The Economist debate: China model - Is there such a thing?

China Model:
This house believes China offers a better development model than the West.
The Economist, Economist Debates, Thursday August 12th 2010

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Addendum, in parenthesis, in August 13, 2010: Closing the debate and Winner Announcement:

August 13, 2010
James Miles

Given we argued so much over the motion's meaning, it is hard to declare a "winner". The numbers point to a victory for the motion's opponent, Susan Shirk. But congratulations are also due to Stefan Halper, who pointed out right at the beginning that, even though proposing the motion, he believed (as Ms Shirk argued) that there was no model to speak of. That muddied the waters! If the vote was really about the main points of contention between the two debaters, then the majority of you agreed with Ms Shirk that other countries would not be seduced by authoritarian state capitalism just because of China's achievements, and that China itself is in any case evolving in ways that could open the door for considerable change in the way it works politically.

But many voted in favour of the motion, and it is likely that some, if not many, did so out of a genuine belief that China does in fact have a better model to offer (with which Mr Halper, though the motion's proposer, disagreed). If I am right, this has been an interesting result. It is, I suspect, very different from what the outcome would have been had we been able to conduct this exercise 20 years ago. And it could be evidence of what Mr Halper has argued, namely that China is "shrinking the idea of the West". Undeniably, both he and Ms Shirk, as well as our expert contributor Michael Pettis, deserve enormous thanks for putting themselves in the firing line.

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From the August 12, 2010, edition:

Rebuttal Statements:

Against the motion
Susan Shirk - Director, Institute on Global Conflict and Cooperation, University of California

Stefan Halper agrees with me that China has no distinctive model of development that other countries could adopt. He also acknowledges that China's breakneck growth has produced severe inequality, corruption and environmental pollution, and that in many respects, China is a fragile superpower. Then he shifts the ground of the debate to argue that China is engaged in a "battle of ideas" with the West and is winning. [More below]
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Defending the motion
Stefan Halper - Senior Fellow, Politics and International Studies, University of Cambridge

Susan Shirk opens her argument with a curious claim: she seems to say that Americans who worry about the decline of the West and who "overestimate the strengths of the Chinese system" suffer from distorted vision. But then, pointing to Japan's breakaway growth two decades ago, she says that indeed, China's economic performance is even "more impressive" than Japan's was in the 1980s. [More below]
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Audience participation
Comments from the floor.
Featured guest: Michael Pettis

There is nothing especially Chinese about the Chinese development model. It is mostly a souped-up version of the Asian development model, and shares fundamental features with Brazil during the "miracle" years of the 1960s and 1970s. While it can generate tremendous growth early on, it also leads inexorably to deep imbalances, and ironically just as we are debating its superiority, China may be on the verge of a difficult transition into a different growth model.

At the heart of the model are subsidies for manufacturing and investment paid for by households. In some cases, as with Brazil in the 1960s and 1970s, the household costs are explicit—Brazil taxed household income heavily and invested the proceeds in manufacturing and infrastructure. The Asian variety relies on less explicit mechanisms to accomplish the same purpose.

There are primarily three such mechanisms. First, wage growth is constrained to well below the growth in worker productivity, forcing workers to subsidise employers. Second, the exchange rate is undervalued. This reduces the real value of wages by raising import costs, while subsidising manufacturers in the tradable goods sector. Third, and most powerful, is financial repression. Most savings in these countries are in the form of bank deposits, and the banks are controlled by the monetary authorities, who determine the direction of credit, socialise the risks, and set lending and deposit rates.

Very low lending and deposit rates create a powerful mechanism for using household savings to boost growth by heavily subsidising the cost of capital. In the case of China, every year well over 5% of GDP is transferred from household savers to banks and borrowers in the form of repressed interest rates. As an aside, the resulting low cost of capital explains the seeming paradox of China's capital-intensive, rather than labour-intensive, growth—labour may be cheap, but capital is almost free.

The result of this enormously successful model is so much investment-driven and employment-generating growth that even with massive transfers from households, household income nonetheless surges. In China, for the past decade, as the country was clocking in growth rates of 10-12% annually, household income, and with it household consumption, grew 8-9% annually.

But there are at least two constraints to this model. In the early stages, when investment is low, the diversion of household wealth into investment in capacity and infrastructure is likely to be economically productive. The longer heavily subsidised investment continues, however, the more likely it is that cheap capital and socialised credit risk fund economically wasteful projects. At some point, rather than create wealth, capital users begin to destroy wealth, but nonetheless show profits by passing more than 100% of the losses on to households.

The second constraint is that policies that force households to subsidise growth are likely to generate much faster growth in production than in consumption-growth in household consumption being largely a function of household income growth. In that case, large and growing trade surpluses are needed to absorb the balance.

This is what happened in China in the past decade. And as long as the rest of the world—primarily America and the trade-deficit countries of Europe—have been able to absorb the rising trade surplus, the fact that domestic households absorbed a declining share of Chinese production did not matter much.

But by 2007 China's trade surplus as a share of global GDP had become the highest recorded in 100 years, perhaps ever, and the rest of the world found it increasing difficult to absorb it. To make matters worse, the global financial crisis sharply reduced the ability and willingness of other countries even to maintain current trade deficits.

China has hit both constraints: capital is wasted, perhaps on an unprecedented scale, and the world is finding it increasingly difficult to absorb excess Chinese capacity. For all its past success China now needs urgently to abandon the development model.

The sooner it does so the less painful the adjustment will be, but it will be difficult anyway. China must raise wages, interest rates and the value of the currency. If it does so quickly, it could cause severe financial distress to businesses and projects heavily dependent on subsidised costs, and the resulting surge in unemployment could cause consumption to decline just as Chinese competitiveness abroad deteriorates. If it does so slowly, it will need accommodation from the external sector, but it is not at all clear that the rest of the world, most importantly America and the trade-deficit countries of Europe, will allow their trade deficits to shrink so slowly.

The historical precedents for this kind of adjustment are not encouraging, and the adjustment China needs to make dwarfs those of its predecessors. Like it or not, China must change its growth model. It is unlikely that we will be debating this topic in five years' time.
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The moderator's rebuttal remarks
James Miles
Aug 9th 2010

Some of our debate is stumbling over the basic premise—whether or not there is a "China model" in the first place. Contributors disagree on the ingredients of China's successes, the extent to whether what it has achieved is sustainable, and the applicability of these successes to other countries. I agree the motion contains assumptions that deserve argument, but I also think that just as few of our commentators challenge the ill-defined notion of what "the West" entails, there can also be a consensus on certain ingredients of the Chinese experience that, in combination, could be described as distinctively Chinese.

Authoritarianism, one-party rule, a strong state hand on the economic tiller (including control over strategic industries) and a vigorous engagement with the global economy are certainly components. Other fast-developing Asian economies shared most, if not all, of these elements during their takeoff periods. But they also sooner or later adopted varying degrees of democracy. Of China's forerunners in Asia—Japan and the four tigers of South Korea, Taiwan, Hong Kong and Singapore—none is as stubbornly resistant to any form of opposition as China today. That makes China's experience stand out in Asia, as well as among its fellow BRICs. A decade ago, some observers predicted that China would follow the Asian model as it developed, and become at least somewhat more open politically as it grew richer. Holding the Olympic Games in 2008, optimists thought, would help usher in the kind of changes that staging the event helped catalyse in South Korea and Mexico. It did not.

The question to answer, it seems to me, is whether the Chinese-style combination of the above-mentioned ingredients is attractive to some other countries to the extent that "western" notions of democracy and free markets are less likely to take root in them. Part of the answer depends on how stable you believe China's balancing of these components to be. Susan Shirk says in her rebuttal that in today's China, "rulers have turned to the toolkit of democratic governance in order to maintain credibility". If so, that would imply that China is evolving as other Asian countries have, and that the components I have described may change within the next few years. As one of our commentators put it, "the system seems to be evolving to cope with the challenges".

Stefan Halper appears less sanguine about the pace of this evolution. He speaks in his rebuttal of China's "promotion of authoritarian values". These, he says, "challenge and marginalise the values that have informed western progress for centuries". In other words, he implies, authoritarian leaders who take heart from China's successes do not see a democratic China taking shape in a way that could soon wrong-foot them.

One contributor notes that "we somehow forget Taiwan", whose takeoff preceded that of China "and probably was responsible to some extent for what we see now in China". Taiwan, this commentator says, is closer to the western model. In my experience, the Taiwan model is one of particular fascination to many people in China. Some admire its openness, but some also worry about its corruption and what they regard as the chaos of its politics. I do not often hear Chinese express a yearning for their country to be like it.

What seems particularly interesting to me is that voting in this debate appears relatively evenly balanced. My guess is that some of those voting in favour of the motion are Chinese who do genuinely feel that their country is rising and the West is in decline. If the party enjoys strong legitimacy, is it possible that the components of the model are balanced, at least in the eyes of middle-class urban citizens, just about right? Might pride in China's growing global influence overcome their desire for possibly risky change?

There is another essential ingredient to consider, however. That is whether China can maintain its trajectory of rapid economic growth. The concerns Mr Halper raises in his rebuttal suggest a degree of confidence that it will continue for the foreseeable future. But there are some who worry that China has, in effect, picked the low-hanging fruit and will find it hard to make the transition it seeks to a more domestically driven economy. One commentator frets about a "demographic time bomb" as the labour-force peaks in the coming decade and the proportion of retirees rapidly expands. A slowdown of economic growth, and the social tensions this could push to the surface, could rapidly reduce some of the concerns raised by Mr Halper. I look forward to more of your views.
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The proposer's rebuttal remarks
Stefan Halper
Aug 9th 2010

Susan Shirk opens her argument with a curious claim: she seems to say that Americans who worry about the decline of the West and who "overestimate the strengths of the Chinese system" suffer from distorted vision. But then, pointing to Japan's breakaway growth two decades ago, she says that indeed, China's economic performance is even "more impressive" than Japan's was in the 1980s. Pardon me if I seem confused, but "more impressive than Japan" would indicate that Chinese economic planners must have been doing something right and that we ought to be concerned with a rising new China, not to mention its promotion of authoritarian values and its expanding support in the world beyond the West.

But let's begin with the "decline of the West":

• If growth means jobs, wealth, power and better quality of life, why should Americans not be concerned about China's unprecedented 10-11% annual growth (compared an American average of 2.8% over the past decade)?
• Why should we not be concerned about China's relentless acquisition of energy and mineral resources throughout the developing world—a determined march which has sustained authoritarian governance in innumerable fragile and/or failing states, and both distorted local development and driven up global prices for copper, oil, steel, zinc and timber, and hence consumer prices worldwide?
• Should Americans not be concerned about the decline of western power in the UN and the WTO, where China's "cheque book diplomacy" enlists an expanding bloc of supporters and admirers when America's and China's interests clash?
• Should Americans ignore China's recent claim of "indisputable sovereignty" over the South China Sea, which, if allowed to stand, would reverse the principle of freedom of navigation and open access to Asia's maritime commons. China's bald attempt to unilaterally seize undersea mineral and gas deposits claimed by nine nations makes this even more alarming?
• Should Americans not ask why China has increased funding for its 2.3m strong military (the world's largest) at such a rapid rate—17.8% last year compared with America's 3.4%?

And, while Ms Shirk worries that we are "overestimating the strengths of the Chinese system", let's take a quick look at China's actual economic performance during the dark days of the recession. When American and European economic growth slowed—the American economy actually contracted by 6.2% in the fourth quarter of 2008—China's economy grew by 9% in 2008.

China's towering trade surpluses with America and Europe have, over two decades, helped it generate more hard currency reserves than any other nation—now over $2 trillion. This, together with the highest savings rates in the world, has provided economic planners with the capacity to maintain employment, expand housing, invest in heavy industry, build roads and rail and subsidise an export sector hit hard by the collapse of demand in America. Meanwhile, there have been real challenges. Chinese planners have had to contain violent demonstrations in Tibet and in Xinjiang province, the "angry young online", workers' demands for wage increases and disputes with a range of international corporations over business conditions, privacy issues and intellectual property rights. If the issue at hand is to compare Chinese and American governance, China's achievements are impressive.

Though China provides an example of what a developing nation can achieve, it does not offer a model that can be replicated. Ms Shirk underscores this point when she references the more than "70% of the population of working age or the massive domestic market" to explain China's remarkable economic progress. Here we agree that China is unique; such large numbers of workers and domestic markets are unavailable in other developing nations.

Unfortunately, the debate motion, as worded, has deeply confused this exchange by presenting a false choice. It is not a question of China offering a better or worse model than the West. China's governance is unique. It cannot be reproduced any more easily than American democracy can be reproduced in France, Iraq or Venezuela. It is a variant of the Asian model first developed by the Japanese in 1932 in Manchukuo, then refined by the Koreans, the Taiwanese, the Singaporeans. It is characterised by high savings rates, good education, Confucian values emphasising family and harmony, and an emphasis on export driven growth. There the similarities end; the Asian authoritarian governments mentioned above have evolved towards pluralism. China, after 60 years, has not. Its complexity, its size, the all-powerful Communist Party make it impossible to replicate. So the notion of presenting China's experience as a "model" is simply a misapplication of the term.

What is more important is that the failure of the Washington Consensus (the western development model) in the 1980s left the door open for the Chinese in the developing world—and what that has meant for the spread of authoritarian government. While the Washington Consensus (implemented through the World Bank and the IMF) offered loans in return for government reform, deregulation and transparency, too often conditions failed to improve in participating countries. Moreover, not only has China's support been forthcoming without reforms, but it also pledges non-interference in internal affairs and undertakes to protect its partners in world bodies from ethics-based sanctions. But what you see is only a part of what you get.

The more enduring impact of China's largesse is the promotion of concepts of governance that challenge and marginalise the values that have informed western progress for centuries. Faced with the choice of instituting democratic or authoritarian governance, most developing-country leaders choose the latter as less complicated and providing greater longevity. Democratic virtues are thought to pale when compared with China's support and protection.

Sadly, Ms Shirk, comforted by America's massive military and economic strength, has neglected the real challenge presented by China, namely the battle of ideas about governance—which China's authoritarian embrace is winning in the "world beyond the West".
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The opposition's rebuttal remarks
Susan Shirk
Aug 9th 2010

Stefan Halper agrees with me that China has no distinctive model of development that other countries could adopt. He also acknowledges that China's breakneck growth has produced severe inequality, corruption and environmental pollution, and that in many respects, China is a fragile superpower. Then he shifts the ground of the debate to argue that China is engaged in a "battle of ideas" with the West and is winning. According to him and to Joshua Cooper Ramo, there is something called a "Beijing consensus" consisting of "market authoritarianism" which competes with western values.

Contrary to the simplifications of authors like Halper and others, there actually is no consensus in Beijing, or elsewhere in China, on an alternative set of political ideas. To the contrary, norms like transparency, rule of law and democracy are on the ascendance inside China. And internationally, there is no sign that China is waging a Soviet-style ideological contest with America or subverting popular commitment to the values of freedom and democracy around the world.

At home, China's Communist Party leaders know that economic success alone will not maintain popular support in a highly mobile, educated and well-informed society. Chinese consumers are just as outraged about tainted food and medicine as are foreign consumers. Farmers have turned violently against local officials who collude with developers to buy up their land at unfairly low prices. Urbanites march against industrial projects that would endanger the health of their families by spilling poisonous wastes into rivers.

China's leaders do not dare stand for election, but they have introduced democratic-style mechanisms for monitoring and disciplining local officials who fail to protect the public welfare. The commercial media and the internet, although censored, have been unleashed to expose product quality and environmental problems. Large projects require public hearings to review their environmental impacts. Government agencies must solicit public comment on draft regulations. And citizens have the right to sue the government in the courts.

Are these methods as effective as elections? Almost certainly not, so long as the Communist Party insists on choosing all the government officials (including the judges). But they show how in today's China, the communist rulers have turned to the toolkit of democratic governance in order to maintain credibility.

The same is true when it comes to values. Chinese politicians bolster their legitimacy not just by appealing to nationalism and Confucian tradition, but also by celebrating the values of transparency, rule of law and democracy. Just search for these terms on a Chinese search engine, and you will be amazed at how frequently they are referenced in official speeches and articles. (Incidentally, moderator James Miles, Chinese statements reference these concepts more frequently than they mention a "Chinese model".)

In the international arena, China has emerged from its cocoon to become a significant and controversial player on every continent. But China's presence in Africa, Latin America and the Middle East has nothing to do with ideas and everything to do with its economic interests. As a latecomer to the international energy game, China has located oil and gas investments in states that have been shunned by western governments and companies because of their bad governance. To sweeten the deals, China builds roads and power plants; merchants and arms exporters follow to take advantage of the new commercial opportunities. But contrary to Mr Halper's claim, there is no evidence that the government is "mentoring" dictators to help them suppress democratic challenges or that China's presence is reducing the prospects for a genuine civil society from emerging in these countries. It is just as likely that Sinophobia could feed anti-regime citizen movements in these countries.

China, moreover, has no inclination at all to engage in a "battle of ideas" with the West. As the moderator notes, what is striking about China's foreign policy is how cautiously it has sought to avoid an ideological cold war with America by emphasising commonalities instead of highlighting differences.

Finally, Mr Halper's sweeping assertion that China's rise is reducing the support for western values around the world has no basis in fact. International surveys of public opinion show no erosion of support for democratic ideals among people in non-western countries during the past decade while China's strength and global influence were growing. Surveys by the Pew Center for People and the Press show that to the contrary, even in predominantly Muslim countries, a majority or plurality of those surveyed continue to favour democracy. Pew surveys also show that people in countries like Brazil and Egypt desire "honest elections with at least two parties". People are impressed with China's economic success, but evidently few of them want to live in a country like China.
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Comments from Readers:



MieczyslawJerzy wrote:

Dear Sir, How can one refer to CHINA MODEL? The unique evolution of communism into an entrepreneurial powerhouse in the most populous Country in the world has no model. The intellect, foresight and disciplines as well as adaptability of the Chinese Leadership cannot be boxed into an HBS model! Looking at the Chinese achievements in arts sports and science has no model. The slow and steady growth of the economy in spite of many pitfalls of the vastness of the population, ethnic and regional old traditions, lack of sources of energy, etc. China has built up resources which have and will have even greater and more profound effects on our over-ripened and indulgent opinionated complacencies.

posted on 11/08/2010 21:51:18 pm Recommended (3) Report abuse

Texas Transplant wrote:

Dear Sir,

Most of the points on both sides of this arguments are valid; but both sides miss the most important factors resulting in rapid growth in emerging economies. The first and most important is simply that they are emerging; starting from scratch. They have no old, decaying infrastructure in need of replacement. And they have no bloated management structure unwilling and unable to keep up with changing technology and management practice.

The United States came out of World War II with probably more industrial capacity than the rest of the world combined, and no war damage. As a result, we prospered for at least one generation. Then Germany, Japan, and to some extent Briton and France began to recover. Ten years or so later Korea, following their war joined this group. Since they came out of their wars having lost most of their industrial capacity (or having none to start with) they then had the advantage of new infrastructure built to the latest concepts of production. And they had lean management structures. In the 1980’s General Motors had 5 levels of management for every level at Toyota. And the emerging economies did not suffer from the old saw that “everyone will rise to the level of their incompetence”.

The BRIC countries have gone even further with their efforts to make production more efficient. Brazil, for example, has ethanol refineries co-located with their sugar cane fields. China has their button and thread factories co-located with their clothing industry. In time the BRIC’s will also reach middle age.

But none of the comments above address the real problem that will eventually affect all of us. That is the simple fact that what is happening in manufacturing today is exactly what happened to farming 100 years ago. Technology produced machines that reduced the need for humans in most aspects of farming, especially grains. Technology is now reducing the manpower requirements in industry. The result is loss of millions of jobs in the developed economies and an eventual limit in the growth of emerging economies. People working in part time service jobs simply do not earn the wages of a skilled person in manufacturing. Thus they have less to spend the economies of the developed countries are stagnant or declining. Without the excess credit that was pumped into the developed economies over the past 30 years, the current economic situation would have been apparent sooner.

Therefore, my point is that this whole argument is moot. In the end the “China” model will produce no better, nor worse results than systems in place in other economies. But, because they started later, the results should become apparent sooner.

John Ott

posted on 11/08/2010 21:31:30 pm Recommended (1) Report abuse

Charles Tang wrote:

Dear Sir,

Rather than debate a Chinese model, or the existence of such a model, I would like to point out some important notions from the undergoing debate that form Chinese viewpoints. Most China bashers, chronic China doubters, Sinophobia outlook, and Western views have difficulty to comprehend some basic Chinese notions in any model:

Over the last quarter of a century, successive Chinese governments since Deng Xiaoping have made the greatest achievement of human rights in the history of mankind as it lifted over 450 million people out of poverty. Surely the right to live with a minimum of human dignity is the essence of human rights. Many millions of people from other countries were likewise benefitted from Chinese growth and imports.

All Chinese feel the pride that China is now a stronger and respected country that can defend itself against humiliations imposed by Western Powers that divided Chinese territory and imposed unfair treaties.

Successive Chinese governments who have made this economic improvements since Deng have earned the respect and trust of the Chinese People.

For these and other reasons, the ruling party in China should be able to win any election in China, should it choose to hold them.

While democracy is to be admired in the United States and in some other advanced Western democracies, in many of the emerging nations, we find that they are by the people, from the people and for very few of the people. The reference to Egypt as an example of democracy seems to be exaggerated.

China is country of continental dimensions, with over 150 dialects and 57 ethnic races. Over 7000 years of Chinese history has clearly shown that only a strong central government can hold the country together.

China is not trying to compete with the West, nor is it trying to promote its economic or ideological model, if such exists. It is clear that China’s main ideology today is prosperity for its people and for the country.

Although some of the prescriptions of the Washington Consensus are irreprehensible, for many decades it has been a formula for the sustained poverty of many emerging nations that needed IMF bailouts.

The USA was fixated by Iraq for the duration of the Bush Presidency, and for the foreseeable future will have to concentrate much of its energies to repairing the US economy.

China’s formula for interacting with the world has achieved positive results. China does not share the US missionary zeal of attempting to convert the world to its own image or to send in the marines to achieve this.

Unlike US “pocket book” diplomacy, China imposes no strings to its dealings with the world. China simply wants to do business with the world in harmony and does not wish to interfere into the internal affairs of any country.

China’s defense budget is a pittance compared to the US defense budget.

Many China critics prefer to ignore that the 200 years of European industrial revolution created comparatively more pollution, offered slave like working conditions, low salaries, and almost total disregard for safety and justice for the poor.

The major cities of China such as Shanghai, Beijing and others are a pleasure to live in. They are modern, clean, safe, and international with many options for entertainment, culture and dining. These cities offer all the comforts of modern life where most people are pursuing their goals of richness certain of a better future. I believe that Ms. Susan Shirk has probably never lived in China.

Chinese model, if such exists, is to initially, like all the “Asian Tigers”, use a well tried mercantile theory of low cost manufacturing and prosperity through export based income. This is coupled with non interference in other countries internal affairs to secure the strategic resources it needs for its sustained development and to feed its people.

China does not match European and even American history in imposing unfair treaties and colonization that depleted the colonies of their riches and resources.

Charles Tang

Chairman, Brazil China Chamber of Commerce

posted on 11/08/2010 19:04:17 pm Recommended (5) Report abuse

BryceNoble wrote:

Dear Sir,

I cannot, for the life of me, understand how this question would have any answer other than 'no.'

I see Mr. Halper's comment about the boom that was Japan's 1980's. Does he not realize what has happened since? Does 'The Lost Decade' ring a bell?

If China's economic growth is 'more impressive' than Japan's, then they are all the more likely to have a bigger bust.

America's system is the better system for the freedom of the individual. And, in so being, it is also, necessarily, better for the country as a whole.

China has had a recent rise in productivity and wealth within their country. But the only way China will reach it's potential is if it embraces the free-thinking ways of the West. China has a chance to topple our system over only because the political leaders of our nation for the past century have made so many missteps from the origin of our political system. The only good parts have been acknowledging freedoms for individuals that previously had it denied to them.

China may be gaining on America, but it is not because the authoritarian nature of their political structure is superior. On the contrary, it is due to the fact that our economy marches down that path more and more everyday.

If China embraces freedom, and quits funding our crazed spending...we will become a distant second to them. However, that is assuming quite a bit.

posted on 11/08/2010 18:28:49 pm Recommended (0) Report abuse

cyberoid wrote:

Dear Sir, the Chinese have revealed themselves to be highly pragmatic, even -- to stretch the term -- Taoist in their pursuit of economic success.

While we in the West may praise ourselves for being equally objective, on closer examination our economic system is riddled with biases.

For example, there is the Lutheran Doctrine that those with the most are blessed and therefore the best suited to exercise their financial will for the rest of us not so endowed. Holy of Holies.

We proclaim and amazingly, also believe that a "free" market -- actually, one dominated by wealthy individuals and large institutions, corrupted to serve their purposes -- will necessarily enrich the commonweal. How silly.

We pretend that the government elected "by the people" -- but in truth, by the machinery of electioneering, funded by powerful interests -- somehow represents the people's interests. Pollyannish.

The Chinese, at least as I know them, don't harbor such religious beliefs. They simply want to develop their economy and society. While we revisit our limiting mythologies over and over, the Chinese, bit by bit, are overcoming theirs. Organized labor, gay rights, democracy where it truly works -- these and many other reforms are coming to pass.

China isn't perfect, but what we can see is that it is improving, always improving; while we are stuck in our own mud.

posted on 11/08/2010 17:57:02 pm Recommended (3) Report abuse

ZvQF33ZfHM wrote:

Dear Sir,

With the fast and stable development of the all aspects of China, we can see the developing country China is stepping into the developed one. The whole world witnessed its fast growth in recent years, the Olympic Games in Beijing, the Expo in Shanghai. There were also bad things happened, (as the cruch crisis, the catastrophic earthquake)but China still can solve these hard difficulties well. Compared with other westen countries which influenced heavily by similar difficulties, China with much more canny rather than clumsy. Aparrently the present growing China could be a better choice for west countries,if the west can not find another good development model by themselves.

posted on 11/08/2010 17:19:40 pm Recommended (1) Report abuse

Jason in Chicago wrote:

Dear Sir, unless China develops a culture for individual rights, especially intellectual property laws, the central-planning model will always restrict growth. We've seen an immense growth in manufacturing in recent decades, but the kind of high-tech innovation and advances in productivity that lead to true economic power will remain elusive until personal freedoms are improved. A personal anecdote: as a student in China this last year, I saw the culture of academic dishonesty (i.e. cheating) which is another symptom of the broader problem with intellectual property.

posted on 11/08/2010 14:15:12 pm Recommended (0) Report abuse

Rainy Day Miracle wrote:

Dear Sir,

China’s market authoritarian system might not be following a definite “model” but its own legitimacy rests on its large-scale, sustained economic development. Most authoritarian regimes, however, aren’t economically dynamic, and as a result of their poor economic performance, they frequently face crises of failure, which often lead to political instability or worse. Historically there is no correlation between authoritarian systems and economic growth: for every East Asian Tiger there were five or six non-democracies around the world that did not experience a rags-to-riches story, such as the one now being felt in China.

How can China’s market authoritarian system win a war of ideas when the whole basis of its legitimacy rests on its economic performance--something that no authoritarian state-market or not-can promise? In this way, Stefan Halper’s argument, while intriguing, is short on nuance.

posted on 11/08/2010 14:03:13 pm Recommended (0) Report abuse

Top Analyst wrote:

Dear Sir,

I think the question is not the "either-or" but it is more of which one is more suitable for which social structure and within which time frame. "China Model" is more of a "capitalist economy on steroids"; whereas "West model" is genuine development ground up. China model is copying solutions from West Model and implenting them in a quicker fashion. How can there even be comparison of such two things? China model would not exist without innovation from the West. With regards to the slowdown in the West, its a temporary phase; may be it will prolong a bit more, but at the end of the day, its the innovation that will fuel the economy and it can come from any sector. There was Manufacturing in 50-70s and there were computers from 70-till 2007. It will be something else in next decades. The obvious one is the Energy sector. As long as China Model is not providing substantial innovations it is doomed to have same fate as any other model. Thus it is no better or worse in that manner.

posted on 11/08/2010 12:08:32 pm Recommended (1) Report abuse

LUISITTO wrote:

Dear Sir,EIGENBEGRIFFE is a german word very useful. This is an attempt to judge things from the standpoint of the actor , not the one who observes . For example , the historic time of china is 2010 or perhaps 1950? . Does the chinese language manage the european BEGRIFFE "development" , "progress" ... or even "democracy". Even more , Does the average chinese care for this or only we watching?

posted on 11/08/2010 11:49:56 am Recommended (0) Report abuse

taibeijing wrote:

Dear Sir,

It may sound too aggressive or even negative to say that, the using the term of “model” or “Beijing Consensus”, simply fell into what I called “a fallacy of conceptual framework”. Reproducible or not, “model” implies a somewhat autonomous mechanism and the Chinese practices are heavily manipulated and can hardly be described as a “model”. And the term “Beijing Consensus” implies the Chinese had reached some kind of conclusion about how the country’s development should proceed. But it is definitely not true. Chinese traditions dictate dynamic flexibility in policies, what we saw in these past years might look like a “consensus”, but are actually a collection of impromptu decisions that in many occasions contradictory to each other.

I am sorry to say that, the West needs a different set of concepts, or a different conceptual framework, in order to make real sense about China’s “economy” and politics. For example, some people still like to call China an “authoritarian regime”, but they are at the same time puzzled by the seemingly quasi “democratic” processes that the “rulers” introduced. And some people feels that China is moving into a more “democratic and plural” society, while angered by the frequent heavy-handed depressions that the “government” exert on its people and institutions.

Contradictory, eh? NOT AT ALL! All contractions disappeared IF WE LOOK AT CHINA AS A FAMILY OWNED, MONOPOLIZED CORPORATION with a strong sense of mission. The constitution is the company charter, the polibureau the Board of Directors, the 75 million party members the minority shareholders, and the rest of 1.2 billion people the captivated customers.

The economy, and politics in China, is being mostly run like such a corporation. The directors in the board fight each other sometimes, and they all appeal to the minority shareholders for support if necessary and as a last resort, they will bring the cases to the customers. Whoever controls the “marketing department” has a greater chance of winning an internal fight, of course. Although not without conflicts, the Board members share an ultimate goal that is to keep the monopolized status of the company. Customers are captive, but without their certain level of support, this monopolized status might crack. So the Board must exercise displinary actions, or implementing a “performance system”, upon its workers, therefore the anti-corruption campaign. Then of course, the board members do not forget to use these campaigns as tools to remove the unfriendly elements in the corporation. To win over the support of its customers, again, the board members have to come up with “marketing programs” that keep the general customers in tame.

All this happened in the grand picture of international framework. So the corporation not only has to deal with its domestic market, but also with any potential international competitors, such as the United States and its value appeals. While the corporation’s domestic “marketing programs” are mostly offensive in nature, its international programs are mostly defensive. There is no necessary logical links between the two; therefore, it would be incorrect to derive conclusions about its international presence based on its domestic strategies, and vice versa.

China is mystical only because the Western world keeps trying to understand it with the Western conceptual frameworks. Instead of talking about the competing “value”, we should spend more time and effort in discussing the competing “conceptual framework”. That is, even when the Chinese people share the general value of election and freedom of speech, they can still act “very strangely and contradictory” from a Western point of view, because of the inner logic of their different conceptual framework.

The issue of depicting the Chinese conceptual framework is a task for a book or at least a long article, which is beyond the scope of this short comment. However, it is an essential task, if America and the NATO bloc takes the future impact of China seriously.

Kenneth Chou

A columnist and business consultant stationed in Beijing

posted on 11/08/2010 11:29:22 am Recommended (2) Report abuse

Zhouzhou_2 wrote:

Dear Sir,

I strongly disagree with the motion, in every sense of how it could be interpreted. However, I see even Mr Halper is careful about its exact words.

In short: China has seen economic growth by approaching capitalism, while staying strongly protectionist for its own market, and authoritarian in politics. None of this comes as a surprise, and part of it cannot be done again by other countries.

Having strong economic growth when coming from a weak base, in a time of peace, infrastructure and education investment and in a market system is not uniquely chinese, of course.

What is uniquely chinese is the strong protectionist part of the chinese economy, that prevents foreign companies to do trade the easy way there. China could allow to do so only because of its massive size, and after slowly convincing investors that they're still getting something worth the investment, while taking control and knowledge from them. I believe that no other country, maybe with the exception of India, is in the position to negotiate like this with global investors. Because it cannot be repeated, it cannot serve as a model for other countries.

As to the one party rule, I believe it did not help development at all, other than avoiding internal trouble. Any stable democratic system could have achieved better results under similar circumstances.

posted on 11/08/2010 06:46:11 am Recommended (0) Report abuse

ms.chico wrote:

Dear Sir,

Is it so easy to simplify development into clear-cut models? I'm not really sure how China's recent development can be compared directly with that of the West. Is it possible to qualify the differences in history, social values and geo-politics between East and West?

posted on 11/08/2010 06:32:59 am Recommended (0) Report abuse

mcleancr wrote:

Dear Sir,

The Chinese Model thus far demonstrated will not become a new model of development in any other country; no other country can match China's combination of cheap labor and centrally-guided, totalitarian government. In the earlier days of this economic revolution, the guidance of the government was necessary to unlock the power of the Chinese labor force. Through strategic infrastructure investments, national incentives for workers to migrate closer to factories and opportunities for foreign companies to manufacture goods, the government provided the essential spark China needed. But today, the government's heavy hand is more stifling to the long-term growth of China than it is supporting it. The government's role in directing growth is limiting innovation and entrepreneurship of the rising middle class and nouveau riche. China's strength lay not only in its sheer number of laborers, but potentially in its number of creative and nimble minds. Unless the government becomes willing to allow these minds to innovate and lead the next phase of economic growth I believe China is nearing the end of its period of growth. Thus, the Chinese model of state led economic growth will only be followed by the least developed countries. For sustained economic growth the government must instead foster the creativity and innovation of a country's citizens and immigrants.

posted on 11/08/2010 05:41:29 am Recommended (1) Report abuse

roran wrote:

Dear Sir,

I agree with Halper when he states that China offers an alternative model of governance, which has been unique in its surprising ability to deliver economic growth.

If we were to take this model of governance as purely "authoritarian", it would imply that china could have gone either ways. China could have ended up like North Korea, or it could have followed the path to prosperity.

My own take on China's success is that they got a few things right, which enabled them to compete in the 21st century:

1) Education: Building eductional infrastructure from scratch to educate a 500 million plus workforce!! Massive achievement.

2) Attracting Foreign Direct Investment: The Communist regime mastered the concept of arbitrage of taxes and labor costs across borders while shying away (initially) from short term capital flows.

3) Building the Hardware of China: Roads, ports, cities, railway lines, airports, etc. at an unheard of speed and precision.

the key concept of their success that i want to bring to light is their government's will and ability to execute relentlessly.

therefore, in my view, the battle of ideas of china vs. the west is that western ideology explicitly implies that democracy forges accountability, which inturn guides government towards inclusive development, governance and execution of plans and, coversely, implies that authoritarian governments lack the necessary checks and balances which make it likely for them to be lax in execution of policies that are most important to the nation.

China has proven itself to be unique by any measure in this framework.

however, i have voted "NO", because, i believe that china is heading towards a time bomb of instability. I donot think it possible for one regime to effectively manage the growing aspirations of 1.4 billion people who are now aware of the world around them. The 'Docile' workforce has already started baring its fangs. China is past the point in history where a single tiannamen can subdue a mammoth nation. Kudos to the leaders of china for not going the North Korea way, but in a decade, the chinese regime as we know it, will not exist.

posted on 11/08/2010 04:37:59 am Recommended (1) Report abuse

roran wrote:

Dear Sir,

I agree with Halper when he states that China offers an alternative model of governance, which has been unique in its surprising ability to deliver economic growth.

If we were to take this model of governance as purely "authoritarian", it would imply that china could have gone either ways. China could have ended up like North Korea, or it could have followed the path to prosperity.

My own take on China's success is that they got a few things right, which enabled them to compete in the 21st century:

1) Education: Building eductional infrastructure from scratch to educate a 500 million plus workforce!! Massive achievement.

2) Attracting Foreign Direct Investment: The Communist regime mastered the concept of arbitrage of taxes and labor costs across borders while shying away (initially) from short term capital flows.

3) Building the Hardware of China: Roads, ports, cities, railway lines, airports, etc. at an unheard of speed and precision.

the key concept of their success that i want to bring to light is their government's will and ability to execute relentlessly.

therefore, in my view, the battle of ideas of china vs. the west is that western ideology explicitly implies that democracy forges accountability, which inturn guides government towards inclusive development, governance and execution of plans and, coversely, implies that authoritarian governments lack the necessary checks and balances which make it likely for them to be lax in execution of policies that are most important to the nation.

China has proven itself to be unique by any measure in this framework.

however, i have voted "NO", because, i believe that china is heading towards a time bomb of instability. I donot think it possible for one regime to effectively manage the growing aspirations of 1.4 billion people who are now aware of the world around them. The 'Docile' workforce has already started baring its fangs. China is past the point in history where a single tiannamen can subdue a mammoth nation. Kudos to the leaders of china for not going the North Korea way, but in a decade, the chinese regime as we know it, will not exist.

posted on 11/08/2010 04:37:56 am Recommended (0) Report abuse

Skepticpolitico wrote:

Dear Sir,

A few points:

First, the debate as to whether or not China's development model is superior to that of Western countries is tainted by the fact that many Westerners know very little about what a 'western growth model' actually entails. While it is commonly believed that the West developed via free trade, free markets and lasseiz-faire economic policy, the historical reality is that truly free markets had very little place in their development. Take the US, for example. Alexander Hamilton, the first Treasury Secretary was himself a strong advocate of protectionism, and during the industrial revolution the northern states employed strong tariffs in the interests of protecting domestic producers from British competition. Furthermore, even the rise of Britain was assisted by free trade by the Navigation Acts, which sought to restrict competition through tough regulations enforced by the then-massive British navy. In short, what western countries have preached in terms of economic policy is far different from what they have practiced, democracy aside.

This brings me to my second point- if we decide to make the comparison between the West and China based upon the policies the West has preached, then the dynamic of this discussion changes quite a bit, because liberalized trade and financial markets have often brought instability and import dependency to the developing countries that have implemented it- see for example, Argentina (who had a financial crisis) Mexico (the tequila hangover), The Philippines (who had a disastrous stint selling flowers at the behest of the IMF). This is not to say that markets are necessarily bad, or that trade is necessarily bad, but in the case of fragile developing economies, neoliberal policies have their problems.

Finally, if we make the comparison between the Chinese and the Western models based upon what Western policies actually entailed, then the discussion gets a lot more interesting. But this approach can also be troublesome. The circumstances surrounding China's development project were quite unique in ways that really do matter. When it came to industrialization, China did not have first-mover advantage, unlike the Western nation-states. Its history is also very different; in structuralist parlance, the country has gone from being a core country during the monarchy, to the periphery during colonialism and through WWII, and then back to being a core country today (or so it has been argued). The point of all of this is that if one even decides to make this comparison at all, one is intellectually obligated to introduce a truly frustrating level of complexity.

posted on 11/08/2010 00:58:44 am Recommended (9) Report abuse

Colombia is passion wrote:

Dear Sir,

Simply put, if any country wants to import the China Model, most likely that country will end up like Cuba when tried to import the Russian Model. Model are not copy-paste ideologies. Each country has its own model. Cuba tried to copy-paste the Russian Model thinking that the friendly Caribbeans were like the cold Siberians. Models are so depended of its own circumstances and own environment that no even the European Union can create one that can be exactly replicated on every single country. Like we say in Latin America...Each Parrot on its own branch.

thanks

posted on 10/08/2010 22:39:20 pm Recommended (3) Report abuse

RXj5WvVpbK wrote:

Dear Sir,

A friend from mainland China, who's a sociology professor at Guangdong U., says the Chinese want to be more American than the Americans are, especially in flaunting their material possessions.

posted on 10/08/2010 21:15:30 pm Recommended (0) Report abuse

Nguoiphanbien wrote:

Dear Sir,

My comments are here directed at other commenters because I have long given up on this so called debate. And I'd like to address three issues:

1) China is not afraid of criticism. What they (and by 'they' I mean the Chinese public) object to is a sense of being unfairly singled out and bombarded with 'attacks', NOT, 'criticisms', day in and day out by the 'west'. And the 'west' here means the media from the usual suspects in the US/UK and western (not eastsern) european countries. From my personal experience, when I raised development issues with Chinese officials even in a very critical way, their usual response was: "tell me more about it" or "why did you say or what made you think that?"

2) Some commenters on this forum are quite delusional in terms of good and evil. It's ALWAYS easy, way too easy, to criticize others when you can do that in the comfort of an air-conditioned room, sipping nice imported coffee or whatever exotic drink there is, with no worry for basic survival such as hunger and diseases because in the worst case scenario, there is government welfare even if one has exhausted his/her unemployment benefits. The majority of Chinese citizens don't have this kind of luxury so their priorities are different and their government is responding to the citizens' priorities. It's that simple.

3) Most developed countries that can afford their citizens a very generous social safety package do so because they can afford it. China can't, at least not now. These social programs started when the US/Western European countries dominated the world in terms of technology and operated in a world without competition. Without the Internet revolution and free trade, it took decades before any new technology/product could 'travel' and be adopted and improved upon in foreign lands. So the west could afford paying their workers much more than what can reasonably be justified by the workers' productivity. Remember, there was little to no competition from the rest of the developing world. Now that the world is wide open and competition is fierce, companies can no longer afford to pay their workers more than their productivity increases which have been stagnant anyway, hence the resentment towards countries like China. On one hand people like the cheap goods, but on the other hand they want to remain overpaid beyond the productivity benchmark. Don't blame China, there are lots of countries from the developing world and Eastern Europe, Russia, are eager and happy to take the place of China. And workers in the west will still be left with the same challenges and conundrum - how to get overpaid and cheap goods at the same time?

More comments, this link: http://www.economist.com/debate/days/view/554