Idea to write this article came from watching a presentation on a local tv about a recent translation of the book by China’s actual president Xi Jingpin. Although very brief this presentation brought into the open guests’ limited knowledge of today’s China. This is specifically the case when an attempt is made to explain China’s success in economic development. Trying to explain this development through a single political or economic theory will result in incorrect conclusions. We mustn’t forget that when we speak about different countries, we think of one or several specific elements that characterizes them. However, in the case of China these elements are numerous. In fact, China is very different from any other country. Therefore, attempts to explain Chinese phenomenon by comparing it with some country in Europe from former communist bloc just because China is governed by a party from the same ideology, not only will result in wrong conclusions, even more so, will highlight commentator’s limited knowledge about China and even their ego-centrism.
China with its size, culture, history, population, language and writing, even religion, is unlike any other country. However, in present days people in decision making roles, analysts, as well as ordinary people, are interested to understand reasons behind its economic growth for the last 20 or so years. Inevitably, there will be questions around the role of communist ideology in this growth considering that this same ideology failed drastically everywhere else in the world. This is exactly where the first mistake is made; trying to understand China’s recent successes from a single ideological perspective.
A communist and capitalist society blended into one
Because of its uniqueness China can accommodate both communism and capitalism at the same time and within the same governing system. In fact, this is the key to success that the rest derives from. Having said that, this does not mean that China is immune to problems that can arise, and they do arise, nor it makes immune from potential problems that may face in the future. About few of them I will talk further below. Separate from all ideology, details of this economic development through the model of Free Economic Zones deserves a though research.
Confucianism – philosophy turned religion
Specific characteristics of Chinese history also play an important role in this success. We must not forget the age of Chinese empire and its way of governance which, although is reflected in achievements that last into present days, they also contain acts of unimaginable ruthlessness for many societies in other parts of the world. This history, in Chinese terms is not history but a way of governing; a way of creating a strong entity/state where individuals are supposed to serve a higher aim and be sacrificed if needed. This entity/state requires appropriate leadership whose duty is to ensure a proper balance of ‘heaven’. In this course of duty leadership is there to make big decisions, often unpopular as well as painful. At the same time leadership accepts this duty being aware of the need that to secure longevity it must make sure that elements of this ‘heaven’ are content. In all this there is space for some sort of ideology, but one that is flexible enough to allow for accommodation of current requirements. This is typically what Confucianism, philosophy turned religion, teaches. Nevertheless, we also must keep in mind that the low base of Chinese economy 20+ years ago allowed for such levels of growth in percentage terms. Difficulties in maintaining such levels of growth are already here and have been accepted and central government is actively taking measures to counter them. On the last 5year plan the government has set a target annual growth rate which although impressive comparing to other developed economies is well below double digit levels enjoyed for several years previously.
Now cancelled ‘One Child’ policy in another major decision in this list. China would have been very different if instead of 1.4billion today there would have been something like 1.8 or even 2billion. It is this continuous rule of law in persisting to push through major decisions irrespective of emotional costs that may have for ordinary people that it is instilled in people’s culture. In return, the population look, at this one, or more, person either under the name of royalty or party, for guidance and control. Homogeneity of the most of population, unified language with very little changes as far back as it is known, are pieces to this big puzzle that makes it work in practice.
‘Made in China’ model of economic growth
During my many visits in China and meetings with colleagues and students I reiterate my opinion that China is at an age defying crossroad. China is about to exhaust its major advantage of a base for providing cheap manufacturing resources, mainly labor, at an enormous scale. Therefore, current government must find and create new possibilities while at the same time ensure stability and smooth continuation of reforms. It is at this point that problems are appearing; resistance to changes in policies by regional governments. In other words, China is facing a common problem for most developing economies; spread of wealth at relatively equal levels across the country. This challenge is of crucial importance to prevent further, already substantial, differences between regions. China has achieved a lot, but there is still long way to go before rest of us can accept an admirable ‘Made in China’ model of economic growth. It is imperative that China reaches a substantial level of a consuming economy, big enough to guarantee a satisfactory level of growth, before it’s impressive advantage of a low-cost manufacturing base dries out.
It is for these reasons that decisions such as cancellation of ‘one Child’ policy, support for smaller firms, easing of working visas for foreigners, developments of capacities to support e-commerce-based firms, new technologies especially clean energy and Artificial Intelligence research, are so important in the long term.
However, central government’s decision does not apply internally only. Now world famous ‘One Belt One Road’ initiative is not supposed only to reflect the image of China’s recent achievements. It is a way of creating markets for long term that will create opportunities for investments that will meet and exceed growth targets. It is this historical opportunity for China to correct a disastrous decision from early 15th century when although at its peak of power Emperor Hongxi decided to cancel expedition by eunuch Zheng He.
China has only been scratched
Being so self-content to the point of arrogance he decided to destroy ships and all notes and books brought from that expedition. It was this decision that made China miss its historical opportunity for expansion beyond its land and cultural borders. This well documented episode in Chinese history is being taken as a lesson, a reason why current government is striving not only not to miss the opportunity but also to create them wherever possible.
There is so much going on in China nowadays. It makes it so exciting to live and grow up there now. China is huge in every sense. Just as I say to many friends and colleagues; it is so huge, with so much potential, that it has only been ‘scratched’! Meantime, crossroad remains! Let’s hope, for the good of all us, that China makes right decisions and gets through with least pain possible.
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