- There is extremely tough market-driven competition in China, with factories operating on such small margins that they go bankrupt one year and start up with something new the next. At the same time, the state plays a crucial role in major strategic investments in industries such as mining and telecommunications, says Heidi Østbø Haugen.
She is a China researcher and professor at the Department of Sociology and Human Geography at the University of Oslo, and is currently publishing Power and Market: An Introduction to China's Economy.
- China's economy is shaped both by this cut-throat market competition and by a state that sets clear priorities and boundaries, she says.
Does not want alternative centres of power
Heidi Østbø Haugen stresses that the Chinese model is a difficult balancing act.
- Chinese authorities occupy a paradoxical position. They need market forces to drive the economy forward, but at the same time they do not want alternative centres of power that could threaten the authority of the Communist Party, she says.
She points out that China has been effective at using market mechanisms to raise people's standard of living, which has also provided the state with important resources. At the same time, the state must control the market in order to retain its current monopoly on power.
- This means that wealthy entrepreneurs, technology giants and regional economic elites must not become too powerful. They must be stopped when their agendas do not align with those of the state, the China researcher explains.
A three-tier pyramid
- To understand China, it can be useful to imagine the Chinese economy as a kind of pyramid, says Heidi Berg, an economist and sustainability director for the Confederation of Danish Industry in China.
- At the top, there is a very strong central government with very clear ideas about the direction it wants the entire economy to take. Then there is a middle tier consisting of state-owned companies and the provinces, says Berg, noting that many decisions in China are made at the provincial rather than central level.
- And then there is the bottom, third element of the pyramid, which consists of the vast majority of companies. These are privately owned small businesses that in fact operate in an extreme market economy, Berg says.
According to her, this three-part structure enables China to operate a centrally controlled economy while at the same time maintaining such a dynamic market economy.
This text is based on an episode of the University Podcast, the University of Oslo's own podcast, featuring Heidi Østbø Haugen, a China researcher and professor at the Department of Sociology and Human Geography at the University of Oslo, and Heidi Berg, an economist employed by the Confederation of Danish Industry in China.
They discuss China's economy, history and everyday life. They talk about how China is in many ways a leading country in terms of climate policy and the expansion of public transport. They explain why many Chinese people today do not want more children. They examine the West's view of China and China's view of itself, and, not least, some Chinese paradoxes.
Heidi Berg points to the dramatic growth China has undergone over the past fifty years.
- Part of this development has produced a highly educated, capable and internationally minded population, one that is aware of both global problems and the challenges facing China in a completely different way than earlier generations were, Berg notes.
She sees this development as a paradox for a China that wants to retain full state control.
- How can you continue to govern a people as you have done until now when those same people have developed different interests and different views of the world? Berg asks.
A new generation that is not so easy to govern
Heidi Østbø Haugen also sees the challenges facing the Chinese state in a new generation that does not want to be governed in the same way as its parents' generation.
- China's growth was built on cheap labour: people who were willing to work long days in factories. The work was monotonous and physically demanding. At the same time, they had faith in the future, which helped them endure - not least for the sake of the next generation, Østbø Haugen says.
She refers to "the grand Chinese narrative" surrounding the economic transformation China has experienced, a narrative that large parts of the population have believed in. It has been about restoring China to its former greatness.
- The Chinese Communist Party has positioned itself as the guiding star of this narrative, and as the only force capable of returning China to its former glory, Østbø Haugen says.
However, she emphasises that such a grand narrative can only work if citizens are able to create their own individual or family projects - projects involving a belief that their lives will improve decade by decade, just as China has grown decade by decade.
And this is where another paradox emerges, in the China researcher's view.
- For the state, it has now become a challenge that some parts of the population do not feel that life is improving decade by decade. They are not confident that the good education they have received will give them a better job than their parents had. Nor are they confident that they can give their children the childhood they would like them to have, Østbø Haugen says.
They lie flat
She points out that there has been little room for protest in China's one-party state. Nevertheless, today's young people have found a way to protest through a phenomenon known as "lying flat".
- Some literally lie down at home for a shorter or longer period. They simply opt out. Others do it more metaphorically: perhaps they move to the countryside in the hope of creating a slower, better life, Østbø Haugen says.
She stresses that the state sees this as laziness and a lack of loyalty to the parents' generation.
Heidi Berg, for her part, emphasises that "lying flat" is not necessarily a political act, but is just as much about a feeling of hopelessness.
- For many years, China had annual growth of more than 10 per cent, with enormous career opportunities and salary increases for large parts of the population. When that is the benchmark, growth of 3 per cent - which is normal and considered good in Europe - becomes a defeat. And that, too, is a Chinese paradox, Berg says.
