Chongqing vs. Guangdong: Which Model Will Rule China?

Politicians compete over political and economic models–and China’s future.

By Michele Scrimenti

For years people have been using terms like, “The Beijing Consensus” and “The China Model” to talk about the country’s impressive growth over the last two decades. But, as an article in last week’s Economist points out, there is no one China model.

From the article:

In Guangdong province in the south the Communist Party chief, Wang Yang, is dropping hints that his more liberal style of governing might offer a better way for running the country.

Guangdong has long been the most vibrant and economically liberal province in China. Now the idea that economic liberalism might be matched by greater political openness has come to be called the “Guangdong model”.

(A brief pause for shameless self-promotion: We mention Wang Yang all the time over at our sister site. He’s backing our Chinese partner, the Hanson Group, so we’re kinda biased.)

The Chongqing Model

The Economist then contrasts this model with Bo Xilai’s, the attention-seeking Party Secretary of Chongqing. (For a closer look at Bo, this Sydney Morning Herald piece is excellent.)

Bo trumpets the importance of state-owned enterprises, traditional socialist values and the inspirational power of Mao-era songs—while getting tough on organised crime. Maoist websites lionise Mr Bo; the Chongqing model is held up in shining contrast to that of Guangdong and its “capitalist roaders”.

Another thing not mentioned in the article is press freedoms. While media censorship is pervasive and often enforced by the central government, Guangdong has been able to get away with having a very aggressive, push-the-envelope press corps for around 20 years. (NB: That doesn’t always work out well.) Chongqing papers, on the other, tend to toe the party line.

There are more differences between Chongqing and Guangdong that the article doesn’t bring up, but that would take a lot more time, and I want to talk about something else the article didn’t address: The regional “models” aren’t limited to Guangdong and Chongqing.

Back-door boom towns

After a wave of bankruptcies a couple months ago, Wenzhou, a prosperous city in Zhejiang, is on the outs. The city has boomed on grey market lending to export oriented SMEs. When the rates turned usurious and the entrepreneurs relied too much on loans for liquidity, the house of cards fell down. Still, with slight government oversight and regulation (which is happening in Wenzhou now), the model could work.

Just south of Wenzhou is another city that got rich through back-door means. Xiamen, the richest city in Fujian, the province opposite Taiwan, was at the center of a massive smuggling ring that helped enrich its citizens. The success of the city, which continues to be a major trading port and tourist destination, is also due to its status as a Special Economic Zone, which provided tax breaks and subsidies, thereby tempering the free market zeal of Wenzhou with a dash of government supervision. (Fun fact: Xi Jinping, future president of China, was governor of Fujian at the height of the smuggling.)

False Dichotomy

Beyond all these omissions, the biggest mistake by the Economist is pitting the two models against each other. It sounds sexy, but it’s inaccurate. (The article quotes a researcher saying something to that effect.)

First, you’ve got an inland province vs. a coastal one. The coast has natural advantages that even the mighty Yangtze (which flows through Chongqing) cannot compensate for. Therefore, the Guangdong Model couldn’t be applied wholesale to central and western provinces.

Also, I listed the Xiamen and Wenzhou as additional models to make clear there are way more than two choices. (There are more than four, but this post is already too long.) Different provinces have and will follow different paths to growth.

So, to answer the question I posed in the title of the blog, “Which model will rule China?” My best guess is: it’ll be a little bit of Chongqing and Guangdong, mixed in with whatever that province has cooked up on its own. In 20 or 30 years, it will probably be obvious that we’re dealing with the United Provinces of China, not the People’s Republic.


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