ABSTRACT
With the help of a civilizational frame of analysis, this chapter discusses compressed development as a new economic trajectory distinctive of China’s rise. It focuses on formal policies and informal practices reflected in China’s flexible state; and analyzes the private sector and foreign investment flows. Sinicization processes and particularly China’s multiple traditions make possible the confluence of these diverse forces and offer hope for the many daunting challenges that await China in the future. Flexible politics lies at the heart of China’s compressed development. And flexible politics results from the specific characteristics of the Chinese state. China’s fragile financial system and the problem of non-performing bank loans provide a second illustration of flexible politics. At the end of the 1990s, non-performing loans were variously estimated to amount to fully one third of total loans, leading to predictions of a collapse of the Chinese banking sector.
