Using a comparative lens, we identify the Chinese path of capitalism as “state neoliberalism,” which is quite different from other varieties of capitalism in the contemporary world-economy. In So and Chu (2015), state neoliberalism in China has the following distinguished traits:
First and most fundamentally, state neoliberalism identifies the communist party-state as the dominant agent to promote neoliberalism as part of its strategy to facilitate national development. Apart from launching many standard developmental state supports, the Chinese state endorsed neoliberalism so that an increasing number of commodities were subjected to market principles, workers and natural resources were exposed to ruthless capitalist exploitation, state commitment to welfare and social services were cut back, and many state enterprises in the non-strategic sector were privatized. In so doing, China also differed from neoliberal capitalism in the West in that it is the communist party-state, not the capitalists, who initiated the neoliberal turn. Indeed, before the initiation of policy change in state socialist China in 1978, market relations were strongly suppressed by the state, property was predominantly stateowned or collectively owned, market institutions were rudimentary, and a capitalist class was practically non-existent. The communist party-state laid the groundwork for the emergence of neoliberal capitalism by carving out a space for the emergence of market relations, the birth of a capitalist class, and for a long time played an instrumental role in the imposition of blatant neoliberal practices. Unlike neoliberal capitalism in the West (where capital accumulation serves as the ultimate motive to drive the economy), the constant ebb and flow of neoliberal practices in China was often governed by the communist party-state’s overriding concern for its survival and continued leadership.
Second, the Chinese road to capitalism has been distinguished by its decentralization policies and local initiatives. Benefiting from the state socialist legacy of localized administration as well as brigade and commune enterprises, local governments and TVEs (township and village enterprises) played a pivotal role in China’s capitalist development, especially in its initial phase in the 1980s. Administrative and fiscal decentralization policies had generated both the institutional foundation and immense incentives (and pressures) for these local state actors to capture market opportunities. This is why the Chinese local economy was so competitive in the early 1980s even though the communist party-state had yet to institute legal reforms to safeguard private property rights.