BIZCHINA / Weekly Roundup
How Chinese bumblebee ignores economic laws
By Khalid Malik (China Daily)
Updated: 2007-07-04 15:45
The author Khalid Malik is United Nations Development Program resident
representative and UN Resident Coordinator in China. The article is
excerpted from his April 18 speech at Peking University
Before I first came to China a little over three years ago, I invested
time in meeting with professors from Columbia and Harvard universities.
I was based in New York, and I'd been following China for some time.
When I got here I realized it was difficult to square what they were
telling me with what I was seeing. That forced me to dig in and try to
understand what was happening to get a structured way of looking at
things.
China has become a different country in a single lifetime. It hasn't
happened elsewhere. Those who are economists find it very difficult using
traditional techniques.
So the question is, how to explain the change.
China has the largest sustained GDP growth ever witnessed. It has
outperformed earlier tigers. Its share of world trade has tripled since
1990 and is still rising fast. China now has a per capita income of
$1,700 which means China is no longer a low-income country.
China alone is responsible for the reduction in global poverty. If you
took China out of the equation, global poverty actually rose. When you
take a dollar a day as the poverty line, China reduced poverty by 422
million people from 1981 to 2001. Regardless of measure, it is the
largest reduction in human history.
As a result China is regaining its place in the world.
Related readings:
China's economy to grow 10.9% in 2007
Central bank vows tight policy to rein in economy
EU mulls giving China market economy status: WSJ
Economy to sustain fast growth for 2 more decades
Part of the explanation can be found in a historical study of PPP
(purchasing power parity) data from 1600 to 2003. By the 1820s, China had
already enjoyed a long period of having one-third of world trade. It
dropped to a low of 4 percent in 1920. The 2003 figures show China
gaining its rightful place in the global economy.
Neoclassical economics generally sees growth and development as a simple
form of adding more capital and labor. The emphasis is very much on
standard policies and institutions regardless of the country-specific
context.
And yet the Chinese bumblebee continues to defy the laws of neoclassical
gravity because neoclassical economics has defined some of the rules of
gravity.
Is this the beginning of something that could be called the "Beijing
Consensus"? This new consensus could replace the discredited "Washington
Consensus" formulated in the late 1980s. It defined the keys to success
in developing countries as macro-stability, liberalization (lowering
tariff barriers and market deregulation) and privatization.
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