chapter  3
26 Pages

History, politics and 30 years of development and reform development and reform

To an outside observer unfamiliar with China’s history since the country came in regular contact with the West or with its history since 1949, the accelerated growth and rapid structural transformation of the Chinese economy since 1978 came as a complete surprise and has widely been seen as a “miracle”. A miracle implies that there is no real explanation for the acceleration in growth, the modernization of the economy and the urbanization of society. But China was not the first economy to enjoy such an abrupt change in economic performance. Growth in Japan, Republic of Korea, Taiwan Province, Hong Kong and Singapore all enjoyed two to three decades of near double digit growth that some considered a miracle but most analysts now describe as the product of various reforms in policy unleashing a pent up potential for growth. Because these economies were catching up with the high income countries of Europe and North America, their growth was particularly rapid until they began to catch up. What was different about China was that the number of people involved in this acceleration was far larger than anything that had occurred previously in history and, to date at least, accelerated growth appears to be going on longer than in the other economies that experienced accelerated growth and structural transformation. For someone familiar with Chinese history over the past two centuries and particularly since 1949, the transformation of China since 1978 should have been less of a surprise, and, with the benefit of hindsight, can be readily explained. What is it about Chinese history that should have prepared us for this dramatic change in economic performance? And what role did politics and political leadership play in making the changes that unleashed China’s pent up potential? Our focus in the first part of this chapter will be on the conditions that existed in China prior to 1949 that help explain the present. The emphasis will be on the influences that created a unified Chinese state, the origins of the high value placed on education, China’s pre-modern experience with long distance commerce, and the limited industrialization that occurred prior to 1949. We then will turn to economic developments in the years from 1949 to 1978 and how they influenced what happened after 1978. In the latter part of the chapter we will begin with a brief discussion of the nature of Chinese politics in the nineteenth century and how political attitudes and beliefs in that period could still be found in the post-1949 era. The next part of the chapter will speculate

about how political actions and movements in the first three decades of the People’s Republic era shaped development in that period and had a major influence on developments after 1978. Up to this point the chapter will have focused on what it is in China’s history and politics that helps explain the country’s economic performance during the 30 years of reform. In the final section we will discuss what lessons other countries can draw from China’s historical and political experience. Because only a small number of countries have experienced a history similar to that of China, there is much about the Chinese reform experience that cannot be easily adapted elsewhere. However, all developing countries can learn from comparing China’s experience with their own, even if the lesson on occasion will be that they will have to do things differently.