China’s media carries a wide range of different views. A significant part of this is pro-capitalist. It is therefore of interest that Global Times, one of China’s main English language papers, has just carried an interview stating the ‘superiorities of the socialist system’, seeing the international financial crisis as ‘an unprecedented crisis of capitalism’, and concluding that ‘the China path… is not only a brand new one that has never been seen before but also a path that is becoming more and more successful.’ The interview was with Hu Angang, Director of the Center for China Studies of Tsinghua University, Beijing. Extracts from the interview are below and the full interview may be read in Global Times here.
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At present, discussion and controversy about the ‘China model’ or ‘China path’ has become a hot topic… Qiushi magazine (Qiushi) interviewed Hu Angang (Hu)… of Tsinghua University, on these issues.
Qiushi: How should one determine the advantages of China’s political system and the signs of its success?
Hu: With integration, regionalisation and globalisation of the international economy, competition among countries becomes more intense day by day… Market and technological competition is also inherently a competition of national systems. The result is not simply determined by the fair or foul nature of a state system, but by the advantages of a state system compared with its competitors.
China’s total population increased from nearly 500 million in 1945 to 1.3 billion today. At the same time, it has also changed from a poor and weak nation which utterly lacked cohesion to a world-class power with great vitality and growing prosperity…
We should rely on neither subjective judgments nor Western values. Instead, we should prove objective facts. Both over the last 30 years and in the aftermath of the financial crisis, China has been unusually successful compared to other nations.
Although there are still many unsatisfactory factors within China’s political system, it is suitable for China’s basic national conditions and development, adaptable for an increasingly open international environment, able to respond to various internal and external challenges and fully demonstrating tremendous development advantages and unique competitive advantages during fierce international competition…
Qiushi: What has been the secret of China’s rapid economic growth and significant social progress in 30 years?
Hu: Based on international comparison rather than being accidental or merely depending on luck, China’s development miracle has its own path.
According to the database developed by the World Bank and the UN, the 20 economies which grew fastest during 1978-2008 were all developing countries and regions. Among these economies, 13 have implemented five-year plans. Among ten economies which had the fastest economic growth rate, eight have implemented five-year plans.
Just as Deng Xiaoping said, both central planning and the market are economic tools. We should use not only the ‘visible hand’ of the five-year plan to provide public services and promote social progress, but also the ‘invisible hand’ of the market mechanism to provide a fine investment environment and promote economic growth, which is a key to understanding the Chinese miracle.
Qiushi: Why can China’s answers amaze the world?
Hu: The international financial crisis brought heavy trauma to the global economy. Many major economies suffered. But China is almost an exception.
The crisis is like a worldwide examination, which tests each economy’s system in dealing with it. We use four major macro-economic indicators of G20 countries as a means of comparison: economic growth rate, inflation rate, unemployment rate and the proportion of fiscal deficit in GDP.
Based on the examination results of 20 economies, China had the best macro-economic indicator among G20 countries and topped the economic growth rate at 9.2 percent in 2009. It was one of the seven countries to successfully avoid negative economic growth. In 2009, the US economic growth rate was minus 2.5 percent, the average economic growth rate of the EU was minus 3.9 percent, and the Japanese economic growth rate was minus 5.3 percent. China’s economic growth rate was 2.7 percentage points higher than India, which had the second highest economic growth rate in that year.
Ironically, in January 2009, Time magazine gleefully predicted that China’s economy had begun to decline, and that the China miracle would be hard to continue.
In March, the magazine openly predicted that China’s GDP growth in 2009 would not exceed 4 percent.
However, this prediction was soon smashed by fact (within 10 months).
In this global examination, China took the lead in recovery, achieved stable growth and major macro-economic targets and delivered ‘an answer’ which amazed and surprised the world. The country which experienced real economic decline was the US itself.
Qiushi: Why was China most successful in coping with the financial crisis?
Hu: The first is our full understanding and profound grasp of the laws of socialist market economy and the political superiorities of the socialist system.
Second is the correct handling of the relationship between the government and the market. We not only adhere to government leadership and guidance but also fully achieve fundamental market function in resource allocation.
Take investment for example. The government invested 4 trillion yuan ($608 billion) during 2009-10. But this led to more than 10 times non-government investment. Fixed-asset investment within two years accumulated to a total 50.3 trillion yuan, that ensured the high growth rate of China’s economy.
Based on China’s situation, our capability to deal with crisis mainly came from the collective learning, versatility and competitiveness of Chinese people, the highly efficient national policy-making capacity, the strong political mobilisation capacity, the growing national financial capacity, and the ‘two initiatives’ of central and local governments.
The international financial crisis is an unprecedented crisis of capitalism. The fact that China has successfully dealt with the international financial crisis has caught wide attention among US scholars and also led to their self-reflection on the crisis of capitalism…
In short, ‘the China path’ is not only a brand new one that has never been seen before but also a path that is becoming more and more successful.