Achievements and challenges of the Chinese model of Capitalism - How much can be explained by Confucianism?

Nielsen, Klaus (2017) Achievements and challenges of the Chinese model of Capitalism - How much can be explained by Confucianism? In: Hanappi, H. and Katsikides, S. and Scholz-Wäckerle, M. (eds.) Evolutionary Political Economy in Action: A Cyprus Symposium. Routledge Advances in Heterodox Economics. London, UK and New York, U.S.: Routledge, pp. 74-91. ISBN 9781138204119.

Abstract

Since the economic reforms in the late 1970s, China has experienced continuous high growth rates and a transformation of a historically unseen scale and scope. Hundreds of million people have been lifted out of poverty and the material infrastructure has undergone an astonishing renewal. Growth rates were maintained after 2007 by means of a massive fiscal stimulus programme. There is certainly potential for continued high growth rates but major challenges are on the horizon. China will experience the most radical demographic change in the next decades with an enormous rise in dependency rates in the next 30-40 years. China face enormous environmental and social challenges with air pollution, toxic rivers, weak food security, huge income inequality, exploitation of workers, lack of social security and a highly inefficient health system. Further, corruption is endemic, not the least in the form of land seizures by local government officials. The challenges are caused by outdated and inefficient institutions, such as weak property rights, the system of fixed residency (hukou), and a politicized legal system, which are only partly and imperfectly offset by benevolent discretionary action by the central leadership. This chapter takes a cultural economic approach in an analysis of these achievements and challenges. It is assumed that everywhere economic action and business practices are heavily influenced by the taken-for-granted effects of deep-rooted cultural characteristics. In this chapter it is analysed to what extent the deep-rooted norms and values of Confucianism impacts on economic relations and the behaviour of economic agents in China today. It is assumed that basic Confucian values such as the importance of the family, group mentality, stability, loyalty to superiors, paternalism and reciprocity underpin business practices and economic governance The chapter aims at an interpretation of the achievements and challenges of the Chinese model of capitalism which stresses the role of Confucian culture underpinning the growth process. Further, the chapter analyses to what extent Confucianism is at odds with the requirements and pressures of the modernization of Chinese society as claimed by Max Weber in his seminal book ‘The Religion of China’. In this chapter, we argue that although the impact of Confucianism is ambiguous it has mostly facilitated and supported the emergence of the highly successful capitalism in China. However, the ongoing modernization of China puts pressure on the Confucian cultural heritage. New middle class norms stress quality of life and self-determination in ways that challenges the behavioural norms. Further, the introduction of a full blown capitalist economy, has led to business scandals, exploitation, corruption and corporate excesses. The widespread dissent, protests and even riots that have emerged in recent years can be interpreted as anger over violations of basic Confucian values. Together, the protests inspired by the Confucian heritage and the emerging individualism and middle class norms put pressure on the current model of development.

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