The Chinese Path: An Answer to a Series of Problems Developing Countries Face in Modernization

Employees of the Sanli Engine Company, a privately-owned company based in Jinjiang, Fujian Province, assemble lawnmowers for sale outside of China(Photograph taken on August 10, 2009). More than three decades of reform and opening up have fueled considerable advances in China’s state-owned and private sectors, enabling various forms of ownership to develop side by side in a mutually-complementary fashion. / Photo by Xinhua reporter Zhang Guojun

From:English Edition of Qiushi Journal

Journal of the CC of the Chinese Communist Party

Vol. 6 No.3 July 1, 2014

Modernization is the dream of all developing countries. While many countries have pursued dreams of modernization, pushing themselves forwards to achieve development and progress, none have overcome as many difficulties and obstacles as China, which has succeeded in putting an economically and culturally backward country of 1.3 billion people on the fast track to modernization. In light of this fact, we may say that the Chinese path represents a successful attempt to overcome difficulties that developing countries commonly face in modernization.

I. The success of the Chinese path indicates that developing countries no longer have to rely on Western approaches to modernization

All developing countries, including China, face the challenge of identifying a path of development. Following the Second World War, the majority of the world’s developing countries—with the exception of socialist countries, as represented by the Soviet Union—opted to emulate the Western model of modernization.

The path that Western countries have guided developing countries towards takes its roots in neoliberalism—an economic philosophy that emerged in the 1920s-30s, the core ideas of which are marketization, liberalization, and privatization. In 1989, the US government and the Western financial world formulated a set of ten policy prescriptions aimed at guiding economic reforms in Latin America. Later dubbed the “Washington Consensus,” these proposals were essentially a continuation of neoliberal thinking. However, with the introduction of this so-called “consensus” into Latin America in the 1990s, Latin American countries began to experience a phase of continued economic and financial crisis, and have since been confronted with serious economic recessions, polarization, and intense social conflicts. Moreover, following the drastic changes that occurred in the Soviet Union and Eastern European countries, the “shock therapy” of neoliberalism was at one point the cause of serious economic recession in Eastern Europe. Therefore, it is fair to say that the global spread of neoliberalism has been the cause of bitter suffering in many developing countries.

As an approach to modernization that has been developed outside the capitalist system, the Chinese path represents a fundamental departure from the Western model of modernization that has previously been relied upon. Through its glorious achievements, China has shown the world a path of development that differs completely from the one predetermined by Western countries. As a result, the world has begun to shift its gaze to the East.

The Chinese path differs fundamentally from neoliberalism and the “Washington Consensus” in several regards. Firstly, the differences between the two can be seen from an institutional perspective. The socialist system with Chinese characteristics is founded on the fundamental political system of people’s congresses. This fundamental political system serves as the basis for China’s basic political systems, which include multi-party cooperation and political consultation. The socialist system with Chinese characteristics also comprises a basic economic system whereby public ownership is the mainstay while various forms of ownership are able to develop side by side. Secondly, the differences between the two are evident from the guiding principles they follow. China’s socialist market economy attaches great importance to the role of macro control, laying emphasis on exerting the strengths of both planning and market forces. Thirdly, the differences between the two are evident from the role of the government in economic activities. A great deal of research, including research by Western scholars, has argued that the success of the Chinese path is attributable to the fact that China not only boasts a “big government,” but also a “good government.” These features fundamentally distinguish the Chinese path from neoliberalism, which takes the capitalist political system and private ownership as its basic political and economic foundations, and which advocates “small government” that is governments that do not intervene in the economy. Other distinctive features of the Chinese path include export-oriented policies, high savings and investment rates, and an emphasis on education and human resource development. Together, the aforementioned features constitute the main aspects of the Chinese path.

Fact has demonstrated that the Chinese path—a path that differs from the developmental models advocated by the West—has been the strongest driving force behind China’s development. This path has enabled the Chinese nation to proudly reassert itself among the nations of the world. Moreover, it will guarantee that the Chinese dream of national rejuvenation will eventually come true. The Chinese path has delivered the message that every country should choose its own path of development in accordance with its own national conditions. It has demonstrated that the socialist system, a strong government, a mixed economy, and macro control are equally capable of becoming factors for successful modernization. In the future, the Chinese model will continue to shatter the myth that surrounds neoliberalism and the “Washington Consensus.”

II. The Chinese path has effectively overcome the “late starter’s disadvantage” that developing countries face in modernization

It is a widely-held view that developing countries enjoy a number of advantages as they are attempting to modernize: advanced scientific and technological achievements that can be borrowed from developed countries; a wealth of existing knowledge and experience with regard to modernization; open international markets; and abundant demographic and natural resource dividends. Capitalizing on these “late starter’s advantages,” some developing countries have formulated “catch-up” strategies, which have been successful in certain cases. However, in most circumstances, the “late starter’s advantage” is only seen during the early stages of modernization. Once a country has reached a certain level of economic and social development, this advantage will begin to diminish, being increasingly replaced by a “late starter’s disadvantage,” which severely obstructs the modernization process in that country. The “late starter’s disadvantage” is demonstrated in the following aspects.

First, developing countries face an international political and economic order that is unfavorable to their development. Principally established by the US-led countries of the West, the old international political and economic order is strongly characterized by remnants of colonialism and hegemonism. In the political domain, the major Western countries often engage in power politics, meddling in the affairs of other countries and interfering in regional conflicts. In the economic domain, developed Western countries are bent on preserving the inequitable division of labor in the international production system, unequal exchange in the international trade system, and inequality among different countries in the international financial system. These facts constitute the root cause of the North-South gap, and are important factors constraining the modernization of developing countries.

Second, developing countries face growing constraints from various factors of development such as natural resources, environments, science, technology, and human resources. Historically speaking, developed countries plundered developing countries for energy resources and raw materials during the course of their modernization, never giving any thought to their environmental protection obligations. The overwhelming advantages that these countries boasted in terms of science, technology, and human resources also became a strong driving force behind their modernization. However, when developing countries began their push for modernization, they lacked the important factors of development that Western countries once had at their disposal, and this put them at an absolute disadvantage. While some countries in the Middle East and Latin America may boast abundant reserves of oil, they lack a sufficient level of diversity in natural resources. These countries cannot possibly gather a good variety of resources from around the globe like the British Empire once did. Most other developing countries, including China, are being forced to confront increasingly acute energy shortages, as well as the dilemma of protecting the environment and maintaining development. With regard to science and technology, Western countries impose strict restrictions on the transfer of advanced and key technologies to developing countries, creating inequitable rules for international trade and levying high technology transfer fees. Moreover, owing to the fact that developing countries generally lag behind in terms of science and education, there is a tendency for leading talent in developing countries to flow in large numbers to developed countries in search of a better environment for scientific research, which only exacerbates the talent shortages that developing countries already face.

Third, developing countries face insufficient drive in development owing to a lack of funds. In today’s world, most developing countries lack the funds that they need in order to develop. On the one hand, prior to the outbreak of the global financial crisis, developed countries were always the primary destination for international capital flows. Of the US$ 1.77 trillion in global foreign direct investment (FDI) that was recorded in the year 2008, as much as US$ 1.1 trillion went to developed countries. Though this situation has changed somewhat since the financial crisis, developed countries were still able to attract more investment than developing countries in the year 2011. Moreover, the foreign investment that does go to developing countries is extremely imbalanced, being unevenly spread among these countries. On the other hand, since gaining independence, a number of developing countries have suffered from a lack of funds for extended periods of time. This lack of funds has resulted in the underdevelopment of infrastructure and public facilities in developing countries, which in turn has made them unattractive locations for foreign investment and adversely affected the inflow of international capital.

These three “late starter’s disadvantages” are difficulties that developing countries are currently facing, and will continue to face for a considerable period of time, as they seek to achieve modernization. However, the Chinese path represents a realistic approach through which these three major disadvantages may be effectively addressed.

First, as a path of peaceful development, the Chinese path is able to provide strong impetus for the establishment of a new world order. Opposition to hegemonism and the establishment of a new international political and economic order on the basis of the Five Principles of Peaceful Coexistence constitute major aspects of China’s foreign policy. Therefore, we may say that the more developed China is, the greater the chance developing countries will stand of breaking through the old international political and economic order, and the stronger their position will be.

Second, the Chinese path allows us to effectively concentrate the strength of our entire society on efforts to break through constraints on development. From the very outset of our modernization drive, China has identified resource conservation, environmental protection, and sustainable development as national strategies, approaching these efforts as a national initiative. For this reason, China’s efforts to resolve constraints on development have proven much more effective than those of other developing countries. China is also a pioneer among developing countries in the field of sustainable development. With regard to science, technology, and talent, China’s institutions enable it to focus efforts on making breakthroughs in key and cutting-edge technologies whilst effectively cultivating the talent in applied science the country needs to develop. China’s institutional advantages in this regard are demonstrated most directly by the successful launch of the Shenzhou spacecraft and by the robust development of the country’s education programs since the launch of the reform and opening up drive. In 2011, the number of students in higher education in China reached 31.67 million, more than any other country in the world.

Third, the Chinese people’s tradition of saving and the government’s considerable financial strength have enabled the country to effectively address the funds shortages that commonly plague developing countries. The Chinese people have long maintained a tradition of frugality and saving. China’s national savings rate has consistently been among the world’s highest since the 1970s. These savings have played an enormous role in easing the shortage of funds for development and facilitating the country’s economic take-off. In addition, the rapid development of China’s economy, the sharp increase of tax revenues, and the Chinese government’s control of land and other critically important resources have endowed China with considerable financial strength. In 2012, China’s fiscal revenue reached 11.72 trillion yuan. This has enabled China to engage in the large-scale development of infrastructure, allowing it to accomplish major undertakings of national significance that would likely have been beyond the reach of other countries.

With these developmental advantages, the Chinese path is not only benefitting China’s modernization at present, but will also continue to benefit it in the future. The Chinese path has provided other developing countries with a relatively clear and implementable solution to the problems that they have encountered during the process of modernization.

III. The Chinese path has provided answers to dilemmas that confront developing countries in modernization

Developing countries have always been confronted with the following dilemmas as they have sought to modernize.

The first is the dilemma between promoting development and maintaining stability. Stability represents the precondition of development. However, in the case of many developing countries, economic development has often been accompanied by political turbulence, which in turn undermines economic growth. The difficulty that developing countries face in balancing development and stability arises from the massive shock that modernization exerts on traditional social structures and ideas through the initiation of systemic changes politically, economically, and culturally. An example of this situation can be found in the modernization of many Arab states, where the frequent onset of religious conflict and social turbulence has severely obstructed or even interrupted the modernization process.

The second is the dilemma between opening up to the outside world and maintaining independent development. Judging from the past experiences of developing countries, we may say that opening up to the outside world is a double-edged sword. For many developing countries, opening up to the outside world has come at the expense of their right to independent development. Using huge investment and financial aid packages as bait, Western countries have enticed numerous developing countries into opening their doors to Western capital. Once they accept the rules of the West, these developing countries are then reduced to passive links in the capitalist chain as their political and economic policies bow to Western influence and their economic lifelines come under Western control.

Under the leadership of the CPC, China has succeeded in identifying an independent path of development whereby rapid economic development and internal political stability are able to exist side by side.

The Chinese path is characterized by its adherence to the leadership of the CPC and to Marxism as the unified dominant ideology. This is the fundamental reason why China has been able to maintain political stability while achieving rapid development. Coming in stark contrast to the contesting political parties, endless quarreling, and ideological chaos that are characteristic of many developing countries, China has maintained a solid commitment to upholding the leadership of the CPC and the guiding role of Marxist ideology, and this has proven to be a solid foundation for the steady development of its economy and society. A political system in which the CPC governs while the other political parties participate in governance has enabled the CPC to pool the wisdom of various political parties and groups while maintaining the continuity and stability of its policies. The Chinese path represents the product of unity in the thinking and perceptions of the entire Party and the Chinese nation. On the issue of reform and opening up, we have formed the widest possible consensus of the people as a whole.

In addition, with its powerful state-owned sector and capacity for macro control, China is able to prevent developed countries from taking control of its economic lifelines, thereby maintaining the independence and autonomy of its political and economic development. The low capacity of developing countries to guard against risks is directly attributable to the weakness of their own industries, and especially to the relative weakness of those important economic sectors that are directly controlled by the state. In China, important manufacturing and service sectors such as energy, transportation, and finance are firmly controlled by the state; while land—which represents the most important resource for economic development—remains firmly under the ownership of the whole people. This not only facilitates the government in its macro-control initiatives, but also effectively prevents developed countries from using their superior capital supply to control the critical sectors of our economy. Therefore, it can be said that China’s independent and self-reliant development is underpinned by a concrete institutional foundation.

Category : Capitalism / China / Socialism

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