China’s Success Comes from its Political System

From: English Edition of Qiushi Journal Updated: 2011-09-20 16:25
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 The debate over the “China Model” is currently a topic of intense interest. In a recent written interview with the foreign media, President Hu Jintao responded by praising China’s political model. This affirmation demonstrated a level of confidence fitting for a large country. It reiterated China’s firm commitment to socialism with Chinese characteristics, and also served to address the concerns of the academic world and the public in explicit terms. 

 But what has made the Chinese political model so successful? What defines it as a successful model? And how will it evolve?

 March 17, 2011, a resident of Bei’er Village casts her vote. Bei’er Village, located in Hangbu Town, Kecheng District, Quzhou City, Zhejiang Province, has been honored as an ethnically unified, progressive and prosperous village. Bei’er Village held a vote from March 15 to 17, 2011 to elect a new village committee. Elections of new village committees are currently taking place across Zhejiang Province, and are the first to be carried out since the revision of the Organic Law of Villager Committees of the People’s Republic of China. This round of elections, which will cover more than 37.78 million people in 30,000 villages, is set to conclude at the end of April. / Photo by Xinhua reporter Tan Jin

 I. The benchmark for judging the superiority and success of China’s political system

 There is no such thing as the best political system. Likewise, the world will never be totally dominated by a universal political system. Political systems come in a diverse range of forms. They coexist, borrow from each other, and compete with one another. The emergence of this situation is closely related to several major changes that took place in the world population and the layout of nations after the Second World War. Firstly, the world population has increased significantly since the end of the war, from around 2.4 billion to nearly 6.8 billion at present. Secondly, the number of countries and regions in the world has increased substantially, shooting from 45 to more than 200. There are two reasons for this, the first being the successive independence of colonial countries after the end of the war, and the second being the collapse of the Soviet Union and Yugoslavia after 1990. Thirdly, as the average population per country has dropped from 53 million to 35 million, the relative difficulty of running a state has decreased, and economies have become more active as a result. Fourthly, the rapid integration, regionalization and globalization of the world economy have brought about increasingly intense competition between world nations. In the midst of such fierce international competition, slow movers are equally as likely to fail as those who do not progress at all. In essence, the market competition and technological competition that ensues between states boils down to competition between the different systems that they employ. It should be noted that the outcome of such competition is not decided by the inherent merits of any given system alone, but by how well a system performs in relation to its competitors.

 China’s population has risen from almost 500 million to 1.3 billion since 1945. In this time, China has gone from weakness as a poor, backward and disunited nation to strength as a vibrant, prosperous and united global power. But how has China been able to govern itself so successfully? And how should we view China’s success in an international context in order to further demonstrate the suitability and success of its political system?

 We cannot rely on our own subjective judgment to do this, nor can we turn to Western values to make such a judgment for us. Instead, we must let the numbers and the facts speak for themselves. By “success” we mean something specific—the term is not being used in its abstract sense; we cannot gauge success on the basis of a single standard, and respective issues, examples and indexes must be viewed specifically in their own contexts. Moreover, “success” cannot be proclaimed on the basis of self appraisal. It must be confirmed through a process of comparison with other countries. 

 Our discussion will revolve around two aspects: the first is a long-term developmental comparison between more than 100 countries and regions over the past 30 years (1978-2008), while the second is a short-term comparison which will look at how G20 nations have coped with the international financial crisis over the last three years (2008-2010). These comparisons will endeavor to show that China has done better than any other country and that its performance cannot be matched anywhere else. 

 China’s political system is not without its shortcomings. Despite this, both historical fact and international comparisons have demonstrated that it is suited to China’s basic national conditions and to its current stage of development. Likewise, China’s political system has also proven its adaptability to an increasingly open internal and external environment, being able to respond to numerous challenges and demonstrate its huge advantages and unique edge in the course of fierce international competition. This has been achieved by China’s efforts to restructure and reform its political system over the past 30 years. Firstly, China has developed a set of codes, regulations and processes to govern the transition between its national leaders, which has ensured the stability and continuity of its political leadership. Secondly, China’s leaders have adhered to an ideology of “seeking the truth from the facts.” Thirdly, China has developed a democratic, scientific and regulated approach to public policy making. These are the fundamental reasons why China is always so successful.   

 II. The secret to China’s high economic growth and remarkable social progress over the past 30 years

 An international comparison reveals that China’s miracle is by no means an accident, nor is it a matter of luck. We can see that it is, in fact, founded on the approach that China has taken towards development. There is nothing complex or mysterious about this approach. On the contrary, this is a straightforward approach that follows a natural grain of logic. 

 We have selected three indexes with which we will conduct a comparison of more than 100 countries and regions on the basis of data from the World Bank and the UN Development Programme. The first is average annual growth rate of GDP, which reflects performance in terms of economic growth. The second is the coefficient of relative variation in the average annual growth of GDP, which reflects the state of macroeconomic stability. The third is the improvement of human development index (HDI), which reflects the extent of social progress and social equality. Through our comparison, we have found that all of the 20 fastest growing economies during the period from 1978-2008 were developing countries and regions. Of these countries, a total of 13 implement a policy of five-year plans. Moreover, as many as 8 of the 10 fastest growing economies carry out five-year plans (see Table 1). This is no coincidence. Deng Xiaoping once said that planning and market forces are both means of economic growth. Five-year plans, as a “visible hand” serve to promote social progress through the provision of public services, whilst the market economy, as an “invisible hand” promotes economic growth through the creation of a sound environment for investment. This is a key to understanding the Chinese miracle.

 Countries and regions with a population of less than 3 million are not included. In the table, “a” refers to countries which carry out economic and social development plans, but not necessarily five-year plans. Bracketed numbers indicate starting and ending years.Source of GDP growth rate and fluctuation coefficient data: World Bank, WDI 2010. Source of HDI data: UNDP, HDI Trends Components 2009. Figures for the number of five-year plans were compiled by the author.

 Numerous entrepreneurs and scholars familiar with the situation in China have given their full affirmation to this practice. In November 2009, James McGregor, former chairman of the US-China Chamber of Commerce, told the New York Times that “One key thing we (the United States) can learn from China is setting goals, making plans and focusing on pushing the whole country ahead as a nation. The Chinese have five-year plans. They devote themselves to their objectives.” (“Five Things the U.S. Can Learn from China,” Reference News, Page 1, November 15, 2009). Moreover, in his book China’s Megatrends, futurist John Naisbit identifies “framing the ‘forest’ and letting the ‘trees’ grow” as one of the eight pillars of a New Society (in contrast to Western countries). He writes that “The vision and the goals are being shaped in a top-down, bottom-up process. The government frames the policies and priorities within which citizens create their own roles and their own contributions to the whole, forming a structure that allows and benefits from diversity while sustaining order and harmony” (John Naisbit, China’s Megatrends, China Industry and Commerce United Publishing House Co., Ltd., 2009, p. 61/title page).

 During a recent economics forum in Taiwan, I cited the formulation of the Twelfth Five-Year Plan to give a detailed illustration of how the Chinese mainland has realized a democratic, scientific and regulated mechanism for decision making. This process can be roughly divided into 11 steps. The process of research and compilation takes around two and a half years, during which the opinions of the people are solicited first and then researched centrally. Following this, the views of the people are sought again, which is followed by another round of central research. This process is not secretive in any way. In effect, it has made decision making in the Chinese mainland a public process. In other words, it has “swapped a black box for a see-through box” as we say it. The next day, a Taiwanese scholar criticized Taiwan’s policy making mechanism in the Want Daily. One of his core views was that “It is time for Taiwan to learn from the mainland.”

 III. Why has China been able to deliver such an incredible performance  

 The international financial crisis that originated in the United States has dealt a severe blow to the global economy. As the crisis spread, a number of the world’s major economies were thrown into turmoil. However, China can be viewed as something of an exception. As a global challenge, the financial crisis put the response mechanisms of all countries to the test. 

 We have chosen four major macroscopic economic indicators to conduct a comparison between G20 countries, they are: economic growth, inflation, unemployment and budget balance of GDP.

 Judging from the results, it is evident that China delivered the best macroeconomic performance of all G20 countries in 2009. China demonstrated the highest rate of economic growth in 2009, reaching 9.2%. In addition, China was one of only 7 nations that managed to avert the onset of negative growth. According to the figures, the economic growth rates of the United States, EU countries (on average) and Japan in 2009 were -2.5%, -3.9% and -5.3% respectively. Moreover, China’s economic growth rate was also as much as 2.7 percentage points higher than its closest competitor — India (see Table 2). 

 Ironic in retrospect are the seemingly smug predictions that an influential US publication proceeded to make at the beginning of 2009, the likes of “China has already begun an economic decline and perhaps will be worse off than the United States,” and “China will not be able to continue its miracle,” “it is but a caged giant.” Furthermore, on March 2 of the same year, the same magazine openly predicted that the growth of China’s GDP in 2009 would not exceed 4%. However, this prediction was soon (just ten months) to be smashed by the facts. In what can be considered a global test, China stunned the world by spearheading the economic recovery, achieving steady growth and meeting its main macroeconomic targets. While this was happening, it was the US that went into genuine economic decline. During this time, China also closed the gap between its GDP and that of the United States, narrowing the difference from 4 fold at the beginning of the crisis to roughly 2.5 fold after the crisis.

 The Economist, Feb. 20th – 26th 2010, pp. 85-86. China’s unemployment rate refers to the registered unemployment rate in urban areas. Surveyed unemployment figures may be slightly higher.

 So why was China able to cope with the international financial crisis so successfully in comparison with other countries? What have we come to realize? And what experiences can we draw? Firstly, we have gained a full insight into the economic laws of the socialist market economy and the political superiorities of the socialist system. Secondly, we succeeded in balancing the relationship between the government and market forces, namely, we asserted the leading role of the government while giving full play to the basic role of market forces in the allocation of resources. For example, the stimulating effect of the government’s 4 trillion yuan investment from 2009-2010 helped to generate more than ten times this amount in non-governmental investment. China’s total investment in fixed assets during this two year period reached 50.3 trillion yuan, which effectively ensured the rapid economic growth of the country.

 Different nations exhibit different capacities for development and different levels of national strength. They have also demonstrated different levels of performance in their respective responses to the international financial crisis. We can attribute China’s ability to cope with the crisis to five aspects: first, the ability of the Chinese people to study as a whole, respond flexibly to unfavorable situations and excel in competition; second, the highly efficient decision making mechanisms of the government; third, the government’s huge capacity for political mobilization; fourth, China’s constantly growing fiscal power; and fifth, our ability to give full rein to the initiative of both the central and local governments.

 The essence of the international financial crisis, which was initiated by the United States and exported to the rest of the world, is an unprecedented crisis of capitalism. China’s success in coping with the international financial crisis has captivated large numbers of American scholars, and urged them to engage in self-reflection over this capitalist crisis. One of the most eye-catching instances of such self-reflection is a recently published article by American scholar Francis Fukuyama, in which the author states that China’s success in navigating the economic crisis was based on the ability of its political system to make large, complex decisions quickly, and make them relatively well, at least in economic policy. In comparison, the US lacks the capacity to respond to crisis, which makes it more rigid. Compelled by fact, Fukuyama’s words can be construed as a partial correction or even a negation of the theories he published 20 years ago in The End of History.

 In summary, the “Chinese Path” is not only unprecedented, but is also becoming more and more successful. The best thing we can do is go our own way and just let them talk.

(Originally appeared in Red Flag Manuscript, No.3, 2011)

Note:Author: Director of the Center for China Studies of Tsinghua University
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