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June 21, 2010: Dr. Christopher A. McNally

(Click to enlarge) Dr. Christopher A. McNally discusses the differences between Sino-Capitalism and Anglo-American Captialism.

Rising Frictions in U.S.-China Relations: Sino-Capitalism versus Anglo-American Capitalism

 

(Washington D.C.) June 21–The world’s largest trading power, China, has developed its own form of capitalist political economy, “Sino-Capitalism,” which is already global in reach and may challenge the Anglo-American capitalist system. In this program, Dr. Christopher A. McNally, a fellow with the East-West Center, explained that Sino-Capitalism is quite different from its western version and is characterized by a reliance on informal business networks, guidance from the state and socialist and imperial influences. The U.S. economy is currently heavily intertwined with the Chinese economy and must manage the economic relationship carefully as China continues to develop its role in the global economy and the global economy continues to be dependent on the health and stability of the Chinese economy.

 

The Sino-Capitalist political economy system has origins which can be traced back to the entrepreneurial overseas Chinese communities who established a network of businesses in the Asian region after World War II. These networks were brought back to mainland China, where they developed from the bottom up during the reforms of the late 1970s. This form of capitalism is directed solely by the Chinese Communist Party (CCP) and is thriving, in part, because policies foster economic expansion, which then bolster CCP legitimacy; these actions then loop and repeat. China’s imperial history can also be used to describe this system where the state is dominant and the citizens are subservient to its policies. However, Sino-Capitalism is still in a transitional phase. Dr. McNally explained that the lack of legal regulation in China requires businesses to develop good relations with the CCP, but a slowly emerging capitalist class could challenge the state’s ability to make or implement economic policies.

 

As China continues its rapid growth, many are dependent on its actions due to the globalized nature of the international system. Dr. McNally stated that since 2000, the United States and China have formed a symbiotic relationship, which some have called “Chimerica.” Because China is a large saver-nation and an exporter of capital and the United States is a large consumer-nation, the United States purchases Chinese goods and China, in turn, finances U.S. spending and accumulation of debt. With tensions rising between the two countries, the larger question is whether the two types of capitalism will continue their symbiotic relationship or clash. Dr. McNally argues that this economic partnership will continue due to the importance of the existing “vendor relationship.”

While the U.S.-China economic relationship is transitioning from one where China is asymmetrically dependent on the United States to one of mutual interdependence, both countries must carefully review their policies to address different interests and perceptions. Dr. McNally notes that the CCP’s lack of regard for the effects its policies on the balance of the global system, its lack of trust in self-sustained markets and fondness for stability must be taken into consideration. As wealth shifts from West to East, the United States must analyze the implications of this transition and eventually choose between accepting China’s growing influence in the global economic system or preventing further integration with China in an effort to maintain its economic influence. 

 

Christopher A. McNally is a fellow at the East-West Center who is studying the interests, institutions, and ideas underlying formations of capitalism. His current research focuses on contemporary varieties of capitalism, in particular, the nature and logic of China’s capitalist transition. Dr. McNally is also working on a book project that studies the implications of China’s economic renaissance on the global order. Previously, he has held fellowships, conducting fieldwork and research, at the Asia Research Centre in West Australia, the Institute of Asia Pacific Studies at the Chinese University of Hong Kong and at the Shanghai Academy of Social Sciences. Dr. McNally has edited three volumes, including an examination of China’s political economy, China’s Emergent Political Economy – Capitalism in the Dragon’s Lair (Routledge, 2008). Additionally, he has published many book chapters, policy analyses, editorials, and articles in journals such as The China Quarterly , Asian Affairs , and Comparative Social Research. Dr. McNally received his Ph.D. in political science from the University of Washington in Seattle.

 

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