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Over the course of his study, political scientist Julian Gruin spoke to 60 policymakers, bankers and (retired) members and officials of the Chinese Communist Party (CCP) to get an answer to the question that has been occupying academics for some time: namely, how China was able to become an economic superpower in the space of roughly 30 years without this being accompanied by a transition to more democracy and greater individual freedoms.

Chinese economy

Western perspective

However natural that question may seem from a Western perspective, it ultimately says more about us than it does about China. The Western, eurocentric perspective assumes that democracy based on the rule of law, individual freedoms and a strict separation between the free market and the state must be the ultimate goal for any nation.

However, because the Chinese state apparatus is synonymous with the CCP and all banks are owned by the state, the distinction between the state and the market is far less clear cut in China. For that reason, a lot of Western research into China’s rampant economic growth had stalled, being unable to resolve the apparent contradiction between a free market economy and an authoritarian state, which, after all, cannot be explained from a theoretical, Western perspective.

Gruin was initially in Beijing to study the Chinese response to the 2008-2010 financial crisis. His research focused on the question of why Western powers had been forced to make every effort to prevent mass redundancies and to bail out the banks, while the Chinese economy continued to grow steadily. Gradually, Gruin came to the conclusion that it was the traditional Western division between the market and the state that prevented him from coming to a plausible explanation.

The reality of the Chinese system

By speaking to more than 60 insiders, Gruin was able to circumvent the traditional eurocentric perspective and was able to identify and outline the way in which the Chinese Communist Party controls the banking system and, as such, controls the Chinese economy.

This is information that is neither public knowledge, nor can be found in books or annual reports that are publicly available. Getting individuals to speak candidly proved no easy feat, if only due to the fact that the respondents owed their careers to the CCP and consequently had no interest in sharing their views. For that reason, Gruin had to gain the trust of every individual involved before a conversation could even take place. This often involved going out with them repeatedly, but occasionally also meant giving an official’s daughter tennis lessons.

Based on the interviews, Gruin identified how the CCP retains control of the Chinese banks. The strength of that control is demonstrated by the HR system, which has been rigged to rotate party members-cum-bankers between key positions within the various banks in order to prepare them for positions within the party.

The loyalty to the CCP of the individuals Gruin interviewed for his book appeared not chiefly motivated by personal gain, but rather was based on a deeper common social conviction that the CCP had brought the country socio-economic stability. Asked what he considered to be the most remarkable discovery he made, after some reflection, Gruin replies: ‘The realisation that many of the people I interviewed were aware of the darker sides of the CCP. They recognised the shortcomings, but were nevertheless convinced that this was the best system for China.'

About the author

Julian Gruin is an Assistant Professor of Transnational Governance at the University of Amsterdam. From 2016-2019 Gruin is also an ESRC FRL Fellow at the University of Warwick. Gruin works in the disciplines of international political economy and economic sociology, his research interests are global financial governance, Chinese political economy, and the evolving nature of power in the global economy. Gruin obtained a PhD from Oxford University.

 

Dr J.Y. (Julian) Gruin

Faculty of Social and Behavioural Sciences

Programme group: Political Economy and Transnational Governance