China's distinctive system: Can it be a model for others?

Journal of Contemporary China

Volumn 19, Issue 65, 2010, Pages 437-460

  Naughton, Barry ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

DEVELOPING WORLD; ECONOMIC DEVELOPMENT; ECONOMIC GROWTH; GOVERNMENT RELATIONS; MARKET CONDITIONS; NATIONAL ECONOMY;

BEIJING [CHINA]; CHINA;

EID: 77951894646     PISSN: 10670564     EISSN: 14699400     Source Type: Journal    
DOI: 10.1080/10670561003666079     Document Type: Article

References (35)

1. John Williamson, 'What Washington means by policy reform', in John Williamson, ed., Latin American Readjustment: How Much has Happened? (Washington, DC: Institute for International Economics, 1989).
2. See also Williamson's retrospective discussion: John Williamson, 'What should the World Bank think about the Washington Consensus?', The World Bank Research Observer 15(2), (August 2000), pp. 251-264, available at: http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2000/11/10/000094946_00102705411757/Rendered/PDF/multi_page.pdf
3. David Pilling, 'China's "warp-speed" 'industrial revolution', Financial Times [London],(17 December 2008), available at: http://www.ft.com/cms/s/0/db443b20-cc5b-11dd-9c43-000077b07658.html
4. see also 'China's reforms: the second Long March', The Economist,(11 December 2008), available at: http://www.economist.com/world/asia/displayStory.cfm?story_id=12758848&source=most_commented.
5. Andrew Batson, 'Lin urges flexibility in fighting poverty', Wall Street Journal,(29 February 2008), p. A10.
6. Both Pilling and The Economist attribute the 'crossing the river' phrase to Deng Xiaoping. As readers of this journal are probably aware, Chen Yun used this term in 1980 to emphasize the importance of caution in reforms.
7. Justin Lin, since June 2008 the Chief Economist of the World Bank-the first Chief Economist from a developing country-has clearly and repeatedly argued that the fundamental root of China's development success has been the shift toward a 'comparative advantage following' strategy of labor-intensive development.
8. see Justin Lin, Fang Cai and Zhou Li, The China Miracle: Development Strategy and Economic Reform(Hong Kong: Chinese University Press, 1996).
9. Roy F. Foster, Luck and the Irish: A Brief History of Change from 1970(New York: Oxford University Press, 2008).
10. Ian Buruma, 'China's dark triumph', Los Angeles Times,(13 January 2008);
11. Rowan Callick, 'The China model', The American, (November-December 2007), available at: http://www.american.com/archive/2007/november-december-magazine-contents/the-china-model/.
12. Patrick Arippol, 'WI Harper-strategic crossroads', Stanford Graduate School of Business Case E-257, (6 June 2007), p. 14.
13. Joshua Cooper Ramo, The Beijing Consensus (London: The Foreign Policy Centre, May 2004), available at: http://fpc.org.uk/fsblob/244.pdf.
14. Arthur Kroeber, 'Rising China and the liberal West', China Economic Quarterly, (March 2008), p. 33;
15. Cf.Dieter Ernst and Barry Naughton, 'China's emerging industrial economy: insights from the IT industry', in Christopher A. McNally, ed., China's Emergent Political Economy: Capitalism in the Dragon's Lair (New York: Routledge, 2008), pp. 39-50.
16. An introduction to this extensive literature is provided by William Megginson and Jeffry M. Netter, 'From state to market: a survey of empirical studies on privatization', Journal of Economic Literature 39, (2001), pp. 321-389.
17. One example is the piece I wrote with John McMillan at the very beginning of the 1990s: John McMillan and Barry Naughton, 'How to reform a planned economy: lessons from China', Oxford Review of Economic Policy 8(1), (Spring 1992).
18. National Bureau of Statistics, 2009 Statistical Abstract [Zhongguo Tongji Zhaiyao 2009] (Beijing: ZhongguoTongji, 2009), p. 141 and earlier issues.
19. The State Asset Supervision and Administration Commission (SASAC) regularly updates total profitability on its website. For 2008 final data, see SASAC, General Operating Conditions of Central Enterprises in 2008, available at: http://www.sasac.gov.cn/n1180/n1566/n258203/n258329/6649463.html.
20. Zhou Limin, 'SASAC will inject about 10 billion RMB; electric firms make the "gift list"', Zhongguo Jingjingbao, (17 January 2009), available at: http://news.cb.com.cn/?action-viewnews-itemid-3639.
21. Barry Naughton, 'Claiming profit for the state: SASAC and the capital management budget', China Leadership Monitor no. 18, (Spring 2006), available at: http://media.hoover.org/documents/CLM18BN.pdf
22. Barry Naughton, 'SASAC and rising corporate power', China Leadership Monitor no. 24, (Winter 2008), available at: http://media.hoover.org/documents/CLM24BN.pdf.
23. Dani Rodrik has incorporated this 'Chinese' lesson into a broader framework which stresses the need to first go through a process of 'growth diagnostics'. If the diagnostic indicates that a weak investment effort is the key obstacle to development, then a country should give priority to clearing away obstacles to investment, including having the government take the leading role in some situations.
24. See Dani Rodrik, One Economics, Many Recipes:Globalization, Institutions, and Economic Growth (Princeton, NJ: Princeton University Press, 2007)
25. Commission on Growth and Development, The Growth Report: Strategies for Sustained Growth and Inclusive Development (Washington, DC: World Bank, 2008), pp. 34-37, available at: http://www.growthcommission.org/index.php?option=com_content&task=view&id=96&Itemid=169.
26. Chintay Shih, Kung Wang and Yi-ling Wei, 'Hsinchu, Taiwan: Asia's pioneering high-tech park', in Henry S. Rowan, Marguerite Gong Hancock and William F. Miller, eds, Making IT: The Rise of Asia in High Tech (Stanford, CA: Stanford University Press, 2007), pp. 101-122 at p. 116.
27. SASAC, Provisional Methods for Assessing Performance of Responsible Managers of Central Enterprises, (30 December 2006), available at: http://www.sasac.gov.cn/gzjg/yjkh/200701310039.htm
28. SASAC, Results of 2005 Performance Assessment for Central Enterprises, available at: http://www.sasac.gov.cn/gzjg/yjkh/200608220155.htm. In 2005, two firms had their grades lowered for safety or environmental violations (PetroChina and the Railroad Construction company), and another eight firms lost points for safety or financial infractions.
29. In this sense, 'planning' must be closely related to 'experimentation', even though the two are usually thought of as being polar opposites. See the line of argument developed by Sebastian Heilmann, 'Policy experimentation in China's economic rise', Studies in Comparative International Development 43(1), (March 2008), pp. 1-26.
30. This important point was emphasized by Joseph Stiglitz, 'Whither reform? Ten years of the transition', Annual World Bank Conference on Development Economics, Washington, DC, 1999.
31. Barry Naughton, 'Hierarchy and the market economy: how has political hierarchy shaped China's transition to a market economy?', in Janos Kornai and Yingyi Qian, eds, Market and Socialism Reconsidered (London: Macmillan, for the International Economic Association, 2008).
32. Communist Party of China, 'Party center notification on a few matters relating to the establishment of State Council SASAC', (24 March 2003), in 2004 Zhongguo Guoyou Zichan Jiandu Guanli Nianjian [China State-owned Assets Supervision and Management Yearbook] (Beijing: Zhongguo Jingji, 2004), p. 99.
33. This relationship is described very clearly in Christopher McNally, 'Strange bedfellows: Communist Party institutions in the corporate governance of Chinese state holding corporations', Business and Politics 4(1), (2002), pp. 91-115.
34. An interesting case of this occurred at the end of 2007, when China Eastern Airlines tried to bring in Singapore Airlines as a strategic investor. The proposal was eventually defeated by a vote of minority shareholders, who had to approve it according to corporate governance provisions of the listed vehicles in Hong Kong and Shanghai. But the key decisions were actually made behind the scenes when the chairman of China Air-which vigorously opposed the proposal-was promoted to be head of the nominal regulatory agency CAAC. Such a promotion could only have been decided by the Politburo Standing Committee (see Naughton, 'SASAC and rising corporate power').
35. Jonathan Soble, 'Japan set to build passenger jets with ANA order', Financial Times, (28 March 2008), p. 22.