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The economic consequences of the recent political changes in China: the new institutional economics perspective

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  • Tomasz Legiedz

    (University of Lodz)

Abstract

Motivation: Over 30 years ago, Deng Xiaoping had the two-term limit on the presidency inscribed in the constitution of China. It was part of Deng’s plan to institutionalize leadership changes in China, to avoid a return to one-man rule. This solution has ensured political stability which undoubtedly had a positive impact on economic growth in the following decades. However, in March 2018, the National People’s Congress of China approved the removal of the two-term limit on the presidency. Moreover, president Xi Jinping consolidated his political power as the party voted to enshrine his name and political ideology in the party’s constitution — elevating his status to the level of its founder, Chairman Mao. Aim: The purpose of this article is to analyse the impact of recent changes in the political system of China on the Chinese economy as well as the chances for further development of this country. The paper applies the new institutional economics perspective, particularly, the limited and open access orders framework proposed by D.C. North, J.J Wallis, and B.R. Weingast. Results: The article will present arguments proving that recent political changes in China will negatively affect growth and economic development. The concentration of power in the hands of one man could be a symptom of regression of the limited access order, which, according to North, Wallis, and Weingast affects not only the economy but also could increase the risk of violence.

Suggested Citation

  • Tomasz Legiedz, 2019. "The economic consequences of the recent political changes in China: the new institutional economics perspective," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 18(2), pages 197-208, June.
    • Handle: RePEc:cpn:umkeip:v:18:y:2019:i:2:p:197-208
    DOI: 10.12775/EiP.2019.015
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    References listed on IDEAS

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    2. North,Douglass C. & Wallis,John Joseph & Weingast,Barry R., 2013. "Violence and Social Orders," Cambridge Books, Cambridge University Press, number 9781107646995, January.
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    4. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
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    6. Olson, Mancur, 1993. "Dictatorship, Democracy, and Development," American Political Science Review, Cambridge University Press, vol. 87(3), pages 567-576, September.
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    More about this item

    Keywords

    people’s Republic of China; new institutional economics; economic development; social order;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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