Land, Debt, and Socialist Market Economy of China

Land, Debt, and Socialist Market Economy of China

Waiching Li (University of Economics, Czech Republic)
Copyright: © 2018 |Pages: 22
DOI: 10.4018/978-1-5225-4026-7.ch014

Abstract

Is China's development model an alternative to the Western model? The public ownership of land is the major character of the market economy of China. China's local governments take the land under their regional control as the startup asset, playing an active role in promoting China's industrialization and urbanization. One cannot understand China's model without understanding its development logic, involving land, debt, and local government. This chapter makes an in-depth observation the role of land and the financing based on land played in the cycle of capital flow that feeds China's development. Land financing is responsible for debt accumulation on the local government level, especially the period after the financial crisis of 2008. This chapter points out the paradoxical nature of China's dual-track system of land ownership and analyzes its inherent problems in the context of China's contemporary political-economic arrangement.
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Socialism With Chinese Characteristics

“Socialism with Chinese characteristics” is not a new concept. At the 12th National Congress in 1982, the supreme party leader of that time Deng Xiao Ping put forward the phrase to signal that China was disassociating itself from Mao’s repressive communism and entering the stage of economic reform and opening-up. Since the establishment of People’s Republic of China, China followed the Soviet Model of command economy, but after 30 years experiment of plan and control, that model had left the majority of Chinese living in abject poverty. China ended up in the rank of the poorest nations on the earth, a rare state to China through its history.

In 1982, Deng proclaimed that China must combine the basic principles of Marxism with the concrete reality of the nation at the time, “take our road, build socialism with Chinese characteristics” in search of a path to modernity (Tang, 2017). Since then, even though that government report never failed to mention “socialism market economy” at the following sessions of congressional meetings, however, the central topic was always about reform and opening-up, “market economy”, and GDP growth.

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