TWQ: The Influence and Illusion of China’s New Left - Winter 2012

The 2008 global financial crisis was a wake-up call for China’s leadership about the potential limits of the free market system to achieve optimum development policy outcomes. The 30-year consensus among China’s leadership has been that economic policy should be primarily market-centric and efficiency-first. However, there is now a growing divergence of opinion among Chinese intellectuals on whether China should continue this fundamental course.

There are two primary camps in the debate: pro-market and efficiency-first Rightists, who favor a continued emphasis on GDP growth, and the New Left (xinzuopai) camp, which places greater emphasis  on building a social safety net and improving social equality. While the debate may appear at times to be academic to the untrained eye, Chinese intellectuals also serve as informal government advisers on policy issues, so their viewpoints can have a strong influence on Beijing. The influence of the New Leftists in particular appears to be growing, as members have published a number of best-selling books. Considering that the underlying goal of both camps is to preserve political and social stability in China, the stakes are high.

After the financial crisis, the New Leftists were quick to pronounce the  death of the market-centric approach, and proposed with much fanfare the advance of “state capitalism” as a new development model that the Chinese leadership should adopt. Although the market-centric and efficiency-first doctrine has produced some glaring social inequities which require constructive policy attention, the solutions proposed by the New Leftists to strengthen state control over economic life unfortunately will not necessarily resolve the widening income gap and sense of social alienation, felt by many Chinese left relatively behind by 30 years of runaway growth. While their objectives are laudable, the New Left’s proposed solutions may indeed even exacerbate social stability issues. Nevertheless, in addressing social discontent, the incoming Chinese leadership in 2012 may continue to tilt toward the New Leftist proposals and concentrate more on diminishing the income gap by fiat, rather than drawing on market-oriented reforms.

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Charles Freeman
Senior Adviser (Non-resident), Economic and Trade Affairs

Wen Jin Yuan