Governing the 'Chinese Dream': Corruption, Inequality and the Rule of Law

Rafael   Di Tella; Meg  Rithmire; Kait  Szydlowski

Case | HBS Case Collection | December 2014 (Revised November 2015)

Governing the 'Chinese Dream': Corruption, Inequality and the Rule of Law

by Rafael Di Tella, Meg Rithmire and Kait Szydlowski

Abstract

Xi Jinping assumed his position as head of China's fifth generation of leaders in 2012. Xi was head of both the People's Republic of China and the Chinese Communist Party, which had ruled China since 1949. Xi inherited a country far more unequal than the one that Mao Zedong, Communist China's first leader, had left behind in 1978. The growth of markets had made China much wealthier, but also generated many social problems, including inequality, corruption, and social protests. This case discusses China's political and economic development in the 20th century to situate Xi's—and China's—contemporary challenges.

Keywords: China; Growth; inequality; Wealth and Poverty; social stability; perceptions of inequality; chinese dream; chinese political thought; corruption; Equality and Inequality; China;

Language: English

Format: Print

34 pages

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Citation:

Di Tella, Rafael, Meg Rithmire, and Kait Szydlowski. "Governing the 'Chinese Dream': Corruption, Inequality and the Rule of Law." Harvard Business School Case 715-023, December 2014. (Revised November 2015.)

In late October 2011, after losing 1 billion of dollar reserves in one month, the Argentine government began imposing a series of currency controls, limiting the ability to buy foreign currency. As of October 2011, Argentina's tax collection agency AFIP had been granted the power to approve or reject all requests to buy dollars with pesos in Argentina's banking system. By June 2012, AFIP had removed "saving" as a legitimate explanation. While the official exchange rate was approaching six pesos to the dollar, the black market was demanding almost ten pesos to the dollar—a nearly 65% difference. These were not the first currency restrictions that Argentina had imposed on its citizens.

Book Abstract: Although comparative politics is conventionally seen as the study of politics across countries, the field has a longstanding and increasingly prominent tradition in national contexts; focusing on subnational units, institutions, actors and processes. This book offers the first comprehensive assessment of the substantive, theoretical, and methodological contributions. With empirical chapters from across the contemporary Global South, including India, Mexico, and China, as well as Russia, the contributors show how subnational research provides useful insights about substantive themes in political science, from regimes and representation, to states and security, to social and economic development. In addition to methodological chapters with specific guidance about best practices for doing subnational research, this volume also proposes a set of strategies for subnational research, assesses their strengths and weaknesses, and offers illustrative empirical applications.

Working Paper | HBS Working Paper Series | 2019

Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms

Meg Rithmire

Recent focus on China’s surging outward investment has overlooked a puzzling fact about China’s policy regime governing outward investment: rather than increasing liberalization and enhancing domestic “push” factors, China’s policy toward outward investment has been ambivalent and vacillating, pushing large-scale internationalization while also embracing strict capital controls. This paper accounts for China’s ambivalent policy moves by focusing on the domestic coalitions that sustain capital openness. I show how three types of domestic Chinese capital—state capital (SOEs), private capital (SMEs and large competitive firms), and crony capital (firms who enjoy access to profits based non-market rather than market advantages)—differ in political vulnerability and therefore pursue globalization in different ways. While all prefer capital openness, they do so for different reasons: state capital uses preferential access to domestic credit to expand internationally for political power and prestige in addition to profits; private capital, in keeping with the theoretical expectations of the international business literature, seeks markets and/or efficiency; and crony capital seeks to transform domestic access into international safety as quickly as possible. China’s policy ambivalence can largely be explained as the party-state’s attempts to discipline or empower these groups.

Keywords: outward investment; capital controls; Investment; Global Range; Capital; Globalization; Policy; Government and Politics; China;

Citation:

Rithmire, Meg. "Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms." Harvard Business School Working Paper, No. 20-009, June 2019. View Details

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