What Explains China’s Rise?

In any discussion on economic development, China invariably shows up. How did China manage an economic transformation that it now rivals even the greatest developed economy? Isn’t it amazing that China did that without being a democracy? Or maybe precisely because it is an autocracy that it could do what India, the largest democracy in the world, cannot do?

Those are not easy questions to answer because a story as large as China cannot be easily or quickly told. Big books have been written by reputed scholars on the subject. They are useful, instructive and fascinating. My personal favorite is the book How China Became Capitalist (2012) by Ronald Coase and Ning Wang.

Anyone seriously interested in understanding the economic rise of China should read Coase’s book. (Just by the way, Coase wrote that book at the age 101.) The publisher, Palgrave, gives this as the description of the book:

How China Became Capitalist details the extraordinary, and often unanticipated, journey that China has taken over the past thirty five years in transforming itself from a closed agrarian socialist economy to an indomitable economic force in the international arena. The authors revitalise the debate around the rise of the Chinese economy through the use of primary sources, persuasively arguing that the reforms implemented by the Chinese leaders did not represent a concerted attempt to create a capitalist economy, and that it was ‘marginal revolutions’ that introduced the market and entrepreneurship back to China. Lessons from the West were guided by the traditional Chinese principle of ‘seeking truth from facts’. By turning to capitalism, China re-embraced her own cultural roots. How China Became Capitalist challenges received wisdom about the future of the Chinese economy, warning that while China has enormous potential for further growth, the future is clouded by the government’s monopoly of ideas and power. Coase and Wang argue that the development of a market for ideas which has a long and revered tradition in China would be integral in bringing about the Chinese dream of social harmony.m [Source.]

I was motivated to write this post to respond to two readers, Sid and Namami. I discussed their questions with my friend Sudipta Chatterjee. He recommended two TED talks on the topic. They are excellent. It’s worth watching them. Here they are:

Understanding the Rise of China by Martin Jacques (2010).

and A Tale of Two Political Systems by Eric X.Li

Watching Li’s talk is thought-provoking. His claims are contestable — and that’s what Yasheng Huang did in a blog post “Democracy Still Wins.

I will leave it here for the moment. In the followup to this bit, I will present my view on the matter. For now, I hope you watch those two videos and read Huang’s critique.

10 thoughts on “What Explains China’s Rise?

  1. The Past is Passe
    The Future is the Reality
    “China re-embraced her own cultural roots “
    My Question is: What exactly are chinese “cultural roots”?
    Whenever someone invoked his or her God/Gods/culture/Prophet/Sage/heritage/’spirituality’…
    it means there’s a > 50% probability that:
    –That person is insecure like a poorly endowed girl put on a padded bra or a falling person grabbing straws
    –That person wanted a tag/label to legitimize his/her stand on certain thing
    A good example is the motive behind muslimahs(in kufir countries) wearing burqa in public. She likely would tell you burqa reduces the possbility of sexual harrassment on her.But would sex crimes against musimahs jump if they put off the burqa? The bottom line is wearing burqa costume is like waving a placard ‘I’m a muslim&I’ll not be assimulated’ .
    Another example is that white nationalists want to bomb the fuck out of the M.E.muslims (or ban immigrants from certain countries) to defend ‘christian vlaues’
    What exactly is ‘culture’? To me its a dynamic thing.
    I can’t define chinese culture(except the language part) though Chinese civilisation has certain characteristics:
    –Its the most secular among old civilisations. One good example:both Jesus and Confucius had parentage issue; Christians tell you Jesus is the Son of God and ancient Chinese history record stated Confucius was a bastard.
    –Chinese have strong sense of historical lineage and pretty comprehensive history records . The average chinese high school leavers can read 2000 yrs old texts, albeit with some slight difficulty. Chinese can communicate with the past readily but it doesn’t mean the average modern chinese romanticise the past. Exactly 100 yrs ago,there started a serious chinese intellectual movement the impact is still felt today, known as the ‘May 4th Movement’, to retrospectively examine china’s past. It is a movement of self-criticism if not self-shaming. The leftist writer Lu-Xun called Confucist moral orthodoxy ‘cannibalism’. All the early chinese communist leaders were ‘May 4th’ followers. It climaxed during the ‘Cultural Revolution’. Excessive it might have been but the spirit was right.
    The Past is Passe
    The Future is the Reality

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  2. My company’s chips were always made in Taiwan (the world-leader in silicon foundries). Recently, China’s SMIC bid for our business, quoting 40% lesser. How can they do it? Govt subsidies! These subsidies are publicly acknowledged.

    China’s goal, among other things, is to bring Taiwan to its knees. How China gained this technology is a different story — its command economy and spy networks playing a central role in it. Chinese capitalism rides on govt subsidies and central planning — its main goal is: Beggar-Thy-Neighbor.

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  3. Thank you for addressing the question and the links to the videos, Atanu. I’ll go through both the videos and the critique as you suggest, and look forward to your follow up.

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    • I live in Europe- Of the two TED talks , I can’t make any conclusion from the one by Martin Jacques. Is he an admirer of Han arrogance ?
      Some questions which need to be asked listening to both the videos

      If China is a self organizing society why do they need a President for life
      https://www.newyorker.com/news/daily-comment/xi-jinping-may-be-president-for-life-what-will-happen-to-china
      I want to ask both why are there dissidents in China ?
      https://www.newyorker.com/news/daily-comment/xi-jinping-may-be-president-for-life-what-will-happen-to-china
      Why are the chinese building a big army ; are they afraid of invasions
      Chinese have replaced europeans in exploiting African riches , even endangering wildlife.
      How about bullying neighbours in the south china sea

      -No explanation of acquiring the knowhow by any means

      Enough said for now

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    • I have viewed both the videos a few times, Atanu. Thank you for sharing them. I’d have never come across these perspectives otherwise.

      While the videos are different, what I have gathered as the common thread from both, is that economic models and theories that are based on experiences and political systems in the west do not have a carry over effect to a society and culture that operates very differently — such as China. And China proves that a different, state centric model just works. And how! From both the videos, I gather that a majority of the Chinese look up to and respect the authority and oversight of the state. And the state has delivered, under the constraints of a very large society that is not ethnically diverse (the Han angle, at the exclusion of others), decentralization (the ‘civilizational state’ suggesting distributed government control, as opposed to a single ‘nation state’) and finally an inherent acceptance of a paternalistic government playing a central role in their lives.

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  4. The Chinese are stealing US firms’ technology and using it to help Chinese companies compete with those same firms in China and around the world. They do this in two ways.

    First, US firms that want to do business in China are required to have a Chinese partner and to share their technology with that firm. That compulsory sharing of technology is explicitly forbidden by WTO rules. Since joining the WTO in 2001, the Chinese have ignored this rule and disingenuously claim that US firms voluntarily agree to share their technology because they want to be active in China.

    Second, the Chinese use the Internet to enter the computer systems of US firms and steal technology and blueprints. Chinese President Xi Jinping agreed in 2015 that his govt would stop doing this. But, after a temporary decline, such cyber theft has resumed, presumably because state-owned companies and others have the ability to reach into the computer systems of US firms.

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  5. Mr. Atanu Dey,
    The motive of your question: why china rises so fast to the surprise of many..
    The Objective:To seek answers to the above through rationale, data, cultural perspectives..
    ……………
    According to the other posters’ claim, apparently china rises so fast because of some unethnical practises like thievery of tech.
    I checked from the chinese gov.stats bureau that the chinese nominal GDP(in US$) rised from 0.99 trillion in 1999 to 10.1 trillion in 2014(due to supposedly fast growth, some inflation, currency appreciation and 2 GDP calculation adjustements at 16% and 6% if I remember right). So one can claim the chinese growth must be fake if thievery of tech can accomplish so much.
    You started the thread on 20th Feb. I posted once followed by 3 other posters. The last was posted on 26th Feb, 18 days ago.
    Now apparently the matter is settled. May I suggest to go on to other topics?
    I’m no economist that I only took economics up to second year university level. One topic that interests me is the effect of agricultural subsidies. Many might not know that 3rd world poor countries like china, india… actually subsidized their agriculture more than the developed countries like US, Holland. Are my guess right:
    **Countries like india has higher agricultural production costs than US, Holland because of the latters’ high degree of mechanization and advanced agricultural tech?
    (Being said, are developed Japan and developing Brazil notable exception?)
    **Bulk food prices,if unsubsidized, will be more expensive in 3rd world than in 1st world?
    **Many insecure 3rd worlders love to quote PPP GDP to feel less poor. Since the poorer the people the more dispensible income are spent on bulk food like rice, wheat. So PPP GDP must voodoonomics?

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    • @Lin:

      One topic that interests me is the effect of agricultural subsidies. Many might not know that 3rd world poor countries like china, india… actually subsidized their agriculture more than the developed countries like US, Holland. Are my guess right:
      **Countries like india has higher agricultural production costs than US, Holland because of the latters’ high degree of mechanization and advanced agricultural tech?
      (Being said, are developed Japan and developing Brazil notable exception?)
      **Bulk food prices,if unsubsidized, will be more expensive in 3rd world than in 1st world?
      **Many insecure 3rd worlders love to quote PPP GDP to feel less poor. Since the poorer the people the more dispensible income are spent on bulk food like rice, wheat. So PPP GDP must voodoonomics?

      Good questions. If you are reading this comment, please post a comment to the most recent “Ask me anything” so that I get to know that are still interested in answer. If you are, I’ll reply. Thanks.

      Like

  6. Pingback: What Explains China’s Rise? — Part 3 | Atanu Dey on India's Development

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