The Dark Side of Globalised Production: Economic ‘Rebalancing’ in Contemporary China

Abstract

China’s post-crisis economic performance has been remarkable amongst major economies. Many analysts see China increasingly delinking from the global economy, powered by its domestic growth engine of consumer spending. Such a ‘rebalancing’ is predicated, so the story goes, on a structural shift from reliance on export demand to local demand. This shift, in turn, should be further encouraged: either through deepening economic liberalisation to include the service sector or through redistributive measures to boost demand. This chapter questions the assumptions underlying these ‘rebalancing’ narratives. Instead, it posits that the People’s Republic of China (PRC’s) economy remains deeply imbricated in and responsive to the dynamics of the global capitalist economy. China responded to a severe crisis of its surplus-producing export-manufacturing sectors in 2008–2009 with a debt-financed period of growth, facilitated by the state (and the state-controlled banking sector). But its core manufacturing sectors remain deeply embedded in global production networks (GPNs), under the command and control functions of global lead firms. In these sectors, depressed demand and intense market pressure have severely limited growth potential. Without a return to sustained and generalised profitability in these highly globalised productive sectors, an economic crisis is ultimately likely. The chapter closes by demonstrating the critically important role real estate has come to play in the Chinese political economy, and asks whether an expansion of asset prices in housing far above their underlying values signifies what David Harvey refers to as a ‘switching crisis’ of capital accumulation—from productive to nonproductive investments.