The Chinese development model—commonly referred to as the Beijing Consensus—has become a key reference point in global political and economic discussions over the last two decades. Unlike the liberal, market-driven trajectory followed by Western democracies, China has carved out a distinctive path that blends authoritarian governance with selective economic liberalization. Rising from the shadows of a colonial past and what it describes as the “Century of Humiliation”, China has engineered a historic ascent to become the world’s second-largest economy.

In 1978, at the dawn of Deng Xiaoping’s reform era, more than 60% of China’s population lived in extreme poverty. The country was overwhelmingly rural, under-industrialized, and tightly controlled by rigid collectivist policies. Yet, by 2020, extreme poverty had fallen to less than 1%—a transformation the World Bank describes as the most rapid and sustained poverty reduction in history. This achievement was not merely a product of economic growth but of deliberate institutional innovation.

What China did right lies not in a single reform, but in a carefully sequenced and state-managed transition. Deng’s strategy of “crossing the river by feeling the stones” demonstrated a pragmatic, trial-and-error approach. This phase saw the rollout of Special Economic Zones (SEZs), the dismantling of Mao-era collectivized farming through the Household Responsibility System, and the dual-track pricing system that allowed for market experimentation while preserving state control. These reforms catalyzed rapid productivity gains and attracted massive foreign direct investment (FDI), helping China’s GDP grow at an average of nearly 10% per year for three decades.

Tournament Decentralization 

While China's political institutions remain authoritarian, they are far from static. The Chinese Communist Party (CCP) has maintained tight political control, but it has also shown remarkable adaptability. It introduced village-level elections, permitted local-level experimentation, and instituted performance-based promotion for bureaucrats—linking career progression to local economic success. These measures added a degree of responsiveness and meritocracy within the one-party framework.

Crucially, China did not pursue top-down control alone. Decentralization became a central pillar of its growth strategy. Local governments were granted significant autonomy to manage land, approve investment projects, and partner with private and foreign firms. This created a system of “tournament decentralization”, where local leaders competed to attract capital, build infrastructure, and boost regional GDP. As Barry Naughton describes in The Chinese Economy: Transitions and Growth, this quasi-market within government became a powerful engine for localized innovation and efficiency.

China’s state capacity was reinforced through rigorous long-term planning. Five-Year Plans acted as both strategic vision documents and feedback systems, enabling mid-course corrections. Investments in education, health, and infrastructure were scaled up as the economy diversified. Simultaneously, the state enhanced legal mechanisms, allowing citizens to file lawsuits against local governments in land and labor disputes—signaling an evolving, though limited, form of accountability.

As Giovanni Arrighi observes in Adam Smith in Beijing, China’s model is not a replication of Western modernity, but a selective adaptation. The country has appropriated elements of capitalism, technology, and global trade—but has done so on its own institutional and cultural terms.

The Solar Story

A striking example of China’s long-term planning and state-led industrial policy is its dominance in the solar energy sector. In the 1990s, the United States led the global solar photovoltaic (PV) market, accounting for over 40% of global production. Solar technology at that time was prohibitively expensive—costing around $750 per megawatt-hour—compared to coal, which ranged between $120–150.

Yet while American and European firms downsized or shut down due to low demand, the Chinese state bet big on the future of clean energy. Through a combination of massive subsidies—including free land, cheap electricity, easy credit, and even labor support—China created the ecosystem needed for solar firms to scale. The state also absorbed early losses by encouraging domestic consumption and mandating solar deployment through policy.

As solar technology matured and costs plummeted to almost $11 per megawatt-hour, demand exploded globally. China, having already built the industrial base, emerged as the undeniable leader—producing over 90% of the world’s polysilicon and 97% of all solar wafers. This is not just an economic success story but a demonstration of how industrial policy, when aligned with long-term strategic vision, can shape entire global markets.

Cracks in the System

Despite its phenomenal success, the Chinese model is not without flaws. One of its biggest advantages—centralized control with little dissent—is also a potential liability. The absence of opposition has allowed for swift policy execution, but it has also stifled critical feedback and innovation from civil society. As Minxin Pei warns in China’s Trapped Transition,

―Authoritarian regimes can grow for a while, but without inclusive institutions, they eventually hit a ceiling.

That ceiling may be approaching. Structural problems are beginning to surface: the Evergrande real estate crisis exposed massive debt accumulation and speculative bubbles; youth unemployment in urban areas has surged past 20%; and demographic challenges—such as a shrinking working-age population—now threaten long-term growth. Moreover, the CCP’s clampdown on major tech firms, media, NGOs, and academic institutions has raised concerns about an increasingly restrictive environment that may erode innovation and trust.

Corruption within the military and bureaucracy, frequent political purges, and rising surveillance are further indicators of institutional strain. These trends suggest that without greater inclusiveness and transparency, the Chinese model may struggle to sustain its momentum.

Lessons for India

As India stands on the threshold of becoming the world’s third-largest economy and aspires toward the vision of a “Viksit Bharat” by 2047, China’s trajectory offers valuable insights—alongside cautionary notes. India’s democratic system, though inherently different, can still draw institutional lessons from China’s experience to accelerate its own development.

First, strengthening democratic institutions must be a national priority. This includes ensuring the autonomy, capacity, and accountability of key institutions—from the judiciary and election commission to local municipal bodies. Decentralization in India remains incomplete. Empowering Panchayati Raj institutions and urban local bodies with adequate funds, functions, and functionaries—as recommended by successive Finance Commissions—will be critical to improving last-mile governance and service delivery.

Second, India must more decisively promote labor-intensive manufacturing. Despite having the world’s youngest population, India has struggled to create enough jobs for its demographic dividend. Investing in sectors like textiles, electronics assembly, food processing, and renewable energy can absorb large numbers of semi-skilled workers. China’s early growth was anchored in exactly such sectors before it moved up the value chain.

Third, India needs to cultivate long-term strategic thinking in identifying future drivers of growth. Whether it’s clean energy, semiconductors, artificial intelligence, or rare earths, India must build domestic capacity and global competitiveness. This calls for a robust industrial policy framework, stronger public-private partnerships, and a significant boost in investment in research and development. At present, India’s R&D expenditure hovers around 0.6% of GDP—far lower than China’s 2.6% and South Korea’s nearly 5%.

Moreover, India must strengthen its ecosystem of think tanks, universities, and innovation hubs to support evidence-based policymaking and foster a future-ready workforce. Just as China mobilized local governments to experiment with industrial strategies and attract investment, India too can benefit from performance-linked incentives and inter-state competition—channeling cooperative federalism into tangible development outcomes.

While China’s model may not be directly replicable in a democratic setup like India, the emphasis it places on institutional adaptability, long-term strategic planning, and coordinated governance holds enduring relevance. India’s path will be different—but learning from China’s successes and failures can help shape a more inclusive, resilient, and forward-looking developmental trajectory.

(The author is a Research Intern at the Institute of Chinese Studies and holds a Master’s degree in Political Science from Pondicherry University. Views expressed are personal. She can be reached at avaniabha14@gmail.com or Avani Abha (@AvaniAbha12063) / X)