The China Way

Enough has been written and said about China’s economic dream run, but there seems to be a slight dearth of writings detailing the process China undertook to become what it is today. Indeed it is not the most favorite topic of the ‘free’ world. It probably forces us to acknowledge that this pseudo-Socialist country is doing better, for a decade now, at what capitalism basically stands for. China’s economy was growing at around 10% per year in the first decade of the 21st century, one of the highest sustained rates of wealth creation in world history. The rate of growth seems all the more astounding because it is contrasted with the relatively inward-looking Mao period and the era of war that preceded it. And the central point of this article is that China has now moved from being an example to becoming an economic model. The lack of rights and freedom in China, subject of much brouhaha in the Western media, may now be seen as part of a way to grow much faster economically, and that is the issue.

Probably the first thing which comes to mind upon reading this is whether it is another pointless conspiracy theory directed against the world’s favorite whipping-boy. But the chance that countries may adopt the ‘China Way’ in more ways than is healthy is real. Russia is a Communist country, and one with a lacklustre economic growth. Would it not accommodate China’s measures as regards citizen handling, labor laws etc.? Much of Africa is unorganized as regards governance and economy. For them it is perfectly understandable to look wishfully at China and hope to emulate it, move for move.

Also, this is not to take away from China what it has done right, and every country has something to learn from them. The characteristics of a modern economy include an active enthusiasm for growth, capital investment and industrialization, and ever-increasing productivity through the development of technology. In those terms, China’s economy, particularly since 1978, measures up spectacularly. Among the key factors have been Foreign Direct Investment (FDI), cheap labor, and the immense importance of Overseas Chinese financial and human investment, as well as continuing investment in education and scientific and technical research and development.

However, all is not well. Although China is developing a legally protected concept of private property (a law enshrining this was passed in 2007), and state ownership of industries and enterprises is clearly declining, the state and the CCP are still heavily entwined with business. Good relations with the CCP are often essential to win licenses to do business, or to raise capital to set one up. The state and the party have changed form immeasurably since the era of Mao, but neither has retreated from society; they have merely found new ways to interact with and control it.

Finally, merits and demerits shown, the issue is not just about China. A stricter system, without constant hassles of employee and worker unions, only introduces more efficiency in the system. Machines work better, so should say, than people, but is that what we set out to be? Is it then okay for really poor countries to go the China way for the sake of temporary growth in a country-wide or probably region/sector-wide implementation? Will these countries really switch to a deliberate less efficient but more worker friendly system in time, at the cost of a drastic drop in growth rate? Should we even go down these paths? Common sense and an experience of witnessing the greed of governments for GDP growth percentages, the subsequent bragging and re-election to office makes me very skeptical of this path to progress, but the debate is still open.

Yashaswi Sankrityayan

[Image courtesy:]
[Image courtesy:]