The Economic Ascent of China and the Potential for Restructuring the Capitalist World-Economy

Paul S Ciccantell,Stephen Bunker

doi:10.5195/jwsr.2004.281

Abstract

The economic ascent of China in the past two decades is the most dramatic change in the capitalist world-economy of this period. Analyses focus on changes in government control of the economy, the availability of low cost workers for export production, the historical characteristics of Chinese economy and society, and the role of the Chinese government as a developmental state. All highlight key parts of Chinas economic ascent, but none addresses what we argue will be the critical component of future sustained economic ascent, if it is to take place in China: the role of raw materials and transport industries as generative sectors. These generative sectors in the most successful historical cases articulate domestic economic development with the creation ofnew systems of international economic and political relations, ultimately restructuring the capitalist world-economy in support of a nations ascent to core status and its ability to challenge the existing hegemon and other ascendant economies for hegemony. China is following the Japanese model of coastal greenfield heavy industrialization as state policies focus on deepening industrialization in steel, shipbuilding, and other heavy industries. However, following the models of earlier ascendant economies does not guarantee success. In this paper, we analyze the efforts underway in China to use steel, coal and other linked industries as driving forces for sustained economic ascent, and the potential consequences of these efforts for China and for the world economy.

Highlights

These generative sectors in the most successful historical cases articulate domestic economic development with the creation of new systems of international economic and political relations, restructuring the capitalist world-economy in support of a nation’s ascent to core status and its ability to challenge the existing hegemon and other ascendant economies for hegemony
Between 1985 and 2002, China’s economy grew by an average of 9.65 per year and China’s exports increased from us$28 billion in 1985 to us$325 billion in 2002. Analyses of this dramatic growth focus on changes in government control of the Chinese economy, the availability of tremendous numbers of low cost workers for export production by Japanese, European, U.S and other transnational corporations, the historical characteristics of the Chinese economy and society, including China’s historical role as the center of the world economy and the role of family business networks in organizing production and trade, and the role of the Chinese government as a developmental state. All of these approaches highlight key parts of China’s economic ascent, but none addresses what we argue will be the critical component of future sustained economic ascent, if it is to take place in China: the role of raw materials and transport industries as generative sectors
From our theoretical and methodological perspective, we focus analytically on a critical set of industries and indicators and on the often highly conflictual process of developing a system of state-sector-firm relations that supports these generative sectors and, via a range of material, economic and sociopolitical mechanisms, the broader process of economic ascent

Summary

Introduction

These generative sectors in the most successful historical cases articulate domestic economic development with the creation of new systems of international economic and political relations, restructuring the capitalist world-economy in support of a nation’s ascent to core status and its ability to challenge the existing hegemon and other ascendant economies for hegemony. Because Japan lacked domestic supplies of metallurgical coal and iron ore, Japanese steel firms could search out and help develop the lowest cost suppliers in the world with access to large scale ocean shipping potential, resulting in significant raw materials cost advantages for Japanese steel firms (Abegglen and Stalk 1985: 73–78).

Results

Conclusion