China: A Socialist Model of Development?

Abstract

In the past 40 years, China's growth has been phenomenal. Since the global financial crisis and the Great Recession in the major capitalist economies, China has continued to close the output gap with the leading capitalist economies. Will China continue to catch up in the next 40 years or will it suffer the fate of the so-called "middle income trap" experienced by other "emerging" economies? The paper considers three possible explanations for China's economic progress: that offered by: neoclassical growth theory; a Keynesian-style forced investment model; and a Marxian model based on the laws of value and the productivity of labor. The neoclassical model highlights China's comparative advantage of cheap and plentiful labor; the Keynesian model concentrates on the role of China's high investment ratio; the Marxist model emphasizes China's exceptional curbing of the law of value in capitalist production, allowing the faster expansion of labor productivity while revealing the essential contradictions within "socialism with Chinese characteristics".