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Chinese Scholar: Socialism is a Key to the China Model

[Editor’s Note: Discussions of the China Model have created broad interest and many controversies over the past few years. The Chinese Communist Party (CCP), while facing challenges to its legitimacy at home, desperately seeks endorsement from the outside. The China Model discussion provides an opportunity to bolster the Party’s credibility. The following report is based on an article from Red Flag Manuscripts (红旗文稿), a semi monthly journal put out by the CCP’s Central Committee. The author, Zhao Hong, a researcher at the CCP’s Central Party School, criticizes Western countries for “avoiding the socialist nature” of the China Model. He emphasizes, “The success of the China Model is the success of socialism with Chinese characteristics.” An excerpt from the translation of the article follows.] [1]

Three Western Models

There are essentially three types of development models in developed countries: one that is represented by the United States and Britain is called “the Anglo-Saxon” model; a second, represented by Germany and Japan, is “the Rhine” model; and a third, represented by Sweden, is the democratic socialist model.

1. The Anglo-Saxon Model

The “Anglo-Saxon” model is the neo-liberal capitalist model, also known as the neo-American model, since the characteristics of this model are reflected most in the United States. The U.S. embodies the Anglo-Saxon model for a number of reasons. First, is the tradition of laissez-faire in American history. The U.S also has a very efficient market economy, and the government agencies have provided a comprehensive political protection system and macroeconomic policies.

What are the basic principles of the neo-liberal model? From the ideological standpoint, people advocate liberalism and full competition; regarding resource allocation, all resources are allocated through the market itself; as to decisions, they are made mainly by businesses. The government’s role is kept to a minimum and the corporations are governed through a board of directors and shareholders, with the role of executives mostly managerial.

However, the neo-liberal model is impossible to copy, because this model is entirely built on a unique foundation. The U.S. is one of the richest countries in natural resources. The U.S. dollar enjoys an advantage: it is the reference currency in the international market. Therefore, the U.S. maintains its international dominance with the power of money, including its own and other countries’ money.

The most obvious disadvantage of this model is that it produces huge trade deficits. In 1971, the U.S. saw its first trade deficit of USD $1.5 billion. By 1982, the trade deficit increased to $38 billion. In 1987, it reached $152 billion. In the 1990’s, the U.S. trade deficit consistently remained greater than $100 billion. Since then, the deficit has continued to climb upward. The recent U.S. “subprime mortgage” crisis triggered a global financial crisis, and it exposed the fundamental flaws of the Anglo-Saxon model. Although the reasons for the crisis are many, it is clear that this crisis is directly caused by the fundamental contradictions inherent in capitalism. Some Western economists have begun to question the superiority of the Western financial system and of capitalism itself.

2. The Rhine Model

The “Rhine model,” also known as the social market economy, is prevalent in Europe. It has two fundamental principles: First, it emphasizes that economic vitality must be based on the market. The market should be left alone as much as possible. Second, it also emphasizes that the market alone cannot dominate the entirety of societal living. The state should provide protection.

The countries that follow the “Rhine model” not only stress the importance of justice and fairness in terms of economic interests and economic power, they also protect those who have lost their ability to work or suffer unexpected difficulties, so they give people a sense of security. These countries have a mature social security system, which eases the labor-business rift, and motivates people to participate in politics.

3. The Democratic Socialist Model

The Democratic Socialist model grew out of the Social Democratic Party’s fundamental philosophy. First, it emphasizes the basic values of democratic socialism, “freedom, equality, solidarity, democracy and labor.” Second, it advocates a more moderate approach to social transition. Then, through its continuous improvement and reform policy, society will gradually evolve from capitalism to democratic socialism.

Under the specific historical conditions and social environment in Sweden, the Swedish Social Democratic Party has been able to combine the uniqueness of these two policies and create a special “Sweden Model.”  Sweden’s social welfare system ensures some level of basic living standards for all its citizens, especially senior citizens. Swedish society implements a “cradle to grave” welfare system, covering everyone for life, and warranting the operation of the welfare system through legislation.

In a world full of danger and challenges, it is increasingly difficult to maintain such an expensive welfare standard. Therefore, this model is also constantly being adjusted.

The Distinct China Model

Compared to the models mentioned above, China’s development model in the past 30 years has fundamental differences from the Western models. It maintains the Communist Party’s leadership, upholds broad participation by the masses, and adheres to socialism with Chinese characteristics. It implements the reform of the socialist market economy; it adheres to Marxism; and it promotes world harmony.

When Western scholars talk about the “Beijing Consensus,” or China Model, they often overlook or deliberately avoid China’s “socialist” nature. They are reluctant to admit that the success of the China Model is the success of socialism with Chinese characteristics. In fact, the reason that China has made rapid progress is because the country insists on independence and sovereignty, and insists on following the socialist path. Under such prerequisites, China absorbs capital, technology and experience from the developed countries. China has refused to subvert its own system by replacing it with another country’s transplanted system.

China will not adopt the Western political system of “separation of powers” and the “bicameral” system. China has tried to overcome the limitations of the system of “separation of powers,” and create a new political system under which the vast majority of the people become the masters of society.

Some Western scholars believe that China’s success is due to its practice of privatization, liberalization and internationalization, and they think that China’s current reform didn’t go far enough. In their view, China’s state-owned economy is too large, government intervention and social regulation have played too big a role, the level of its internationalization is too low, and political reform lags behind. Therefore, from their perspective, China should continue to reduce or, in some cases, even eliminate government intervention or social regulation; China should completely privatize state-owned enterprises; China should further accelerate the pace of international economic integration, and China should gradually introduce Western-style constitutional governance.

However, the history and current state of the world’s political establishments has revealed that there is no universal democratic model that fits the whole world. China implements the people’s congress system, and China adheres to the leadership of the Communist Party. It is the choice of the Chinese people and of history. It is in line with China’s reality.

[1] Qiushi Journal, December 3, 2009