China's Regions in an Era of Globalization

Tim Summers

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9781134818464
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

The rise of China has been shaped and driven by its engagement with the global economy during a period of intensified globalization, yet China is a continent-sized economy and society with substantial diversity across its different regions. This means that its engagement with the global economy cannot just be understood at the national level, but requires analysis of the differences in participation in the global economy across China's regions.

This book responds to this challenge by looking at the development of China's regions in this era of globalization. It traces the evolution of regional policy in China and its implications in a global context. Detailed chapters examine the global trajectory of what is now becoming known as the Greater Bay Area in southern China, the globalization of the inland mega-city of Chongqing, and the role of China's regions in the globally-focused belt and road initiative launched by the Chinese government in late 2013.

The book will be of interest to practitioners and scholars engaging with contemporary China's political economy and international relations.

1

GLOBALIZATION AND CHINA

The context for this exploration of China’s regions in an era of globalization begins with a discussion of what is meant by ‘globalization’ itself. This is not such a straightforward question to answer, as even though globalization may have become a ‘paradigmatic’ concept in describing global political economy since the 1980s,¹ it remains a highly contested one. Interpretations of globalization have ranged from seeing it as ‘neutral’ economic and commercial processes driven by growing trade and investment to the globalization of capitalism following the end of the Cold War, or as the political and cultural spread of ‘Western’, especially US, influence.² A conventional view of globalization sees it as ‘an objective process of market integration on a global scale, driven by developments in transportation and communication technologies’.³ This economic emphasis is at the heart of many understandings of globalization – including, as we will see, in China – and the role of business in globalization is a key part of its emergence. But globalization is about more than economic integration. The changes in markets, trade and investment, and business operation are intertwined with politics and social issues, from questions of where power lies in the global economy to the much-debated problems of socio-economic inequality between and within countries.⁴

As many writers have pointed out,⁵ globalization is not a new phenomenon, and it would be more accurate to refer to a ‘recent’ or ‘current’ phase of globalization when talking about developments from the 1980s onwards. The earlier phase of globalization this period followed had been characterized by the Bretton Woods institutions (World Bank, International Monetary Fund) which were key to the management of parts of the global economy – at that stage, this did not include China – in the decades after World War II. The features of this period included growth in international trade, but also a reasonably strong role for national governments in the management of flows of goods and capital across their borders. However, this balance did not survive the economic shocks of the 1970s, and in the 1980s and 1990s the Bretton Woods monetary regime was superseded by ‘a more ambitious agenda of economic liberalization and deep integration’, what Harvard economist Dani Rodrik calls ‘hyperglobalization’.⁶ The choice of terms to describe this has reflected intense academic debates about how to characterize and explain this period.⁷

The main characteristics of this period range from the emerging dominance of multi-national corporations across many sectors of the economy, the changing nature of transborder trade and investment as well as its rapid growth, to the growth of financial globalization, and the role of national governments and global institutions in facilitating these developments. The ways that these developments are interlinked are complex, but they have taken place in the context of the spread of capitalism, and an ideology of ‘free enterprise as the key to continuous economic progress’.⁸ The spread of this capitalist globalization in the 1980s was partly enabled by the ‘opening up’ of China (as we will discuss further below), and subsequently by the end of the Cold War.

A second important feature of this phase of globalization of particular relevance to understanding China’s relationship with globalization is the changing nature of production. During this period a ‘business revolution’ has stimulated the transformation of national firms into transnational (or multinational) corporations through the development of supply chains and outsourcing on a global scale.⁹ These global production networks constitute an ‘international division of labour, in which each function or discrete stage of a value chain is spatially or geographically relocated in the most efficient site, and undertaken by different firms’.¹⁰ Such production networks were not a novelty of the 1980s, and in east Asia had been developed with Japanese corporations in the lead from the 1960s onwards; but the scale and pace of their development on a global scale grew substantially under the new phase of globalization from the 1980s onwards, spurred by technological development, which enabled the rapid exchange of information on a global scale.

These phenomena have not just been driven by corporations. National governments and international institutions such as the World Bank and IMF have facilitated these developments through measures to liberalize international trade and investment, as have domestic policies that have cemented the rights of foreign investors, increased labour flexibility, and reduced corporate taxes. In doing this, relationships between states have often become competitive as governments have sought to maximize national competitiveness in attracting investment, leading to convergence across countries in many areas of economic policy. The outcomes have included increased power of capital relative to labour, a somewhat circumscribed space for state policies, and state capture by business interests, what some have described as ‘elected plutocracy’. The idea that states have been passive responders to the influence of global capital has also stimulated debate over the extent to which globalization has challenged the pre-eminence of the nation-state as a ‘power container’, as the transformation of states and their economic interdependence during this period of globalization has had an impact on international relations by diluting the ability of national governments to set the policy agenda or control outcomes. This has also enhanced the relevance of looking at the involvement of sub-national governments in international affairs (sometimes known as ‘paradiplomacy’).¹¹

The resulting structures of global political economy have enabled the industrial organization of production on a global basis, with the land, labour and resources available in ‘new frontiers’ (such as China from the 1980s) being pulled into more complex global production hierarchies; this has been further stimulated after the demise of the socialist alternatives to capitalist modernity and decline of anti-systemic movements, which previously provided the focus for labour resistance.¹² Production has become fragmented across multiple geographies and firms, producing new organizational structures in the corporate world. In many sectors, though, in spite of this fragmentation, supply chains have been organized and managed by large oligopolistic ‘system integrator’ firms – from Apple to Boeing – which are able to play this role because they have access to the capital and human resources to engage in the intensive research and development activities necessary to remain globally competitive.¹³ Potential new entrants, particularly from developing economies, are consequently required to climb a steep and competitive curve in order to stand a chance of becoming significant players on a global – and sometimes even a national – playing field.

For all the talk of market economies and competition, globalization has therefore not led to a ‘flat world’. The intensified hierarchies and the dominance in many sectors of a small number of firms means that the ‘commanding heights’ of much of the global economy have – at least until very recently¹⁴ – remained predominantly in the hands of firms based in developed economies, especially the US, Europe, and Japan. This raises specific challenges for firms and governments in emerging economies such as China, and this is an important factor informing industrial policy in China today.

The final feature of this phase of globalization that will be particularly relevant to analysis of the relationship between China’s regions and globalization since the 1980s relates to the spatial structures of global political economy. This can be encapsulated in the metaphor of a ‘network society’, through which sociologist Manuel Castells analyses recent transformations in global political economy.¹⁵ In this conceptualization, the dominant spatial configurations of political economy during recent decades have increasingly become those of global networks between metropolitan areas, with capital, information, technology, and people (elites more than workers) flowing across borders through the nodes in these networks – this conceptualization reflects the production networks described above too. An important feature of this network organization is an emphasis on the development of megalopolises or ‘global cities’, which will be touched later in this book. Importantly for our purposes, regions, too, are reformed during this phase of globalization. This ‘shift in the allocation of resources from surfaces, or national spaces, to nodes in global networks’¹⁶ is in contrast to an earlier period where bounded surfaces were the dominant spatial structure within which political economy was imagined and realized, reflected in the idea of the nation-state as the dominant political-economic ‘power container’.

The network metaphor therefore highlights the extent of state transformation during this era, as well as the spatial limitations of globalization and the marginalization of territories and peoples not included in these networks. Of particular relevance to Chinese and other efforts to extend globalization, the proactive development of infrastructure to develop such networks can be seen as a form of ‘spatial fix’ to reduce spatial barriers to and speed up flows of capital, in particular through the building of transport networks to bring products to market.¹⁷ Technology – or the technological subjugation of distance¹⁸ – is an essential ingredient of this process through which ‘space organizes time in the network society’,¹⁹ though technology should be seen as an enabling tool rather than driver of globalization.²⁰ This network society has also seen the rapid growth in financial globalization, which – as the post-2008 global crisis made clear – has increasingly driven developments in the global economy.

China and globalization

These features of globalization – the shift to a neoliberal ‘hyperglobalization’, the business revolution of production networks and global value chains, the dominant role of finance, and the spatial network structures these have created – are key to understanding how China’s economic and social transformations since the 1980s relate to these processes of globalization. Many explanations of China’s development during this period emphasize the role of policy change and developments within China, starting with the decision pushed by Chinese leader Deng Xiaopin...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Acknowledgements and note
• Introduction
• 1 Globalization and China
• 2 Regional policy in contemporary China: a historical overview
• 3 The Greater Bay Area: from factory floor to global challenger
• 4 Chongqing: globalization moves inland
• 5 The belt and road initiative and China’s regions
• 6 Conclusion: China and its regions in an era of globalization
• Bibliography
• Index