The China Model in the Global Economy

The China Model in the Global Economy

Bahar Baysal Kar (Kırklareli University, Turkey) and Taha Eğri (Kırklareli Unıversıty, Turkey)
DOI: 10.4018/978-1-5225-8440-7.ch001

Abstract

The purpose of this chapter is to stand against the claim that the same neo-liberal model emerges in all countries as a result of the competitive pressures arising from globalization. Countries can experience a globalization pattern that improves their growth performance and living standards with different policy preferences in the fields of finance, trade, and investment. The variety of Chinese capitalism is a case of this situation. In the first section, this Chinese development model with its illiberal policies first is examined. In the second section, the new development initiatives and institutional arrangements and their potential effects are discussed. In addition, the implications of these new development initiatives are argued in terms of global governance systems.
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Introduction

The dominant power of post-communist world order is US free market capitalism. With the global financial crisis, new varieties of capitalism has emerged and the world order has begun to change in favor of the new capitalism models. “Refurbished state capitalism” (McNally, 2013a), “state-permeated capitalism” (Nölke & Claar, 2013), “strategic capitalism” (Şenses, Öniş & Bakır, 2013) or “state capitalism” (Bremmer, 2010) represented by emerging market economies such as China, India, Russia and Brazil is an example of these new models. While these countries managed to overcome the global crisis quickly, they also became the pioneers of global growth (McNally, 2013, p.33). Chinese capitalism alone is also portrayed as a rival to US capitalism. It is frequently discussed in the literature as the rising power of the global system (Wolf, 2014). Today China's economy is the second largest economy in the world and it is even significantly larger than the sum of Brazillin, Indian and Russian economies. On the other hand, it is also an important resource for world economy with commodity demand (Wolf, 2014, p. 147). In fact, the debate on China's rise in the global system has begun before the global crisis. In these discussions, Beijing Consensus1 is exemplified2 which reflects the experience of China's economic development for the southern countries against liberalization, privatization and stabilization based on the Washington Consensus (Yağcı, 2016). On the other hand, China is positioned separately within Asian economies and is regarded as the pioneer of commercial and economic expansion in East Asia and other regions. Thus, there are arguments that China replaced the United States (Arrighi, 2008).

In this study, Chinese capitalism model will be examined as an alternative capitalism to the liberal economic model and as an alternative specific development model. Firstly, the characteristics of the Chinese capitalism model will be defined. Secondly, its different policy preferences in trade and finance will be discussed. Finally, the reforms which are introduced in recent years as a response to the structural problems and their consequences in terms of international political economy will be presented. For this purpose, the “second image” perspective, which underlies that domestic structures play a critical role in explaining the government's preferences for international politics (Ten Brink, 2014; Nölke, Ten Brink, Claar & May, 2015). In other words, this approach emphasizes domestic socio-economic institutions and their political affiliation, questioning the externalization of domestic structures and effectively blending comparative and international political economy approaches. By looking at the preferences of policy makers in the context of China's national development model, it is possible to develop an understanding of how China has risen within the global capitalist system (Ten Brink, 2014; Nölke et al, 2015).

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