China's Rocket to Modernity

Why "socialism with Chinese characteristics" looks a lot like capitalism

SHANGHAI—You know those time-lapse videos of sunflowers sprouting, zipping straight up, and bursting into bloom in the space of a few seconds? While flipping the TV channels in my hotel room, I saw a Chinese-language ad featuring a new variation: an entire city of skyscrapers popping out of the ground and rising heavenward at a miraculous speed.

Maybe that ad was created with modern technology. Or maybe it was just a real-time video of what has happened here in Shanghai. It has transformed itself from a decaying industrial city to a gleaming, futuristic metropolis in the historical equivalent of the blink of an eye.

The gaudiest results of the metamorphosis lie in the area east of the Huangpu River. That area, known as Pudong, is the home of the Shanghai Stock Exchange, a magnetic levitation train that goes 250 mph, and, a year from now, Expo 2010—what we used to call a world's fair. Its annual economic output of $38 billion surpasses not only that of most cities but most countries. Yet fewer than 20 years ago, it was a sleepy farm region dotted with rice paddies, offering a lovely home for frogs.

Given its proximity to one of China's biggest cities, what has happened may sound natural and inevitable in retrospect. It wasn't. As long ago as the 1950s, I'm told, Shanghai's first communist mayor, Chen Yi, used to lament that such nice real estate couldn't be developed because it was on the wrong side of the river.

What kept the area backward was the economic system he served: communism. What freed its potential was removing the shackles imposed when Mao Tse-tung and his party gained power in 1949.

Since its inception, the Chinese government has carried out some gigantic economic experiments, most of them catastrophic. In the 1950s, Mao launched a crash program in industrialization that devastated the economy and caused some 15 million people to starve to death.

In the 1960s, he initiated the Cultural Revolution, which encouraged violent rampages by young ideological fanatics and banished anyone with an education, above-average skills, or managerial experience into the countryside to shovel manure. Results: more economic destruction and millions more dead.

But in 1979, the government decided to try a different approach: creating special zones where normal markets would be permitted to operate. They called it "socialism with Chinese characteristics," but it looked an awful lot like capitalism. The one in Pudong was created in 1990.

This time, disaster failed to ensue. On the contrary, the broad reversal succeeded beyond Ayn Rand's wildest dreams.

In the ensuing three decades, the Chinese economy has tripled in size—and then tripled again. The World Bank says that in 1981, 65 percent of Chinese were poor. Today the figure is 4 percent.

In less than 30 years, China's economic miracle has raised half a billion people—one out of every 10 people on the planet—out of poverty. Nothing in human history comes close to that achievement.

This year, like every other country, China is feeling the effects of the global recession. So its economy will probably expand by only 6 or 7 percent this year—which would represent eye-popping growth almost anywhere else.

Economic progress, of course, has side effects, and lately those have gotten China plenty of attention—for producing clouds of greenhouse-gas emissions, putting pressure on oil supplies, exporting like mad, and becoming the U.S. government's biggest creditor. China as an economic powerhouse gives some Westerners nightmares.

But next to mass chaos, poverty, and famine, those problems look pretty manageable, if not mythical. And it would be the height of perversity to conclude that the rest of the world suffers because 1.3 billion Chinese are now free to make constructive use of their energy and talent.

Not all of them have seen the benefits of that opportunity. But it is safe to bet that few of them would trade the economic experiment going on today for the harebrained exercises that preceded it.

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  • MNG||

    All we need for an economic miracle is communism!

  • ||

    All we need for an economic miracle is communism!

    Reading comprehension isn't your long suit is it, sparky?

    China (and India) are booming because they gave up on the soviet-style command economy.

    -jcr

  • Alan Vanneman||

    A Reason article that praises high-speed rail! Pinch me, I'm dreaming!

    More seriously, it would be nice if this article had one single word about free speech, elections, the right not to be run over by a tank--you know, all that "free minds" stuff.

  • Guy_Smiley||

    I, for one, welcome our new Chinese overlords.

  • T||

    More seriously, it would be nice if this article had one single word about free speech, elections, the right not to be run over by a tank--you know, all that "free minds" stuff.

    Generally speaking, people who are starving could give a shit about that kind of crap. Not starving takes precedence. And strangely, now that more Chinese are in the "not starving" group, more of them are agitating for greater freedom.

  • Lefiti \"Quoting Morris, who c||

    The myth of the necessary link between capitalism and democracy must be on life support. Authoritarian capitalism! Reality is so much more complex than blnkered ideologues are capable of realizing.

  • ||

    --==* Cougarster.C'om *==-- It's where Cougar (women who are mature, rich and experienced) and men who like them can meet.

  • ||

    Nothing in human history comes close to that achievement.

    Only if you don't count Borlaug's Green Revolution, of course.

  • chinaman||

    Just report that the chinese people live in harmony.

  • ce||

    More seriously, it would be nice if this article had one single word about free speech, elections, the right not to be run over by a tank--you know, all that "free minds" stuff.

    They do have elections. The national government isn't elected, but most of the provincial and city governments are.

  • ||

    Generally speaking, people who are starving could give a shit about that kind of crap.

    True.

  • matt2||

    Who the fuck paid for Steve Chapman's ticket to Shanghai? Was it a one-way?

  • Sean W. Malone||

    Harsh Matt2... Harsh.

    Seriously though, what's sort of amusing to me is that if you look at the way people talk about various countries in the media or on Wiki even. They call economic successes due to capitalism & free(er) markets "Miracles"...

    In Estonia, India, Singapore, Russia (to some extent), China, Costa Rica, Hong Kong, Germany post-war, Japan post-war...

    Again and again and again and again, market liberalization = success. And yet the way people talk about it is like the successes are just magical and it's simply shocking that socialism failed to produce the intended result.

  • KT||

    I'm sure they're excited to be as free as we are, so they can privatize gains and socialize losses like we do.

  • JB||

    Well, this achievement comes on the backs of the West. All of the innovations and inventions and even business practices developed by the West have been used in China's rise.

  • EscapedWestOfTheBigMuddy||

    Nothing in human history comes close to that achievement.

    Only if you don't count Borlaug's Green Revolution, of course.



    It could be argued that the Green Revolution raised billions of people to poverty.

    I'm with you on the biggest relief of human suffering bit, though.

  • ||

    China is now a state-managed capitalist country. And they will continue to kick our supposed free-market ass.

    They use government as a source of funds (angel investor) to seed promising industry and then IPO their shit to the rest of the world.

    In raw Red Herring terms - they are the angels and we are the vultures.

  • Sean W. Malone||

    "China is now a state-managed capitalist country. And they will continue to kick our supposed free-market ass."

    We have a much less free-market than China in a lot of ways, and the Chinese people actually produce stuff, which means they are actively contributing to wealth & savings (i.e. capital). China, while they still have a long way to go, are moving in the right direction towards market liberalization and capitalism as we move away from it.

    And as far as government funded seed money is concerned, sure, but the real question is how much latitude do business execs have with that money and who reaps the direct benefit. Eventually, China will find that their free-market zones have so far outstripped the government funded bits that that seed money becomes negligible, if it isn't already.

    Aside from that point... it's kinda baby steps no matter what. To get where china is now from where they were a few decades ago is astounding. And it's unsurprising that government still has a large-ish role to play.

  • ||

    Shrike wrote, "China is now a state-managed capitalist country. And they will continue to kick our supposed free-market ass."

    "State-managed capitalism" is nothing but fascism under another name. And so the merry-go-round turns once again.

  • Sean W. Malone||

    JAM: You're right... however, the important point as I was trying to note above is what *direction* you're moving.

    As far as economic success is concerned, I think it's fair to say that:

    Laissez-Faire capitalism > "hampered markets"/mixed economy > crony "capitalism" > corporatism > fascism > state socialism > communism > Zimbabwe

    It's easy enough to see which direction on that chain China is moving and which direction we are... though we're both about at the same place.

  • rac3rx||

    I'm sure if the U.S. abolished regulations regarding child labor, minimum wage, unionization, safety, and intellectual property protection, we could have a booming economy just like China.

    Don't get me wrong, for the most part, I wouldn't mind, but this is the most simplistic piece of dreck I've read lately. Is this seriously what passes for "intellectual" discussion these days?

  • ||

    Eighty percent of the office space in Shanghai and Beijing is vacant. Beijing has more empty office space than Manhattan has, in total, occupied or unoccupied. Factories are closing. The Chinese economy is in the process of imploding, contrary to official statistics. 750 million Chinese live and work in agriculture in rural areas at a subsistence level with no access to education. If that's modernity then I say let them have and let them keep it. I don't want any part of it.

  • ||

    I have lived in China two years. The place is a libertarian's nightmare. Indeed, the economy has grown remarkably thanks to market based reforms, but please do not exaggerate the glitz of Shanghai and the other more developed parts of the country. There are still hundreds of millions of peasants with virtually nothing. Even in Beijing, I'd say over 75% of the population lives in conditions most Americans would find totally unacceptable.

    I currently work in one of the "world-class" facilities built specially for the Olympics. Already, the facility is so full of problems and terrible workmanship that I am sure the place will have to be abandoned in less than 5 years. Everything in the place that can break already has. And it's less than a year old. The socialist mindset is still pervasive...It's inefficient, dirty; the people are rude, lazy, and stupid. You can thank the government for all of it.

    Capitalism here is so regulated and corrupt, designed only to serve the party members at the top. Walk past the gleaming skyscrapers and you just may run into a donkey pulling a cart of manure. The place still has a long way to go. The Chinese people I work with in Beijing are all college educated, considered "qualified", and cannot even photocopy or do simple tasks without major mistakes.

    Even today, probably 90% of Chinese think that Mao Zedong was a wonderful leader who did amazing things.

    After two years, I have become mostly fluent in Mandarin. I sometimes wish I hadn't, since it has allowed me to learn quite a lot more about modern Chinese society/thought/culture. Sadly, the more I learn, the more depressed and underwhelmed I become.

  • Scarpe Nike Italia||

    is good

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