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The Political Logic of Economic Reform in China (California Series on Social Choice and Political Economy), by Susan L. Shirk
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In the past decade, China was able to carry out economic reform without political reform, while the Soviet Union attempted the opposite strategy. How did China succeed at economic market reform without changing communist rule? Susan Shirk shows that Chinese communist political institutions are more flexible and less centralized than their Soviet counterparts were.
Shirk pioneers a rational choice institutional approach to analyze policy-making in a non-democratic authoritarian country and to explain the history of Chinese market reforms from 1979 to the present. Drawing on extensive interviews with high-level Chinese officials, she pieces together detailed histories of economic reform policy decisions and shows how the political logic of Chinese communist institutions shaped those decisions.
Combining theoretical ambition with the flavor of on-the-ground policy-making in Beijing, this book is a major contribution to the study of reform in China and other communist countries.
- Sales Rank: #9333909 in Books
- Published on: 1993-08-05
- Original language: English
- Number of items: 1
- Dimensions: 9.50" h x 6.50" w x 1.25" l,
- Binding: Hardcover
- 412 pages
About the Author
Susan L. Shirk is Professor of Political Science at the University of California, San Diego, and the author of Competitive Comrades: Career Incentives and Student Strategies in China (California, 1982).
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Groping the Political Stone of China's Reform
By Fang
"Cross the River by Groping the Stone" ( mo zhe shi tou guo he ), the early guiding principle of China's economic reform, is generally considered to be the motto of Deng Xiaoping, tycoon and mastermind behind the reform, as an encouragement of trail-and-error. Ironically, it was in fact first raised in 1980 by Chen Yun, leader of the conservative cult in CCP, to express his concern on maintaining stability and political legitimacy and advocation for a slow, steady pace of reform 1. But the sentence was later borrowed and re-expressed by Deng in a more provocative manner 2.
The moral of the story is: it is impossible for an economic reform to be purely "economic", free of political interference; nor is it possible for a reform to separate itself entirely from old institutions and norms and ignore vested interests. The problem, then, is to find a political formula that can maintain the delicate balance between political legitimacy and economic invigoration. In The Political Logic of Economic Reform in China, Susan Shrik provided an in-depth study on how the political stone underpinned China's economic reform steps across the turbulent river of post-Mao era.
Unlike Soviet Union, where political and economic reforms were initiated simultaneously and eventually torn the entire regime apart, according to Shirk, China's reform not only preserved CCP's regime and political institutions, but also mobilized existing power structures and decision-making processes to generate reform policies and create new stakeholders in reform. The result is a "second-best" piecemeal reform approach, which did not produce the economically optimal outcomes and subjected economic reform to political manipulations, but successfully reoriented the state apparatus and the Party towards market economy, raised living standards and boosted economic performance without threatening Communist regime ( pp. 1-6 ).
Shirk identified some prerequisites of gradual market reform in China. Compared to Soviet Union, although China is also a Communist country, the political and economic authority was less decentralized and institutionalized, planned economy covered less sectors and was less stringent, and implantation of centralized planning did not wipe out market transaction. To paraphrase Gerschenkron, this is an advantage of "institutional backwardness" in which the level of institutionalization was "flexible" enough to encourage innovation and give weight to beneficiaries of reform, but at the same time also "authoritative" enough to suppress bureaucratic discontents ( pp. 346-349 ). Shirk went somewhat deterministic in arguing that Sovie Union "cannot choose" China's path because of its maturity of politics and planned economy, forcing Gorbachev to shift authority to elected governmental institutions, causing instability and lack of accountability in the reform ( p. 348 ).
But such "backwardness" does not mean chaos or personalistic rule; it just create a distinctive kind of political logic. Shirk's "political logic" consists of three parts: the formal political principles, actors, authorities and institutions; the informal personal connections and "unwritten rules"; and the operations of formal and informal parts respectively, as well as the interactions between them, that ultimately produce the political context and momentums of economic reform. She further elaborated CCP's characteristics of reform politics into four categories: an authority relation in which Party oversees the government but sometimes met resistance; leadership incentives of conforming to "reciprocal accountability" and leadership succesion struggle, in which leaders and elite selectorates were accountable to each other; bargaining arena consisting of hieararchical bureaucracy; selected enfranchised groups of various government departments and provincial leaders, whose interests might conflict with each other; and a decision-making process based on consensus which made reform decisions slow to go through but harm vested interests as least as possible ( Chapters 3-7; also see pp. 336-339 ). Moreover, the personal cult of Deng Xiaoping and other reformist CCP leaders were sometimes large enough to shift the institutions and proccesses back and forth, for example manipulating the Constitution, to create advantageous conditions for the reform they see fit.
As Shirk puts it: The pace, sequencing, content and form of reform policies from 1979 on reflect the institutional context ( p. 129 ). Gradual and piecemeal reform was almost inevitable due to the complicated decision-making process and enfranchisement of vested interests. Redistributive policies that created the most intense conflict within the bureaucracy were continually postponed and never got off the ground ( at least till 1991 ). Agricultural reforms preceded industrial reforms because of less bureaucratic representation and stronger CCP control over reform policies. Economic growth was highly expansionary and achieved by compromises. Particularistic contracting was preferred over uniform, comprehensive rules because under reciprocal accountability Party leaders must design reform policies that could allocate benefits to selectorates, local officials and bureaucrats. "Experimental" reform programs were used by pro-reform leaders and officials not only to test applicabilities of certain policies but also to garner political support and create novel constituencies. To illustrate, Shirk outlined the rural, industrial, financial and price reform process from 1978 to 1988 ( Chapters 9-13 ). Being too detailed to summarize here, with intensive efforts on documentary review and interviews, Shirk's record of events is nevertheless one of the most credible records so far about China's first 15 years of Reform and Open.
Shirk took great pain to merge the two stories of economic reform and functioning of political system. Unlike scholars focused primarily on economic realm, such as Barry Naughton , who presented China's reform as a growth "out of the plan"3 and triggered primarily by non-state sectors, Shirk revealed that the process was heavily structured by state's political plans and considerations. It might be justified to say that Deng and other reformers did not have a comprehensive "economic reform plan" in heart, as in the absence of experience, precedents and political support they simply cannot produce one. But they did carefully pushed and pulled the reform to limit it within certain pace and scope so that in generated maximum outcomes without causing too much turbulence within the Party and among the general public. Shirk rightfully raised the question of evaluation of China's success ( pp. 144-145 ). Viewed from economic terms, China's reform was no doubt second-best; but as a political "refunctionality", it was far more desirable by CCP over the Shock Therapy of Soviet Union and East European states, albeit it carried unforseen consequences as well .
Shirk's book cast doubt upon some conventional wisdoms that coarsely categorized China together with other East Asian "miracles" such as Japan and South Korea. Aside from the authoritarian nature of political regimes, novel openness to foreign capital and trade, and the ostensible heavy hand of state machine in economic development, the rest of China's reform model conformed poorly with the concept of "developmental state", in which the regime strived to unify its bureaucracy to a large extend and "rationally" worked to introduce market economy where that produces the best results, and either to withdraw after the goal of intervention has been achieved or recognize the main roles of non-state economic actors in economic development but continued cooperating with them 4 . Rather, China's economic development was heavily subjected to the legacy of pre-reform Communist politics. State bureaucracies not only designed reforms but also served as merchants selling reform franchises. Far more compromises, conflicts and even ideological struggles emerged out of the development process. And while developmental states ( except Singapore, arguably ) underwent democratic transitions one by one, CCP's reshaping of legitimacy based on economic performance, omnipresent enfranchisement of non-state actors plus the bloody suppression in 1989 essentially prevented democratization from occuring in China.
Much has changed since Shirk's book was published. While Shirk has produced a seminal work on China's political economy, Shirk's obssession with details and operations of political system seems to prevented her to produce predictive conclusions on her findings. She apparently has underestimated CCP's "resilience" in the face of liberalization pressures, which consists of the increasingly norm-bound nature of its succession politics; the increase in meritocratic as opposed to factional considerations in the promotion of political elites; the differentiation and functional specialization of institutions within the regime; and the establishment of institutions for political participation and appeal that strengthen the CCP's legitimacy among the public at large 5. Moreover, CCP has undergone a paradigm shift from "Hayekian experimentalism" in Shirk's time to "Polanyian programmatic reform", rebuilding China's system of governance into one no longer focused on planning and industrial entrepreneurship but on market regulation 6. Economic liberalization continues without political pluralization, and the government will downsize its bureaucracy and limit its managerial role while recentralizing fiscal, security, and information control.
But Shirk's concerns in the book cannot be discredited easily. Her conclusion that "communist institutions are unlikely to survive the marketization of a socialist economy.....Communist parties will be unable to satisfy the new social demands stimulated by economic transformation...without fundamental reforms" ( p. 350 ) pointed to a fundamental dilemma of refom in China, which was later confirmed by numerous literatures: it had found solid footing on political "stones" so far, but is gradually heading towards the river's deeper current where no existing political "stones" would provide support. The deep embeddedness of economic operation into the political institutions created opportunities for rent-seeking, and coupled with CCP's ardent refusal of profound political reforms they have limited the benefits of free market economy among certain elite groups, excacerbated resistance towards further marketization and liberalization that would eliminate distortion of economy, and restrained the regime's capability to deal with social problems affiliated to market reforms 7. Marketization and liberalization of economy picked up its own "logic" and rapidly spilled over to other domains, but CCP remained highly selective in subsequent reforms, cautiously maintaining its grip over political power. Part of the state apparatus became increasingly "predatory", eclipsing the benefits of market economy.
Since the 2008 global financial crisis, the Communist regime launched a massive wave of state interventions to invest in infrastructure, boost new growth points and maintain the pace of economic growth. But these efforts also triggered the widespread fear that "The State Advances, The Private Sector Retreats" ( guo jin min tui ) will signal a return to more planned economy and less market operation. In the meantime, widespread corruption, social inequality and civil unrest continues to plague China's territory. All in all it appears that China's regime hope to let market operate within a selected scope, while keeping the option of state's steering of the economy in hand. Such hybridity of institutions, while increasingly awkward and clumsy, is almost inherent the "political logic" of CCP.
China's combination of heavy state regulations and market-oriented growth, as well as the lack of agreements on describing and explaining the model, reveals on the one hand, the dynamic and on-going nature of China's transition and on the other hand, a huge gap between ideal-typical social science terms and the complication of China's mergence of market and state. The success and problems of China's reform and transition seem to resist any simple categorization. There is no doubt that China has picked up elements of capitalist society, but Chinese leaders have vowed to develop a social, political and economic model that is "distinct from that of the West". The success of their efforts hinges upon whether and how the political logic "co-evolves" together with market economy and society. Susan Shirk showed that CCP leaders in the era of Deng Xiaoping were agile in adapting economic sphere to political institutions and principles; now time might be ripe that they shift their efforts the other way around. But would that mean the end of CCP's monopoly over China's power ? How long can their resilience survive? Can China continue economic growth and commensurate administrative reform without democratization? And how should scholars explain the process and derive useful lessons ? Those are the questions left by Shirk and should interest us the most.
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1 See Chen Yun, Economic Situations and the Lessons, speech at the CCP's Central Committee Working Meeting, （陈云：《经济形势与经验教训》，在中央工作会议上的讲话）December 16th, 1980. For Chinese text, see [...]
2 This is an interesting example of, to paraphrase John Padgett, "linguistic and ideological transposition and refunctionality", a common phenomenon in Communist and post-Communist politics, in which leaders borrow and reformulate previous doctrines, ideologies and even words and "reinvigorate" them as legitimization of political succession or incentives for reforms. See John Padgett and Walter Powell, "The Problem of Emergence", in John Padgett ed., The Emergence of Organizations and Market. Princeton, NJ: Princeton University Press, 2012 ( forthcoming ).
3 Barry Naughton, Growing Out of the Plan: Chinese Economic Reform, 1978-1993. Cambridge: Cambridge University Press, 1996.
4 See, for example, Robert Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton, NJ: Princeton University Press, 1990. Chalmers Johnson, Japan: Who Governs? The Rise of the Developmental State. New York, NY: W.W. Norton & Company, 1995. Meredith Woo-Cumings ed., The Developmental State. Ithaca, NY: Cornell University Press, 1999.
5 Andrew Nathan, "Authoritarian Resilience", on Journal of Democracy, Vol. 14 No. 1, 2003, pp. 6-7.
6 Dali Yang, Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China. Stanford, CA: Stanford University Press, 2004.
7 See Minxin Pei, China's Trapped Transition: The Limits of Developmental Autocracy. Cambridge, MA: Harvard University Press, 2006.
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