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How China Learnt from the West in the Reform and Opening-up Era?

Apr 04, 2023
  • Brian Wong

    DPhil in Politics candidate and Rhodes Scholar at Balliol College, Oxford

Recent years have seen a surge in interest in framing China’s developmental trajectory as a sui generis, exceptional story attributable to the excellence of the Chinese people and its governance model.

Indeed, China averaged a whopping 13% annualised growth rate between 1990 and 2020, as compared with 4.5% in the U.S.; the Chinese GDP went up from 5% in 1990 to 66% by 2020. Infrastructural investment and hyper-efficient export-driven economics in the first two decades post-1990, coupled with the booming of venture capital-fuelled innovation and technology sectors in the 2010s, played a key role in promulgating the Chinese economic miracle.

However, the claims that the Chinese story is unique and irreplicable, risks omitting two important facts. The first, is that there existed much similarity between Mainland China’s recipe for success, and that of the Four Asian Tigers - e.g. Hong Kong, Singapore, South Korea, and Taiwan. Robust and forceful political institutions, paired with highly market-centric economic liberalisation aimed at boosting industrial competitiveness, capital flows, and innovation within dynamic state-owned enterprises - these are striking similarities, to name but a few.

The second, is that China and America have been long-standing beneficiaries from one another. Since its normalisation of relations with China at the pivotal 1972 Nixon-Mao meet, the U.S. benefited from China’s cheap and gargantuan production workforce, structurally robust and efficient technological innovation, and - now -- vast consumer market and burgeoning middle class. Washington also gained a crucial counterweight to the USSR at the peak of the Cold War. Those who claim that constructive engagement between Washington and Beijing only enriched the latter, seem to conveniently gloss over bare and clear facts.

On the other hand, China also benefited substantially from receiving and adopting many of the best practices implemented and pursued by the U.S.. The first and foremost dimension here was the introduction of principles of market economy as a means of regulating and organising China’s national and provincial economies.

In America, China found its exit strategy from the vastly stifling and ossified constraints imposed by its own planned economy. It was through enshrining ownership rights, gradually integrating and removing barriers to a singular national market, and holding company directors and managers accountable through market forces, that the country succeeded in liberating the true potential vested in its vast population.

A key political consideration that is oft-overlooked here concerns plausible deniability and externalised validation. In seeing through market-oriented reforms, progressively oriented Chinese bureaucrats had to fend off substantial consternation and pushbacks from more conservative and risk-averse colleagues. Drawing upon the success story of America -- and the testimony and advice of external advisors and friends from afar - played a key role in smoothening the process of liberalisation, and ameliorating scepticism in the room. 

A further dimension concerns the extent to which borrowing from and adapting to the Chinese context “Western” standards, in fact allowed China to position itself as the premier destination for investment and corporate engagement for the first decades of the millennium. Synchronisation with international labour, legal, and corporate governance standards in turn brought China into the WTO in the late 1990s - a monumental decision that truly kickstarted the country’s decades of hyper-globalisation.  What’s worth remembering here is that many of China’s leading economic success stories - whether it be Alibaba, which revolutionised digital commerce, or (formerly, which capitalised upon the era of booming domestic and international travel, to name but two -- relied heavily upon not just American capital (venture capital or listings on NASDAQ, or both), but also best practices from the financial industry.

None of these is to take away from the incredible accomplishments of entrepreneurs and financiers that have transformed and sublimated such practices since then; yet it goes to show that China’s contemporary successes are intertwined with evolutions and institutions in the West. A wholesale repudiation of such mutual learning is not only ahistorical, but also arguably deeply detrimental to the Chinese economy as it seeks to forge a path leading to its “great rejuvenation” and enduring modernisation.

The final dimension constitutes the importance of profound interpersonal friendships and exchanges that undergirds the modern Chinese story. Many of China’s leading entrepreneurs, scientists, and intellectuals -- in this generation -- received their education abroad, yet returned to the country they love to stay and build. With unrivalled insights into China’s idiosyncrasies and armed with cutting-edge knowledge acquired at Western universities, they have both benefited from, and come to personalise, the best of both worlds. 

China’s economic growth during the four decades of reform and opening-up, is by all means unique - in scale, in ambition, and in depth. Yet to understand such transformations fully, we must recognize and acknowledge the role played by Western ideals and innovation; only then, could we be seeking real truths from substantive facts. 

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