What is the Chinese System?

This is a graph of the Chinese economy from 1952 to 2005:



The growth in GDP since the economic reforms has been nothing short of phenomenal. During this time, the Chinese leadership has weathered several storms, from the June 4th incident to the Asian financial crisis to the 2008 financial crisis. Through it all, China has continued its remarkable economic growth.

Although such growth comes at a cost (pollution, social unrest, corruption), it has also lifted hundreds of millions of people out of poverty.

There is no question that the CCP was an integral actor in this amazing success. Furthermore, the CCP's performance has been consistent for over 3 decades, proving that its success is not a fluke but a systematically wise guidance of the Chinese economy.

So my question is this: what is it about the CCP that is contributing to its success? Authoritarian regimes are a dime a dozen among third-world countries. The CCP itself did not have a stellar record in its past: the Great Leap and the Cultrual Revolution comes to mind.

We all know that Deng Xiaoping instituted reforms after he seized power after the Cultural Revolution. However, Deng died in 1997 and had stopped handling the day-to-day affairs of state long before that. Nevertheless, the Chinese economy plodded on.

What kind of reforms, if any, did Deng institute in the CCP itself to ensure that even today, the CCP is able to make economically sound decisions in a society that moves at a dizzying pace?

If not Deng, then *what* created the modern CCP? Since the CCP institutes policies and shapes the political infrastructure that affects every aspect of the Chinese nation, one could call it simply, the "Chinese System".

So what are the success factors of the Chinese System? How does the system produce a competent leadership? How does it consistently make successful policy decisions?

Maybe it just stepped out of the way of the people's desire to achieve and be prosperous?

I think we should not get too caught up in the idea of some phenomenal governing that can generate growth like no other. It is people's nature to want to improve their lives where the opportunities are opened to them. The CCP helps by overseeing regulations and maintaining stability, but I will not say the CCP made the chinese economy grow, the chinese people did. The CCP may help by simply be more competent and less corrupt than some other asian governments.

With a large population base to start with and much lower average income, added to the fact that China made the growth while she is industrializing and entering into market economy, the growth is amazing but not unexpected.

People don't need motivation to make money and be productive, people need education, infrastructure and capital.

1949 to 1978 saw a period of relatively love growth at about 5% per annum was actually the development of relatively modern infrastructure, industry and the development of services and utilities that could create human and material capital.

Without that material development China would still be a poor and backward nation like it was before 1949.

Player 0 said:

People don't need motivation to make money and be productive, people need education, infrastructure and capital.

1949 to 1978 saw a period of relatively love growth at about 5% per annum was actually the development of relatively modern infrastructure, industry and the development of services and utilities that could create human and material capital.

Without that material development China would still be a poor and backward nation like it was before 1949.

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Of course they don't need motivation, they are self-motivated - the CCP's role is to be competent and provide the opportunities i.e. infrastructure, education facilities and attracting capitals. The populace are smart enough to figure out the rest and start working away.

no_name said:

Maybe it just stepped out of the way of the people's desire to achieve and be prosperous?

I think we should not get too caught up in the idea of some phenomenal governing that can generate growth like no other. It is people's nature to want to improve their lives where the opportunities are opened to them. The CCP helps by overseeing regulations and maintaining stability, but I will not say the CCP made the chinese economy grow, the chinese people did. The CCP may help by simply be more competent and less corrupt than some other asian governments.

With a large population base to start with and much lower average income, added to the fact that China made the growth while she is industrializing and entering into market economy, the growth is amazing but not unexpected.

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Regulations and a stable society is the entire purpose of a government, wouldn't you say?

Bad regulations can lead to either a stifled growth environment, or an out of control wealth disparity that creates social unrest.

Yes, the Chinese people work hard to improve their lives, but I wouldn't say that they are unique in this. Every society would work hard if the proper infrastructure is in place.

And *why* would the CCP be more competent and less corrupt than other authoritarian governments? Most of the time, authoritarianism breeds nepotism. What is different about the CCP?

solarz said:

Regulations and a stable society is the entire purpose of a government, wouldn't you say?

Bad regulations can lead to either a stifled growth environment, or an out of control wealth disparity that creates social unrest.

Yes, the Chinese people work hard to improve their lives, but I wouldn't say that they are unique in this. Every society would work hard if the proper infrastructure is in place.

And *why* would the CCP be more competent and less corrupt than other authoritarian governments? Most of the time, authoritarianism breeds nepotism. What is different about the CCP?

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The development of human capital and decentralization allowed the CCP to better maximize development through a horizontal economic model, that alone makes it better suited to growth and development than the USSR.

Other than that, loyalty and and long term vision to the goal of using market development as a means to improve the well being of people, increase wealth and strengthen the nation.

The biggest direct contributions of the CCP in my opinion are as follows:

Infrastructure
Only governments have the kind of capital to make big infrastructure projects possible, especially the kinds that generate massive positive externalities which greater benefit society and the country as a whole, but which would be massively under provided if left to market forces since investors would not be able to get a good return on their investment precisely because they cannot charge for those externalities.

One only needs to compare India to China to appreciate how big and important a role the government played in setting up the infrastructure needed to allow the economy to grow unencumbered.

Education
This very similar to infrastructure, and can be quite convincingly described as human infrastructure. The comprehensive and determined drive to eradicate illiteracy and expand secondary and tertiary education has massively boosted China's human capital, which when combined with the aforementioned comprehensive physical infrastructure investments, made China far and away the most attractive destination for outsourcing and home grown manufacturing since China offered first world infrastructure and education standards for third world labour prices.

Liberation of women
I think this is an often overlooked aspect of the CCP's contribution in not only bringing women into the work place, but also in shattering glass ceilings and opening up pretty much all aspects and levels of employment to women with far fewer limitations than liberal western countries.

China has far more female millionaires and CEOs than any western country, and there are no jobs that spring to mind where women would be rejected out of hand, even for heavy menial jobs like mine workers and construction work or frontline combat roles within the military.

There is still a lot of social sexual discrimination against women, but in the workplace, women have it as good in China as anywhere in the world bar none.

Government special economic zones, export subsidies, massive government funding for R&D and technology transfer requirements for foreign companies
These are much hated and often trumpeted in the west about how China isn't playing fair, but the undeniable fact is they are effective. But western indignation rings rather hollow when they themselves have done the exact same thing when they were modernising, and have pretty much ripped up the rulebook and done whatever they wanted to save themselves during the recent financial crisis. South Koreans and Japanese with long memories should be particularly bitter at the marked different treatment the west got compared to them when the Asian Financial Crisis struck, when the west carved up most South Korean and Japanese banks and bought them for pennies on the dollar as a condiction for IMF bailouts.

All the western 'fair trade' practices strikes many as more of a means to keep developing countries from actually catching up rather than aiming to be actually fair since those countries who strictly follow the west's dictates in veritable get stuck in modernisation traps and never really break into the first world group. And before anyone starts, South Korea, Japan and Taiwan all used export subsidies and reverse engineering to get to where they are now.

The SEZ and export subsidies helped Chinese manufacturing to build up critical mass quickly and government mandated technology transfers from foreign parterners allowed China to rapidly ascend the technology ladder and break out of low value added assembly jobs very quickly.

Government grants and funding for key R&D projects are also training up vast numbers of top end researchers and engineers, many of whom go into the private sector after being trained up by the state, or more often collaborate directly with private companies to commercialise innovations developed using government funding. All of this is helping Chinese high tech firms to move beyond mere imitation towards increasingly innovation as they catch up to the cutting edge of technology frontiers.

The One Child Policy
This will obviously be the most controversial, but I think the CCP made the right call.

The OCP allowed China to better focus its limited resources into caring for and educating their children, and this was a major contributing factor in how literacy and higher education rates managed to climb so quickly so rapidly.

Without this concerntration of resources to improve human capital nation wide, many of the modernisation and technology advancement achievements would not have been possible. In addition, I believe that inequality and social mobility would have been even worse had there not been a one child policy.

Many bleeding hearts lament how there is now a two tier system caused by the Hukou system between city folk and village folk, and that migrant workers are exploited and rural areas are falling behind the cities in terms of wealth and development.

However, all of that would have been far worse without the OCP and the education improvements that brought.

Most rural families struggle to send even their sole offspring to university because of the financial burden that requires. Few of those rural kids who went to university and made a better life for themselves and their families back in the villages would have made it out of the fields had they had several siblings that all needed feeding and clothing.

Those migrant workers would not have been able to get and keep down factory or restaurant jobs if they had no education and we illiterate. Without those jobs, the rural area would be even poorer because of the loss of the massive remittances migrant workers send home.

One again only has to compare China to India to see where unfettered population growth leads. For all the Indian boasting about a younger population compared to China, an eye watering percentage and number of those Indian young are illiterate with almost no prospects or chance to break out of the crippling poverty they have been born into. In the decades to come, those people would become a burdon to society rather than a boon.

Having said all that, I think the OCP has served its purpose and is now becoming an obstacle to the betterment of China because of China's greying population and the massive social distortions the OCP has had on China. In my view, the OCP should be relaxed and then scrapped as a priority. But I would not deny the good it has done just as I accept the evils done in its name.

The OCP was a devil's bargain, but on balance, I think it was the right call to make at the time, and it served China well.

There are obvious many other things the CCP has done right, ranging from maintaining national unity to creating and implementing good legislation and regulations. But I consider those part and parcel of any half competent government, so in that regard, what the CCP has done in those fields hardly makes it stand out from the crowd. If anything, when it comes to implementing legislation and government policy, the CCP hardly has a stellar track record. The often (yet overly reported) illegal land grabs by officials and food safe scandals will attest to that.

Those bleeding hearts usually forget that it's their softness that'd doom humanity when grit is called upon to carry civilization through...the irony is, it's always take a dictatorship to make the hard decisions on the spot, leave it to democracy deliberation the critical hours will come and gone but nothing being done...grit is something exclusive to the hard-hearted, period.

With a population still at 1.3 billion, the One Child Policy is still a brutal necessity, though now it can afford with moderation to effect some control growth where it is desired. When a nation like China move into this modern era, without disasters / diseases / war / famine to check the numbers, the old ideology of breeding like rabbit only do more harm than good; worse, most of the old thinking that favors more children actually rooted in the ancient sexual discrimination of a patriarchal society - that is, give birth to boys is preferred than girls. There're unspeakable deeds done in the name of OCP but overall it was a resounding success...to those who disagree, just look at India and Philippines, those two who has enormous potentials yet doomed by the lack of effectively enforced birth control policies.

On a physical scale, China doesn't have the land to feed this many, it'd be better if the population reduced to the below-billion mark but natural process takes time, and less drastic.

What I'm trying to get at is, how did the CCP go from the days of the Great Leap Forward to a party that has consistently managed to make the right calls with regards to China's progress?

For example, they could have focused on building a financial system like the US, but instead chose to focus on infrastructure. They could have focused on the military like the Soviet Union, but chose to focus on the economy instead. The party could be rife with nepotism and incompetent appointments, but somehow it has managed to produce competent leaders for 3 decades.

solarz said:

What I'm trying to get at is, how did the CCP go from the days of the Great Leap Forward to a party that has consistently managed to make the right calls with regards to China's progress?

For example, they could have focused on building a financial system like the US, but instead chose to focus on infrastructure. They could have focused on the military like the Soviet Union, but chose to focus on the economy instead. The party could be rife with nepotism and incompetent appointments, but somehow it has managed to produce competent leaders for 3 decades.

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The 2 decades of devastation, peaked at Cultural Revolution, leave casualties on all sector of Chinese society, and that extends to the leadership cadre as well...along with Mao and Zhou, almost all of the big wigs have died one way or the other, leaving Deng Xiaoping about the only one that got enough weight to throw around and lead a dead tired China to recovery and reform. Fortunately, Deng is pragmatic amongst all things, and a culture of pragmatism have prevailed in his time...despite other detraction and various groups jockey for leadership, pragmatism in leadership carried through to this day.

Also, the failed examples of USSR and the Eastern Bloc, those big and small recessions over the decades, several localized wars all over the globe, gave the Chinese leadership something to reference to when comes to their own.