Economic miracles?

It’s Saturday, and a work day in China thanks to the country’s impossibly strange holiday policy, giving you a long week off for Spring Festival but making you work through the weekend in return. Like a lot of other things here, it’s something you get used to.

It’s not only a workday, but it’s an intense workday. The government is open for business today, and in my work for one of my clients I have to deal with a particular government agency that I am now convinced represents the pinnacle of bureaucratic incompetence, arbitrariness and outright stupidity. My Chinese colleagues have been on the phone with them all day, and have been coming to my office nearly in tears at the outrageous and inexplicable demands. This agency makes K.’s dilemma in Kafka’s The Trial seem pleasant. I am waiting for the day when I can write my book and tell the world just how primitive and dysfunctional the bureaucracy here is. Someday. Not now. At the moment, I love this government agency and appreciate all their help and cooperation.

That was all just an irrelevant preface to an article that caught my eye on the “myths” behind both China’s and India’s “economic miracles.” Forgive the scare quotes, but I’m not 100 percent sure whether these things are actually myths or whether what’s happened in China and India are actually miracles. I’m especially not sure if the parallels the writer tries to draw between the two countries apply. I don’t know enough about India to judge, but I am always suspicious when explanations sound just a bit too tidy.

This, he says is the universally accepted myth:

A mix of market reforms and global integration finally unleashed their [India and China’s] entrepreneurial energies. As these giants shook off their ‘socialist slumber,’ they entered the ‘flattened’ playing field of global capitalism. The result has been high economic growth in both countries and correspondingly large declines in poverty

This, he says, is the reality, at least in regard to China:

Start with the claim that global integration and associated market reforms resulted in high growth, which in turn produced dramatic declines in extreme poverty. Applied to China, the timing simply does not fit. China has indeed made large strides in foreign trade and investment since the 1990s, but well before then, say between 1978 and 1993, the country had already achieved an average annual growth rate of about nine percent – even higher than the impressive seven percent growth rate in East Asia between 1960 and 1980.

China’s poverty-reduction storyline is similarly flawed. While expansion of exports of labor-intensive manufactures lifted many people out of poverty over the past decade, the principal reason for the dramatic decline over the past three decades may lie elsewhere. World Bank estimates suggest that two-thirds of the decline in extremely poor people (those living below the admittedly crude poverty line of one dollar a day per capita at 1993 international parity prices) between 1981 and 2004 had taken place by the mid-1980s. Much of the extreme poverty was concentrated in rural areas, and its large decline in the first half of the 1980s may have been principally the result of domestic factors that have little if anything to do with global integration: a spurt in agricultural growth following de-collectivization, in which output increased at 7.1% per year on average between 1979 and 1984, almost triple the 1970-78 rate; a land reform program, involving a highly egalitarian distribution of land-cultivation rights subject only to differences in regional average and family size, which provided a floor for rural income; and increased farm procurement prices.

I was taking all of this seriously, thinking this writer might be making some good points, and then I came to this astonishing paragraph:

China’s earlier socialist period arguably provided a good launching pad for market reform. That foundation provided wide access to education and health care; highly egalitarian land redistribution that created a rural safety net and thus eased the process of market reform, with all its wrenching disruptions and dislocations; increased female labor participation and education that enhanced women’s contribution to economic growth; and a system of regional economic decentralization (that linked the career paths of Communist Party officials to local area performance). County governments were in charge of production enterprises long before Deng Xiaoping’s economic reforms set in, and, even more significantly, the earlier commune system’s production brigades evolved into the highly successful township and village enterprises that led the later phenomenal rise of rural industrialization.

Oh god. And this guy is telling us what he sees as the myths about China? It sounds like he’s swallowed the biggest myth of all, hook, line and sinker. Some of the comments are intense and make for good reading.

I know, this post is meandering and inconclusive. Honestly, it’s mainly to take my mind off the government agency I need to deal with in a few minutes. But I love working with them.

The Discussion: 17 Comments

He may have a point.

There are to sides in this kind of political systems.

One side is the sheer brutality of the means used to re engineer a society with its dire consequences for the population. For example the famines triggered by the forced collectivization of the agriculture. The ruining of the life of those who do not “fit” with the regime ( and even of those who fitted!)

On the other side there is an expansion of education, that although strongly directed to indoctrination, rises the education level of the population. During my time in school the best books about physics and mathematics were Russian!! You only needed to skip over the first chapter over Marxist theory and world view.

Once the ideological corset is a little bit opened, the people have better means and organizations to implement more modern production system. Usually reforms starts with a trickle, just given some freedom of action, and things start to move at an increasing rate, first in the economic area and then, with more precarious results, in the political area.

Just look at the examples in Russia, East Europe, former soviet republics, Vietnam (I have special interest here) and … yes of course in China.

I am still waiting for North Korea. It seems that something is finally veeeeeery slowly moving there. (it is funny, I always counted on that North Korea would it make faster than Albania)

That the means justify the ends and that the ends could be less destructively achieved by other, less butchery means,…. that is another question…..

And yes. Some of these regimes are still totalitarians and thuggish. Some of them may evolve to a illustrated despotism, an improvement after all.
May that be the destiny of China?
Hhhhhmmm…. that would be a very little achievement for such a big nation.

February 2, 2008 @ 4:31 pm | Comment

I think that’s actually becoming a consensus opinion at the moment – that China’s economy will keep on growing, with ups and downs (but more ups than downs), and the despotic regime will remain in power, continuing to reform just enough to ensure the people accept their claim as the permanent rulers.

He might make some fair points about how the reforms that made the big difference for the dirt-poor happened before Deng opened up the country for global investment. Where I think he’s scary is where he, in effect, blesses Maoism, as though it all worked out for the best thanks to those communes…

February 2, 2008 @ 4:43 pm | Comment

Richard, I too do not think you should just write this guy off as a kook. I did not go read his article, but I do think he makes a good point about the universal education and the health care. One of the things China had/has going for it that most countries with a similar per capita GDP did not/do not have is extremely high literacy and rural health care. Now I am not going to claim China’s rural health care is world class, but I will venture to say that for China’s wealth, it is respectable. If you ask me, literacy and health care seem like good foundations on which to build an economy.

February 2, 2008 @ 11:49 pm | Comment

This perspective is refreshing in that it doesn’t lazily attribute transformations in Asia over the past few decades solely to that fabulously nebulous term ‘globalization’. Just imagine, some countries can do good things that have nothing to do with influence/links to the West…shocking! Someone call the Economist.

All too often, such changes (in China at least) have been used as justification for a global neo-liberal/corporate agenda that hold up the growth of Asia as proof that ‘globalization’ is good for the world. I find this sort of baffling, because it doesn’t take a rocket scientist to notice that was it going on in China right now isn’t very liberal (in the political or economic meaning).

Please don’t think I’m some fervent left-wing/communist (I’m not at all), but it’s nice to see someone put forward theories/ideas that don’t regurgitate the usual myths related to flat worlds and the divine wonder of free trade. Even on the chance this guy is wrong (open for debate as always), at least he’s trying.

February 3, 2008 @ 7:53 am | Comment

This is really why so many Western voices end up with a ridiculous, biased view of Chinese affairs. There’s a gross allergy to anything which potentially paints the Chinese Communist Party, or god forbid, Mao in a positive light.

Think about your own reaction for a second, richard. What specific argument by the author do you actually disagree with? None, really. Has he made a value judgment about the Mao era in its entirety? No, of course not… so why did you end up with the impression that he had “blessed” Mao?

Think about your own thought process for a second, richard. This might be a rare chance for you to see your own blinders.

If you were struggling to somehow find a way to criticize Mao, because you can’t accept an objective study of positive aspects of his life… here’s my suggestion:

1) Mao didn’t actually initiate the reforms that allowed this tremendous boost in economic prosperity; Deng gets all of the credit for that;

2) there were tremendously negative components of the Mao era that are indefensible, and have no redeeming qualities of any kind.

Now, back on topic. I think the author makes a very fair commentary about the positive aspects of social/economic reforms under the Mao era, in terms of (somewhat accidentally) creating a excellent structure for later economic reforms under Deng.

Some of this has discussed above (universal education/health care, social equality, etc). I’d emphasize the author’s comments about the importance of land reforms.

What differs China from other large developing nations like India or Brazil? The relative absence of soul-draining slums in which generations of a perpetual under-class are raised.

I’m not implying that social gap isn’t a hugely significant issue in China, but I will assert that 99% of the children in China today will have at least a decent chance of making it to a 4 year university. This is something that’s simply not true in developing nations like India and Brazil.

And why is this possible in China? Because even the poorest migrant worker in China owns farming land. Even the poorly-dressed families who live on landfills and recycle urban garbage *own* land. They always have the option of returning home, and maintaining at least a subsistence living by working the land.

This land ownership was only possible originally due to the huge scale land redistributions that followed the revolution of ’49, and it’s only being maintained today because ownership of peasant land is not privately transferable.

Take away either of these two government policies, and what you’d see today isn’t a relatively wealthy Guangzhou with a relatively poor (but improving) Hunan… you would instead see a Chinese Mumbai.

I personally very much prefer and appreciate the Chinese model of development.

February 3, 2008 @ 10:38 am | Comment

CCT, I appreciate your comment. I made it very clear that I was inconclusive and drifting in this post. I had no thought process at all. I was typing while I was waiting for my phone to ring. Did you read this part:

I know, this post is meandering and inconclusive. Honestly, it’s mainly to take my mind off the government agency I need to deal with in a few minutes.

I apologize – I probably should not have posted at all, because I wasn’t focused.

The story interested me, but the writer seemed to have some prejudices that irked me. It’s obvious he’s quite smart, but reading the last sectionI highlighted I felt one could walk away with an overly warm and fuzzy feeling about Mao’s “reforms.” Some of the comments reflected this feeling as well (though that doesn’t mean I’m right).

CLB, yes, I know about Mao’s program that did bring some benefits to the poor, which is why many of the desperately poor – especially the very old ones – today miss him. The barefoot doctors and other programs were good things, but there’s more to the story about the good old days than that.

February 3, 2008 @ 10:46 am | Comment


“99% of the children in China today will have at least a decent chance of making it to a 4 year university”

Are you kidding me? What fantasy world are you living in? Whatever socialist advantages China had regarding education and health care are no longer valid. China’s per capita investment in those areas are low even for third world countries.

And don’t get me started regarding peasant land ownership. Are you oblivious to the expropriation of farmland for suburban real estate developments and building of industrial parks by local governments?

February 3, 2008 @ 9:35 pm | Comment

“99% of the children in China today will have at least a decent chance of making it to a 4 year university”

Maybe CCT and ferin are relying on the same source for their statistics?

February 3, 2008 @ 11:43 pm | Comment

about the government agency: THEY LOVE YOU TOO, RICHARD.
You just haven’t reached the nessecary level of conciousness yet to understand how much they acctually do and misread theri caring efforts as “bureaucratic incompetence, arbitrariness and outright stupidity”.
Some day you will understand, I am sure – and will appologize.

February 4, 2008 @ 9:25 pm | Comment

I’m sure I’ll attain enlightenment any day now…

February 4, 2008 @ 9:32 pm | Comment

As to the globalzation argument:
I don’t know how many people were lifted from under the one dollar line of extreme poverty by domestic market reforms and how much by opening to the outer economies. It’s true that most of the economic growth in the 80es came from liberalization of the domestic agricualtural markets. So it might well be true that a lot of poverty reduction came from these domestic market reforms. The question for me would be: Do you want to stop there – and live on with your barefooted doctor happily ever after?

And one should bear in mind that 9% growth in the 80s wasn’t really that much. When you start from nothing it’s easy to get such high figures.

If I think about it, in some sense it’s true that Mao created the basis for this miracle. There had to be someone there to destroy the economy totally in the first place to make it a miracle instead of just an economic recovery.
In that sense Hitler also created the basis for the German economic miracle after WW2.

February 4, 2008 @ 10:00 pm | Comment

Wow, I can have a field day with those last few lines, Shulan!

Well yes, what you say about Hitler is true in a perverse sense. But unlike Mao, at least Hitler really did preside over an “economic miracle” of his own, as illusory as it was and largely subsidized by national debt. As has been said many times before, had Hitler died in 1938 he would be remembered as one of the most successful and beloved rulers in history, as sickening and monstrous as many of his policies were.

As far as China goes, I found another flaw in the article to be its ignoring another rather amazing aspect of the economy since Deng’s reforms, i.e., the emergence of a significant middle class, of cell phone-carrying, car-driving, fashion-conscious yuppies. Who would have believed it even 30 years ago? And here I am, working with Chinese 30-somethings who at work are applying Six Sigma principles and ISO 9001 standards and at home drinking Australian Shiraz and eating Gruyere and crackers… This is a relatively small sliver of the population – but a tiny sliver of China’s population is equal to the entire population of all Europe. Again, who could have dreamed it 30 years ago…?

Of course, there’s still the 800 million who remain dirt poor.

February 4, 2008 @ 11:04 pm | Comment

You are welcome Richard. : )

I am affraid you might be right with your 1938-Hitler-death thesis.

And yes, the middle class thing that’s what I meant with the barefooted doctor happily ever after sentence.
As long as you don’t want people to live with a bit more than 1 dollar a day, you need the opening of the country and globalization. Otherwise a lot of poeple would not be so good of as they are now.

February 4, 2008 @ 11:49 pm | Comment


Are you kidding me? What fantasy world are you living in? Whatever socialist advantages China had regarding education and health care are no longer valid. China’s per capita investment in those areas are low even for third world countries.
Universal 9 year education is indeed a “socialist” issue, but higher education is *not*. It’s not practical at this point in time for all Chinese to attend university, and that’s certainly not the point.

I did not imply that 99% of Chinese youths will attend college. I’m only implying that because of the absence of institutionalized slums, 99% of Chinese youths have the *opportunity* to do so if they commit themselves to their academic studies. This isn’t a socialist versus capitalism issue, it’s a social engineering issue.

China is to the point where universal 9-year education is basically a reality. (Nothing in China is ever “universal” of course; I’ll settle for 98%+… which still means 26 million Chinese falling through the cracks, but 1.28 billion Chinese included in the net.)

As someone who has donated tens of thousands of dollars over the past 5 years to education charities in China, I know that for a fact… because the international charities I worked with are ending their projects and starting to work in new directions.

And China, to her great credit, has always offered university access on the basis of academic achievement. This is precisely why I personally have many, many friends from leading universities (Beida, Tsinghua, Jiaoda, Fudan) with roots from the most rural of villages.

If you want actual statistics, they look something like this:
– 13% of Chinese (19-21) enrolled in higher education in 2001,
– ~20% will do so this year,
– ~40% will do so in 2020.

February 5, 2008 @ 1:33 am | Comment

Oh, and as far as abuses of the rural collective land ownership system…

Let’s say hypothetically that 1, 5, or even 10% of rural land collectives have seen corruption and abuse. So, address that corruption and abuse. It doesn’t in any way take away from the brilliance of a system that has brought stability and a safety net to 90%, 95%, or even 99% of the Chinese rural population.

Stop comparing China with whatever your active imagination is able to invent. Compare China with her developing analogues: Brazil and India. Try comparing the “slums” of Guangzhou with the slums of Rio or Mumbai, and then tell me that China’s policies aren’t working.

February 5, 2008 @ 1:36 am | Comment

you are fun!
90%, 95% or even 99%. Could it perhaps also be 2%, 33% or even 100%?
Anyway, no need to be too precise. Everybody knows, these Americans have problems with numbers.
But could you give me perhaps the references for all these numbers? I would like to use them in my Master’s thesis on the subject How Mao created Wallmart.

February 5, 2008 @ 8:27 am | Comment


Government statistics sounded great during the GLF too. That’s what propaganda is supposed to do. If 90%, 95%, or even 99% of China’s peasantry enjoyed stability and a social safety net, there would be no reason for them to ever go to the cities to begin with…what would China’s economic miracle run on then? If you have so many friends from Beida et al with rural roots, you must surely know the inequities in admission standards for the rural students compared with their priviledged city compariots? Unless of course your friends are the working class, peasant class, and soldier class university students of the early and mid 1970’s? In case you may have forgotten, that academic door had permanently closed decades ago.

February 5, 2008 @ 11:37 am | Comment

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