Robin Jourdan evaluates the economic effect of China on Washington Consensus in her second blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.
China. The Red Dragon. Fabled, mysterious, and powerful. It is one of the great civilizations of the world. China has the world’s oldest, surviving culture. To 2009, its relationship with the world’s powers could be summed up best by Den Xiaoping’s advice to build China’s strength while maintaining a low, international profile. Since 2009, its economic and political model, the Beijing Consensus, aka The China Model, has thrived and expanded to other parts of the globe. Its set of policies consists of state-led finances and limited and hybridized property rights under an autocratic framework. The current economic success of China challenges an already weakened Washington Consensus, which makes prominent use of private property and market-based distributions.
China has transformed itself from a closed, planned economy to a financial powerhouse. It has done this at the same time that the Washington Consensus has failed to deliver economic stability and growth to many. Successes of the Beijing Consensus include China itself. Since the late 1970s, China’s economy has grown at an unheard-of rate of 10% annually. Using the One Belt One Road Initiative, smile diplomacy, and checkbook diplomacy, China has provided much-needed infrastructure, like highways and airports, at home and abroad. China has become the land that failed to fail and is on a trajectory to become a viable global superpower. The Chinese economy is moving from an export-driven model to one based on investment and consumer demand. Such a development suggests a more mature economy thriving just as trust in the West, especially with the US, is at an all-time low. This success can’t help but represent a challenge to democracy and capitalism.
Of late, China is dealing with internal challenges: inequality, unstable financial conditions, and environmental sustainability. Since 1980 GDP produced by state companies has fallen while private sector output has risen over 300 times. Private (non-state) sector business is buoying wages and the Chinese economy. Success in the increasingly stratified society correlates to a Chinese (Party) way of living. These come at a time when the Chinese Communist Party’s tactics of political repression, its poor human rights reputation, and regional ambitions cast a dark shadow. Recent years have seen China’s GDP growth rate drop lower than neighboring India’s. Such contradictions in other societies have proven thorny.
China’s economic miracle appears to be ending. Who knows what the Party will choose next? The “what-if’s” are growing.
One question that remains is how can the two couldn’t-be-more-different superpowers (China and the US) co-exist at the end of this century? Turning to history, the co-habitation example of the US and USSR doesn’t warrant repeating. A business-as-usual scenario would be simply an unfinished option. The US and Europe could impose a chill on China, which may well be of small consequence anyhow. If China prevails; a fragile condition might exist, given the contesting resources of the US and the West. Or a new relationship could arise. It is undeniable that China is on its way to becoming a science superpower. Perhaps the language of logic and scientific method could become the building blocks of a China-US Peace, a sort of “East-phalia” situation. Such a peace could build on familiar and successful models: International Space Station and the Antarctica treaties.
However, the high hurdle continues to be inequality. These superpowers need to apply lessons from other societies (Iceland, Sweden, and others) that seem to have made more progress eradicating inequality than anywhere else. Perhaps it’s time to decouple Beijing and Washington’s political systems from economics and move past the “us” -vs- “them” unsustainable scenarios.
© Robin Jourdan 2019