ThirdWorld Quarterly, Vol. 17, No. 4, pp. 689± 706, 1996 China:developmental state or dysfunctionaldevelopment? SHAUNG BRESLIN Since1978 the Chinese Communist Party ( CCP)leadershiphas implementeda series ofreforms designedto restore the party’ s legitimacyby moving from a politicallyto a moreeconomically mobilised society. This strategy has entailed thegradual dismantling of the instruments of state planning, and their replace- mentwith market mechanisms, in anattempt to increaseeconomic ef® ciencyand productivity.With China’ s internalMaoist model of development and other socialistdevelopmental models now essentially moribund, some withinChina, andeven among the CCP itself,have looked East for inspirationÐ or for aspirations.Where reform in much of Eastern Europe had resulted in a decline inparty authority and the descent into economic chaos, China’ s EastAsian neighboursappeared to provideshining examples of howrapid economic growth couldbe compatible with continued authoritarian government. Whileit is truethat the Chinese reform experiment does contain some similaritieswith the capitalist developmental states ofEast Asia, we should not concludefrom this that China is followinga coherentstrategy of emulating the NICs. China’s developmentaltrajectory has beento a largeextent dysfunctional. Thereare threekey factors here which this paper will explore in detail.The ® rst is theway that political demandsÐ both from within the party± state structure itselfand from other societal groupsÐ have obstructed the formulation of a coherentand effective national economic development strategy. In the words of thetitle of Susan Shirk’ s excellentinterpretation of reform in China, we must assess `Thepolitical logic of economic reform’ . 1 Second,the reform process has resultedin a signi®cant redistribution of economicdecision-making power, primarily from central to local level authori- ties.The central authorities have granted local governments across China varyingdegrees of ®nancialautonomy. In addition, some haveexploited growing internationalcontacts to ® ndfurther sources ofextra-budgetary investment ®nance,or pressured theoretically (quasi) independent banks and enterprises to supportlocal development plans. As aresult,China’ s developmentaltrajectory owesat least as muchto the dysfunctional agglomeration of numerous local initiatives,as itdoes to the plans and strategies of the national level decision- makingelites. Thethird factor is theextent to whichChina’ s externaleconomic interests are nowin¯ uencing developmental strategies and processes. As localauthorities competewith each other (not to mentionother developmental states inEastAsia ShaunG Breslinis atthe Department of Politics,University ofNewcastle uponTyne, Newcastle NE17RU, UK. 0143-6597/96/040689-18$6.00 Ó 1996Third World Quarterly 689 SHAUN GBRESLIN andelsewhere) for investment, there has beena tendencyto emphasise low-cost andlow-regulation advantages to attract labour intensive component assembly investments.As employmentand growth in some areas becomeincreasingly contingenton attracting and retaining such foreign investment, some local authoritieshave abandoned internally de® ned development strategies and pay moreheed to the requirements of Asian investors. While this investment has broughttangible bene® ts tothe Chinese economy, the long-term wisdom of this strategyis morequestionable. At the very least, the dynamic relationship betweenthe local and the international adds a furtherquestion mark over the centralelites’ ability to adopt and enforce coherent national development programmes. Thesethree factors are allinextricably linked. Indeed, there is almostan evolutionaryprocess here.The political constraints on economic strategy in the early1980s in large part contributed to the dysfunctional growth of local economicautonomy in the second half of the decade. This localism not only exacerbatedthe problem of political demands in¯ uencing economic strategy, but has alsoin turnbeen a majorfactor in explaining the importance of international economiccontacts in the 1990s. In short, inter-elite discord generated dysfunc- tionaldevelopment, which in turn generated further unexpected developments whichhave militated against the adoption of any coherent programme or model forreformÐ either internal or external. The Chinese developmentalstate: economicsor politics in command? Inrejecting the Maoist model of development(and Hua Guofeng’ s variationon thetheme between 1976 and 1978), the Chinese leadership initially looked backwardsfor their models to theheyday of Leninist` orthodoxy’. The8th Party Congressof 1956 was takenas agoldenera ofcollective leadership pursuing pragmaticeconomic development strategies which placed economic develop- mentabove class con¯ict, and even allowed for a role(albeit a veryminor role) formarket forces inthe countryside. But1956 was obviouslynot 1978. On onelevel, the economic system thathad helpedgenerate rapid growth before 1956 had lost much of its appeal by 1978. Bothwithin China and in much of therest ofthesocialist world, state planning hadbecome more associated with stagnation than with growth. On anotherlevel, therewere considerable disagreements over how far the CCP couldor should go inabandoningthe past. All groups were ® rm intheir commitment to shoringup the CCP’sgripon power, but there was considerabledisagreement over the practicalitiesof rejecting the past, and on what point an increased role for the marketbecame incompatible with socialist principles. During1984 and 1985 consensus within the elites over the best development strategyhad become severely strained. The success oflimitedmarketisation and increasedinternational contacts through the Special Economic Zones ( SEZs) impressedkey leaders such as thethen Premier, Zhao Ziyang. For these more reformminded leaders, further price reform, economic liberalisation and interna- tionalisationwere the logical way forward. However, others argued that reform hadalready gone too far. In the Autumn of 1985,Chen Yun, one of theoriginal 690 CHINA: DYSFUNCTIONAL DEVELOPMENT? architectsof the post-Mao reforms, issued a strongpublic warning on the dangersof over-rapid development, neglect of state planning and grain pro- duction,and questioned the personal and socialist ethics of some partyof® cials. 2 Zhaowas unpreparedor unable(or both) to pushhis case intheface offairly widespreadand bitter opposition, particularly as heappears to have failed to persuadeDeng Xiaoping to supporthim. Zhao opted instead for a moremoderate andacceptable package of reforms, which included transferring power away fromthe more sceptically inclined central planning and ® nancialinstitutions to theprovinces. Despiteabandoning his formal positions of power,Deng Xiaoping has clearly remainedthe single most dominant ® gurein Chinese politics. Like Deng, Chen Yunand other members ofthe Long March revolutionary generation were also ableto exert considerable political in¯ uence from behind the scenes. This confusingdistribution of power has considerablyimpinged on the freedom of movementof formalpower-holders such as HuYaobang,Zhao Ziyang and Jiang Zemin.3 Theynot only have to consider how the party elders will respond to theirinitiatives, but how Deng Xiaoping will respond to anycriticism from these partyelders. Deng’ s skillat factional management has beena sourceof considerablesuccessÐ at least by his own criteria. He has keptthe party in powerand more or less togetherdespite considerable strains from both within theparty and without. Nevertheless, his political balancing game has impinged onthe smooth evolution of coherent and economically logical policies. If oppositionthreatens to disrupt unity and thus jeopardise the party’ s gripon power,Deng has beenquick to react and abandon (more often postpone until morefavourable times) offensive policies. Furthermore, Deng’ s patronage helpedboth Hu Yaobang and Zhao Ziyang assume theposition of party leader inthe 1980s, but both men also lost this position when Deng sacri® cedtheir politicalcareers forthe sake ofunity. SusanShirk has explainedhow the priorities of maintaining a semblanceof internalparty cohesion and unity has becomesomething of a de®ning character- isticof how the CCP has managedthe process ofreform. To prevent strong oppositionto reform, an ethos of fairness came todominate policy making, or whatShirk calls an ideology of `balancism’. 4 Inpractice, this meant that central decisionmakers chosepolicy options which ensured that no unit or actorlost too much,rather than those which were best for the country as awhole.In short, ratherthan choosing the best policy, decision makers chosethe satis® cing policyÐthe one that did just enough to satisfy and suf® ce. 5 Theimplications of thisapproach to policymaking are enormous.First, there is atendencyto make small incremental changes that are easier toget past obstructionswithin the policy-making elite than coherent and comprehensive reforms.It also means thatyou can back-track on speci® c policyif necessary withoutjeopardising the entire reform process. Second, Shirk notes that there was noreal coherence between reforms indifferent areas. Withindividual agenciesleft to develop their own reforms, the result of this fragmented decision-makingprocess was anumberof unconnected,incoherent, and at times contradictory,reforms. 6 Third,it has alsocreated something akin to a boomand bust cycleÐ or more 691 SHAUN GBRESLIN correctlyan expand and retrench cycle. You Ji suggeststhat Zhao Ziyang advocateda rapidpace of developmentto