By Hu Angang
The path that China has chosen to rise and to modernisation is green, innovative, harmonious, peaceful, and cooperative. This article digs deep to analyse the roadmap of China’s rise.
The industrialisation of China started at a point not only later but also lower than that of the west. The industrialisation of China hasn’t started until the 1950s, which is 100-200 years behind that of the west, which has begun in the mid of the 17th century. When China just began her industrialisation in 1950, average personal income in the western Europe was 9.5 times more than that of China, and in the United States, 20.8 times. China was among the poorest countries in the world, with an average GDP lower than that of India.
China has been developing in a way different from how the west rises that she rises or re-emerges from the shadow of decline. The economy began to soar, once again, in 1978, and the rise of China is more than just a rise. It is a re-rise or re-emerge.
How Should China Rise?
The path China chooses shall bring forth new ideas and go beyond the traditional way of developing, which should not be aiming at exceeding those developed countries, going after the living standard of the west, or targeting merely a higher Gross National Product or GNP. The new way of developing should be focussing on improving not only the economy, but also our politics and society, to level up the overall index of modernisation; seek not only economic profit, but also social equity, to increase the wealth of all people; improve not only average income, but also the synergic development of economics, technology, education, culture, military and so on, to empower our nation; and considers not only people’s need in the short run, but also life and development of future generations. Those are the main characteristics of China’s new way of development.1
The new strategy of synergic development in the 21st century is what China shall adopt to develop in a green way. In this case, China will not follow the same old road that many western countries took where they had gone through high energy consumption and high pollution emission and has taken the strategy of green development until income improved.2 What we should do is to shorten the period of high energy consumption and high pollution emission, to step in the stage of green development faster than the west has done.
The path that China has chosen to rise and to modernisation is green, innovative, harmonious, peaceful, and cooperative. This is a unique and unprecedented way that no great power in this world has ever taken. On the 12th National Congress of Communist Party of China in 1982, Deng Xiaoping first proposed “the path of China”, “a path to socialism and modernisation with Chinese characteristics”, and it has been the topic of the following national congresses all the way to the 16th in 2002. And the 17th congress in 2007 is to dig deeper on this topic as well. China’s way to modernisation is a historical process over a long period of continuous progressing, and during which the process of practice, acknowledge, re-practice, and re-acknowledge is constantly repeated.
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The Impacts of the Rise of China
As an irreversible historical trend, the rise of China not only has revolutionised the Chinese society, but is also influencing the world as a whole. Further, taking into consideration the Chinese population which counts to 1/5 of humankind, modernisation of China has to be the process of a populous country rises to a power with comprehensive national strength. Be it the way to rise or to modernisation, its impacts go beyond China’s border to influence the whole world’s development. I summarise the influence of China’s rise to the world as the following five scale effects: 1) scale effects of the huge population, 2) scale effects of employment from more labour participation, 3) the fast flowing economic scale effects, 4) scale effects of the open market and trading, and 5) scale effects of energy consumption and environment pollution. Among the above mentioned five scale effects, the first four are more about positive externalities, while the last is about negative externalities. Generally speaking, the positive externalities of the rise of China outweigh the negative externalities.
One of our latest researches has shown that China’s neighbouring economies have become the major beneficiaries of the rise of China. According to the statistics of our 1st, 2nd and 3rd biggest trading partners from our neighbouring economies, among the 24 neighbouring economies, 12 of them appeared before 1995, and 4 of them took China as their biggest trading partner, 3 as the 2nd biggest, and 5 as the 3rd biggest; 21 appeared before 2015, and 11 of them took China as the biggest trading partner, 6 as the 2nd biggest and 4 as the 3rd biggest. It means that the rise of a country can bring positive externalities to her neighbouring economies, and although we cannot deny the existence of negative externalities and competition, we can achieve a win-win stage through cooperation and negotiation.
What Drives the Economic Development of China and the 5 Factors?
For a country to rise, one of the key factors is innovation, constant innovation. It should be responsible for the rapid decline of traditional agriculture holding back innovation and failing in the face of competition and conflict. To encourage innovation, constant innovation, leads to rise and empowers a country, and fundamentally drives the rise of China. Then how does China innovate? The innovation of China can be summarised as the following: firstly, innovation of ideas, Deng Xiaoping proposed in 1978 “free up minds and seek the truth from facts” and “a path to socialism and modernisation with Chinese characteristics”. Secondly, innovation of policy, in 1992, Jiang Zeming made it clear, based on Deng Xiaoping’s idea, the concept of innovating socialist Market Economic System, in the 14th National Congress of Communist Party of China. The third is market innovation, the policy of opening up was introduced by Deng Xiaoping in 1978. In 2001 China officially joined the World Trade Organization and has become a great market with more openness and competitiveness. And lastly is technology innovation. In 2006, Hu Jingtao brought up the goal of establishing an “innovative country”, to encourage technology innovation in a larger scale, independent innovating, to recreate on the basis of bringing in and learning, to combine various technology in innovation and to realise original and fundamental innovation. To be brief, it is constant innovation that drives the rise of China and it is comprehensive innovation that drives the comprehensive rise of China.
To be more specific, there are five major factors that has been pushing forward the rapid economic development of China in the past three decades.
The first one is acceleration effect. Within a period of time, those newcomers are likely to realise economic growth at a higher speed than the developed countries did. China is catching up. While the “four little dragons in East Asia” have created the miracle of 30 years of fast growth, the longest and fastest economic growth in developing countries since the industrial revolution, China is breaking the record. And more importantly, the miracle is coming to reality in a country that has 1/5 of world population.
Secondly, there’s improvement in industry structure. Within a period of time, the newcomers shall experience a faster transformation in industry structure. For instance, it took Japan 80 years to decrease from 70% to 50% the number of those working in agriculture; it took the United States 50 years, 1820-1970, took the Soviet Union 33 years. 1917-1950, and took China only 17 years, 1978-1995. From 1978 to 2003, China’s population, employment, production, demand, consumption and trade have witnessed significant transformation in structure, which has driven workers to production sectors of higher level, and during which physical assets accumulated, employers’ skills upgraded, education improved, organisational structure optimised, and international trade liberalised.
The third is opening up. Less-developed countries are participating in the process of globalisation more rapidly than the developed countries are. A fast-growing volume of international trade is necessary for a country’s economic boom. In all the emerging economies, be it Japan, Korea, Thailand or Taiwan, the proportion of net-export in GDP has increased noticeably. China’s opening up began in the 1970s, and has been transforming from an isolated country to an outward-looking one, and has become one of the world’s largest traders, with her volume of international trade growing from $20.6 billion in 1978 to $3.96 trillion.
The next one is institutional reform. With the freer market and further improved market mechanism, the Opening-up Policy of China is making market mechanism an ever more important role in allocating resources. And with the in-depth development of the market-oriented reform, market infrastructure has been constructed and improved, and market rules and code of conduct for market participants established and implemented.
The last one is the effect of technology catch-up. In a country with rather backward technology, the speed at which technology spread is way higher than that in a country with advanced technology. When this is the case, those countries with backward technology are gradually catching up with the developed countries, for the reason that the cost of importing technology is much lower than that of technology innovation, and that it could be fairly time consuming to commercialise technology. Therefore, although developing countries are behind the developed countries in terms of technology, developing countries could import technology to avoid waste in time and money, and to shorten the time lag for new products to go to the market.
Technology in China has three sources: 1) means of production containing new technology imported directly, such as a high-tech product, but excluding long-and-mid-term technology transfer, such as intellectual property; 2) new technology acquired through foreign capital where foreign capital is not all used in research and development; 3) institutional innovation realised by domestic companies supported by research and development funds, which can be seen from the proportion of R&D funds in GDP.
Besides, China is also absorbing and spreading knowledge, technology and information through the internet, by cooperating with developed countries in terms of science & technology and international exchange of high-tech talents, which cannot be quantified. China has been developing and accumulating knowledge in a sustained and stable way, yet there’s still a long way to go.
From all perspectives, be it historical or realistic, domestic or international, quantitative or qualitative, macro or micro, the rise of China has an incredibly high speed, large scale, and far-reaching influence to the world. In terms of information and research, we’re confronted with information asymmetry, incompleteness, and uncertainty, where it is hard to obtain information promptly, to undertake dynamic analysis accurately, not to mention to undertake a comprehensive “forest analysis”.3
Generally speaking, there are both opportunities and challenges out there for China, and the opportunities outweigh the challenges. There are both long-existing conflict and new conflicts, but the new ones outnumber the old ones. There are both advantages and disadvantages, but the advantages outweigh the disadvantages. Nevertheless, one thing we can be sure about is that we are standing at a historic point where we are facing with conditions largely different from what we had in 1949, time when our nation was funded, or in 1978, time when the reform was started.
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About the Author
Hu Angang is one of the pioneers and leading authorities in the realm of Contemporary China Studies. He now serves as the Dean of the Institute of Contemporary China Studies of Tsinghua University and Professor of School of Public Policy and Management of Tsinghua University. Hu has published about 70 books. His latest works are the Grand Strategy of China’s 13th Five-year Program(2015), Super China (2015), New Think Tank with Chinese Characteristics : Hu Angang’s Views (2014), Collective Presidency in China (2013), China: Innovative Green Development (2012) and 2030 China: Towards Common Affluence (2011).
References
1. Hu Angang: China – New Mode of Development, “Chinapress”,
NYUS, 16.05.1992; Collection of Hu Angang – 10 Relationships of China Stepping to the 21st Century, page 347, Heilongjiang Education Publisher, 1985
2. The writer’s speech in General Office of the State Council, and was later included in Hu Angang: China New Concept of Development, Zhejiang People’s Publisher, Hangzhou, 2004
3. As Mao Zedong pointed out, research cannot be objective, biased or superficial, and we can’t see the forest for the trees. Mao Zedong: On Contraction, Collection of Mao Zedong (Volume I), Page 312-313, People’s Publishing House, Beijing, 1991
