By: Prof. Josephus Moses Gray | Assistant Professor of International Relations |
The People’s Republic of China’s transformation from a poor and backward nation into a modernized and prosperous one is proven to be an amazing achievement in human history of tackling poverty and providing a valuable experience for other nations. China not only is an important driving force of global economic growth but also makes a significant contribution to global order in promoting interconnectivity between countries and regions. China has accomplished what took developed countries hundreds of years to accomplish and become an upper-middle income country from a low-income one. China has overcome the great divergence of development among different countries formed after the first industrial revolution and made a miraculous economic catch-up from behind.
As the People’s Republic of China marks the 70th anniversary of the start of the historic carnival activities, it is significant to reflect back from the 1940s to presence to takes an in-depth look at the forces that shaped that great and rewarding transformation of China. This article which contains several parts will be released to the public in series due to the limitation of space in the local newspapers. However, the first part of this instructive article examines China 70th years of remarkable transformations and growth, how the state surpassed other industrial nations and become the world second economic power. It also looks into the new era of China’s win-win diplomacy that former president Deng Xiaoping’s ushered in to allow China to focus on economic development, and examines President Xi Jinping’s developmental strategies especially the belt and road initiative. It concludes that with the country modus operandi and how China becomes the second economic power in the world.
Also the article briefly looks at the famous Sun-Tzu style propounded that China needed to initiated to conquer the world using its little dragons that have occupied mature markets, beginning with thousands of small Chinese businesses and companies in Africa’s five regions, Middle East, and South America that pave the way to the biggest ones, and most importantly, encouraged by the “Go Out Policy” launched in 1999. In order to answers to these questions, Assistant Professor of the University of Liberia Graduate Program of International Studies, Professor Josephus Moses Gray, provides an in-depth analysis of China’s incredible transformation and growth, keeping the focus on the nation’s strategies and modus operandi.
The People’s Republic of China was founded in 1949, in the past 70 years, under the leadership of the Central Government, China made much headway in socio-economic development. In 1949, most than a half-century ago, the birth of new China opened up a new chapter in world politics, as far as international relations is concerned.
On October 1, 1949, the People’s Republic of China was formally established, with its national capital in Beijing. “The Chinese people have stood up, declared as the former Chairman of the Communist Party, Mao Zedong announced the creation of the modern Chinese state, a global economic power in human history.
This year marks the 70th anniversary of the founding of the People’s Republic of China and is vital reflect on how the Chinese work hard to build a moderately prosperous society in all respects, and that profound changes have taken place over the past seven decades as China has become the second-largest economy in the world. China remarkable jump has been made from an impoverished society which only depended on sufficient food and clothing to a flourishing society in the world. The state now plays a better role in the international arena due to its improved socio-economic situation.
In the past, China was listed among the poorest nations on earth, and the state was blemished by the failure of the Great Leap Forward and the political disorders during the Great Proletarian Cultural Revolution. The country integration into the global economy was trifling, it industry was ineffective. Nowadays, China has become the world’s second economic power in decade or two, to the bewilderment of many economists and political scientists, and thanks mainly to four dynamics factors.
As the Chinese people celebrate their seven decades of reforms and opening up characterized by growth and socio-economic development, others under-developed nations need to see China’s great transformation as a wake-up call to transform their economics and political policies by initiating their own development path different from the outdated philosophy of hegemony, and always stick to peaceful development. China has successfully expanded beyond its border ushering a new era of industrialization, and record-breaking socio-economic development. The state is also credited for its successful strategic approach towards the establishment of diplomatic ties and cooperation with hundreds of sovereign states, governments, and people across the globe.
Major Reform Steps by China
According to Jinglian Wu (2007), the major Reform Steps in China 1978-2017 are captured under different eras and summarized: In 1979 Open door” policy initiated, foreign trade and investment reforms begin; law on Joint Venture Companies passed, in 1980 the state established a policy of eating from Separate Kitchens” reforms in intergovernmental fiscal relations, while in 1999 government reforms consolidate industry-related ministries and institutes and 1978 the former president Deng Xiaoping’s speech at the Central Party Work Conference “Emancipate the Mind, Seek Truth from Facts and Unite as One in Looking to the Future”. Deng Xiaoping’s push for ‘reform and opening up’ launched China’s rise from the wreckage of the Cultural Revolution to the world second-biggest economy.
Other periods include 1993 decision of the third plenum of the 14th party congress to establish a “socialist market economy” paving way for fiscal, financial, SOE reforms, 2001 launching of the 10th five year plan emphasizes efficiency, structural change, industrial upgrading, 2013 12th Five Year Plan launched, emphasizing rebalancing and avoiding middle income trap and 16 point program introduced to fight inflation, the 2016 13th Five Year Plan Launched emphasizing innovation and productivity as drivers of growth and the 2017 19th Party Congress defines “New Era” and China’s new long term goals for Modernization
One of the most outstanding aspects of China’s efficacious strategies is, without a doubt, the invention of practical policy regarding the approach to trade. Er-Rafia (2018) explained that the number of China’s largest companies in the world has been growing steadily and Incontestably, Chinese companies invade their domestic market from the outset with economies of scale, since the Chinese market itself is gigantic, something that a Western company cannot afford to do at home from the beginning. A Chinese company that is emerging nationally is already a strong company having won a victory over its competitors.
According to Er-Rafia, the Chinese company’s presence in the local market disturbs international competition and attracts Western companies that propose commercial agreements. Given the massive size of the untapped Chinese market, these companies compete easily (to a certain extent) in the global market.
The successful China reform goes with a painful decision and hard work especially instituting several actions that focused on policy implementation and enforcement since any law that lacks enforcement action is considered a dead law. Reforms in China developed gradually, starting in rural areas with the household responsibility system and township and village enterprises. Nowadays, China has become the world’s second economic power in decade or two, to the bewilderment of many economists and political scientists, and thanks mainly to four dynamics factors.
For others, the credit first goes to former President Deng Xiaoping’s opening-up-to-the-world policies and the 1979 Equity Joint Venture Law, together the state has allowed foreign capital and Western companies to enter China, transforming the domestic economic landscape entirely from one that was outmoded and old-fashioned to one that is dynamic and contemporary.
The second dynamic can be attributed to the State Strategy instituted over a period of time and importantly outlined in the various five-year plans. According to several publications, this strategy has led to the gradual flourishing of the Chinese economy and that of some industries targeted by the State in the five-year plans. Steps to open the economy to foreign trade and investment only started to play a significant role in the 1990s. The financial sector and State-Owned Enterprises (SOE) reform were also gradual, gaining momentum only in the mid‐1990s.
The country’s motto was “Crossing the river by feeling the stones,” denoting partial reforms in an experimental manner, often starting in a few regions, and expanding them upon proven success. Other publications, under different authors, disclosed that another strategy was a means to find solutions suitable to China, experimentation, and gradualism was a means to circumvent political resistance against reforms.
Accordingly, many in the Communist Party retained a deep suspicion of the market, while gradual experimental reform was also pragmatic. While Experimental reforms confined to specific regions and sectors, allowed the central government to gather information on the impacts of such reforms.
The third factor is China’s most precious treasure, its hard-working labor force which is estimated to be 800 million, has allowed China to become the world’s factory in the past three decades. A broader strategy emerged only in 1993, with the Decisions of the 3rd Plenum of the 14th Central Committee. Decentralization or regionalization of state authority became a powerful tool in China’s reformed, the various provinces and local governments received increasing authority over investment approvals, fiscal resources, and policies. Zhong Sheng (2018) disclosed that the provinces, municipalities and even counties were allowed, even encouraged, to experiment with reforms.
Another key area of China’s remarkable transformation is the fiscal system and the political organizations that are grounded within the Communist Party were key in aligning regional government incentives. The benefits of reforms were distributed broadly across the population and governments, creating strong incentives to pursue growth and promote a market economy.
In practicality of the reforms, the authorities were also able to mature and test the managerial processes and harmonizing policies needed to implement the reforms. In this case, success meant the experiment was geared for expansion to other regions and sectors across the country. While successful experiments became official policy and were quickly adopted throughout the country, and by decentralizing, authorities turned the country into a laboratory for reforms.
Another area of success by the Chinese was the strategy of approaching reforms with the tested policy one step at a time, and initial with those most likely to deliver results, allowing the administration to built up its repute for practical delivery. There is a saying that every successful reform helped the next, gradually China to build up its “reform” capital, which turn out to be a success story of the international system.
Fascinated Statistics about China
In this contemporary era, dozens of scholars have viewed China’s recent engagement with other countries as a development partner. Their basis of the argument is that China’s presence presents an opportunity for development and economic growth, by providing aid to poverty struck and marginalized countries especially positioned in Africa, the Caribbean region and Sothern Asia. The Chinese approach to development has helped to provide foreign aid assistance, visible infrastructure development, debt annulment, constructions of roads and bridges, support to health care delivery and education systems, and long and short term scholarship schemes to empower and train other nationals in several disciplines.
The National Bureau of Statistics of China discloses that the country’s industrial output in 2018 expanded to 6.8%, while fresh data also showed that China’s GDP rose to 80 trillion yuan, which is estimated at 12.3 trillion US dollars. In a short period of time, over 13 million jobs were created, while more than 700 million of which 10 million are rural residents were lifted out of poverty which amounted to over 70 percent global poverty reduction. In the area of traditional diplomacy, Beijing maintains a diplomatic relationship with 54 of the 55 African states, and that Africa is the largest overseas destination for Chinese investors and visitors.
Further figures from the National Bureau of Statistics; show that China’s GDP has averaged a yearly growth rate of about 9.5 percent. While in terms of foreign trade, China has registered a yearly growth of over 14.5 percent in U.S. dollars. In the last 10 years, with China’s strength in the workforce, capital, market and technology, the nation, on average, contributed 30 percent of the global economic growth yearly, sharing the benefits of China’s development with the world.
Similarly, the country’s share in the global economic growth rose from 2.7 to 16 percent; its per-capita GDP exceeded US$800 in 2017. China is the first developing country to meet the Millennium Development Goals set by the United Nations in terms of poverty reduction; it has backed up this proposal with a fund of US$60 billion for major capital projects, which researchers believed are tied to developing locals’ economic capacity, and geared towards a win-win cooperation to be sustainable.
The fourth factor but not the least is China’s overseas Chinese or Chinese descent living abroad. The World Bank’s Migration and Development Brief published in 2017, revealed that these Chinese diaspora has sent remittances estimated at $64 billion. On the other hand, some of these overseas Chinese came back home to benefit from China’s booming economy and offer their expertise gained abroad, mostly in Western countries such as western Europe and North America, including Germany, United Kingdom of Great Britain, France, Spain, Netherlands, and United States of America.
Reflections on 40th years reforms
In his recent publication, The Governance of China, President Xi Jinping disclosed that from 1950 to 2016, China provided foreign countries with over RMB400 billion in aid, and will continue to increase assistance. He further explained that President Xi China has contributed on average over 30 percent of global growth each year and revealed that in the coming years, China is expected to importUS$8 trillion worth of goods, attract US$600 billion in foreign investment, and made US$750 billion in outbound investment.
The People’s Daily (2018) in one of its editions, reported that President Xi Jinping made a powerful voice to the world that China will stay committed to reform and opening up at a grand gathering to celebrate the 40th anniversary of the great revolution held on Dec. 18 in Beijing. President Xi, also general secretary of the Central Committee of the Communist Party of China and chairman of the Central Military Commission.
According to the author of the People’s Daily publication, President Xi speech reviewed the remarkable achievements made in the past 40 years of reform and opening-up and summarizing the valuable experiences. The president told the gathering that during the past 40 years, China has made an economic miracle through brave exploration and concrete actions. Thanks to the Chinese people’s pioneering spirit for innovation and resilience for self-dependence, they boosted the country’s GDP growth by an annual average of 9.5 percent.
He reflected that within a short time span of several decades, the country has accomplished what took developed countries hundreds of years to accomplish and become an upper-middle income country from a low-income one. It has overcome the great divergence of development among different countries formed after the first industrial revolution and made a miraculous economic catch-up from behind.
Setting a textbook-like example in the world economic history, China has greatly enhanced the confidence of underdeveloped countries to shake off poverty and catch up with the world. China has established close relations with global partners through its openness and the aspiration to embrace the world. Under the non-alignment principle, China made friends with the world and opened its doors for construction.
It established various partnerships with over 100 countries and international organizations and is committed to building equal and balanced partnerships for global development as well as creating common development opportunities and space. President Xi noted that over the past 40 years, China’s trade in goods has increased 198 fold, and trade in services 147 fold. It has attracted investment totaling $2 trillion, becoming the world’s largest trader of goods, the largest tourism market, and a major trading partner of over 130 countries.
The joint construction of the Belt and Road Initiative promotes interconnectivity among countries, as a result of which a pattern of interconnected development has been formed, while China has gained rich experiences in human development by focusing on development and the welfare of the people.
Life expectancy is such a sensitive indicator or overall social conditions because it sums up in a single figure all positive including rising living standards, good education, good health care, environmental protection and negative including poverty, lack of education, poor health care, pollution trends. From a critical analysis, one can conclude that China’s life expectancy is better than would be expected purely from its economic development.
Technological, Innovation and Infrastructure
Accordingly, Chinese industries are not only getting closer to the technological frontier in conventional areas such as electronics, machinery, automobiles, high-speed railways and aviation but also driving technological innovations in emerging areas.
Technological innovation is intrinsically about capturing a new phenomenon through the identification or the creation of new combinations of component technologies. Improvements in the structure, design, or method of an existing technology that delivers a better performance are called incremental innovations. According to an article published by a China researcher, Prof. Hung Ho, China’s has attracted not only many of the best technologies, but also many of the best scientific and technological talents globally, while the Wall Street Journal, citing “executives at Chinese and Western companies,” put it, “China’s technology sector is reaching a critical mass of expertise, talent and financial firepower that could realign the power structure of the global technology industry in the years ahead.”
In addition, in searching for the best supply chain capability to commercialize innovations, high-tech industries increasingly look to China for manufacturing solutions, a kind of complementary innovation. Apple’s products are typical examples.
China’s internal market, now with 1.4 billion consumers and a per capita income of $8,000+ is also a blessing to innovation in many ways. The huge market size promises sufficient return to cover the costs of either acquiring foreign technology or undertaking a cumulative learning process to catch up with frontier foreign technologies, Prof. Hung Ho asserted.
The Chinese tradition of emphasizing education is also crucially important for its technological rise. Globally, China has the highest number of students studying overseas and the ratio of these students returning to China has been increasing. China’s recent phenomenal achievements in science and technology show exactly the contrary.
Infrastructure and basic industries used to be a major bottleneck in China’s economic development. Over the past 70 years, China has increased investment in the construction of base industries and infrastructure, such as energy, transportation, and telecommunication, and remarkable achievement has been made in this regard.
Nowadays, China has become the second largest energy producer in the world, next only to the United States of America. The total self-sufficient rate of energy is 90 percent in China, the statistics from the Chinese Bureau of Statistics have revealed. The country has over the past 60 years greatly enhanced its transportation capacity, with railways, highways, airports, and ports built one after another. The length of railway lines in service increased from 21,800 km in 1949 to 120,000 km in 2018.
According to a global index report, China conducted economic and cultural exchanges with over 220 countries and regions in the world. China today opens wider to the outside world and has become a major trading power in the world today. China has been actively participating in international competition and economic cooperation, increasing investment in overseas projects.
In the 21st century, the pace of socio-economic development quickens the pace in China. Great progress has been made in educational undertakings, with the educational popularization rate and the level of education approaching the average of medium-income countries. Further statistics show that in the early 1950s, illiterates and semi-illiterates made up over 60 percent of the total population of China. In 2007, the gross attendance rate of schools of higher learning, high schools, middle schools, and primary schools reached 99.5 from 23.5 percent, the report has said.
As the Chinese people celebrate their seven decades of reforms and opening up characterized by growth and socio-economic development, others under-developed nations need to see China’s great transformation as a wake-up call to transform their economics and political policies by initiating their own development path different from the outdated philosophy of hegemony, and always stick to peaceful development.
China’s transformation from a poor and backward nation into a modernized and prosperous one is proven to be an amazing achievement in human history of tackling poverty and providing a valuable experience for other nations. China not only is an important driving force of global economic growth but also makes a significant contribution to maintaining world peace and stability as well as promoting interconnectivity between countries and regions.
Authored by Josephus Moses Gray, Assistant Professor of International Relations, University of Liberia Graduate Program of International Studies. Contact: Mobile-(+231)880-3302-99/ Email: email@example.com