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Tuesday, April 13, 2010

China's "Beijing Consensus" Challenging the Washington Consensus

Since its formal elaboration in 1989, the Washington Consensus has been largely regarded as the premier model of growth for developing nations. However, this framework is increasingly coming under fire as China continues to experience large-scale economic growth, utilizing a methodology almost entirely counter to the Washington Consensus. China's success using this alternative model is garnering attention from other developing nations, who have typically been suspicious of the Washington Consensus since its inception. With China on the rise, unless a catastrophic economic event occurs to dampen the success of this new "Beijing Consensus", it is likely the neoliberal Washington Consensus is on its way out.

Washington Consensus

The Washington Consensus, as delineated by John Williamson, has ten core tenets:

1) Fiscal Discipline
2) Restructuring Public/Social Expenditure Priorities
3) Tax Reform
4) Liberalizing Interest Rates
5) Competitive Exchange Rates
6) Trade Liberalization
7) Liberalization of Inward Foreign Direct Investment
8) Privatization
9) Deregulation
10) Property Rights

Under the model, successful implementation of these principles should result in economic growth in general, and per capita GDP expansion particularly. Regardless of espoused results many have rejected this model, including a majority of the developing world where it is widely felt that the Washington Consensus was simply a new mechanism for the developed core to take advantage of the developing periphery. Indeed, Williamson himself has acknowledged that the Washington Consensus "has been interpreted to mean bashing the state, a new imperialism, the creation of a laissez-faire global economy, [and] that the only thing that matters is the growth of GDP." Argentina’s case is often cited as a quintessential example illustrating the failures of this model.

Beijing Consensus

China, as opposed to the rigid, structural framework of the Washington Consensus, has adopted a much more dynamic, fluid, and tailored policy. It’s driven by three primary themes, which are:

1) Innovation
2) Pursuit of Dynamic Goals/Rejection of Per Capita GDP

3) Self-Determination

Innovation has long been emphasized by China, and it a critical component of the Beijing model. According to Joshua Ramo, “In order to outpace the ‘friction losses of reform’, government must actively innovate in order to address the challenges introduced by the changing economic and social environment. The Chinese government often utilizes public opinion polls and survey to determine the issues most important to the public and address them first.

China’s rejection of per capita GDP as a measure of economic growth is part statistical evolution, part rejection of Western policy frameworks. Instead, the Beijing Consensus places emphasis on measures such as quality of life and individual equity, which helps provide a more comprehensive picture of living conditions and illuminates trends that have a disparate impact on certain groups. By stressing these new metrics, China has also shown the necessity and feasibility of pursuing multiple goals simultaneously. The following quote from Yusuf and Nabeshima illustrates this:

“[China’s development strategy], according to Premier Wen Jiabao, involves putting people first and promoting reform and innovation in accordance with the ‘five-balances’: balancing urban and rural development, balancing development among regions, balancing economic and social development, balancing development between man and nature, and balancing domestic development with opening wider to the outside world.”

Finally, in concert with much of China’s foreign policy, the Beijing Consensus stresses the need for developing nations to resist pressures from developed nations, particularly the U.S. To set an example of this, China claims it does not impose its own priorities or agenda on developing partner nations. This may be debatable, but the fact that China espouses this ideology at all is a stark contrast to the Washington Consensus’ rigid policy framework.


The schism between the Western “regulatory state” and the Eastern “development state” has become pronounced and will only continue to grow. The Western version has advocated refraining from interfering in the marketplace, except to insure certain limited goals, whereas China has intervened actively in the economy in order to guide and support large-scale, substantive goals. However, it is not the theory itself, but rather China’s success which could ultimately cause the demise of the Washington Consensus. Utilizing this model, China has cut the number of its citizens living in absolute poverty by 235 million. The World Bank confirms, “China has contributed to 67% of the total reduction of global poverty during the last 25 years” (People’s Daily, 2008). With these levels of success, it may only be a matter of time before the Beijing Consensus finds a new home in Washington.


--. 2008. “235 million people lifted from absolute poverty.” People’s Daily (English).

Ramo, Joshua Cooper. 2004. “The Beijing Consensus.” The Foreign Policy Centre.

Williamson, John. 2004. “A short history of the Washington consensus.” Proceedings from 2004: From the Washington Consensus towards a new Global Governance. Barcelona.

Yusuf, Shahid and Kaoru Nabeshima. 2006. China’s Development Priorities. The World Bank.

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