New Left Review 72, November-December 2011

Hung Ho-fung

PAPER-TIGER FINANCE?

After more than thirty years of capitalist transition, and with most of its economic activities driven by the pursuit of profit, few would dispute that the Chinese economy is fully capitalist now. [1] Carl Walter and Fraser Howie, Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise, John Wiley & Sons: Singapore 2011, £19.99, hardback 234 pp, 978 0 470 82586 0 Yet perhaps that label alone is insufficient to capture the many twists and turns of the prc’s post-Mao development. Huang Yasheng, for example, distinguished two stages in his acclaimed Capitalism with Chinese Characteristics (discussed in these pages by Joel Andreas, with a reply from Huang). First had come the entrepreneurial capitalism of the 1980s, when growth was driven by the dynamism of rural private enterprise, as well as by collective firms, many of which were private ones in disguise. This had been followed from the early 1990s by a turn to state-led capitalism, with large, urban state-owned enterprises displacing and subjugating the private sector. The soes, no less driven by profit motives, benefited from fiscal, financial and policy advantages offered by the ccp; yet their monopoly status, across sectors from telecommunications to banking, rendered them less efficient than the competitive private sector, Huang argued.

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