Pathways to Sustainable Growth
Edited by Anis Chowdhury and Iyanatul Islam
Chapter 12: Marketization, democracy and economic growth in China
12. Marketization, democracy and economic growth in China Leong H. Liew1 INTRODUCTION Interest in China’s political change and its progress towards democratization2 is strong. There is a considerable literature on this topic. The bulk of it is written largely from a political science perspective that examines the impact of Chinese economic reform on the development of civil society (for example, He, 1997; Unger, 1996; White et al., 1996), legal reform (for example, Pei, 1997; Tanner, 1994) and political governance (for example, Kelliher, 1997; O’Brien, 1994). Possibly because the literature is largely written from a political science perspective, its primary focus is on how economic reform and the resulting economic growth have aﬀected the process of democratization in China. The cross-country evidence that democracy is positively correlated with economic growth is overwhelming (Diamond, 1992: 466; Przeworski and Limongi, 1997: 156). But does the positive correlation between democracy and economic growth mean a causal relationship between the two variables? And if it does, what is the direction of this causality? Does economic growth promote democracy or does democracy promote economic growth? Or is the relationship symbiotic? This chapter explores these questions with regard to contemporary China. It argues that early moves towards democratization in the post-Mao reform era were due more to a speciﬁc cause of economic growth – marketization of the economy – than to economic growth per se. Since marketization3 is responsible for the impressive growth rates in the reform era, it can easily be mistakenly concluded that economic growth...
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