China Boom CMS

<p>With regard to the history factor, the political factor, you cannot ignore the Cultural Revolution. China's reform and opening didn't happen until after the 10-year catastrophe that was the Cultural Revolution and common Chinese people supported these reforms. They remained committed to the path of opening up, a crucial piece of historical background. First, I think the Cultural Revolution and the history of reform forced Chinese people and leaders to realize that they must follow the path of market reform. Because the previous period, the period under the centrally-planned economy, created shortages of all sorts of goods, the national economy was able to expand in certain areas like heavy industry, but the people were poor. Common people faced serious hardship. Life then was also quite equal. It was fair. The gaps in wealth weren't too large. But, basically, life was poor. Deng Xiaoping had a saying, &quot;Poverty isn't socialism.&quot; So, I think you can say, under these circumstances, market reform was necessary. Along with market reform came personal freedoms, and this invigorated the response in the economy and in productivity. Secondly, I think because of the Cultural Revolution and its bitter lessons, Chinese people, top to bottom, are very single-minded. China cannot look back. It can't repeat the same mistake. I think that in spite of the 30-year period of reform, there is still conflict between the left and right, sometimes very serious conflict, especially on points of ideology. There are people with old ways of thinking. Some advocate returning to a planned economy. I think having experienced the Cultural Revolution makes the majority of people completely opposed to this idea. You can say most people know China's current period is the greatest period in its history. The people have rights and freedoms, so it's the best period in that way too.</p>

<p>I&rsquo;m in the camp that thinks the boom wouldn&rsquo;t have been possible, perhaps, without the Cultural Revolution; that that was such a disaster and so traumatic for the nation, that it allowed the leadership to do a 180 degree turn and embrace capitalism the way they did. If there had been no Cultural Revolution, I think it's quite conceivable that the government may not have launched the market reforms, that they would have pushed ahead and muddled along like many socialist states did in that period. I think it was because the Cultural Revolution was such a disaster, tens of millions of people died in famine and political violence and the country was torn apart, the economy was in shambles and I think communism, as an ideology, was all but dead at that point. It completely discredited it. And so, it was only because of that, I think, that the leadership had the courage, because if they wanted to survive and stay in power, I think it was their only choice to embrace market reforms the way they did. And they succeeded.</p>

<p>From an economic perspective, as important as what happened in those 30 years, is what happened in the 30 years before. So, the period from '48 to '78 laid the groundwork for the type of dynamism that we saw after. And the analogy that I like to use is a slingshot. So, since 1978, we&rsquo;ve averaged 9% economic growth in China and the reason, in part, that that growth was so fast, was because the growth before it was so distorted. So, it&rsquo;s like you take a slingshot and if you pull it in the wrong direction for 30 years and then you let it go, the speed with which the stone you have in your slingshot travels is going to be light speed. And that&rsquo;s what happened in China. So, in 1949, when the CCP comes to power, Mao Zedong takes the country, the People&rsquo;s Republic of China, in an economic direction that is not conducive to its resource endowment. China has a lot of labor, doesn&rsquo;t have a lot of resources, and doesn&rsquo;t have a lot of capital. Other countries in East Asia with that type of endowment, like Japan and Korea and Southeast Asia, were doing the types of economic activities that having a lot of labor makes you very good at. So, we&rsquo;re talking about light manufacturing, like toys and textiles and apparel. China, on the contrary, decided to follow a Soviet model of industrialization. So, instead of doing things that required a lot of labor, it decided to do things that took a lot of resources and a lot of capital. So, steel and aluminum and cement, a lot of capital-intensive heavy industry. Over 30 years, that economic strategy brought the country to the point of famine, a number of times...</p>

<p>China had a communist revolution which, like it or not, kind of wrenched it from a feudal past and propelled it into a kind of modernity that continues to escape India today, which remains, very much, a feudal society. And the kind of continuities with the past in India are far stronger than they are in China. As a result, it [India] remains a deeply misogynist and deeply patriarchal society, which there are huge elements of in China today as well, but there was a dislocation that was created in the 50s, 60s, and 70s, which means that the participation of [Chinese] women in the workforce today is higher than the world average, while in India it&rsquo;s really much, much lower than the world average. If you look at female literacy figures, it&rsquo;s more or less the same as male literacy, because maybe one or two percentage points down; in India it&rsquo;s something like less than 50% of women are considered literate today. So, of course, when you have half of your population, and less than half of those are literate, that&rsquo;s bound to have a big impact on any kind of economic growth story. So, gender empowerment is something that is very much there to China&rsquo;s advantage&hellip; as other aspects of human development, and that is really, in some ways, the biggest gulf between India and China; not just the infrastructure which people tend to focus a lot on, but human development, and by this I&rsquo;m talking about literacy, gender empowerment, dignity of labor, those kinds of issues.</p>