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(HERALD, AFRICAN EXECUTIVE) Development: Lessons from the Chinese economy

Development: Lessons from the Chinese economy
Friday, 03 February 2012 00:00
Diana Ntono

Africa and East Asia in world history have undergone almost similar stages of development as a result of the spread of western civilisation for many decades. Africa and East Asian regions have faced colonisation from western powers, taken part in endless western and foreign political power struggles (like the World Wars and the great Cold war), and have struggled with economic crises such as the mid-80s and 1990s third world crisis.

However, in the 21st century, Africa's economic growth and development is still very slow and far behind compared to the East Asian region.

Chinese fast economic growth and development in recent years is not a new phenomenon but an extension of the "East Asian miracle" whereby the Chinese have learnt, adopted and applied similar developmental factors but modified them to fit their political, social and cultural environment, thus becoming the new model to Africa's development dreams.

While factors responsible for China's recent development are not clearly outlined, they can be traced from various examples in the Asian pacific countries like South Korea, Taiwan and Japan. Hence the aim of this paper is to point out and discuss the three major factors that have greatly influenced the growth and development of East Asian nations of South Korea and Taiwan under the East Asian development model and any implications to Chinese economic development.

China's fast economic growth and development started in the 1970s under the leadership of Deng Xiaoping's reform and open door policy. The end of the cold war era resulted into the triumph of the capitalist liberal economic order. China had to make changes to adjust to the new international capitalist order but maintained its political ideology as a communist state under the strong governance of the Communist Party of China (CPC).

Although China continues to be under a communist order politically, economically Beijing has accepted and embraced the liberal economic order becoming a member of many international organisations like the IMF, World Bank and the United Nations.

On the regional level, it has greatly participated in various multilateral institutions such as the Association of Southeast Asian Nations, Shanghai Co-operation Organisation and Asian Development Bank. The increased economic integration of Beijing has resulted in China's interdependence to the global economy and vice versa. In 2010, China's economy was able to jump to the second position after the USA as the fastest growing economy after overtaking Japan.

Despite the fact that China has become the centre and subject in political economy in the 21st century as another miracle of economic development in the East Asian region, factors that have contributed to the development are still not clear. Various theoretical perspectives have been put forward to explain the East Asian economic development.

According to Chi Hung Kwan, China's new position as the fastest growing economy in the East Asian region is neither a threat nor disrupting the flying geese model. The "flying geese" theory was coined by a Japanese economist Akamatsuk. It is also referred to as theory of the flying geese pattern of industrial development.

The model is seen as an important instrument to understanding the development and international economic relations in the Asian pacific. The theory aimed at explaining the development trajectories of less developing nations and has nothing to do with political ideologies but industrial development. He divided countries into three segments: The advanced countries or "leaders" such as Europe and America; the middle group or "rising" nations such as Japan and nations that are developing faster than the third group called the "followers," that is, less developed. It therefore forms the V shape like flying geese trend.

In order to join the developed nations, Akamatsuk uses the example of the textile industry in Japan. He suggests that less developed countries begin by importing technology and new products from industrialised countries.

However, with time, the developing nations are able to acquire the required techniques and capital goods which enable them to establish similar industries rather than importing. In the final stage, the less developed countries can industrialise and attain export capabilities which later lead to trade conflicts between rising nations and advanced ones.

In addition to the above, to further illustrate this phenomenon under an open and globalised economy, Chi Hung notes that the flying geese model would explain the shift of industries from advanced nations to developing nations rather than re-establishing the same industry in the same nation hence a shift from Japan textile production, electronics and other high tech products from Japan to other Asian nations including China.

Therefore, by being part of the flying geese, one can argue that China has adopted similar policies to associate with the East Asian developmental model to achieve its recent economic development.

The East Asian economic development model can be simply understood as a theory that has been dominant to explain the economic success in East Asia. The "statist'' school has been helpful in understanding the role of the state in development of East Asian economies.

Using the example of Taiwan's industrialisation, he argues that the small and medium enterprise (SMEs) that are the major contributors of its exports were established as a state political strategy that determined public policy to privatisation sector hence a politically inspired industrial success.

Economic bureaucracy is vital to understanding East Asian economic development and this can be explained in relation to the leadership support and role they played in the policy process. The bureaucrats or elites were strong men who supported the industry policies in Taiwan and those industries that were not supported like the automobile collapsed.

However, scholars like Bruce Cumings, believe that the hegemonic power is responsible for the origins of the development of Asian states. Using the case of Northeast Asia, he applied the world system theory. Noting that USA as hegemony at the core established a hierarchy of nations but not frozen and it can change with time but in line with the hegemony state interests which can be either economic or security concerns.

For example: South Korea, Japan, Taiwan and Manchuria. It is due to the fear of soviet expansion to East Asia; that the USA rebuilt the Japan's economy after the World War II, ranking it as the second wealthiest economy and supported its economic activities in Manchuria. Its interest in South Korea was due to China's communist threat. Therefore, these states were shaped and modelled to fit the world system as semi- periphery by the hegemony.

While David Kang illustrates that Asian development was a result of money politics which led to public and private interaction. In the case of South Korea, the government provided public goods, fostered investment and created infrastructure not for state development but because of corruption reasons in the interest of small groups of business and political elites. He therefore believes that politics as opposed to economic consideration dominated policy making. For example the exchange of bribes between the state officials and business had great influence on the policy choice such as export-oriented industrialisation or industrial arrangements.

Using the flying geese model against that above scholarly perspectives implications to understand China's recent economic development can be discussed as follows. The most important being the role of the government or political factors that has had great influence on China's economic development. China's unique communist feature is important when discussing its economic development.

China had been closed from the world during the cold war and only joined the liberal economic order in 1970s under the ‘‘open door policy" during Deng Xiaoping's regime. He encouraged foreign investment in the country, modernisation of agriculture as well as industrialisation for economic development. While in recent years, the Chinese government has continued to promote export oriented industries.

Providing business incentives to business men to invest in foreign countries for example various Small and medium Chinese firms have cropped up in Africa as new form of Chinese investment in the region hence a source of revenue and economic benefits to China.

In addition, China's market size is important. The country is highly populated providing a source of cheap labour as well as acting as the market for finished goods. This has enabled Beijing to develop and sustain its manufacturing and industry sector. However, without the support of the hegemonic state, China would not be able to attain technology through FDI, capital as well as accessing markets of advanced nations as already explained by the flying geese model.

Therefore, one cannot ignore the vital role of the hegemony as argued by Bruce Cumings. China has become an important area of interest to the USA in terms of security concerns - refer to the case "North Korea threat" as a nuclear state. China's rise has also raised US fear to be challenged as a dominating power in the Asian Pacific.

Just like Japan, China finally opened its market to various foreign investments while the USA has given China great access to its economy.

In summary, China's economic growth cannot be fully explained by a single factor but the above different perspectives give us a better understanding of the origins of East Asian economic development. Therefore, China being part of East Asia factors contributing to its recent economic development can be traced along the same path.

These include include both domestic factors like the role of the state; societal factors like elite behaviour; as well as external factors such as the international politics and hegemonic state. These factors have been part of East Asian region and development hence the argument in this paper that Beijing learnt, adopted and modified similar policies form its neighbours.

Commenting briefly on Africa's continued active engagement with China to address it's economic and developmental concerns, financial aid and assistance, trade, investment plus band wagoning is not the only solution but learning, adopting as well as modifying these lessons from the East in relation to Africa's needs is very important.

* Diana Ntono is a Graduate Student at the Institute of International Studies, Jilin University, PR China. This article is reproduced from The African Executive

Labels: CHINA

posted by MrK @ 2:54 PM