How do we explain and evaluate institutional reforms in China?

By Kean Fan Lim, Newcastle University

China is currently engaged in an escalating ‘trade war’ with the USA. That it is now considered an ‘opponent’ by the Trump administration underscores two crucial aspects of Chinese political-economic development since Deng Xiaoping instituted ‘reform and liberalisation’ (gaige kaifang 改革开放) to a largely agrarian and insulated economy in 1978. First, China has become a globally significant economy in large part due to its entwinement with the US economy. At the same time, however, this entwinement accentuates fundamental institutional differences with, if not an explicit divergence from, American-styled free market capitalism. These differences could be explained from three angles.

The first perspective is a straightforward echo of Francis Fukuyama’s ‘end of history’ thesis: any difference is only temporary and will inevitably converge with the path of liberal markets and political democracy. The second perspective can be termed ‘Chinese exceptionalism’, which views political-economic development as integral to an internally coherent, historically transcendental and hence inimitable ‘China’. The third perspective – and one that is intrinsically open-ended – is that of geographical political economy. Eschewing the teleological and reductionist bases of the first two perspectives, it construes institutional reforms and change at the national level as constituted by developments at different geographical scales (e.g. commune, county, city, province, the supranational), and because relations between these scales differ significantly when viewed simultaneously across the country, historical analysis becomes problematised and has to be reassessed on the premise of inter-scalar relations. This is the central focus of my latest book, On Shifting Foundations: State Rescaling, Policy Experimentation and Economic Restructuring in Post-1949 China (RGS-IBG Book Series).

To understand how China is co-existing with the global system of capitalism, the book begins with an emergent geographical phenomenon – the proliferation of what are officially termed as “nationally strategic new areas” (国家战略新区). Following the success of five Special Economic Zones in the 1980s, the Chinese state designated three intra-urban “new areas” in Shanghai, Tianjin and Chongqing between 1990 and 2010. Each new area was delegated the power to ‘move first and experiment first’ (xianxing xianshi quan 先行先试权) with exploratory socioeconomic reforms deemed to be of national significance.  ‘New areas’ proliferated after Xi Jinping became leader of the CPC in 2012 and, at the time writing, 19 ‘new areas’ have been designated (see Figure 1). Why is it important to explain and evaluate policy experimentation, which represents tentative attempts at change, in these ‘new areas’?

Experimenting with change: China’s “nationally strategic new areas”, 1990-2016. Source: Reproduced from Lim (2019: 3)
Experimenting with change: China’s “nationally strategic new areas”, 1990-2016
    Source: Reproduced from Lim (2019: 3)

The answer, as argued in the book, is because these policies reveal instability in specific domains of the national regulatory structure in China. In other words, it is underlying structural stress that drives policy reforms. The fast-expanding number of ‘new areas’ over the past decade could, therefore, be interpreted as an indirect acknowledgement of substantial stress on national-level regulation. Understanding how place-specific policy experimentation addresses these problems thereby suggests the extent to which true foundational change is possible at the national scale

Two case studies of “nationally strategic new areas” are presented in the book. Chapters 4 and 5 examine the formation of Hengqin and Qianhai New Areas, which preceded the eventual designation of Nansha New Area in the Pearl River Delta city-region, while Chapters 6 and 7 foreground and evaluate the formation of Liangjiang New Area in the interior municipality of Chongqing.  My aim was to ascertain how the vastly different methods of policy experimentation in each of the case studies could be considered ‘nationally strategic’. The chapters explain how and why subnational actors lobbied the central government for the power to tentatively reform national-level institutions. For this reason, no preconceived parameters for comparisons between each ‘new area’ were derived and I chose not to benchmark the developments in each area against a stylised model (e.g., that of a ‘variety of capitalism’).

This comparative approach offered greater flexibility to tease out the connections between state rescaling, policy experimentation and institutional path dependency. It departs from prevailing narratives in the Chinese media and academic circles that compare one ‘nationally strategic new area’ with another based on some ‘objective’ parameters (e.g., income, geographical extent, population etc.). The latter approach appeared to be missing a crucial point: each new area contains experimental reforms that are set within its immediate geographical–historical context, but concurrently address specific national-level structural constraints. And it was through assessing these reforms in tandem that contradictions pertaining to national-scale restructuring became apparent. Tracing the source of differences between each new area to the foundational institutions of the Communist Party of China (CPC) offered insight into the regulatory tensions underpinning China’s self-proclaimed transition to a ‘socialist market economy’.

This geographical political economy approach could be read, in turn, as a foil to the discursive grandstanding of the current Xi Jinping leadership: against the lofty ambitions of attaining the ‘China Dream’, the policy evaluations and geo-historical analysis in my book offer concrete evidence about the difficulties of effecting change within a regulatory structure primed for reproducing party survival since its inception in 1949. Yet it is also for this reason, as the Trump administration is finding out, why a ‘trade war’ will not accelerate further liberalisation of the Chinese economy.

About the author: Dr. Kean Fan Lim is Lecturer in Economic Geography at the Centre for Urban and Regional Development Studies (CURDS), School of Geography, Politics and Sociology, Newcastle University.

Kean Fan Lim. (2019). On Shifting Foundations: State Rescaling, Policy Experimentation and Economic Restructuring in Post-1949 China. RGS-IBG Book Series/Wiley.

Leave a Reply or Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s