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

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  • McNally Christopher A

    (East-West Center and Chaminade University)

Abstract

Guanxi and guanxi capitalism are much-debated terms in the context of Chinas evolving political economy. This article explores the changing nature of Chinas 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 Chinas 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 Chinas emergent capitalism a unique quality.

Suggested Citation

  • McNally Christopher A, 2011. "China's Changing Guanxi Capitalism: Private Entrepreneurs between Leninist Control and Relentless Accumulation," Business and Politics, De Gruyter, vol. 13(2), pages 1-31, August.
  • Handle: RePEc:bpj:buspol:v:13:y:2011:i:2:n:5
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    References listed on IDEAS

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    1. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    2. Huang,Yasheng, 2008. "Capitalism with Chinese Characteristics," Cambridge Books, Cambridge University Press, number 9780521898102.
    3. Jinn-Yuh Hsu & AnnaLee Saxenian, 2000. "The limits of guanxi capitalism: transnational collaboration between Taiwan and the USA," Environment and Planning A, Pion Ltd, London, vol. 32(11), pages 1991-2005, November.
    4. Hsing You-tien,, 1998. "Making Capitalism in China: The Taiwan Connection," OUP Catalogue, Oxford University Press, number 9780195103243.
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    Cited by:

    1. Zhiyang Liu & Zhiqi Chen, 2014. "Venture Capital Networks and Investment Performance in China," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 97-111, June.
    2. Huatao Peng & Geert Duysters & Bert Sadowski, 2016. "The changing role of guanxi in influencing the development of entrepreneurial companies: a case study of the emergence of pharmaceutical companies in China," International Entrepreneurship and Management Journal, Springer, vol. 12(1), pages 215-258, March.
    3. Tebogo Rahaba Ngoma, 2016. "It is not whom you know, it is how well you know them: Foreign entrepreneurs building close guanxi relationships
      [Es geht nicht darum, wen du kennst, sondern wie gut du sie kennst: Wie ausländische
      ," Journal of International Entrepreneurship, Springer, vol. 14(2), pages 239-258, June.

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