Why the Chinese Communist Party argued over Cake

The cake issue

What's more important in regards to a cake? Making more of it or divvying it up evenly? The term Cake was a metaphor that arose in discourse on socio-economic development. This led to an internal split among “orthodox” and the “liberals/reformist” members within the Chinese Communist Party. During this time China had reached incredible growth in socio-economic development but wealth inequality greatly rose. This was seen as a serious problem due to perceptions of social instability, increased crime and the divide between the “haves” and the “have nots”. This debate sparked a competition between two models of development which took place in the cities of Chongqing and Guangdou.

Chongqing: A hands-on approach

Since the 1980's, China’s socio-economic development has largely focused on growing the private sector, attracting foreign investment and economic liberalization. It has worked very successfully through the creation of Special Economic Zones which helped lift an estimated 600-700 million people from poverty in the past 30 or so years. Nonetheless there are elements within the Chinese Communist Party which argue that economic liberalization has increased social inequality and an embrace of negative bourgeois values. This faction is commonly referred to as the “New Left” which embraces more state planning, Maoist-style cultural ethics and protecting state owned enterprises from economic liberalization. In short it emphasis the role of the state sector rather than the private sector.

Chongqing, the namesake of the Chongqing model.

He was considered one of the main advocates of the “New Left” in China. During his tenure as the Communist Party Secretary of Chongqing he unleashed a wave of reforms and polices that included cracking down on organized crime, encouraging foreign investment, funding social welfare programs and cultivating a “Maoist red culture” of egalitarianism. His controversial pursuit of a “Maoist red culture” which involved organizing mass gatherings to sing old time communist songs received both praise and worry from the Communist Party elite. Policies which where locally well received included the building of low income housing, giving residency permits to rural migrants and attempting to alleviate inequality.

Bo Xilai argued that, when it comes to “the cake”, it is important to make sure it is cut up equally as those who make it will not feel motivated to bake it. Even though it was locally popular and was praised for its achievements in alleviating inequality it faced many criticisms. Firstly it racked up a high amount of deficit spending for its social and infrastructure projects. Some party members concluded that its GDP rate was inflated due to massive social projects and thus somewhat artificial. Thirdly Chongqing received a disproportionately higher share of stimulus money from the central government. According to certain businessmen and officials under Bo’s leadership amenities such as salaries were often late or were replaced by IOUs instead. During his clampdown on organized crime he was accused of hampering the rule of law and invasion of privacy.

Bo Xilai, the chief advocate of the Chongqing Model.

However, the Chongqing model’s downfall from Chinese political discussion was caused largely by Bo Xilai’s conviction for corruption (for which he received life imprisonment) and the stripping of his party membership. Furthermore after his removal as party secretary of Chongqing the Communist Party started reversing Bo’s policies including the “red Maoist” cultural policies.

Guangdong: The market approach

In contrast, the Guangdong Model, which is the current standard model of socio-economic development, puts heavy emphasis on the private sector and economic liberalization. Its primary proponent is Wang Yang who is well known within the Communist Party of China to have comparatively liberal views on economic and political policy. He was the Communist Party Secretary of of Guangdong from 2007-13. Under his leadership he pioneered the role of the market in economic life even when it was at odds with the central party line. During the 2008 World Financial Crisis he argued that bankrupted small and medium sized enterprises should be allowed to fail rather than rescued by state intervention.

Wang Yang is of a differing opinion to his colleague.

He believed that unproductive small and medium enterprises should be eliminated by the market. The party line on the other hand believed that those enterprises should've been protected or saved from financial ruin. Wang Yang in keeping with his position of economic liberalization believed that it was more important to bake the cake as big as possible and that dividing it up could be done later. One prominent feature of Wang Yang’s governance was his openness to civil society and loosening restrictions on NGO’s, protesters and other groups. During a workers protest Wang Yang chose to listen and negotiate with them which resulted in concessions of higher wages. Normally the party policy was harsh handed. Wang also touted the belief that government spending should be more transparent and that the rule of law needed to be strengthened in order to create economic success.

The conclusion?

The perceptive reader will note a parallel that may be made between these two economic development strategies. China is an economic supergiant with more diverse industries and endeavors than many other nations put together. The Communist Party is fooling itself if it believes it can do more than merely carry the namesake of communism. With the trend toward more free-market policies proving enormously beneficial for the world's most populous nation, we must begin to accept that they might be on to something. 

Don't Argue. Build.

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