Why China thrives
China is grabbing fervent attention these days thanks to its high economic growth rate, the ambitious Belt and Road Initiative and the trade war. Positive changes come when the government has one righteous goal - the prosperity of its people. America, in a matter of around 400 years of European settlement, became the most influential country in the world. Europe enjoyed full-fledged prosperity earlier that America and that prevails to this day. However, with the consistent high economic growth rate for almost four decades, China seems to be beating the competition now.
This article aspires to explore some of the key elements that are propelling the northern neighbors forward in the economy race.
- Government system suited to the soil and stability
There are debates among political scholars around the world about the system adopted by the communist country – is it socialist market economy, private capitalism or state capitalism? China claims it is a ‘socialist market economy’, the term coined by past president Jiang Zemin. Whatever the debates and claims, the thing to be understood is that China adopts a system suited to its soil, unique to the world and that prioritizes people’s economic rights over political ones. Countries like China with recorded history going back to over 3500 years have outdated and feudalistic structures with wide social, political and economic gaps in the population coming to the 20th century. The structures need to be demolished to build new, stronger ones, and to narrow the gap. China understood the necessity and orchestrated the transformation ending the monarchy in 1912, and establishing the communist government in 1949. So, unlike the USA, which has a comparatively short history and where almost all people four centuries ago started from the same baseline, China had to have a stalwart government to hit the social structure and to vehemently transform the nation. A powerful government committed to bringing positive transformation whatever the cost propels China’s economic prosperity.
Importantly, the one-party political system in China, disparaged by the West, gives government stability, something very important to plunge the nation into strategies to realize long-term visions. The stability facilitates the government to plan decades’ long projects and to consistently perform to complete them.
- Necessary Freedom
Political pundits around the world claim that the best systems of government have freedom embedded in them, and freedom is the most fundamental prerequisite to prosperity; however, such claims need to speak for the necessity of deeper understanding of freedom too.
Jean Jacques Rousseau in his famous essay ‘The Social Contract’ claimed that man is born free but everywhere he is in chains. Humans are in chains -- chains which could be dispensed like norms of conservative societies, illogical traditions, and customs, etc., which restrain human potential. In many democratic countries, people fall victim to such chains. China has unshackled people from such chains allowing channeling of all energy on only that is necessary, which is economic prosperity.
Freedom as the most cherished value is indubitable but the question that flares up is -- is freedom the right to obstruct and to sabotage every development arrangement of the government or is it the availability of the ground to pursue and fulfill dreams? Humans are free when they can hope and can engage to fulfill their dreams, and Chinese people seem to have been availed of this necessary freedom. They can safely walk the streets in the middle of the night, can experiment with novel ideas in science and technology, and can start their own business with regulations that facilitate their endeavor. This is the type of freedom people necessarily want and which drives the economy of a nation.
Various world-class surveys have shown that Chinese women constitute a very high percentage of a total of self-made female billionaires comparing to other nations. Women like Yang Mianmin of Haier, Sun Yafang of Huawei, Dong Mingzhu of Gree Appliances and Peng Lei of Ali Baba have been inspiring others by their achievements in the tech world. This happened due to the availability of necessary freedom. Economic prosperity does not come by engaging in the unnecessary in the name of political freedom. The thriving of economy demands for the cruelest of struggle, which in turn demands necessary control. For over three decades, China has been marching forward with the highest economic growth and these recent years, it has been challenging others in 5G, artificial intelligence and robotics. According to the publication of the United Nations Conference on Trade and Development (UNCTAD), China was the largest recipient of foreign direct investment (FDI) among developing economies in 2018 thanks to the attractive environment for the security of investment and the necessary freedom to thrive it provides. If the country had curbed necessary freedom, it would not have been a haven for foreign investors.
Nature operates by rules of binary opposition -- there must be autonomy but there must be control from the benevolent force too. China constrains unnecessary political rights but offers the necessary freedom that lets people flourish economically.
- Inclusive institutions
In the book ‘Why Nations Fail’, authors Daron Acemoglu and James Robinson argue that the nations having ‘inclusive’ institutions succeed whereas those with ‘extractive’ institutions fail. They elaborate on inclusive institutions as those which provide an incentive for talent and creative ideas and extractive institutions as those which allow the elite to rule over, exploit and extract wealth from the weak.
In spite of democracy, many countries are struggling because the system is vulnerable to misuse by political leaders who encourage extractive institutions and serve a few elites. Many times in democratic countries, it is seen that big companies cater only to their profits and puppeteer the government forcing it to ignore the welfare of the larger mass of people. In China, the government that intends to rocket the country’s economy empowers inclusive institutions by funding startups and new ventures and also encouraging angel investors and venture capitalists to invest in them.
- Rejecting fatalism and pushing technology
Chinese culture and system discourage people to see religious reasons behind their adversities and encourage rational approach. More the populace of the country is indoctrinated with outdated scriptures and religious teachings; the less likely they are to thrive. Being a country whose beliefs are not guided by religion, the country certainly has an advantage over others as religions tend to make people fatalistic.
China has emphasized the development of science and technology. There is massive spending on research and development, students are encouraged to go abroad for studies, and Chinese universities are tied up with the best of foreign universities. People are pushed into being technology savvy. The government has ambitious plans in 5G, AI and robotics. The country has already exhibited its world-class excellence in many infrastructure projects. China’s devotion to flourish science and technology helps it thrive economically.
- Minding own business
One of the principal reasons behind China’s consistent economic growth also has been its non-interference principle. The country has meddled comparatively lesser into the matters of others. China believes in feeling the stone in water and walking alone silently. While powerful and rich nations are squandering their resources to wage war and topple down governments, China is marching head-on with blinders that allow seeing just the finishing line.
So, when other nations are diverging away from their real issues, China has been able to maintain its focus on the rights of its people to economically prosper and is beating others in the economy race.
(Mahesh Koirala is an independent thinker with a Master’s degree in political science)