Thanks for the informative post brother. Just wondering, was there ever impetus or movement to privatise the bigger banks? How different are latter-day opinions with regards to this, when you compare the current scenario and Mao's period.Thanks. @
tranquilium Also how do you compare Soviet Banking and the current Chinese model. Absurd question, I know but I'm intrigued. Thanks.
Well, I can't tell you much about the Soviet model, because I never really study on it, but while there are talks regarding to opening the banking sector to private investors, there has never been any suggestion on privatization the bigger commercial banks, let alone the central one. The reason is several fold:
1. The first one is the because mentality. Like I repeated mentioned, Chinese culture spent two millennia as absolute monarchy as oppose to Europeans who spent less than tenth of the time in absolute monarchy and way longer in feudalism. I remember a interest talk from Martin Jacques.
He mentioned that unlike European cultures where government is this outside force to be resisted, the Chinese culture believes the government to be patriarch of the family. Personally I think it is very good analogy. Now if we use this analogy, then if the entire nation is a single large house hold, who will control the money? The patriarch, of course.
2. The second one is a practical reason. I don't really need to go into too much depth. Just look at 97 and 08 financial crisis. The OP mentioned 97 southeast Asia financial crisis, the fact is, China maintained has a 7.8% growth in 98 where all other countries involves (Japan, South Korea, Russia, Indonesia, Thailand Singapore, etc) have negative growth, some of them into the negative double digits. The only other Southeast/East country that got out of the crisis with good growth is Vietnam which has a 5.5% growth and it is socialist country just like China. Similarly in 08 where US and European nations dip into negative growth, China maintained a 9.6% growth speed. In fact, judging by the trend, the 08 crisis barely fazed China.
GDP growth (annual %) | Data | Table
This goes to show the resilience of socialist countries granted by their control of their economy.
On the issue of Mao, frankly, there are enough urban myth regarding to him that it can fit enough episodes to make a tv series. To save time, I will just talk about his relationship with Deng's reforms in the 80s.
The Chinese economic reform in the 80s are often regarded as one of the most successful reform in the 20th century. People are often contributing that solely to Deng's brilliance. Hey, it is way easier for western readers to swallow the pill if you pretend the effort is act of a single genius then an inevitable effort from at least two generations of people, because a genius is just a random event and admitting it is from consistent effort would require western audience to acknowledge Chinese actually know what they are doing.
Back to the topic. In reality, Deng's reform in the 80s is neither spontaneous nor conceived solely by him. The reform in the 80s are actually the third such reform in the series, because the first two ended in failure. (Well, the first one ended in failure, the second one sort worked, but didn't quite achieve the effect)
You have to understand that Mao is a utilitarian at heart. Back in the 30s where other CCP members are holding Karl Marx and Lenin's word as gospel, Mao was one that insisted communism must be combined with actual conditions in China. For him and his followers, they picked communism because it offers the best tools to strengthen China and if the original principles doesn't suit China's needs, they have no problem tossing it out of the window. Heck, it is joked that if divine intervention is actually the best way to run a country, Mao would probably convert to theocracy. As a result, while PRC sticked mainly to planned economy in the first decade, it is purely out of necessity. The background of this choice is that when PRC is founded, it was a war torn land that has not see peace for close to a century already with no infrastructure, no education and no money to work with. Under these conditions, planned economy is necessary because you need to concentrate on whatever you have to build the barely essentials.
By the 60s, the worst time is already over. With basic infrastructure and education under its belt, China set about developing things more than the bare necessities. As a result, the first round of reform comes in August, 1964 aiming to establish economic-oriented management in industry and transportation in 12 testing grounds around the country. However, due to lack of experience and preparation, the result ended in economic chaos. The reform is subsequently aborted in 1965. The second set of reform came around the end of 1971, where the reform aimed to address inefficiencies in agriculture due to over rigid structure. This reform would later lead to the country-side reform in land ownership in the 80s. Unlike the first reform which caused economic chaos since it is overly aggressive, the second set of reform generally worked as intend, but it is overly conservative, so it didn't create enough impact to truly change the Chinese economic structure.
After an aggressive failure and an conserve non-impact, Deng's reform came in the 80s as the third reform in the series and the rest is history.
Basically, Deng was able to do what he did in the 80s because Chinese people has spent over a decade of time experimenting and testing different approaches to the reform and their collective effort yield result and create one of the greatest economic transformations in 20th century.
