power shifts

demographicS

climate change

global financial system

scarcity

Issue Brief No. 02

The Beijing Consensus:

An alternative approach
to development
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Introduction 
The latest global financial and economic crisis has collectively often referred to as the Beijing Consensus.
undermined the credibility of the neoliberal program The prospect of rapid economic growth without political
for economic development and growth. While the US liberalization is increasingly gaining popularity among
and European economies have dramatically contracted, developing countries that oppose the “one-size fits all”
emerging economies have suffered relatively less from the approach of the Washington Consensus. This Issue
economic meltdown. A notable example is China, whose Brief reviews the different components of the Beijing
economic successes have brought the Chinese model Consensus and the implications for the international
to the fore as an alternative approach to development. political and economic system.
Different aspects of China’s development model are

The Beijing Consensus is increasingly viewed by developing countries as an attractive alternative to

western development strategies based on free market and democracy.

Defining the Beijing Consensus Innovation-based development

The Beijing Consensus reflects a new approach to First, the Beijing Consensus refers to China’s willingness
development based on China’s model for economic to experiment and use innovation as a driver of progress.
growth and political principles of non-interference and The government’s SciTech Guideline for 2006-2020
self-determination. The term was introduced in 2004 illustrates this (see box 2). China is investing heavily in
by Joshua Cooper Ramo, who contended that “China is research and development (R&D) and has figured among
marking a path for other nations around the world who the world’s top four R&D countries in recent years.
are trying to figure out not simply how to develop their This has resulted in China becoming a world leader in,
countries, but also how to fit into the international order in for example, clean energy technology. Foreign direct
a way that allows them to be truly independent, to protect
their way of life and political choices in a world with a
single massively powerful centre of gravity.” Viewed as a
foreign creation, the term Beijing Consensus was never BEIJING CONSENSUS
embraced by the Chinese leadership. Furthermore, • Innovation-based development
there is no agreement on its existence, content or utility • Economic success measured not by per capita GDP but by its
sustainability and level of equality
for understanding developments in China and abroad.
• Self-determination for China and for other countries vis-à-vis
Nonetheless, the term is widely used among policy the United States:
makers and in the media, contributing to the widespread - Opposition to the Washington Consensus
- Globalization on their own terms
perception that the Beijing Consensus is changing the - Chinese influence by example, not weaponry
international order. Ramo defines the Beijing Consensus - Develop asymmetric capabilities to balance against the U.S.

as the “new physics of Chinese power” based on three

theorems (see box 1) that are discussed in more detail Source: Joshua Cooper Ramo: “The Beijing Consensus: Notes on the New Physics
of Chinese Power.” London: Foreign Policy Centre, 2004.
below.
  Box 1: Components of the Beijing Consensus
 Issue Brief
The Beijing Consensus: an alternative approach to development

INNOVATION ECONOMIC SUCCESS

• R&D spending: USD 136 billion (2006 est.) – 2nd Traditional indicators:
• Real GDP growth: 9.1% (2009) up from 7.8% (1980)
Government‘s SciTech Guideline 2006-2020: • GDP (current USD): USD 4.985 trillion (2009) up from
• Ratio of total investment of R&D over GDP should rise to over 2.5% USD 189.4 billion (1980)
• Ratio of contribution of scientific and technological advancement to • GDP per capita.: USD 6700 (2009) up from USD 251 (1980)
economic growth should be over 60% • National Investment: 41.13% (2008) up from 28.78% (1980)
• Rate of dependence on imported technologies should be reduced to
less than 30% People-focused development indicators:
• Both the number of patents obtained by Chinese citizens and the • Overall HDI value: 0.655 (2009) up from 0.368 (1980)
number of international citations of scientific papers by Chinese
nationality authors should be within top 5 in the world Other HDI indicators:
• Enrollment rates in elementary schools and junior high: 99% • Adult literacy rate: 93.9% (2009) up from 65.5% (1980)
• Higher education enrolment: 24.2% • Life expectancy: 73.12 years (2008) up from 65.97 (1980)
• 82 million posses higher education degrees • Infant mortality (per 1,000 live births): 16.6 (2009) down from 46.1 (1980)
• USD 29bn allocated to education, annual increase of 23.6%

  Box 2: Emphasis on Science, Technology and Education   Box 3: Development Beyond GDP

investment and expanding education play an important The emphasis on sustainable and equitable economic
role in the rapid modernization of the Chinese economy. growth lies at the heart of the government’s efforts to
China aims to use education to turn its 1.3 billion reconcile a communist regime with a capitalist economy.
population into human resources assets. When the The discrepancy between rhetoric and reality, however,
People’s Republic of China was founded in 1949, it had an must be noted. China has one of the world’s most uneven
80% illiteracy rate and a 20% enrollment rate of schoolage wealth distributions and a large divide between urban
children. A student population of 260 million in 2009 saw and rural development levels.
China with the world’s largest educational system.
Self-determination
Alternative measurers of economic succes The third Beijing Consensus component is self
Using economics to improve society and enhance determination for China and other countries vis-à-vis the
the quality of life is the second theorem of the Beijing US. China emphasizes the need for developing countries
Consensus. The centrality of GDP to traditional to actively seek independence from outside pressure.
assessments of economic development levels is a notion
rejected by China as the sole indicator of economic Opposition to the Washington Consensus
success. Instead, China’s policies are “people-focused” While Ramo argues that China has thrived by pointedly
and measure development based on the quality of life of ignoring the Washington Consensus, in fact, China
the population, sustainability and equality levels. Merely adheres to eight of the ten elements of the Washington
looking at GDP would fail to fully appreciate China’s Consensus (see box 4). Yet, China has convincingly
development since this does not take into account, for demonstrated that deregulated, market-based decision
instance, the progress China has made on the Human making is not the only path to economic growth and
Development Index (see box 3) or the fact that China integration in the global economy. In his book The Beijing
has lifted 300 million people out of the poverty pit. Consensus (2010) Stephan Halper describes the Chinese
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Chinese influence by example, not weaponry

WASHINGTON CONSENSUS China has boosted its public diplomacy efforts, including
policies as smile diplomacy, harmonious world, and the
• Fiscal discipline
establishment of Confucius Institutes to promote the
• Reordering public expenditure priorities away from non-merit
subsidies towards public goods Chinese language and culture. It has also launched a
• Tax reform that combines broad tax base with moderate marginal tax media strategy with the aim of creating a China-friendly,
• Liberalized interest rates public opinion environment. These efforts to create
• Competitive exchange rate
soft power are contributing to the spread of the Beijing
• Trade liberalization
• Liberalization of inward FDI Consensus by example. This fits into the government’s
• Privatization objective of a “peaceful rise” and security doctrine of
• Deregulation non-interference, which aim to ease fears about China’s
• Strong protection of property rights
sudden ascension as global power.

Source: John Williamson, 1989

Develop asymmetric capabilities to balance against the US
  Box 4: The Ten Points of the Washington Consensus With its large state-owned companies and huge
capital reserves, China’s most powerful instrument
model as a form of illiberal state-directed capitalism, in to counterbalance the US and to gain political clout is
which the economy is dominated by large state-owned economic diplomacy. Particularly in Africa, China has
companies in sectors that are vital to the national pursued an active diplomacy to acquire access to natural
interests, such as energy, public utilities, transportation resources in return for investments in local infrastructure.
and heavy industry. The private sector plays merely a Increasingly, China is diversifying investments in Africa
supporting role and is heavily influenced by the ruling away from the energy sector to include the service and
political elite through political patronage. The appeal of manufacturing industries (see figure 1). China is also
the Beijing Consensus to developing countries stems diversifying its foreign holdings by venturing into the
partly from the success of this Chinese model and the debt-ridden economies in Europe, an area where it long
failure of the Washington Consensus in a large part of the played only a minor role. Already owning a significant part
developing world. of American debt, China recently offered to buy billions of
dollars’ worth of bonds in the deeply financially troubled
Globalization on its own terms economies of Ireland, Greece, Spain and Portugal. China
China partakes in globalization on its own terms, which is also providing larger loans than global lenders like
Ramo calls “practicing globalization with Chinese the World Bank and the IMF. Where the World Bank lent
Characteristics”. The government heavily influences $200 million to the Philippines, China lent $2 billion.
China’s competitiveness on the international market by China’s overseas financial aid rose from $1.5 billion
maintaining low labor costs, an undervalued currency, in 2003 to $27.5 billion in 2006. Key recipients include
heavy state subsidies to boost the export driven economy, regimes that may not necessarily qualify for Western
and a highly protectionist market. Foreign investment is aid. For instance, China has pledged $600 million to
carefully orchestrated, for example with the creation of Cambodia (more than ten times US aid) and given
export processing zones. China is also trying to promote $400 million to Myanmar in the past five years (compared
its national product standards as global standards. to US aid of $12 million per year).
 Issue Brief
The Beijing Consensus: an alternative approach to development

Political Implications
chinese investments in africa The Beijing Consensus has two important political
implications. First, the rise of China is affecting the
global balance of power to the detriment of the US.
Despite its military inferiority, China is creating strong
economic ties and gaining political clout by offering
1. Sudan
countries beneficial terms of trade, aid and investment.
In the future, countries will increasingly look to China
for diplomatic support and form alliances with China.
9. Guinea This development is reinforced by the emulation of the
8. Ghana
Beijing Consensus by developing countries. At present,
7. Nigeria
countries propped by Chinese support for sovereignty
6. Ghabon
2. DRC and rejection of non-interference with national affairs are
5. Congo
already showing signs of defying US power. For example,
4. Angola
Iran’s defiance of US and European sanctions against its
nuclear program was bolstered by the support it received
1. Sudan from China. The Chinese government argues that China
Project: Power plant construction, 3. Zimbabwe
Sudan does not have to observe sanctions against Iran that
Natural Resource for repayment: Oil
were drawn up unilaterally by the US and the EU. Iranian
Year: 2001
Total Chinese financing: US$128m Parliament Speaker Ali Larijani said that “China can play
6. Ghabon
2. DRC Project: Belinga iron ore project a more significant and effective role concerning Iran’s
Project: Key road, rail and other including key infrastructure, Gabon
nuclear issue.”
infrastructure, DRC Natural Resource for repayment:
Natural Resource for repayment: Iron Ore Second, the Beijing Consensus contributes to a declining
Copper & cobalt Year: 2006
Year: 2008 Total Chinese financing: Approx consensus on the values that underpin the international
Total Chinese financing: US$9bn, US$3bn
system. Autocratic regimes see in China the proof that
reduced tot US$6bn
7. Nigeria: economic growth does not have to be associated with
3. Zimbabwe Project: Construction of turbine power
Project: Construction of coal mines and plant, Nigeria increased political freedom or democratization (see
thermal power stations, Zimbabwe Natural Resource for repayment: Oil box 5). China’s large-scale financial aid to these regimes
Natural Resource for repayment: Year: 2005
Chrome Total Chinese financing: US$298m is undermining the incentive to improve on governance
Year: 2006
8. Ghana and to conform to standards on human rights, the rule
4. Angola Project: Bui Dam, Ghana of law and democracy. By consolidating these regimes,
Project: Construction of infrastructure, Natural Resource for repayment:
Angols Cocoa the Beijing Consensus is resulting in a lack of progress
Natural Resource for repayment: Oil Year: 2007
Year: 2004 Total Chinese financing: US$562m on what are increasingly perceived as Western agendas,
Total Chinese financing: US$1.02bn such as climate change, non-proliferation, and the
9. Guinea
5. Congo Project: Souapiti Dam, Guinea “responsibility to protect” doctrine for intervention in
Project: Congo River Dam, Congo Natural Resource for repayment:
Natural Resource for repayment: Oil Bauxite humanitarian crises. In addition, Chinese purchases of
Year: 2001 Year: 2006 European debt can ease complaints from European states
Total Chinese financing: US$280m Total Chinese financing: US$1bn
about Beijing’s human rights records and positioning in
Based on Martin Davis, “Will Chinas Influence Africa‘s Development?“, Gordon Institute international affairs.
of Business Science, University of Pretoria, May 10, 2010.

  Figure 1: Chinese investments in Africa

 World Foresight Forum
Secure homelands for future generations

Free Market). Second, China is becoming increasingly

“The Beijing Consensus shows that having a non-democratic country successful in changing the rules of the game. With its
can also give a good life for the people.”
Former prime minister Tun Dr Mahathir Mohamad of Malaysia subsidies, export tax rebates and undervaluation of its
called democracy a “failed” ideology and held up China’s model of exchange rate, China has subverted international trade
authoritarianism as an alternative “worth studying”. 
rules. However, despite pending claims, the WTO has not
“We are making some political reforms, but slowly. We can make been able to force China to comply. This has contributed to
economic reforms without political reforms like China, which is doing
the impression that it pays to subvert or use international
very well.”
Nabil Sukkar, Managing Director of the Syrian Consulting Bureau and rules selectively, which may prompt other countries to
Investment follow China’s example. Third, the growing role of the
“At the Heavenly Gate in Beijing hope is born.” Chinese government in the economy has raised fears that
Former South African president Thabo Mbeki, arguing the China model China will use its economic might for political gain. As a
has application to Africa.
consequence, other governments are also increasingly
“China and Venezuela’s economies, dominated by major state owned assessing their own economic policies through a strategic
companies, offer the world a healthy model for growth as the global lens. As a result of these developments, countries are
financial system crumbles.”
Venezuelan president Hugo Chavez turning to protectionist measures. WTO Director Lamy
observes an emerging pattern of increased import
“China has been able to develop its economy without plundering other
countries and the Chinese economic miracle is indeed a source of
licensing, import tariffs and surcharges, and trade
pride and inspiration.” remedies to support national industries. This trend is also
President Robert Mugabe of Zimbabwe urged other countries in the world to
emulate the example of China, which he said provides the best example of how informed by rising unemployment due to the crisis and
countries should relate globally at economic, political and cultural levels.
the popular view that China is “stealing jobs”. Elevated
“Why could Mumbai not be more like Shanghai?” trade barriers could cause world trade to shrink by up to
Indian prime minister Manmohan Singh
8% and reduce global welfare by up to $350 billion. The
“China’s approach should serve as a paradigm for South–South return of government interference in the economy and
cooperation.”
Brazilian president Luiz Inacio Lula da Silva the increase of protectionist measures put pressure on
the rules and values that are in place to safeguard the
“I find that the Chinese treat us as equals. The west treats us as
former subjects.”
market capitalist system and free trade regime.
President Festus Mogae of Botswana

The New Approach

  Box 5: Emulation of the China model The rise of the Beijing Consensus has not only
empowered China and developing countries but has
Economic Implications also contributed to the perception of China as a threat to
With its extensive economic diplomacy, China has created liberal market democracies. Treating China as a threat
a climate in which supporting Chinese growth also leads to counterproductive tit-for-tat policies, such as
becomes a non-Chinese interest, for instance in Africa increased protectionism, and has human consequences,
(see figure 2). Against this background and the budgetary leaving millions of people in poverty in the developing
problems of advanced economies caused by the crisis, world. Western policy makers should realize that
China’s economic model is gaining ground. This has growing commercial relations with China are undeniably
several implications. First, governments are abandoning an increasingly important determinant of interstate
the Washington Consensus and playing an increasingly relations. These relations do not benefit from a debate
important role in the support, ownership and management that is framed as a zero-sum game in terms of China
of businesses (see also WFF Issue Brief The End of the versus the West. Rather, the new approach should focus
 Issue Brief
The Beijing Consensus: an alternative approach to development

CHINA & AFRICA GROWTH COUPLING

Beginnings of a growth correlation Almost an absolute correlation after 1999 - Coincided with China’s New Africa Policy

16

14

12 Africa’s growth is tracking the

V-shaped recovery of China

10

8
%
6

2
China real GDP growth
0
Africa real GDP growth
-2 1999-2008: Growth correlation
of 0.919972
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Martin Davis, “Will Chinas Influence Africa‘s Development?“, Gordon Institute of Business Science, University of Pretoria, May 10, 2010.

  Figure 2: Chinese growth becomes non-Chinese interest

on transforming the appealing elements of the Beijing and autocratic state capitalist countries should be
Consensus into win-win policies for both emerging and tempered by a global strategy for economic growth. The
advanced economies. Beijing Consensus’ emphasis on innovation provides the
First, the Beijing Consensus’ emphasis on people-focused basis for such a strategy, which should include limiting
development offers a good starting point towards a shared protectionism and increasing pressure on states to
agenda for political reform. There is an opportunity to abide by international trade regulations. For example,
send a message to China that sustainable and equitable encouraging China to allow its currency to appreciate to
economic growth are not well-served with poor working avoid inflation would, at the same time, reduce foreign
conditions, low wages, political oppression, environmental criticism of the low value of the Chinese currency as an
irresponsibility and human rights violations. However, unfair subsidy to Chinese goods. In turn, appreciation
China’s leadership is unlikely to be receptive to of the Chinese currency would make foreign goods less
addressing all these issues in the short term. Increasing expensive in China, creating more internal demand. With
wages, for example, would erode the competitive basis internal demand rising, the Chinese economy can move
of China’s economy and could therefore undermine the from an export-driven model towards amore mature one,
regime. So the new approach should focus on more based on investment and consumer demand. This would
feasible reforms, such as introducing minimal labor reduce the dependence of the Chinese on selling goods
standards, environmental stewardship, and gradually abroad, which could ease the fears and protectionist
reducing government censorship. This would allow the behavior of other countries, and make international
Chinese government to continue to meet its pledges to economic growth more sustainable.
its people to enhance their quality of life, while Western

11-15 April 2011

(and domestic) demands for greater political freedoms
can be met.
Second, polarization between liberal market democracies The Hague, The Netherlands
This publication is part of a series of WFF Issue Briefs
that offer background information on themes to be
addressed at the World Foresight Forum. The Issue
Briefs aim to inform and stimulate the debate on
global challenges. The views and opinions expressed
here are those of the authors and do not necessarily
express the official views of the WFF or any of its
speakers or sponsors.

World Foresight Forum is an initiative of 

Authors: Islam Qasem, Teun van Dongen, Marjolein de Ridder

Copyright: 2011 World Foresight Forum (WFF). All rights reserved.

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