One of the most insightful experts on China and it’s economic structure is Professor Yasheng Huang. Professor Huang teaches international management at the MIT Sloan School of Management and he is a ferocious analyst of the Chinese economy. His most recent book, Capitalism with Chinese Characteristics: Entrepreneurship and the State (New York: Cambridge University Press, 2008) is a must read for anyone interested in understanding how China became the emergent power of the BRICSAM.
Since I’m in the midst of it, I can not provide a final evaluation, but let me take a first cut at this study. There’s a hint early on by Yasheng Huang of the analysis to follow. Yasheng writes: “…- the Chinese economy is so complicated that what appears to be straightforward and obvious on the surface is not at all so once we dig into the details.”
“Is there any reason to think that the general economic success of China has been a result of institutional forces dramatically different from those that have favored growth elsewhere?”
There are two explanations for China’s emergence. The first - now traditional view suggests, according to Yasheng that China’s economic growth was built on partially privatizing SOEs,introducing foreign competition and encouraging new entrepeurship while retaining SOEs. Thus the argument is that China’s rapid economic transformation is a product of reliance on , “unique, context-specific local institutional innovations, such as ownership by the local state of township and village enterprises (TVEs), decentralization and selective financial controls.” The China story in other words fails to rely on the traditional elements of growth - private ownership, property rights security, financial liberalization and reforms of political institutions.
The minority view, but espoused heartily Yasheng Huang and backed up and with strong analytic and empirical work, at least in the initial chapters of this study, is that China is not a ‘unique’ model but relies on exactly the development of traditional institutions and rights that economists and political economists point to in their developmental models. This deep microeconomic analysis of governmental documents reveals answers to many confounding issues anyone interested in the Chinese economic institutions encounters. many of the questions surround classification - are TVEs public or private, when are SOEs capable of being classified as private - and more. In this classification battle note Lenovo (I shall not give the punch line away) , an early example of the classification problem surrounding the ownership question in the Chinese economy.
The bottom line for Yasheng Huang is not that there is any contradiction over the rapid growth of China, either interpretation leads you there but the institutions, the policies responsible for the economic growth are seen to be quite different. The explanation for the poor welfare distribution and the growing income inequality are significantly different. And it raises the debate over democratization, or the lack of, in China once again. The Beijing consensus may be no more than a chimera that may please officials in Beijing only.