The main objective of this monograph is to explore mechanisms, institutions, and instruments that helped the Chinese Leninist party-state to survive the collapse of the Soviet Union and world geopolitical resetting, enabled it to consolidate its grip over society while simultaneously implementing what looks like successful transition to a āmarket economyā (Lin et al. 2001). Communist Party of China (CPC) and its leadership ensured a transition from totalitarianism to a transformed authoritarian model leading a Chinese society and state to embrace a political model of socialist democracy (Shi 1993; Zhang 2011) with Chinese characteristics (Hu 2011, 2014). This enabled successful military modernization which is transforming the Peoples Republic of China (PRC) to the world third military power by the quality of its military modernization program, and allegedly the second in the world by military procurement volume calculated based on PPP and the first by the quantity of the military personnel. An economic vitality of Chinese state is rising, its political construction ensured limited social stability (Stein and Ngok 2013; Golenkova 2016), and its military modernization is leading China to the second place in the world by military capacity. At the same time, Chinaās East European Leninist counterparts, including former Soviet Union, forcedly embarking on āmarket reformsā in respective times, seem to sign their own death warrants, indeed without exception and joint the international community on weaker conditions and more subordinate place in the international system or even being dismantled or disappeared from the world scene. Chinese case and Chinaās development look extraordinary because China produced an authentic model of development which includes successful modernizing of economic, political, and military dimensions of previously poor state with enormous population and several unsuccessful historical attempts to modernize itself. The monograph aimed at explaining this phenomenon which has now certainly an international meaning and also explores the consequences of Chinese military modernization for strategic stability.
Chinese ātransition to marketā looks āinfiniteā with reforms each time apparently embracing new and deeper layers while conclusive systemic transformation remains unachieved. Chinese politico-economic structure overall looks sustainable and yielding to reform with the latter, however, invariably unfinished. Authors explain conundrums of the Chinese party-state vitality and its economic āinfiniteā transition by looking closer at the patterns of Chinaās āmarket orientedā price-setting reform. This reform took place prior to most of other institutional alterations aimed at Chinaās state socialism āmarriage with market economyā, indeed before abolishing central planning, SOE joint-stocking, banking reform, and the rest of attempts at transforming macroeconomic regulation. Thus, it had deeply tangible structural impact on Chinaās transition, constituting its pivotal pattern, even, perhaps, its DNA.
Chinese economists of different breeds (Sheng Hong, Fan Gang, Zhang Jun, Wu Jinglian) widely recognized the significance of price reform. Moreover, some of them (Justin Lin Yifu, Fan Gang, Zhang Jun) used the reformās apparent logic, arrangements and sequence elaborating the theory of Chinese āincremental transitionā (political economy of gradual reforms) designed to distinguish Chinaās path from ācalamitousā Russian and East European ābig-bangā experiences. Several Western China watchers followed the suit (Barry Naughton, Maria Csanadi).
This monograph explains, however, that what was widely seen as ādouble-trackā price reform (i.e., simultaneous and parallel existence of fixed and free prices with the latter gradually superseding the formerāand as some argues exemplified overall Chinese transition and reform pattern) never existed in China, at least not in presumed scale and also not leading to expected results. Closer look at the Chinese sources testifies that ādouble-trackā price setting almost immediately started to evolve into what we tend to call āmultiple-trackā price-setting and āmultiple-trackā transition. Within this setting, the quotas of raw materials, equipment, and processed goods obtained and sold on fixed and non-fixed prices became the subject of covert but intensive bargaining between party-state institutions and producers, as well as under indispensable patronage, control, and regulation of the party-state. Each ātrackā is, actually, a sum of haggled conditions on which the given regulatory or producing unit can take part in the given setting of āmarket transactionsā.
In the course of reforms, the logic, spirit, and institutions of āmultiple-trackingā penetrated the edifice of Chinaās post-Maoist political economy, structurally designing all directions of ātransition to marketā, from macroeconomic adjustments to SOE (State Owned Enterprise) joint-stocking, āprivatizationā and to more recent attempts at financial deregulation. Haggled transactions reproduce conditions of soft-budget constraint (hidden guarantees) for all systemically important units leading to their increasing abilities to privatize incomes and profits and nationalize the costs.
Party-state, in its turn, remains the key integrator of the āmultiple-trackā setting, staying political power monopolist, macro- and indeed also microeconomic regulator as well as the lender of last resort. The immense scale of macroeconomic imbalances (which is nothing but a scale of accumulated nationalized costs) does not allow the party-state to abandon in honest administrative meddling. Moreover, the latter remains the basic technique of preventing the āhaggling partiesā to crawl apart and of making the āmultiple-trackā setting stick together. Without such overt and covert meddling, the āmultiple-trackā setting is clearly prone to implosion.
Each round of āmarket reformsā in China is invariably designed to secure the party-state political and financial monopoly in order to dominate multiplied and āmorally hazardousā ātracksā. Technically speaking, this is clearly not centrally planned economy anymore. However, calling it āmarketā would be a big advance, since the underlying leverage which integrates it is still predominantly command-administrative by its nature. āMultiple-trackā setting perspective may better explain both vitality of the Chinese Leninist party-state and āinfiniteā character of its ātransition to marketā. However, these settings managed to create a second economy in the world by the volume and use a considerable portion of the earned money to militarily defend political and economic mechanisms of this system.
Thus, successes of economic and political reforms triggered a massive military reform in 2015 enabling Chinese military to enter a new quality in development. The military power which is being created through the process of economic reforms is much different from the militaries which were built during the previous period of the PRC history (Hu 2014), as well as any previous Chinese states. For the first time in history, China is intentionally building a largely expeditionary military which has protection of its overseas interests as the primary mission. Taking into account the traditionally high role of the military in the PRC political system, the key question is: How will this new military organization affect the behavior of China in Asia and other parts of the world?
For the first time in history, navy is becoming the major service in the Chinese military, attracting most of investment and human resources available, often at the expense of the ground force. But even ground force and the air force are becoming more and more prepared for expeditionary operations around the globe with expanded participation in the UN peacekeeping missions, international exercises, deployments in the various climate zones inside of China.
The development of the Chinese strategic deterrence forces is also suggesting the growing global ambitions. It is becoming more and more evident that China seeks to become a third great nuclear power after the USA and Russia, closing the gap between itself and the leaders and, possibly, making a āleap to parityā with them later in the next decade. It is clear that this intention will undoubtedly influence the global stability and defense arrangements of other nations.
The simultaneous development of three families of intercontinental ballistic missiles, nuclear ballistic missile submarines and strategic bombers, the construction of the ballistic missile early warning systems in cooperation with Russia and the new strategic missile defense are making any other explanations unlikely. China is trying to build the professional military which will be capable to affect the global security to the same extent as the Chinese economy affects the global economy. The military will be capable of projecting Chinese interests globally while the role of great nuclear power will turn any significant military conflict against China in an impossible enterprise.
At the same time, the ongoing military reform is also representing the new stage of development for the Chinese political system. Xi Jinping reforms lead to concentration of instruments of control over the military in the hands of CCP Chairman, and the 2017 reform of the Peopleās Armed Police has instituted a system of unified military control over the significant part of the internal security apparatus. The Chinese military intelligence continues to play an important role in informing the Chinese foreign policy, and the military security agencies remain powerful element in the countryās political life in general.
In the new era of the great power competition, the key issue is Chinaās ability to achieve technological modernization of the military and to engage into a full-scale military rivalry with the USA. There are various assessments of the Chinese technological projects emphasizing various factors including growing potential for indigenous innovation, intellectual property rights violations, procurement of defense technology from various sources (especially Russia) and economic and scientific cooperation with the Western countries. The US policies toward China designed to cut the Chinese access to foreign technology are to some extent guided by some of these assessments.
Different countries see China differently (Shambaugh 2020). The USA sees the ongoing cooperation with the West still to be the key condition of the Chinese development progress. At the political level, some US officials still appear to be unable to accept the Chinese ability for moving forward without the procurement or theft of technology. Chinese leadership as it is clearly seen based on both the CPC theory and practice sees international cooperation as a constituent part of an independent national way of a successful development. Limiting this cooperation is considered by the US leadership as to be a practical way to curb the Chinese progress to a full-fledged global power. However, the real picture of the Chinese defense innovation drivers is much more complicated. China is becoming a world leader in some areas of defense technology. In other cases, it is using the spillover from economic reforms aimed at ensuring an indigenous economic growth and international cooperation in some civilian sectors with the West. In some areas especially in defense, China is still highly dependent on cooperation with Russia. This is and will be a driver of further Chinese-Russian cooperation in certain areas. What made Chinaās economic and military reforms successful and a Chinese model of development a unique one is a national political mechanism ensuring continuity and change in transformation and progress of Chinese state and its power model. However, the applicability of this model and the Chinese leadership possibilities to project it well into the future without any further changes (including āBelt and Roadā [BRI] initiative) are dependent on both internal and external developments and the ability of a new generation of Chinese leadership to answer future challenges. The answer to this question is broader than just āwithinā Chinese experience but certainly directly related to it and generates further questio...