Rising China in the Changing World Economy ed. by Liming Wang (review)

China’s rapid and sustained economic development over the past thirty years has transformed it into world’s second largest economy and potentially the largest in the foreseeable future. As one of the first major economies pulling out of the global economic recession in 2008 and one of the last remaining countries ruled by a communist party, China presents a challenge to established thinking on the essential primacy of global capitalism and settled nature of the world system. As China becomes more integrated into the world economy and the international system, both are themselves transformed as a result of China’s involvement. Drawing upon the papers presented in “China and the Changing Landscape of the World Economy,” a conference at University College Dublin in Ireland in July 2009, and in a follow-up conference, “Confucianism and Financial Crisis Management,” at Renmin University in China in December 2012, this volume provides a comprehensive analysis of the important issues concerning China’s economic development and international economic integration with the changing capitalist world economy.

This volume has sixteen chapters. In chapter 1, Wei Xia and Liming Wang present a fresh, four-stage analysis and overview of the reform process since 1978, which has been instrumental in China’s rise. Xia and Wang then address the question of the ultimate goal and future direction of ongoing reform in a changing China. Finally, Xia and Wang examine the major challenges that lie ahead for the Chinese economy. These include successfully effecting a change in the economic growth pattern from an export-led model to a more balanced model that pays more attention to domestic private consumption, reversing the widening gap between the rich and the poor, dealing with the harmful effect of an aging society, achieving environmental sustainability, and ensuring good governance.

In chapter 2, Gregory C. Chow examines the major factors contributing to China’s successful economic development. Chow identifies three fundamental economic factors that have contributed to China’s rapid economic growth: an abundance of high-quality human capital, a set of workable market institutions, and the technological gap between China and the most developed economies. Then Chow presents five problems facing the Chinese economic systems: corruption, income disparity, education, health care, and environmental degradation. Chow concludes that these problems will not sufficiently create serious social instability that would impede further growth. He predicts that China will keep on rising.

In chapter 3, Giuseppe Gabusi raises two very interesting questions: If institutions matter, why did China develop despite the absence of right institutions recommended by the post-Washington consensus? Further, if the Chinese economy is, thus, successful, does it mean that the Chinese invented a new (state-led) model of economic development that international development agencies should recommend to developing economies? Gabusi presents the arguments of the Experimentalist school which claims that China’s seemingly disparate reforms have generated high growth because incremental experimentation has unleashed an unintended virtuous cycle. In contrast, the Convergence school posits that Chinese economic success has occurred despite gradualism and that China’s experiments in noncapitalist institutions are unsuccessful. The Convergence school thinks that China’s experience is, in fact, not different from the East Asian countries, where liberalization, internationalization, and privatization of economic activities are deemed to be the factors behind the so-called economic miracle. Gabusi concludes that China’s breakneck industrial growth in the last thirty years is not endless and has had some negative effects, such as alarming inequalities between the rich and the poor. Strong privileged interest groups and commercialized local governments are blocking equal distribution of benefits of economic growth throughout society, thus the CCP’s strategy of growth-above-all-else will continue in the near future.

In chapter 4, Sangaralingam Ramesh advances the concept of a continental drift to study the process of economic development from China’s coastal regions to its interior. Ramesh argues that tougher environmental protection enforcement in the coastal regions...