These three books on the Asian economy, particularly the Chinese economy as well as China’s political system, are eloquently written. Two of them deal with the Asian economy in general and China’s economic take-off in particular. The authors explain how China, through its economic reforms, transformed its rural, agricultural, command economy into social market economy, and they have analysed how China embraced the world market and became a superpower. For this, the authors drew upon various factors, from the impact of the global economic scenario to China’s domestic factors, per se, such as the “one child policy” or the role of political leaders like Zhu Rongji, the man behind China’s economic take-off in the world market.
In this tumultuous period, Zhu served as the mayor and the chief of the Communist Party of China (CPC) in Shanghai from 1988 to 1991, and as the vice premier of the State Council from April 1991 to March 1998, and later as premier, from March 1998 to March 2003. John Keane’s book describes how China evolved, through its long term experiment, a form of democracy backed by one-party rule. Keane’s argument revolves on whether China’s political system is authoritarian. Read together, the three books cover a wide range of China’s economic and political structures.
In Zhu Rongji and China’s Economic Take-off, John Wong, a professional fellow and academic advisor to the East Asian Institute of the National University of Singapore, offers an historical explanation and comparative analysis of China’s economic growth and its future prospects, in general, and Zhu Rongji’s crucial role in China’s economic reform in the 1970s, in particular, as China witnessed an unprecedented growth for over three decades, from 1979 to 2013.
The literature on the topic is profuse. Laurence J. Brahm’s Zhu Rongji and the Transformation of Modern China (Wiley Eastern: University of California, 2002) explores China’s astonishing transformation from a centrally planned to a market economy in the twentieth century. Brahm tells the inside story of Zhu’s rise to power, the political obstacles that he had overcome and the policies and strategies that he had engineered to set China on a new path. He provides the untold story of Zhu and his strategies, and the key events that shaped China into a modern nation and economic powerhouse. An equally significant book, The Making of an Economic Superpower: Unlocking China's Secret of Rapid Industrialization, by Yi Wen (Singapore: World Scientific, 2016, Pages 336), explains that only a radical reinterpretation of the history of the Industrial Revolution and the rise of the West (as incorrectly portrayed by the institutional theory) can fully explain China’s growth miracle and why the determined rise of China is unstoppable despite its current “backward” financial system and political institutions. Zhu Rongji offers his personal account of the transformation in a remarkable book, Zhu Rongji on the Record (Foreign Languages Press, 2013). The book is acollection of over one hundred important speeches, articles, letters, and instructions from the former premier Zhu during his term as vice premier, when he was responsible for achieving the economic vision of the supreme leader, Deng Xiaoping.
John Wong’s Zhu Rongji and China’s Economic Take-off is a welcome addition to the historical literature. Wong covers a variety of topics including a brief survey of the state of the economy at the beginning and at the end of Zhu’s term as the fifth premier of the People’s Republic; and how he tried to perform as best as he could in macro-economic management during the 1997 Asian financial crisis, as how he started banking and financial liberalisation.[1] The book also includes special studies of such topics as China’s service sector, its export structure, and the sources of its high growth. The collection ends with a chapter on China’s rapid population transition, of falling fertility, and an account of how Zhu had finally embraced capitalism. These chapters provide a comprehensive review of various aspects of China’s economic and social development along with its reform process during China’s critical period of economic growth when Zhu was in charge, and they serve as a record of Zhu’s legacies in managing China’s economic take-off.
This book is unique in a sense that every chapter begins with a lengthy introduction, which not only highlights the main issues and arguments, but also provides a broad background to interpret those issues and arguments from today’s perspectives based on updated information. In a way, this book has a certain dualistic feature. While the individual chapters are historical essays that reflect events taking place at that point in time, the long introductions to the chapters are essentially self-contained essays that discuss the related issues and perspectives in a broad sweep. Some readers may find the introductions more relevant to what is happening in China today. This book covers China’s economy from 1979 to 2003, which has been basically a continuing process of reform, growth and change.
John Wong taught economics first at the University of Hong Kong and subsequently at the National University of Singapore. As a professor of economics, he explains China’s economic growth theoretically with Rostow’s five stages of economic growth (Walt Whitman Rostow, interestingly, served as a foreign and national security advisor to the presidents John F. Kennedy and Lyndon B. Johnson).
The author, Wong, does not use too much economic jargon, enabling readers from various disciplines to easily understand his detailed explanation of China’s economic growth and Zhu’s role in it. He explains that the post-1979 period of China’s economic growth truly signifies the real economic take-off. The author has divided the whole post-1979 growth process into four distinctive phases. The first phase is the first reform decade of 1979-1989, when the country registered an average annual growth of 8.6 percent. It was a half-reformed economy, based on a dual-track price system, without automatic macroeconomic stabilisers. This period was also marked by a short spurt of hyper growth at 14 to 15 percent in the mid-1980s that led to economic overheating and eventually high inflation at 19 percent, which was China’s first inflationary shock since the creation of the PRC in 1949. This was the key economic factor that led to the outbreak of the Tiananmen crisis in June 1989.
The second phase, 1989-1991, saw growth plummeting to 6.5 percent. The political leaders were mired in a bruising political debate and then split over the issue of whether or not to slow down the economic reform. The third phase, 1992-2002, was marked by the return of high economic growth averaging 9.9 percent, which was initially sparked off by Deng Xiaoping’s Nanxun (the tour of South China) in early 1992. Deng, apart from reigniting the market reform, deepened and broadened the reforms to convert China into a social market economy.
The fourth phase, 2003-2013, witnessed another upsurge of high growth averaging 9.9 percent, with a short spurt of super-growth of 12 percent occurring in the first few years until the outbreak of the global financial crisis in 2008. Much of the high growth of this phase can be attributed to the World Trade Organization (WTO) effect, which accompanied the rapid integration of China into the global economy. China’s accession to the WTO has made it possible for China to capture the mechanism of international capitalism—mainly through trade, foreign direct investment (FDI) and technology transfer—to raise its economic growth to an even higher level.[2]
It was Deng Xiaoping’s economic reform and opening or gaige kaifang that fuelled the economic growth. The economic reform was epitomised in the creation of the socialist market economy, while the open door policy culminated in China’s accession to the WTO. Both policies reinforced each other and sparked off the process of high growth. This explains why Deng was officially called the architect of China’s economic reform and development.
Wong clarifies that it was not so easy for Deng to push through the economic reforms. There were political challenges, and he had to convince many Maoist ideologues and conservatives to give market reforms a trial run.[3] Zhu’s involvement in managing the Chinese economy spanned his whole career in the central government, first as vice-premier, and then as premier. In 1991, Deng plucked him from his job as the Shanghai mayor for his new position in Beijing as vice-premier in the State Council, which is China’s economic cabinet.
Deng considered Zhu as the only person in a high position who understood economics, although he was originally an engineer by training. When Zhu joined, he took charge of economic affairs under the premier, Li Peng. Zhu’s first challenge as the “economic czar,” as he was so dubbed by the foreign press, was to stabilise the economy and reduce economic overheating by bringing down the runaway inflation, which shot up to 22 percent in 1994. It was difficult to control, but Zhu’s early career with the State Planning Commission had made him a good regulator. He succeeded in stabilising the overheated economy by applying a combination of tough administrative measures and some aspects of conventional monetary and fiscal policies meant for the market economy. In March 1998, when Zhu was confirmed as the premier at the Ninth National People’s Congress, China’s economic growth plunged to 7.7 percent. Some of his reform policies related to the state-owned enterprises (SOEs) and the banking sector dampened growth further. He tried his best to maintain growth at 8 percent. His pro-growth slogan was baoba, or striving to maintain growth. His successor in 2003, Wen Jiabao, received a rich legacy including double-digit growth rate, which was also partly fuelled by the China’s accession to the WTO in 2001.
Wong explains that the first wave of reforms, approved at the Third Party Plenum in November 1993, which Zhu carried out in 1994, included reforms in taxes, foreign exchange, and banking. Without these elements, Deng’s socialist market economy just could not function. Another wave of reform initiatives was targeted at the SOEs, which proved to be a long drawn process.[4] Zhu actually started reforming the state enterprises in 1994, initially by modernising the management structure of SOEs, then numbering over 100,000. He later tried the strategy of zhuada fangxiao (grasp the big, release the small) which involved restructuring and consolidating the large SOEs before putting them under the central government’s control while passing on the smaller ones to the local governments for their disposal.[5] Finally Zhu had to apply drastic measures of retrenchment, by which redundant workers were not nominally laid off outright, but were gradually pensioned off. It had a political and social impact too. When Zhu’s tenure ended as premier in 2003 there remained 120 or so large centrally-owned SOEs (the yangqi) which were becoming much more market-oriented and were also going international (zou-chu-qu) or following the ‘go global’ policy. The policy aimed to expose the large SOEs to greater international competition by investing overseas and establishing a foothold in the world market.[6]
To Zhu, the membership of the WTO was important as China’s economic growth had increasingly become export driven. But China had a problem because of its inefficient SOEs and its many small- and medium-enterprises. Besides, China’s agricultural products suffered a lot due to fierce competition from more efficient international producers. But Zhu took the view that the long term benefits of the WTO membership would eventually outweigh the short-term costs. He liberalised China’s foreign trade sector by lowering the average tariff rates and opening more areas to foreign investment.[7] The dynamic benefits of China’s WTO membership in 2001 were quickly borne out. Since then, China experienced double-digit rates of economic growth for full six years until the global financial crisis in 2008. On the eve of joining the WTO, the country was already a huge and diverse economy with a large pool of low-cost labour and an adequate supply of skilled labour capable of producing both low value-added as well as certain technological and capital intensive goods for the world market. By 2013, China had already become the world’s largest exporting country.[8]
Wong’s chapter, “Population Transition from Rapidly Declining Fertility Rates,” offers interesting insights. The one child policy (OCP) was the world’s greatest social experiment which brought negative social consequences, as the country experienced a rapid population slowdown in its natural growth, and an ageing problem started to surface and had an impact on the labour market. The working-age population aged 15 to 59 started to decline, first becoming visible in 2012. In 2014, government relaxed the rule for having a second child, but Wong argues it may not be effective in reversing such sharply declining birth trends.[9]
The book also covers contemporary historical events with a bearing on the country’s economic growth, and concludes with an exploration of issues of unemployment, income disparities, and the plight of millions of peasants in the rural areas. As aresult, the book becomes bulky as it goes beyond the Zhu Rongji period.
In the second book under review, Is This The Asian Century? the author Jong-Wha Lee makes the same argument as John Wong that over the last thirty-five years, China’s strong and sustained economic growth averaging more than 9.5 percent annually, has driven a miraculous transformation of a rural, command economy into global economic superpower. In fact, in terms of the purchasing power of aggregate income, China has overtaken the United States as the world’s largest economy. But in terms of the quality and sustainability of its growth, China still has a long way to go. Jong-Wha Lee suggests some pointers, so that China can maintain its growth[10].
Jong-Wha Lee is a professor of economics and director of the Asiatic Research Institute at Korea University, South Korea. He has served as senior adviser for international economic affairs to a former president of South Korea, and he was also previously chief economist and head of the office of the regional economic integration at the Asian Development Bank and an economist at the International Monetary Fund. He has authored many publications on topics relating to human capital, growth, financial crises and economic integration. His book Is This the Asian Century? comprises twenty-five articles that the author has published on the Project Syndicate website since 2012. These articles are grouped into four broad topics: growth and structural adjustment; economic integration and cooperation; business, money and finance; and education and society.
The strength of this book lies in the fact that its chapters have an equal distribution of pages: each chapter is around two-and-half pages. The chapters are very short in terms of depth analysis of the subject, yet the author has made an attempt to cover the topics very concisely with lot of updated information.
Jong-Wha Lee’s study joins a number of books on the topic. How Asia Works: Success and Failure in the World's Most Dynamic Region by Joe Studwell (Grove/Atlantic, 2013), explains the economies of nine countries—Japan, South Korea, Taiwan, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, and China, and shows why some countries’ economies have prospered while others have languished. Economic Studies in Inequality, Social Exclusion and well-Being: Infrastructure and Economic Growth in Asia edited by Jacques Silber (Springer, 2013), provides a comparative analysis of the aggregate and sectoral implications of higher spending on the infrastructure in three very different Asian countries: China, Pakistan, and the Philippines. It demonstrates that investment in infrastructure can be a highly effective tool in fighting poverty reduction and achieving economic growth.
But in Is This The Asian Century? Jong-Wha Lee presents his analysis of Asia’s economic transformation as well as social and cultural changes and suggests the ways that the Asian economies can overcome major economic and social challenges to continue their path towards a more balanced and sustainable growth in the twenty-first century.
The region’s success has been underpinned by the dynamic growth of China and India, which account for almost 60 percent of the continent’s total GDP in purchasing power parity.[11] The author explores the Chinese and Indian economic transformative reforms and the issues to be resolved for sustained growth. In the chapter on the Indian economy, in about two-and-half pages the author compares the economic condition of China and India. But it would have been better for the reader if the author had explained the topic in detail. The author has, however, explained that China and India have emerged as global economic superpowers, with China leading the way. But both are facing problems.
Chinese growth is slowing and the need for structural change becoming increasingly acute. India’s economic growth began to accelerate dramatically in the early 1990s due to trade liberalisation and other economic reforms. Then reforms stalled, the fiscal and current account deficits soared, and annual GDP growth fell to 4 to 5 percent.[12]
In the author’s view, India has the advantage of being able to learn from China, as China transformed its agrarian economy by building a strong labour-intensive industrial base, shifting workers from agriculture to manufacturing and construction, and improving productivity across all sectors. Today, the agricultural sector accounts for only one-third of total employment in China compared to one-half in India. The author points out that India needs to build a flexible labour market, in line with the argument of the economists Jagdish Bhagwati and Arvind Panagariya that the excessive labour market regulations deter Indian entrepreneurs from employing unskilled workers and developing labour intensive manufacturing industries.[13] The author also emphasises that India’s public health and education (including vocational education, training and higher education) remains at a low level. Moreover, the lack of adequate transport, communication and energy infrastructure is undermining India’s productivity growth. The author believes that the government of the Indian prime minister, NarendraModi, lacks a strong focus on expanding India’s labour-intensive industries. That, together with the planned reforms, would enable India to seize the opportunities that arise with favourable demographics and achieve Chinese-style growth.[14] Apart from the comparative analysis of the economies of China and India, the issues relating to the ASEAN+3 (the Association of Southeast Asian Nations plus China, Japan and South Korea) are explained in detail.
There is an interesting convergence of views, with Jong-Wha Lee arguing along the same lines as John Wong, that China’s low fertility rates are already causing the prime working age population of people aged fifteen to fifty-nine to decline, while India will get a demographic dividend.[15]
Turning to another Asian tiger economy, South Korea, the author argues that this East Asian country has become a model for developing countries as it is the world’s eighth-largest trading economy. But lately its economy is faltering, significantly dropping its GDP from 8.1 percent in 1965-2005 to 3.6 percent in the last ten years. South Korea needs strategy to achieve a demand-side rebalancing and supply-side productivity increases. Strict rules are needed to improve corporate governance and prevent unfair practices by those affiliated with the chaebols, the large conglomerates such as Hyundai, LG, and Samsung.[16]
South Korea’s fertility rate is also low, just 1.2 births per woman, among the lowest in the world. For high quality child care many South Korean women withdraw from the labour market after marriage or child birth. Taking a cue from Japan, South Korea could do well to provide a better environment for child rearing, including flexible working environments, affordable and high quality child care, paid maternal and paternal leave, and low interest rate loans for newly-weds that could promote marriage and child birth.[17]
The most remarkable miracle economy in Southeast Asia, Singapore, also faces a fertility rate of 1.3, the author explains, leading the city-state to hire live-in maids from neighbouring countries such as the Philippines and Indonesia to take care of the house work and childcare. To some extent it fills the population gap and sustains the economy.[18]
The author believes that North Korea’s system is failing and its economy has been stagnating since the 1990s. Food shortages have left 24 million people suffering from starvation and more than 25 of every 1,000 infants die each year compared to four in South Korea.[19] In order to survive, the world’s most centralised and closed economy must open up, but the author suggests that in this regard, China, South Korea and the international community have to move cautiously. In brief, the author has suggested the path that the Asian economies should follow to continue a more balanced and sustainable growth in the twenty-first century. If they are able to maintain balanced growth, the twenty-first century will really be the Asian Century.
In When Trees Fall, Monkeys Scatter: Rethinking Democracy in China, John Keane explores the political system of China. Keane, a professor at the University of Sydney and the Wissenschaftszentrum Berlin (WZB), is renowned globally for his creative thinking about democracy as the author of an acclaimed full-length history of democracy, Life and Death of Democracy (2009). He is also the director and co-founder of the Sydney Democracy Network (SDN).
The literature on democracy in China is large and varied. Daniel A. Bell explains that China has evolved a political system that can best be described as “political meritocracy” in his book, The China Model: Political Meritocracy and the Limits of Democracy (Princeton University Press, 2016). Among many issues, Bell addresses the question of how political meritocracy can be best combined with democracy in China. In his book, China's Democratic Future: How It Will Happen and Where It Will Lead (Columbia University Press, 2004), Bruce Gilley explains that a new democracy will be born, not by overthrow, but by transformation. Gilley forecasts that there will be an elite-led transformation instead of a popular-led overthrow.
But here, in his book, John Keane makes a case for a radically different account of the return of China to the global stage. Keane’s entire argument revolves on whether China’s political system is authoritarian, or whether it follows a Western liberal democracy. Many believe that the Chinese political system is best described as an “authoritarian” one, or a “unique brand of authoritarian capitalism.” Others believe that the system is a “fragmented authoritarianism,” where the rulers show signs of responsiveness to the increasingly diverse demands of Chinese society (for instance, the mayor of Qidong city, Sun Jianhua, was forced to cancel a waste water project in Qidong in 2012, due to public pressure),[20] but nonetheless, a political system that remains authoritarian based on a one-party foundation. China is at odds with Western style electoral or liberal democracy. Another term is used for the Chinese political system is monitoring democracy. Put simply, it is a polity, indeed a whole way of life, in which those who exercise power are subject not just to periodic ‘free and fair elections,’ but also to tight public scrutiny and sanction by a myriad of independent watchdog institutions designed to tame and remove the corrupting effects of arbitrary power.[21]
China is not even a “people’s democracy,” as party officials and intellectuals at all levels often like to claim. But in this book, the author argues that China does not fall into any of these categories, rather he hypothetically calls Chinese democracy a ‘democracy made in China’ or ‘phantom democracy.’ This implies that China is engaged in a long term experiment with locally-made and publicly legitimate forms of democracy backed by one party rule, and supported by hundreds of millions of people. The author hopes, phantom democracy will survive in China.[22]
This book is a debate on the Chinese political system, with the author arguing that China is not an authoritarian state or socialist political democracy because the rulers are willing to learn the arts of governing, and are engaged in constant self-examination, self-justification, and experimentation with democratic practices. The book probes the new democratic practices in some detail and it asks whether there is any truth in the claim that China is an advocate and builder of democracy, and a laboratory of incremental democracy with local characteristics.
The author explains that phantom democracy shapes the lives of many millions of Chinese citizens, including party members and state officials at all levels. Many millions of Chinese now think and feel that their country is a democracy because its rulers are the guardians of ‘good government’ geared to protecting and enhancing the best interests of ‘the people.’[23]
The author cites examples of democratic practices in Chinese society: Chinese public opinion leaders and media speaking in favour of greater social justice and criticising the ruling party on policy issues is one example of the democratic nature of China. In the present digital age China bulks large: 640 million Chinese users spend on average twenty-six hours a week online, Chinese technology is globally competitive, and Alibaba, China’s largest e-commerce company overtook Wal-Mart as the world’s largest retailer in 2014.[24] Keane gives several examples of how the Internet is used to criticise the government on a range of policy issues, and that it has had an impact too. For instance, a party boss in Taizhou City was forced to resign in 2013 after an online video exposed an extravagant banquet he had organised, the cost of which was far beyond the limit set by the party. The public occupation of the streets and squares in Hong Kong during the “Umbrella Uprising” in the summer-autumn of 2014, in support of free and fair elections and social justice, was the largest digital storm the party has so far faced.[25] The author argues in favour of “phantom democracy,” pointing out instances where the locally produced democratic innovations have had profound and durable effects in shaping the Chinese polity. Keane cites the example of Jack Ma’s “Alibaba-democracy,” where all employees are treated equally, and a ten-member deliberative body is democratically elected from a pool of over 20,000 employees.[26]
The author argues that China is, in fact, a complex one-party polity infused with elements of democracy made in China—what this book calls phantom democracy. But the author concludes that under the hypothetical phantom democracy the citizens have to be strictly controlled to maintain the status quo of the ruling party.[27]
To recapitulate, the author’s portrayal of phantom democracy is complex in nature. Keane uses rhetoric in the chapter, “Cuckoo in the Nest,” implying a democratic cuckoo in the Chinese nest.[28] It would have been more interesting if the author could have emphasised more on the locally made democratic mechanisms. Moreover, this book would have benefited from having an introduction to each chapter, or the summary at the end of each chapter.
These three books under review have a common thread: they explain the economic reform and political system that were subjected to long term experiments that helped China to emerge and occupy a niche in a competitive global world. The book on Zhu Rongji offers an historical explanation and comparative analysis of China’s economic growth and its future prospects, in general, and Zhu’s contribution to China’s economic take-off, in particular. The book on the Asian Century also argues that China’s strong and sustained output growth has driven the miraculous transformation of a rural, command economy into global economic superpower. The book on democracy explains that China’s polity is neither an authoritarian regime nor a Western style liberal democracy; rather that Chinese democracy can be called “democracy made in China” or “phantom democracy.” China is, in fact, a complex one-party polity infused with elements of democracy made in China, and supported by hundreds of millions of people. This book is unique as the author has analysed various political systems and put forward a new way of thinking by presenting a complex one-party political system as a ‘phantom democracy.’
Dr.Kamaran M.K. Mondal is an Assistant Professor in the Department of Political Science at ChandidasMahavidyalaya, the University of Burdwan in West Bengal. He holds an MPhil and a PhD from Jawaharlal Nehru University, New Delhi. His articles have appeared in the International Studies Quarterly, The Calcutta Journal of Global Affairs, The IUP Journal of International Relations, Inquest: A Journal of Social Science and Humanities, Ajanta andThe Milli Gazette Online, and his book chapters have been published in Terrorism and Human Rights in the Globalizing World: Experience in Indian Context; AntarjatikSamparko, Politics of Location and Identity in North East India, Thoughts on Liberal Arts and Popular Culture; Globalisation, Environment and Sustainable Development: Indian Perspective; Development and Politics in India; and State, Nation and Multiculturalism: Problems in Perspectives.
[1] John Wong, Zhu Rongji and China’s Economic Take-off, 114-15.
[2] Ibid, 51.
[3] Ibid, 52.
[4] I bid, 197.
[5] Ibid, 95.
[6] Ibid, 258-59.
[7] Ibid, 214.
[8] Ibid, 237,251.
[9] Ibid, 309-10.
[10] Jong-Wha Lee, Is This the Asian Century?, 96.
[11] Ibid, 4.
[12] Ibid, 16.
[13] Ibid, 17.
[14] Ibid, 18.
[15] Ibid, 16.
[16] Ibid, 20,22.
[17] Ibid, 30,92.
[18] Ibid, 110.
[19] Ibid, 52.
[20] John Keane, When Trees Fall, Monkeys Scatter: Rethinking Democracy in China, 2.
[21] Ibid, 4-6.
[22] Ibid, 11.
[23] Ibid, 28.
[24] Ibid, 49,54.
[25] Ibid, 61-62.
[26] Ibid, 106.
[27] Ibid,155.
[28] Ibid, 109.