China's New Leftists and the China Model Debate after the Financial Crisis

In the wake of the 2008 global financial crisis, China’s leadership is now paying specific attention to potential limits of the free market system as a basis for achieving optimum policy outcomes. Meanwhile, the Chinese intellectual community is also embroiled in a fierce debate, with the pro-market neoliberals and the pro-equality New Leftists serving as the two primary camps in conflict on whether China should continue its “market-centric and efficiency-first development model.”

The New Left is an academic camp in China arguing that economic policy should not only focus on boosting growth but also on establishing a solid social safety net and enhancing social equity as well. After the crisis, the New Leftists were quick to pronounce the death of the market-centric approach and propose with much fanfare the advance of state capitalism as a new development model that the Chinese leadership should adopt.

Against this backdrop, Charles W. Freeman III and Wen Jin Yuan conclude that though the market-centric and efficiency-first doctrine has produced some glaring social inequities that require constructive policy attention, the solutions proposed by the New Leftists of strengthening state control over economic life will not necessarily resolve the widening income gap and sense of social alienation felt by many Chinese left relatively behind by thirty years of runaway growth; indeed it may even exacerbate social stability issues underlying the justified concerns of the New Leftists. Nevertheless, in addressing social discontent issues, the incoming Chinese leadership in 2012 may continue to tilt the policy balance toward the New Leftists and concentrate more on diminishing the income gap by fiat, rather than drawing on market-oriented reforms.

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Charles Freeman
Senior Adviser (Non-resident), Freeman Chair in China Studies

Wen Jin Yuan