The Chinese Way

Jul 09, 2010 Editorial

The Chinese economy is the great wonder of the modern age. In a short span of thirty years, China has moved from being scorned as just another “poverty stricken third world country” to becoming the “workshop of the world”. It is on course to surpass the United States as the largest economy on the planet by the middle of this century. Its participation in the ongoing, frenetic efforts by the “developed” countries to cap their catastrophic financial meltdown is regarded as crucial.
Witness the collective sigh of relief when the Chinese government recently allowed their currency to appreciate in value after two years of US pressure and pleading. The west hopes that the consequently more expensive Chinese merchandise will discourage their citizens from further hocking their countries to the Chinese. To the average Guyanese, these assertions can only be seen as hyperbolic. After all, at the same time in 1978 that Deng Xioping was introducing his economic innovations we were entering our first structural adjustment programme under the aegis of the IMF and the World Bank.
As graduates of a host of other programmes by those two august economic stabilisation and development institutions in the succeeding three decades (the same time line as the Chinese miracle) one cannot but help concluding that “the Chinese Way” might be a tad more effective in delivering the goods (literally) than that of the “Washington Consensus”. With the consistent 10% annual growth rate that the Chinese over that time, their per capita GDP has increased twelvefold while we are still to even regain the level we had achieved in the sixties!
But how did they achieve their miracle, and is it one we might want to emulate? Well for one we would have to point out that their government has remained firmly in the hands of the Chinese Communist party in a political system that brooks no opposition. In a manner that can only be called paradoxical, this party, dedicated firmly to the tenets of Marxism, has in practice established an economic system that hews firmly to the neoclassical path. A prudent fiscal policy, economic openness, privatization, market liberalization, and the protection of private property are the hallmarks of the Chinese Way.
Balancing the budget is a priority as is restraining inflation. The government has not been noticeably active in overtly redistributive programmes and most of the transfers of the central government have been directed into developing the country’s infrastructure. While initially there had been massive governmental intervention into the productive sector, over 80% of the enterprises owned by the state have either been transferred into private hands or converted into publicly listed corporations.
Now none of these moves should be strange to us – they are practically a restatement of the Washington Consensus of the World Bank and the IMF. We should note that when we first got involved with the World Bank in the early seventies, it actually encouraged governmental intervention in the productive sector.
So what is the difference that has created an economy that attracts the second largest destination for foreign direct investment? Is it the increasingly higher levels of income disparity? This is even higher than ours, and in fact, is just about the same as prevails in the US. Is it also the highest urban-rural income gap in the world?
According to the Director of the China Centre for Economic Research at Peking University, “The answer is that China has for three decades been ruled by a disinterested government — a detached, unbiased regime that takes a neutral stance when conflicts of interest arise among different social and political groups. This does not mean that Beijing has been devoid of self-interest. On the contrary, the state is often predatory toward citizens, but its predation is “identity-blind” in the sense that Beijing does not generally care about the social and political status of its chosen prey — unlike many governments elsewhere that act to protect and enrich specific social or political groups. As a consequence, the Chinese government has been more likely than other authoritarian regimes to adopt growth-enhancing policies.”
There might be a lesson here for both the rulers and the ruled in our country.

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