It took Western-style economic incentives to help China recover

PUBLISHED : Monday, 27 July, 2015, 12:01am
UPDATED : Monday, 27 July, 2015, 12:01am

Niv Horesh ("Broken model", July 20) says some developing economies succeed in picking winners by state control.

He notes China's recent economic success. But China's real gross domestic product scarcely moved between 1952 and 1977, rising just 3 per cent from 34 billion yuan to 34.9 billion yuan.

The one-party "governance" model collapsed China's economy through internal follies - Great Leap Forward and Cultural Revolution - so growth was from an almost zero base. Why should the world think that a good system?

Deng Xiaoping's Western-style economic incentives and exports to Western consumer societies helped China emerge from the collapse the Communist Party created.

It's ironic that free trade gave China its export-based wealth, weakening the US blue-collar worker, yet Professor Horesh criticises this spread of global wealth. Why does he think that using a Western economic model to rescue China from one party policy-making is evidence one party systems work?

Europe's citizens learned over decades, looking across the Iron Curtain, that centrally controlled "solutions" produce weaker results. Successful black swans such as Singapore don't change that reality. In Asia, some countries will choose vaguely neo-liberal solutions, others more collectivist ones. That's up to them - if they have the vote. Japan, Taiwan and South Korea all consigned their military strongmen to history, benefiting from a broadly Western model.

Professor Horesh is missing the wood for the anti-neo-liberal trees. It doesn't matter to the West that "China is supremely confident in its own governance model". The West is already developed. Nor is China's domestic solution needed to solve disagreements about "neo-liberal economics". He alleges an "accepted belief" that the West dominated the world "because it embraced small government and privatisation", but it isn't accepted. Western voters can and do choose differently. Danish and French voters elected governments against neo-liberalism, and Britain and US have chosen governments broadly in favour.

Many people dislike neo-liberalism. That doesn't mean they think state direction is better. Where information and capital can flow freely, economic and human progress are most advanced.

All people wish China successful development, following its own path. China's example should not trouble the West, but triumphalism emerging from a sense of victimhood is troubling, and that's what Professor Horesh regrettably encourages.

Paul Serfaty, Mid-Levels