Is the “Beijing Model” Applicable in Other Countries?
Introduction
The Chinese economical development is under close examination of the experts across the world as the country has succeeded to achieve the leading positions across the world based on its economical model. Some experts believe that Chinese model of economical development may be applied by other countries, while the opponents to this position state that this approach may exist under the circumstances available in China. Since second half of the twentieth century, Chinese development is featured with permanent growth with annual rate of 10%. In the contemporary economical society, the GDP in the country is higher up to twelve times that it existed in recent years. Some experts stand to the position that the economical success of the country is linked to the approach taken by the leadership of the state towards facilitation of the liberalism of economy. The model of the Chinese development has received the title by the scholars as Beijing Consensus as opposite approach welcomed by the Western countries. From this perspective, the paper dwells on the consideration of the features of the Beijing Consensus, while the author includes comparison with the Western Consensus. Given the fact that the researchers in this filed challenge the possible application of Chinese model by other emerging countries, the author provides the recommendations as to its usage (Li, Brødsgaard and Jacobsen, 2010).
Overview of Beijing Consensus or Chinese model
The Beijing Consensus implies the alternative model of the economical development, political community of the country, improvement of the welfare of the population of the country for the amendment the global power. The main pillar of Chinese model is grounded on the fact that economical development of the country takes place without political liberalization. This approach is widely supported by the developing countries which stand to the position that the power of the Western countries should be diminished. This notion was presented in 2004 by expert Joshua Cooper Ramo that stated that China attempts to take a leading position in the world by promotion its model in the international arena. According to the expert of this notion, the Beijing Consensus implies that China intends to take innovative and experimental actions which should guide the development of the country to the inevitable success and power. In fact, the leadership of the country makes significant investments in the research and development. This approach of the country has led to the fact that China is the leader in some industries due to the expansion of the export-led growth strategy. At the same time, the country creates a relevant environment for the maintenance of the flow of the foreign direct investment to the country. The presence of the subsidiaries of different giants in the territory of China influences positively the employment level in the country while the countries ensure the creation of the working opportunities for the local population. Meanwhile, it is highly important to note that strategy of China towards the attraction of a major portion of the foreign direct investment has dual meaning. In addition to the fact that country removes several limitations that existed earlier China for the investors, the current business environment is regarded as liberal and friendly one. The investors are reassured in the further economical development of the country and expect the rerun over the investments due to the foreign reserve accumulation of Chinese leadership (Peerenboom, n.d.).
Consequently, the ambiguous approach of the country over the foreign direct investment lies in the fact that China increases the presence of the national companies in the United States and within other developed markets. The leadership of the country states that the foreign direct investment is the major source of the state budget, while the stability of the financial market tin the country is based on the input and output flow of the investments. Meanwhile, the Chinese economical model means that the human resource asset should be composed. Under this statement, one should understand that the leadership of the state should invest in the education which enables the access of the population to understanding technologies and other innovations that influence the development of the national markets. Moreover, the availability of the high-skill workers is highly appreciated by the managers across the world and serves the role of the supplementary factor for the attraction of the foreign direct investment to the country (Jiang, 2011).
The second pillar of the Beijing Consensus implies that the economic theories should be applied for the further improvement of the welfare and living of the population. In this respect, the leadership of China relies on the level of the GDP per capita as the symbol of the welfare of the country and its economical growth. In case it increases within the years, the experts come to the conclusion that it succeeds in the improvement the living of the population. Simultaneously, the internal and foreign policies of China are regarded as focused at the living of the individual as there is an assumption that happy people are indicator of the success. For the purposes of the confirmation of this approach, one may note that China has already managed to diminish the exposure to the poverty in the country and in the Asian region in particular. Besides, the allocation of the financial resources is not equal in the state as a significant amount of people are still have relatively small wages, while the leaders and managers of the companies increase their wealth. With that, the population of China is featured with huge gap between the revenues of the people (Lee, Jee and Eun, 2011).
The last important pillar of Chinese model states that the self-determination of the country should take place in contrast to the United states. The country shows to the world that the power of the United States and its influence should be changed. Given the fact that some emerging markets irrespective of Asian region rely on financial and other forms of assistance that may be provided by the United States, it is possible to state that this country is powerful enough. However, this approach is not supported by the all countries anymore. Due to the fact that Western developed economies require from the developing markets to introduce relevant reforms, these countries prefer to cooperate with China as creditor. China stands to the position that it is better to have trade relations between the countries, while the implementation of democratic principles is not vital for the development of the partners.
Besides, Beijing Consensus should be treated as the opposition to the Washington Consensus. By virtue of its economic model, the leadership of the country showed to the world that the state may develop in the economical dimensions with the realization of the deregulation in the internal market what leads to the integration in the global economy company across the world. At the same time, the Chinese Model of economical development should be regarded as the type of the liberal and oriented at the state capitalism where the state owned enterprises operate in the market. The state companies exist in the most sensitive in financial scope industries as energy, public relations, etc. Accordingly, Chinese consensus have some political implications that should be taken by the other state with the transfer of this model in the national economy. The development of China influences directly the existence of the global imbalances in the world and the entire balance of power. Furthermore, with strengthening its power China undermines the role and position of the United State sin the world. This imbalance is caused by the fact that leadership of the country is engaged in the creation of the numerous economical linkages with the other markets what contributes to the political influence of China. In this regard, it is possible to presume that some countries will prefer to turn to China for the resolution of the conflict or diplomatic assistance as China has the significant power in provident international organizations under current circumstances as the United Nations, the International Monetary Fund, etc.
Consequently, the example of the development of Chinese states shows to the rest of the world that the country may develop without the introduction of the democratic regime in the territory of the state and its legal system in particular. Form one point of view, this approach is criticized due to the spread of the globalization and attempts of the United Nations and others peacekeepers to maintain the stability within the world. However, there is no evidence that the economical development of China with the relevant autocratic regime underlines the stability in the world. In fact the country supports the technological and other forms of progress and development, while the military sphere is not the objective of the country. Therefore, it is possible to state that Beijing Consensus is grounded on the promotion of the economical development, while the autocratic regime should not be resembled with the extension of the political independence and democratization. At the same time, there is an opposite view to this presumption. The author draws attention that the Beijing consensus may unite the developing markets located in the Asian region so that it will influence in the negative way the realization of such policies of the Western countries as limitation of proliferation of usage of nuclear weapons, protection of the human rights and freedoms, etc. In addition to this statement, it is necessary to state that China takes leading position for the accumulation of the foreign reserve. In its reserve, the state has a significant portion of the American dollar while the purchase of the national currency of the European Union is ongoing. Given this fact, it is possible to state that China is collecting for the vital instrument that may be used in future against such powerful giants in the international arena as the United States and the European Union. With that, the experts believe that Beijing Consensus should not be applied in the Asian region by other states as well as this model should not be implemented by the countries which obtain huge investments from China. This means that the Chinese model of economical development should not be realized in African region. In case this approach will be widely supported, the spread of the global imbalances is expected. However, the researchers in this field of study can not come to the conclusion as to whether the Beijing consensus should be treated as notion or concept. Some experts stand to the point that this approach should be regarded as model which is implemented based on the individual circumstances. This position is confirmed with the fact that all states have different backgrounds so that it is impossible to presume that Chinese model will work in other jurisdiction (Hasmath, n.d.).
All countries have different financial resources, human capital and economical power so that the model should be taken accordingly. At the same time, China have a lot of problems regardless of the permanent economical growth and development. The extensive foreign reserve accumulation has resulted in the huge dependence of the country over the value and position of the American dollar in the financial system. In case this currency will lose its value, the world may expect the global financial crash that will undermine the performance and stability of all the world. China is dependent over the American dollar based on the fact that its model contains the direction for the extensive export led-growth strategy, while certain regions are vulnerable t the changes in the economical development of the Chinese state. With that, the author highlights that the countries should not attempt to implement particular model or concept in its economy, while the efforts should be concentrated on the decrease of the dependency between the states (McKinnon, 2010).
Furthermore, the existence of the Beijing Consensus gives rise to some lessons that should be taken by other countries having the intention to introduce this concept in the internal market. The Chinese model is too overwhelmingly concentrated on the human resources, while the political reform is not considered. This model implies that the poor working conditions still exist in the business environment, while the population receive low salaries and the violation of the human rights takes place. The leadership of China do not pay attention to these important problems that influence the composition of the business environment as well. With that, the other countries desiring to implement thChinese model should be focus on the improvement of the social standards covering the introduction of the corporate social responsibility strategies, creation of the minimal labour standards, etc. With that actions, the country will be able to succeed in both sides where one refers to the economical development and second is relevant for the political reforms conducted by the Western countries. Realization of this activity will serve the role of the inevitable support from both sides of the world as Asian region and Western countries. Given the fact that the global imbalances are deepening, it is possible to predict the development of the world in some years, while the power is subject to the rebalance as well (Yaacc, n.d.).
In addition, the further application of the Chinese model by other countries should be grounded on the limited dependence of the country on its export. This lesson is highly important based on the experience of China as the country today faces the necessity to adopt measures from the reduction of its dependence over release of the goods in foreign jurisdictions. The overview of several resources confirm that the leadership of African states favour the Chinese economical model as this region is driven by the desire to improve the welfare of its population. From this perspective it is possible to state the African region is close in its incentives to the drivers of the Chinese model as the founders intended to increase the benefits obtained by the Chinese population. Therefore, the leaders are driven by the ideology rather than by policy goals and political objectives. Thus, the African states may attempt to implement this model, while no one may predict that it will bring the same economical growth that is observed in Chinese region. Furthermore, Chinese model should be adjusted to the national circumstance of every country. In order to define as to whether this approach may be taken by any state, the author would like to draw attention on the next elements that should be improver within its framework. In particular, these elements are the following:
The level of the interference of the Chinese government in the economy of the country is significant. The state authorities have power to regulate the tax regimes and signature of the contracts with the business units coming from the Western jurisdictions (Peerenboom and Bugaric, n.d.). Moreover, the state bodies have huge portion of authority to determine the value of the national currency and its appreciation in the financial system, while the national central bank is quite limited in its activity. Therefore, the level of interference should be decreased in order to add flexibility to the actions of the business units within the territory of the country and in the exercising the duties before the trade partners. In addition, the close interventions in the situation in the financial market is the flaw of Chinese economy while the country can not continue the sterilization as the instrument for the foreign reserve accumulation. The countries having the intention to use Chinese model should take these lessons for the future with the purpose to avoid the mistakes taken by the Chinese leadership. The removal of the flaws will guide the development of any country to the success in economical and financial dimension.
BUSINESS ALLEGIANCE
The Chinese business environment is featured with the high level of accountability and transparency in the actions of the business units. Moreover, the majority of the companies operating in the territory of China are state-owned so that the level of flexibility and freedom for business units is minimal. In this regard, some managers lack motivation for adoption measures that should lead development of the company to successful performance. Therefore, the new model with Chinese pillars should be grounded on the fact that the managers must receive relevant reward for the activity as they are the drivers of the economical agenda of the country (Asongu, n.d.).
CONTROL OF RESOURCES
The state authorities of the country control the flow of the capital across the state. Furthermore, the managers of the business units should report about its activity and amount of the flow of the foreign direct investments. In addition, the financial system is grounded on the extensive foreign reserve accumulation that should be widely controlled. In this regard, the Chinese model should be taken by other countries in case that will not follow the example of China in purchase of one particular currency which will constitute the majors portion of the reserve. Moreover, China is exposed to artificial devaluation of the national currency that is not welcomed by the experts in the financial market. This artificial devaluation may create negative image for the investors and undermine the performance of Chinese business units operating in the national internal market (Williamson, 2012).
The Chinese model of economical development should be treated by society as the alternative path for the realization of the reforms. It is an approach to understanding the existing global order where the new balance is created. Given the fact that Beijing consensus has been formed upon elaboration of the model of the Washington Consensus that experts rely on it as on alternative. This concept may be used by the countries that have not found benefits under current international regime and structure. The experts believe that by virtue of the Chinese consensus one may obtain power in the global arena. Furthermore, the power is seen in the emerging markets as African region and the Middle East. Consequently, there is still no clear understanding of the Chinese model. The Chinese government should be appreciated for the successful realization of the pillars and policies launched by the Western leaders. In fact, China managed to find the balance between the level of the interference of the government and the market. Meanwhile, China is approximately only economy of the world that succeeded to address the spread of the crisis and prevent its intrusion into the national system. The Chinese model as the concept of the economical development is extraordinary as no other country has shown the similar speed of the growth. Regardless the fact that country obtained economical power, its leaders have received the political leverages which may serve the role of the supplementary instruments for the achievement of political objectives in the international relations (Gokcekus and Suzuki, n.d.).
It is clear that the Chinese model is extensively criticized as instruments of the state authorities as sterilization is not supported in the global scale. Meanwhile, the experts do not favour the existence of the combination of the exports and high savings rates. However, it is evident that Chinese model should be considered closely by developing markets as well as they may take some additional lessons for the improvement of the national economical development irrespective of the ignorance of the democratic principles. China represents the example of the successful model of the economical growth and relatively permanent political stability. The development is linked to the Beijing Consensus, while the experts point out on the existence of several flaws in this concept. Form one perspective, this ideology may be taken by such regions as African and other emerging markets located in Asia. However, this strategy should be adjusted to the circumstance of the development and growth of any country. China had the desire to improve its welfare what played the major role in the determination of the vectors of the internal and external policies. In fact, the agenda of the emerging markets differ today while these states may opt out for the Chinese model as the alternative way to the Washington consensus (Yasheng Huang, 2010). Given the fact that the United States and the European Union are losing the positions in the international arena, the cooperation with China is seemed reasonable. With that, the Beijing consensus may be regarded relevant for the other countries upon the removal of the evident flaws that may pose the threat to the functioning of the internal market of the country.
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