Lessons from China

[Pk_Thunder]

Lessons from China​

Tuesday, 13 Jan, 2009 | 09:59 AM PST |
By Shahid Javed Burki

PAKISTAN is one of the three countries — the other two being Bhutan and Nepal — that border on the world’s two largest countries in terms of population size. And yet its economic relations with China and India remain weak.

I wrote about Pakistan’s economic relations with India last week, suggesting that it would be to the country’s advantage if economic contacts were to be established between the two neighbours. China will be the subject of today’s article and those to follow over the next few weeks.

The space devoted to China can be justified on several grounds. There are lessons that Pakistan can learn from the way the Chinese were able to transform their economy. The remarkable change in the size and structure of the economy has affected its neighbours, including Pakistan. The countries in East Asia have benefited enormously. India is also pulling itself closer to the Chinese economy. Pakistan, unfortunately, has not benefited as much.Its economic leaders have not fully understood how the growth of the Chinese economy could be to their country’s advantage. Today I will describe how China turned its economy from the one managed entirely by the state to the one in which the private sector has begun to play an important role. There are lessons for Pakistan in the Chinese experience.

China’s ‘opening and reform’ programme was launched in 1987 by Deng Xiaoping when he established his leadership at the Third Plenum of the Communist Party. This was a remarkable comeback for an individual who had been banished to political wildernesses by Mao Zedong, the father of modern China. Mao died in 1976 and after two years of political uncertainty the Chinese turned to Deng to put the country back on track.

The new leader launched another revolution for China, abandoning traditional communism in the field of economics in favour of “communism with Chinese characteristics”. He told the Communist Party — and through the party the people of China — that it was “glorious to be rich”. That slogan must have made the embalmed body of Mao turn in his mausoleum. While entrepreneurship and individualism were to be encouraged in economics, in politics the Communist Party was to retain the monopoly of power it had enjoyed since it assumed control of the country in October 1949.

In economics, Deng launched an experiment that was unusual for a country of China’s size. The country was to aim for high rates of economic growth by increasing its share in international markets. The export-led growth strategy had been followed successfully by the smaller “miracle economies” of East Asia. Korea, Taiwan, Hong Kong and Singapore had grown at double digit rates of GDP increase by selecting industries and lines of products that had expanding demand in the world particularly in the West.

For China to adopt the same strategy was particularly audacious since it meant claiming a very large share of global markets. Deng believed that it was possible for China to succeed by doing two things: by inviting foreign capital and technical know-how to the country and by locating export industries close to the ports.

Two years after launching his reform programme, Deng paid a visit to Shenzhen, near

Hong Kong. It was then a sleeping village with a population of a few thousand. He chose the village as China’s first Special Economic Zone, the SEZ, and provided generous tax benefits to those wishing to invest. The government also provided the zone with world class physical infrastructure and built a motorway to connect it to Hong Kong across the border. Proximity to Hong Kong proved to be extraordinarily attractive. What was then a British colony — it was to revert later to China — was running out of space to expand its rapidly growing industrial base. It was also experiencing labour shortages. Shenzhen offered exactly what Hong Kong lacked: space and cheap labour. Soon the SEZ was a bustling industrial city. It now has thousands of factories and 10 million people.

Three types of investors flocked to Shenzhen. First to come were the overseas Chinese, initially from Hong Kong but subsequently from Singapore, Taiwan and Malaysia as well. They knew the language and also knew how to do business in what was once their homeland.

Once the overseas Chinese had established themselves in Shenzhen, western companies followed attracted by cheap labour, fiscal incentives and proximity to the port of Hong Kong. The Chinese private sector was the last to arrive in Shenzhen. It had been constrained by government regulations. Once freed of government control, the Chinese private sector quickly expanded in Shenzhen.

The Shenzhen model was replicated in other coastal areas of China. Several special economic zones were established along the country’s eastern shore. The sites chosen were close to the main ports and within easy distance to some of the country’s export markets.

The export-oriented growth strategy worked for the country: within a couple of decades, as a trading nation, China went from 27th in the world to the third place. By 2007, its trade surplus with the United States was larger than what Japan was able to achieve in the 1980s. Development of exports resulted in sharp increases in wages and incomes as tens of millions of Chinese left the countryside in search of better paying jobs in the industrial sector. In 1978, when China took the reform route, annual income per capita was still pitifully low at $190. Three decades of nearly 10 per cent annual growth increased it to $2500. China is now the world’s third largest economy.

China’s phenomenal economic success, therefore, was the result of intelligent public policy. Although Mao Zedong damaged his country in several different ways by moving whimsically to keep his people on what he believed was the right track, he prepared the ground for the later rise of the country. He did this by doing away with unequal distribution of economic assets, in particular agricultural land; by bringing education and healthcare to all segments of the population; and by improving the social status of women. It was on the ground prepared by Mao that Deng was able to erect the modern Chinese economy.

What are the lessons in all of this for a country such as Pakistan? There are several. It is hard to succeed without starting with a reasonably equitable distribution of the asset base; without educating the entire population, including women; without concentrating on building a strong export sector; and without the leadership groups submerging their narrow interests in favour of the larger public good.

 

[el nino]

China is considered a super power because it has a $3.5 trillion dollar GDP

AND $1.3 TRILLION in forex

ITS armed forces are now benefitting from its massive growth with a defense budget offically at $60 billion but could be twice as much.

India is talked about by the WEST as a potential regional super power becasuse it has a $1.2 trillion dollar GDP & FOREX OF $260 BILLION

" NOT BECAUSE IT HAS NUCLEAR WEAPONS"

lesson from china grow your GDP FIRST

if you want better life for your people and international clout..

otherwise sink like NORTH KOREA the mighty nuclear& missle power that has no clout

 

[Aeneas]

safeness and stableness are also very important for China economy,once the government called "stableness overwhelm everything".interior areas of China didn't experience any war after Deng became our leader.he shelved many issues which could lead to conflict or war,such as border issues with neighbor nations.and he guide government try hard to improve public security level.especially in area of big city.that make investor feel good for develop.even terrorist can't make much accident during Beijing Olympic Games.

but China also meet many problems from then on.for example,corruption and social unfairness.these issues are discussed very acutely from government to folk now.the mainly target is corruption,which were hated mostly by Chinese people.

 

[ju87]

safeness and stableness are also very important for China economy,once the government called "stableness overwhelm everything".interior areas of China didn't experience any war after Deng became our leader.he shelved many issues which could lead to conflict or war,such as border issues with neighbor nations.and he guide government try hard to improve public security level.especially in area of big city.that make investor feel good for develop.even terrorist can't make much accident during Beijing Olympic Games.

but China also meet many problems from then on.for example,corruption and social unfairness.these issues are discussed very acutely from government to folk now.the mainly target is corruption,which were hated mostly by Chinese people.

As a Chinese who (hopefully) lives in China, how bad have your experiences been with corruption?

 

[ever4244]

As a Chinese who (hopefully) lives in China, how bad have your experiences been with corruption?

No real experience yet, but a lot of stories.

China's corruption is that invisible soft type, not the straight money demanding type. you have to be some certain kind of influencial businessman or official in that circle to get the first hand experience, otherwise, it will be only stories.

 

[roopesh]

No real experience yet, but a lot of stories.
China's corruption is that invisible soft type, not the straight money demanding type. you have to be some certain kind of influencial businessman or official in that circle to get the first hand experience, otherwise, it will be only stories.

China social system has both pro and cons. So i dont like it. But politics is the best..i feel like killing all inidan poleticians and bring china concept...inidian poletics filled with gundas and illegal ppl

 

[Aeneas]

As a Chinese who (hopefully) lives in China, how bad have your experiences been with corruption?

privilege——government official try to profit from the ualsmplz they had.for example,you should know Spring Festival is the most important festival for Chinese,all family members should come back to home.that make a problem called "transport peak during the Spring Festival",so many people go home at the same time which make crowd in trains.even worse,it bring out a job called "ticket scalpers" who buy a lot of train tickets and sell them to people who really need it at a much expensive price.in fact,most ticket scalpers have connection with railway offical,they get large quantity of tickets from railway offical without queue.so you may queue for a whole night only to find the ticket seller tell you all ticket had been sold out.then you had to find ticket scalpers for expensive ticket.

it's simple to tell,but in fact it's a big problem which are criticized very acutely now.if you look up for Chinese web,you could find many people discuss about it.

there are many problems likewise,in every field,bank,realty business,school.we know who is the men to be blamed,but they are under the protect of some government offical who profit from them.

 

[Aeneas]

it may be called "contradiction of fairness and efficiency" in Chinese term.means we must sacrifice fairness partly for more efficiency,or sacrifice efficiency partly for more fairness.like walk,you raise left leg,press all your weight on right leg,and then raise right leg,and press all your weight on left leg.

perhaps,it's time for Chinese people ask for more fairness than efficiency.

 

[ju87]

I happen to know someone from mainland China who has a sibling, in contravention of the one child policy (he is Han). When I asked him how this was possible, he simply said corruption. How widespread is this?

 

[Aeneas]

I happen to know someone from mainland China who has a sibling, in contravention of the one child policy (he is Han). When I asked him how this was possible, he simply said corruption. How widespread is this?

in fact,one child policy had been controverted for a long time,one of the power to persist it firmly is the department of planned parenthood himself.partly not for the good of nation or people,but for their own profit.

it's the law of one child policy bring them money,all the profit would be gone if only the law be changed.the law is the weapon in their hands.

in my opinion,the law is correct in the past,but incorrect today.

 

[ever4244]

I happen to know someone from mainland China who has a sibling, in contravention of the one child policy (he is Han). When I asked him how this was possible, he simply said corruption. How widespread is this?

That is impossible to answer, at least for common ppl.

When you have to bypass the rule or when you have to neutralize other's by-pass, you brible. Otherwise we have no chance to witness and solidify the cases. But how many time need a pll to by-pass the rule? Maybe one or two in a live time for a common pll, so you never know how bad it is. All is rumour, but rumour has its owns reason. So I guess the situation is not too bright. However, I do not know many other specific cases of corruption apart from thoes broadcasted on television.

 

[Aeneas]

That is impossible to answer, at least for common ppl.

When you have to bypass the rule or when you have to neutralize other's by-pass, you brible. Otherwise we have no chance to witness and solidify the cases. But how many time need a pll to by-pass the rule? Maybe one or two in a live time for a common pll, so you never know how bad it is. All is rumour, but rumour has its owns reason. So I guess the situation is not too bright. However, I do not know many other specific cases of corruption apart from thoes broadcasted on television.

recommend you to read a novel named "宦海无涯".

 

[ever4244]

recommend you to read a novel named "宦海无涯".

thanks, I ll take a look

 

[ju87]

That is impossible to answer, at least for common ppl.

When you have to bypass the rule or when you have to neutralize other's by-pass, you brible. Otherwise we have no chance to witness and solidify the cases. But how many time need a pll to by-pass the rule? Maybe one or two in a live time for a common pll, so you never know how bad it is. All is rumour, but rumour has its owns reason. So I guess the situation is not too bright. However, I do not know many other specific cases of corruption apart from thoes broadcasted on television.

It's a shame, coz many Indians look to China's one-child policy and wish India had the same. The democracy crap gets in the way.

As I understand, the one child policy is restricted to Han Chinese only?

 

[Aeneas]

It's a shame, coz many Indians look to China's one-child policy and wish India had the same. The democracy crap gets in the way.

As I understand, the one child policy is restricted to Han Chinese only?

not exactly,one child policy is restricted to minority region.if you were Han live in those region,you can have more children.there are some other policy which give profit to minority,such as quota for government department,bonus point for college entrance examination.so,when a Han married a minority(for example Tibetan),the parents would let their children sign hukou as a minority.it's easy to understand refer to India quota policy for college.