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Beijing Consensus: China’s developmental alternative to the third world?

By Prashant Sahu

Introduction

The concept of “Beijing Consensus” (Beijing Gongshi 北京 共识) represents a set of ideas for economic development which tries to encapsulate the policies followed by China since 1978. In the wake of Global financial crisis (2008-09), this concept was promoted as an alternative development model, particularly suited to the Third World countries.

These policies stand in stark contrast to the concept of “Washington Consensus” proposed by John Williamson in 1989 based on the political-economic philosophy of neo-liberalism. Washington Consensus were a set of policy recommendations for the developing economies in Africa, Asia and Latin America and the post-Soviet “transition economies” to receive IMF bailouts in the 1990s. The purported aimed to institutionalize market principles in these countries along with a minimalist role of the state.

Image Credit: Asian Warrior

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The Washington Consensus package included a contracted fiscal deficit, competitive exchange rates, sale of state-owned assets, institution of private property and a free-market economy, political democracy, and provisions for foreign direct investment in several sectors (Pettinger 2017). The World Bank and the IMF executed these policies as they administered “shock therapy” on developing and transition economies in the 1990s. However, by the end of the decade, these policies had resulted in a massive economic and political crisis in these countries as income inequalities rose rapidly both domestically and between the Global North and Global South (Naim 1999).

Three dimensions of Beijing Consensus

In the 2000s Beijing consensus gained currency as an alternative to the US-based model. However, this political-economy concept did not come from Chinese sources. The term “Beijing Consensus” was coined in 2004 by Joshua Cooper Ramos of the UK-based think tank Foreign Policy Center. Since then, it has attracted much scholarly attention and policy debates over its viability and replicability in Third World countries.

Beijing Consensus is built on three broad ideas based on the Chinese development experience since the 1980s: Innovation, Different economic parameters and Self-determination. (Ramos 2004: 11-12)

Firstly, the Innovation component represents the nation’s will and capability to experiment not just with technology and business but also with policies in every other domain. It is based on the premise that developing countries need not start with low-end Western technology, but can also start in the most advanced fields. Innovation was aimed to increase the “density of Chinese society” (ibid: 15). Innovation was to be practiced not only in agriculture and high technology industrial manufacturing, but also in Chinese political system. Seen for instance in the introduction of new parameters for recruitment of Chinese leaders, as post-graduates and PhDs began to increase in the CPC. (ibid: 20)

The second factor of different economic parameters refers to the overlooking of per-capita GDP as the sole criteria for measuring the developmental standing of a country. Instead, parameters such as Human Development Index (HDI) are to be used, which are more comprehensive in evaluating the different quality-of-life variables such as Literacy, Gender-parity and Health indicators. This dimension defines the nature of market-led economy growth, focusing on sustainability and equitability. This aspect was reflected in Hu Jintao’s call for “clean GDP”, i.e. GDP shorn of environmental pollution and corruption. (ibid: 23)

Finally, the Self-determination dimension refers to how the China Model is spreading across the world and offering new ideas to other countries for their own development. This is happening in three ways: As an alternative to the Washington consensus, generating capacity for indigenous growth and creation of international trade interdependence. (ibid: 28).

These three aspects of Beijing consensus make it an attractive proposition for developing countries as it allows them the freedom from “one-size-fits-all” solutions provided by the WB-IMF organisations.

Critical analysis

Several scholars have criticised “Beijing consensus” upon analysing different segments of the Chinese growth experience since the 1980s. Three crucial observations about China’s growth experience have been highlighted: (a) per capita personal incomes in China did not rise in proportion to the growth in national economic size; (b) economic growth is not separate from the dispensation in power as household income grew more under Deng’s leadership (1978-1992) than under Jiang Zemin’s tenure (1992-2002); (c) success of China’s economic growth has been through mixed-ownership enterprises but through private-sector enterprises. (Huang 2011).

He further brings out that personal income growth excelled during periods of liberal political and policy direction in the 1980s, than when more statist policies were carried out in the 1990s.

Scott Kennedy points to the fact that despite the focus on innovation, “the Chinese have not been innovation leaders” (Kennedy 2010). Chinese enterprises are largely concentrated in the assembly and manufacturing segment of the production process, and the major part of value addition of Chinese IT exports happens outside China. Further, most of the Chinese export enterprises are either joint ventures or wholly owned foreign subsidiaries in China.

Yao Yang, director of economic research at Peking University, brings out problems such as the rising income inequalities, regional imbalances, overdependence on external demand, low domestic consumption, commercialised local governments and powerful interest groups which prevent welfare reforms. These structural problems are leading to increased protests and demands for greater democratisation in decision-making (Yao 2010).

Conclusion

In conclusion, the Beijing consensus, which has evolved from the particular developmental experiences of China, has its fair share of problems. The much-applauded Chinese growth story and its applicability in other countries with different political, economic and social systems are open questions. Further, China’s economic development has been substantially determined and guided by the Communist Party of China, and the application of the “China model” in multi-party democracies needs further research.

Nevertheless, China’s growing presence in the Third World Countries in Africa, Latin America and Asia, as a loan-provider, exporter of commodities, and as a source of foreign direct investment through projects like BRI and MSR, have put China in a favourable and competitive position to the West. It has increased the domestic and foreign policy choices available to these countries, which were historically denied these choices by Colonialism and the Cold War. These developing countries have not substantially benefitted from the present West-driven globalisation, and China offers them an effective alternative.

References

  1. Huang, Yasheng (2011), Rethinking the Beijing Consensus, Asia Policy, Number 11 pp. 1-26, Project Muse https://doi.org/10.1353/asp.2011.0001
  2. Kennedy, Scott (2010), The Myth of the Beijing Consensus, Journal of Contemporary China, 19:65, 461-477, https://doi.org/10.1080/10670561003666087
  3. Naim, Moises (1999), Fads and Fashion in Economic Reforms: Washington Consensus or        Washington Confusion?, IMF Working draftshttps://www.imf.org/external/pubs/ft/seminar/1999/reforms/Naim.HTM
  4. Pettinger, Tejvan (2017), Washington Consensus: Definition and Criticism, Economics Help, https://www.economicshelp.org/blog/7387/economics/washington-consensus-definition-and-criticism/
  5. Ramos, Joshua Cooper (2004), The Beijing Consensus, London: The Foreign Policy Center http://fpc.org.uk/publications/TheBeijingConsensus
  6. Yao Yang (2010), The End of the Beijing Consensus, Foreign Affairs, http://www.foreignaffairs.com/articles/65947/the-end-of-the-beijing-consensus

Author’s Profile

Prashant Sahu is a PhD candidate in the Chinese Studies division of Center for East Asian Studies in Jawaharlal Nehru University. His area of interests include Chinese Science, Technology and Innovation (STI), Chinese Foreign policy and Chinese Politics. He can be reached at prashantsahu13@gmail.com.

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