China's Gilded Age

China's Gilded Age (2020) by Yuen Yuen Ang is an accessible read that is well worth reading for multiple reasons. The book advances theoretical understandings on corruption and poverty, it presents creative methodologies that could inspire all sorts of new research, and presents unique findings that explain how China sustained high levels of economic growth alongside pervasive corruption. Ang also wrote the excellent book How China Escaped the Poverty Trap (2016).

A few notes (three long quotes, key arguments from the book):

"The durability and gigantic scale of Chinese economic expansion, juxtaposed with reports of "rising"and "explosive"corruption, cannot simply be brushed away by assertions of imminent collapse, even amid the current slowdown. How China has come this far –from an impoverished communist regime to a capitalist superpower rivaling the United States, despite a crisis of corruption that its leadership sees as "grave"and "shocking"–must be explained. This is the task of my book." (p. 5)

"Through an "unbundled"approach, my study draws a clear distinction between the quantity and quality of corruption. Wealthy economies may have low quantities of aggregate corruption, as measured by standard cross-national indices, but it doesn't mean that they have no corruption; rather, their corruption may be of a different quality –concentrated in access money, which is difficult to capture and not immediately growth-retarding. Contrary to popular beliefs, the rise of capitalism was not accompanied by the eradication of corruption, but rather by the evolution of the quality of corruption from thuggery and theft toward sophisticated exchanges of power and profit. Compared with countries that prospered earlier, China is still a relative newcomer on this evolutionary path... Why has China prospered alongside vast corruption? I offer a four-part explanation. First, the dominant type of corruption in China is access money –elite exchanges of power and wealth –rather than petty bribery or outright theft... access money may actually raise private investment –and even spur over-investment, as seen in China's real estate sector –thereby increasing growth, at least until the onset of a crisis." (p. 14)

"One of the most intractable problems of development is the trap of "corruption-causing-poverty-causing-corruption." In other words, countries are poor because they are corrupt, and they are corrupt because they are poor... The scholarly literature poses two solutions to this problem. The first is to "skip straight to Weber" by replicating the best practices of first-world public administration in developing countries. Pay is too low? Raise it. Bureaucracy is overstaffed? Slash it. Petty corruption is rampant? Vow to punish it. Although these measures appear correct in principle, in practice they routinely fail and may even backfire, raising administrative costs and undermining public sector morale. The second solution, as Fisman and Golden underscore, is to "trigger a change in social norms." Social norms are important, and muck-raking journalism and public protests can help citizens hold corrupt elites accountable. But norms cannot fill empty stomachs. Poorly paid bureaucrats often steal, extort, or moonlight in order to subsist. Reform-era China charted an unusual pathway out of this vicious cycle. Its solution was to allow street-level bureaucrats to extract some payments to top up their paltry formal salaries, while also aligning their financial incentives with long-term economic development objectives. Essentially, the state applied a profit-sharing model to the communist bureaucracy." (p. 85-86) 

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How China Escaped the Poverty Trap

Yuen Yuen Ang's "How China Escaped the Poverty Trap" (2016) is an excellent read and should be essential reading for all development studies students and actors. This book challenges many assumptions that have long been repeated as mantras in research and practice.

The author summarizes the book as one that "investigates how China escaped the poverty trap and made the Great Leap from a barren communist political economy into the middle-income, capitalist dynamo that it is today. More broadly, grounded in my analysis of China's metamorphosis, this is broadly about how development actually happens… My answer begins with a simple observation: development is a coevolutionary process. States and markets interact and adapt to each other, changing mutually over time. Neither economic growth nor good governance comes first in development." (p. 3)

The argument in summary: "Authors are often asked to give a one-line summary of their argument. Here is mine: Poor and weak countries can escape the poverty trap by first building markets with weak institutions and, more fundamentally, by crafting environments that facilitate improvisation among the relevant players… no particular solution is universally effective or ideal. Particular solutions work only when they fit the needs and resources of particular contexts and the success criteria of the players involved." (p. 16-17) Again, later in the text: "Whether it is in Western Europe, the United States, East Asia, China, or Nigeria, particular solutions work only when they fit the particular demands of their environments. Therefore, it is futile and even self-defeating to search for one replicable model believed to work always and everywhere." (p. 223)

On participation: "it must be stressed that the presence of civil society and public participation does not always produce successful collective decision making. Free-for-all participation can easily degenerate into chaos and deadlock. Indeed, Evans acknowledges, "a public administrative apparatus with the capacity necessary to both provide information inputs and implement the decisions that result from the process is a central element in making deliberation possible." Effective public participation requires a blend of top-down authority and bottom-up participation. Bottom-up participation alone does not magically produce adaptive results." (p. 58) Similarly: "It is well known that Chinese leadership makes ample use of experimentation in policy making, what I further emphasize is that effective experimentation has to be bounded. Free-for-all experimentation invites chaos, not adaptability. (p. 241)

On diversity and diversification: "Having too few or too many alternatives both impedes adaptation; effective adaptation requires a right balance of consistency and flexibility. Translated into the context of China's political system, this brings attention to the role of central leadership in setting a national agenda of change and in signalling the amount of discretion that may be exercised in different policy realms." (p. 100) Also: "The Chinese experience suggests that in order to achieve visible and rapid results, start by defining success narrowly. Focusing narrowly on a few goals (i.e. ends) should not be confused with making a few changes (i.e. means)." (p. 242)

On the downsides of the Chinese development model: "there is the problem of environmental degradation, probably the most widely discussed controversy associated with industrial transfer. Some worry that industrial transfer is merely a disguised scheme of 'pollution transfer' to underdeveloped and investment-hungry areas" (p. 214)

On inequality: "Regional inequality as a consequence of market opening and development is well-known among observers of China. It is less noticed and understood, however, that regional inequality is also a strategy of China's national development. As this chapter illuminates, a key element of China's overall development success has been to exploit highly unequal endowments across coastal, central, and western regions" (p. 221)

Ang also concisely states that "no charity could be better than thoughtless charity" (p. 238).

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The Parable of the Pauper

"Imagine a pauper who turns to two finance gurus for advice. Not only is he broke, this pauper is poorly educated and lives in a rough neighborhood. The first guru urges, "Earn your first paycheck. Once you start making money, your circumstances will improve, and you will eventually escape poverty." The second guru counsels differently: "Start by doing as my rich clients do: attend college, move to a safe town, and buy health insurance. You can only escape poverty by first creating the prerequisites for wealth." The two gurus mean well, but the advice of both clearly falls short. The first guru provides no clue as to how the pauper might earn his first paycheck, much less how to sustain a stable income. Conversely, the second guru ignores the realities of poverty. If the pauper could afford to, he would have obtained the prerequisites for a better life long ago. Attaining such prerequisites is not the solution to poverty, the difficulty of attaining them is itself the problem. The parable of the pauper and two gurus reflects a fundamental problem of development in the real world." (p. 1)

  • "no particular solution is universally effective or ideal. Particular solutions work only when they fit the needs and resources of particular contexts and the success criteria of the players involved." (p. 16-17)
  • "Whether it is in Western Europe, the United States, East Asia, China, or Nigeria, particular solutions work only when they fit the particular demands of their environments. Therefore, it is futile and even self-defeating to search for one replicable model believed to work always and everywhere." (p. 223)

- Yuen Yuen Ang (2016) How China Escaped the Poverty Trap

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Doctoral Studentship: Africa-China Relations

Deadline for receipt of applications: 21 June 2016.

This full-time, fixed-term position is available for 4 years, from September 2016 to August 2019.

The scholarship is attached to the European Research Council (ERC) Advanced Grant entitled African Governance and Space: Transport Corridors, Border Towns and Port Cities in Transition (AFRIGOS) that runs for 5 years between 2016 and 2020. AFRIGOS is led by Professor Paul Nugent and investigates the process of 'respacing' Africa, a political drive towards regional and continental integration, on the one hand, and the re-casting of Africa's engagement with the global economy, on the other. This is reflected in unprecedented levels of investment in physical and communications infrastructure, and the outsourcing of key functions of Customs, Immigration and security agencies. The principal research questions are approached through a comparative study of port cities, border towns and other strategic nodes situated along the busiest transport corridors in East, West-Central, West and Southern Africa.

We are looking for someone to work specifically on Chinese infrastructural investment and trade along transport corridors, and more broadly on China-Africa and China-EU relations in the context of regional integration initiatives in Africa. The successful applicant will be expected to develop an independent research project that will connect to the larger agenda of AFRIGOS. This may involve empirical case-studies from one or more regions of Africa. Because the student will carry out much of the research in China, or with Chinese respondents in Africa, we would intend to appoint someone with a good knowledge of Mandarin. It is anticipated that the successful applicant will hold a Masters degree from a relevant Social Science or Humanities discipline.

The supervision will be provided by core members of the project team, and in particular Professor Nugent, Dr. Wolfgang Zeller and Dr. José-Maria Muñoz or by other staff within the School of Social and Political Science.

More details.

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