Although popular culture in China often denounces guanxi, it also encourages and teaches guanxi tactics.

Everyone does it, so one must not be left out.

Moreover, guanxi has the power to superimpose upon officials and authorities a respect for alternative relational ethics. This unique gift economy affirms the ethics of obligation, reciprocity, friendship, and mutual aid. The impersonal, communist Chinese state must occasionally concede to the power of human relationships over its own omniscient power.

As Karl Marx pointed out, commodities have a dual nature: both a “use-value” and a mysterious “exchange-value.” The material usefulness of a product is its use-value; exchange value is created when the owner of the product finds another use in exchanging it. Thus, exchange-value is only actualized when the commodity changes hands.

Stretching this idea from commodities to gifts, we see that gifts also have a dual nature. They contain use-value and also symbolic value, which, like Marx’s exchange-value, is realized only when the gift is given away.

Anthropologists have studied this phenomenon of giving gifts. In 1969, Claude Lévi-Strauss wrote that gifts have more value in their giving than in their material composition.

Bronislaw Malinowski asserted that gift giving helps to organize Trobriand society by affirming rank, establishing kinship and clarifying legal relationships.

Marshall Sahlins found that gifts help to promote peace among the !Kung bushmen. In contemporary Chinese society, gift giving, via the art of guanxi, has material use and it also subverts administrative power.

Guanxi transactions can be very subtle but very powerful. They are culturally embedded and rich in symbolism. In China, the guanxi gift economy operates secretly inside and around the official state economy.

Significant differences exist between the non-utilitarian use of commodities and gifts. When a commodity is bought and sold, the transaction is final and the exchange is clearly delineated. Unlike a commodity, a gift cannot be truly separated from its owner. Because of this, a person in China who receives a gift really does not receive full rights of ownership.

In fact, in many societies, including the Chinese, gift exchanges are thought to forge spiritual bonds between the giver and the recipient. Gifts are considered extensions of the giver. Moreover, the giver has established a moral right to claim future compensation. In short, commodity exchanges are objective; gift giving is subjective.

Chinese guanxi strategy consists of several steps. Defining this strategy displays how the Chinese concept of self is very different from the Western notion of self. Western ideology fashions a person as unique and individual, with man being defined by his ability to think and be rational.

Chinese ideology, in contrast, defines a person in relationship to others, and is based on moral and social status. Chinese personhood centers on the heart, not the mind - hence the importance of renqing (previously covered).

By Western standards, the Chinese operate with a vastly different set of personal boundaries. They are less clear cut, and constantly in flux, as relationships develop and evolve. Consequently, many foreigners perceive Chinese behavior patterns as indirect and “feminine”; in turn many Chinese perceive foreigners as aggressive and “masculine.”

The first step in conducting a guanxi transaction involves establishing connection and familiarity with the targeted person to be asked for a favor or service. A guanxi exchange cannot be cold-blooded and impersonal like a commodity exchange. Some relationship, or go between to that person, must be cultivated. This will bridge the all important gap between the Chinese definition of outside – wai - and inside – nei regarding relationships.

The inside/outside dichotomy rules most of Chinese interactions. It may have derived from ancient kinship practices and the fact that China was traditionally an agricultural society. Farmers did not mix much with outsiders, and strangers are not to be trusted. In the West there is the concept of the “Good Samaritan,” but in China no cultural obligation exists that exhorts citizens to help a stranger. The art of guanxi can neatly bridge this gap.

The Chinese language even has terms to describe this. Because food is so cherished and popular, the metaphors often refer to food: a known or familiar person – someone easily approached for guanxi transactions – is called a cooked person - shouren. The uncooked or raw person, - shengren, is a stranger. The terms ripe - chengshou, or unripe - xinsheng, may also be used.

The first step of establishing a familiar connection attempts to fuse the personal identities between the two people involved: the donor and the recipient. Shared qualities and experiences - being classmates, for example - are frequently invoked. Between strangers this process can be achieved by recognizing a common acquaintance or friend. The idea is to generate a sense of bonding, and to activate a mutual sense of obligation to each other.

The second step in the art of guanxi is to break down any symbolic boundaries between the two people so that the gift may be exchanged. Guanxi in the form of feasting, a favor, or a gift, highlights the sense of sharing a common link to the giver via his hometown, his family, or his workplace. More importantly, it passes on an intangible sense of the donor’s labor and wealth.

The Chinese often say when giving a gift: Zhi liwu shi wo de yidian xinyi - This gift is a small token of my regard. The character xin represents heart, and xinyi represents sentiments of the heart or spirit. Thus, the donor is really attempting to impart something significant, much more than the gift is worth. The gift adds an intimate substance to the recipient. This is very different than the no-strings-attached gift giving of the Western world.

The third aspect of the guanxi transaction involves a psychological struggle for face between the donor and recipient. Face involves prestige, identity, and security. Threats to face are threats to identity if the donor internalizes a rejection or negative judgment. When a guanxi transaction is conducted face is always involved. Paradoxically, the donor, by giving away something, always gains face. In contrast, a person may lose face depending upon the amount and frequency with which one receives guanxi transactions.

By sacrificing material wealth and labor and transferring it to another via a banquet, gift, or favor - the donor takes a morally superior position over the recipient. Moreover, symbolically the donor can incorporate the recipient’s face, as well as obligate that person to his will. This is why people of higher social status and wealth are targeted by donors of lower status. Guanxi transactions symbolically shift the power hierarchy.

The fourth step focuses on the person who receives the gift. This person, by accepting, has lost face, and is now morally obligated to the donor. The donor’s energy has been transferred to the recipient, softening his will. The Chinese say: Chi ren zui ruan; Na ren shou duan. Eating from others, one’s mouth becomes soft; taking from others, one’s hand becomes short. By accepting a gift a loss is incurred, the recipient is softened up and morally obligated to repay the debt.

The fifth and last step requires the recipient to repay the debt to compensate. A material gift may be in order, or a banquet, or some form of work. Frequently the obligation is paid by getting something done: using one’s position to grant a favor or acquire something necessary to the gift giver.

Guanxi transactions are more sophisticated and complicated than barter or commodity exchange because the items in circulation do not have definite, objective values. Guanxi does not equate with black marketeering transactions, because not only material values of things are being exchanged, but also the quality of the personal relationships between the two parties involved is being strengthened. The goods are only mediating the relationship. In contrast, bribes and underground economies are usually based on material exchanges that are finite and discreet.

To sum up, guanxi transactions are based on rules of etiquette that stress the importance of the relationship between the two parties rather than the gift in question. Personal relationships are crucial. Speedy and precise repayment is not required for guanxi transactions, and in fact, such behavior is often considered bad form. In contrast, the capitalist economy, and even the barter economy, is immediate, impersonal and more materialistic.