Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
The China Model -The First Thirty Years and Beyond
R.K. Marjerison
The objective of this paper is to present an overview of the China Model of
economic development to date, observe some possible lessons learned and
present some likely scenarios going forward. A literature review on these and
related topics was conducted, the results reviewed and summarized. The
findings, while not shocking in nature are revealing of some notable successes
and some areas of risk going forward.
JEL Codes: A14, B24, B25, E60, N00, O10, O20, P20, Z20
1. Introduction
The ―China Model‖, also known inter changeably as the ―Beijing Consensus‖, is a term coined
in 2004 to describe the style and nature of the economic development phenomenon that has
been occurring in China for the last thirty years. While these two terms, ―China Model‖, and
―Beijing Consensus‖ have been, and continue to be used extensively both in academic as well
as popular geopolitical and media contexts, their exact definition, and indeed whether there
actually is such a definitive strategy, has not reached consensus:
Despite the increasing prominence of the Beijing Consensus or China Model in
media and policy circles, the theoretical literature on the subject remains limited. This
limitation stems in part from the lack of agreement over the existence of such a model
or consensus. The term Beijing Consensus was coined in 2004 by Joshua Cooper
Ramo, Time Magazine‘s former foreign editor, playing on the idea of a declining
Washington Consensus. Though the term quickly became popular in Western public
discourse, scholars and officials in China itself remained divided over whether there is in
fact a China Model or Beijing Consensus. (McGiffert, 2009).
Despite a lack of clarity regarding the precise definition of term ―China Model‖, there is little
doubt regarding the financial phenomenon that Ramos was seeking to describe;
Since China began undertaking economic reforms in 1978, its economy has grown at a
rate of nearly ten percent a year, and its per-capita GDP is now twelve times greater
than it was three decades ago. Many analysts attribute the country's economic success
to its unconventional approach to economic policy – a combination of mixed ownership,
basic property rights, and heavy government intervention. (Yao, 2010)
_______________________________________________________________
Associate Professor R.K. Marjerison, Royal Thimphu College, Bhutan. Email: RMarjerison@gmail.com
1
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
While several economists and researchers have presented definitions and listed the
characteristics of the China Model, it may be best to leave the description to the originator of
the expression, Ramo, (2004) who defines the Beijing Consensus as having three main parts;
1. A commitment to innovation and constant experimentation. There are no set rules
carved in stone and handed down by the IMF to a Moses-like prophet that everyone
must follow if they want to get to the promised gross domestic product. There is,
instead, constant tinkering and constant change, and a recognition that different
strategies are appropriate for different situations.
2. A rejection of per capita GDP as the be-all and end-all: sustainability and equality
must also be part of the mix.
3. Self-determination. (Ramo, 2004)
The extent to which the China Model is actually unique and was developed by China over the
last thirty years is also open to interpretation and discussion. The significance of the results
however is not in question, nor is the importance of the China Model concept as an alternative,
however imprecisely defined, to the strategy for economic development in the west, principally
by the U.S.
The global financial crisis reinvigorated ongoing debates over whether China has its
own distinct and separate ‗model‘ of political economy and/or development. There is
much that connects this Chinese model with previous systems of national political
economies; partly in terms of specific policy preferences, but also in terms of shared
basic conceptions of the distribution of power in the global order. Like these previous
systems, China has come to stand as an example of an alternative to following
dominant (neo-) liberal models of development. In this respect, what the China model
is not and what China does not stand for might be more important than what it actually
is and what it does stand for. However, the idea of a coherent and unique Chinese
model has considerable purchase, and is both informed by and also feeds into
considerations of China's uniqueness and difference from the norms, ideas and
philosophies that dominate the rest of the world. (Breslin, 2007)
So while the exact characteristics of the China Model are vague, and in fact the very existence
of the China Model can be questioned, the very act of engaging in the discussion over
characteristics serves to demonstrate the significance, and the existence of a concept known
as the China Model.
So in many respects, we can think of the China model as a speech act—talking
about it makes it exist and something that has to be dealt with. But it does not yet have
inter-subjective meaning: there is no common and agreed understanding of what the
China model means and whether it implies uniqueness or not. And whether they like it
or not, those who talk and write about the China model or the Beijing Consensus need
to be aware that they are part of the process of making it real. This includes not just
those who laud and admire the Chinese alternative, but also those who are more critical
and/or concerned about a Chinese challenge to the existing global order. (Breslin, 2011)
2
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
2. The China Model – Pros and Cons
However defined or labeled, the strategies and tactics employed by China in the area of
economic development have resulted in an economic growth and development phenomenon
over the last three decades that is unparalleled in history.
China has reduced poverty from 84% in 1981 to 16% in 2005, a decline in the absolute
number of the poor of 627million. Growth in China has been staggering: real GDP has
increased at an average annual rate of 9.7% over the last 30 years, even faster than
occurred in other East Asian countries such as Japan and Korea. This rapid growth, the
fall in poverty and China‘s strikingly quick recovery from the Great Recession are the
fundamental reasons to be impressed with the developmental record of China.
(Williamson, 2012)
Along with the impressive record of economic development has come a stable and while
unusual by Western norms, a well accepted system of governance. Arguably, social and
political stability are related to economic prosperity and while critics of China‘s policies
regarding censorship and freedom of speech there is little doubt that the living conditions of
millions of Chinese have improved and that has contributed to popular support for the existing
Government. ―The system‘s advantage over the standard authoritarian or totalitarian approach
is obvious: it produces economic growth, which keeps people happy.‖ (Callick, 2007)
The China Model has garnered considerable attention worldwide both for its success as a
driver of economic development, and also as an alternative to the U.S. driven model, which
has not always been successful in developing nations. In addition to the demonstrated
economic development and growth, the China Model may appeal to governments in countries
where democracy is not the system of governance.
From Vietnam to Syria, from Burma to Venezuela, and all across Africa, leaders of
developing countries are admiring and emulating what might be called the China Model.
It has two components. The first is to copy successful elements of liberal economic
policy by opening up much of the economy to foreign and domestic investment, allowing
labor flexibility, keeping the tax and regulatory burden low, and creating a first-class
infrastructure through a combination of private sector and state spending. The second
part is to permit the ruling party to retain a firm grip on government, the courts, the
army, the internal security apparatus, and the free flow of information. A shorthand way
to describe the model is: economic freedom plus political repression. (Callick, 2007)
In summation, we find a wide range of connected as well as unconnected reasons given by
proponents as well as supporters of the China Plan.
Those less enthusiastic about supporting the concept of the China Model may share one or
more of several rationales. Williamson gives several of the more often considered reasons:
Although China has been successful in its development approach, the West should not
endorse the Chinese approach as a model for development because:
3
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4





China‘s advocacy of gradualism is only sometimes, not always, worth adopting.
Though often effective, China‘s emphasis on innovation can be costly not only to
multinational companies but also to those who have to pay for reinvention of the
wheel.
Chinese reliance on foreign demand as a supplement to domestic demand, by
accumulating foreign assets with a likely negative yield, deprives the domestic
economy of resources that it could be using to much greater effect.
While state capitalism does have the underappreciated advantage of assisting
the government in achieving rapid recovery from a negative demand shock, it
was the increasing role of the market in China‘s economy that served as the
foundation of China‘s rapid growth.
Authoritarianism may appeal to other third-world leaders, but the espousal of
national sovereignty irrespective of the merits of the regime or the policies
defended may not appeal to the people. (Williamson, 2012)
Another important factor, and one not mentioned by Williamson is the inequitable distribution of
wealth that has occurred during the period of the China Model. While the certainty of the
causal effect relationship is not clear, the present situation with regard to wealth distribution in
China is not contended, nor is the view that less disparity between society elements is
desirable and a sign of a healthy nation and economy. ―The overall Gini coefficient -- a
measure of economic inequality in which zero equals perfect equality and one absolute
inequality -- reached 0.47 in 2008, the same level as in the United States. More disturbing,
Chinese city dwellers are now earning three and a half times as much as their fellow citizens in
the countryside, the highest urban-rural income gap in the world.‖ (Yao, 2010)
Kennedy, (2010), opposes the China Model not for a lack of relevance, results, or importance,
but rather as being unrelated to China‘s economic success story. Note that Kennedy does
refer to the China Model as the Beijing Consensus BC, as an alternative to the Washington
Consensus WC, ―Although ambitious, the original conception of the BC is not up to the task of
being a worthwhile competitor to the alternative model from which its name was coined, not
because of the WC's apparent worthiness, but rather because the BC is a misguided and
inaccurate summary of China's actual reform experience. It not only gets the empirical facts
wrong about China, it also disregards the similarities and differences China's experience
shares with other countries, and it distorts China's place in international politics.‖ (Kennedy,
2010)
Another area of concern for critics, or non-supporters of the China Model is the belief that the
China Model is not only an alternative to the existing system of economic development, but a
competitor and threat to the status quo. One of the proponents of this view is Stefan Halper,
senior fellow at the Cambridge Centre for International Studies, who captures the popularized
contemporary definition of the Beijing Consensus in his 2010 book Beijing Consensus: How
China’s Authoritarian Model will Dominate the World. His work deals with the threat posed by
China‘s market-authoritarian model, which provides rapid growth, stability, and the promise of
better life at the expense of liberal democracy. He writes, ―Of immediate concern is that
China‘s governing model is more appealing to the developing world and some of the middle4
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
sized powers than America‘s market-democratic model. Given the choice between market
democracy and its freedoms and market authoritarianism and its high growth, stability,
improved living standards, and limits on expression – a majority in the developing world and in
many middle-sized, non-western powers prefer the authoritarian model.‖ (Halper, 2010)
In summarizing opponents to the desirability of the China Model we see a widely spaced
variety of reasons and rationale, some opposing all or part of the China Model on economic
grounds and some on a more philosophical, political, or possibly nationalistic basis. Those
reasons for opposition are only vaguely connected by the idea that the China Model is either
not the reason for China‘s economic success, not good in general, not good for Chinese
citizens, or not good for the existing global economic structure.
3. Conclusions, The China Model – Going Forward
The future success and durability of the China Model going forward from 2014 may depend
more on who and how ―success‖ is defined than solely on the continued rate of growth of the
Chinese economy. Other considerations on how success is defined may include the economic
impact that the China Model has on other nations, as well as the extent to which other nations,
particularly those with more authoritarian governments may emulate and adopt the
characteristics of the China Model.
There are those that support the China Model to the extent that they find its continued success
not only probable, but also suggest that the China Model may become the preeminent system
of economic growth worldwide. ―In the wake of the deepest recession in the West since 1929,
many Western as well as Chinese analysts have been quick to pronounce the death of free
markets and the triumph of the so-called Beijing Consensus. Not only has economic power
gravitated toward the East, they argue, but the shift to state capitalism, Chinese-style, is
burying market economics.‖ (Huang, 2011)
Another school of thought is based on the premise that the success of the China Model is a
result of the movement by China towards a traditional strategy of economic growth, that in fact,
the China Market is not a new, unique strategy of economic development, but rather a method
of adoption of the traditional western method of encouraging economic growth. ―Based on a
careful analysis of data going beyond GDP performance, this essay shows that when
measured by factors that directly track the living standards of the average Chinese person,
China has performed the best when it pursued liberalizing, market-oriented economic reforms,
as well as conducted modest political reform, and moved away from statist policies.‖ (Huang,
2011) And, ―But, in fact, over the last 30 years, the Chinese economy has moved unmistakably
toward the market doctrines of neoclassical economics, with an emphasis on prudent fiscal
policy, economic openness, privatization, market liberalization, and the protection of private
property.‖ (Yao, 2010)
Reasons for a slowing of the growth rate may include social or political factors as well. In May
2012, the New York Times stated that China released data that "showed its economy was
continuing to weaken," and quoted a political scientist at Renmin University of China in Beijing
5
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
(Zhang Ming) as saying: "Many economic problems that we face are actually political problems
in disguise, such as the nature of the economy, the nature of the ownership system in the
country and groups of vested interests. ... The problems are so serious that they have to be
solved now and can no longer be put off." In fact, much of the belief that the China Model is not
sustainable, or destined to last are based on social or political, rather than strictly economic
views. ―So far, this strategy has succeeded, but there are signs that it will not last because of
the growing income inequality and the internal and external imbalances it has created.‖ (Yao,
2010)
Summary
However it is defined, the China Model concept has resulted in the largest uninterrupted, and
most substantial period of economic growth in history – thirty plus years of 10% annual growth.
Neither proponents nor opponents of the China Model can be easily categorized as the
reasons for both positions are varied, diverse and inconsistent in rationale, assumptions and
desired outcomes.
History, as well as common sense, indicates that indefinite sustained economic growth of 8 or
10% is not likely and perhaps not possible, so to conclude that the China Model is failing due
to slowing of the growth rate is illogical.
The very nature of the China Model, the vagueness in defining characteristics combined with
the trial and error/ experimentation and adaptability of the China Model make discussion of
whether it is desirable, or sustainable to be less irrelevant. ―For most observers, it is this
experimentation and non-ideological (perhaps even de-ideologized) commitment to doing
whatever it takes to promote growth while maintaining political stability that is the defining
hallmark of the Chinese mode of governance.‖ (Breslin, 2011) The China Model is a dynamic
and ever evolving concept, adapting, albeit slowly, and carefully to situational changes.
Therefore it cannot be characterized easily as successful or as failing as an absolute, but more
accurately to be determined to be in varying stages of success or failure at any given point in
time.
What is highly probable is that the China Model will sustain, in one form or another for many
years to come, albeit with a slower rate of economic growth and that disruption to the
economic growth or economic stability of China will be more likely to come from social
instability as a result of income disparity, poor distribution of wealth and real or perceived
slowing of economic prosperity, than from factors typically considered to be directly of
economic impact in nature such as market conditions, competition, or domestic or international
economic conditions.
6
Proceedings of Annual Shanghai Business, Economics and Finance Conference
3 - 4 November 2014, Shanghai University of International Business and Economics, Shanghai, China
ISBN: 978-1-922069-63-4
References
Breslin, Shaun. "The ‗China model‘ and the global crisis: from Friedrich List to a Chinese mode
of governance?" International Affairs 87.6 2011: 1323-1343.
Cainey, A., Xu A., Hendrichs, M., & Wong, T. 2012. China‘s Digital Champions. Booz &
Compant.
Callick, R. 2007. The China Model. The American, 1(7), 36-44.
Doubts cast over China model as growth falters New York Times | Updated: May 12 2012,
01:46 IST
http://www.financialexpress.com/news/Doubts-cast-over-China-model-as-growthfalters/948252
Halper, S. 2010. The Beijing Consensus: How China's Authoritarian Model will Dominate
the 21st Century. Basic Books
Huang, Yasheng, Rethinking the Beijing Consensus (Asia Policy, January 2011)
http://www.nbr.org/publications/element.aspx?id=481
Kennedy, S. 2010. The myth of the Beijing Consensus. Journal of Contemporary
China, 19(65), 461-477.
McGiffert, C. 2009. Chinese Soft Power and Its Implications for the United States. CSIS.
Ramo, J. 2004. The Beijing Consensus (Foreign Policy Centre, May 2004)
http://fpc.org.uk/fsblob/244.pdf
Williamson, J. (2012). Is the ―Beijing Consensus‖ Now Dominant? (Asia Policy, January 2012)
Yao, Y. 2010. The end of Beijing consensus. Foreign Affairs, 2.
Zhang, Jiakun Jack. "Seeking the Beijing Consensus in Asia: An Empirical Test of Soft
Power". 4/15/2011. DUKE UNIVERSITY. Retrieved 28 January 2014.
7