Lessons to Learn From China

Since the beginning of reforms and opening to the world 40 years ago, China has been a very good “And now, after four decades of rapid economic development, the country is increasingly emerging as a teacher. As he invests more capital abroad, he has a huge interest in the way the countries he invests in develop.

But is the world ready to learn from it? Over the past few years, China has been using its policy of extenuating abroad “ ” expressed in the most ambitious manner in its Breeth and Road Initiative to both advance its economic interest and design its soft power.

Chinese leaders want to restore their country to what they see as its legitimate position in the world. China's economic weight peaked in 1600 when it represented more than a third of the global economy. Its share of global GDP declined gradually until 1820, when it began to drop even faster, due to the industrial revolution's strong influence on Western economic growth.

By the early 1960s, China's share of global GDP had dropped below 5 percent. Then Ten Hsiao Pini started reforming and opening China, and at that point the miracle of the country's economic growth began. Since 1978, China has expelled hundreds of millions of people from poverty, and its share in the global economy, currently one fifth, continues to grow.

If China wants to increase its international influence, naming its experience as a model for others, it must identify mechanisms that support its success, and explain why the atp is transferred. This is essentially the mission of a new centre created by Tsinghua University in Beijing.

The Chinese Academic Center for Practices and Economic Thoughts, with its acronym of ACEPS, is dedicated to understanding and spreading China's development experience. Earlier this month, she launched this process with her first report, titled “economic licenses occupied by the 40 years of reforms and the opening of China”.

The report includes 5 visible observations. First, growth over the past four decades was driven mainly by the creation of new companies, instead of restructuring old ones. Moreover, conversion of agricultural land for industrial and residential use played a vital role in encouraging investments.

At the same time, deep reform in the financial system was essential to fostering entrepreneurial activity and consumption. The opening already encouraged learning, and ultimately, macroeconomic policies that enabled the country to avoid financial crises and to ease fluctuations in economic growth.

A key issue raised by the report ʹ and in fact in nearly every analysis of China's development experience since 1978 has to do with relative roles of the state and market. Was creating new private companies or helping the government most important in China's success?

But this is not a new issue. But, as Harvard economist Danny Rodrik noted at the opening of the inaugural meeting, the way someone responds to it speaks more about it than about the Chinese economy.

However, the ACEP report could provide useful information on the issue, stressing how state management and economic liberalisation co-operate. New private companies were the main drivers of economic growth, but it was the state that created powerful incentives for market access.

Entrepreneurs invested a lot in their relations, with government authorities and the state using market signals to oriented resource collection, and to assess experimental initiatives. Beyond encouraging the entry of new companies, the Chinese state mobilised considerable local investment resources.

Even more impressive, is the fact that the state carried out continuous experiments, taking lectures at all levels of government, which will remain essential, while China is addressing serious problems such as inequality. However, explaining the main factors that promote the development of China is only the first step.

If China wants to export its development model in a meaningful way, it will have to overcome a number of additional barriers beginning with international distrust

on the rise. In the midst of developed countries, the main complaint is that China has exploited the innovations of others, asking foreign companies to share their technology with Chinese companies as a condition for entering the kinz market.

Although it is perfectly normal for a country in the phase of China's economic development to absorb and imitate foreign technologies, size and market power, it dramatically increases its capacity to encourage technology transfer.

And China has been happy to use that lever, often in ways that its competitors consider unfair. Meanwhile, developing countries are increasingly questioning whether Chinese investments are really helping them. So far, China has generally avoided conditioning its investments, with clear political demands.

But with many of these poor economic returns, China no longer has the luxury to ignore the way its resources are used, or what happens to the debt of its credit beneficiaries.

By convincing other countries to accept its development lectures, China faces a difficult dilemma. After all, China owes its partly successful development to the fact that it maintained full ownership and control of the process. By contrast, Central and Eastern European countries had developmental policies that were imposed by the European Union a dynamic that has significantly contributed to the rise of anti-Establishment political forces.

At the time of increasing discontent with the growing international influence, China's ability to promote its development model is being severely damaged. And that doesn't help the fact that the West remains determined, that an undemocratic approach is not allowed to succeed at a global level.

We're going to a dangerous crash, not between civilizations, but between systems. We need to fit together. It makes sense that developing countries completely reject lectures of Chinese economic wonder, and the deepening enmity between China and the West is not in anyone's interest.

On the contrary, countries must be open to learn from China, which in turn must recognize the limits of its political model, even compared to the flawed democracies of the West.

Note: Eric Berglof, former economist at the European Bank for Reconstruction and Development, is currently Director of the Global Affairs Institute at London's School of Economy and Political Sciences.

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