China Puzzle Case Study

The so-called China Puzzle refers to the question whether China could sustain its ruling position and ensure the continuous high economic growth of the last two decades: According to the official data, China has maintained an average annual growth rate of 9,7 percent during the last 30 years; furthermore, the GDP p.c. surged from 250 USD in the late 1970s to about 4’705 USD by 2010 (China Statistical

Yearbook, 2010).

In both five-year plans of the 11th and 12th National People's Congress, the regime articulated inter alia two major objectives: on the one hand ensuring "higher quality growth" shall guarantee high economic growth rates but also take into account issues of environmental deterioration. On the other hand establishing a

harmonious

Perspectives on the stability of China's system differ. Some scholars with focus on the economic institutions argue that China might function as a new economic growth model, constituting an alternative to the growth model based on the

Washington Consensus (Zhao, 2010; Kennedy, 2010). Here, Musacchio and Lazzarini

(2012) suggest that China's hybrid form of state capitalism could maintain its economic growth performance. Others argue that China's current institutional set-up could rather be perceived as a model of transition, having appropriate characteristics for catching-up; yet a reaching high-income level at a later stage of economic development might require an institutional transition (Fatás and Mihov, 2009). A different approach considers the interdependency of economic and political institutions. Taking the Tiananmen Incident in 1989 as an indicator for the Chinese people's demand for political participation, some argue that - in reference to Lipset's and Fukuyama's modernisation theory - economic growth might trigger the emergence of an active civil society that will initiate a democratisation process

(Lipset, 1959; Fukuyama, 1993). Yet, a possible growth slowdown might