Katrin Bennhold: What Is the Beijing Consensus?
The New York Times’ Dealbook blog reports on from Davos on discussions of the so-called Beijing Consensus, or the Chinese mdoel of economic-political development:
But what actually characterizes the Chinese model? A Chinese economist here at Davos, who preferred to remain anonymous, tried to shed some light on the question, citing four key characteristics he said define Beijing’s communist-capitalist-Confucian system.
Policy toolkit: The Chinese authorities have a much larger toolkit to interfere in the economy, he said. They can regulate and tax and hand out contracts like in the West. But they also can – and don’t hesitate to – meddle in financial markets if they feel a share price, for example, is not at the right level.
Corporate allegiance: Many companies are not only state-owned, but accountable to the government as well. The government picks the management and managers report to the government. They are motivated less by pay than their Western counterparts, mainly because they are paid less: Even the boss of ICBC, the world’s biggest bank by some measures, reportedly earns less than $200,000 a year.
Resources: Beijing controls unusually large resources. They have not just nearly $3 trillion in currency reserves and get a steady stream of profits from state-owned business but they also control all the land. “Fiscal problems do not exist in China,” the economist said. “If they authorities need money they can just sell some land.”
Long-term planning: The authorities in Beijing set long-term strategic priorities and then systematically pursue them in five-year-plans.
Read more about the Beijing Consensus via CDT.