I have been reading Demystifying the Chinese Economy by Justin Yifu Lin which details how China from 1979 onwards achieved rapid economic growth.
Now Yifu Lin is a respected professor of Economics and a former Senior Vice President and Chief Economist of the World Bank so he knows a thing or two about these things.
Prof Yifu Lin points out that for a very long period of history China was a global leader, until the industrial revolution when Western countries rapidly developed leaving China behind. It was only after the ascension of Mao and the Communist party in 1949 that the Chinese started thinking about restoring their leadership on the global stage.
However this was not an easy task and despite producing nuclear weapons and a formidable army, some structural shortcomings and flaws of the Mao regime meant China was still one of the poorest countries in the world in 1979, with a per capita income of $210. In comparison, Zimbabwe’s GDP per capita was $736 in 1979 and $916 in 1980.
This changed in 1978 when Deng Xiaoping came to power after the death of Mao. In the Communist Party’s 3rd Plenary Session of the Central Committee held that year, the Chinese changed their fate by ushering in reforms.
Deng in 1980 made a target, that by 2000 China should have quadrupled its 1980 GDP, which required a growth rate of 7.2% every year, a figure generally thought by economists to be impossible to achieve long term except after a war or natural disaster.
It turns out Deng Xiaoping was modest in his demands, because China achieved an average annual growth rate of 9.9% from 1979 to 2009 (it has slowed down a bit since). By 2009 the Chinese GDP per capita stood at $3744 (Zimbabwe’s meanwhile had fallen to $594).
The Chinese, in 30 years, went from being broke and unable to feed themselves to making modern gadgets, (I use a Chinese made phone, Xiaomi), having reserves in excess of $3 trillion and lifting an incredible 600 million people from poverty.
I think this book contains important lessons for other developing countries like Zimbabwe. The first being that a leadership with vision is a prerequisite for development. We need our economic Deng.
Secondly developing countries can exploit what economists term “the latecomer advantage”, which allows developing countries to develop much faster than developed ones using importation, integration and imitation. This allows us to quickly develop technologically without spending as much in R&D while also avoiding the mistakes done by the early implementers. For example you’d think we would go straight to optical fiber networks and skips ADSL in telecommunications.
But because each country is different solutions should not be imported wholesale, they must be tailored to suit that country’s unique social, political and historical circumstances.
Indeed, Yifu Lin warns in the preface that, “… the opportunities and challenges facing developed countries differ from those of developing countries,” hence “when attempting to adopt theories from developed countries to guide their policies, developing countries may be at loss about which one to pick. Even if they select one, the theory may not suit their conditions.”
The responsibility, then, is on the scholars and intellectuals of the developing countries who by their positions are uniquely situated to understand the history, culture and realities of their countries and should use that knowledge to formulate a system capable of transforming their countries.
Importantly, Yifu Lin says, the intellectuals of the developing world “should thus deepen the understanding of their countries in all aspects including in political, economic and other social dimensions.” Only then can they create a practical economic framework that addresses the unique opportunities and challenges of modernizing their countries.
Which brings me to my point. Actually this is all I initially meant to say, that our intellectuals, our scholars, do not seem prepared to take up this important task.
Where are our intellectuals? Do they really understand – in a non-partisan manner- our history, our culture? Can they come up with practical ideas of sustainable long term growth?
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4 comments
MIght just be me, but I think you only really mentioned one lesson to be learnt. The article starts of as a history piece, mentions “the latecomer advantage” lesson, then ends as book review.
Tawanda, your article has some interesting but also conflicting and restrictive views.
Interesting in the need for development. There are a lot of intellectuals and scholars within and outside Zimbabwe involved in the development, sadly, in most cases, of other countries.
Conflicting in that you mention the need for a visionary leader and then go on to ask a closed question of scholarly/intellectual introspection which is non-partisan….
Restrictive in that perhaps you would prefer the discourse to flow in a certain way…you gave an example of your current mobile phone and unlike Yifu Lin, you would want to encourage Zim scholars and intellectuals to limit themselves to economic & social spheres whilst detaching themselves from the political (or partisan) element.
There are many success stories out there, personally, I’m inspired less by the Chinese but more by the Japanese, South Korean and Singaporean experiences. Let me briefly say why. Whilst probably 95% or more of electronic manufacturing takes place in China (the Chinese design aspect has greatly been lacking – which explains why there are too numerous fake products coming from that source. There are now steps to address this by encouraging a “Designed in China” policy).
In contrast, products coming from the other listed countries are usually bona fide and specific brands can be traced to source. Where the Chinese took short cuts and encouraged poor products (by taking a softer stance on their lack of production control & standards, the other countries frowned upon cheating (poor, shortcuts, non-standard production) and encouraged quality output at affordable pricing.
The Chinese seem to be only realising now the power of design & quality control after they have destroyed any possible brand respect by unscrupulous Chinese firms for decades.
Perhaps, a country’s belief and moral systems also play a pivotal part in this development you’re talking about. The Japanese take education so seriously that some students commit suicide if they fail exams – very extreme, but their parents also work very long hours. I use no Chinese-designed product but probably mostly Chinese-made products (Sony, Philips, Siemens etc). To their credit, the Chinese execute corrupt officials, I wonder if they do the same to manufacturers of fake products.
Enterprise is very limited in Zimbabwe currently by the political make-up which puts a terrible blanket on every discourse by demanding credit be given to those in political power even where they don’t deserve it (their vision is where we are now).
Can you help me please with this question,,, National strategic studies is a non partisan. How do agree with this statement?
Sorry, but I don’t want to learn anything anymore from China.
Back in the 70s, I was taught to hero-warship them. I was made to believe that Chairman Mao Tse Tungi was the best for Zimbabwe and the rest of the developing world. It did not take long for me to realize that all that was a fallacy. For a brief period in the 80’s, Zimbabwe tried a few things that we learnt from Mao’s China – the leadership code, cooperatives (Mushandira Pamwe) and other experiments. The outcome was a total disaster.
Despite the reforms in China initiated first by Deng Xiaoping, the Chinese government still has too much control over enterprises. At least in the telecom industry, I know that the government controls key companies such as ZTE and China International Telecommunication Construction Company (CITCC). Although Huawei declares itself a free enterprise, it is suspected that it is government controlled – a reason Huawei has found it difficult to penetrate the US market.
Most of these government controlled or affiliated companies have been funded by debt. Most of the Chinese projects in Africa are funded by debt some of it from the Chinese Export and Import (EXIM) Bank. So most of the growth that has been happening in China was fueled by debt leading to outstanding bank loans of over 140%.
Without going too much into the Chinese economy of which I am not an expert, I can at least note that it is not sustainable for an economy to rely heavily on debt. Second, too much government control on major companies can hurt the economy – the reason why I have always been a strong advocate for privatization and deregulation.
In a nutshell, I sure hope that Zimbabwe and the rest of the third world donot go the China way. At any rate, Zimbabwe would have to be a neo-imperialist country in order to be like China.