China's Changing Guanxi Capitalism: Private Entrepreneurs between Leninist Control and Relentless Accumulation

McNally Christopher A
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McNally Christopher A: East-West Center and Chaminade University

Business and Politics, 2011, vol. 13, issue 2, 1-31

Abstract: Guanxi and guanxi capitalism are much-debated terms in the context of China's evolving political economy. This article explores the changing nature of China's guanxi capitalism. It analyzes first various aspects of guanxi capitalism, a unique conceptual blend infused with seemingly incongruous cultural and historical meanings drawn from both Chinese and Western roots. It then introduces three case studies of private firms, illustrating empirically how Chinese entrepreneurs' relationship with the political system is evolving. The article ends by assessing the ways in which political factors, guanxi practices and capitalist accumulation are interacting and changing. I hold that guanxi capitalism is playing a crucial role in realigning the interests of state and capital in China. It yields idiosyncratic benefits to certain Chinese private firms, while also bridging the logics of freewheeling capital accumulation and authoritarian control in a state-dominated economy. In this view, guanxi capitalism encompasses both contradictory and complementary institutional logics. Since the persistence of Leninist control generates "deliberate ambiguity" in how China's private sector is governed, the penetration of guanxi networks into government-business relations creates institutional space that enables both Leninist control and relentless capital accumulation to proceed, in turn lending China's emergent capitalism a unique quality.

Date: 2011
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DOI: 10.2202/1469-3569.1339

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