A Beijing Consensus in the Making: The Rise
of Chinese Initiatives in the International
Political Economy and Implications for
Developing Countries
PERCEPTIONS, Summer 2016, Volume XXI, Number 2, pp. 29-56.
Abstract
The “Beijing Consensus” (BC) as a concept
has been utilised to distinguish China’s
economic development experience from the
“Washington Consensus” (WC), the policy
toolkit offered to developing countries by
Washington-based international organisations.
This paper posits that recent Chinese initiatives
in the international political economy constitute
the building blocks of an emerging BC with
potential to significantly influence developing
countries’ economic development trajectories.
In order to have a better understanding of the
emerging BC and its relation with China’s
economic development experience, the main
elements of the Chinese economic development
experience are compared to the WC and PostWC (PWC), and an early critical analysis of
the BC is provided. This analysis illustrates
that China does not try to export its economic
development model to other countries; the
BC has similar and distinguishing features
compared to the WC and PWC; and while
* Dr., Koç University, Department of Political
Science and International Relations, İstanbul,
Turkey. E-mail: muyagci@ku.edu.tr. The
author thanks the Editor for editorial assistance,
two anonymous reviewers for their helpful
comments and suggestions and Ziya Öniş for
his support and encouragement in writing this
paper.
Electronic copy available at: https://ssrn.com/abstract=2910831
Mustafa Yağcı
30
policy prescriptions of the WC would
not have much influence on developing
countries and their economic
development trajectories if these
prescriptions and some other neoliberal
policies had not been recommended
or conditioned on them by IMF and
World Bank programs, under “coercive
conditionality”.3
Thus, it is important
to distinguish between WC policy
prescriptions seen as necessary elements
of successful economic development
and how these prescriptions were
implemented in developing countries
with the involvement of international
financial organizations. In other words,
it is necessary to distinguish between
the WC in theory and the WC in
practice.
economic and political implications of
a rising China. The “Beijing Consensus”
(BC) as a concept has been utilised to
make the point that China’s successful
economic development experience
over the last three decades offers
an alternative to the policy toolkit
offered to developing countries by the
International Monetary Fund (IMF)
and the World Bank, the so called
“Washington Consensus” (WC).2
While the BC has been conceptualised
to reveal Chinese style economic
development policies, this paper asserts
that a better comparison between
the BC and WC would be to analyse
how China’s place in the international
political economy would influence and
alter developing countries’ economic
development trajectories by changing
global development dynamics. In this
respect, this paper examines recent
Chinese initiatives in the international
political economy as building blocks
of an emerging BC. This emerging
BC offers an opportunity to evaluate
how Chinese initiatives differ or not
from WC practices, especially in terms
of their potential influence on the
economic development trajectory of
developing countries.
While early conceptualisations of
the WC offered ideal policies that
would lead to successful economic
development in developing countries,
The “Beijing Consensus”
(BC) as a concept has been
utilised to make the point that
China’s successful economic
development experience over
the last three decades offers an
alternative to the policy toolkit
offered to developing countries
by the International Monetary
Fund (IMF) and the World
Bank, the so called “Washington
Consensus” (WC).
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
31
BC is in contrast to the expectation
that the rise of Brazil, India and China
will lead to a less liberal international
order.5
From a different perspective, the
emerging BC does not try to export the
Chinese economic development model
to other countries, as argued by some
scholars.6
In addition, the emerging
BC as a transnational policy paradigm
distinguishes itself from the WC and
PWC by emphasising infrastructural
finance, mutual development, no policy
conditionality and organizational
features that are absent in the USbacked international financial
organizations. Moreover, Chinese
initiatives under investigation in this
study are not conducted in isolation
from the domestic economic reforms
efforts or from the economic slowdown
referred to as the “new normal” in
China. With this in mind, this paper
provides a domestic, second image
explanation for these recent initiatives.7
This paper is organised as follows: in
the first section the BC as a Chinese
economic development experience is
compared to the WC and PWC in
practice. The second section provides a
domestic level, second image analysis of
recent economic reform efforts in China
and how they have resulted in the rise of
Chinese initiatives in the international
political economy. The third section
examines the building blocks of the
emerging BC in comparison to their
This paper offers a comparison between
the WC and Post-WC (PWC) in
practice with the Chinese economic
development experience and shows
that they diverge in different policy
areas and in the ways these polices are
implemented. Furthermore, this study
brings an analysis of recent Chinese
initiatives in the international political
economy, the Asian Infrastructure and
Investment Bank (AIIB), the New
Silk Road Project- commonly known
as “One Belt One Road” (OBOR),
the New BRICS Development Bank
(NBDB), and the Free Trade Area of
the Asia Pacific (FTAAP), as building
blocks of the emerging BC, and
provides a critical account of how the
emerging BC will possibly alter the
economic development trajectories
of developing countries.4
An early
analysis of these initiatives helps us
in having a better understanding of
the emerging BC, its implications for
the global political economy, and how
these initiatives will influence the
economic development trajectories
of developing countries. The analysis
in this paper illustrates that Chinese
experience significantly diverges from
the WC and PWC in practice though
the emerging BC resembles the WC
and PWC in terms of promoting
free trade relations and liberalisation
of inward foreign direct investment
(FDI) in developing countries. The
liberal orientation in the emerging
Mustafa Yağcı
32
but Bretton Woods organisations have
contributed to the emerging economy
crises by promoting this policy.11 The
WC in practice has not generated its
desired outcomes, and the economic
problems of developing countries in the
1990s were interpreted as the failure of
these practices.12
After these failures and dissatisfaction
came the call for an alternative economic
development paradigm that would
replace the WC. Stiglitz iterated that
“The debate now is not over whether the
WC is dead or alive, but over what will
replace it”13 and there were calls for a
“Post-Washington Consensus” (PWC)
which would recognise that we need a
broader set of instruments and that our
goals should be broader in achieving
US backed counterparts, and the last
section concludes with the implications
of these initiatives in the international
political economy.
The (Post)- Washington
Consensus versus the
Chinese Economic
Development Experience
The WC in theory refers to the policy
recommendations of free-market
capitalism, outward orientation, and
prudent macroeconomic policies as
these are assumed by technocratic
Washington to result in “economic
objectives of growth, low inflation, a
viable balance of payments, and an
equitable income distribution”.8
The
original formulation of the WC was not
a policy prescription for development,
but this is how it is interpreted.9
The
WC in practice involved not only a
shift from state-led development to
market-oriented development, but
also, more importantly, a shift in how
development problems were framed
and, relatedly, how appropriate policy
solutions were justified with the
dominance of ahistorical orientations
via IMF and World Bank stabilisation
and structural adjustment programs.10
Moreover, early formulation of the WC,
or the WC in theory, did not include
rapid capital account liberalisation,
The WC in theory refers to the
policy recommendations of
free-market capitalism, outward
orientation, and prudent
macroeconomic policies as these
are assumed by technocratic
Washington to result in
“economic objectives of growth,
low inflation, a viable balance
of payments, and an equitable
income distribution”.
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
33
to economic and financial crisis and
sustained economic development
over the last three decades.17 China
has achieved significant economic
development progress by having an
average economic growth rate of 10%,
becoming an upper-middle income
country, and lifting over 500 million
people out of poverty over the last three
decades.18 This success story led to the
argument that the BC is replacing the
WC as it enables developing countries
to fit into the international system
by achieving economic success while
preserving their independence.19
According to Ramo, the main features
of the BC are a focus on innovation,
goals of sustainable and equitable
economic development, and Chinese
characteristics of development, which
emphasise self-determination in
international affairs and establishing
their own model of development.20
These features and the rise of China
are appealing to other developing
countries because the BC resembles a
very good example for other developing
countries on how to “organize the
place of a developing country in
the world”.21 Debate over the BC
started with the labelling of the main
features of the Chinese development
experience as the BC and outlining
how these features are appealing to
other developing countries. In Chinese
economic development, the “process of
higher standards of living by seeking
equitable, sustainable and democratic
development.14 Öniş and Şenses
emphasise the critical role of Bretton
Woods organisations in determining
economic development policy agendas
around the world and they assert that
the rise of the PWC after the emerging
economy crises in the 1990s can be
seen as an improvement over the WC.
However, the PWC has limitations
of its own in terms of adopting a
narrow, technocratic approach to statemarket relations, taking existing power
relations as predetermined, giving
less focus to widespread problems of
poverty, inequality and competitiveness
in the national and global economy,
and paying almost no attention to the
industrialisation efforts of developing
countries.15 More recently, the global
economic crisis has been interpreted as
being one of the latest manifestations
of the growing dissatisfaction with
the neo-liberal economic paradigm
associated with the WC, and this
dissatisfaction has renewed interest
for industrial strategies in different
contexts.16
With this background of transition from
one dominant economic development
paradigm to another and problems
faced in that transition by developing
countries, the Chinese experience stands
as the ultimate success story among
developing countries with its resilience
Mustafa Yağcı
34
together and promoting export-led
development, thus the China model
has the features not of an ideological
commitment but rather a pragmatist
approach to development, in other
words, evidence of a strong, prodevelopment state and selective learning
from the Western experience.26 Others
have noted that China’s unique features
of geographical size, labour-abundant
economy and hierarchical authoritarian
political system disqualify the Chinese
experience from easy generalisation, but
the Chinese experience may offer some
lessons to other developing countries:
public ownership can be efficient and
can generate public goods, competition
is (still) more important than ownership,
and a strategy of investment-led growth
is essential.27 Some have emphasised
that China has been successful in
economic development by bringing
together local policy experimentation
and long-term policy prioritisation
by utilising the policies of other
countries selectively.28 Some assert
that the Chinese Communist Party’s
strong commitment to economic
development, its guidance and efficient
utilisation of land, capital, labour,
entrepreneurship, and technological
innovation led to the Chinese success
story, however economic development
also brought other problems with it
such as social inequality, persistent
and oppressive bureaucracy, and
environmental crisis.29 Hsu further
gradualism, experimentation, managed
globalization and a strong state has
allowed for a sequencing of reforms
that has served China well”, making
the Chinese experience a success
story.22 For Williamson, development
policies pursued by China referring to
the BC include incremental reform,
innovation and experimentation,
export-led growth, state capitalism
and authoritarianism.23 Lee, Jee
and Eun underscore that one of the
critical features of the BC has been
to regulate inward FDI so that local
partner Chinese companies could
transfer technology by parallel learning
as “China took advantage of its large
market size to pressure the foreign
partner to transfer core technology to
the local partner”.24
There are also critiques of BC
characteristics, such as noting that
technological innovation has not
been at the centre of China’s growth,
pointing to a lack of evidence to argue
that China is pursuing sustainable and
equitable development, and showing
China as a unique case thus forming a
“consensus” out of it is not helpful for
other developing countries.25 On the
other hand, policies of the China model
are very similar to those of the newly
industrialised economies of East Asia
(Singapore, Hong Kong, South Korea)
in bringing neo-liberal economic
policy and political authoritarianism
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
35
Moreover, the gap between what
China does and what other developing
countries do has been widening in
contrast to the BC’s implication that
China is illustrating a model for other
developing countries.32
The Chinese development experience
can be characterized as similar to the
developmental states in East Asia but
China has some other country specific,
unique features such as the incremental
and experimental approach to
economic reform.33 For instance, the
Shanghai Pilot Free Trade Zone was
established in 2013 for experimenting
with new economic reforms such as
financial liberalisation.34 Another
major difference between the Chinese
experience and other developmental
states is that countries such as Japan,
South Korea and Taiwan were able to
take advantage of the Cold War era.
By being allies of the United States,
these countries received financial
support and were able to sell their
products in Western markets, while
also receiving military protection
against the aggressive countries in the
region. In contrast, China did not have
a major international partner but took
advantage of the Chinese diaspora in
the finance and trade centres of Hong
Kong, Macao, Taiwan and Singapore,
especially in the early years of economic
opening, and facilitated inward
investment from these countries, which
argues that replication of the China
model is not advisable because of
the problems Chinese development
has caused such as increasing
income inequality and exclusionary
development practices.30
In terms of financial policy, it is
highlighted that China has been
successful so far in bringing together
exchange rate stability, closed financial
markets and monetary independence,
the so called “impossible trinity”
which was very critical in its economic
development success.31 However,
the evidence illustrates that other
developing countries are nowhere near
China in achieving this impossible
trinity, rather, in developing countries
exchange rates have been less stable,
their financial systems have been
more open and monetary policy more
independent compared with China.
In terms of financial policy, it is
highlighted that China has been
successful so far in bringing
together exchange rate stability,
closed financial markets and
monetary independence, the
so called “impossible trinity”
which was very critical in its
economic development success.
Mustafa Yağcı
36
to use the term “Chinese experience”
in economic development and compare
it with the WC and PWC in practice.
The IMF and the World Bank offer
policy recommendations and advocate
policy change and reform in developing
countries that would result in an “ideal
type” environment for economic
development. The Chinese experience
differs significantly from these policy
recommendations. With a focus on the
role of the state in the economy, finance,
trade, investment and social policies,
pace of economic reform, policy
implementation style and ultimate goal,
Table 1 illustrates how the Chinese
experience utilises different policies to
achieve the main economic objective of
industrialisation and differs from the
WC and PWC in practice. It should be
noted that in East Asian developmental
states and in the Chinese experience
the ultimate objective has been to
foster industrialisation in economic
development whereas the WC and
PWC in practice did not prioritise this
objective.40 This distinction is critical to
having a better understanding of the
emerging BC and its influence on the
development trajectory of developing
countries.
helped the coastal regions of China
emerge as trade and finance centres.35
Despite these characterizations of
the BC, it should be noted that even
for the developmental states of East
Asia, we cannot talk about a unique
East Asian economic development
model because of divergent historical,
institutional and political contexts
within which development policies
have been implemented.36 Therefore,
countries should take lessons from
other development experiences with
careful consideration of their own
circumstances.37 China as an example
of economic development success story
offers very important lessons for other
developing countries but it is better
to see it as the “Chinese economic
development experience” with unique
Chinese characteristics rather than a
model to be utilised in other contexts.
Because of the unique and even
contradictory features of Chinese
economic development, McNally calls
the Chinese economic system as “SinoCapitalism”.38 It can also be argued that
the China model cannot be transferred
to other countries for several reasons.39
Therefore, instead of the BC, I prefer
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
37
Central Committee of the Communist
Party of China gives us a good
opportunity to analyse the extent of the
latest economic reform efforts in China
and their international implications.
Chinese Economic Reform
Efforts
In November 2013, the Third Plenary
Session of the 18th Central Committee
of the Communist Party of China took
One of the major characteristics of
Chinese economic development is
the pragmatism to adopt different
policies at different stages of economic
development. In the last few years
Chinese policy makers have started
to implement new economic policies
to adjust their economic development
to what they call the “new normal” in
the economy by targeting 7.5% and
7% economic growth rates in 2014
and 2015 respectively.41 In this respect,
the Third Plenary Session of the 18th
Table 1: (Post)-Washington Consensus versus Chinese Experience
Washington
Consensus
Post-Washington
Consensus
Chinese
Experience
Role of State in
the Economy Minimal Regulatory Market Maker
Financial System Deregulation Optimal Regulation Strictly Controlled
Trade Policy Free International
Trade
Free International
Trade
Export Promotion and
Protection
Investment
Policy
Liberalisation of
Inward FDI
Liberalisation of
Inward FDI
Regulation of Inward
FDI and Technology
Transfer
Social Policy Very Limited Limited
Redistribution Poverty Alleviation
Pace of Reform Fast Regulation First Incremental and
Experimental
Policy
Implementation One Size Fits All Policy
Recommendation
Flexibility - Chinese
Characteristics
Key Goal Integration to
World Economy
Proper Domestic
Regulation Industrialisation
Source: Author’s analysis.
Mustafa Yağcı
38
significant influence on the economic
development trajectory of developing
countries.
The establishment of the AIIB and
NBDB, the Chinese initiative of
OBOR, and the proposal of the
FTAAP stem from the need to reform
the Chinese economy, and are the
international implications of domestic
economic reform efforts. Before we
analyse these recent Chinese initiatives
in more detail, we can learn from
the lessons of Chinese development
assistance in other countries and
regions. McKinnon indicates that
Chinese development assistance to
African countries is mainly in the form
of non-concessional loans and export
credits, and Chinese development
assistance is complemented with direct
investments by Chinese companies.45
According to McKinnon, the main
feature of Chinese development
assistance to Africa is avoiding lending
cash to the recipient countries but
making quasi-barter deals so that
China will receive commodities in
return for development aid. Davies
asserts that African governments
can take advantage of competition
between Chinese and Western donors
in terms of offering development aid
but he also emphasises that the aid
relationship will continue as long as
donors’ interests are met.46 Jenkins
analyses the Chinese development
very important decisions to “deepen the
economic reform”.42 Some of the main
proposals during these meetings were
financial liberalisation reform; making
use of accumulated foreign exchange
reserves; taking advantage of production
overcapacity in the economy; and being
a reference of economic development
for other countries by establishing
cooperation mechanisms. In this
regard, the published report from the
meetings indicates that:
“We will set up developmentoriented financial institutions,
accelerate the construction
of infrastructure connecting
China with neighboring
countries and regions, and
work hard to build a Silk
Road Economic Belt and a
Maritime Silk Road, so as
to form a new pattern of allround opening”.43
These are very important statements in
terms of having a better understanding
of China’s place in the international
political economy because “the more
significant long-term story may be
about the continuing, remarkably rapid,
evolution of the international political
economy and China’s place in it”44 as
China starts to play a more crucial role
in the coming years not just in trading
relations but also in development
finance, both of which will have a
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
39
Lin and Wang provide a more
detailed analysis of how China
can contribute to development
assistance and argue that China
can provide “ideas, tacit knowledge,
implementation capacity, opportunities
as well as finances” in facilitating the
structural transformation of recipient
countries, as China is “a bit ahead in
structural transformation, has a high
complementary and more instruments
of interaction”.48 Because of the rising
labour cost in China and the domestic
economic reform efforts, Chinese
investments in other regions will be
critical as “the reallocation of China’s
manufacturing to more sophisticated,
higher value-added products and tasks
will open great opportunities for laborabundant, lower income countries
to produce the labor intensive lightmanufacturing goods that China
leaves behind”.49 Moreover, revealing
the Chinese strategy in development
assistance, Chinese policy makers in
their official documents emphasise the
importance of building up recipient
countries’ self-development capacity,
not attaching any political or economic
reform conditions, and respecting
and treating recipient countries as
equal for mutual benefit and common
development. More recent versions
indicate that a more internationalised
orientation in the Chinese approach of
providing development assistance for
infrastructure projects will be one of the
assistance in Latin America and asserts
that China’s main interests in the
region are “raw materials, a market
for exports of manufactured goods
and an area of diplomatic competition
with Taiwan” and that the asymmetric
nature of the relationship illustrates the
centre-periphery distinction. However,
he also notes, China is far from being
a hegemon in the region, as the US is
still the most powerful actor in Latin
America.47 Here it should be noted that
research on Chinese development aid
in Africa and Latin America focuses
on how the Chinese approach to
development aid differs from Western
style, while overlooking the impact of
Chinese activities on the economic
development trajectory of developing
countries. In contrast, this study tries
to examine how the emerging BC
will potentially influence developing
countries’ economic development
trajectories in comparison to the WC
and PWC.
The establishment of the AIIB
and NBDB, the Chinese
initiative of OBOR, and the
proposal of the FTAAP stem
from the need to reform the
Chinese economy, and are the
international implications of
domestic economic reform
efforts.
Mustafa Yağcı
40
and Li indicate the critical role of
international financial organisations for
“the promotion and implementation
of a particular set of policy ideas and
principles” and note that “multilateral
organizations, therefore, are key
sources of notionally ‘independent’
and expert authority, with the sort of
financial leverage that makes their
advice hard to resist”.52 That is why the
activities of multilateral organisations
have had a big influence on ideas about
development over the last 50 years as a
complement to American foreign policy.
In explaining the multilateral turn in
Chinese initiatives, Chin indicates
that “multilateral organizations can
legitimize and universalize Chinese
interests at a time when China needs
to reassure others about the way it will
use its newfound powers in the global
system”.53
main priorities of Chinese authorities.50
Related to the latest initiatives of
Chinese policy makers, Lin and Wang
assert that “One Belt One Road” is a
reflection of the Chinese economic
development experience because “in
order to get rich you need to build
roads first”, and building infrastructure
is a very important countercyclical
measure to boost aggregate demand
and long term productivity.51 However,
the issue of whether and how China
will contribute to industrialisation
efforts in developing countries is
an open question. As Table 1 has
illustrated, the Chinese experience
has prioritised industrialisation
in economic development and
Chinese characteristics of economic
development, thus policies in different
areas have all sought to contribute to
industrialisation efforts. This issue will
be further investigated in later sections
with a focus on the potential influence
of the emerging BC on industrialisation
efforts in developing countries.
Recent Chinese initiatives illustrate
that China will put more emphasis on
multilateral dimensions of development
assistance and development finance in
addition to bilateral or regional policies.
This will have a major influence on
the way China’s aspirations will shape
the international political economy
and create new dynamics for global
economic development. Beeson
Chinese policy makers in their
official documents emphasise
the importance of building
up recipient countries’ selfdevelopment capacity, not
attaching any political or
economic reform conditions,
and respecting and treating
recipient countries as equal for
mutual benefit and common
development.
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
41
Jinping has expressed China’s goals
of implementing new international
development organisations and
proposals that will have major influence
on other developing economies.
For instance, during his visit to
Kazakhstan57 in September 2013, Xi
Jinping expressed China’s interest in
establishing an “economic belt along
the Silk Road” from the Pacific Ocean
to the Baltic Sea, and in October 2013,
before the APEC meeting in Bali, Xi
Jinping expressed China’s intention
to establish a new multilateral Asian
infrastructure bank and Maritime
Silk Road.58 The Silk Road Economic
Belt and the 21st Century Maritime
Silk Road together form the OBOR,
a proposal that is complementary
with the initiative of the AIIB.59 In
November 2014, Chinese authorities
pushed the Free Trade Area of the Asia
Pacific (FTAAP) issue on the APEC
agenda, and the meeting resulted in
an agreement for a two-year study on
the possibility of a Pacific-wide free
trade zone.60 During the most recent
APEC meeting, China again pushed
for acceleration of the FTAAP, and a
senior Chinese official indicated that
study on the FTAAP was in the phase
of substantive drafting.61 Lastly, in July
2014, during their meeting in Brazil,
the BRICS countries announced their
plan to establish a new development
bank.62 It may be argued that this is a
BRICS initiative not a Chinese one,
Recent scholarship has also focused
on efforts to alter the power dynamics
in existing international organizations
of the IMF and the World Bank.54
Although IMF quotas and governance
reforms were approved in 2010, the
US Congress ratified the reforms in
December 2015, only after recent
Chinese initiatives had taken hold.55
With the recent developments,
there needs to be more focus on
the organisational and operational
features of Chinese initiatives that will
be in competition if not in conflict
with the existing Bretton Woods
organisations. Chinese initiatives of
the AIIB and NBDB, the OBOR
and the proposal of the FTAAP are
in different areas and their objectives
may seem distinct, however they are
interconnected, and they have similar
goals in terms of determining China’s
place in the international political
economy and sustaining Chinese
economic development in the coming
years.56 Their analysis together brings
a better perspective to evaluate China’s
changing role and how it will alter
future global development dynamics.
The Beijing Consensus in the
Making
Since 2013, coinciding with Chinese
domestic economic reform efforts, on
several occasions Chinese leader Xi
Mustafa Yağcı
42
structural adjustment and stabilisation
programs. The World Bank and IMF’s
coercive power, combined with not
having any other alternative in the
international system, left developing
countries with no option but to comply
with policy conditionality in return
for financial assistance. Although
Babb notes that there seems to be no
competing paradigm to the WC at
the national or international system,
I argue that recent Chinese initiatives
illustrate that the emerging BC offers
an alternative transnational policy
paradigm by distinguishing itself from
the practices of the WC and PWC, by
emphasising mutual benefit and mutual
development, and also not attaching
any policy conditionality to its finances.
Moreover, in terms of organisational
features, the emerging BC maintains a
share of power with other developing
countries, and supports a rotation of
presidencies in key positions. With
these features, the unwritten rule of
having an American president for the
World Bank, a European president
for the IMF and a Japanese president
for the Asian Development Bank
(ADB) will be further questioned
by other emerging countries. More
importantly, with recent Chinese
initiatives, developing countries will
have important alternatives for their
developmental needs, which may
possibly ease their position in the
international system and will open up
more developmental space for them
but considering the economic and
financial superiority of China within
the BRICS, India’s current economic
power and major economic problems
faced by Russia, Brazil and South
Africa, it is not difficult to see that
China is the indispensable actor in this
new organisation.63
In this paper I assert that these
Chinese initiatives form the building
blocks of the emerging BC and in this
regard I see the BC as an emerging
transnational policy paradigm in
competition with the WC.64 Babb
illustrates the rise, prominence and
decline of the WC and argues that
the WC was not merely an intellectual
product or collection of economic
ideas, because the World Bank and
IMF were critical in its adoption
by developing countries with strict
policy conditionality attached to the
The World Bank and IMF’s
coercive power, combined with
not having any other alternative
in the international system,
left developing countries with
no option but to comply with
policy conditionality in return
for financial assistance.
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
43
and their implications for developing
countries.
The Asian Infrastructure and
Investment Bank (AIIB)
The AIIB as a multilateral development
bank has 57 founding members
from Asia, Africa, Europe and South
America, and is headquartered in
Beijing. Its first President is from China
and it has started its operations in
2016.68 The initial authorised capital of
the AIIB is US$ 100 billion. The Asian
member countries will be the majority
shareholders and will hold almost
75% of shares.69 China has provided
about US$ 30 billion to initial capital
subscription; India US$ 8 billion; and
Russia US$ 6.5 billion; constituting
the three largest contributors to the
AIIB’s initial capital.70 With its 30%
contribution to initial capital stock,
China will have 26.06% of the total
votes and thus the largest voting right,
with the second largest voting power
going to India (7.5%) and the third
largest to Russia (5.93%) –assuming
the number of member countries
remains the same.71 With 26.06%
of voting power, China will be able
to block any decision that requires a
super majority.72 However, Chinese
authorities have recently announced
that they will not exercise veto power at
the AIIB, in contrast to the American
especially in terms of infrastructure
finance.65 However, I also argue that
Chinese initiatives are not promising
in terms of enlarging developmental
space for developing countries’ trade
relations and industrialisation efforts.
Chinese initiatives aim to foster free
trade and liberalisation of inward FDI
in countries involved in the OBOR
and FTAAP. This means that mutual
development goal advocated by
Chinese authorities does not necessarily
refer to facilitating industrialisation
efforts in developing countries which
require infant industry protection and
technology transfer policies as was the
case for the China. Thus, while the
emerging BC does not advocate policy
change within recipient countries,
Chinese initiatives aim to liberalise
trade and investment relations with
developing countries and these policies
are similar to the WC and PWC. This is
actually an irony because “China, which
has never had a liberal internationalist
tradition in its intellectual history until
modern times, is now claiming to be
assuming the mantle of international
economic liberalism”.66 This raises
the question of whether China is
kicking away the ladder for developing
countries such that they will not be
able to utilise critical policies for their
industrialisation efforts if they want to
join the Chinese train of development.67
The sections below provide a more
detailed analysis of Chinese initiatives
Mustafa Yağcı
44
it should be a three-way
combination of infrastructure,
institutions and peopleto-people exchanges and a
five-way progress in policy
communication, infrastructure
connectivity, trade link, capital
flow, and understanding
among people”.76
The National Development and
Reform Commission of China issued
the first formal document outlining
the ambitious goals and extent of this
project in March 2015, indicating
that the main goals of this project
are “peace, development, cooperation
and mutual benefit” and that the
initiative is “designed to uphold the
global free trade regime and the open
world economy in the spirit of open
regional cooperation” and also “aimed
at promoting orderly and free flow of
economic factors”.77 According to the
same document, this new initiative
is critical for the opening up reform
efforts in China as it “will enable
China to further expand and deepen
its opening-up, and to strengthen
its mutually beneficial cooperation
with countries in Asia, Europe and
Africa and the rest of the world”.78
As argued in previous sections, this
initiative strives to facilitate trade and
investment liberalisation and countries
involved should “remove investment
and trade barriers for the creation of
a sound business environment within
the region”.79 This will facilitate the
practices at the IMF and World
Bank.73 The AIIB will raise capital in
US dollars, euros, and yuan, and will
make loans in US dollars.74 The AIIB
will focus on financing infrastructure
projects in Asian countries and will
also complement OBOR. According
to OECD estimates, the global
infrastructure gap is expected by 2030
to be around US$50 trillion and,
according to the ADB, between 2010-
2020, Asian countries will need total
infrastructure investment of US$8
trillion, in other words, almost US$750
billion infrastructure investment every
year.75 These studies illustrate that
the AIIB will fill a very important
gap for the economic development
trajectory of Asian countries and will
be in competition with the US-backed
international organizations.
One Belt One Road
(OBOR)
OBOR is one of China’s most
ambitious initiatives and the AIIB’s
operations will be in line with it. Xi
Jinping expressed the ambitious goals
of OBOR during APEC meetings
held in Beijing in November 2014:
“[connectivity] is not merely
about building roads and
bridges or making linear
connection of different places
on surface. More importantly,
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
45
times of crisis and will also finance
infrastructure and development
projects around the world, with an
initial subscribed capital of US$ 50
billion and authorised capital of US$
100 billion.83 China provides US$
41 billion, India, Russia and Brazil
US$18 billion, and South Africa US5$
billion for the authorised capital.84
The headquarters of the NBDB is
in Shanghai and the first president
is from India. This organisation is a
major step toward institutionalising
the BRICS cooperation and rivalling
the US-backed IMF and World Bank.
At the NBDB no country has veto
power and all BRICS countries will
have equal votes.85 The appeal of this
organisation to developing countries
will shape its future influence and
China as the biggest contributor to the
funds will play a key role in operations
of the bank. Table 2 below compares
the IMF, World Bank, ADB and recent
multilateral initiatives of the AIIB and
NBDB in more detail.
investment of Chinese companies in
these countries. OBOR complements
AIIB activities, and while Chinese
officials indicate that AIIB operations
do not involve policy conditionality,
OBOR involves implicit conditionality
of trade and investment liberalisation,
which will facilitate foreign investments
by Chinese companies.
China has established a US$ 40 billion
fund for the purposes of this project.80
Recently, the China Export-Import
Bank announced that at the end of
2015, it had outstanding loans covering
1,000 projects in 49 countries, worth
more than 520 billion yuan or US$
78.93 billion.81 A recent report has
claimed that China plans to spend US$
240 billion to OBOR related projects
in the near term.82 One of the most
ambitious projects of the 21st century,
with the goal of connecting three
continents and more than 60 countries
via roads, railways, bridges, will take
a long time to complete and will be a
big test for China. However, even the
proposal of this mega project by China
shows its aspirations of assuming a
new role in the international political
economy.
The New BRICS
Development Bank (NBDB)
The NBDB is a multilateral
development bank that will provide
liquidity to member states during
This organisation is a major
step toward institutionalising
the BRICS cooperation and
rivalling the US-backed IMF
and World Bank. At the NBDB
no country has veto power and
all BRICS countries will have
equal votes.
Mustafa Yağcı
46
of FTAAP partners in the world GDP
is around 58%.87 Countries that are not
currently included in the FTAAP, such
as Cambodia, Lao PDR, Myanmar,
India and European Union countries,
are part of the OBOR, which also
seeks to foster trade and inward FDI
liberalisation.88 In other words, the
Chinese initiatives of OBOR and the
FTAAP complement each other in
different ways for the common goal
of liberalising trade and investment
regimes in developing countries.
The Free Trade Area of the
Asia Pacific (FTAAP)
China’s exclusion from TPP
negotiations has led the Chinese
leadership to revitalize the FTAAP
proposal and bring it back to the APEC
agenda in 2014.86 TPP negotiations
cover 12 countries but the FTAAP is
proposed to include all the parties in
the TPP plus eight more, including
China and Russia. The combined share
Table II: Current Multilateral Development Organisations versus Chinese
Initiatives
IMF World
Bank ADB AIIB NBDB
Headquarters Washington
DC
Washington
DC Manila Beijing Shanghai
President European American Japanese Asian BRICS
Largest Capital
Contributor
USA
(17.68%)
USA
(16.88%)
Japan
(15.67%)
China
(29.78%) China (41%)
Largest Voting
Power
USA
(16.74%)
USA
(15.97%)
Japan
(12.84%)
China
(26.06%)
Equal among
BRICS
Veto Power Yes Yes Yes No No
Number of
Members 188 188 67 57 5
Authorised
Capital Stock
US$ 286
Billion
US$ 212
Billion
US$ 100
Billion
US$ 100
Billion
US$ 100
Billion
Sources: https://www.imf.org/external/np/sec/memdir/members.aspx#total;
https://www.imf.org/external/np/exr/facts/glance.htm;
http://siteresources.worldbank.org/BODINT/Resources/278027-1215524804501/IBRDCountryVotingTable.pdf;
http://www.adb.org/sites/default/files/page/30786/oi-appendix1.pdf
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
47
and PWC policies as listed in Table 1,
namely, China’s efforts to promote free
trade and the liberalisation of inward
FDI. This illustrates that despite China’s
emphasis on “no policy conditionality”
and “mutual development”, being part
of these Chinese initiatives requires
implicit conditionalities. This is a very
critical contradiction of the emerging
BC. Also, in the operations of the
NBDB, the ways in which the differing
national interests of BRICS countries
will shape the functioning of the
bank and how China as the biggest
economic power will take a position
in the coming years will be a major
challenge to overcome.90
Conclusion
This article seeks to re-conceptualise
the “Beijing Consensus” by examining
the latest Chinese initiatives in the
international political economy with
a focus on how they will influence
Implications of the Emerging
Beijing Consensus for
Developing Countries
While Chinese initiatives offer
opportunities to developing countries
especially in terms of infrastructure
finance, they also illustrate some
challenges and contradictions in the
Chinese approach to multilateral
development assistance. For instance,
Chinese authorities emphasise
mutual development as an ultimate
goal of these initiatives. However, for
these initiatives to result in mutual
development, there needs to be efforts to
support industrialisation in developing
countries, as many developing
countries suffer from what Rodrik
calls “premature deindustrialization”:
“Developing countries are turning
into service economies without having
gone through a proper experience of
industrialization”.89 As seen in previous
sections, developmental states and
China have prioritised industrialisation
as an ultimate objective of economic
policy and they have utilised different
policies for this purpose. By promoting
free trade and liberalisation of inward
FDI in OBOR and the FTAAP, the
emerging BC is not promising in
supporting the industrialisation efforts
of developing countries by eliminating
export-led growth strategies and
technological transfers from inward
FDI. The emerging Beijing Consensus
has two common elements with the WC
While Chinese initiatives offer
opportunities to developing
countries especially in terms of
infrastructure finance, they also
illustrate some challenges and
contradictions in the Chinese
approach to multilateral
development assistance.
Mustafa Yağcı
48
economy in the years to come. China’s
success in these efforts will depend
on its progress in domestic economic
reform efforts, the sustainability of
its economic development, its appeal
to other countries in development
projects, and whether these initiatives
will result in “mutual development”.
The founding members list of the AIIB
illustrates that there is a demand to get
on board China’s development train
not just from developing countries but
also developed economies, including
Germany, France and the UK. This is
an early sign that China will be able
to find partners in its latest initiatives.
Therefore, the emerging features of
the BC, the functioning of Chinese
initiatives and their political economy
implications for developing countries,
along with China’s changing role in the
international political economy and
changing global development dynamics
will all be major avenues of research in
the years to come.
the development trajectories of
developing countries. The Chinese
train of development took off decades
ago but now other countries can join
it by participating in China’s latest
initiatives. China’s domestic economic
reform efforts, its desire to have a higher
return on accumulated reserves, and
the necessity it faces to export excess
production capacity, have contributed
to these initiatives. Moreover, in
contrast to the policy prescription,
policy change, and policy reform
oriented activities of the World Bank
and the IMF, China, identifying itself
as a developing country, offers mutual
development and cooperation to other
developing countries without any policy
change request or policy conditionality.
However, efforts to promote free trade
and liberalisation of inward FDI make
the emerging BC resemble WC and
PWC practices, which would not
be helpful in developing countries’
industrialisation efforts. Moreover,
an economic slowdown in China and
economic transformation reforms are
negatively influencing commodity
exporter developing countries, which
are over-dependent on China. This
creates a dilemma for them: they
seek to join recent Chinese initiatives
but China’s economic development
trajectory is negatively influencing
them. Chinese initiatives are in their
early stages of establishment however
their early analysis provides a good
indication of the role China wishes
to play in the international political
In contrast to the policy
prescription, policy change,
and policy reform oriented
activities of the World Bank
and the IMF, China, identifying
itself as a developing country,
offers mutual development and
cooperation to other developing
countries without any policy
change request or policy
conditionality.
A Beijing Consensus in the Making: The Rise of Chinese Initiatives in the International Political Economy and Implications for Developing Countries
49
Endnotes
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4 While this paper uses the “Beijing Consensus” as an umbrella term for recent Chinese
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5 Andreas Nölke, et al., “Domestic Structures, Foreign Economic Policies and Global
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11 John Williamson, “Differing Interpretations of the Washington Consensus”,
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49 Ibid., p. 13.
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50 Ibid., p. 14-15.
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78 Ibid.
79 Ibid.
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Pacific Policy Studies, Vol. 2, No. 2 (2015), pp. 416-424.
87 Duong Tran and Adam Heal, A Free Trade Area of the Asia-Pacific: Potential Pathways to
Implementation, No. 4., United Nations Economic and Social Commission for Asia and
the Pacific (ESCAP), 2014.
88 Another major free-trade agreement under negotiation in the Asia Pacific region is the
Regional Comprehensive Economic Partnership (RCEP). This paper sees RCEP as an
ASEAN initiative rather than Chinese initiative, that is why RCEP is not examined
in this paper. For more details on RCEP, see Tran and Heal “A Free Trade Area of the
Asia-Pacific”.
Mustafa Yağcı
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89 Dani Rodrik, “Premature deindustrialization”, Journal of Economic Growth, Vol. 21, No.
1 (2016), p. 2.
90 Chin, “The BRICS‐led Development Bank
