What is the “guanxi” culture in China and what role does “gift economy” play in forging “guanxi”?

“Guanxi” involves gift giving, but it also involves doing favors. The ethics of obligation and reciprocity are the key of what is involved here. For example, if you have a kinship relation, if you come from the same hometown, or if you are former classmates, then these interpersonal relations incur obligations. For reciprocity, if you get help from somebody in the past, then you have an obligation in the future to give back. For example, if we were friends and I helped you see a specialist when you couldn’t find one, then if I come to you and ask you to help my child enroll in some school many years down the road, there would be an expectation that you reciprocate the favor. Thus, “guanxi” is the reliance on ethics of obligation and reciprocity. It operates through the exchange of favors, but also through gift giving. Gifts are different from money in that they take a while to reciprocate and the value of them is not as clear cut. They create a relationship between two people through building feelings of obligation and gratitude whereas money is cold and does not incur obligations because nothing is owed after you’ve paid. Thus, “guanxi” is the creation of relationships, especially long-term ones. 

What historical or cultural contexts allowed for this phenomenon to take place in China?  

In Western society, there is a tendency to be very independent and individualistic. People therefore don't like to rely on others so much and will feel suffocated if they have to depend on others or if they have an obligation to help those depending on them. In contrast, China is very much a sharing economy. It may be more individualistic now than it was back in the 80s and 90s because you now have a new generation of the “only child’s who are going to be more individualistic because they were brought up in a way where their needs are prioritized and they don’t often need to share. So of course, China is a dynamic society, but nevertheless, there is a deeply rooted inter-relational culture of collectivism that really emphasizes personalistic relations of obligation and reciprocity. 

Confucian thinking is also at the heart of this focus on relationships. Confucian culture is largely about relationships, and hierarchical relationships were especially emphasized. The five key relationships are between ruler and subject, father and son, elder brother and younger brother, husband and wife, and friend and friend. Amongst these relationships, even with friends who supposedly are the most equal there is built in hierarchy. For example, one friend may be older or wealthier than the other. Confucius very much emphasized 仁 (ren), the virtue of humaneness where you are kind and you fulfill your obligations to another or human being. There are two parts to the Chinese character, the first meaning human and the second meaning the number two. Together, they suggest that it always takes at least two people, highlighting that the basic unit of Confucian thinking is a relationship, not an individual. 

Were there any key turning points as “guanxi” became a prominent cultural trend? 

The political context where “guanxi” really came to thrive and become extremely important in everyday life more than before was in the Maoist economy where you had a Soviet-style centralized command economy, and the state was the main redistributor of goods that satisfied people's needs. The state was importantly not looking out for what people desired, but only aimed to determine the basic amount of food and basic necessities required to sustain the number of people in your household. But people wanted more than just the baseline ration tickets, and that's where “guanxi” developed a life of its own. Thus, it is the larger political context of state redistribution where people’s ability to get things without the presence of a fully developed market is restricted that people grow to rely on personalistic relations. 

The line between corruption and “gifting” often seems blurry. What are the boundaries in both theory and practice?

In many non-Western societies and especially non-Protestant Western societies, there exists this logic to corruption based on kinship ethics and this obligation to take care of your own people. Whereas the ideal for bureaucracies is impersonality, tradition and culture clash with its emphasis on obligations to personalistic relations. In China, there are of course the officials who rightly deserve to be punished for corruption because they are just looking out for their own individual interests and pocketing the money for  themselves and their family members. But there are also less clear-cut situations because many believe that once you've become a powerful official, you have the obligation to help the village where you came from, help your old classmates, and so on. This kind of traditional ethics has trouble steering its way in an impersonal bureaucracy where officials are supposed to treat everyone equally regardless of whether or not they have a personal connection with them. But the Chinese culture makes it so that many don’t operate like that and so there is this nuanced and complex clash between societal and bureaucratic norms. I think in practice you can distinguish “guanxi” from corruption by considering the question: Did this relationship end in really high profits for the official? For example, if the official was just helping a poor villager from his hometown get access to a school, that is not quite corruption because he did not get a massive profit out of it for himself. That thus leans towards “guanxi”, rather than corruption which more often entails profits of money and real valuables like really fancy watches and so forth. 

In the less clear-cut cases, legality is two-pronged in that it is what is written in the law books, but also what the society as a whole typically considers as acceptable or unacceptable. In that sense, “guanxi” works in a gray zone. Sometimes there are things that are prohibited based on the law books but can be overridden by popular ethics if a majority of people deem it acceptable. For example, a local official enjoyed some favors while helping local villagers and was accused by higher administrative levels of corruption. He was put into prison and underwent many days of interrogation. Upon this knowledge, villagers and ordinary people whom he served started organizing together to go to the higher-level authorities’ offices and vouch for the imprisoned local officer. They reiterated that he was just trying to help the people and they couldn’t understand why superiors would call this corruption. So in practice, I think there is a gray zone in legality that can be and is often negotiated. 

Do you think anything could downgrade the prominence of “guanxi” culture in China? 

In the Chinese translation of my book, I included a rebuttal to a Dr. Douglas Guthrie, a scholar who, back in 2002, argued that “guanxi” was in decline due to the expansion of the rational market in China. In my rebuttal, I agreed that it may be declining in some areas. For example, unlike in the early 1980s, when there was such a huge demand for new color TVs, China wasn't making enough color TVs and the quality wasn't very good, people really wanted the imported Japanese color TVs. Now, the market provides plenty of color TVs, so there's no problem in getting it through the impersonal market where you just pay money. You don't need to spend time cultivating “guanxi” to get a hold of it. However, there are many other areas where you still need “guanxi” and the economy in exchange of favors is still alive and well. My argument is that so long as you have an intervening state bureaucratic process that is exerting a lot of power in determining what people should like and should go for by trying to restrict entry or access to certain things, then you're going to have “guanxi” and the gift economy working. Also, I mentioned that in 2002, a whole new field of “guanxi” operations opened up in getting exit visas and passports because the Chinese were eager to go abroad and see the rest of the world, but it wasn't very easy to get those documents. This shows that as the market changes, some uses of “guanxi” may decline, but at the same time, other uses will rise, and people will continue to cultivate relationships with people who could directly or indirectly help them in those new areas.