The history of neoliberalism makes clear that China was an important part of its evolution, but scholars disagree over whether China is neoliberal or not. Because Chinese development was pivotal for enabling Western neoliberalism, this thesis aimed to study the relationship between China and the neoliberal model in the long term. In order to determine if neoliberalism can be used to explain Chinese development, this thesis analyzed the key economic reforms and indicators of neoliberalism in China and the United States decade by decade, from the 1970s to 2010s, as well as extracting themes from interview data based on 15 interviews from foreign entrepreneurs who work in Shanghai or Suzhou. Three research questions were posed in order to determine the long- term evolution of legislation that contributed to the shift of China from a command economy to an economic powerhouse in the capitalist world economy.
The first question posed was, “Does a trend of convergence between ‘Western’
and Chinese political economies exist?” In analyzing economic reforms implemented in China and the United States in parallel from the 1970s to the 2010s decade, I concluded that a convergence between Western and Chinese political economies existed. My conclusion comes from the following key similarities between China and the United States in each decade. There was striking parallelism in the economic situation in United States and China in the 1970s, despite the fact that the countries were completely
different. In short, both countries were committed to political economic models that had
not merged after World War II. Both countries were experiencing dire economic
situations after World War II, and despite both countries’ commitment to patterns of the past, the leadership in China and the United States began to search for other economic alternatives around the same time. Throughout the 1980s and the 1990s, both China and the United States were moving in a clear neoliberal policy direction since the neoliberal elements of privatization, deregulation, cuts in public spending, floating exchange rates, protection of property rights, liberalization of trade and investment, and limits to state power can be seen in China and the United States throughout these two decades. With both countries strongly committed to their overall economic strategy in the 1990s, parallelism between China and the United States can also be seen based on the
flourishing inequality and reduced welfare for citizens. After 2008, both countries at the same time seem to diverge from the neoliberal model, evidenced by policy changes adopted in the 2000s and 2010s to enable states to reassert control over markets and the redirecting of the market economy towards social concerns.
My second research question asked, “If there is a trend, how has it changed over time? As addressed in the previous research question, there was a trend of convergence between Western and Chinese political economies, and this trend has changed in the way that the United States and China were going in a clear neoliberal direction in the 1980s- 1990s, but, after analyzing Chinese and US reforms in the 2000s-2010s decades, I concluded that this neoliberal direction shifted in both countries, and a different kind of model is taking shape in both China and the US that diverges from neoliberalism since the policies being implemented throughout those decades run directly contrary to the core practices of neoliberalism
The final question this thesis set out to answer was, “Is China evolving towards, or away from the neoliberal model? Or rather should a different concept be used?” After analyzing the key indicators of neoliberalism in each decade in the United States and China and extracting themes from the interview data from the foreign entrepreneurs in China, this thesis concludes that China is evolving away from the neoliberal model.
Regarding the question “Should a different concept be used?” I concluded that neoliberalism is the right concept to use. While the policies being implemented in the most recent decades are not neoliberal, the concept of neoliberalism can be used to explain such reforms because the policies implemented run directly contrary to the core practices of neoliberalism. Based on Chinese policies in the 1980s-1990s, China was moving in a neoliberal direction due to the focus on capital accumulation, the expansion of commercial markets, the privileging of corporations, deregulation of labor markets, and dismantling of social protections, but in the 2000s-2010s, we start to see the policies alter in a different, non-neoliberal direction. During this time, the Chinese state maintains a commitment to protect many elements for their citizens, such as the establishment of a new social security system in order to ensure workers’ rights and protect them against market dysfunction. In the 2000s, China began to pay more attention to China’s income distribution system, social services system, energy issues, and the quality of the
environment. The shift in Chinese labor laws in the 2000s signal a departure from
neoliberalism since such developments in labor suggest an end to the era of cheap labour in China and a relatively more optimistic future for Chinese workers due to the increased real wages, better social protection, and pension benefits. Such reforms in China directly contradict a key tenant of neoliberalism, the process of progressive erosion of legal
protections to labor. China’s departure from the neoliberal model is evidenced by policy changes being adopted to enable states to reassert control over markets and the
redirecting of the market economy towards social concerns. Post 2008, the Chinese Government has major influence in the amount and nature of investment in China, particularly in infrastructure and in the selection of key sectors for development.
Continuing to stray from the neoliberal path in the current decade, the Chinese leadership further focuses on the improvement of socialist market economy, ensuring a healthy and lasting development of the economy in order to continuously improve the population’s standard of living, the development of rural economy, and creating new workplaces for the population. The interviews from the foreign entrepreneurs in china further back up the claim that China is diverging from a neoliberal path. The interviews stress how China in the current decade is reasserting control over their markets, focusing on their country domestically, and serving the Chinese people more and more. A key aspect of a
neoliberal path is implementing policies that open up foreign markets, but as addressed in the interview data, in the most recent decades, China has closed their doors to foreign employees, implemented laws putting limitations on importers, closed the market in certain sectors, and established strict regulations on foreign companies.
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