The 1990s: Washington Consensus in China?
The 1990s, especially the years after 1992, saw the regime’s abandoning of socialism and self-reliance. Radical market Leninist reforms were implemented in conjunction with deeper external integration. The nomenclatura privatization of state-owned enterprises (SOEs) created a huge income disparity, leading to substantial underconsumption. Meanwhile, wider access to foreign investment undercut domestic enterprises, bringing China’s industrialization to a standstill. The interaction of reform and opening under the worst conditions therefore reinforced China’s dependence on overseas markets and foreign investment to maintain high growth rate, and set China on the path of dependent development. The declining economic momentum at the turn of the millennium drove China for a WTO membership in a bid to resume an export-led, FDI-driven high growth to address the regime’s overriding concern for legitimacy.