Between Stability and Liberty: The Transformation of China and Its Controversial Impacts on the Global South in Times of Crises

Abstract

Inspired by The Great Transformation written by Karl Polanyi, the author argues specifically that the transformation of China since 1978 is a fundamentally different process in comparison to that of Europe/North America. In particular, a process of public planning rather than nationwide social and market liberalization has shaped the trajectory of the transformation of China and its ability to overcome various crises. Largely, this ability reflects the determination of the government to make a trade-off between stability and liberty, hence embedding the markets in its societal contexts. Nevertheless, evidence from four crises that occurred between 1997 and 2021 (with the fourth crisis still ongoing) shows that the impact of China on the Global South (GS) in times of crises is increasing in controversy. For example, an increase in the external debt of the related countries to China and the associated commodification of their resources have led to concerns about future crises in the GS. The author argues that China could establish an instrumental rather than a ceremonial reciprocity with the GS to safeguard future possible crises.

Keywords:

• China
• economic crisis
• social crisis
• global south
• liberty
• stability

JEL Classification Codes:

• B25
• H12
• P21
• P33

Notes

1 To a large extent, the transformation of China is a realistic case that illustrates progressive institutional change as argued by Paul Bush (1987), which has been explained in one of my previously published articles (Siu 2020).

2 China’s historical connection with the GS will not be discussed in this article.

3 While 65.8% of the confirmed cases were reported in Mainland China, another 21.7% were in Hong Kong. Cumulative cases in Taiwan, Singapore, and Canada were around 3–4% respectively.

4 Based on a comprehensive online search of related newsletters through country names and other information, I used a spreadsheet to record the details. I found that in the first four months of 2021, China supplied over 500 million doses of COVID-19 vaccines to 34 GS countries in Asia, Africa, and Latin America, of which approximately 2% or 10 million doses were donated to them.

5 Despite the controversies with the practices of the Washington Consensus in assisting the development of the less developed countries, the governments are required to meet a set of conditions like carrying out “reasonable” steps to liberalize their banking systems, financial and foreign exchange markets, capital accounts and so on and so forth to be able to obtain loans from the World Bank and International Monetary Fund for development purposes (see for example, Serra and Stiglitz 2008).

6 Estimations presented in this report are based on databases from the China-Africa Research Initiative (CARI) at the John Hopkins University and the World Bank, respectively, to provide objective comparisons.

Additional information

Notes on contributors

Ricardo C. S. Siu

Ricardo C. S. Siu is an associate professor of business economics at the University of Macau (China).