Splitting Hairs, Helping Heirs
Jacqueline Newmyer reviews Social Connections in China
by Jacqueline Newmyer
From International Health, Vol. 27 (1) - Spring 2005
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Jacqueline Newmyer is a Postdoctoral Fellow in National Security at Harvard, and a fellow at the Olin Center for Strategic Studies. Social Connections in China : Institutions, Culture, and the Changing Nature of Guanxi (Structural Analysis in the Social Sciences) is edited by Thomas Gold et al.

Though anthropology is the discipline that purports to study ordinary human beings, and their habits and patterns of social interaction, very few anthropological studies hold any appeal outside narrow scholarly circles. And if it is the rare work of anthropology that reaches the bestseller list, it is the even rarer work that makes it onto the nightstand or desk of a chief executive officer. Whether this reflects the esoteric state of academia or the corporate world’s solipsism, it is somewhat surprising that this is the case in an age of growing appreciation for techniques such as “viral marketing,” whose efficacy presumably depends on an understanding of how informal social networks operate. The case of the People’s Republic of China (PRC) suggests that there are fortunes not only to be made but also to be saved through an improved understanding of the logic of human relations in different environments.

By now, even the businessman whose literary excursions are confined to Fortune and Forbes has read or heard about the importance of networking to doing business on the mainland and, for that matter, elsewhere in East Asia. The obsession with shifting operations to, targeting consumers on, and forging joint-venture ties with China has created a hitherto unrealized opportunity for scholars to separate myth from reality and thereby illuminate an area of pressing commercial concern. Enter Social Connections in China, an edited volume that summarizes and attempts to advance the anthropological debate over the influence of informal ties or “guanxi” in the conduct of business transactions from Beijing to Guangzhou and from Shanghai to Urumqi.

The editors pose a series of questions at the outset: Is the importance of “connections” in the PRC an artifact of Chinese culture, politics, or history? Does the strength or weakness of a connection— whether it is born of shared bloodlines, school ties, or a common hometown—dictate its applicability or practical value? Is there even anything especially Chinese about obligations attached to membership in informal networks and recourse to them for favors like job referrals? Finally, the editors ask, how has the replacement of Maoism with what the Chinese call “market socialism” affected the prevalence or use of guanxi?

In the substantive chapters of Social Connections, some of these lines of inquiry prove more fruitful than others. Contributor Andrew Kipnis, for example, begins with the puzzle of specifying guanxi’s meaning. “Is a definition of guanxi meant to distinguish something Chinese from something non-Chinese? Or is it meant to distinguish one sort of Chinese thing from another sort of Chinese thing?” But then he gets tangled up in explaining his choice to look at “practices of guanxi production” rather than guanxi itself. Kipnis devotes an awful lot of space to what is a fairly obvious methodological decision. After all, a scholar has to work from evidence, and the behavior associated with guanxi, or the “practice of guanxi production,” has the virtue of being observable. He ends up arguing that transactions involving guanxi are distinguishable from other exchanges because they involve “ganqing,” sentimentality or fellow feeling. So “practices of guanxi production” are really acts of generating ganqing, and we may contrast these with the cold, impersonal contractual relationships of the market, which are defined by “ganqing avoidance.” But, in a final twist, Kipnis asserts that contracts and master-slave relations can include elements of guanxi because feelings have infiltrated such seemingly barren fields. All this creates the opportunity for useful illustrative discussions of the history of slavery in China and the tactics employed by the Chinese Communist Party (CCP) in ascending to power, but it does not go very far toward exposing what is or is not Chinese about guanxi.

In this regard, the Kipnis chapter is unfortunately typical. Other chapters similarly fail to deliver their promised answers. For instance, Amy Hanser’s contribution—a chapter called “Youth Job Searches in Urban China: The Use of Social Connections in a Changing Labor Market”—turns out to be a mix of anecdotes from a geographically and academically confined pool of university students and young alumni, selected on the basis of their connections to Hanser’s own connections, that is, her Chinese acquaintances! A scholar of social ties who limits herself to interviewing her own contacts demonstrates an alarming disregard for, or ignorance of, the potential of her subject matter to distort a small sample.

Most of the other chapters concern the role of guanxi in decisions about investing in enterprises, and they disappoint because they begin from a common, questionable premise—that the most important distinction among businesses in the PRC is whether they are state-owned or fully private. Unfortunately, none of the authors explains how the division between state-owned enterprises and private concerns may be sustained in a corporate environment known for corruption—or, at least, for the importance of personal relations and wheel-greasing in everything from the granting of bank loans to awards of the right to operate in special enterprise zones, out of the crosshairs of CCP commissars.

If guanxi thrived under Mao as a covert way of allocating investment in the absence of a market, one would expect that the state-owned sector would continue to be a venue rife with guanxi. If, in fact, as several contributors to Social Connections in China suggest, this is not the case, then the book exposes the contradiction at the heart of a regime that is trying to marry Maoism and capitalism. This contradiction makes an appearance in discussions of guanxi in the management literature of economists and business-school scholars, who have been debating whether the salience of informal connections has been a help or hindrance to Asian economic development since the heyday of the Japanese economy in the 1980s. On this subject, Francis Fukuyama has argued that family businesses suffer barriers to growth and product diversification in part because of the limits imposed by finite numbers of relatives, while Dwight Perkins has showed that guanxi-based enterprises may prosper, subject to the hazards of unaccountable loans and reliance on bail-outs that characterize states where guanxi flourishes.

Studies of guanxi from both anthropological and management sources arrive at the institution’s political underpinnings. It is a shame that the contributors to Social Connections decline to consult the work of Massachusetts Institute of Technology Political Science Professor Lucian Pye about studies of informal ties in the PRC. Using his characteristic psychological approach, Pye applies the insight of Montesquieu that the principle of tyrannies is fear and effectively demonstrates that guanxi is an artifact of, to borrow one of his titles, the spirit of Chinese politics.

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