China, global capitalism and the quest for legitimacy

Abstract

The widely held view ascribes China’s remarkable economic growth in the 1990s to the communist regime’s gradualist reform policies and illiberal development strategy. This essay challenges that view. The author argues that economic growth became the most important source of legitimacy of the Chinese communist regime in the aftermath of the Global 1989. The Chinese regime adopted a radical efficiency-biased economic reform in the 1990s. Such radical reform regardless of social justice gave rise to rampant corruption and a huge income gap between the rich and poor. Meanwhile, misinterpreting the East Asian growth model, the Chinese regime, eager to drive the economy to grow faster, carried out an externally oriented development strategy that combined export promotion with import liberalization at the expense of autonomous national development. By the late 1990s, both the economic reform and industrial development were stuck in a quagmire, rendering the economic growth difficult to sustain. Its deep concern for legitimacy thus led the Chinese regime to accept harsh terms on economic liberalization in order to secure WTO membership, in the hope of increasing export and FDI on a larger scale to reverse the declining economic momentum.