What Chinese Model, President Zardari?

Speaking at the China Pavilion of Shanghai Expo, President Zardari said what has pretty much become a cliché’; “Pakistan can learn a lot from the Chinese model of economic development.” I assume President Zardari is aware of an ideologically circumscribed, intellectually coherent set of policies or strategic decisions which together make up a ‘China model’.

Chinese think tanks, scholars, diplomats, entrepreneurs, and journalists that I frequently meet seem to have divergent and pragmatic view of what constitutes ‘Chinese model,’ and how it differs from previously worshiped ‘Asian model’ or ‘Japanese model.’

Does President Zardari want to learn from Chinese experience of lifting approximately 300 million out of poverty? This would of course be a noble endeavor. But it will be terrible if our President thinks of ‘Chinese model’ as economic freedom but political repression.

I am sure he meant something – maybe he characterized the China model as export-oriented growth? But wait – wasn’t that Asian development model and our leaders used to lecture us how we should be following that model of growth until it fell apart.

Maybe President Zardari finds China’s success in selective industrial policy? But that would make it a Japanese model, wouldn’t it?

I wish I could pick my phone and call him and ask; “Mr. President, please tell me if you are absolutely convinced that China is really a success story? Please tell me if China’s growth was planned, intentional and by design? Please tell me if China’s footstep can be copied in Pakistan?”

I know our president is so witty he may have responded with a popular Chinese idiom: “A bird does not sing because it has an answer. It sings because it has a song.”

And, I respect that. There is no consensus on ‘Chinese model’ – economists, policy makers and entrepreneurs have their guesses but there is a consensus around pragmatism. China has been pragmatic in seeking opportunities and fostering innovation from the bottom up. The hallmark of China’s success has been it’s refusal to espouse any complete scheme of change. This has defined Chinese development style ever since the policy of reform was initiated in 1978.

Majority reforms in China have resulted from a process of experimentation, usually on a limited jurisdictional scale. China has 32 provinces. The bankruptcy law, for example, was tested out in one province and then it was rolled out to the rest of the country. Similarly, the special economic zones in four provinces were an important precursor to a whole raft of market-oriented reforms that followed.

In addition to the top-down experimentation, there have been plenty of bottom-up innovation and grassroots efforts. In fact, most rural reforms in China were driven from the bottom up. The disbanding of the communes, for example, was initiated when a commune decided to break ranks with party orthodoxy and decided to sell their surplus food on the market. This was a reaction to a desperate situation and it spread. Within the space of a few years, almost the whole country had followed suit. These things were allowed by the state; they were not designed by the state.

But the wisdom of the Chinese government was to step back to observe changes and to make room for good practices to spread.

Following the flow can be a good practice but not an economic model – at least not one taught in text books.

And, that brings me to second key ingredient of a model – “success.” It is true that China has lifted nearly 300 million people out of poverty but growth has been polarizing. China’s Gini coefficient (It is commonly used as a measure of inequality of income or wealth), has in a few years already surpassed that of the United States, which is rather interesting for a communist country. The fruits of growth have been largely shared, but there are also a lot of massive swaths of the population who are excluded from this growth. There has been massive dislocation that has resulted from this growth, too. Unprecedented scale of urbanization; from about 20 percent just a few years ago to nearly 50 percent today—the largest movement of people from the countryside to cities ever seen in the history of humanity.

Maybe President Zardari finds success in China but for many, jury is still out. However, all agree that China’s progress has been significant. Pakistan can learn plenty from the bottom up approach of China. It is high time that Islamabad allows provinces to make key strategic decisions and be around to cheer their progress.