The Dark Side of Globalised Production: Economic ‘Rebalancing’ in Contemporary China

  • Steve RolfEmail author
Part of the International Political Economy Series book series (IPES)


China’s post-crisis economic performance has been remarkable amongst major economies. Many analysts see China increasingly delinking from the global economy, powered by its domestic growth engine of consumer spending. Such a ‘rebalancing’ is predicated, so the story goes, on a structural shift from reliance on export demand to local demand. This shift, in turn, should be further encouraged: either through deepening economic liberalisation to include the service sector or through redistributive measures to boost demand. This chapter questions the assumptions underlying these ‘rebalancing’ narratives. Instead, it posits that the People’s Republic of China (PRC’s) economy remains deeply imbricated in and responsive to the dynamics of the global capitalist economy. China responded to a severe crisis of its surplus-producing export-manufacturing sectors in 2008–2009 with a debt-financed period of growth, facilitated by the state (and the state-controlled banking sector). But its core manufacturing sectors remain deeply embedded in global production networks (GPNs), under the command and control functions of global lead firms. In these sectors, depressed demand and intense market pressure have severely limited growth potential. Without a return to sustained and generalised profitability in these highly globalised productive sectors, an economic crisis is ultimately likely. The chapter closes by demonstrating the critically important role real estate has come to play in the Chinese political economy, and asks whether an expansion of asset prices in housing far above their underlying values signifies what David Harvey refers to as a ‘switching crisis’ of capital accumulation—from productive to nonproductive investments.


  1. Aglietta, M. (2010). A Theory of Capitalist Regulation: The US Experience. London: Verso.Google Scholar
  2. Akyüz, Y. (2011). Export Dependence and Sustainability of Growth in China. China and World Economy, 19(1), 1–23.CrossRefGoogle Scholar
  3. Alvaredo, F., Chancel, L., Piketty, T., Saez, E., & Zucman, G. (2017). Global Inequality Dynamics: New Findings from National Bureau of Economic Research, Working Paper (no. 23119).Google Scholar
  4. Amsden, A. (1989). Asia’s Next Giant. Oxford: Oxford University Press.Google Scholar
  5. Appelbaum, R. (2009). Big Suppliers in Greater China: A Growing Counterweight to the Power of Giant Retailers. In H.-F. Hung (Ed.), China and the Transformation of Global Capitalism. Baltimore, MD: Johns Hopkins University Press.Google Scholar
  6. Baran, P., & Sweezy, P. (1966). Monopoly Capital: An Essay on the American Economic and Social Order. New York: Monthly Review Press.Google Scholar
  7. Barboza, D. (2016, December 29). How China Built ‘iPhone City’ with Billions in Perks for Apple’s Partner. New York Times.Google Scholar
  8. Barker, C. (2013). Marx on the Factory Acts. Notes for a Talk Given at the Historical Materialism Conference, London. Retrieved May 3, 2016, from
  9. Beauregard, R. (1994). Capital Switching and the Built Environment: United States, 1970–89. Environment and Planning A, 26, 715–732.CrossRefGoogle Scholar
  10. Boyer, R. (1990). The Regulation School: A Critical Introduction. New York: Columbia University Press.Google Scholar
  11. Brenner, R., & Glick, M. (1991). The Regulation Approach: Theory and History. New Left Review, 188, 45–119.Google Scholar
  12. Breslin, S. (2011). China and the Crisis: Global Power, Domestic Caution and Local Initiative. Contemporary Politics, 17(2), 185–200.CrossRefGoogle Scholar
  13. Breslin, S. (2014). Financial Transitions in the PRC: Banking on the State? Third World Quarterly, 35(6), 996–1013.CrossRefGoogle Scholar
  14. Brun, L. (2016). Overcapacity in Steel. China’s Role in a Global Problem. Durham, NC: Duke University Press.Google Scholar
  15. Butollo, F. (2014). The End of Cheap Labour? Industrial Transformation and Social Upgrading in China. Frankfurt: Campus Verlag.Google Scholar
  16. Butollo, F. (2015). Growing Against the Odds: Government Agency and Strategic Recoupling as Sources of Competitiveness in the Garment Industry of the Pearl River Delta. Cambridge Journal of Regions, Economy and Society, 8, 521–536.CrossRefGoogle Scholar
  17. Cammack, P. (2015, September 23–26). Production and Social Reproduction in the Contemporary World Market: The Social Reproduction Complex. Paper presented at the 9th Pan-European Conference on International Relations, Giardini Naxos, Sicily. Retrieved November 10, 2016, from
  18. Cartier, C. (2001). Globalizing South China. London: Blackwell.CrossRefGoogle Scholar
  19. Chan, K. W. (2010). A China Paradox: Migrant Labor Shortage Amidst Rural Labor Supply Abundance. Eurasian Geography and Economics, 51(4), 513–530.CrossRefGoogle Scholar
  20. Chan, K. W. (2014). China’s Urbanization 2020: A New Blueprint and Direction. Eurasian Geography and Economics, 55(1), 1–9.CrossRefGoogle Scholar
  21. Chan, C. K.-C., & Zhai, Y. (2013). Active Labour Market Policies in China – Towards Improved Labour Protection? Journal of Asian Public Policy, 6(1), 10–25.CrossRefGoogle Scholar
  22. Chan, C. K.-C., & Hui, E. S. (2014). The Development of Collective Bargaining in China: From ‘Collective Bargaining by Riot’ to ‘Party State-Led Wage Bargaining’. China Quarterly, 217, 221–242.CrossRefGoogle Scholar
  23. Chan, J., Pun, N., & Selden, M. (2013). The Politics of Global Production: Apple, Foxconn and China’s New Working Class. New Technology, Work and Employment, 28(2), 100–115.CrossRefGoogle Scholar
  24. China Labour Bulletin. (2014, February). Searching for the Union: The Workers’ Movement in China 2011–13.Google Scholar
  25. China Labour Bulletin. (2017). China’s Social Security System. Retrieved May 1, 2017, from
  26. Christophers, B. (2011). Revisiting the Urbanization of Capital. Annals of the Association of American Geographers, 101(6), 1347–1364.CrossRefGoogle Scholar
  27. Dollar, D. (2008). Is China Delinking from the US Economy? Retrieved August 1, 2016, from
  28. Dollar, D. (2014, June). Sino Shift. Finance and Development. Retrieved January 16, 2017, from
  29. Eaton, S. (2015). The Advance of the State in Contemporary China: State-Market Relations in the Reform Era. Cambridge: Cambridge University Press.Google Scholar
  30. Eichengreen, B., Park, D., & Shin, K. (2013). Growth Slowdowns Redux: New Evidence on the Middle-Income Trap. National Bureau of Economic Research. Working Paper Series (No. 18673), Cambridge, MA: National Bureau of Economic Research.Google Scholar
  31. European Central Bank [ECB]. (2011). Monthly Bulletin: July 2011. Retrieved December 12, 2016, from
  32. Financial Times. (2017, May 17). China’s Aviation Finally Takes Off with Help from the West. Retrieved May 18, 2017, from
  33. Friedman, E. (2014). Insurgency Trap: Labor Politics in Postsocialist China. Ithaca, NY: Cornell University Press.CrossRefGoogle Scholar
  34. Friedman, E., & Kuruvilla, S. (2015). Experimentation and Decentralization in China’s Labor Relations. Human Relations, 68(2), 181–195.CrossRefGoogle Scholar
  35. Fung Business Intelligence. (2016). In Depth – China’s Apparel Market. Retrieved January 30, 2017, from
  36. Gasiorek, M., & Lopez-Gonzalez, J. (2013). China-EU Global Value Chains: Who Creates Value, How and Where? Growing Linkages and Opportunities. Retrieved March 1, 2017, from
  37. Gatley, T. (2013, June). China’s Missing Consumption. Gavekal Dragonomics. Research Note. Retrieved October 9, 2016, from
  38. Gaulard, M. (2013). Changes in the Chinese Property Market: An Indicator of the Difficulties Faced by Local Authorities. China Perspectives, 2, 3–14.Google Scholar
  39. Ghemawat, P., & Hout, T. (2016). Can China’s Companies Conquer the World: The Overlooked Importance of Corporate Power. Foreign Affairs, 95, 86.Google Scholar
  40. Giles, J., Park, A., Cai, F., & Du, Y. (2012). Weathering a Storm: Survey-Based Perspectives on Employment in China in the Aftermath of the Global Financial Crisis. World Bank, Policy Research Working Paper (no. 5984), Washington, DC: The World Bank.Google Scholar
  41. Gray, K. (2015). Labour and Development in East Asia: Social Forces and Passive Revolution. London: Routledge.Google Scholar
  42. Green, S. (2010, June 25). China Can Urbanize Its Way to Prosperity. The Wall Street Journal Asia.Google Scholar
  43. Grimes, S., & Yang, C. (2017). From Foreign Technology Dependence Towards Greater Innovation Autonomy: China’s Integration into the Information and Communications Technology (ICT) Global Value Chain (GVC). Area Development and Policy. Published online before print.Google Scholar
  44. Harman, C. (2010). Zombie Capitalism: Global Crisis and the Relevance of Marx. London: Verso.Google Scholar
  45. Harney, A. (2008). The China Price: The True Cost of Chinese Competitive Advantage. London: Penguin.Google Scholar
  46. Harvey, D. (2010). The Enigma of Capital and the Crises of Capitalism. Oxford: Oxford University Press.Google Scholar
  47. Harvey, D. (2012). The Urban Roots of Financial Crises. In L. Panitch, G. Albo, & V. Chibber (Eds.), Socialist Register: The Crisis and the Left. Pontypool: Merlin Press.Google Scholar
  48. Harvey, D. (2016). The Ways of the World. London: Profile.Google Scholar
  49. He, S., & Wu, F. (2009). China’s Emerging Neoliberal Urbanism: Perspectives from Urban Redevelopment. Antipode, 41(2), 282–304.CrossRefGoogle Scholar
  50. Horner, R. (2016). A New Economic Geography of Trade and Development? Governing South–South Trade, Value Chains and Production Networks. Territory, Politics, Governance, 4(4), 400–420.CrossRefGoogle Scholar
  51. Hsing, Y.-T. (2010). The Great Urban Transformation: Politics of Land and Property in China. Oxford: Oxford University Press.CrossRefGoogle Scholar
  52. Hsing, Y.-T. (2012). No Crisis in China? The Rise of China’s Social Crisis. In M. Castells, J. Caraca, & G. Cardoso (Eds.), Aftermath: The Cultures of the Economic Crisis (pp. 251–277). Oxford: Oxford University Press.Google Scholar
  53. Huang, Y. (2008). Capitalism with Chinese Characteristics: Entrepreneurship and the State. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  54. Hung, H.-F. (2015). The China Boom: Why China Will Not Rule the World. New York: Columbia University Press.CrossRefGoogle Scholar
  55. Johnson, C. (1982). MITI and the Japanese Miracle: The Growth of Japanese Industrial Policy, 1925–1975. Stanford, CA: Stanford University Press.Google Scholar
  56. Kaplinsky, R., & Morris, M. (2016). Thinning and Thickening: Productive Sector Policies in the Era of Global Value Chains. European Journal of Development Research, 28(4), 625–645.CrossRefGoogle Scholar
  57. Kent, C. (2016, June 16). The Economic Transition in China. Speech at the Economic Society of Australia. Retrieved February 1, 2017, from
  58. King, R. (1989). Capital Switching and the Role of Ground Rent: 2. Switching between Circuits and Switching between Submarkets. Environment and Planning A, 21, 711–738.CrossRefGoogle Scholar
  59. Kincaid, J. (2003). Underconsumption Versus the Rate of Profit: A Reply to Burkett and Hart-Landsberg. Historical Materialism, 11(1), 161–177.CrossRefGoogle Scholar
  60. Kroeber, A. (2016). China’s Economy: What Everyone Needs to Know. Oxford: Oxford University Press.Google Scholar
  61. Lardy, N., & Borst, N. (2013, February). A Blueprint for Rebalancing the Chinese Economy. Peterson Institute for International Economics Policy Brief No. PB13-02. Washington, DC: Peterson Institute.Google Scholar
  62. Li, M. (2016). China and the Twenty-First Century Crisis. London: Pluto.Google Scholar
  63. Liu, F., Zhang, J., & Zhu, T. (2016). How Much Can We Trust China’s Investment Statistics? Journal of Chinese Economic and Business Studies, 14(3), 215–228.CrossRefGoogle Scholar
  64. Lo, D. (2016). China Confronts the Great Recession: ‘Rebalancing’ Neoliberalism, or Else? In P. Arestis & M. Sawyer (Eds.), Emerging Economies During and After the Great Recession (International Papers in Political Economy Series). Basingstoke: Palgrave Macmillan.Google Scholar
  65. Lüthje, B. (2014). Why No Fordism in China? Regimes of Accumulation and Regimes of Production in Chinese Manufacturing Industries. IFS Working Paper No. 3.Google Scholar
  66. Lüthje, B., & Butollo, F. (2017). Why the Foxconn Model Does Not Die: Production Networks and Labour Relations in the IT Industry in South China. Globalizations, 14(2), 216–231.CrossRefGoogle Scholar
  67. Lüthje, B., Luo, S., & Zhang, H. (2013). Beyond the Iron Rice Bowl: Regimes of Production and Industrial Relations in China. Frankfurt: Campus Verlag.Google Scholar
  68. MacCarthy, N. (2014, December 5). China Used More Concrete in 3 Years Than the U.S. Used in the Entire 20th Century. Forbes. Retrieved November 1, 2016, from
  69. Mandeng, O. (2016). The Chinese Money Wall (Update). Retrieved December 1, 2016, from
  70. Marx, K. (1990). Capital Volume I. London: Penguin.Google Scholar
  71. Marx, K. (1992). Capital Volume II. London: Penguin.Google Scholar
  72. Mathai, K., Gottlieb, G., Hong, G. H., Jung, S. E., Schmittmann, J., & Yu, J. (2016). China’s Changing Trade and the Implications for the CLMV Economies. IMF Departmental Paper Series, Washington, DC: The International Monetary Fund.Google Scholar
  73. McKinsey Global Institute. (2015). Debt and (Not Much) Deleveraging. Retrieved April 29, 2017, from
  74. McKinsey Global Institute. (2016, June). China’s Choice: Capturing the $5 Trillion Productivity Opportunity. Retrieved April 28, 2017, from
  75. McNally, C., Lüthje, B., & ten Brink, T. (2013). Rebalancing China’s Emergent Capitalism: State Power, Economic Liberalization and Social Upgrading. Journal of Current Chinese Affairs, 42(4), 3–16.CrossRefGoogle Scholar
  76. Milberg, W., & Winkler, D. (2013). Outsourcing Economics: Global Value Chains in Capitalist Development. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  77. Miller, T. (2012). China’s Urban Billion: The Story Behind the Biggest Migration in Human History. London: Zed Books.Google Scholar
  78. Miller, T. (2016, May 24). The Migrant Housing Solution. Gavekal Dragonomics. Research Note.Google Scholar
  79. Nolan, P. (2014). Globalisation and Industrial Policy: The Case of China. The World Economy, 37(6), 747–764.CrossRefGoogle Scholar
  80. Obstfeld, M., & Rogoff, K. (2009). Global Imbalances and the Financial Crisis: Products of Common Causes. Centre for Economic Policy. Research Discussion Paper Series (No 7606). Retrieved March 1, 2017, from
  81. OECD. (2015). OECD Urban Policy Reviews: China 2015. Paris: Organisation for Economic Cooperation and Development.Google Scholar
  82. OECD. (2017). A Decade of Social Protection Development in Selected Asian Countries. Paris: Organisation for Economic Cooperation and Development.CrossRefGoogle Scholar
  83. Pauls, R. (2016). Capitalist Development, Contradictions and Crises in China, 1993–2011. Dissertation, Ruhr-Universität Bochum. Retrieved March 6, 2017, from
  84. Pettis, M. (2013). The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy. Princeton, NJ: Princeton University Press.Google Scholar
  85. Piketty, T. (2014). Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  86. Pradella, L. (2014). Globalization and the Critique of Political Economy: New Insights from Marx’s Writings. London: Routledge.CrossRefGoogle Scholar
  87. Qi, H. (2014). The Labor Share Question in China. Monthly Review, 65(8), 23–35.CrossRefGoogle Scholar
  88. Qu, H. & Li, J. (2016, July 21). China’s New Challenge: Faster Services Expansion, Slower Productivity Growth. HSBC Global Research Report. Retrieved January 11, 2017, from
  89. Roach, S. (2014). Unbalanced: The Codependency of America and China. New Haven, CT: Yale University Press.Google Scholar
  90. Roberts, M. (2016). The Long Depression: Marxism and the Global Crisis of Capitalism. Chicago: Haymarket.Google Scholar
  91. Rodrik, D. (2006). What’s So Special About China’s Exports? China and World Economy, 14(5), 1–19.CrossRefGoogle Scholar
  92. Ross, J. (2012) Investment Will Boost China’s Economy. China Daily. Retrieved July 11, 2017, from
  93. Ross, J. (2016, September 26). Why Are China and India Growing So Fast? State Investment. Huffington Post. Retrieved September 27, 2016, from
  94. Rugman, A., Nguyen, Q., & Wei, Z. (2016). Rethinking the Literature on the Performance of Chinese Multinational Enterprises. Management and Organization Review, 12(2), 269–302.CrossRefGoogle Scholar
  95. Shaikh, A. (2003). Who Pays for the ‘Welfare’ in the Welfare State? A Multi-Country Study. Social Research, 70(2), 531–550.Google Scholar
  96. Shambaugh, D. (2016). China’s Future. Cambridge: Polity Press.Google Scholar
  97. Shepard, W. (2015). Ghost Cities of China: The Story of Cities without People in the World’s Most Populated Country. London: Zed Books.Google Scholar
  98. Silver, B. (2003). Forces of Labor: Workers’ Movements and Globalization Since 1870. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  99. Smith, J. (2016). Imperialism in the Twenty First Century: Globalisation, Super-Exploitation, and Capitalism’s Final Crisis. New York: Monthly Review Press.Google Scholar
  100. Sorace, C., & Hurst, W. (2016). China’s Phantom Urbanisation and the Pathology of Ghost Cities. Journal of Contemporary Asia, 46(2), 304–322.CrossRefGoogle Scholar
  101. South China Morning Post [SCMP]. (2017, March 24). Be Afraid: China Is on the Path to Global Technology Dominance. Retrieved March 25, 2017, from
  102. Stockhammer, E. (2013). Rising Inequality as a Cause of the Present Crisis. Cambridge Journal of Economics, 39.Google Scholar
  103. ten Brink, T. (2013). Paradoxes of Prosperity in China’s New Capitalism. Journal of Current Chinese Affairs, 42(4), 17–44.CrossRefGoogle Scholar
  104. Towson, J., & Woetzel, J. (2015, May). Why China’s Consumers Will Continue to Surprise the World. McKinsey & Company. Retrieved October 13, 2016, from
  105. Tsai, K. (2015, August). The Rise of Shadow Banking in China: The Political Economy of Modern Chinese State Capitalism. HKUST Thought Leadership Brief, No. 10.Google Scholar
  106. UN Comtrade. (2015). Retrieved May 23, 2017, from
  107. ValueWalk. (2017). Deutsche Bank Warns: Chinese Property Bubble Is Getting Bigger. Retrieved June 20, 2017, from
  108. van Liemt, G. (2016). Hon Hai/ Foxconn: Which Way Forward? In J. Drahokoupil, R. Andrijasevic, & D. Sacchetto (Eds.), Flexible Workforces and Low Profit Margins: Electronics Assembly between Europe and China. Brussels: European Trade Union Institute (ETUI).Google Scholar
  109. Vermeiren, M. (2013). Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime? New Political Economy, 18(5), 680–714.CrossRefGoogle Scholar
  110. Wade, R. (1990). Governing the Market. Princeton, NJ: Princeton University Press.Google Scholar
  111. Wang, H. (2009). The End of the Revolution: China and the Limits of Modernity. London: Verso.Google Scholar
  112. Wolf, M. (2017, April 11). China Faces a Tough Fight to Escape Its Debt Trap. Financial Times. Retrieved April 12, 2017, from
  113. Wood, A. (2014). Best Tall Buildings: An Overview of 2013 Skyscrapers. London: Routledge.Google Scholar
  114. Woodworth, M. D., & Wallace, J. L. (2017). Seeing Ghosts: Parsing China’s “Ghost City” Controversy. Urban Geography, 38(8), 1270–1128.Google Scholar
  115. World Bank. (2014). Urban China: Toward Efficient, Inclusive, and Sustainable Urbanization. Washington, DC: The World Bank.CrossRefGoogle Scholar
  116. Xing, Y. (2016). Estimating the Upper Limits of Value Added in the People’s Republic of China’s Processing Exports. In Y. Xing (Ed.), Uncovering Value Added in Trade: New Approaches to Analysing Global Value Chains. Singapore: World Scientific.Google Scholar
  117. Yang, C. (2014). Market Rebalancing of Global Production Networks in the Post-Washington Consensus Globalizing Era: Transformation of Export-Oriented Development in China. Review of International Political Economy, 21(1), 130–156.CrossRefGoogle Scholar
  118. Zhang, L. (2016, September). Rebalancing in China: Progress & Prospects. IMF Working Paper, Asia & Pacific Department.Google Scholar
  119. Zhang, L., & Li, M. (2016). Local Fiscal Capability and Liberalization of Urban Hukou. Journal of Contemporary China, 25(102), 893–907.CrossRefGoogle Scholar
  120. Zhang, Z., Moore-Cherry, N., & Redmond, D. (2017). A Crisis of Crisis Management? Evaluating Post-2010 Housing Restructuring in Nanjing, China. Housing Policy Debate.Google Scholar
  121. Zhu, S., & Pickles, J. (2014). Bring In, Go Up, Go West, Go Out: Upgrading, Regionalisation and Delocalisation in China’s Apparel Production Networks. Journal of Contemporary Asia, 44(1), 36–63.CrossRefGoogle Scholar
  122. Zhuang, W., & Ngok, K. (2014). Labour Inspection in Contemporary China: Like the Anglo-Saxon Model, But Different. International Labour Review, 153(4), 561–585.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.School of Sociology, Politics and International RelationsUniversity of BristolBristolUK

Personalised recommendations