Demystifying China’s Economy Development

199 Pages·2015·3.434 MB·English

by  Fang Cai (auth.)

China Insights
Fang Cai
Demystifying
China’s Economy
Development
China Insights
Chairman of Editorial Board
Wang Weiguang
Vice Chairman of Editorial Board
Li Yang (Standing Executive), Li Jie, Li Peilin, Cai Fang
Editorial Board Members (in alphabetical order)
Bu Xianqun, Cai Fang, Gao Peiyong, Hao Shiyuan,
Huang Ping, Ma Yuan, Jin Bei, Li Jie, Li Lin, Li Peilin,
Li Yang, Wang Lei, Wang Weiguang, Wang Wei, Yang Yi,
Zhao Jianying, Zhou Hong, Zhuo Xinping
This book series collects and presents cutting-edge studies on various issues that
have emerged during the process of China’s social and economic transformation,
and promotes a comprehensive understanding of the economic, political, cultural
and religious aspects of contemporary China. It brings together academic endeavors
by contemporary Chinese researchers in various social science and related fi elds
that record, interpret and analyze social phenomena that are unique to Chinese
society, its reforms and rapid transition. This series offers a key English-language
resource for researchers and students in China studies and related subjects, as well
as for general interest readers looking to better grasp today’s China.
The book series is a cooperation project between Springer and China Social
Science Press of China.
More information about this series at h ttp://www.springer.com/series/13591
Fang Cai
Demystifying China’s
Economy Development
Fang Cai
Chinese Academy of Social Sciences
Beijing , China
Sponsored by Chinese Fund for the Humanities and Social Sciences ((cid:7516)(cid:1174)(cid:14823)(cid:1117)(cid:2430)(cid:12142)(cid:1354)(cid:12289)(cid:4502)
(cid:3626)(cid:18433)(cid:17268)(cid:2265))
ISSN 2363-7579 ISSN 2363-7587 (electronic)
China Insights
ISBN 978-3-662-46102-0 ISBN 978-3-662-46103-7 (eBook)
DOI 10.1007/978-3-662-46103-7
Library of Congress Control Number: 2015939273
Springer Heidelberg New York Dordrecht London
© China Social Science Press and Springer-Verlag Berlin Heidelberg 2015
T his work is subject to copyright. All rights are reserved by the Publishers, whether the whole or part of
the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation,
broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information
storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
T he use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
T he publishers, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made.
Printed on acid-free paper
S pringer-Verlag GmbH Berlin Heidelberg is part of Springer Science+Business Media
(www.springer.com)
Pref ace
Modern China, since the Opium War, has dropped far behind and suffered from
attacks and bullies. “Inferior technologies, systems and culture” becomes a prevail-
ing cultural psychology among most Chinese. Changing the pattern that “China is
comparatively weaker than western countries” and reinvigorating China start from
cultural criticism and innovation. Since then Chinese has begun to “open their eyes
to see the whole world around” and learnt from Japan, Europe, America and Soviet
Russia. We are in tension and anxiety for long, dying to get over from being behind
and bullied, poor and weak and surpass Western powers. As it were, in the pursuit
of dream of power nation and national rejuvenation for the last century, we focus on
understanding and learning but do a little even nothing to get understood. It has no
signifi cant changes even in the modernization evolvement after China’s reform and
opening up in 1978. Such phenomenon is well demonstrated by a great amount of
translation of western writings in 1980s and 1990s. This is how Chinese perceives
the relation between China and the world in modern times.
At the same time when Chinese is pursuing for the dream of power nation and
national rejuvenation in modern times, they are also trying to seek for DAO to res-
cue from national subjugation and get wealthy and powerful by “material (technol-
ogy) criticism”, “institutional criticism” and “cultural criticism”. D AO is fi rstly a
philosophy, of course, as well as a fl ag and a soul. What philosophy, what fl ag and
what soul are critical to resist national destruction and get wealthy and powerful?
For over a century, Chinese people keep exploring and attempting in disgrace, fail-
ure and anxiety, and have undergone the phase of “western learning for practical
application while Chinese learning as basis”, the failure of constitutional monarchy
practice, the bankruptcy of western capitalist politics and the major frustrations of
world socialist movement in early 1990s, but fi nally harvest Chinese revolution suc-
cess, national independence and liberation, especially combine scientifi c socialist
theoretical logic with Chinese social development history logic together and fi nd
out a Chinese socialism modernization path – a path of socialism with Chinese char-
acteristics. After the reform and opening up in recent 30 years, China’s socialism
market economy has got rapid development; economic, political, cultural and social
construction have made tremendous achievements; comprehensive national strength,
v
vi Preface
cultural soft strength and international infl uence have substantially improved; the
socialism with Chinese characteristics has made huge success; although not perfect,
the institutional systems are generally established. China, a dream catcher for last
century, is rising among the world nationalities with more confi dence in unswerving
path, theory and institution.
Meanwhile, we should be aware that the long-developed perception and the cul-
tural mental habit of learning from the West constrain Chinese from showing “his-
torical China” and “contemporary real China” to the world, although China has
risen to be one of the current world powers. Western people and nationalities, infl u-
enced by the habitual history pattern that “China is comparatively weaker than
western countries”, rooted in Chinese and western cultural exchange, have little
knowledge of China’s history and contemporary development, let alone China’s
development path, as well as cognition and understanding of philosophical issues
such as scientifi city and effectiveness of “China theory” and “China institution” on
China, and their unique values and contributions to human civilization. The omis-
sion of “self-recognition display” leaves much room for malicious politicians to
wide spread “China collapse”, “China threat” and “China national capitalism”.
During the development process of “crossing a river by feeling the way over the
stones”, we concentrate more energy on learning from the West and understanding
the world, and get used to recognize ourselves by western experience and words, but
ignore “self-recognition” and “being understood”. We blend ourselves into the
world more forgiving and friendly, but are not objectively or actually understood.
Hence, just and responsible academic and cultural researchers should undertake the
important assumptions to summarize D AO of successful socialism with Chinese
characteristics, narrate China stories, illustrate China experience, use international
expressions, tell the world the real China, and let the world acknowledge that west-
ern modern pattern is not the end of human history and the socialism with Chinese
characteristics is also a valuable treasure of human thoughts.
Chinese Academy of Social Sciences organizes leading experts and scholars and
some outside experts to write series of U nderstanding China . These books intro-
duce and summarize China path, China theories and China institutions, and contain
objective description and interpretation to modern development in aspects of politi-
cal system, human right, law governance, economic system, economics, fi nance,
social administration, social security, population policy, value, religious faith,
nationality policy, rural issue, urbanization, industrialization, ecology and ancient
civilization, literature and art.
These published books are expected to let Chinese readers have better under-
standing of China’s modernization process in the last century, and more rational
concepts on current troubles; intensify the overall reform and national confi dence;
agglomerate consensus and strength for reform and development; improve foreign
readers’ understanding of China and create more favorable international environ-
ment for China’s development.
Beijing, China
January 9, 2014
Contents
1 It Takes 30 Years to Reach Benevolent Governance ............................ 1
1.1 Doubling of Per Capita Income...................................................... 2
1.2 Worldwide Example of Poverty Reduction .................................... 4
1.3 China’s Featured Policies of Agriculture,
Farmer and Rural Area ................................................................... 8
1.4 Social Protection That Develops from Nothing ............................. 12
1.5 Unbalanced Inclusive Development ............................................... 17
References ................................................................................................. 19
2 Development Is an Unyielding Principle ............................................... 2 1
2.1 “The Scenery Here Is Exceptionally Beautiful” ............................ 21
2.2 “China Collapse” ............................................................................ 24
2.3 Source of Economic Growth to Date ............................................. 26
2.4 Towards Scientifi c Development .................................................... 29
2.5 Transforming Economic Development Model ............................... 34
References ................................................................................................. 37
3 Reform Is the Fundamental Driving Force........................................... 3 9
3.1 Logics of Reform ........................................................................... 39
3.2 Incentive Mechanism and Governance Mode ................................ 43
3.3 Market Competition Environment ................................................. 48
3.4 Development-Oriented Government .............................................. 52
References ................................................................................................. 56
4 Globalization and Chinese Factor ......................................................... 5 7
4.1 Meaning of Globalization .............................................................. 57
4.2 Catch-up and Convergence ............................................................ 60
4.3 Break the Supply “Bottleneck” ...................................................... 61
4.4 Is This “Toil Just For The Benefi t of Others”? ............................... 66
vii
viii Contents
4.5 Effect of Large Economy ............................................................... 69
4.6 “Goose” or “Dragon” ..................................................................... 72
References ................................................................................................. 77
5 Development Stages and Turning Point ................................................ 79
5.1 Economic Development Stages ...................................................... 79
5.2 Turning Point of Chinese Economy ............................................... 83
5.3 Understanding the Macroeconomic Situation ................................ 88
5.4 Is It a “Middle Income Trap”? ....................................................... 92
5.5 Responses with Chinese Characteristics ........................................ 95
References ................................................................................................. 97
6 Engine for Sustainable Growth.............................................................. 99
6.1 Focusing on the Supply Factors ..................................................... 99
6.2 Labor Productivity.......................................................................... 104
6.3 Capital-Labor Ratio ........................................................................ 107
6.4 Total Factor Productivity ................................................................ 111
References ................................................................................................. 114
7 Sustaining Demographic Dividend ........................................................ 115
7.1 Future Challenges of Employment ................................................. 115
7.2 Will Education Be Excessive?........................................................ 122
7.3 Dealing with “Getting Old Before Getting Rich” .......................... 128
References ................................................................................................. 132
8 Realization of Inclusive Growth ............................................................ 135
8.1 To Improve Labor Force Participation Rate ................................... 135
8.2 The True Meaning of Urbanization ................................................ 140
8.3 Agriculture Should Be Self-Supporting ......................................... 144
References ................................................................................................. 152
9 Digging the Institutional Dividend ........................................................ 153
9.1 Breaking Government Paradox ...................................................... 153
9.2 Removing Allocation Obstacles ..................................................... 158
9.3 Fear for Poverty and Unequal Distribution .................................... 161
9.4 Social Protection Is Not a Negative Incentive ................................ 168
References ................................................................................................. 175
10 Embracing the Great Renaissance ........................................................ 177
10.1 “Needham Puzzle” ......................................................................... 177
10.2 Two “Century Goals” ..................................................................... 183
10.3 China’s Version of “Income Doubling Programme” ...................... 185
10.4 Connotations of Modernization...................................................... 188
10.5 Climbing Growth and Diffi culty Overcoming ............................... 191
References ................................................................................................. 193
Chapter 1
It Takes 30 Years to Reach Benevolent
Governance
Confucius said: “A kingdom must wait for 30 years to reach benevolent governance.”
The 11th generation of Confucius, who was also an authoritative scholar of the
Confucius Classics in Western Han, Kong An’guo, interpreted this sentence as, “A
generation may include thirty years, which is the period that a government must
need to reach benevolent governance.” That is to say, 30-years, which could be
called a generation, is a period of time that can previews effectiveness of benevolent
governance. The reform of China, staring from the Third Plenary Session of the
11th Central Committee of the Chinese Communist Party in 1978, has been per-
formed for more than 30 years. During this period, China has undergone tremen-
dous changes comparing with the last several thousand years in the Chinese history,
which is rather rare in the world economic history as well.
The most prominent manifestations of China’s achievements in reform and open-
ing up are the general improvement of people’s livelihood. To be specifi c, in the
process of economic growth and overall improvement of income, the government
has implemented a large-scale rural poverty reduction program to solve the “issues
of agriculture, farmer and rural area”; while promoting the expansion of urban and
rural employment, the government also tries to strengthen the labor market regula-
tion and build the initial social protection mechanisms to provide a basic safety net
for the vulnerable groups in the labor market. These undisputed facts show that
during the 30 years, China’s economic and social development is an inclusive style.
However, the improvement speed of the living standards of urban and rural residents
still varies, so does the degree of social protection improvement. They are shown in
the income gap among residents and the expanding inequality in accessing to basic
public services. These are the policy challenges that cannot be avoided.
© China Social Science Press and Springer-Verlag Berlin Heidelberg 2015 1
F. Cai, Demystifying China’s Economy Development, China Insights,
DOI 10.1007/978-3-662-46103-7_1