Marketization and Limited Government Reforms in the Xi Jinping Political Era: A Policy Analysis

William Hongsong Wang

doi:10.62374/0030jr12

Authors

William Hongsong Wang Complutense University of Madrid

DOI:

https://doi.org/10.62374/0030jr12

Keywords:

China, Marketization reform, Limited government, Austrian economics, Public choice theory

Abstract

The influence of China in the world is undebatable, and it has been increasing over time. Because of the one-party political system and the heavy-handed role of China’s government in the Chinese economy, it is essential to understand government policies in China. The objective of this research is to provide more insight into these policies in the epoch of marketization and limited government reforms in China and to anticipate possible outcomes resulting from these policies. The focus of this paper will be the Xi Jinping era, which started in 2012 and could endure into the 2020s given his latest political victory at the 19th CPC National Congress. I will also provide a brief policy assessment of the period from 1978 to 2012, the chapter of Chinese marketization and limited government reforms before the Xi Jinping era, which will help me to more effectively analyze of the historical background of Xi’s policies and offer more specific policy recommendations for Xi’s political era. My approach is based on the theoretical foundations of praxeology, which I will apply using the theories of both Austrian School economics and the Public Choice School. I conclude that the Xi Jinping political era poses some risks to the marketization of China and the limitation of government’s role in society, as some policies violate the principles of private property rights and endanger prosperity in China.

References

Abdoolcarim, Z. (2017, December 1). Wang Qishan. Time. Retrieved from http://time.com/collection/2017-time-100/4742836/wang-qishan

Anderlini, J., Wang, F., & Mitchell, T. (2017, January 17). Xi Jinping delivers robust defense of globalization at Davos. The Financial Times. Retrieved from https://aboutus.ft.com/engb/announcements/financial-times-appoints-feng-wang-editor-in-chief-of-ftchinese

Arana, I. (2017, October 28). Guo Wengui, el multimillonario chino que desde EEUU amenaza a los corruptos del Partido Comunista Chino [The Chinese billionaire who is in the US threatens to expose the corruption scandals of the Chinese Communist Party]. El mundo. Retrieved from http://www.elmundo.es/cronica/2017/10/28/59ea31d722601def768b45f4.html

Arthur, C. (2012, December 14). China Tightens 'Great Firewall' Internet Control with New Technology. The Guardian. Retrieved from https://www.theguardian.com/technology/2012/dec/14/china-tightens-great-firewall-internet-control

Balcerowicz, L. (1994). Understanding post-communist transitions. Journal of Democracy, 5(4), 75-89. https://doi.org/10.1353/jod.1994.0053

Balcerowicz, L. (1995). Socialism, Capitalism, Transformation. Budapest: Central European University Press. https://doi.org/10.1515/9789633864951

Balcerowicz, L. (2013, May 13). Balcerowicz on Economic 'Shock Therapy'. Institute of Economic Affairs. Retrieved from https://iea.org.uk/multimedia/video/balcerowicz-on-economic-%E2%80%98shock-therapy%E2%80%99

Bauer, P. T. (1976). Dissent on Development. Cambridge: Harvard University Press.

BBC News. (2016, July 12). Why is the South China Sea Contentious?. BBC News. Retrieved from http://www.bbc.com/news/world-asia-pacific-13748349

Beijing Review. (1982). New Members of CPC Central Leading Organs. Beijing Review, 25(38), 22-24.

Bloomberg News. (2017, July 3). China's Great Firewall gets tougher as popular VPN shut down. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2017-07-03/china-s-great-firewall-gets-tougher-as-popular-vpn-shut-down

Bloomberg News. (2017, July 10). China tells carriers to block access to personal VPNs by February. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2017-07-10/china-is-said-to-order-carriers-to-bar-personal-vpns-by-february

Boettke, P. J. (2000). Calculation and Coordination: Essays on Socialism and Transitional Political Economy. London and New York: Routledge. https://doi.org/10.4324/9780203469682

Boettke, P. J. (2005). Anarchism as a progressive research program in political economy. In E. Stringham (Ed.), Anarchy, state and public choice (pp. 206-219). Cheltenham: Edward Elgar. https://doi.org/10.4337/9781845428242.00024

Brennan, G., & Buchanan, J. M. (2008). The Reason of Rules: Constitutional Political Economy. Carmel: Liberty Fund, 2008. https://doi.org/10.1007/978-0-387-75870-1_17

Buchanan, J. M., & Tullock, G. (1962). The Calculus of Consent. Ann Arbor: University of Michigan Press.

Coase, R., & Wang, N. (2016). How China Became Capitalist. New York: Springer.

CPC Central Committee. (1978). Communique of the Third Plenary Session of the 11th Central Committee of the CPC. Beijing Review, 21(52), 6-16.

CPC Central Committee. (1981). Communique of the Sixth Plenary Session of the 11th Central Committee of CPC. Beijing Review, 24(27), 6-8.

CPC Central Committee. (1981). On Questions of Party History. Beijing Review, 24(27), 10-39.

Deng, G. (2015). The influence of elite philanthropy on NGO development in China. Asian Studies Review, 39(4), 554-570. https://doi.org/10.1080/10357823.2015.1084996

Dittmer, L. (2017). Xi Jinping's "New Normal": Quo Vadis?. Journal of Chinese Political Science, 22(3), 429-446. https://doi.org/10.1007/s11366-017-9489-4

Easterly, W. (2002). The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics. Cambridge: MIT Press.

Easterly, W., & Easterly, W. R. (2006). The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good. London: Penguin.

Fang, Q. (2017). Xi Jinping's anticorruption campaign from a historical perspective. Modern China Studies, 24(2), 112-138.

Fewsmith, J. (2010). Bo Xilai takes on organized crime. China Leadership Monitor, 32, 1-8.

Gan, N. (2017, September 5). China's second most powerful man 'reappears' on state TV amid speculation over his future. South China Morning Post. Retrieved from http://www.scmp.com/news/china/policies-politics/article/2109911/does-reappearance-chinas-no-2-state-media-suggest-hes

Gertz, B. (2017, October 26). American social media silence Chinese dissident. The Washington Free Beacon. Retrieved from http://freebeacon.com/national-security/american-social-media-silence-chinese-dissident

Gilley, B. (2003). The Limits of Authoritarian Resilience. Journal of Democracy, 14(1), 18-26. https://doi.org/10.1353/jod.2003.0008

Guo, J., Zhang, Q. & Yang, T. (Ed.). (2017, June 21). 李克強主持召開國務院常務會議完善社會保障體系助力老有所養 [Li Keqiang chaired a State Council executive meeting to improve the social security system to help the pensioners]. Xinhuanet. Retrieved from http://news.xinhuanet.com/politics/2017-06/21/c_1121187318.htm

Guo, Z. (2016, March 10). 獨家解碼：中國政治為何離不開「小組長」？[Exclusive: why cannot China's politics be independent from the leader of the leading groups?] The Initium. Retrieved from https://theinitium.com/article/20160310-opinion-politics-in-china-whygroup-leader-important-guozijian

Harper, D. A. (2003). Foundations of Entrepreneurship and Economic Development. London and New York: Routledge. https://doi.org/10.4324/9780203380215

Hasmath, R., & Hsu, J. Y. (2014). Isomorphic pressures, epistemic communities and state-NGO collaboration in China. The China Quarterly, 220, 936-954. https://doi.org/10.1017/S0305741014001155

Hasmath, R., & Hsu, J. Y. (2016). Communities of Practice and the NGO Sector in China. Paper presented at International Society for Third Sector Research Conference, Stockholm, Sweden. https://doi.org/10.2139/ssrn.2612686

Hayek, F. A. (1945). The use of knowledge in society. The American economic review, 35(4), 519-530.

Hill, P., & Polly, H. (1986). Development Economics on Trial: the Anthropological Case for a Prosecution. New York: Cambridge University Press. https://doi.org/10.1017/CBO9781139165983

Hoppe, H. H. (1993/2006). Economics and Ethics of Private Property: Studies in Political Economy and Philosophy. Auburn: Ludwig von Mises Institute.

Hu, W. (2016). Xi Jinping's 'Big Power Diplomacy' and China's Central National Security Commission (CNSC). Journal of Contemporary China, 25(98), 163-177. https://doi.org/10.1080/10670564.2015.1075716

Huang, Y., Chang, J., & Chew, J. (2013). What to expect from Likonomics?. China: Postcard from Beijing. Hong Kong: Barclays.

Huerta de Soto, J. H. (2006). Money, Bank Credit, and Economic cycles. Auburn: Ludwig von Mises Institute.

Huerta de Soto, J. H. (2009a). Classical liberalism versus anarcho-capitalism. In J. Hülsmann & S. Kinsella (Eds.), Property, Freedom, Society. Essays in Honor of Hans-Hermann Hoppe (pp. 161-178). Auburn: Ludwig von Mises Institute.

Huerta de Soto, J. H. (2009b). The Theory of Dynamic Efficiency. London and New York: Routledge. https://doi.org/10.4324/9780203930601

Huerta de Soto, J. H. (2010). Socialism, Economic Calculation and Entrepreneurship. Cheltenham: Edward Elgar. https://doi.org/10.4337/9781849805001

Hsu, J. Y., & Hasmath, R. (2014). The local corporatist state and NGO relations in China. Journal of contemporary China, 23(87), 516-534. https://doi.org/10.1080/10670564.2013.843929

Jiang, Z. (1991, July 2). 江澤民同志在紀念中國共產黨成立70週年大會上的重要講話 [Speech at the conference to celebrate the 70th anniversary of the establishment of the CPC]. People's Daily. Retrieved from http://www.people.com.cn.

Ke, L. (2015). The Chinese economy from "Likonomics" to New Normal. Economy, Culture & History Japan Spotlight Bimonthly, 34(3), 44-47. https://doi.org/10.1016/j.japwor.2015.04.001

Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press.

Kirzner, I. M. (1979). Perception, Opportunity, and Profit: Studies in the Theory of Entrepreneurship. Chicago: University of Chicago Press.

Kirzner, I. M. (2002). The Meaning of the Market Process: Essays in the Development of Modern Austrian Economics. London and New York: Routledge. https://doi.org/10.4324/9780203004456

Klein, P. G. (2010). The Capitalist & the Entrepreneur. Auburn: Ludwig von Mises Institute.

Liao, J. (Ed.). (2016, June 28). 李克強：中國結構性改革不依靠"大水漫灌"的強刺激 [Li Keqiang: China's Structural Reforms do not rely on the 'Big Flood Irrigation'- the strong economic Stimulus]. Xinhuanet. Retrieved from http://news.xinhuanet.com/fortune/2016-06/28/c_129095666.htm

Lin, J. Y. (1988). The household responsibility system in China's agricultural reform: a theoretical and Empirical Study. Economic Development and Cultural Change, 36(S3), S199-S224. https://doi.org/10.1086/edcc.36.s3.1566543

Lu, Y. (1987). A new generation of Chinese leaders. Beijing Review, 30(45), 16-18.

Martin, P. & Zhai, K. (2017, November 10). Xi Mounts Fresh Defense of Globalization in Contrast to Trump. Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2017-11-10/xi-mounts-fresh-defense-of-globalization-in-contrast-to-trump

Mees, H. (2016). The Chinese Birdcage: How China's Rise almost Toppled the West. Springer. In The Chinese Birdcage (pp. 21-32). Ney York: Palgrave Macmillan. https://doi.org/10.1057/978-1-137-58886-9

Minzner, C. (2015). Legal reform in the Xi Jinping era. Asia Policy 20(1), 4-9. https://doi.org/10.1353/asp.2015.0023

Mises, L. V. (1949/1998). Human Action. Auburn: Ludwig von Mises Institute.

Mitchell, T. (2017, October 24). China Anti-graft Tsar Cut from Top Communist Party Leadership. The Financial Times. Retrieved from https://www.ft.com/content/9617d884-b894-11e7-8c12-5661783e5589

Nie, W. (2016). Xi Jinping's foreign policy dilemma: One Belt, One Road or the South China Sea?. Contemporary Southeast Asia: A Journal of International and Strategic Affairs, 38(3), 422-444. https://doi.org/10.1355/cs38-3c

Observatory of Economic Complexity. (2017). China (CHN) Exports, Imports, and Trade Partners. The Observatory of Economic Complexity. Retrieved December 1, 2017, from https://atlas.media.mit.edu/en/profile/country/chn

Olson, M. (2000). Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships. New York: Basic Books.

Olson, M. (2009). The Logic of Collective Action. Cambridge: Harvard University Press. https://doi.org/10.2307/j.ctvjsf3ts

Olson, M. (2008). The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press.

Osterfeld, D. (1992). Prosperity versus Planning: How Government Stifles Economic Growth. Oxford: Oxford University Press.

Overholt, W. H. (2012). Reassessing China: awaiting Xi Jinping. The Washington Quarterly, 35(2), 121-137. https://doi.org/10.1080/0163660X.2012.666496

Pan, C., & Alonso, M. A. (2017). Shadow Banking in China: Blessing or Curse?. Paper presented at the Renaissance of Austrian Monetary Economics, Madrid, Spain.

People's Daily Online. (2002, January 18). Records of Comrade Deng Xiaoping's Shenzhen tour. People's Daily Online. Retrieved from http://en.people.cn/200201/18/eng20020118_88932.shtml

People's Daily Online. (2002, January 25). Records of Comrade Deng Xiaoping's Shenzhen Tour II. People's Daily Online. Retrieved from http://en.people.cn/200201/25/eng20020125_89333.shtml

Pham, P. (2017, December 19). Why is tension rising in the South China Sea?. Forbes. Retrieved from https://www.forbes.com/sites/peterpham/2017/12/19/why-is-tension-rising-in-thesouth-china-sea/#588159781fa4

Rothbard, M. N. (2003). The Ethics of Liberty. New York: New York University Press.

S.C. (2013, July 1). Likonomics: What's Not to Like." The Economist. Retrieved from https://www.economist.com/blogs/freeexchange/2013/07/stimulus-v-reform-china

Timmons, H. (2017, November 1). Facebook blocked dissident Guo Wengui after the Chinese government complained. Quartz. Retrieved from https://qz.com/1117822/facebookblocked-dissident-guo-wengui-after-the-chinese-government-complained

Tow, D. (2017, August 16). One Belt One Road Initiative: its meaning and significance. China Business Review. Retrieved from https://www.chinabusinessreview.com/one-belt-one-road-initiative-its-meaning-and-significance

VICE News. (2017, November 15). This exiled Chinese billionaire uses YouTube to wage a war on corruption. VICE News. Retrieved from https://news.vice.com/en_us/article/ywnn9v/this-exiled-chinese-billionaire-uses-youtube-to-wage-a-war-on-corruption

Wang, W. H., and Vegas, A. (2017). Business cycle and stability of China's financial and monetary system. Procesos de Mercado, 14(1), 123-171. https://doi.org/10.52195/pm.v14i1.90

Wang, Z., Cao, Y., Qian, Z., Song, C., & Krishnamurthy, S. V. (2017). Your state is Not mine: a closer look at evading stateful internet censorship. Proceedings of the 2017 Internet Measurement Conference, (pp. 114-127). New York: ACM. https://doi.org/10.1145/3131365.3131374

Womack, B. (2017). Xi Jinping and continuing political reform in China. Journal of Chinese Political Science, 22(3), 393-406. https://doi.org/10.1007/s11366-017-9486-7

Xi, J. (2017, January 17). Jointly shoulder responsibility of our times, promote global growth. CGTN. Retrieved from https://america.cgtn.com/2017/01/17/full-text-of-xi-jinping-keynote-at-the-world-economic-forum

Xinhua. (2015, December 22). What is China's Supply-side Reform?" China.org.cn. Retrieved from http://china.org.cn/business/2015-12/22/content_37375156.htm

Xinhua. (2016, July 4). Xi Jinping: the SOEs Should be confidently managed as stronger, better and bigger. Xinhuanet. Retrieved from http://news.xinhuanet.com/politics/2016-07/04/c_1119162333.htm

Xinhua. (2017, May 6). Backgrounder: keywords on Belt and Road Initiative. Xinhuanet. Retrieved from http://news.xinhuanet.com/english/2017-05/06/c_136261504.htm

Yuen, S. (2014). Disciplining the Party: Xi Jinping's anti-corruption campaign and its limits. China Perspectives, 2014(3), 41-47. https://doi.org/10.4000/chinaperspectives.6542

Zhang, J. (2015). China's new foreign policy under Xi Jinping: towards 'Peaceful Rise 2.0'?. Global Change, Peace & Security, 27(1), 5-19. https://doi.org/10.1080/14781158.2015.993958

Zhao, M., & Ventresca, M. (2015, May 1). Unintended change of the incumbent system: a trajectory view of political legitimacy in the China NGO sector. SSRN. https://doi.org/10.2139/ssrn.2473658

Zhao, S. (1993). Deng Xiaoping's southern tour: elite Politics in post-Tiananmen China. Asian Survey, 33(8), 739-756. https://doi.org/10.2307/2645086

Zhao, S. (2016). Xi Jinping's Maoist revival. Journal of Democracy, 27(3), 83-97. https://doi.org/10.1353/jod.2016.0051

Zhao, Z. (1987). Advance Along the Road of Socialism with Chinese Characteristics: Report Delivered at the 13th National Congress of the Communist Party of China on October 25, 1987. Beijing Review, 30(45).

Zhu, J. (2013). The Branch Road to China's Reform (中國改革的歧路). Taipei: Linking Publishing.