Marketisation and Democracy in China

Marketisation and Democracy in China

Article Type: Bookshelf From: Journal of Small Business and Enterprise Development, Volume 15, Issue 4

Jianjun Zhang,Routledge,Abingdon,2008,xviii +277 pp.,ISBN: 0 415 45222 8,

Keywords: China, Entrepreneurship, Economic development,Democracy

This excellent book is based on Jianjun Zhang’s doctoral studies which he undertook at the University of California at Berkeley. As the title suggests it focuses upon recent marketisation processes and the emergence of democracy in China. In his introduction, the author contextualises the main challenges that he faced during his research. To guide his work on the link between marketisation and democracy, the author posits two fundamental research questions: first, would marketisation in China lead to democracy? And second,would the nascent “entrepreneurial class” evolve into the driving force behind the emergent Chinese democracy and eventually replace the traditional political elite? These are very important questions and pertinent to ongoing transformation of China’s modern socio-economic and cultural infrastructure. The remainder of the volume is divided into three parts and incorporates a further nine chapters. Marketisation is defined as the process involved in the transition from a centrally planned and controlled economy in China towards a market lead economy. The author’s working definition is essentially Schumpeterian and it incorporates two essential elements: “meaningful participation” and “political competition”. I will briefly outline bellow the structure and content of this research monograph for the benefit of both students and experts of this fascinating field of academic study.

In part one, Jianjun Zhang explores the development patterns and the evolution of property rights in China. The first chapter explores the origins of two distinct regional development patterns, in Sunan and in Wenzhou. The two patterns differ in that in Sunan the local government played an active and important role while in Wenzhou its input was supplementary to the driving force exerted by local entrepreneurs. In the next chapter, the author discusses issues of power and structural changes which resulted from these two distinct development patterns. In the third chapter, we are presented with various approaches to the privatisation process of township and village enterprises that took place in the two regions under scrutiny. Interestingly, in Sunan “manipulated privatisation” prevailed and this approach favoured very low priced managerial buy-outs. In contrast, only a small proportion of collectively owned enterprises were privatised “transparently” in the Wenzhou region. According to the author, these radically opposite approaches to collective privatisation are the results of two different political constraints in relation to power structures and associated relationships.

Part two examines the emerging class structures and elite relationships that followed privatisation in these two regions of China. The reader is presented with a detailed comparison of the polarised class structure in Sunan, which is contrasted with the flat class structure that emerged in the Wenzhou region. Importantly, we are familiarised with both mechanisms and the elite interaction that these caused and thereafter also supported. In the following two chapters there are detailed discussions of the relationship between business and political elites in the two regions under observation. In the Sunan region, both elite groups are privileged and enjoy great advantages over the rest of the population. Thus, these two privileged social classes have interests to protect and therefore an incentive to collude in obtaining and maintaining power. By contrast, however, in the Wenzhou region the fats growing entrepreneurial class has become both vociferous and powerful through its participation in local politics, and this process has been beneficiary for its budding democracy.

Part three explores the political consequences of these two contrasting regional economic development patterns in China. The author used two interrelated indicators in his attempt to measure the degree of democratisation in these two regions, namely “business associations” and “village elections”. It is interesting to note that through both perspectives, the Wenzhou region emerged as more democratically inclined than Sunan. These contrasting developments and associated processes could have important repercussions to the socio-economic and political development of these two regions. The author tentatively labels the Sunan structure as “authoritarianism”and contrasts it with the “embryonic democracy” which is increasingly evident in the Wenzhou region. This is a very powerful and convincing proposition, which involves contrasting political and business elite configurations that resulted from two specific development trajectories. The resultant class structures and social conditions clearly establish not only the relevant outcomes but also the causal direction and conditions that sustain them. Chapter ten outlines the main findings and concluding remarks as well as their implications for China’s political future. It highlights the importance of privatisation and emergent class structure to economic development and democracy in China. To some extent, this volume acts as a warning not only to the Chinese people but also to other developed and developing countries. There can be many dangers and pitfalls in market reforms that result in the enrichment of the few as achieved at the expense of the many…

Overall this is a well written and enjoyable book, one that I would recommend to all who are interested in China’s recent socio-economic and political development. Academics, researchers and students as well as policy makers,economic observers and entrepreneurs could benefit considerably from reading this book. I look forward to review Jianjun Zhang’s next contribution to this interesting aspect of entrepreneurship and small business development in China.

Harry MatlayBirmingham City University, Birmingham, UK