “The Real China Model: It’s Not What You Think It is,” Foreign Affairs, June 29, 2018 (online).

“it is inaccurate—and indeed misleading—to equate the China model with conventional authoritarianism”

• 2020. “The Myth of the Tech Race,” Project Syndicate, Special Edition: Beyond the Tech Lash. April 21, 2020.

“… the bottom-up emergence of what I would describe as “modular manufacturing” in Shenzhen… upending the traditional model of global mass manufacturing… This creative movement emerged with scant attention, let alone support, from grand strategists in Beijing.”

• 2021. “Decoding Xi Jinping: How Will China’s Bureaucrats Interpret His Call for Common Prosperity?” Foreign Affairs (web edition), 8 December 2021.

“The party [under Xi] has no clear answers when it comes to resolving the conundrum of how to tame the excesses of capitalism without stifling its creative potential.” 2018. Keynote Lecture, United Nations and UNDP Cambodia. “The Real China Model: What Other Developing Countries Should Learn from China.” 13 Sep 2018. Link.

Takeaways

• Political economists have long struggled with a vexing problem: Which comes first in development–growth or good institutions? All three schools of thought (“growth first,” “good institutions first,” or “fortunate histories first”) run into dead ends.
• In fact, development is not a linear process, but a three-step coevolutionary process.
  • Harness normatively weak institutions to build new markets
  • Emerging markets stimulate and enable strong (modern) institutions
  • Strong (modern) institutions preserve markets
• The first step of local actors harnessing normatively weak institutions to build new markets can be simply termed, “using what you have.”
• This three-step, coevolutionary process of development can be found not only in China, but also in Europe, the United States, and Nigeria.

Main Reference

• 2016. How China Escaped the Poverty Trap, Chapter 2

“Conventionally good institutions… are institutions that preserve markets after markets have already been built. Building markets, however, calls for drastically different institutions.” (24)

Secondary references

• 2021. “Beyond Elite Innovation.” Boston Review, Forum on “Making Prosperity Local.” In Public Purpose: Government’s Role in Shared Prosperity. MIT Press. Link.

“using what you have—local actors using indigenous resources and local knowledge to kick-start entrepreneurial activities or solve problems”

• 2018. “Normatively Weak Institutions Can be Functionally Strong: A Surprising Lesson from China.” OECD Development Matters Blog. April 4, 2018. Link.

“Normatively weak institutions can be functionally strong, meaning institutions that look weak or wrong by first-world standards may function effectively in developing contexts.”

Takeaways

• The assumption that corruption impedes growth is partially flawed and premised on glorified narratives of Western development and biased global corruption metrics.
  • In fact, when America was a developing country during its Gilded Age, it also saw rapid growth with corruption.
• Different types of corruption have different effects on the economy. Ang unbundles corruption into four types: petty theft, grand theft, speed money, access money.
  • Whereas petty theft, grand theft, and speed money all impede impede, access money can fuel corrupt deals but worsen inequality and risks over time.
• In China, corruption evolved over time from theft and speed money toward access money.

Main references

• 2020. China’s Gilded Age, Chapter 2

“Contrary to popular beliefs, the rise of capitalism was accompanied by the eradication of corruption, but rather by the evolution of corruption from thuggery and theft toward sophisticated exchanges of power and wealth.” (14)

• 2024. “Why has China’s economy grown despite corruption and is now stagnating?” SSRN, Link.

“China appears anomalous only if one takes the idealized West as the benchmark.”

Secondary references

• 2020. “Unbundling Corruption: Revisiting Six Questions on Corruption,” Global Perspectives, April 2020.
• 2021. “The Robber Barons of Beijing: Can China Survive Its Gilded Age?” Foreign Affairs, July/August Print Issue on Can China Keep Rising.
• 2020. “Unbundling Corruption: Why it Matters and How to Do It,” OECD Development Matters Blog, 25 June 2020.

2021. Freakonomics (with Stephen Dubner). “Is the US Really Less Corrupt than China?” 21 Nov 2021. Link.

Takeaways

• Contrary to popular cultural tropes, America and China today are not caught in the “clash of civilizations.” Rather, we’re witnessing a curious form of great power competition: the clash of two Gilded Ages.
• Both the U.S. and China confront sharp inequality, corruption or capture of state power by economic elites, and persistent financial risks.
• However, that the U.S. and China are similar does not mean they are identical. America is a democracy, whereas China is ruled by one party. Thus, the two countries are pursuing progressive reforms, in response to capitalist excesses, very differently.

Main reference

• 2022. “The Clash of Two Gilded Ages,” Noema, 31 August 2022. Link.

“The ‘clash of two Gilded Ages’ reminds us that the U.S. and China are rivals who share similar woes at home. Their competition should not be over who trips and outruns the other, but rather who fixes their own problems first.”

Secondary references

• 2021. “The Robber Barons of Beijing: Can China Survive Its Gilded Age?” Foreign Affairs, July/August Print Issue on Can China Keep Rising.
• 2021. “Decoding Xi Jinping: How Will China’s Bureaucrats Interpret His Call for Common Prosperity?” Foreign Affairs (web edition), 8 December 2021.

• 2021. INET Podcast interview with Robert Johnson. 2 Dec 2021. Link.

2023. The Ezra Klein Show, The New York Times. “There’s Been A Revolution in How China is Governed.” 24 Jan 2023. Link.

Takeaways

• China’s combination of accomplishments and stumbles, from the 1980s through the present day, makes it an even more instructive case than if it were only a miracle.
• The lens of the US “Gilded Age” is useful in assessing China’s accomplishments and stumbles. We must recognize the mixed outcomes that Gilded Ages produce rather than caricaturing countries as successes or failures.
• In taking lessons from China – or any “success” story, for that matter – we should not only ask what to learn, but also what not to learn.

Main References

• 2023. “The Moral of the China Story.” Project Syndicate. 29 Dec 2023.

“China’s trajectory reminds us that no solution, even one as ingenious as the model bequeathed by Deng, can last forever. Every generation, and every stage of development, confronts a new set of problems that demands a new response.”

• 2021. Lecture at Center for Global Development. “Lessons from China.” Posted on Youtube 21 June 2021. Link.