Context for Socialization 97

Understanding the historical, political, and institutional contexts of China regaining IMF membership and the transformations in the international political economy in the 1970s and 1980s enables us to examine if the China-IMF relationship fulfills the conditions for international organization socialization. In this subsection, I am going to assess if the contexts of the establishment of China-IMF relationship satisfied the conditions for IMF socialization to take place. First of all, let us recall the two themes of conditions for international organization socialization:

1. Based upon their authoritative influences, international organizations legitimately seek to diffuse international norms via various interactive mechanisms with participating members.

2. States with political principles and policy practices that are different from those of international organizations join international organizations because of material and nonmaterial (dis)incentives; and later they are socialized into accepting international norms via various interactive mechanisms with international organizations.

With regard to the first condition, the IMF proved to have the desire to transfer the international neoliberal economic norms to its newly joined members such as China and some other developing countries. The IMF gradually switched policy focuses from its developed to developing country members in the 1970s and 1980s, while more and more developing countries approached and joined the Fund. The enlarging IMF membership- especially by including China in the Fund- further consolidated its legitimacy and authority in international economic governance. However, these new member states included some Eastern European countries, some former communist countries and the countries that were still running communist economic regimes while - and after they had- joined the IMF. These states had maintained very different economic policy practices and political interests and values from those of the IMF and its main western advanced economy state member states.

Take China as an example, it was still running the centrally planned economic regime when it approached the IMF. Although the new leaders initiated some prior domestic reforms in economic liberalization in the late 1970s, the most crucial economic policy decisions, such as distribution of resources, price levels of crucial goods, central banking, and foreign exchange, etc. were controlled by the central communist government. In order to keep the international economic order that was based on the liberal international economy with little restrictions on trade, investment and foreign exchange, the IMF sought to make the new state members learn and accept the international neoliberal economic norms. It would also consolidate the IMF’s role among the developing world by socializing them into accepting the Fund’s prevailing norms.

With regard to the second condition, China was eager for international capital and expertise to support its domestic reforms, as well as to develop its international links and improve its international reputation. After decades of isolation, China was lagging far behind in terms of technology and expertise. The domestic scholars and experts were mostly educated in China or the Soviet Union, and thus their knowledge about building modern economic and social systems was limited within the (Chinese version of) Marxist communist framework. The government leaders with reformist minds realized they should adopt a more liberal development strategy. (Naughton 2007) They also supported the idea of international economic interdependence. Joining international economic organizations was one way to obtain international capital and expertise, as well as to establish the reputation of a friendly member of the international political society. However, the domestic political pressure and the disturbances in the central leadership

throughout the 1970s created some obstacles for China’s access to the IMF. In addition, it was not easy for Chinese government officials and the society in general to accept the ideological switch caused by China’s access to the international economic organizations.

After a whole decade of internal research16 on the international economic organizations

and incremental opening to the outside world, China eventually decided to join the IMF in 1980. By then, China was more familiar with the rules and regulations of the international regime, yet it still lacked substantial experience in dealing with international organizations; and the international neoliberal economic norms pointed toward a complete different direction for China’s economic development from what the communist orientations would lead China to.

The initial engagement was a success, without any major technical disputes or ideological conflicts occurring. The early part of China-IMF interactions that will be included in the analysis of China’s participation in IMF programs in the next section displays a mostly harmonious relationship between the two. Although China was unfamiliar with the rules and regulations of the IMF, it knew what to expect from the membership of an international economic organization that was led by the US and its western advanced economic allies. In fact China was in need of the international capital, expertise and approval that only a legitimate multilateral institution like the IMF was able to provide.

These conditions created a favourable context for ‘socialization’ to take place. To recall the definition of socialization, it refers to the process by which social interactions

16 _{The research carried out by the UNSG was entirely based on the researchers’ limited knowledge about}

between the staff and participants of the international organizations lead the participants to endorse the organization’s predominated norms. According to Finnemore, international organizations teach values and construct domestic institutions and procedures inside states that reflect emergent international norms and practices. States then adhere to these norms and practices even when these seem inconsistent with their material welfare or security interests at the time. (Finnemore 1996) Abram and Antonia Chayes argued that international organizations and their treaties not only ensure transparency, cut transaction costs, build capacity, and enhance dispute settlement, but also persuade states to ‘explore, redefine and sometimes discover’ their own, and mutual interests. (Chayes and Chayes 1995: 1-33)

So did China’s participation in IMF programs actually lead it to redefine its interests and values? Did the IMF socialize China into accepting and internalizing the neoliberal economic norms in the later domestic policy practices? Could we use ‘socialization’ to explain the IMF’s impact on China since 1980? The key approach to these questions is to assess the actual processes of socialization, via which the IMF could transfer international norms to China. Therefore, the next section will analyze the IMF programs that China participated in, which are divided into three types: financial assistance, technical assistance, and policy advice. It attempts to find out how and the extent to which the IMF has socialized China into accepting these international norms. Johnston’s framework of three ‘microprocesses of socialization’ will be applied to assess the IMF’s approaches to socialize China, and their consequences.