China’s economic rise is in part thanks to its political elites
- Western observers tend to attribute China’s rapid growth to market reforms, but this downplays the crucial role of the state as a driver of economic success
- China’s trajectory highlights the power of a capable, dynamic political elite to drive prosperity
This is partly because it is hard to measure the contribution of political elites to a country’s economic development.
While Chinese elites maintain a tight grip on state institutions, the index clearly recognises their enormous contribution to China’s economic development. In terms of elites’ role in income redistribution and in public security and welfare, China ranked sixth and ninth, respectively. While the report finds that elites create value for Chinese society in the political domain, China ranked 32nd in elites’ contribution to markets and economic growth.
In terms of “coalition dominance”, which refers to the power of insiders in the country’s political economy, China ranked 138th. At the same time, it ranked sixth in “creative destruction”, suggesting that its elite-oriented system is far better at adapting to changing external conditions than some Western economists believe.
The Schumpeterian nature of China’s political elite may baffle foreign observers. But it will not come as a surprise to people who are well-versed in the country’s long history and familiar with how the Chinese state was first formed several millennia ago. As the late Chinese-American historian Ray Huang observed, China is a politically precocious country that completed the process of becoming a modern state 1,500 years before Europe did.
Huang, along with political scientist Francis Fukuyama, was struck by the exceptionally short reigns of feudal Chinese rulers. The tiny warring kingdoms that preceded Imperial China were incapable of resisting frequent invasions from northern nomads or managing natural disasters, creating a political need for a unified government. This came in the form of China’s first emperor, Qin Shi Huang, who ruled China between 221 and 210BC, and whose political project was to establish a powerful centralised regime.
Qin’s China was, in many respects, the antecedent to the modern state, as defined by sociologist Max Weber, with a vast, centralised bureaucracy and a well-structured tax system. Europe, by contrast, did not take its first steps towards political modernisation until the fifteenth century.
But early development also had disadvantages. Whereas European merchants were able to accumulate political influence before the formation of centralised states, the Chinese regime’s consolidated power enabled it to nip such developments in the bud.
That is why capitalism could not emerge in ancient China, despite its relatively modern state institutions. The result was the so-called “Great Divergence,” as Western states industrialised first and overtook China.
Following unification, China’s huge population and efficient bureaucracy allowed successive Chinese empires to experience long periods of prosperity and achieve remarkable advances in science, technology, and culture. But China also sealed itself off from the world for centuries, leading to its gradual decline.
Many countries today struggle to stimulate growth, owing to bureaucratic incompetence, regulatory capture, and rampant corruption. But China’s trajectory highlights the power of a capable, dynamic political elite to drive prosperity – as well as the danger of downplaying the crucial economic role of a strong, efficient state.