Mon | Sep 28, 2020

Earl Bailey | The socio-politics of engaging China

Published:Friday | February 15, 2019 | 12:00 AM
Chinese President Xi Jinping

China’s unique form of political economy, the socialist market economy (SME), is almost 100 years old. In 1992, these political economic principles were substantively integrated into the Chinese Communist Party Congress (CPC). Constitutional changes supported economic reforms, making it the accepted economic, political and social system for China.

China’s ‘opening up’ and ‘rise’ is its successful transitioning from a planned economy to an SME and subsequent integration in global politics and economy. The country’s physical and social infrastructure and economic and financial institutions have undergone monumental transformation.

In 1993, SME’s tenets were further refined at the 15th National Congress of the CPC, heralding a series of at least four major economic reforms:

1. Restructuring and modernising China’s traditional corporate system, deepening the State’s role in shaping corporations to assume national focus. There was emphasis on redefining radical systems of ownerships, rights, and responsibilities. The separation of government roles in corporate administration from enterprise management was clear. Corporations were charged with implementing scientific innovations in management, expanding small businesses, sole proprietorships, and private enterprises.

2. Sector-wide market and price liberalisation took effect through state-controlled mechanisms. Price liberalisation resulted in the abolition of dual-track price systems for valuing means of production (capital, labour, technology, and information). Under this dual-track system, state and private enterprises had different prices for similar products, for example, healthcare and education. This saw significant increases in trade of goods and services, with increased capital inflows to state and private businesses.

3. There were major breakthroughs in macroeconomic regulation, involving the gradual transitioning from direct sector regulation to a state-managed regulatory system. This saw a better integration of planning and use of fiscal monetary policies at the state and national levels to manage sectoral and industry interests. This more accurately aligned sectoral and industry interests to the State. Herein again lies the state indoctrination of industries.

4. There was formulating in the open-economy framework. China deliberately crafted a strategy, with specific timelines on opening up its economy and society to the world as a precursor to its rise! This opening up and rise saw an increased attraction of foreign-direct investment to China over other developing country in the 1990s and early 2000s. Establishing the State’s foreign trade and commerce arm was revolutionary for a traditionally closed economy. This move, orchestrated reform of the country’s foreign-exchange rate system, gave businesses and enterprises more extensive rights to trade liberally. Consequently, China’s foreign-exchange reserves expanded. China’s international visibility increased with membership to international economic and trade organisations (for example, World Trade Organization) simultaneously with revolutionary changes to its centuries-old trade laws and regulations. China began to align itself to international trade rules. National and state laws and regulations were repealed, amended, and abolished, and new government departments and institutions were created.


Under the SME, China has managed to cultivate a dual market system of the gift economy (guanxi), which permeates the country’s social market structure, and on the other hand, market capitalism. The dual markets cancel out the contradiction inherent in the SME, infused with tenets of Confucianism. This is distinct from Western capitalism, which is imbued with Judaeo-Christian principles.

Engaging China requires an understanding of the sociocultural energies dictating how the country operates and its peculiar provincial autonomies. For example, doing business in Wuhan and Beijing is different. There may be one China to engage internationally, but internally, there are respected differences!

Within the SME, individual provinces and regions have autonomy in organising their systems in the State’s interest. Chinese-owned international companies operate in the State’s interests. The ideas and principles of the party and the tenets ofguanxi and capitalism are visible throughout all of China’s private and public institutions. This is the root cause of most of the uncertainties and confusion surrounding Jamaica’s relationship with China and Chinese companies.

Under the SME, China has developed a skilled and expert workforce.

Jamaica needs to assimilate this skill base advantageously to transform its physical infrastructural resources. Instead of feeding suspicions on Chinese involvement in shaping the country’s built environment, the focus should be on technical transfers and expanded trade in non-traditional areas.

Earl Bailey, PhD, is a consultant development planner and a senior lecturer and programme director at the University of Technology, Jamaica. Email feedback to