Does the Future Belong to China?

Interesting back-and-forth in the British magazine Prospect between Will Hutton, the author of The Writing on the Wall: China and the West in the 21st Century, and Meghnad Desai. a former director of the Centre for Global Governance and an emeritus professor of economics at the LSE and a Labour peer.

Hutton leads off:

It is a commonplace to observe that the rise of China is transforming the world. Extrapolate from current growth rates and China will be the world’s largest economy by the middle of this century, if not before. If it remains communist, the impact on the world system will be enormous and very damaging. Britain and the US are, for all their faults, democracies that accept the rule of law. This is not true of China. If an unreformed China takes its place at the top table, the global order will be kinder to despotism; the fragile emergence of an international system of governance based on the rule of law will be set back and the relations between states will depend even more nakedly on their relative power.

All that, however, is predicated on two very big “ifs”—if the current Chinese growth rate continues, and if the country remains communist. I think there are substantial doubts about each proposition. What is certain is that both cannot hold. China is reaching the limits of the sustainability of its current model, and to extrapolate from the past into the future as if nothing needs to change is a first-order mistake.

Our concern in the west should be to help China face its enormous challenges without damaging us in the process. If Chinese communism can transform itself, then China could, like Japan before it, smoothly integrate into the world power system. If not, severe convulsions lie ahead.

To which Professor Desai responds:

For a liberal pluralist, you sound oddly like a monist, if not a monotheist. For you, there is only one road to capitalism—the western one—and only one political system—ours.

China has a lot to learn about macroeconomic management, but its failings have nothing to do with totalitarianism. India is also shy about liberalising its capital account. The Asian financial crisis of 1997 taught China and India to keep a pool of liquidity handy, even at the cost of forgoing a better use for the money.

Yes, there is a Leninist party in power within a state capitalist system. But capitalism has no unique path, nor does it require a liberal democratic infrastructure to flourish. Japan’s economic rise took place without a fully liberal infrastructure, and most European states, including Britain and Germany, were capitalist before they were democratic. What the most recent phase of globalisation has shown is that capitalism requires neither the Weberian Protestant ethic nor liberal democracy; any country with a decent savings rate, mass education and access to western markets can “do” capitalism. It is not a western Christian monopoly. Indeed, some Asians are proving better at it than the Europeans.

It is a rich exchange and there is much with which to agree and much which needs to be challenged. I myself hew a bit closer to Hutton’s view in that I believe that China’s current problems are deep and systemic and cannot easily be solved without calling into question the whole system. These weaknesses jeopardize China’s continued economic growth, perhaps not in the short-term, but unless the CCP finds its way to resolving key issues of environmental degradation (Anyone want to buy a baby blue dolphin olympic mascot keychain? Anyone?), endemic corruption, and a creaky banking system, the long-term future of China’s economic miracle is uncertain to say the least.

Towards the end of the exchange, however, Professor Desai gets in this parting shot:

I do not defend the inequities or brutalities thrown up by China’s growth. But I don’t think they are a sign of weakness. Despite similar problems in most other economies in the past, none collapsed because of excessive growth. The USSR died because of stagnation.

You see the inequities and brutalities of China’s growth as unique to China’s communist system, and it offends your liberal sensibilities. You want these inequities and brutalities to be swept away. I see them as part of the historic path of rapid accumulation that many economies pass through. This is how income growth occurs in capitalism. What’s new?

Much to discuss here.

via Arts & Letters Daily
cross-posted at Jottings from the Granite Studio

The Discussion: 24 Comments

What a great exchange. While Professor Desai may be correct that governments don’t tend to collapse because of too much growth, his BS about the brutality and inequities being sympotmatic of any nation’s rapid rise to wealth is just that – BS. Corruption, for sure, is symptomatic. Waste, too. But not the complete disregard for human rights and rule of law.

December 15, 2006 @ 1:09 pm | Comment

Professor Desai must know the end of the totalitarian regime which eventually allow more freedom thereafter after the signing of the Magna Carta that makes the English King to follow a set of rules as to how he can treat his subjects. I strongly believe this lay the foundation for the growth of the British Empire. So his assertions that presence or absence of totalitarianism in not a factor of LONG TERM growth is without foundation. The rule of law whether Christian or otherwise is an pre requisite for sustainable growth.

December 15, 2006 @ 2:33 pm | Comment


‘his BS about the brutality and inequities being sympotmatic of any nation’s rapid rise to wealth is just that – BS.’

Please give us examples of one country rise to wealth WITHOUT experiencing brutality and inequalities. And please don’t quote nanny state Singapore. It’s one family dynasty, not your typical ‘liberal western democracy’.

December 15, 2006 @ 3:47 pm | Comment

Just some words to Prof. Desai: It’s the rule of law, stupid!
All countries which have been economicaly sucsessfull had it to a certain degree.

December 15, 2006 @ 6:18 pm | Comment

Venezuela and various other oil nations. Belize. Singapore. Too many others to even name. The US, even – depending on our definitions. it only took its huge leap to world’s richest and most powerful nation in the mid-20th century, long after its ugliest periods of oppression of the Native Americans, slaves, etc.

Let’s get our definitions straight. I never used the word “inequalities,” you did, rather cleverly. I quoted the professor who said “inequities and brutalities” specifically in reference to the gross injustices imposed on China’s have-nots by the haves. Now, inequalities exist in all societies, and injustices, too. It’s an unfair world. And anytime you have a government that’s bringing in lots of money you get corruption, in Singapore and everywhere else. But with every country’s ascension to wealth, you do NOT always (or even usually) see grotesque exploitation of the disenfranchised. We can even take a look at the Evil Empire Nazi Germany, which inherited an economy that was thoroughly battered by depression shortly after being strangled by hyper-inflation. People were going hungry and unemployment was rampant. Hitler did make Germany strong and rich again – the economy soared in a very short time (it was in many ways a government-subsidized recovery, but it lasted for years and years). The German people did not suffer, as long as they were Aryans who didn’t criticize the Party; nearly all enjoyed at lest some of the trickling wealth. (The brutality and inequities were dished out on the “enemies”- Jews, gypsies, etc.) Those were very good times for the German people, with nothing faintly similar to what we see in China today.

In Saudi Arabia, the leaders become sickeningly rich in a matter of decades; the king would drive down the street in his limousine throwing $100 bills into the wind for mobs on the street to catch, a revolting display of short-sightedness and stupidity. But there, as in Iraq, a large number of people entered the middle class, businesses grew and boomed, like the Bin Laden construction empire, and there was little exploitation and suppression of the masses that is now such an everyday occurrence throughout China. At worst, the masses were ignored. (And Saddam’s murders don’t count; that wasn’t brutality fueled by suddent wealth, just a continueation of ancient clan warring and old grudges.)

This is an annoying myth – that what China is going through now is “a phase” that every country goes through as it matures. Some idiots even say America was like this during the 19th century, which is simply false. While there were hideous labor inequities and horror stories of oppression, there was also the rise of the muckracking news reporters who helped expose them. With the robber barons like Rockefeller and Carnegie arose the “avenging angels” like Ida Tarbell, Upton Sinclair and H.L. Mencken. There was never a time in its history that you would see in America the things you see going on in China today in terms of widespread daily injustices and brutality – people thrown out of their houses onto the street, people scamming one another with poisoned baby formula and the like, corrupt officials stealing their citizens’ property, then arresting them if they protest. Sure, you can find anecdotal stories about America and every country and draw parallels, if it gives you pleasure. But you’re only fooling yourself.

December 15, 2006 @ 6:28 pm | Comment

Side note re: the blue dolphin link. Why, China just LOVES dolphins, right? There was a Xinhua news story (and video clip on TV here) about how 2.36-metre tall Mongolian herdsman Bao Xishun was taken to a Shenyan aquarium to save two of its captive dolphins. Seems they had swallowed pieces of plastic and he was the only person in the world who could save their lives by sticking his extra-long arm down their throats to pull the garbage put. No word on whether they were blue dolphins. Or whether the plastic crap will be sold as an Olympic souvenir…

December 15, 2006 @ 8:21 pm | Comment


The dolphins that Bao saved were of the bottlenosed “Flipper” variety, not baiji.

December 15, 2006 @ 10:10 pm | Comment

“There was never a time in its history that you would see in America the things you see going on in China today in terms of widespread daily injustices and brutality – people thrown out of their houses onto the street, people scamming one another with poisoned baby formula and the like, corrupt officials stealing their citizens’ property, then arresting them if they protest.” – Richard

Richard, you are plain wrong. That kind of thing happens in America and Canada even today. Now it is not widespread. In the 19th century it was widespread.

Apparently your American public school education (or private school education) has brainwashed you to believe that America is and was this great Utopia. Yikes…

I agree with so much you say on you blog, but not this post. This is just perverse.

What about slavery, which is an absolute disenfranchisement of the human being?

And how about the Native Indian pushed off his/her property at every point, and eventually nearly completely exterminated. Not to mention the many many cases which I recall reading somewhere so many numbers of times in America of “Americans” by “Americans.”

People have scammed people all the time (how about the press gangs, which are the most disgusting form of con). We certainly have had it in our history books. I don’t know about the ones you grew up with. Such things are not the exclusive feature of the emerging Chinese economy. Not that it excuses it. But how would you control 1.5 billion people? It’s a maybe a bit high and mighty of you, particularly for someone who is going back to China again!

Is the Communist government to blame? Partly.

Is simple Communism or Socialism to blame? Not at all. The system, at present is not even a clear one to decipher. Not simple communism, nor simple capitalism. It is more like a Wild East, like the Wild West of the mythic 19th century West. More like the Myth that never entirely existed in the United States than anything that ever actually existed before.

The real question should be: how does the average Chinese get involved with political change? Through protest? Through joining the Party and changing it? Through economic contribution and, by extension, social development and charitable development programmes. Some super-rich Chinese have taken the latter course, which is possible the most realistic, but maybe not the most long-term initiative. More people in China need to think about the contribution and responsibility of the individual in the wider community. It is surprising this has not more been the case, considering that Communism should have supplanted narrow Confucian family values with a wider vision of social responsibility.

Will such consciousness come from the economic enfranchisement of a larger number of individuals? It hasn’t seemed to have occured in Taiwan, for instance, despite the latter’s democracy. The Confucian consciousness seems to have stuck, almost to a physical extent. I dont’ think it necessarily need to be a Western vision of individual and social change, either. Brazil’s current climate certainly provides some possible inspiration to all, including to China.

P.S. Richard, I am impassioned and appalled by some of what you said, but please don’t take offence. It just seems like maybe you are taking too much of a moral high ground at some points. I don’t like that at any time from anybody if it is too immediate, and undeveloped. China deserves to be scolded harshly, but let’s take individual cases and not condemn the whole regime to hell immediately, until they have proven that we should do that irrevocably!

December 16, 2006 @ 1:16 am | Comment

Did you see my mention of slavery and the Indians? Did you see how I referenced it, knowing my point would be misunderstood? Did you read where i said I wasn’t talking about what happened centuries ago? I am talking about those quick, rapid spurts of growth, the 30 years that China has had, and America too went from a middling power to master of the universe in less than 30 years, from 1918 to 1945 and no slavery or mass oppression in the style of China resulted. Read my comment carefully again.

I knew this would happen. 🙂

Here, let me help: apparently you missed this part:

The US, even – depending on our definitions. it only took its huge leap to world’s richest and most powerful nation in the mid-20th century, long after its ugliest periods of oppression of the Native Americans, slaves, etc.

So you see, oppression and slavery weren’t as a result of our huge leap to super-powerdom. They occurred long before. You can become a great power long after you’ve civilized yourself and ended such vile practices. There is no rule that says a country can only leap to wealth if they repress and torture and kill along the way.

December 16, 2006 @ 3:07 am | Comment

Actually, richard, the fastest GDP growth in the United States occured from 1860-1900, when most of those abuses were occurring. In fact, the only indicator of national strength that increased between 1918 and 1945 was the relative percent of GDP that the U.S. had in the world, mainly because Europe was cannibalizing itself with reparations, WWI’s aftermath, and later a Great Depression that hurt Europe much more than the U.S.

December 16, 2006 @ 5:57 am | Comment

Richard those are some terrible examples. To carry through on my promise to criticise without using 4 letter words, let me point out the errors in your reasoning.

Venezuela and Belize are hardly examples of prosperous states, in fact per capita income in both countries are presently lower than China’s. Singapore is as others have noted, a very special case, a small city state of only a few million jutting out of Malaysia.

The nations that have become wealthy from oil are possibly the worst examples you can pick from. To use Saudi Arabia as an example, it’s per capita income since the 80’s has been in steady decline despite record high gas prices. This is primarily due to two factors. A population increase from a high birth rate and a large number of low paid immigrants from south and southeast asia. This is however tangential to the main issue. Saudi Arabia really does not have a middle class. It has extremely wealthy oil sheiks and extremely poor desert bedouins with the small middle class wedge between the two. The wealth of the Bin Laden family stems from their proximity to the Saudi royal family and oil. Without either, there would be no construction empire. The problem with seemingly free money in the form of oil revenues is that it destroys the neccessity for people to engage in entrepeneurship or even work at all. There is a reason for the presence of the multitudes of foreign professionals in the middle east, it is because most of the oil nations have not built up the neccessary human capital for the maintenance of a sophisticated modern state. This is the double edged sword of vast oil resources. It allows for a semblance of prosperity but prevents the formulation of social institutions because of an excess of money.

Though I will say that your example of Nazi Germany as an example of a nation not following the practice of grotesque exploitation of the disenfranchised is flat out stupid on so many levels. Germany was already fairly industrialized and it’s industrial and economic capability had exceeded that of Britains even prior to the first world war.

December 16, 2006 @ 7:47 am | Comment

Hey guys, this post made the daou report:

December 16, 2006 @ 10:13 am | Comment

Well, I think we are comparing two different things, but that’s okay. My point remains, for me at least: there is no rule that says a right of passage from poor to super-rich means you must brutalize and mercilessly exploit your own people – repeat, your own people – along the way. There’s always going to be a degree of exploitation of the disenfranchised in any society. Rich or poor. To see this as a phase that each country must go through as it makes the leap to wealth doesn’t hold up to me. And if it were a phase, shouldn’t it have ended in China by now? (And it’s been going on for hundreds of centuries.)

Lisa, nice to hear about the Dao Report.

December 16, 2006 @ 10:48 am | Comment

Actually, richard, the fastest GDP growth in the United States occured from 1860-1900, when most of those abuses were occurring.

Slavery had ended in the North many years earlier and stopped altogether in 1865. Maybe we could argue that when you give up your oppression and put good laws in place protecting your citizens, then you can really take off. I guess we can interpret history any way we want to. Here’s my bottom line, once again: you do not need to terrorize your own people in order to become rich and successful. Quite the opposite. It is when the oppression ends that a country becomes truly great and truly innovative.

Jing, I understood the flaws in the Nazi Germany example and threw it in to get people to think. Yes Germany was industrialized, but it was stagnant and near comatose in 1929, and then it roared back in a way that startled the world based on sheer ingenuity, creative financing and personal sacrifice.

Every country has warts. Every country has periods of oppression. Are those brutal times a prerequisite for wealth and success? I say no. I say they are a prerequisite simply for the existence of any country, rich or poor. When we see a country rising that brutalizes its people, iwe mustn’t say, “Oh, well this is what happens with every country, so it’s nothing important or unusual or worthy of criticism.” That’s an excuse and a crutch that in an instant lets all the obscene acts of the oppressor of the hook. And it’s interesting to see who here embraces this attitude. And it’s not surprising.

December 16, 2006 @ 11:10 am | Comment

‘And it’s interesting to see who here embraces this attitude. And it’s not surprising.’

Yes, us bad bad ‘brainwashed Chinese nationalists/CCP apologists’.

December 16, 2006 @ 12:06 pm | Comment

You said it. 🙂

I don’t think you are brainwashed. Just defensive. That’s no crime, and I appreciate your comments.

December 16, 2006 @ 12:19 pm | Comment

“”There was never a time in its history that you would see in America the things you see going on in China today in terms of widespread daily injustices and brutality – people thrown out of their houses onto the street, people scamming one another with poisoned baby formula and the like, corrupt officials stealing their citizens’ property, then arresting them if they protest.” – Richard

Richard, you are plain wrong. That kind of thing happens in America and Canada even today. Now it is not widespread. In the 19th century it was widespread.

Not only is it not widespread, it almost NEVER happens. When it does happen, it’s considered a serious and strange departure from an overwhelmingly just norm. And, there is working legal machinery in place right it when it does happen.

December 16, 2006 @ 2:36 pm | Comment

You are right about these things almost never happening now in America. About a parallel to the fake baby formula in 19th century America – I’m not convinced but will be open-minded about it. I also don’t believe that a tour of the US in the 19th century would be similar to a tour of China today in terms of misery level and seeing people made miserable by the government set up to protect and represent them. There are definitely examples, like the exploitation of copper miners in Ludlow, Colorado by Rockefeller, but when his Pinkerton guards opened fire on them and killed them it was a national scandal of epic proportions, and Rockefeller was forced to pay heavily. These are crucial differences between the old wild West America and present-day China. In America, the oppressed could find voice and even, at times, see justice done. I believe China is slowly heading in this direction. To say it has a long way to go is a sizable understatement.

December 16, 2006 @ 6:11 pm | Comment

Will Hutton has Meghnad Desai pegged. Desai really is a critic of Western capitalism dying for an alternative model that produces growth. Hutton is criticizing how China’s current “model” ultimately will limit China’s growth and peaceful development, if left unchanged, and Desai will have no criticism. I suspect Beijing’s leaders have a much better grasp on the potential difficulties of their economy than Desai, even if they’re not about to liberalize their country politically. Desai is an unreconstructed Marxist living on wish fulfillment.

December 16, 2006 @ 9:19 pm | Comment

Whoah, whoah, whoah! Practically everybody here is attacking a straw man. Richard, you’re putting words into Desai’s mouth. He does NOT say that brutality and inequities are symptomatic “of ANY nation’s rapid rise to wealth” [emphasis added]. He is NOT saying that there is only one model of development.

As a matter of fact, he argues for the exact opposite — Desai accuses HUTTON of believing that there is only one path. Desai is just pointing out what many pushers of the Washington Consensus conveniently ignore — that many countries became capitalist long before they became democratic.

Actually, I think both authors make some great points.

While I agree with most of Hutton’s comments about China’s problems, I think the big flaw in his argument is that he talks of where Korea and Taiwan are NOW, and not where they were after WW2. When he talks about low Chinese productivity as evidence of failure, he conveniently forgets that the Asian tigers also started out with labour-intensive, low tech exports like toys and copycat goods. It took them decades to get where they are now. China’s productivity is low now, but Hutton fails to mention it has been growing rapidly — probably far more rapidly than with the Asian tigers, exactly because of foreign investment and the wide importation of modern manufacturing machinery from countries like Japan.

Another problem in this discussion seems to be that everyone is assuming Rule of Law and Democracy are one and the same, but I can think of plenty of examples of countries which have one but are sorely lacking in the other. For example, Hong Kong and Singapore managed to have Rule of Law and low levels of corruption while still under non-democratic rule. For that matter, Singapore _still_ doesn’t have real freedom of the press, yet manages to keep corruption at a relatively low level.

Even with no real progress on democracy, I do expect to see further improvement in governance and rule of law in the next few decades, at least enough to prevent the country falling apart.

December 17, 2006 @ 12:01 am | Comment

Interesting discussion. I think yuan revaluation would be a temporary fix for the US and both sides know it. The US doesn’t have anything to sell China that China doesn’t already make. The Great Mall story shows that most American companies that order products from China don’t own factories. It’s not just that Chinese factories have learned how to please the American market, by having products Americans like ready to ship even before they are ordered (the Great Mall is not for individuals, but for foreign companies shopping for ready-made products).

It goes further. Chinese manufacturers have had a profound effect on all American markets they sell into because they have redesigned those products to be flashier but to have fewer features (and less metal).

The Chinese have never shown much interest in creating brands, so the advertising-heavy Americans haven’t felt that they were risking markets or market share. Problem is, the Chinese have managed to mount an assault on brand names by popularizing no-name products. What is lost when brand loyalty is destroyed is gained back by a faster product replacement cycle that the Chinese alone can stay ahead of because they are scheduling it.

So, instead of concentrating on the macro stresses within China itself, and its likely political development, I see bad effects on the receiving end in America. In effect China’s enabling of Everyday Low Prices has destroyed at some level the American tradition of thrift, because people can no longer really judge the quality of the stuff they buy, and they buy based on price alone.

In that regard the Chinese have already gained market share in America in almost every sector – and there are some sectors they dominate to a 90% level or worse.

The next step, in business terms, should be to save money by moving some production to the US. That’s what the Japanese did, but that involved very complicated things like cars. The Chinese seem to be aiming more at using Americans for assembly so they can cut shipping costs. For example, the incredibly expensive new line of men’s razors – don’t you think $25 for blades is a bit steep? – features blades made in the US (or maybe in Brazil) but I’m betting heavy that the Babylon 5-looking plastic handles come from China. I’ve learned to recognize their work, I think.

Well, I for one welcome our new Made in China overlords…

December 17, 2006 @ 12:12 pm | Comment

I shold add that the general policy of the CCP, if it doesn’t come to grief because of overproduction (the Chinese are like the opium merchant who ends up killing the client), then it should come to grief because of environmental destruction. I remember Huankantou well, and I know there are other cases like that. But the Chinese are a long way down the road toward losing respect for America just because they make all the stuff they buy. The Chinese must wonder WHY the Great Mall has twenty stores selling plaster Jesuses. Seriously.

December 17, 2006 @ 12:18 pm | Comment

Danfried, I appreciate your points and agree about democracy and rule of law – I never said, and would never say, they are one and the same, though they certainly work better when operating synergistically. Democracy is secondary; justice is primary. And that’s where I see the main difference between China’s and America’s history. For all the growing pains, the US before nearly anything else implemented a healthy legal system and lots of checks and balances. It gets fucked up all the time, but has worked pretty well in the long run. It is in this area that China today differs so dramatically, despite recent promising steps toward reform. In terms of exploiting and inflilcting mass misery on its own citizenry, the US doesn’t begin to compare to China, thanks to this system of justice, however flawed it might at times appear.

My main objection was with this quote:

I do not defend the inequities or brutalities thrown up by China’s growth. But I don’t think they are a sign of weakness. Despite similar problems in most other economies in the past….

That was it, those words in bold. They set me off I admit it, because they seem to me so casual and so sloppy. What are these “similar problems” and where’s the evidence? As I said repeatedly, every nation has a history of some brutality and unfairness. But often these problems are not at all similar from one country to the next. And, again, it leaves the door open to say, “See, there’s no big deal with today’s brutaltiy and repression in China – it’s quite similar to what all countries went through.” And that is simply a historical falsehood. That’s all.

December 18, 2006 @ 9:30 am | Comment

Just back after a short holiday. Is there any repressions, brutality and oppressions in the growth of America or even England earlier in time? yes very much so. Were they right to do so ? absolutely not. Like Richard said injustices does not need to follow explosive growth, there is no clear logic to link the two. So it does not excuse China or any where else in the world for such brutalities.

But the fact that America and else such brutalisation of its’ weak did occur ,necessitates that they do not sit on it ‘s self righteous horse when criticising China on it’s Human Rights record. But it does not stop the rest of us from doing so and we should continue to do so vehemently when we see injustices happening in all it’s form. The US government should and can call for better Human Rights in China because it is good for China in the longer run and eventually for the rest of us.

My other problem with US as the government critising China is basis it sincerity, it is serving it’s own end or that of the Chinese?

December 21, 2006 @ 12:27 pm | Comment

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