After the Beijing Consensus
China’s development model has often been positioned as an alternative to the long-dominant Washington Consensus. Now that China’s economy is sputtering, doubts about the Chinese model’s sustainability are mounting, though a closer look reveals that it never broke the development mold at all.
CAMBRIDGE – For four decades, “Made in China” has been a defining feature of global capitalism. China has manufactured a majority of global exports since 2010, and many countries are emulating its development paradigm. But a wave of disappointing economic news from China has given rise to increasingly gloomy forecasts, with some going so far as to argue that decline is imminent. There has been much speculation about this reversal’s implications for the global economy, but what does it mean for development theory?
China has been the poster child for successful economic development ever since Deng Xiaoping’s reform and opening up, launched in 1978, unleashed a period of unprecedented economic growth that persisted for so long that it appeared immune to business cycles. In just a few decades, China’s per capita income increased 25-fold, lifting 800 million people out of poverty, and its landscape was transformed by massive infrastructure investments, including highways, airports, and the world’s largest network of high-speed trains. By 2010, China had become the world’s second-largest economy, pulling ahead of France, Germany, Japan, and the United Kingdom to nip at the heels of the United States, which some predict it will overtake by 2030.
China did not achieve this by implementing the Washington Consensus, according to which liberal capitalism – democratic governance plus free markets – was the only possible path to prosperity. Instead, China’s authoritarian regime implemented a state-capitalist system that, in contrast to the radical one-size-fits-all “shock therapy” adopted in much of the post-Soviet bloc, embraced an incremental approach based on experimentation and adaptation.
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