A Theoretical Revisit to the China’s Marketization : Reflection on Neo-liberal Approach to the Socialist Market Economy with Chinese Characteristics

Abstract

China currently is under the second transformation from the reform and opening-up policy to a new model for economic growth as the China’s economy is reaching limits to growth. The Chinese government strives to build a sustainable economic structure that is based on productivity and domestic consumption unlike the growth pattern so far based on investment and export. It raises questions whether the socialist market economy with Chinese characteristics can continue to work. Post-communist transformations have shown diverse pathways unlike initial predictions of the neo-classical economists as well as universalistic approaches within political science. The China’s marketization has clearly shown the case, building the socialist market economy with Chinese characteristics. The Chinese characteristics are a consequential configuration reflecting the China’s historical legacies and particular conditions in politics and economy. Political logic to sustain the CPC rule has led the Chinese leadership to take the gradualism as well as a dual-track approach. Some theorists still criticize the dislocation between the vibrant market economy and the lagged governance structure. However, the paper contends that China is still under the ongoing process of transformation. Therefore, it may not be proper to explain the Chinese particularism with the typical western model of state-society relations. Simply employing the mainstream theories and concepts developed in the western discipline of economics and political science may not provide a proper explanation upon the working principles of Chinese market economy since it has reflected China’s own conditions in politics, society, and economy. In this context, the paper revisits the debates between Neo-liberalism and Historical institutionalism over the Chinese ways of marketization because it is related to theoretical debates on feasibility and viability of the China’s particularism in its marketization. The paper examines the theoretical debates upon the post-communist transformation in China. Elaborating on diverse pathways of post-communist transformations unlike the Neo-liberalists predictions and prescription, the paper argues that China’s institutional particularity has been evolving toward its own political and socio-economic system. It finally demonstrates that the China’s market economy should not be understood with the typical western model of state-society relationship. The gist of this study is to analyze the processes and mechanisms that have formed the socialist market economy with Chinese characteristics.