Rebalancing China’s Political Economy

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This research project focuses on China’s attempts to transition away from development based on extensive growth that relies on exports, low wages, and environmental exploitation to intensive growth driven by rising investment in new technologies, enhanced wages and skills, and improved worker and environmental protections.

Following the 2008–09 global financial crisis, a broad consensus emerged among Chinese and international policymakers and analysts that China’s development model needed substantial rebalancing. Overreliance on export-led growth, insufficient domestic demand (largely because of low wages), staggering income inequality, massive environmental degradation, and the weak innovative capacity of indigenous firms were all seen as key problems. New priorities reflecting this consensus have been laid out in China’s 12th Five-Year Plan (2011–15) and other policy documents. Special weight rests on boosting technology, consumption, and incomes while expanding public-welfare services and environmental protections. Ultimately, rebalancing China's political economy is crucial not only for China’s sustained socio-economic development, but also for global economic growth and stability.

Nonetheless, progress has been slow on key issues. Important industries have developed technologically, and incomes have been rising. Yet wages remain low for the majority of workers, and income distribution is still highly uneven. Social conflicts, with recurring strikes in key industries, have been mounting as a result. And environmental pollution shows no signs of abating.

This East-West Center project aims to analyze how the rebalancing of China’s political economy is occurring and how this will affect global economic imbalances. The project utilizes integrated research on economic, political, and social change, especially with regard to modern industries and workplaces in the traditional centers of export manufacturing in Chinese coastal provinces and the rapidly emerging industrial centers of inner and western China. The project undertakes interdisciplinary investigations on the nature of China’s emergent capitalism, integrating perspectives from political science, law, labor sociology, and comparative and international political economy.

Selected Publications

Lüthje, Boy, and Christopher A. McNally (2015). China's hidden obstacles to socioeconomic rebalancing. AsiaPacific Issues, No. 120. Honolulu: East-West Center.

McNally, Christopher A. (2014). The evolution and contemporary manifestations of Sino-capitalism. In Uwe Becker, ed. The BRICS and emerging economies in comparative perspective—political economy, liberalisation, and institutional change. London: Routledge, pp. 53-78.

McNally, Christopher A. (2013). Refurbishing state capitalism: A policy analysis of efforts to rebalance China’s political economy. In C.A. McNally and B. Luethje, guest editors. Rebalancing China’s Political Economy. Special issue of the Journal of Contemporary Chinese Affairs.  42(4): 45-71 (German Institute of Global and Area Studies, Hamburg, Germany).

McNally, Christopher A., Boy Luethje, and Tobias ten Brink (2013). Rebalancing China’s emergent capitalism: State power, economic liberalization and social upgrading. In C.A. McNally and B. Luethje, guest editors. Rebalancing China’s Political Economy. Special issue of the Journal of Contemporary Chinese Affairs.  42(4): 3-16 (German Institute of Global and Area Studies, Hamburg, Germany).

McNally, Christopher A. (2011). China’s changing Guanxi capitalism—private entrepreneurs between Leninist control and relentless accumulation. Business and Politics 13(3, August): article 5.

McNally, Christopher A. (2009). Chongqing. In David Pong, J.F. Andrews, J. Beja, F. Christiansen, D. Faure, and A. Finnane, eds. Encyclopedia of modern China (pp. 265–66). Detroit: Charles Scribner’s Sons.

McNally, Christopher A., ed. (2008). China’s emergent political economy—capitalism in the dragon’s lair. London: Routledge.

McNally, Christopher A., Hong Guo, and Guangwei Hu (2007). Entrepreneurship and political guanxi networks in China’s private sector. East-West Center Working Papers, Politics, Governance, and Security Series, No. 19.Honolulu: East-West Center.

McNally, Christopher A. (2006). Insinuations on China's emergent capitalism. East-West Center Working Papers, Politics, Governance, and Security Series, No. 15. Honolulu: East-West Center.

McNally, Christopher A. (2004). Sichuan: Driving capitalist development westward. The China Quarterly 178(June): 426–47.

McNally, Christopher A. (2004). Sichuan: Driving capitalist development westward. In David S.G. Goodman, ed. China's campaign to "Open Up the West: National, Provincial and Local Perspectives (pp. 112–33). Cambridge: Cambridge University Press.

McNally, Christopher A. (2002). China's state-owned enterprises: Thriving or crumbling? AsiaPacific Issues, No. 59. Honolulu: East-West Center.

Collaborating Scholars

Tobias ten Brink, Research Fellow, Max Planck Institute for Social Studies, Cologne, Germany

Gaochao He, Department of Political Science, Sun-Yat Sen University, Guangzhou, China

See all current East-West Center Research Projects.