Origins of China’s Contested Relation with Neoliberalism: Economics, the World Bank, and Milton Friedman at the Dawn of Reform

Abstract

China is found both to be neoliberal and to provide an alternative to neoliberal development. To illuminate the origins of this contradiction, this paper analyzes China’s relationship with neoliberalism from a historical and economic theory perspective. Neoliberal economic thinking became relevant to China with the beginning of reform and opening up in 1978, when the Communist Party moved from Maoism to an economic determinist outlook on socialism. This ideological shift opened the door for exchanges with the World Bank and foreign economists, including neoliberals. Yet an analysis of Milton Friedman’s speeches in China reveals a critical divide: the Chinese reformers embrace the market but deny that the market requires universal private property. Thus, China is integrated into the global market while the Chinese state reserves its rights to control the economy.

Effects of Government Contracting of Services on NGOs in China: Convergence and Divergence with International Experience

“…The neoliberal structures of governance (Evans et al, 2005) imposed by contracting explain such convergence. The peculiarity of the Chinese case is the combination of an authoritarian government and neoliberal economic policy, that is, the CPC's partial adoption of neoliberalism under the premise of state control (Weber, 2020). This can be seen in contracting by the CPC's embracing the principles of market liberalization while remaining in control of contract arrangements, prices, definition of services, and performance and accountability mechanisms.…”

“…These effects would include a less diversified market of NGO service providers, censorship, culling of political activism and increased control of NGOs that would hinder their added value. In China's case, the adoption of contracting of welfare services responds to its integration into neoliberal globalization and the extension of neoliberal reforms into the public sector (So and Chu, 2012) under the primacy of state control (Weber, 2020). Therefore, given the similarity of institutional frameworks of contracting with liberal contexts such as the USA (Jing & Savas, 2009), we would expect variation of effects on NGOs to be caused by the different political regimes.…”

Gillian Hart in Beijing: Negotiating capitalist models at the World Bank–China nexus

“…8 As former Bank economist and China program specialist Shahid Husain recollected, Krueger, who had spent her career theorizing state intervention as a form of rent-seeking, was “very hand-in-glove with the U.S. Treasury,” introducing strong positions against import substitution and state-led industrialization efforts while getting “rid of anybody who had been associated with Hollis Chenery” (Husain, 1994: 31–32). For her part, Krueger directly scrutinized 1985's Long-Term Development Issues and Options report—which took a patient approach to enterprise privatization—but it was the more general problematization of price distortion that marked this period, in part through the influence of Eastern European economists working with the Bank (Lim, 1993: 16; Weber, 2020: 4–5, 2021: 115–151). For the Bank, China's unrest was rooted in the CCP's “partial strategies” of price reform: rationalization of commodity prices prompted surges of local government investment in enterprises, but because SOEs were not incentivized to compete through improving productivity, deregulation without privatization resulted in inflation (World Bank, 1989: 27–29, 127).…”

“…A Hartian approach not only provides a spatialized, dialectical account of the Chinese state and the World Bank (cf. Bottelier, 2018; Gewirtz, 2017; Weber, 2020), but suggests a methodological and theoretical turn for studies of the new state capitalism away from a liberal-statist dualism and toward granular, political, and processual accounts that capture “the dialectical and cumulative unfolding of different modalities of state intervention across space, scale and time, by tracing the different forms of interconnection between them” (Alami and Dixon, 2021: 4).…”

State capitalism, imperialism and China: Bringing history back in

“…But just like neoliberalism, state capitalism is frequently employed to categorize the totality of a country's economic system, state-market relations, or policy paradigm. As I have argued for neoliberalism (Weber, 2019(Weber, , 2020, I would argue for state capitalism that while it is virtually impossible to come up with definitive answers to the question of whether a country or some aspects of it is state capitalist due the amorphous nature of the concept, we can constructively study how these broad, ideologically loaded concepts become relevant in a specific context. Yet, this task is more complicated for state capitalism than it is for neoliberalism.…”