My Take

China's economic model has its roots in the West

PUBLISHED : Monday, 11 March, 2013, 12:00am
UPDATED : Monday, 11 March, 2013, 3:19am

Is the China model today's great ideological threat to the West? Yes, but only because many Chinese know nothing about Western economic history and many Westerners suffer from self-induced amnesia about how they got rich.

Much of today's China-bashing, especially about its economic policies and intellectual property theft, focuses on exactly the kind of practices that the US pursued in the 19th century in its trajectory to becoming a pre-eminent world power.

A nifty essay, by Michael Pettis, entitled A brief history of the Chinese growth model ( should help debunk much nonsense about the uniqueness of China's development model. The Peking University finance professor traces its key features through Brazil's economic miracle, the Asian Tiger economies and Japan after the second world war and during and after the 19th century Meiji reforms, back to Alexander Hamilton when he became the first US treasury secretary.

He practically invented all the "market-distorting" practices: prohibitive import tariffs in strategic sectors, infant industry protection (Hamilton might have coined the term), industry subsidies, government-mandated internal improvements and national finance, and yes, intellectual property theft.

On industrial theft, Pettis wrote: "This the US did, and in fact I believe every country that has managed the transition from underdeveloped to developed country status has done it." (In The Dawn of Innovation: the First American Industrial Revolution, US economic writer Charles Morris charts how the US high-speed textile and steel industries took off; it wasn't creativity but massive intellectual theft of closely guarded production techniques from the Brits - acts of espionage which would put to shame any Chinese hacker today.)

Pettis might even go back further to Henry VII, Elizabeth I and Robert Walpole, sometimes called the first British prime minister. You can read that whole history in Daniel Defoe's A Plan of the English Commerce; so forget Robinson Crusoe, the arch-model of Homo economicus.

The China model? It's the hidden US model; or for those who like to wave the British colonial flag, the Tudor model.