“What do you think is unique about the Chinese model? That’s the question a TV reporter asked me the last time I was in Beijing. My response was that I don’t think there is a specific Chinese economic model.
There is a East Asian development model of rapid export-oriented industrialization that was initiated by Japan, South Korea and Taiwan. What China has done is follow the same pattern – on a large scale. I added that the only real innovation from China was that the country had not liberalized politically because it had become rich. This distinguishes China from South Koreans and Taiwanese.
After we were done talking, I asked the reporter if she would be able to use part of my answer. “No, I don’t think so,” she replied. “But it must be nice to be able to say what you think.”
I thought about this exchange this week, as China prepares to celebrate the 100th anniversary of the founding of the Communist Party. It is a central claim by President Xi Jinping that, under the party’s wise leadership, China has discovered a unique path to development that the rest of the world can now learn from. In a speech at the party convention in 2017, Xi proclaimed that China “was opening a new path for other developing countries to achieve modernization.”
The Chinese leader’s claim to have discovered a new path to economic growth is questionable. The early stages of China’s post-Mao economic reform followed a formula that was recognizable to anyone familiar with East Asia’s previous economic “miracles”.
Many of the first factories in southern China were established by Chinese investors abroad from Taiwan, Hong Kong, Thailand and elsewhere. They were carrying a model that had worked in those countries in a new, low-cost environment. The fact that China has continued to grow at double-digit rates for decades is remarkable. But it is not without precedent. Japan achieved a similar feat for many years after World War II. South Korea was poorer than parts of sub-Saharan Africa in the 1950s, but today it is a wealthy country.
But while the Chinese model economy is derivative, the politics are new. Unlike Taiwan or South Korea, which moved from one-party states to democracies as they got richer, China under Xi strengthened the dominance of the Communist Party.
When Chinese commentators talk about offering a new model to the developing world, they also have a political proposal in mind. Why not adopt the order of Chinese-style authoritarianism rather than the chaos of Western-style democracy?
China has also questioned the geopolitical environment that has served as the backdrop for Asia’s rise. The original Asian tigers were all American allies. In the context of its Cold War with the Soviet Union, the United States saw the benefits of opening its market to exports from its East Asian allies. Washington was also willing to tolerate their protectionist policies longer than it could otherwise.
The emergence of Asian economic competitors has never been an easy proposition for Americans. There was panic about the rise of Japan in the 1980s. But the backlash was controllable because Japan was an ally and another democracy.
China was never going to be an ally of the United States. But, until recently, he was very careful to avoid openly challenging American power in the Pacific region. That changed under Xi, as China built military bases in the South China Sea.
As an authoritarian country, increasingly open to its ambition to challenge the military, political and economic might of the United States, China belatedly provoked a backlash in Washington. The Trump administration has largely focused on the national trade deficit with China. Under Joe Biden, however, the backlash became more explicitly ideological. The new president frequently says that the United States and China are locked in an ideological and political struggle to provide the model for the 21st century – democracy or authoritarianism.
The Chinese government has reason to hope that the United States left it too late to rethink its support for the Asian growth model that facilitated China’s rise. China is already the world’s largest manufacturer and exporter. The country now has a huge domestic consumer economy, which offers an alternative source of growth to the export markets that were so essential in the early decades of China’s rise.
China has also just become the first global recipient new foreign direct investment. Chinese companies are expanding all over the world. The US and Chinese economies are so deeply intertwined that true decoupling would be extremely difficult – not to say unpopular with many companies on both sides.
Despite this, Xi took a great risk by openly defying American power. During the first decades of China’s rise, the consensus in Washington was that China too would liberalize politically, as it grew richer. The United States has therefore taken an encouraging and permissive stance in the face of China’s rise, similar to its approach to other East Asian tiger economies.
In the case of China, the American “permission” has now been withdrawn. The United States is restricting China’s access to certain advanced technologies and is organizing its allies to push back Beijing. In this new geopolitical environment, Xi really needs to find a new “Chinese model” – separate from the East Asian model – if China’s rise is to continue uninterrupted.
gideon.rachman@ft.com
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