The Beijing Consensus proposes establishing China as the twenty-first-century model for economic reform in developing countries, emphasizing both China’s innovative and independent decision-making processes. It serves as a direct alternative to the earlier Western prototype of development, the Washington Consensus.
Although the term had existed in the 1990s, talk of the “Beijing Consensus” became common after the 2004 publication of a booklet by Joshua Cooper Ramo, once a partner in the consulting firm of former secretary of state Henry Kissinger. According to the Foreign Policy Centre:
A new Beijing Consensus is emerging with new attitudes to politics, development and the global balance of power. It is driven…by a ruthless willingness to innovate, a strong belief in sovereignty and multilateralism, and a desire to accumulate the tools of “asymmetric power projection.” Though it is often misunderstood as a nascent superpower, China has no intention of entering an arms race. Instead, it is intent on projecting enough “asymmetric power” to limit US political and military action in its region. Through fostering good international relations, it is safeguarding the peaceful environment needed to secure its prosperity, and deterring the attempts of some on the fringes of U.S. politics to turn it into a pariah. (Ramo, 2004)
Ramo argued in the paper that, after the collapse of the Washington Consensus, China acts as a model to developing countries, providing a more equitable paradigm of development. The Washington Consensus had first been devised in 1989 and was most famously set out in a paper by John Williamson at the Peterson Institute for International Economic Studies in Washington, D.C. In Williamson’s view, developing countries should introduce a package of reforms to restart and rejuvenate their economies. The Washington Consensus was promoted through the International Monetary Fund and the World Bank in rescue packages for countries in Latin America and, up to a point, in Africa and Asia during the 1998 Asian economic crisis.
The consensus was labeled, unfairly in Williamson’s view, as market fundamentalism. Its main prescriptions, set out in ten policy guidelines, were to impose fiscal discipline; introduce tax reform, exchange-rate controls, and public-spending restraints; liberalize the regulations for foreign direct investment; and privatize state-owned enterprises. Williamson himself was to acknowledge that naming this raft of proposals the “Washington Consensus” gave it an unwelcome political sheen.
China and India have been the two outstanding countries who have taken a much more selective approach to the ideas as originally set out in the Washington Consensus. They have introduced fiscal controls and liberalized foreign investment policy. China in particular has become one of the world’s largest, and most open, places for foreign direct investment, with over half a million joint ventures or wholly owned foreign ventures by the end of 2007. It has undertaken reforms of its state-owned enterprises, particularly since the 1990s under the leadership of Jiang Zemin and Zhu Rongji. According to the 2005 Organization for Economic Cooperation and Development (OECD) report on China, over half of China’s gross domestic product (GDP) growth can now be attributed to the private sector.
But in other areas, China has pursued a unique path, maintaining a very high level of state control. It has not allowed the convertibility of Chinese currency into other foreign currencies, and, while it has loosened up controls of capital outflows from China since 2005, it has maintained strict limits on how much can be used abroad. Political control from the Communist Party (through the State Council) on approving all major inward and outward investments remains strong, as does management of macroeconomic policy.
Ramo’s argument that China’s development model could be generalized to other developing nations was articulated at a time when the United States, under the Bush presidency, was suffering a decline in prestige and influence, particularly in Asia. The need for an alternative model therefore was on many policy makers’ minds. Ramo recognized the ongoing and dynamic process of innovation in the Chinese system, something that had been there since the Deng Xiaoping (1904–1997) era, with its emphasis on making practice the main criterion for policy, and willingness to experiment in order to work out what might best fit China’s circumstances. Ramo also argued that China’s emphasis on maintaining the sovereignty and independence of its own decision-making processes in the economic and financial sector was also very important.
Whether this adds up to a specific model that is relevant to other countries, rather than just blandly appealing to their nationalistic aspirations, is another matter. Many would argue that China’s economy, with its mix of inward and outward investment, agriculture and heavy industry, developed and undeveloped areas, and wealth and poverty, is so complex and unique that it offers no real framework to apply anywhere else. And even as a model for China, it sometimes lacks coherency. Countries in the Asian region have evidently been attracted by the ability of the Chinese model to deliver high levels of GDP growth, but whether they would be interested in the social and environmental costs of this is another matter.
At the heart of the Beijing Consensus is perhaps something that is not so new—the desire, both within and outside China, to act as a leader and role model for the developing world. This has been apparent before, when China presented itself as the head of nonaligned countries in the 1950s and 1960s, even during a period of increasing isolation, and again in the early 1970s, when Mao Zedong developed the theory of the Three Worlds, promoting China as the leader of that “third world.” Such a role is supported by many developing countries if only because it breaks up the monopoly on international influence and power exercised by the developed world in general, and the United States in particular. Moving beyond this to articulate how Chinese economic policy making and planning might be of use to other countries has proven far more difficult. The crisis in the global financial system from 2008 onward makes confident talk of any particular kind of model even more contentious.
Further Reading
Gresh, A. (2008, November). Understanding the Beijing consensus. Le Monde diplomatique [Diplomatic World]. Retrieved February 9, 2009, from http://mondediplo.com/2008/11/03beijingconsensus
Ramo, J. C. (2004). The Beijing consensus. London: The Foreign Policy Centre. Retrieved February 9, 2009, from http://fpc.org.uk/fsblob/244.pdf
The “Washington Consensus” and “Beijing Consensus.” (n.d.). The People’s Daily. Retrieved February 9, 2009, from http://english.peopledaily.com.cn/200506/18/eng20050618_190947.html
Source: Brown, Kerry. (2009). Beijing Consensus. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 170–171. Great Barrington, MA: Berkshire Publishing.
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