Reform and Openess in China

In Gallagher’s study on China’s “reform and openness”, we see the great degree to which economic reforms and political liberalization are not necessarily linked. China’s political reforms essentially attempt to facilitate economic development and not democratization. They serve to improve the efficiency of the existing political system and not obliterate it. With a history of devastating wars and chaotic revolutions, it is not surprising that we see China take on a gradual, experimental and accumulative approach rather than employ the shock therapy approach and suffer its paralyzing effects.

FDI liberalization has been employed as a pivotal tool to unleash competitive pressures and allow ideological reformulation. The former minimizes the ability of affected groups to mobilize themselves as a credible counter-force while the latter transforms the debate between public and private industries to one that concerned the nationalistic need to strengthen a Chinese industry to confront foreign competition. By doing so, the Chinese regime retains its legitimacy through “shielding itself from accusations that it has sold out socialism”, justifying that drastic political reforms such as a transition to democracy is not necessary. In the realm of the economy, the debate on socialism and capitalism is clearly not an issue for economic development.

FDI liberalization has demonstrated itself to be less politically destabilizing to a reforming socialist regime in China’s case because it did not directly challenge the most recalcitrant interest groups under socialism. It instead led to the gradual corroding of resistance among competing firms on the regional and local level and even among state enterprises which experience losing out on the chance to gain capital and technology from FDI’s intervention.

The only political reforms implemented did not serve the goals of obliterating the existing political system but assist economic reforms. Political reforms within the Chinese Bureaucracy initiated by Deng such as extensive administrative and fiscal decentralization shifted formal authorities from the central government to lower-level governments. This led to a massive entry of new business entities supported by various governments in the form of collaboration between retired bureaucrats and the founding entrepreneur. This changed the ex-post behavior of bureaucrats, converting them from bribe takers to shareholders and the ex-tante behavior of bureaucrats (who wish to leap from government to business) to be more concerned about local economic growth in order to create more opportunities for local business to flourish. Such reforms within the Chinese Bureaucracy aided economic reforms while keeping the socialist party ideology intact.

The successes of the economic reforms experienced in China also places the socialist government in an advantageous position of exercising eudaemonic legitimacy- a mode of legitimacy where the regime justifies its rule by successful economic performance and provision of economic benefits to the individuals in society. In China’s case, this exchange of material gain for a conviction in the worthiness of the existing political order has preserved the Chinese Communist Policy and put a temporary halt to thoughts on political liberalization. For the long term, however, it is not only difficult to maintain economic success but also to distribute these gains evenly especially among the agrarian population that may generate new social demands and consequences, which will ultimately strain the regime’s governing capacity.