State Capitalism and Development

This assignment delves into the multifaceted concept of state capitalism. It examines various theoretical perspectives on how state intervention in economic affairs shapes development outcomes. The assignment encourages critical analysis of case studies, drawing examples from countries like China, to understand the complexities and implications of state-led economic strategies.

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International Political Economy: Case of China
Student Name
Institution

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Introduction
Development is directly associated with prosperity. The origination of development dates
back to the past six decades and gained significance immediately after the 2nd World War. The
process of empowering people to equip them with the potential to pursue goals to improve their
well-being, destiny, and environment is referred to as development. There had been challenges
by the Western countries in their attempts to rebuild the nations that had been shuttered by the
war (Carswell & De Neve, 2013). The most frontier challenge for development strategy is
moving beyond optimal economic policies prescription, having a more comprehensive view of
the social-economic and political dynamics and constraints, and initiating a virtuous spiral of
cumulative change. The country was formerly referred to a third world nation whose industrial
development consumed excess resources that what the country was able to produce (Coe & Hess,
2013). In the past decade, China as a government has been at the forefront of getting solutions to
their then worsened economy. From its statist, modernist, and in particular its liberal beginnings;
China’s development is going through a neoclassical phase that is imperfect due to its strong
industrial revolution. Today, China is amongst the fastest growing countries around the globe.
This study seeks to find out whether state-led development strategies are finding their way back
into fashion in close reference to China.
Are State-Led Development Strategies Coming back into Fashion
Transformational governance, state capacity building, focused governance, and bottom-
up development have come back to fashion in China. China has worked out on implementing
state-led development strategies in its market-based economy. Research shows that more than
600 million citizens have been brought out of extreme poverty and this is the step behind the

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country’s growth in the world economy (Huang & Wu, 2012). These state-led development
strategies adopted by China have doubled the median wages for an average worker; as a result,
China is the World's leading innovator to green energies.
The topic under discussion is justifiable since China's domestic life sciences have been
seen to grow bolstering significant incentives and investments form the country’s authoritative
government. China's size and scale offer the nation a perfect opportunity to continue diversifying
its economic activities over its global value chain. This adoption of state-led development
strategies coupled with the market-led approach is continually making China a substantial
domestic consumer market and large returns generation (Lane & Myant, 2016. Below are five
models used by China in its state-led development strategies which will help in arguing the
question at hand on whether state-led development strategies are coming back to fashion in
China;
Critical Theories- Marxism
The Marxist theory focuses on political practices as the end goal of all governments’
thoughts. The Chinese government introduced western Marxism to the country in the early 1970s
to alleviate the constraints of the “Great Cultural Revolution," and its theoretical basis. The
Marxism theory brought continued revolution under which people's minds were emancipated and
dictatorship was eliminated (McNally, 2012). In China, Marxism is the most famous model of
state-led development strategy applied by the government in driving its political, social, and
economic goals. China keeps upgrading its industrial revolution, and this is an advanced state-led
development strategy which influences people’s life and opportunities for growth. China

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understands the conditions of working-class people and has been taking advanced actions to
incorporate them in industrial policy formulations that can help China prosper.
The events of 1978 in China are continually being manifest in its current state of growth.
All citizens were involved in debating the most suitable market and state economic policies that
could help the country prosper. The debate resulted from the political struggles and ideological
differences that the Chinese Communist Party faced. The application of Karl Max model has
been bringing amenable results, putting development in practice, and enhancing supplementation
in accordance to the millennium development goals (MDGs) of China (Gereffi & Wyman,
2014). Through the application of Karl Marx theory, China has been able to alleviate poverty and
political instabilities that formerly affected its economic growth. The Chinese academia has
attracted a widespread attention to the study of the Marxist theory.
China seeks to deliver essential amenities (goods and services) to all its population, and
the application of Marxism has been critical to saving the country's socialism. China continues to
develop its socialist modernization with the demonstration of western modernization, and this
has made China one of the leading economies in the world. Over the last decade, China's
economic success has made the country become the world's second-largest economy. China as a
government and its people played a paramount role in this rapid expansion and its development
in the global political and economic environments (Koh, 2015). The state-led development
strategies adopted by the Chinese Communist Party in the 1970s continues to takes its route into
China’s current development fashion state. Political leadership in China has brought extensive
development the country’s healthcare, education, and infrastructure. However, China is known to
have lacked policy and state-led institutions that can coordinate public versus private
partnerships in the country (Musacchio, Lazzarini, & Aguilera, 2015). Recently, China has

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established a framework for supporting public and private relationships and this has been helpful
in ensuring that development policies and goals get realized.
Liberalism and Capitalism-Economic Institutions such as WTO
As a developmental state, China has moved from communist to capitalist. Liberalism
involves a political system that emphasizes on equity to citizens’ rights, opportunities, and
individual liberty. On the other side, capitalism involves an economic system that operates in a
market economy over which production rights are privately owned (Strange, 2010). China
remains to be a liberal, democratic, and a capitalist nation in its endeavors to advance its
prospects to state-led development goals. China uses the best development approaches to
economic development and industrial revolution due to the liberal nature of its government. As a
state-led development nation, China continually formulates stable policies that insulate
government bureaucracies from political demands that derailed the state-led approaches by the
Communist government in the 1970s. State-led development strategies are on course in China,
and this is the major reason behind China's fastest growing industrial economy in the world
(Oatley, 2015). China offers its citizens equitable opportunities for a job as well as the patent
right to own private firms in various industries such as health and infrastructure. Currently,
research shows that China has pulled ahead of the United States of America regarding
purchasing-power parity. These continued advances to the modern fashion of state-leadership
have created strong warnings that the future of China lies within the authoritarian market
managers and that liberal-capitalism appears triumphant at China. With this pace of growth and
development, China is projected to dominate the world’s industrial economy in the next five
years.

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Further, China is a member of the World Trade Organization which is the largest
economic institution in the world. The decision by the Chinese government to become a member
of WTO in 2001 has been significant in its economic growth. This membership signified China's
deeper desire to get integrated into the world economy. As a result, the WTO membership has
provided China with advanced access to foreign markets something which has reduced
international trade barriers significantly (Vijayakumar, Sridharan, & Rao, 2010). A primary
state-led strategy by China was attracting foreign investment, and this has continually been
advanced by China's membership to WTO. Further, state-led development strategies are back
into Fashion at China in that China is undergoing economic transformations which offer the
country with firmer and speedier economic progress as compared to other second world class
countries (Onuf, 2012). Further, the liberal political system of government in China has created a
system over which the nation keeps enjoying long-term growth in production and enhancing
competitiveness in the world market. The industrial growth in China has also been advanced by
its WTO membership whereby the Chinese people have secured job opportunities in foreign
countries due to their outstanding innovation and world-class engineering skills. This current
state at China reflects foreseeable economic transformation and development of China, and this
represents equitable growth, balance, and sustainability. China's performance in the past five
years shows its sober economic resilience, financial crisis alleviation, and immense development
strategies as a state-led nation around the globe.
Stare-Led Talk on China-Beijing Consensus- Economic Power
Economic power refers to the ability of a country to own sufficient productive resources
that enable its design and enforce economic decisions such as resource allocation and the
apportionment of goods and services. China is a richer and a prosperous country, and this makes

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the country enjoy more economic power and influence in the state-market place than the
developing nations. As the leading producer in the industrial revolution industry, China is a free
market whereby the price for products is determined by the forces of supply and demand.
Regarding gross domestic product, China's socialist market economy is rated to be the world's
second largest as per the purchasing power parity (Parkin, 1981). The state-led development
strategies are taking a course to fashion in China through its advanced steps and rise to global
economic superpower. Today, China has diversified its industrial revolution in the engineering
sector to most world's countries whereby they construct roads for loans. Further, the rating by the
International Monetary Fund (IMF) to rate China as the number one economic superpower has
helped China diversify its industrial activities and hence continue growing its economy.
The state-led talk on China-Beijing consensus was once viewed to be an awkward and
unsustainable blend of capitalist economics and authoritarian politics. However, China's present
growth model has impressed in the recent past making the Beijing Consensus attract many
admirers globally. The state-led talk that drawn global attendance is currently making China the
most significant investment banker hence attracting the most celebrities who have a great interest
in resolving the pressing challenges in their political economies (Raco, 2014). As a result of this
consensus, China’s economic power has grown to the most unthought-of level. The China-
Beijing consensus implemented development strategies worth $600 billion making China’s
economy grow by 9 percent. China’s performance continues to influence and inspire other
developing countries/ economists not to give up but ensure their strategies are rightly set.
The Chinese Economic Model (China-Beijing Consensus) challenged the democratic
capitalism by the western world nations. The World Economic Forum deliberated on
development strategies that enhance political stability in the nation some of the agenda including

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resources allocation, investment by government to various industries, and the source of financial
resources required to make the country a more developed nation (Saich, 2000). As a result, China
has become the world's economy's number two ahead of Japan and gaining a competitive
advantage over the US. Government policy toolkit, corporate allegiance, resources sourcing, and
strategic priorities were also discussed in the China Model. This builds China's economic
strength hence upgrading the countries profile in international affairs. Before the China-Beijing
Consensus, China suffered global economic crisis through the unscathed downturns set by the
world's unfavorable market environment (Selwyn, 2013). Today, the authorities of China can
design long-term strategic and development priorities that are systematically viable and suitable
to the fiscal challenges that exist in China.
Global Production Network
The concept of Global Production Network (GPN) explains the interconnection of
functions, transactions, and operations through which products or services are produced,
distributed, and consumed. China realized/ unleashed its productive potential through GPN.
Since the early 1970s, China was trying to unravel and understand the global economy's
complexities which posed huge inequalities and empirical difficulties to its social-economic and
political growth. The use of GPN which is restricted to the global value chain and commodity
chain has brought China to its current economic progress (Sikor & Müller, 2009). The use of
liberal governance which helps the government discharge and allocates its resources equitably
made the Chinese get educated and gain excellent, innovative skills in various sectors. Today,
China is enjoying the fruits of fairness and equity in governance. Within the transnational space,
GPNs continue to help China establish solid economic relationships with other world economies.

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China continues to specialize in the industrial revolution in specific core competencies
and strategic new business areas across the globe. Through IMF, the country has been advised on
how to mitigate investment risks which arise from severe market demand fluctuations in the
nations they venture at. There have been advanced standardization and modularization of China's
produced products, and this helps remain economically stable (Farrell, & Newman, 2010). The
Global Production Networks have helped China alleviate global firms’ costs problems something
which has formed a long-term solution to the country's competitive flight from other large world
economies. China today is like one community, the country has the world's best modern
infrastructure which interconnects all cities and regions across the entire nation. This has made
China a unique marketplace and makes people trade freely from one city to another hence
making the economy grow.
Further, China outsources to its independent suppliers its productive operations, and this
has continually boosted its production flexibility without incurring further significant financial
liabilities related to the establishment of new service facilities. Further, the cost of production
modifications is lowered through innovation of new technological ideas that boost both small
and large-scale economic activities in the country (Duffield, 2014). Currently, China is moving a
step ahead to establishing itself as an industrial decomposition through which creative and
reflective industrial actors perpetually thrive. Today, there is no product that China does not
produce or manufacture and this is due to its improved Global Production Networks.
Brazil, Russian, India, China (BRIC)- Role
Brazil, Russia, India, and China (BRIC) convene in the Xiamen city at China for their
annual summit to discuss the future of the globalized economy. BRIC is the world’s leading

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emerging economies. Recent research shows that China enjoys success in its global supply
chains making it's the world's second-largest economy by GDP ( Baylis, Owens, & Smith, 2017).
However, in the year 1990, China's productive capacity formed less than 3 percent of the globe's
manufacturing output something which has been overturned by this recent research. This success
by China can be attributed by its membership with BRIC whose main aims are protecting their
economies, lifting the largely populated poor regions, and safeguarding their social, economic,
and political environments (Block & Keller, 2015). The ability to fight corruption by China has
made the country to become the most developed nation amongst all BRIC members. Financing
from BRIC impacts development to the members and the roles of BRIC include:
Facilitating advanced implementation of past policy commitments: China has the role of
advancing past policy commitment implementation among the BRIC nations to enhance long-
term growth through structural reforms, financial stability, and innovation.
Encouraging cooperation among the BRIC nations: China has the role of supporting the BRIC
countries work together to alleviate the external economic environment challenges that are
unfavorable to them.
Promotion of stable and resilient international financial structure: BRICS aims at creating a
stable financial environment over which its members can enjoy and emerge as world’s best
economies.
Promotion of global trade: BRICS other role is jointly enhancing global growth in trade that
enhances regional trade agreements transparency. To achieve this role, BRICS use internal
exchanges and shared expertise to unify their economic stances in a unified manner.

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Conclusion
State-led development strategies are coming back into fashion. China is the world's
second-largest industrial economy and has the potential to lead the world market in the next five
years. China has one of the World’s largest population size who demand equal access to
government resources and social amenities. The Chinese government is industrially upgrading.
Over the past decades, China has designed various state-led development strategies some of
which include; developing China's research capacity, investment in star research, funding
downstream knowledge translation and transfer, and building industrial R&D infrastructure.
China as a country targets to move its global value chain. However, China has one of the highest
populations in the world, and this poses a threat to its continued economic development in future.
On the contrary, this state-led model of development adopted by China promises a great chance
for growth rather than recession.

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