22 - Weiner2017

20
China’s Postsocialist Transformation

and Global Resurgence: Political
Economy and Geopolitics
h o - f u n g h u n g an d m a r k s e l d e n
China’s Transformations
China’s socioeconomic transformation and global resurgence are best
dated from the United States–China opening of the early 1970s, which
facilitated the country’s entry into the capitalist world economy,
initiated the rapid expansion of trade and led to the first groping
steps toward market predominance. From 1978, the pace of transforma-
tion accelerated with the dismantling of collective farms and restora-
tion of a household-centered rural economy in the early 1980s, together
with the growth of township and village enterprises and the freeing of
rural workers, previously bound to their villages, to migrate in search
of predominantly urban jobs in manufacturing, construction and trade.
In the late 1980s urban price reform opened major commodities to
market forces. In the 1990s, privatization of significant numbers of
state-owned enterprises (SOEs) resulted in layoffs of state workers
and the end of job security for the remaining employees who, for
the first time, were hired on term contracts (three years in most
cases), and faced competition from massive numbers of rural migrant
workers. Throughout these successive stages, decentralization, markets
and exports remained priorities while some 300 million rural migrants
swelled China’s urban population. With the decline in central planning
and regulation, local governments expanded their reach by allowing
local circuits of capital accumulation to plug into global circuits
through foreign trade and foreign direct investment (FDI) inflow, and
by replacing a centralized state revenue system with a decentralized
one under which local governments retained larger portions of tax
502
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China’s Postsocialist Transformation and Global Resurgence
revenue and public enterprise income, while central government sub-

sidies declined.1
In this decentralized regime, local governments became a driving force of

economic growth and planning while competing for private investment and
bank loans. This spurred diverse local strategies of wealth accumulation.
Some local governments directly encouraged and sponsored collective
township and village enterprises or turned state-owned enterprises within
their jurisdiction into profit-oriented units, resulting in “local corporatism” or
“local state entrepreneurialism.”2 Prospering localities facilitated private and
collective industrial enterprises, including foreign enterprises, and relied on
the tax generated in the private sector for revenue. Others, however, engaged
in predatory practices by extorting taxes, fees or favors from local residents
and economic actors, or siphoning off the resources of the party-state
through appropriation and reselling of state assets or obtaining credits
from state-owned banks.3 Most local governments adopted a mix of these
approaches.
Throughout the 1980s, with the important exceptions of major coastal
cities such as Shanghai, Tianjin and Shenzhen, the local entrepreneurial state
frequently lacked sufficient startup capital, technical knowhow and market-
ing expertise to stimulate private-sector development. It could, however,
channel cheap rural labor to domestic and foreign investors in its own
territories. This took such forms as opening local SOEs to foreign capital
and management in the form of joint ventures and development of industrial
parks in major coastal cities. Equally important, however, was relaxing the
restraints on movement, market and entrepreneurship, allowing and even-
tually encouraging villagers to take advantage of myriad new opportunities
for labor and enterprise.4 Notably since the 1990s, China’s growth has been
strongly driven by FDI centered in the export sector.5 By 2004, almost
60 percent of Chinese exports were manufactured in foreign-funded
1 Susan L. Shirk, The Political Logic of Economic Reform in China (Berkeley: University of
California Press, 1993).
2 Jean C. Oi, Rural China Takes Off: Institutional Foundations of Economic Reform (Berkeley:
University of California Press, 1999).
3 Thomas Bernstein and Lü Xiaobo, Taxation Without Representation in Contemporary Rural
China (Cambridge: Cambridge University Press, 2003).
4 See Karl Gerth, “Make Some Get Rich First: State Consumerism and Private Enterprise
in the Creation of Postsocialist China,” in this volume.
5 George Lin, Red Capitalism in South China: Growth and Development of the Pearl River Delta
(Vancouver: University of British Columbia Press, 1997); You-tien Hsing, Making
Capitalism in China: The Taiwan Connection (New York: Oxford University Press, 1998).
503
ho -f ung hu ng a nd ma r k s e ld e n
enterprises, and this percentage was even higher for products with higher
value-added such as electronics. It is a startlingly high figure compared with
other Asian countries in similar stages of takeoff – 20 percent for Taiwan in
the mid 1970s, 25 percent for South Korea in the mid 1970s and 6 percent for
Thailand in the mid 1980s. Measured in terms of the ratio between FDI and
gross capital formation, China’s FDI dependence has been among the highest
in Asia since the 1990s.6
Major legacies of the development trajectory of the early decades of the
People’s Republic of China (PRC) – namely transfer of the rural surplus to
drive state capital accumulation centered in industry and the cities while
suppressing mass consumption, the existence of a huge reservoir of
rural surplus labor resulting from the spatial segregation of a household
registration system (hukou) that kept villagers bound to the land and
the collective, and a low-wage and disciplined industrial labor force –
subsequently made China a magnet for international investment.
Cooperative medical care and mass education offered by the People’s
Communes ensured the abundant rural surplus labor would be more
literate and healthier than their counterparts in other developing countries
at comparable levels of development. Attractions for foreign capital
included not only China’s apparently unlimited supplies of cheap labor
but also the capacity of local governments to provide favorable terms and
to expedite the establishment of international operations in China.7 At the
same time, the collective and state guaranteed basic security at low income
levels in city and countryside while raising life expectancy and becoming
by the 1970s “one of the world’s most egalitarian societies.”8
Relaxation (but not abolition) of the hukou system of population control
facilitated labor mobility. From the 1980s rural migrants were encouraged
to work in the cities but were denied access to many benefits guaranteed to
state-sector urban workers including free health care, subsidized housing,
generous pensions, lifetime employment and free access to public educa-
tion in city schools. The social reproduction of rural migrant laborers
remained the responsibility of their home villages, allowing employers to
6 Ho-fung Hung, The China Boom: Why China Will Not Rule the World (New York:
Columbia University Press, 2016), 56.
7 Barry Naughton, Growing Out of the Plan: Chinese Economic Reform, 1978–1993 (Cambridge:
Cambridge University Press, 1995).
8 Mark Selden, The Political Economy of Chinese Development (Armonk, NY: M. E. Sharpe,
1993); Carl Riskin, Renwei Zhao and Shih Li (eds.), China’s Retreat from Equality: Income
Distribution and Economic Transition (Armonk, NY: M. E. Sharpe, 2001). See also Carl
Riskin, “China’s Human Development After Socialism,” in this volume.
504
minimize the wage level necessary for their survival. Voices calling for
total abolition of the hukou system to ensure migrant workers access to full
urban entitlement have been strong at the level of central government, but
in the absence of subsidies to pay for these services, local governments,
which benefit from the availability of cheap labor without bearing the cost
of their reproduction, have vigorously resisted such calls.9
In the midst of profound economic transformation, the center retained
control of the most valuable state industries and banks and macroeco-
nomic regulatory functions including setting interest and exchange rates
and preferential policy toward certain regions, all important legacies of the
socialist era that continue to the present. However, its direct control over
the economy receded, as local states became the leading agents or direct
regulators of capital accumulation centered on both domestic and
international capital, and as the scale and scope of state enterprise were
cut back.
With market transition from the early 1980s, following the end of
collective agriculture and the commune system together with the rise of
township and village enterprises, rural households gained access to jobs in
local enterprises and labor in coastal factories. State-sector workers, little
touched by the institutional changes of the early reform, benefited from
rising incomes and the availability of new consumer goods in the market.
In short, in the first stage of reform up to the mid 1980s, most segments of
the population, but particularly villagers, benefited from new economic
opportunities. Despite permanent minimum wage work, exclusion from
major benefits enjoyed by urban workers, and facing oppressive working
conditions and long working hours, China’s rural migrant workers were
drawn to higher incomes in the cities.
From the mid 1990s, far-reaching changes undercut the position of state
workers as SOEs were turned into autonomous profit-making units depriv-
ing workers of the security and benefits that the socialist system had
assured. Rather than abolishing the state sector as it had done with the
communes in 1983, managerial authority of many nonessential SOEs was
initially transferred from the central government to local managers, while
9 Feiling Wang, Organizing Through Division and Exclusion: China’s Hukou System
(Stanford: Stanford University Press, 2005), ch. 7; Dorothy Solinger, States’ Gains,
Labor’s Losses: China, France, and Mexico Choose Global Liaisons, 1980–2000 (Ithaca:
Cornell University Press, 2009); Tiejun Cheng and Mark Selden, “City, Countryside
and the Dialectics of Control: The Origins of China’s Hukou System, 1949–1960,” China
Quarterly 139 (Fall 1994), 644–68.
505
prices of most industrial products and raw materials were allowed to float
on the market.10
At the same time, rampant inflation reaching just short of 20 percent in

1988 led to falling living standards among workers and peasants. Popular
discontent precipitated by deepening class divisions created an explosive
situation that was ignited by students calling for political liberalization in
1989 and extended to militant workers.11
Though the liberalization and democratization demands made by
students during the 1989 hunger strike at Tiananmen Square captured
media attention around the world, the movement was far from limited
to Beijing and to those political demands. Student protests which sprang
up in major cities across the country were frequently joined by citizens
from all walks of life, including state workers and some segments of the
state elite whose interests were sacrificed in the reform process.12 Many
demands were more social than political, ranging from checking corrup-
tion and commodity speculation by cadres and state managers to pro-
tecting workers’ rights in reconstituted state-owned enterprises. Where
protesting students employed Western-style language and symbols of
liberal democracy to demand fundamental changes in the socialist
system, some workers took to the streets carrying portraits of Mao
Zedong to express opposition to the undermining of workers’ rights
enshrined in state enterprises. Viewed in this light, the uprising in 1989
not only involved a quest for Western-style liberal democracy, but was
also a call for the protection of society against the expansion of a self-
regulating market that jeopardized workers’ rights and welfare; in other
words, for some it included a vision of socialist democracy at the very
moment when socialism and the Soviet bloc were collapsing in Eastern
Europe.13
In the following decade, in the wake of the state crackdown on the
demonstrators of 1989, the first massive layoffs of workers in SOEs took
place, followed by privatization of many state enterprises, resulting in the
10 Tiejun Wen, Women daodi yao shenme [What Do We Want?] (Beijing: Huaxia
chubanshe, 2004), 37.
11 Hui Wang, China’s New Order: Society, Politics, and Economy in Transition (Cambridge,
MA: Harvard University Press, 2003); Selden, The Political Economy of Chinese
Development, 206–30.
12 Jonathan Unger (ed.), The Pro-Democracy Protests in China: Reports from the Provinces
(Armonk, NY: M. E. Sharpe, 1991).
13 Wang, China’s New Order.
506
permanent loss of job security for all workers. For the first time, state workers
who had enjoyed lifetime employment faced competition for jobs from rural
migrant workers.
Despite growing social dislocation, the 1990s were characterized by
a paradoxical social peace, the product of state repression in the wake of
Tiananmen and other protests together with promotion of new forms of
nationalist ideology. Discarding earlier official nationalist ideology with its
overtones of national liberation and solidarity with developing nations and
national liberation movements, a more chauvinistic nationalism emerged
that sought to restore China’s past imperial glory and “center-of-the-world”
status.14 The political and ideological framework designed to ensure the
smooth unfolding of economic liberalization was succinctly articulated in
two official slogans in the 1990s: “stability above everything” (wending yadao
yiqie) and “realize the great resurgence of the Chinese nation” (shixian
zhonghua minzu de weida fuxing). But for Chinese workers, both those in
SOEs and rural migrant workers, there was little stability.
Imbalance, Crisis, Rebalance

China’s rapid economic growth and social transformation from the 1980s
were facilitated by export-oriented investment. By the new millennium,
China had become the most dynamic center of capital accumulation and
a leading manufacturing and trading nation with the world’s highest
sustained growth rates. This coincided, however, with growing economic
imbalances as a result of excess investment in unproductive state enterprises,
low levels of domestic consumption and growing social polarization, all of
which threatened sustainability and social harmony.15 This imbalance
increased at the peak of China’s boom years in the 2000s and paved the
way for the economic slowdown that followed the 2008 Lehman Brothers
crisis in the United States, resulting in financial turmoil in China’s real estate
and stock markets, and excess capacity that threatened continued industrial
growth in 2015.
With state-owned banks continuing to deliver easy credit to insolvent or
profligate SOEs, roughly 40 percent of which incurred losses in 2006
14 Peter Hays Gries, China’s New Nationalism: Pride, Politics, and Diplomacy (Berkeley and
Los Angeles: University of California Press, 2004); Suisheng Zhao, A Nation-State by
Construction: Dynamics of Modern Chinese Nationalism (Stanford: Stanford University
Press, 2004), 248–90.
15 Hung, The China Boom, Table 6.4.
507
according to government figures, sectoral overinvestment resulted in

a proliferation of nonperforming loans.16 The gains in social and political
stability as a result of job creation and layoff prevention must be set off
against the long-term economic effects of overinvestment in industry and
construction as witnessed by the proliferation of ghost high rises in major
cities, that is, vast rows of unoccupied high-rise apartment blocks. In contrast
to the state sector, many private enterprises, even successful ones, found it
difficult to obtain loans from state banks.17
With high-speed growth over three decades, China advanced from produ-
cing 2 percent to 16 percent of the global economy while increasing per capita
GDP (in purchasing power party [PPP] dollars) fortyfold.18 The East Asian
Tigers – Taiwan, South Korea, Hong Kong and Singapore – during their
initial industrial takeoff in the 1950s, like China, were governed by author-
itarian regimes. Nevertheless, redistributive policies such as land reform and
provision of free education helped make it possible for the fruits of economic
expansion to reach the lower classes, including the rural population.19
Substantially rising income and consumption levels and reduction in
urban–rural income disparity in the 1980s made possible the creation of
sizeable domestic markets in the newly industrializing economies, which
buffered them against the vagaries of the world market, while providing
infant industries with sufficient internal demand before they could compete
internationally. The result was rising income levels that brought per capita
incomes in their economies to levels comparable to many of the world’s high-
income countries while maintaining relatively low levels of income disparity,
a performance in both rising incomes and equality that China could not
match despite its dynamic growth.
In the 1990s China took important steps to strengthen its position in world
markets. In 1993 it unified foreign exchange rates, devalued the currency and
further opened foreign investment, all preparatory to meeting stringent US-
imposed standards that would permit China’s entry into the World Trade
Organization (WTO). By 2001, China had gained important trade advantages
while confronting new challenges.20
16 Ibid., ch. 6.
17 Kellee S. Tsai, Back-Alley Banking: Private Entrepreneurs in China (Ithaca: Cornell
University Press, 2002), 29–35.
18 See Riskin, “China’s Human Development After Socialism,” in this volume.
19 Stephen Haggard, Pathways from the Periphery: The Politics of Growth in the Newly
Industrializing Countries (Ithaca: Cornell University Press, 1990), 223–53.
20 Barry Naughton, The Chinese Economy: Transitions and Growth (Cambridge, MA: MIT
Press, 2007).
508
If the economy was registering important gains, China’s pursuit of

market-driven growth from the 1990s onward exacerbated social polariza-
tion. Class, urban–rural and regional disparities (particularly coastal and
inland) all expanded in the 1990s, hand in hand with rapid economic
growth, one of whose consequences was extraordinary wealth concentra-
tions in the hands of the 0.001 percent of a growing group of multimillio-
naires. With mass migration of village youth to the coastal areas and the
cities, poverty intensified in the rural hinterlands, offset in part by transfer
payments to the village. At the same time, the old bastions of state industry
such as the northeast China rustbelt confronted massive layoffs, plant
closures and unemployment.21 As jobs created by export-oriented global
capital could not increase as rapidly as those disappearing from battered
state-owned factories, in the absence of robust Chinese consumption,
China would experience a net loss of manufacturing jobs from the mid
1990s. The share of manufacturing in total employment never reached the
levels found at the peak of manufacturing employment in the smaller
newly industrializing economies, and already in the 1990s China’s service
sector narrowly surpassed manufacturing in its contribution to GDP, while
agriculture steadily declined.22
Villagers-turned-workers in coastal boom towns and cities faced new
problems. In the 1990s and afterward, given the vast pool of surplus labor
migrating to the cities, China did not experience wage gains comparable to
those of other East Asian newly industrializing economies during their rise.
Rural migrants comprised the fastest-growing sector of industrial labor,
nearly all of them working at state minimum wages in the private sector
and retaining few of the benefits enjoyed by an earlier generation of state
workers even as state workers faced privatization of SOEs and layoffs
from the late 1990s. China’s manufacturing wage as a percentage of
US manufacturing wage stagnated at approximately 5 percent and remained
far below the level of earlier East Asian industrializers during their periods of
highest growth (see Fig. 20.1.) Nevertheless, in the new millennium, annual
increases in the state minimum wage (with the exception of 2008 when world
recession led to large-scale layoffs of workers) steadily boosted worker
income.
21 Ching Kwan Lee, Against the Law: Labor Protests in China’s Rustbelt and Sunbelt
(Berkeley: University of California Press, 2007).
22 Peter Evans and Sarah Staveteig, “The Changing Structure of Employment in
Contemporary China,” in Deborah Davis and Feng Wang (eds.), Creating Wealth and
Poverty in Postsocialist China (Stanford: Stanford University Press, 2008), 69–83.
509
70
Japan
60
Taiwan
South Korea
50 China
Percentage of U.S wage
40
30
20
10
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Figure 20.1. China, Japan, Taiwan and South Korea Hourly Manufacturing Wage as
a Percentage of US Hourly Manufacturing Wage in Periods of High Growth, 1950–2010
Source: Ho-Fung Hung, The China Boom: Why China Will Not Rule the World (New York:
Columbia University Press, 2016), Tab. 3.2.
Japan, Taiwan and South Korea all rapidly closed the income gap with the
United States during their periods of most rapid postwar growth while
reining in economic inequality. For example, Taiwan reduced income
disparity indicated by the decline in Gini coefficient during its takeoff years
from a range of 0.5–0.6 in the 1950s to 0.3–0.4 in the 1970s. By contrast, China’s
Gini coefficient grew from 0.33 in 1980 to more than 0.45 in 2007, placing it
among the highest income disparities in the world, approaching that of the
United States. The share of wage income in China’s GDP fell from 53 percent
in 1998 to 41.4 percent in 2005, driving the declining share of consumption in
GDP. China’s consumption lagged far behind the exuberant growth in
investment and GDP. In recent years, fixed capital formation as a share of
GDP approached 50 percent, while the share of household consumption has
dropped to 30 percent. This means that China’s economic growth remains
disproportionately export-dependent.
Earlier East Asian developmental achievements were also initially based
on high investment and low consumption rates. But China’s fixed-asset
investment rate, which has been above 40 percent of GDP and reached
510
45 percent in 2009, was far higher than Taiwan’s and South Korea’s rates at
their peaks of industrial growth in the 1970s of 25–35 percent. China’s private
consumption share of GDP, below 40 percent and falling since 2004, was
much lower than Taiwan’s (50–60 percent) and South Korea’s (60–70 percent)
in the 1970s.23 The low consumption rate above all of China’s rural migrant
workers and those villagers who remained in the countryside is a product not
only of low wages but also of the fact that many rural migrants, lacking
welfare, health and retirement benefits, require high savings to support
themselves in old age.
In recent years, economic imbalance, precarity of labor, accumulation of
bad loans, massive capital flight and concern about profitless growth have led
many analysts not only to question the sustainability of the China boom but
also to anticipate an imminent economic crisis. Rising state revenue from the
export-led economic boom has thus far made it possible to bail out the state
banks and state enterprises even at a time of slowing growth. Beneath the
surface, however, reliance on state revenue to support the banks, together
with lagging domestic consumption, constrains government capacity to
lower taxes or invest in social programs that are especially urgent for
villagers, rural migrants and laid-off workers.
The US economic crisis of 2008 struck a blow at China’s exports with
growth rates of exports declining from 22 percent in 2007 to –10 percent in
2009. When the global financial crisis struck, China’s export engine stalled
and its export-dependent manufacturing sector contracted sharply across the
board. China then laid off workers in coastal industries. In Guangdong
province alone, 62,000 factories closed in 2008, and by early 2009 some
23 million or 17 percent of the 140 million rural migrant workforce was
unemployed, forcing many to return to their villages.24 As Kam Wing
Chan observes, rural migrant workers served the function of a Marxian
industrial reserve army that could be easily recruited in periods of expansion
and sent home in periods of contraction to live off their small plots of
land until jobs could be found. However, with little work available in the
countryside, most soon returned to the cities, aided by, among other things,
government-financed construction projects. The experience of crisis under-
lined the important role both of the state in sustaining growth and of the
countryside in providing reproduction costs for the rural migrant population
23 Hung, The China Boom, Figures 3.5–3.7.

24 Kam Wing Chan, “The Global Financial Crisis and Migrant Workers in China: ‘There
Is No Future as a Labourer; Returning to the Village Has No Meaning,’” International
Journal of Urban and Regional Research 34, 3 (Sep. 2010), 665–67.
511
including child rearing and support for the elderly, thus reducing the financial
burden on the state and corporations.
In response to the world economic crisis of 2008, the central government
initiated stimulus by swiftly rolling out a US$ 570 billion fiscal stimulus package
to revive growth. This stimulus was not primarily directed toward social
spending, such as financing of medical insurance and social security to raise
disposable income and hence purchasing power of workers and farmers,
encourage consumption and reduce inequality. In fact, barely 20 percent was
allocated for social spending. The largest share went to investment in capital
construction such as high-speed rail, highways and housing projects.
The assumption was twofold: This would provide jobs until exports revived,
and rural migrant workers would support themselves in the interim back in the
village on small agricultural plots. Little was done to support small and
medium-sized labor-intensive enterprises that might have provided jobs and
boosted domestic consumption, thus reducing export dependence.
China’s leaders belatedly recognized that a key to decreasing export
dependence lay in raising consumption of working people through redistri-
bution of a larger share of income from capital to employees, including the
extension of welfare provisions to rural migrant workers and to village-based
farmers. From 2005 efforts were made to fuel a takeoff of domestic consump-
tion by boosting the disposable income of villagers and urban workers. Early
initiatives included the abolition of agricultural taxes, an increase in govern-
ment procurement prices of agricultural products and investment in rural
infrastructure. From 2009, the state focused on annual increases in the
minimum wage and encouragement of investment in poorer regions, espe-
cially the west (with the Go West program). These measures provided
a certain stimulus to consumption, especially among the rural poor and
rural migrants yet, in the absence of an expansive welfare program fully
incorporating villagers and migrant workers, the intertwined problems of
rural poverty, inequality and precarity continue to hold back Chinese con-
sumption and development.
Slightly improved economic conditions and employment opportunities in
the agricultural sector since 2008 slowed the flow of rural–urban migration,
as shown by rising rural local income (both farm and nonfarm) compared
with migrant labor remittances in household income. Despite the fact that
hundreds of millions of migrants have left the countryside, agricultural
income, while declining steadily as a percentage of rural income, continues
to provide the largest share of rural income even as remittances have risen
steadily since the 1980s (see Fig. 20.2).
512
80
Percentage share of total household income
70
60
Local farm income
50 Local nonfarm income
Migrant labor remittances
40
30
20
10
0
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Year
Figure 20.2. Sources of Rural Household Income
Source: Ho-Fung Hung, The China Boom: Why China Will Not Rule the World (New York:
Columbia University Press, 2016), Fig. 6.6.
This was one factor behind a sudden labor shortage in coastal industry,
leading many economists to conclude that the “Lewis turning point” – that is,
the point at which rural surplus labor was exhausted as a result of
a demographic transition rooted in part in China’s flawed (and in 2015
terminated) one-child family planning policy – had finally arrived.25
It remains debatable whether such a turning point has been reached or is
just imminent. But a tightening of the labor market was reflected in the
steady state-mandated increase in China’s minimum wage which has driven
the increase in manufacturing wages since 2005. The livelihood of workers
was further protected by a New Labor Contract Law implemented in 2008.
Despite sporadic enforcement by local governments intent on attracting
investment, it became a weapon workers could sometimes wield to win
concessions from employers.
Beginning in 2010, a wave of labor unrest, including strikes, riots and
worker suicides, swept through China’s industrial sunbelt in the south,
impacting the largest international companies, notably Honda, Walmart,
25 Cai Fang and Du Yang (eds.), The China Population and Labor Yearbook, vol. I,
The Approaching Lewis Turning Point and Its Policy Implications (Leiden: Brill, 2009).
513
Apple and electronics manufacturer Foxconn. With unrest widely reported

in Chinese and foreign media, and with pressures from the Guangdong
Federation of Labor, a number of global companies made significant wage
concessions. In this and other instances, the Chinese state countenanced
unrest at individual plants and sometimes pressured employers to ensure
limited worker gains. At the same time, the state moved aggressively to
prevent sustained movements or regional or national unrest by denying
protesters the opportunity to extend demands across an entire city, region
or industry. The All China Federation of Labor Unions, the agency
of government–corporate power, retained a monopoly on representation,
with rare exceptions wielding power in support of management. In spring
2011, the National People’s Congress approved a new five-year plan that
pledged to raise workers’ wages as a share of GDP and enhance social and
workplace protection of workers. The results include sustained annual
hikes in the minimum wage at a time when labor availability has begun
to decline. The bedrock of China’s state capitalism, however, remains
cooperation among foreign enterprises, the local Chinese state and the
unions under circumstances in which workers are denied the rights to
collective bargaining, to strike and to formation of independent unions.
The state has simultaneously strengthened its legal codes while pressuring
aggrieved workers and other protesters to take their individual cases off the
streets and to the courts, even while denying workers the power inherent in
class-action suits.
China’s economic dynamism has made possible its resurgence to the
position of number 2 in world GDP (it of course ranks far lower in per capita
GDP) and a major economic power measured by trade, investment and
infrastructure construction throughout the Asia-Pacific and beyond. It has
also made possible the reduction of absolute poverty and an advance to
lower-middle-income status while reversing the long-term trend toward
rising income inequality each year since 2008.26 Despite these gains, in
contrast to Taiwan, Korea, Hong Kong and Singapore, all of which rose
within a few decades to the ranks of high-income countries, China has barely
achieved middle-income status in per capita terms, US$ 14,238 in 2015 PPP
terms.27 It has also experienced higher levels of income inequality than any of
the Four Tigers.
26 See Riskin, “China’s Human Development After Socialism,” in this volume.

27 World Bank, GDP Per Capita PPP (2015), data.worldbank.org/indicator/NY.GDP.PCAP
.PP.CD?order=wbapi_data_value_2014±wbapi_data_value±wbapi_data_value-last
&sort=desc.
514
China labor for

Non-China components
labor to and assembly
manufacture 1.8%
components
3.5%
Raw materials
21.9% Apple’s
gross profits
Suppliers 58.5%
gross profits
14.3%
Figure 20.3. Breakdown of Profits on the Apple iPhone.

Source: Adapted from Kenneth L. Kraemer, Greg Linden and Jason Dedrick, “Capturing
Value in Global Networks: Apple’s iPad and iPhone,” 2011, econ.sciences-po.fr/sites/def
ault/files/file/Value_iPad_iPhone.pdf, p. 5.
China’s performance as an industrial power and the world’s leading exporter

rests heavily on the advanced technologies of Japan, Korea, the United States
and other nations. This is illustrated by its assembly of the iPhone, the world’s
most lucrative consumer product, and other electronic goods. While the
electronic object in your pocket informs you that it was “made in China,”
Chinese workers capture only a few dollars per iPhone (1.8 percent) of the price.
Most important is that, while final assembly and some manufacturing took
place in China, the highest share of value-added and profit goes to Japanese and
Korean firms which produced such critical and technologically sophisticated
components as the touch screen and microprocessors in South Korea, Japan and
Malaysia, and the manufacture and assembly of the iPhone and many other
electronic products are organized in China by the Taiwanese firm, Foxconn, the
world’s largest industrial employer. This illustrates the fact that China’s efforts
to gain control of the commanding heights of technology are still in their early
stages. Above all, Apple, which produces no part of the final product, captures
the overwhelming share of profits as the designer and marketer, an extraordin-
ary 58.5 percent of the price of an iPhone (see Fig. 20.3).28
28 Jenny Chan and Mark Selden, “China’s Rural Migrant Workers and Labour Politics,” in
Yingjie Guo (ed.), Handbook on Class and Social Stratification in China (Cheltenham, UK:
Edward Elgar, 2016), 362–82.
515
China has, however, emerged as a major regional economy and the biggest
trading partner of most Asian and Pacific countries. It also provides many
neighboring countries with investment, loans and other economic assistance,
notably through infrastructure developments involving railroads, roads,
dams, harbors and other projects that link recipients, expand trade and
form part of a grandiose Chinese vision of a New Silk Road to strengthen
land and water links from Asia to Europe and beyond.
For all China’s expansive economic and financial position in the Asia-
Pacific and beyond, far from significantly challenging the US-led world
economic order, its resurgence since the 1970s has been framed within the
parameters of the capitalist world system dominated by the United States.
Not only does the dollar reign supreme but US, European and Japanese
corporations and consumers are major beneficiaries of Chinese growth and
trade. China is symbiotically bound to the United States not only by its
30 percent share of Chinese exports (including reexports from Hong Kong)
but also by China’s purchase of US$ 2 trillion of treasury bonds, which
underwrites continued massive US trade deficits. China also adheres to
rules largely dictated by the United States, ranging from the International
Monetary Fund (IMF) and World Bank to the WTO and UNCLOS (United
Nations Convention on the Law of the Sea).
China’s resurgence can be dated from the 1949 reunification of the country
(with the important exception of Taiwan) and the end of foreign invasion
under the PRC. It continued with socialist construction in the 1950s and
accelerated from the 1970s with China’s formal entry into the ranks of the
great powers (a UN Security Council seat and the United States–China
opening) and has been driven by sustained economic growth in the course
of transformation from a collective-socialist model to one that may best
be understood as state-capitalist. That transformation is notable for the
appearance of powerful new social and economic forces as China emerges
as a regional power and makes strides toward becoming a global economic
and trading power. But it is equally striking for the emergence of new social,
economic and environmental contradictions.
If China’s large economy has achieved global reach, its continued devel-
opment is challenged by formidable obstacles including the world’s highest
emissions of greenhouse gases and pollution of air, water and soil so severe as
to threaten its economic and consumption goals, calling into question the
premises of the rush for industrialization and development.
Indeed, the impact of breakneck industrialization on air, water and soil
constitutes a direct challenge to the very growth model that it has pioneered.
516
In response, the state has launched the most ambitious program for curbing
coal production and consumption of oil, natural gas and other sources of
greenhouse gases. Whether the center can enforce the closure of polluting
coal and other mines and implement its ambitious solar- and wind-power
agenda will be critical factors in determining the viability of China’s growth
model.29
We have noted China’s passage from among the most egalitarian nations
to one characterized by extremely unequal patterns of wealth and income
distribution including regions of stark poverty centered in rural areas in
general and western regions in particular. Per capita income of urban resi-
dents in China today is more than three times that of rural residents, and the
per capita income of the wealthiest part of China, the Shanghai region, is
more than five times that of the poorest province, Guizhou.30 Illustrative of
persistent inequality is the fact that average life expectancy in Shanghai, the
wealthiest part of China, was eighty years old, while the figures in Yunnan,
Qinghai and Tibet in the poor western interior are all below seventy,
according to United Nations human development indicators.31 China, in
short, is a nation whose character is shaped by both social class and spatial
contradictions, notably those between capital and labor and between city and
countryside. At the same time, the class structure is masked by scholarly and
official analysis which recognizes only an emerging middle class while deny-
ing the distinctive place of both the very rich and the working-class poor.32 Its
ambitions domestically, regionally and globally may outstrip its capacities.
For more than three decades, a capitalist boom fueling rising incomes as
well as life expectancy has enabled the state to defuse tensions arising from
social cleavages by expanding opportunities and particularly the expectation
of opportunity for the downtrodden while creating a “stability-maintenance”
regime in which local governments buy off and repress contentious collective
actions.33 Facing a new context of economic slowdown and rising social
protest, the Chinese state has thus far maintained a tight grip on power
through a combination of securing the allegiance not only of the prospering
classes but also that of workers and farmers who hope to rise in an expanding
29 John A. Mathews, Greening of Capitalism: How Asia Is Driving the Next Great
Transformation (Stanford: Stanford University Press, 2016).
30 Hung, The China Boom, 92, 94. 31 Ibid., Table 4.1.
32 David S. G. Goodman, Class in Contemporary China (Cambridge: Polity Press,
2014), ch. 4.
33 Ching Kwan Lee and Yonghong Zhang. “The Power of Instability: Unraveling the
Microfoundations of Bargained Authoritarianism in China,” American Journal of
Sociology 118, 6 (2013), 1475–1508.
517
economy and whose isolated protests have focused on immediate gains

rather than being a fundamental challenge to either capital or the power of
the state.34 The issues confronting the 70-million-strong Chinese Communist
Party (CCP) are not, however, confined to the domestic economic and social
spheres but are deeply imbricated with nationalism and China’s growing
global power.
China in Regional and Global Geopolitics

In the three decades following World War II, Asia, and China in
particular, was the storm center of East–West conflict as reflected
in United States–China contention in the Chinese Civil War, the
US–Korean War and the United States–Indochina War. From the early
1960s, the Chinese–Soviet conflict and US stalemate in Indochina paved
the way for a United States–China opening that in turn facilitated
China’s entry on the world political stage and its economic resurgence.
Following its defeat in Indochina in 1975, the United States became
embroiled in successive wars in the Middle East and Central Asia
while, for the first time since the 1840s, East Asia and the western
Pacific entered a period of relative peace.
Is China’s geopolitical resurgence best understood as a new stage in
the historic Chinese empire or Sinocentric regional order which
exercised hegemony throughout much of Asia and the western Pacific
for protracted periods prior to the nineteenth century, or in terms of the
socialist–capitalist conflict shaping the geopolitics of the post-World War II
postcolonial era? The historical regional order with China at its center can
be contrasted with a Westphalian conception rooted in the conflicts among
modern nation-states. We assess China’s geopolitical transformation in
light of the passage from the Chinese–Soviet alliance in the 1950s to
Chinese–Soviet conflict since the 1960s, and from US–Chinese conflict to
the United States–China opening in the 1970s to the new millennium in
which deepening US–Chinese economic and financial ties go hand in hand
with deepening geopolitical competition centered on the western Pacific
and the South China Sea. China’s attempt in the new millennium to
exercise control of the South China Sea and the Philippines’ lawsuit in
the Permanent Court of Arbitration in The Hague, which successfully
34 Bruce Dickson, The Party’s Dilemma: The Chinese Communist Party’s Strategy for Survival
(Oxford: Oxford University Press, 2016).
518
contested Chinese claims, have taken place against a background of

expanded US naval maneuvers to ensure its hegemonic position in the
region at the center of the Barack Obama administration’s attempted
“pivot to Asia.”
As historian Takeshi Hamashita has argued, dynastic China’s worldview
posited a universalism in which no absolute distinction was drawn between
entities “inside” and “outside” the empire, in contrast to a Westphalian
worldview of competing nations.35 China’s historical worldview is best
represented by concentric circles with the emperor and the capital at the
center, surrounded by directly governed provinces and, at the periphery,
tribute vassals, with others beyond the pale who might eventually become
tributary regions. This world order, at its peak in the sixteenth to eighteenth
centuries, was predicated not on the logic of economic extractions by the
center as in the manner of nineteenth- and twentieth-century imperialism,
but on reciprocity with the center (China) frequently subsidizing the periph-
ery in exchange for fealty demonstrated in tributary missions to the imperial
capital, and preservation of a Sinocentric hegemonic order as the condition
for regional peace. In this system, rulers of tributary states derived legitimacy
from the endorsement of the Chinese emperor, and the loyalty of tributary
states was instrumental to the security and economic welfare of the Chinese
empire. In contrast to Western colonialisms, the Chinese tributary system
was far less intrusive: predicated neither on settler colonialism nor on
domination and transformation of local economies. Nevertheless, Manchu
forces and their Mongol allies greatly expanded the territorial scope of the
Qing empire by the eighteenth century with the conquest of Tibet, Xinjiang
and Mongolia.
This tributary order was destroyed by Western and then Japanese imperi-
alism initiating a century of warfare that destroyed the Qing empire as
a result of foreign invasion and wars (from 1840), followed by internal
rebellions (1860s) and dynastic collapse (1911). It would not be reversed until
the founding of the People’s Republic in 1949, and international recognition
of the PRC as the government of China in the 1970s followed by China’s
expansive role in the world economy and the geopolitics of East Asia and the
western Pacific.
During China’s economic resurgence in the 1980s, Deng Xiaoping
advanced a strategy of lying low (tao guang yang hui), that is, focusing
35 Takeshi Hamashita, China, East Asia and the Global Economy: Regional and Historical
Perspectives, eds. Mark Selden and Linda Grove (London: Routledge, 2008).
519
on economic development and refraining from asserting political and

military power in recognition of the nation’s limited military strength.
In that era, China’s foreign policy pivoted on cooperation with the United
States, at times even serving US geopolitical interests, notably in pressur-
ing the Soviet Union. Right after Deng assumed the leadership mantle,
China went to war with Vietnam, in response to Vietnam’s 1978 invasion of
China-backed Cambodia under the Khmer Rouge. After dealing a blow to
Vietnam and withdrawing its forces, Beijing continued to support the
Khmer Rouge guerrillas resisting the Vietnam-backed government in
Phnom Penh.
Following its defeat in Vietnam in 1975, the United States looked to
China to check the expansion of Vietnam’s influence in Southeast Asia,
which it viewed as a Soviet proxy. China’s war with Vietnam and its
support for Khmer Rouge guerrillas in Cambodia, while serving China’s
interest in competition with the Soviet Union, fit the American post-
Indochina War Asia strategy well.36 In return, the United States supported
China’s developmental goals, in sync with US business interests, and
China’s geopolitical goal of securing the return of Hong Kong from
British rule. This dynamic of United States–China collaboration in the
1980s is reflected in historian Mark Elvin’s recollection of his advocacy
for the autonomy of Hong Kong in the context of the 1997 sovereignty
handover. Contacting President Ronald Reagan through a colleague who
had known him during his time as governor of California, Elvin enquired
“through him whether there was any chance of the US being willing to
apply pressure to help in this effort. The contact worked, and the answer
was unequivocal: there was no chance at all, as doing so would risk
damaging American business interests in China.”37
This collusive relationship between China and the United States (and the
West in general) weakened in the aftermath of the 1989 Tiananmen crack-
down, when US policymakers debated sanctioning China. But after the
collapse of the Soviet Union, China’s leadership solidified relations with
American and global business interests by accelerating market reform and
opening to international investment.38 Major American business interests
formed a formidable lobby that helped the administration of Bill Clinton to
delink the annual renewal of China’s most-favored-nation status from
36 Henry Kissinger, On China (New York: Penguin Book, 2012), chs. 13–14.
37 Mark Elvin, “The Historian as Haruspex,” New Left Review 52 (Jul.–Aug. 2008), 83–109.
38 Hung, The China Boom, ch. 3.
520
human rights consideration,39 opening the road to China’s permanent

most-favored-nation status for the United States and its accession to the
WTO in 2001.
In the late 1990s, China’s growing strength gave it confidence to
challenge US geopolitical supremacy, above all in the western Pacific.
This was manifested first in China’s missile testing over the Taiwan
Strait coinciding with Taiwan’s first democratic presidential election in
1996, and subsequently in China’s increasing assertiveness of sovereignty
over the South China Sea. The United States responded to the first
challenge by sending a carrier group through the Taiwan Strait. The
second challenge culminated in the spy plane incident when a Chinese
fighter jet collided with a US reconnaissance plane over the South China
Sea, leading to the crash of the China fighter jet and the forced landing of
the US spy plane on China’s Hainan Island. But just as United States–China
tensions were building, the US “War on Terror,” triggered by the terrorist
attack of 11 September 2001 and the subsequent Afghanistan and Iraq Wars,
shifted US geopolitical priorities to the Middle East and Afghanistan.
As a result, the George W. Bush era was notable for improved relations
in an effort to secure China’s assistance in addressing many thorny issues in
Asia, notably the North Korea nuclear crisis, rising China–Japan tensions
over the Diaoyu/Senkaku Islands, and South China Sea territorial conflicts
involving China and the Philippines, among others.
With the United States tied down in the Middle East, and with China’s
growing global reach in trade, investment and search for resources, Beijing
became more assertive in projecting its political and military power to
protect its growing overseas interests and challenge the United States’ hege-
monic reach, notably in the western Pacific and the South China Sea, but also
extending to regions far from its historical periphery including Africa, Latin
America and Central Asia.
The connection between the global expansion of Chinese capital and
China’s desire to expand its military power regionally and globally is best
articulated in the 2013 National Defense White Paper that stated explicitly for
the first time that protecting China’s overseas interests had become a core
mission of the People’s Liberation Army, as
[w]ith the gradual integration of China’s economy into the world economic
system, overseas interests have become an integral component of China’s
39 David M. Lampton, “America’s China Policy in the Age of the Finance Minister:
Clinton Ends Linkage,” China Quarterly 139 (Sep. 1994), 611–29.
521
national interests. Security issues are increasingly prominent, involving

overseas energy and resources, strategic sea lines of communication, and
Chinese nationals and legal persons overseas.40
China earlier played an important role in the United States–Korea and United
States–Indochina Wars, in both cases helping to thwart US designs on China’s
borders and demonstrating that China was a military force to be reckoned
with. This reality was reinforced by China’s development of nuclear weapons
in 1964 and air and naval power in recent years. Yet, in contrast to the United
States, during the past half-century China has neither forged strong alliances
nor established extensive overseas military bases.
With the rapid growth of China’s navy and air force and the extension of its
power in the South China Sea, the robust United States–China economic
relationship is now challenged by deepening geopolitical conflict in the
western Pacific. At the same time, the US and Chinese economies remain
deeply integrated, presenting for both Beijing and Washington a dilemma
between conflict and cooperation and posing uncertainty for United
States–China relations that is widely recognized as the most important
bilateral relationship in the international system.
China’s increasing role in challenging and reshaping the economic
and geopolitical order in East Asia and the western Pacific is not
a reincarnation of the historical tributary-trade framework, though it
does restore a measure of centrality to China’s regional position. It is
very much a function of an expansive global trade and investment profile,
the legacies of twentieth-century wars and conflicts, and a changing
regional geopolitical order shaped by the 1982 United Nations
Convention on the Law of the Sea, which transformed what were once
open seas into realms controlled by nations. Particularly striking are the
vast territorial gains of the United States (which has been the major
beneficiary of UNCLOS, although it has refused to ratify the treaty) and
Japan, while China was the major loser among the powers.41
China’s growing regional air and naval presence and territorial claims
are centered in the area of its historical reach. However, where China
was long the sole dominant power in the historic Sinocentric tributary-
trade order through the eighteenth century, it presently encounters
40 Chinese Information Office of the State Council, 2013.

41 Gavan McCormack, “Much Ado over Small Islands: The Sino-Japanese Confrontation
over Senkaku/Diaoyu,” Asia-Pacific Journal 11, 21 (3) (27 May 2013), japanfocus.org/-
Gavan-McCormack/3947/article.html.
522
US power in the Pacific predicated on naval and air superiority rooted in

a network of military bases and alliances that encircles China. It also
encounters other nations, notably Japan and South Korea, which possess
economic, technological and geopolitical strengths as well as far higher
income levels and alliance relationships with the United States. Above
all, the logic of China’s expansive reach, still centered in the regions of
its historical periphery, is constrained by the Westphalian system of
sovereign nation-state economic interests in global capitalism, as well
as post-Cold War networks of alliances. China has emerged as the
dominant trade, investment and construction power throughout the
region, and its military strength grows apace. This is not, however,
a revival of a Sinocentric tribute-trade system; rather it takes place
within the parameters of a Westphalian competition for power with
China and the United States at its center and played by the rules of an
international order that is dominated by the United States through the
world trade system, UNCLOS and the United Nations among other
institutions.
A number of Asian states with deep economic ties to China have
responded to China’s expansive moves in the South China and East China
Seas by strengthening security ties with other regional powers, notably the
United States, but also Japan, Australia, Philippines, Vietnam and India. For
its part, as US–Russian relations grow tense over Ukraine, China and Russia
have sought to strengthen their relationship and in July 2016 engaged in joint
naval exercises.
At the same time, together with European and other nations, with the
exception of the United States and Japan, all the above-mentioned US allies
have responded positively to China’s 2015 initiative to establish the US$
100 billion China-centered Asian Infrastructure Investment Bank (AIIB),
China’s boldest international financial initiative to date. China touts the
bank as financing many projects under the “One Belt, One Road” concept
that Xi Jinping floated in 2013 to build a series of ports, roads and railways to
link China and Europe over maritime and land routes and strengthen
China’s already formidable trade, investment and construction ties with
neighboring states. The AIIB is the first major institutional challenge to the
US-dominated international economic order, one that could both
strengthen China’s trade, infrastructure and investment ties with multiple
nations and also enhance intra-regional ties. With the United States and
Japan as the only powers to oppose the bank, efforts to prevent others from
joining failed. Indeed, China has emerged as the world’s biggest lender to
523
developing countries. China’s Development Bank and the Export–Import

Bank provided US$ 684 billion in loans between 2007 and 2014, more than
the next six international lenders.42 Both the AIIB and China’s defeat at the
International Court of Justice over its territorial claims in the South China
Sea illustrate dimensions of how conflicts are playing out in geopolitical,
financial and trade arenas.
To be sure, multiple challenges await the AIIB and the many infrastructure
projects that China proposes to finance. First, although it is the largest
investor, China is unlikely to dominate the institution as the United States
dominated the Bretton Woods institutions after World War II. For all its
economic and financial power, China lacks the overwhelming economic and
military-political edge to control the AIIB in contrast to US political-
economic supremacy over its Cold War allies in the early postwar years,
when all major rivals and allies were in ruins and the United States financed
the war recovery of its allies. Second is the viability of the ambitious projects
of the One Belt, One Road initiatives, many of which involve politically
unstable regions such as Pakistan and Central Asian states, and areas in which
other regional powers like India have been actively courting, such as Sri
Lanka. With high political risks and competition from China’s geopolitical
rivals, many of these projects, together with the AIIB that is expected to
finance them, could fail.
If China’s most expansive economic and geopolitical initiatives of recent
decades have centered in the Asia-Pacific, in its search for markets, resources
and investment opportunities, it has also extended its reach to Europe,
the Americas and Africa in ways that invite comparison with those of other
nations from the age of imperialism to the present. China is the world
leader in investing not only in African natural resources, but also in land,
and Chinese laborers and farmers as well as managers, by some estimates
1 million people, have moved to Africa. The region could become another
front in US–Chinese conflict as the United States establishes a military posi-
tion throughout the region, with a particular eye on North Africa and the
Middle East.43
Critics have charged China with launching a new imperialism in Africa.
For example, in March 2013, the then governor of the Central Bank of Nigeria,
42 Robert Soutar, “China Becomes World’s Biggest Development Lender,” China

Dialogue (25 May 2016), www.chinadialogue.net/article/show/single/en/8947-China-
becomes-world-s-biggest-development-lender.
43 Nick Turse, Tomorrow’s Battlefield: US Proxy Wars and Secret Ops in Africa (New York:
Dispatch Books, 2015).
524
which has been one of the African countries heavily reliant on Chinese loans
for its development, warned in the Financial Times that, by embracing
China, Africa is “opening itself up to a new form of imperialism.” He also
stated that, “China takes from us primary goods and sells us manufactured
ones. This was also the essence of colonialism.”44 At the same time, China’s
growing African presence has not only stimulated African economies but
also provided alternatives to domination by the old imperial powers, at
times by propping up African dictatorships. In December 2015 Xi Jinping
completed a triumphal Africa tour. Beijing has not limited its African turn
to trade and diplomacy. It also joined forces with international mercenaries
to defend its African interests. In 2014, Erik Prince, the founder and former
CEO of US security firm XE Services (formerly Blackwater), which was
heavily involved in the second US invasion of Iraq, became the chairman of
a Hong Kong-based logistics and risk management firm. The firm, Frontier
Services Group, has close ties and interlocking directors with China’s
biggest state-owned conglomerate, CITIC. Its main business is to provide
security services to Chinese companies throughout Africa.45 China’s
African initiatives as well as its far-reaching New Silk Road projects
well illustrate the distance from the regional tributary-trade order of the
eighteenth century.
In recent decades we note a double movement in which the United
States–China relationship, with its synergies and contradictions, has
become the world’s most important not only in economic and financial
but also in geopolitical terms. This has been a period of China’s resur-
gence and relative US decline, the latter illustrated by successive and
simultaneous costly, destructive and abortive or inconclusive wars in the
Middle East and Central Asia. The United States nevertheless retains by
far the most powerful military machine, the dollar securely holds its
position as the global currency and, together with its strong alliance and
base network and its hegemonic reach, the country continues to shape
the dominant global narrative in the WTO, UNCLOS and the United
Nations, the IMF and the World Bank. Stated differently, for all its
growing power and reach, there is scant evidence that China is on the
44 Lamido Sanusi, “Africa Must Get Real About Chinese Ties,” Financial Times (11 Mar.
2013).
45 Śebastien Le Belzic, “Erik Prince: ‘Je suis en mission pour l’économie chinoise en
Afrique,’” Le Monde (3 Sep. 2015), www.lemonde.fr/afrique/article/2015/03/09/erik-
prince-je-suis-en-mission-pour-l-economie-chinoise-en-afrique_4589827_3212.html#flD
GYo16kUxJSPc0.99.
525
verge of replacing or even significantly challenging the United States as

the dominant global power even as it is squarely positioned to shape
outcomes in the Asia-Pacific.
The Chinese economic boom and the rebound of the Chinese economy
after the global crisis of 2008 that battered the US economy heightened
Beijing’s self-confidence in putting aside Deng Xiaoping’s “lying low”
strategy. The CCP has recently become more aggressive in building
on its economic strengths in Asia and in other developing countries to
challenge both its neighbors and US geopolitical interests head on, as
exemplified by its assertive action regarding the sovereignty disputes
over the South China Sea and over the Diaoyu/Senkaku Islands. With
the Chinese economic boom slowing, and with the international backlash
against China’s military assertiveness in Asia and the Pacific, the United
States has signaled its intentions to strengthen its political, military and
economic ties with countries to balance China’s influence through its
“pivot to Asia” and Trans-Pacific Partnership, even as it faces continuing
military challenges in numerous, seemingly endless Middle Eastern wars.
For its part, a state-capitalist China whose communist party retains a firm
grip on power confronts multiple domestic and international challenges,
but at this writing none that threatens its demise or points the way toward
fundamental political change.
Bibliographical Essay
China’s recent rise as a regional and global geopolitical power can be
traced back to its regional centrality in the early modern world. For
a discussion of this centrality and its loss in 1800–1950 as the background
to China’s contemporary resurgence, see Takeshi Hamashita, China,
East Asia and the Global Economy: Regional and Historical Perspectives,
eds. Mark Selden and Linda Grove (London: Routledge, 2008), and
Giovanni Arrighi, Takeshi Hamashita and Mark Selden (eds.),
The Resurgence of East Asia: 500, 150 and 50 Year Perspectives (London:
Routledge, 2008).
For the dynamics of the rise of the East Asian Tigers during the Cold War
as a prelude to China’s economic boom, see Stephen Haggard, Pathways from
the Periphery: The Politics of Growth in the Newly Industrializing Countries
(Ithaca: Cornell University Press, 1990).
For the nature of contemporary China’s state-capitalist economic
boom, see Barry Naughton, Growing out of the Plan: Chinese Economic
526
Reform, 1978–1993 (Cambridge: Cambridge University Press, 1995);

Barry Naughton, The Chinese Economy: Transitions and Growth
(Cambridge, MA: MIT Press, 2007); Nicholas R. Lardy, Markets over
Mao: The Rise of Private Business in China (Washington, DC: Peterson
Institute for International Economics, 2014); Bruce J. Dickson, Wealth
into Power: The Chinese Communist Party’s Embrace of China’s Private Sector
(New York: Cambridge University Press, 2008); You-tien Hsing, Making
Capitalism in China: The Taiwan Connection (New York: Oxford
University Press, 1998); Susan L. Shirk, The Political Logic of Economic
Reform in China (Berkeley: University of California Press, 1993);
Mark Selden, The Political Economy of Chinese Development (Armonk,
NY: M. E. Sharpe, 1993).
For the nature of state-capitalist transformation and the communist party-
state’s handling of challenges from below and the nature of state-capitalist
transition, see Bruce Dickson, The Party’s Dilemma: The Chinese Communist
Party’s Strategy for Survival (London: Oxford University Press, 2016); Ching
Kwan Lee, Against the Law: Labor Protests in China’s Rustbelt and Sunbelt
(Berkeley: University of California Press, 2007); David S. G. Goodman,
Class in Contemporary China (Cambridge: Polity Press, 2014); Elizabeth Perry
and Mark Selden (eds.), Chinese Society: Change, Conflict and Resistance, 3rd
edn. rev. and enlarged (London: Routledge, 2010); Sebastian Heilmann and
Elizabeth J. Perry (eds.), Mao’s Invisible Hand: The Political Foundations of
Adaptive Governance in China (Cambridge, MA: Harvard University Press,
2011); Dorothy Solinger, States’ Gains, Labor’s Losses: China, France, and
Mexico Choose Global Liaisons, 1980–2000 (Ithaca: Cornell University Press,
2009); Joseph Fewsmith, The Logic and Limits of Political Reform in China
(New York: Cambridge University Press, 2013); Teresa Wright, Accepting
Authoritarianism: State–Society Relations in China’s Reform Era (Stanford:
Stanford University Press, 2013); Ya-sheng Huang, Capitalism with Chinese
Characteristics: Entrepreneurship and the State (Cambridge: Cambridge
University Press, 2008).
For China’s increasing influence in the global economy and global politics
(but also the limits of Chinese growth), see Ho-fung Hung, The China Boom:
Why China Will Not Rule the World (New York: Columbia University Press,
2016); Deborah Brautigam, The Dragon’s Gift: The Real Story of China in Africa
(New York: Oxford University Press, 2011); Kevin Gallagher, The Dragon in the
Room: China and the Future of Latin American Industrialization (Stanford:
Stanford University Press, 2010); Cai Fang and Du Yang (eds.), The China
Population and Labor Yearbook, vol. I, The Approaching Lewis Turning Point and
527
Its Policy Implications (Leiden: Brill, 2009).For nationalist upsurge amidst

China’s geopolitical rise, see Suisheng Zhao, A Nation-State by Construction:
Dynamics of Modern Chinese Nationalism (Stanford: Stanford University Press,
2004); Peter Hays Gries, China’s New Nationalism: Pride, Politics, and Diplomacy
(Berkeley: University of California Press, 2004).
528

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20

China’s Postsocialist Transformation

revenue and public enterprise income, while central government sub-

In this decentralized regime, local governments became a driving force of

At the same time, rampant inﬂation reaching just short of 20 percent in

Imbalance, Crisis, Rebalance

according to government ﬁgures, sectoral overinvestment resulted in

If the economy was registering important gains, China’s pursuit of

23 Hung, The China Boom, Figures 3.5–3.7.

Apple and electronics manufacturer Foxconn. With unrest widely reported

26 See Riskin, “China’s Human Development After Socialism,” in this volume.

China labor for

Figure 20.3. Breakdown of Proﬁts on the Apple iPhone.

China’s performance as an industrial power and the world’s leading exporter

economy and whose isolated protests have focused on immediate gains

China in Regional and Global Geopolitics

contested Chinese claims, have taken place against a background of

on economic development and refraining from asserting political and

human rights consideration,39 opening the road to China’s permanent

national interests. Security issues are increasingly prominent, involving

40 Chinese Information Ofﬁce of the State Council, 2013.

US power in the Paciﬁc predicated on naval and air superiority rooted in

developing countries. China’s Development Bank and the Export–Import

42 Robert Soutar, “China Becomes World’s Biggest Development Lender,” China

verge of replacing or even signiﬁcantly challenging the United States as

Reform, 1978–1993 (Cambridge: Cambridge University Press, 1995);

Its Policy Implications (Leiden: Brill, 2009).For nationalist upsurge amidst

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