For four decades, "Made in China" has been a defining feature of global capitalism. But a wave of disappointing economic news from China has given rise to increasingly gloomy forecasts, with some going so far as to argue that decline is imminent. There has been much speculation about this reversal's implications for the global economy, but what does it mean for development theory?
China has been the poster child for successful economic development ever since Deng Xiaoping's reform and opening up, launched in 1978, unleashed a period of unprecedented economic growth. In just a few decades, China's per capita income increased 25-fold, lifting 800 million people out of poverty. By 2010, China had become the world's second-largest economy, pulling ahead of France, Germany, Japan, and the UK to nip at the heels of the US, which some predict it will overtake by 2030.
China did not achieve this by implementing the Washington Consensus, according to which liberal capitalism -- democratic governance plus free markets -- was the only possible path to prosperity. Instead, China's authoritarian regime implemented a state-capitalist system that, in contrast to the radical one-size-fits-all "shock therapy" adopted in much of the post-Soviet bloc, embraced an incremental approach based on experimentation and adaptation.
The Chinese approach has been characterised in a range of ways, from the modest "China case" to the somewhat bolder "China model". Bolder still, some call it the Beijing Consensus, thereby positioning it as a direct alternative -- even challenger -- to its neoliberal counterpart. In development circles, China's experience became the "dragon in the room", especially as a growing number of countries committed to emulating it. Even China's rival, India, "borrowed" the idea of special economic zones.
In 2002, the Financial Times described the Washington Consensus as a "damaged brand". Today, the Beijing Consensus -- or whatever you prefer to call it -- may also be losing its lustre. On the surface, China's economy seems to be suffering from "economic long Covid", which severely disrupted global supply chains and led to a sharp drop in exports.
But China's problems run much deeper. Crippling debt levels, record-high youth unemployment, plummeting consumer confidence, and turmoil in the property sector have put a brake on growth and driven the country to the brink of deflation. A broader backlash against globalisation, including efforts by major economies to shift their supply chains away from China, has further dimmed the country's prospects.
One might take this as evidence that the Chinese development model is flawed. But we should start with an even more fundamental question: How distinctive was China's development path in the first place? In fact, for all its novel aspects, China's experience has not significantly widened the development canon. On the contrary, China adhered to several -- by some counts eight -- of the "Ten Commandments" of the Washington Consensus.
Ultimately, China achieved its "economic miracle" by playing the humble role of "factory of the world", not by acting as a global laboratory or boardroom. With its vast reserves of cheap labour for foreign firms seeking a low-cost production base, China elbowed its way ahead of other developing countries. In this sense, the miracle was a race to the bottom that China won.
Yes, this is beginning to change. But the fact remains that China integrated itself into global production networks, or supply chains, by manufacturing and assembling products invented and designed in developed countries.
With the benefit of hindsight, the Beijing Consensus may simply have been the Washington Consensus with more state intervention and less preachiness. It is worth noting that China's growth miracle also brought rising inequality, a patchy welfare system, suicide-inducing working conditions, and environmental devastation.
So, a quarter of the way into the much-anticipated "Chinese century", the Chinese economy is sputtering, and the global mood is souring. But the demise of the Beijing Consensus might have a silver lining if it serves as a cautionary tale to the developing world.
A more radical rethink of development is needed, with countries seeking to show that they can produce new ideas -- in particular, ideas that complement and advance a sustainable, egalitarian economic paradigm -- rather than just manufacturing low-cost goods made to developed-world specifications. As the Made in China label fades, developing countries should seek to use the tabula rasa for more than merely inscribing their own names. ©2023 Project Syndicate
Antara Haldar, Associate Professor of Empirical Legal Studies at the University of Cambridge, is a visiting faculty member at Harvard University and the principal investigator on a European Research Council grant on law and cognition.