This document provides an overview of neoliberalism in China, beginning with the economic reforms initiated under Deng Xiaoping in 1978. It discusses how China incorporated neoliberal elements like market forces and privatization while maintaining authoritarian centralized control, termed "state neoliberalism." Key aspects summarized include the breakdown of communes and creation of township and village enterprises; corporatization and privatization of state-owned enterprises; rapid urbanization and property development; and China's growing role in global trade and investment. The document also notes potential social and environmental challenges from these reforms and debates around China's trajectory under neoliberal and state capitalist models.

1. Neoliberalism on China and
Beyond
Literature review presentation for SOSC530 Lecture 11
Prepared by Sharon Wong

2. Here we go…
• Neoliberalism “with Chinese Characteristics”
• State Neoliberalism
• Neoliberalism on Trial
• Freedom’s Prospect

3. Neoliberalism “with Chinese
Characteristics”
• Historical Background
• 1978 – political uncertainty due to Mao’s death
• Several years of economic stagnation
• Deng Xiaoping: ECONOMIC REFORMS!
• Coincided with the turn to neoliberal solutions in the U.S. and the
U.K.

4. What are the “Chinese Characteristics”
• Incorporating neoliberal elements with authoritarian
centralized control
• Chile, South Korea, Taiwan, and Singapore already established
the compatibility between authoritarianism and the capitalist
market

5. How?
• Bringing in Market Forces
• Stimulating competition and introducing market
pricing
• Devolution of political-economic power to the regions &
localities
• avoid confrontation with traditional power centers in BJ
• local initiatives could pioneer the way to a new social order
• Opening-up to foreign trade and investment under strict
state supervision
• Putting an end to China’s isolation from the world
market

6. Giving up Egalitarianism?
• Negative! Claimed to be still a long-term goal!
• But… individual and local initiative had to be unleashed
• So as to... ↑ productivity and spark economic growth
• Xiaokang (小康) & “Four Modernizations” (四个现代化)
• Agriculture
• Industry
• Education
• Science and Defense

7. Internal Transformations
• Socialism with Chinese characteristics vis-à-vis Privatization
with Chinese characteristics
• State-manipulated market economy delivering spectacular
economic growth and rising living standards for a significant
proportion of the population > 20 yrs
• State neoliberalization

8. So and Chu’s State Neoliberalism
• Contrasting between China’s experience of neoliberalism, and
that of the North
• A highly contradictory term:
• the party-state: communist and standing on the side of workers
and peasants,
• could not carry out all sorts of neoliberal policies to assault
workers and peasants and undermine their interests

9. General Path
• Singular and unique hold on power by the
Communist Party; at the same time, embraced
economic reforms
• Amass wealth and upgrade its technological
capacities
• So as to
• Better manage internal dissent and defend itself
against external aggression
• Project its power outwards onto its immediate
geopolitical sphere of interest, i.e. East and South-East
Asia

10. Situations before the late 1970s
• Rural and urban dwellers were conferred to their own
sector’s welfare benefits and rights  holding back any
mass rural migration to the cities
• Urban area: SOEs – State-owned enterprises
• Reasonably profitable
• Security of employment with wide range of welfare and pension
benefits
• The iron rice bowl 铁饭碗
• Rural area: Agrarian sector organized to a commune system
• State-owned banks a depository for savings and provided
investment moneys outside of the state budgets

11. In late 1970s and the 1980s
(So and Chu’s State neoliberalism)
• Decollectivization
• dissolution of agriculture commune system to promote “Personal
responsibility system”
• Proletarianization of peasants
• Marketization
• created labor market
• Fiscal decentralization and the weakening of the central
state
• bottom-up revenue-sharing system to build more independent
and powerful local states
• Opening up and spatial differentiation
• open door policy toward foreign investments

12. In the 1980s – Dissolution of agricultural
communes
• Peasants were given the right to use communal lands under
an individualized ‘personal responsibility system’
• could sell surpluses at free market prices
• By the end of 1980s, could lease the land, hire in labor and
sell their products at market prices
• Township village enterprises (TVEs) were created out of the
assets held by the communes and became centers of
• Entrepreneurialism
• Flexible labor practices
• Open market competition

13. The establishments of TVEs
• Constitution of December 1982 - causing the
political and administrative powers turned over
to newly created township and village
governments
• later those governments took possession of the
communes’ industrial assets and restructured them as
TVEs, allowed by legistlation

14. The TVEs
• Capital sources
• Savings by the initial surge in rural incomes
• JV with foreign capital (particularly from HK or through the Chinese
business diaspora)
• Active in rural peripheries of areas liberated for foreign
investment, e.g. Shanghai and Guangdong
• Significances of TVEs
• As proving grounds for reforms Gave dynamism in the economy
during the first 15 years of the reform period (late 1980s to 1990s)
• “Whatever worked with the TVEs could later become the basis of state
policy”
• Surge of development in light industry producing consumer goods for
export  export-led industrialization path (1987)

15. Second wave of neoliberal reforms
• The Tiananmen Incident
• Deng’s violent crackdown indicated neoliberalization in
the economy was not to be accompanied by progress
in the fields of human, civil, or democratic rights
• Another wave:
• Monetary policy became a prime means of control
• More opening to the outside, e.g. Shanghai Pudong
• Democracy of consumption to forestall social
unrest

16. The 1990s
(So and Chu’s State Neoliberalism)
• Strengthening of Managerial capacity
• Cadre responsibility system
• Strengthening of Fiscal capacity
• Tax Sharing Scheme
• The provinces that rely on the central government for revenue
• Debt-financed investments in huge mega-projects

17. “Liberating” the SOEs
• In early 1980s most of China’s phenomenal
growth rate was being powered from outside the
SOE sector
• In 1983s SOEs were allowed to hire ‘contract
workers’ with no social protections and limited
tenure
• Granted managerial autonomy
• Managers could retain a certain proportion of their
profits and sell any surplus they produced over their
targets at free market prices

18. Saving the SOEs
• Short-lived dual pricing system turned out
• Still, SOEs did not flourish
• Fell into debt and had to be supported
• by the central government or
• by the state-owned banks (lending to SOEs on favorable terms
and credits)
• Causing later serious non-performing loans to grew exponentially
in volumes

19. Corporatizing the SOEs
• In 1993, the state “turned targeted large and
medium SOEs into limited liability or shareholding
companies”; some could even offer public issues
of shares
• In 1994, all but the most important of the SOEs
were converted into ‘share-based co-operatives’
• all employees had the nominal right to purchase shares
• By 2002, SOEs accounted for only 14% of total
manufacturing employment relative to the 40 %
share they had held in 1990

20. Foreign Direct Investment
• 1980s – the 5 Special Economic Zones (经济特区)
• Xiamen 厦门
• Shantou 汕头
• Shenzhen 深圳
• Zhuhai 珠海
• Hainandao 海南岛
• Tax holidays, early remittances of profits and
better infrastructure facilities
• Produced goods for export to earn foreign
exchange and to observe foreign technologies
and managerial skills
• > 2/3 FDI came from overseas Chinese (esp. HK
and TW)

21. Bankruptcies of TVEs and SOEs
• More and more ‘open coastal cities’ and ‘open
economic regions’ for FDI
• After 1995 opened the whole country up to FDI
of any type
• Competitive pricing mechanisms took over from
the devolution of power from the central state to
the localities as the core process impelling the
restructuring of the economy
• Bankruptcies of TVEs and SOEs 
Unemployment surged  Labor unrests

22. Huge mega-projects
• Debt-financed investments to transform physical
infrastructures to absorb capital and labor
surpluses and solve labor unrest
• Three Gorges Dam
• New subway systems and highways
• High Speed Railway (HSR)
• The Olympic Games
• Deficit-financed  high risks of fiscal crisis
• Rapid urbanization

23. Rapid Urbanization
• Provides a way to absorb the massive labor
reserves from rural areas
• Provinces and cities engaged in inter-urban
competition
• They resist BJ’s effort to rein in their investments
 have the power to fund their own projects by
selling rights to develop real estate

24. Real-estate development and property
speculation
• Banks and other financial institutions
imprudently funded massive property
developments throughout China
• In 1996 Shanghai bubble burst but resumed even
more vigorously in the late 1990s

25. State-owned Banking System
• Largely state-owned
banking system
expanded rapidly after
1985
• Employees raised from
973,355 to 1,893,957
• Branches raised from
60,785 to 143,796
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
1985 1993

26. State-owned Banking System
• Lots of money went to
failing SOEs
• Creating asset bubbles
• Non-performing loans
• In 2003, a complex
transfer of $45 billion
from its foreign
exchange reserves to 2
big gov’t banks,
0
500
1000
1500
2000
2500
3000
1985 1993
Deposits
Loans

27. Modernization of education of science
• Investment in a definitive strategy of research
and development for both military and civilian
purposes
• Commercial satellite provider
• Foreign corporations transfer a significant
amount of their research and development
activity into China, e.g. Microsoft, Oracle,
Motorola, Siemens, IBM and Intel
• Cheap but skillful labors in China
• Huawei: selling at 1/3 lower than its rivals

28. External Relations
• Foreign Trade: From 7% in 1978 to 40% in 1990
• In 1994, abolished dual currency exchange rate
devaluated the official rate of 50% inducing
massive growth in trade and capital inflows
• By 2002, >40% GDP by FDI
• Export-led development strategy
• Not intended in 1978
• Fully forced after Deng’s southern tour in 1992

29. Connection with HK
• HK’s chaotic entrepreneurial capital attracted by
the cheap labor in Guangdong area in the late
1970s
• Interested in TVEs in rural areas (allowed to build
JV with foreign capitals)
• provided machinery, inputs and the global
marketing
• Emulated by other foreign capitalists, e.g. TW, JP,
S. Korea and the U.S.
• offshore production center

30. Internal Market
• Mid 1990s, attracted foreign capital
• 10% of a billion population constituted a huge
internal market
• Heavy reliance of FDI makes China a special case
different from JP or S. Korea
• Inter-regional trade is weak

31. More Export
• Joining WTO and shifting structures of
international competition
• inevitable realignment of trading relations
• In 1980s, low-value-added production
• In 1990s, low cost but highly skilled labor
attracted value-added ladder of production to
compete with S. Korea, JP, TW , Malaysia and SGP,
e.g. electronics and machine tools
• Causing negative competitive effects on other
countries

32. More Import
• Raw materials and energy
• In 2003, of the world’s production, China took
• 30% Coal
• 36% Steel
• 55% Cement
• Importing from everywhere, including
• Suadi Arabia, Sudan, Iran, Russia, Australia, Brazil,
Argentina and even the U.S.

33. Dominating East and SE Asia
• A regional hegemon with enormous global influence
• Looking like the imperial empires in the nineteenth
century but in economics term
• Slower growth can roil commodity and financial markets
everywhere (e.g. 2004)

34. External outlets for internal surpluses
• Fund the US debt
• Invest overseas to secure position in foreign markets
• E.g. TV assembled in Hungary to assure Europe
markets and N. Carolina to assure the US’s

35. Comparison
(So and Chu’s State Neoliberalism)
• 1980s – Expand private sector
• 1990s – Reducing public sector
• Privatization and corporatization
• Commodification of human services
• Deepening of liberalization

36. The dark side can be…

37. Environmental degradation
• Rural and communal lands were dispossessed and sold
to real-estate development

38. Banking system
• 50% of its loan portfolio is non-performing
• Only way out is by piling up balance of payments surpluses
against the US.
• But conversely, Chinese economic dynamism is held hostage
to US fiscal and monetary policy
• Excessive labor cannot be absorbed there comes a politics of
overt repression

39. Departing from the neoliberal template?
• Massive labor surpluses creating social and political
instability
• Either absorb or violently repress
• The latter, authoritarian
• High fixed capital and excessive production capital and
boom and bust cycle of urban investments
• All of the above require China to act like a Keynesian
state
• Maintain capital & Exchange rate controls

40. Dilemmas
• Chinese business diaspora reabsorbed into the
Chinese polity in 1997 already structured along
capitalistic lines
• The neoliberal rules of international trade set up
through the WTO, which China joined in 2001
• Political demands for liberalization began to
emerge
• Worker protests surfaced in 1986
• Student movement against corruptions and requesting
for greater freedoms climaxed 1989

41. Reconstructing class power?
• Fastest-growing economies at the same time one of the
most unequal societies
• Social inequality was never eradicated during the
revolutionary era
• Regional inequalities have also deepened
• Southern coastal cities vs. northern region
• Uncertain indicator of the constitution of class power
• Wholesale process of proletarianisation

42. Accumulation of wealth
• The privatized SOEs Managers
• Indigenous (土著) capital coming from TVEs
• Real-estate development encouraged by
dispossession
• Speculation in asset values using credit granted
on favorable terms
• Surging consumer culture emerged in the main
urban centers and postmodern culture including
westernization

43. Social Resistances in 1990s
(So and Chu’s State Neoliberalism)
• Cadre-capitalist class formation
• Fusion of political, economic and social capitals
embedded in the local society
• Trickily transforming communal capital into private
capital
• Working class formation
• Workers in the state sector begin to feel like
proletarians in a capitalist
• Peasants discontent
• The middle class intellectuals  the New Left

44. Social Unrests
• Super-exploitation of labor
• Capital accumulated by private and foreign firms comes from unpaid
labor
• Land seizures in rural area
• All manners of protests, ‘many of them violent, have broken out
with increasing frequency across the country in recent months’
• The party is clearly fearful of the potential breakdown in order
and is mobilizing party and police powers to forestall the
proliferation of any general social movement that may arise
• China was the 2nd largest spender of military expenses on the World in
2009

45. The moral claims of the Maoists
• Masses constituted by ‘workers, the peasantry,
the intelligentsia and the national bourgeoisie
whose interests were harmonious with each
other and also with the state’
Vs.
• Massive proletarianisation of workforce, the
breaking of the ‘iron rice bowl’, the evisceration
of social protections, the imposition of user fees,
the creation of a flexible labor market regime,
and the privatization of assets formerly held in
common

46. Harvey’s conclusion…
• China moved towards neoliberalization and the
reconstitution of class power, albeit ‘with distinctly Chinese
characteristics’
• At the same time, moving towards a confluence with the
neoconservative tide in the U.S.
• The authoritarianism
• The appeal to nationalism
• The revival of certain strains of imperialism

47. Turning point: the Retirement of
Jiang (2002)
• The Three Representatives
• 三個代表思想要求中国共产党要：
• 始终代表中国先进社会生产力的发展要求；
• 始终代表中国先进文化的前进方向；
• 始终代表中国最广大人民的根本利益。
• Hu & Wen’s policy
• “Return to the good old days of the 1950s when the
Maoist Party was in full control”

48. So and Chu’s Positive projection vs.
Harvey’s negative conclusion
• The Cadre-capitalist class has failed to capture
the central party-state. Thus, the central party-
state can still uphold the moral high ground of
state socialism
• Punishing Capitalist for tax evasion
• Safety net for peasants by cutting rural taxes
• State intervention of certain areas of capitals
• Develops plans for strategic development and decrees
prices and regulates the movement of capital
• Shares risks and underwrites research and
development

49. So and Chu’s Positive projection vs.
Harvey’s negative conclusion (con’t)
• Actively mobilized the ideology of nationalism
• Defines itself as carrying out a national project to make China strong
and powerful
• A national cohesiveness based on cultural heritage and tradition rather
than hostility toward the outside world
• No excessive nationalism – control anti-Japanese sentiment, restrain
anti-Americanism in the aftermath of the NATO bombing of the
Chinese embassy in Yugoslavia
• Adopts authoritarian policies to discipline labor, suppress
labor protests, and to deactivate civil society
• maintain a favorable environment to attract foreign investment
• facilitate capital accumulation
• seems unavoidable in export-led industrialization
• The way out – State Neoliberalism

50. Emergence of State Neoliberalism
(So and Chu’s State Neoliberalism)
• The late 1990s, began to feel the pains of a
neoliberal economy
• Super-exploitation of labor power
• The World’s most unequal societies
• Environmental degradation
• Leading to discontent and social conflict in
society
• Increasing call to regulate the market
• Growing numbers of labor protests, peasant
demonstrations, social movements, and other large-
scale social disturbances

51. TransitionfromNeoliberalismtoStateNeoliberalismin
the21st Century
(SoandChu’sStateNeoliberalism)
• Building a new socialist countryside and a harmonious society
signaling a change of ideological orientation if the Chinese
state
• State would play a more active role in moderating the
negative impacts of marketization
• Abolishment of agricultural tax
• Increase of rural expenditure by 15% to guarantee minimal living
allowances for farmers
• 87% hike for the health-care budget
• De-commodification of human services
• Promoting the spread of Mimumum Living Standard
Assistance for the rural population

52. Future Trajectory
• 4 possibilities
• Return to socialism
• Moved away from socialism >30 years
• Working class and the peasants are still disorganized
• Return to neoliberalism
• When matured and consolidated its power, will push forward the
neoliberal project
• Move to imperialism
• Great powers will try every means to prevent other states from
challenging its position
• The consolidation of state neoliberalism

53. Consolidation of State Neoliberalism
• The party-state is promoting domestic consumption and
to improve collective consumption and social insurance
• Facing sharp economic downturn and the prospect of
growing social unrest, the part-state has abundant
reasons to move away from neoliberalism to state
neoliberalism
• If going on like this, “China appears to be emerging as the
only poor country that has any chance in the foreseeable
future of subverting the Western-dominated global
hierarchy of wealth”.

54. Let’s go back to the Harvey’s

55. Neoliberalism on Trial
• Stimulating global capital accumulation? Nope!
• Reduction and control of inflation is the only systematic
success neoliberalization can claim
• Only success quoted: Sweden, a Circumscribed
neoliberalization
• Why are so many persuaded and fallen into the trap?

56. Persuading the many
• The volatility of uneven geographical development has
accelerated, permitting certain territories to advance
spectacularly at the expense of others
• Neoliberalization - a huge success from the standpoint of the
upper classes, either restored class power to ruling elites or
created conditions for capitalist class formation
• Spectacular shifts of emphasis under neoliberalizastion giving it
the appearance of incredible dynamism
• the rise of finance and of financial services

57. Main substantive “achievement”
• To redistribute, rather than regenerate, wealth and income
• Through accumulation by dispossession
• Including
• commodification and privatization of land and forceful expulsion
of peasant populations
• Conversion of various forms of property rights
• Suppression of rights to the commons
• Commodification of labor power and the suppression of
alternative forms of production and consumption
• Colonial, neocolonial, and imperial processes of appropriation of
assets
• Monetization of exchange and taxation
• Salve Trade
• Usury, the national debt and the use of the credit system as a
radical means of accumulation by dispossession

58. Achieving accumulation of
dispossession
• Privatization and commodification
• Financialization
• Management and manipulation of crises
• State redistributions
• Cutting expenditure on social welfare
• But increasing spending on surveillance and policing

59. Neoliberal’s evils
• Commodification of Everything
• Cutting powers of trade unions and other working-class
institutions
• Transformation in the spatial and temporal co-ordinates of the
labor market
• Degrading value of the labor
• Environmental Degradations
• Destruction of tropical rain forests due to unrestrained
application of neoliberal principles

60. On Rights
• Theoretically upholding liberalization and freedoms of
individuals
• Actual practices of neoliberalism underpins the restoration or
creation of class power and the results in terms of
impoverishment and environmental degradation

61. Universalism of rights
• Rights  only focus on political economic rights
• Became an imperialists’ tool for westernization
• To accept neoliberal regime of rights is to accept that we have
no alternative except to live under a regime of endless capital
accumulation and economic growth no matter what the
social, ecological, or political consequences

62. UN Charter
• Derivative rights
• Freedoms of speech and expression
• Of education and economic security
• Rights to organize unions
• Enforcing these rights would have posed a serious challenge to
neoliberalism
• Entailing a revolution of great significance in political-economic
practices

63. Freedom’s Prospect
• Roosevelt – excessive market freedoms lay at the root of the
economic and social problems of the 1930s Depression
• Vs.
• Bush – neoliberal freedoms at the center of his political
rhetoric

64. The End of Neoliberalism
• Heavy debts in the capitalist countries, both developed and
developing
• 2 worst-case scenarios from the standpoint of the U.S.
• A short burst of hyper-inflation would provide one way to delete the
outstanding international and consumer debt
• A long-drawn-out period of deflation of the sort that Japan has been
experiencing since 1989.

65. Consolidation of neoconservative
authoritarianism
• Maintaining global hegemony through control over oil
resources
• Fear and insecurity both internally and externally were easily
manipulated for political purposes
• God-given character manifesting destiny of the US to be the
greatest power on earth and as a beacon of freedom, liberty ,
and progress
• Actually the US hegemony is crumbling
• The New Imperialism

66. Alternatives
• Engaging with the plethora of oppositional movements
• Seek to distil from and through their activism the essence of a
broad-based oppositional programme
• Resort to theoretical and practical enquiries into our existing
condition
• Seek to derive alternatives through critical analysis
• Most importantly, initiate dialogue between those taking each
path and thereby to deepen collective understandings and
define more adequate lines of action

67. Oppositional movements
• Different from traditional labor movements
• Not in the form of organized political parties
• Direct relevance to particular issues and constituencies
• Choi Yuen Village
• The Korean Farmers

68. Critical Analysis
• Urging people to respond in class terms: If it looks like class
struggle and acts like class war then we have to name it
unshamedly for what it is
• Shows how and why popular movements are currently bifurcated
• Defining movement types
• Expanded reproduction concerning the exploitation of wage labor and
conditions defining the social wage
• Against accumulation by dispossession
• Points up exploitable contradictions within the neoliberal and
neoconservative agendas
• Monopolization, centralization and internationalization of corporate
and financial power
• Startling increase in class and regional inequalities

69. Critical Analysis (Con’t)
• Discourses to request for broader Rights
• To Life chances, Political association and Good Governance
• For control over production by the direct producers
• To the inviolability and integrity of the human body
• To engate in critique without fear of retaliation
• To a decent and healthy living environment
• To collective control of common property resources
• To the production of space
• To difference

70. Critical Analysis (con’t)
• Argue against the neoconservative assertion of a moral high
ground for its authority and legitimacy
• Criticizing the anti-democratic nature of neoliberalism backed
by the authoritarianism of the neoconservatives that should
surely be the main focus of political struggle

71. To Conclude…
• There is a far, far nobler prospect of freedom to be won
than that which neoliberalism preaches
• There is a far, far worthier system of governance to be
constructed than that which neoconservative allows

72. Movie recommendation
• Inside Job
• http://www.youtube.com/watch?v=XsAFyTZfd4o

73. Thank you!