Introduction [1]

1The re-emergence of China to the world stage in the last decades has caused contentious debates about its implications for the hegemony of the West and the Western idea of modernization. China shows a distinct path towards modernization on which it defies fundamental Western ideas about economic development, globalization and democracy.

2In a globalizing world the problems which the world’s nations face are converging. In the study at hand the statement transcends predicaments such as climate change or global security and refers to the overarching question of how to deal with globalization and the cardinal challenges it poses for national sovereignty and popular legitimacy.

3China’s young relationship with globalization is analyzed. In particular, the following thesis is defended: China’s integration into the world economy has undermined the emergence of democracy. It is embracing economic globalization for the prosperity it promises while accepting the constraints it yields and thus silently shuns popular participation in its journey towards prosperity.

4First, the theoretical building block, i.e. the political trilemma of the world economy is presented. Second, the constraints which China encounters during its re-emergence onto the world economic stage are analyzed. Third, conclusions are drawn.

The Political Trilemma of the World Economy

5In order to analyze China’s integration with the world economy, Rodrik’s “Political Trilemma of the World Economy” (‘Trilemma’ from now on) is employed. [2]

6The idea is that the world economy cannot have full economic integration, juridical national sovereignty (also referred to as ‘nationally-distinct jurisdictions’ or the ‘nation-state’), and mass politics organized at the national level at the same time. Mass politics [3] is condensing the idea of a political system in which there is i) an unrestricted franchise (or political scope), ii) a high degree of political mobilization, and iii) a high responsiveness of political institutions to mobilized groups. [4] Similarly to the well-known monetary trilemma, one can only have two out of the three (cf. Graph 1). This concept deserves elaboration; therefore, each solution to the Trilemma is briefly analyzed in the following.

Graph 1

The Political Trilemma of the World Economy, adopted from Dani Rodrik, Feasible Globalizations, Working Paper 9129, National Bureau of Economic Research, 2002

The Political Trilemma of the World Economy, adopted from Dani Rodrik, Feasible Globalizations, Working Paper 9129, National Bureau of Economic Research, 2002

The Bretton Woods compromise

7In the Bretton Woods compromise deep economic integration is shunned in favour of maintaining nationally distinct jurisdictions and mass politics. It derives its name from the post-World War II era during which the International Monetary Fund (IMF), the World Bank and the General Agreement on Tariffs and Trade (GATT) gave structure to the world economic system.

8The nature of the post-World War II system can most easily be seen in the GATT. More specifically, the GATT did not codify wide-ranging rules on trade such as internationally common labour standards and antitrust rules. Instead, it emerged as a porous system of trade rules with numerous exceptions which secured the supremacy of national regulation in certain key areas. For instance, agricultural policies have been entirely evaded in GATT negotiations, developing nations enjoyed considerable leeway in designing their policies, and anti-dumping and safeguard clauses left policy-makers sufficient margin to protect national interests.

9As such, the GATT is the prototype for what Ruggie [5] aptly termed “embedded liberalism.” [6] For Ruggie, “[t]he essence of embedded liberalism […] is to devise a form of multilateralism that is compatible with the requirements of domestic stability.” [7] In other words, the system accounts for national differences and distinct interests and is therefore rightly called Bretton Woods compromise.

Golden Straitjacket

10In order to illustrate the remaining solutions to the Trilemma, it is reasonable to imagine an economically perfectly integrated world (this section draws heavily on Rodrik’s Globalization Paradox [8]). In perfectly integrated markets national jurisdictions and national policies must be in harmony with internationally-accepted standards. If not, national economies risk being ostracized from the world economy. For instance, multinational corporations have the ability to move to the jurisdiction which offers them the most favourable tax system. This process leads to an “insulation of economic policymaking bodies (central banks, fiscal authorities, and so on) from political participation.” [9] Mass politics is abandoned in favour of ‘deep economic integration’ and the ‘nation-state.’ This idea is aptly termed “The Golden Straitjacket” by Thomas L. Friedman [10]:

“[The] Golden Straitjacket narrows the political and economic policy choices of those in power to relatively tight parameters. That is why it is increasingly difficult these days to find any real differences between ruling and opposition parties in those countries that have put on the Golden Straitjacket. Once your country puts on the Golden Straitjacket, its political choices get reduced to Pepsi or Coke – to slight nuances of tastes, slight nuances of policy, slight alterations in design to account for local traditions, some loosening here or there, but never any major deviation from the core golden rules.”

Global Federalism

11Instead of trading away mass politics for deep economic integration, one could also eschew national jurisdictions and globalize democracy. That is to say, politics would not disappear or be curtailed by the constraints of globalization; it would relocate to the global level.

12Importantly, the ‘global federalism’ solution to the Trilemma does not refer to the fact that national policies are prescribed from above by the pressures arising from deeper integration. On the contrary, in the framework of the Trilemma, the ‘global federalism’ concept refers to the idea that policies are prescribed by an expanded constituency from below, i.e. a global polity arises along with deeper economic integration.

13To sum up, an economy can achieve deep economic integration in two ways: i) through global federalism, or ii) through the Golden Straitjacket. In the first scenario, it can abandon the ‘nation-state’ and embrace mass politics on a global scale in which a global polity is governed by global democracy. In the second scenario, it can abandon mass politics in which it succumbs to the rules of the international economy but maintains national sovereignty in a juridical sense.

China enters the Stage

14China did not face the choices posed by the Trilemma because it was detached from the global economy until recently. Under the reign of Mao Zedong who has been Chairman of the Chinese Communist Party (‘the Party’) from 1945 to 1976, China was isolated from the rest of the world.

15The era of Chinese economic opening commenced after the end of Mao’s reign. Deng Xiaoping proposed his plans for economic reform to the Party in December 1978. The initiation of the ‘open door policy’ (kaifang zhengce) has been characterized as “historical turning point”. [12] Deng’s agenda comprised the following: i) reforming the agricultural economy, ii) decentralizing control over territories, iii) balancing the delicate dichotomy between keeping the structure of a planned economy while providing sufficient market incentives to local enterprises, iv) reforming the burdensome social security system, and v) attracting FDI. [13] Entire volumes have been written to analyze Deng’s reform measures (cf. a.o. Guthrie, 2012; Naughton, 1995 [14]); therefore, this study will not go into detail.

16What remains clear is that the country has evolved “from a policy of self-reliance and suspicion to one of openness and integration” [15] through Deng’s reforms. Chinese development involved the internationalization of the economy from the outset. The Trilemma asserts that moving towards economic integration unambiguously involves making a choice as regards mass politics and nationally-distinct jurisdictions. The relevant developments in China are analyzed in the following.

Tiananmen Turmoil

17The 1980s were not only a period of economic opening; they were just as much a period of intellectual opening which Schwarcz [16] referred to as “The Chinese Enlightenment.” Popular intellectuals demanded that “China should follow the Western way of democracy such as political participation from below, multiparty system and freedom of expression.” [17] The existing political structures came under serious threat from a rising mass politics movement which climaxed in the 1989 student demonstrations on Tiananmen square. The political elite decided to take severe measures against the demonstrators when it commanded martial law troops to clear Tiananmen square on June 4.

18The tensions from the demands for more democracy which culminated in the crackdown on June 4 are a result of China’s economic reforms and consequent global integration. China did not have to deal with the constraints of the Trilemma before it adopted the ‘opening up’ strategy. In other words, China lost its insulation from the constraints of the Trilemma through its integration into the world economy. It required the political elite to make a clear choice: on 4 June 1989 it decided against any form of mass politics. To put it in Nathan’s words: “Those favouring political reform lost out and their cause has been in the deep freeze ever since.” [18]

Post-Tiananmen Decisions

19The post-Tiananmen era was characterized by ideological disputes in the party about whether Chinese development should be socialist or capitalist. This debate frustrated Deng [19] who wanted to invest his energy in practical reforms. He attempted to put an end to the ideological debate by directly turning to the people during his Southern Tour (nan xun) in the beginning of 1992 – which is described as “the most dramatic political incident to occur between the Tiananmen crackdown in June 1989 and the Fourteenth Party Congress in October 1992” [20] by Suisheng. The Southern Tour created a momentum which led to “the adoption by the Fourteenth Party Congress of the most liberal economic document in [the Party’s] history.” [21] The report passed by the Party Congress, in fact, affirmed that the ultimate goal of reform is a “socialist market economic system” [22]—the 1984 expression of a “socialist planned commodity economy” [23] had vanished.

20The ensuing period of growing global economic integration strengthened China’s choice with regard to the Trilemma. China became increasingly locked in and globalization showed its transformative dynamics. The transient climax of this development has been reached with China’s accession to the WTO in 2001 with which China pushed its integration into the world economy forward substantially. Accession naturally involves taking over WTO regulations and also the values it promotes. These are mostly prescribed by the requirements of the global economy or still reflect Western hegemony in the post-World War II era. In the course of the accession negotiations China thus donned the Golden Straitjacket ever closer. Thereby it strengthened its choice of juridical sovereignty and deep economic integration to the detriment of mass politics.

Conclusion

21The Trilemma asserts that an economy can only have two out of three. Either it does not participate in economic globalization and settles with a Bretton Woods compromise in which national distinctions are backed by popular support, or it integrates economically which leads to two additional options. First, an economy can abandon its national sovereignty so that its jurisdiction merges into a global polity supported by mass politics on a global level—the global federalism solution. Second, abandoning mass politics in favour of maintaining juridical sovereignty leads to the economy donning the Golden Straitjacket.

22The pendulum which is attached to economic globalization thus swings between mass politics and juridical national sovereignty. The Tiananmen turmoil was the time when the pendulum movement came to an end coercing China to make a choice. Deng’s focus on economic progress pushed China away from mass politics and towards the juridical national sovereignty node of the Trilemma.

23Succinctly, the nascent democratic aspirations remain suffocated below the thick fabric of the Golden Straitjacket. At the same time, China takes advantage of being ever more deeply integrated with the world economy. One should not forget, however, that the situation is inherently dynamic. The emergence of a Chinese democracy, for instance, might radically change the equation of the Trilemma—debating to what extent, however, belongs to the realm of speculation.