Translating the Chinese Experience

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Yikes! Xi Jinping arrives tomorrow.  The Economist last month added a regular standing section on China to the front of the magazine, along with the US, the Americas, Asia, the Middle East and Africa, Europe and Britain.  They’ve generally been on top of things since 1845, when they added railroads to the list of things they covered. To put it mildly, though, I am not prepared for the visit of the man who is expected to become, next fall, the new leader of a nation that probably will become the world’s largest economy sometime in the next ten years.

It’s time to sort through the steadily accumulating shelf of books.

There are three, it seems to me, that are more interesting than all the rest, one in particular.

Demystifying the Chinese Economy (Cambridge University Press, 2012), by Justin Yifu Lin, is, I suppose, the single book most worth reading from the current torrent, since it depicts the story of the economy the way the Chinese see it themselves. There are two big dates in Chinese history in the twentieth century, October 1949, when Mao Zedong stood at the gate inTiananmen Square and proclaimed, “The Chinese people have stood up!”; and December 1978, when the Third Plenary Session of the Eleventh Central Committee of the Communist Party made it clear that the economy would be opening up.  Lin, born inTaiwan in 1952, has something to trenchant to say about both.

Lin reacted boldly to news of the second development. He had graduated with an MBA the year before from National Chengchi University, well on his way to the upper reaches of Taiwanese society. Now he was serving as a captain in the Taiwanese Defense Force on the garrison harbor island of Kinmen (Quemoy, to readers of a certain age). He quietly slipped out of his uniform one night and swam the mile or so to the mainland, to the old treaty port of Xiamen (formerly Amoy), to defect.

In a letter to his family a year later, he wrote, “based on my cultural, historical, political, economic and military understanding, it is my belief that returning to the motherland is a historical inevitability; it is also the optimal choice.”

By 1982 Lin had successfully retooled with a master’s degree in Marxist political economy from Peking University. Then it was off to the University of Chicago, at the invitation of Theodore Schultz. There the wife he had left behind in Taipei rejoined him, along with their two children.  He obtained a PhD in 1986 and spent a post-doctoral year at Yale, before returning toBeijing, where he became a professor atPekingUniversity and founded the Center for Economic Research.

In 2008, Lin became chief economist of the World Bank.  Today he is a candidate, among several others, including Lawrence Summers, of Harvard University, another former chief economist there, to head the bank itself. Robert Zoellick’s term expires in the fall. In the sixty-five years since they were created, the head of the International Monetary Fund has traditionally been a European and the head of the Bank an American.

Demystifying the Chinese Economy is satisfying because it a full account of the story, as it is understood inChina in the present-day. It contains a chapter on why the scientific and industrial revolutions bypassed China, starting in the seventeenth century; another on the Great Humiliation, the hundred years following the First Opium War (1840), when China was reduced to semi-colonial status by Britain, France and Japan, an ordeal that was ended by the Socialist Revolution, in 1949, led by Mao Zedong; a third chapter on the  ins-and-outs of why the go-it-alone catch-up strategy pursued for thirty years by Mao, often in frank imitation of the Soviet Union, worked out the way it did.

Then come several interesting chapters on the strategy that Chinese planners have pursued since 1978 – comparative- advantage following, he calls it – and its implications for agriculture, the cities, the state-owned enterprises that have led the way, the still-underdeveloped financial system, and the growing inequities that have developed. This is rich stuff,Chicagoeconomics with a Chinese twist or two.  It deserves to be carefully examined and widely discussed in the coming months.

Capitalism with Chinese Characteristics: Entrepreneurship and the State (Cambridge University Press, 2008), by Yasheng Huang, of the Massachusetts Institute of Technology, takes a  different tack, describing the tension that has developed since 1978 between an entrepreneurial, market-driven rural sector and the state-led urban China  When rural China has the upper hand, he writes, Chinese capitalism is competitive and virtuous; when the cities rule, capitalism tends towards political dependency and corruption.

Entrepreneurial capitalism dominated in the 1980s, Huang says, state-led capitalism in the ’90s. The next ten years will determine whether Chinabecomes a democracy like the other nations of the East Asian Miracle, or a variation on the familiar Latin American theme of dashed hopes and perpetual turbulence. Huang created China Lab and India Lab at MIT’s SloanSchoolto help entrepreneurs improve their management skills.  He travels in TED and INET circles.

Heaven Cracks, Earth Shakes: The Tangshan Earthquake and the Death of Mao’s China (Basic Books, 2012), by James Palmer, depicts the events in China of the remarkable year of 1976, the final year of the government-imposed chaos known as the Cultural Revolution.  Zhou Enlai died in January, factions skirmished behind the scenes and in the streets in anticipation of the death of Mao, and in July an earthquake devastated Tangshan, an industrial city a hundred miles east of Beijing. More than 250,000 people died, a quarter of the population.

From that point on, Palmer says, the Mandate of Heaven – the traditional source of legitimacy for those who would governChina– was broadly doubted.  When Mao died a few weeks later, the reformers fought a short and brutal contest with the radicals, and, after they won, setChinaon its modern path.  Palmer brings certain convictions to his story – he works with Daoist and Buddhist groups inChina, his publisher explains. Still, to consider the Chinese miracle in its infancy makes for remarkably interesting reading

But then with vice president Xi arriving tomorrow, who has time?