Cake Theory

Cake theory () is a metaphor about economic development and the redistribution of wealth in the political discourse of China. It emerged in 2010 as problems with an increased wealth gap became gradually more apparent. If economic development is seen as analogous to baking a cake, one side of the debate suggests that development should focus on 'dividing the cake more fairly,' while the other says development should be focused on 'baking a bigger cake.'

Synopsis

Thirty years of economic growth in China has resulted in higher standards of living and a substantial growth in national income, but also led to a widening wealth gap and a host of associated social problems. Conflicts are emerging between the 'haves' and 'have-nots' of society. The '' nouveau riche'' are seen as variously the beneficiaries of their hard work and enterprising character under the new market economy, or as cheaters of the system and inheritors of unfair privilege. At the 2010 National People's Congress, Premier Wen Jiabao remarked that "we must develop our economy to make the cake that is prosperity bigger, but also use a reasonable system to distribute the cake fairly."

To deal with the increasingly sharp conflicts between different interest groups, the Communist Party of China was said to have split ideologically over the "cake issue". On one side, orthodox communists suggest that the solution is to focus on distributing the wealth while pursuing higher growth ("dividing the cake"), while reformers and liberals suggest that the solution is to pursue continued growth and worry about dividing the wealth once the material wealth threshold is reached ("baking a bigger cake").

The ideological cleavage surfaced publicly in a war of words in late 2011, when Guangdong party chief Wang Yang stated that "one must bake a bigger cake first before dividing it."
Original quote: 要通过发展经济，把社会财富这个蛋糕做大，也要通过合理的收入分配制度把蛋糕分好 Wang said that "continued economic development" must take precedence over all other tasks. In response, Chongqing party chief Bo Xilai remarked, "Some people think ..that one must bake a large cake before dividing it; but this is wrong in practice. Because if the distribution of the cake is unfair, those who make the cake won't feel motivated to bake it; therefore we can't bake a bigger cake."
Original quote: 有人认为，你总要先把经济搞上去，挣了钱才能改善民生吧！‘蛋糕’做大了才能分‘蛋糕’，这看似有理，其实行不通。因为‘蛋糕’分得不公平，做‘蛋糕’的人就没有积极性，这‘蛋糕’就总也做不大。

The egalitarian ' divide-the-cake' approach is an important component of the " Chongqing Model" advanced by former star politician Bo Xilai. Bo gave the city's throngs of migrant workers residency status so they could enjoy the same rights and privileges given to urban residents, such as health care and education. In addition, Bo pursued a wide array of public housing programs, and cracked down on local gangsters, businesspeople, and their cronies in government.Jiang, Wenra
Bo Xilai, a fallen star in an opaque land
, ''The Globe and Mail'', 16 March 2012. While the "Chongqing Model" won significant accolades from some of China's top leaders, pundits remarked that ultimately it became too dependent on the personality of Bo Xilai himself, and thus the expansion of the model to other areas of the country would be difficult.

While the reform oriented and economically liberal " growing the pie" commonly associated with Wang Yang in the " Guangdong model". Wang has also pressed for more transparency in government spending,The Economist
The Guangdong model: One Chinese province adopts a beguilingly open approach—up to a point
26 November 2011. and greater rule of law.European Council on Foreign Relations
One or Two Chinese Models?
November 2011. While pursuing a more market oriented economy where the external market and private sector play key roles.

The metaphor is said to be emblematic of the ideological struggles within the top echelons of China's leadership. It asks the central question of whether further growth or fair distribution should be at the centerpiece of China's political agenda.

See also

* Fair cake-cutting
* Fair division
* Growing the pie

References

{{Bo Xilai

Politics of China
Bo Xilai
Cake-cutting
Economic inequality
Economic development in China
Ideology of the Chinese Communist Party