The Maoist roots of China’s economic rise explored in Red Swan – book review

Red Swan: How Unorthodox Policy Making Facilitated China’s Rise

by Sebastian Heilmann

Chinese University Press

2.5 stars

Sebastian Heilmann brings what is, for English-speaking readers, a somewhat rare European – or in this case, German – perspective to “China’s rise”.

There are almost as many explanations for China’s economic development as there are books on the subject. These start, as they must, from the realisation that conventional economic development models and theories – which have tended to emphasise economic and political liberalism, strong institutions, the rule of law and so on – did not predict China’s success in the form it has taken.

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Heilmann has several different things going on his book, the chapters of which originated as previously published papers. One, and his opening, is to reiterate that traditional development models cannot accommodate China’s path to relative prosperity. Fair enough, but that point hardly seems to need reiterating any more.

Heilmann discusses in depth – as have done such others as Yuen Yuen Ang – the role of localised experimentation as a fundamental factor in China’s development.

Whereas Ang discusses “co-evolutionary” interaction between markets and institutions, Heilmann concentrates on the process from experimentation to policy, the mechanisms such as feedback loops within it, and – because it has not been static – the way it has developed and changed over time. He notes in particular the “very different” leadership styles of Deng Xiaoping and Xi Jinping.

In the introduction, Heilmann coins the term “guerilla-style policy making”. The phrase has considerable descriptive utility: it “can be characterised as a ‘push and seize’ style, that contrasts with the stability oriented ‘anticipate and regulate’ norm of modern constitutional governments and rule-of-law polities”, Heilmann says.

But Heilmann means it literally: “The roots are firmly planted … in the fertile soil of China’s Maoist past.”

While striking, the argument that, for example, the Great Leap Forward and the opening of China’s stock exchange derive from some basic underlying approach to policy, requires more than the circumstantial evidence that Heilmann provides. If anything seems to have characterised the past 30 years or so of Chinese policy success, it has been the almost complete rejection of the decades that came before.

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Some may conclude from Heilmann’s takedown of conventional models and theories that the problem could be the modelling itself. Heilmann himself avoids the term, and presents his analysis as a series of modi operandi.

Heilmann is at pains to note that China is different not just from the West, but also from “the former Soviet and Eastern European communist party-states” and Japan. But however different China’s path might be, one might also want to avoid concluding that China is largely, if not entirely, unique.

Local policy experimentation, for example, is not in itself incompatible with the Western rules-based systems China has eschewed: there is considerable policy variation between, and experimentation in, US states and municipalities, for example. The difference, therefore, must be in the way experiments are initiated, culled and finally adapted for wider implementation.

But experimentation combined with circumstance-based, top-down decision-making is hardly unique to China either – it is what prevails in corporations. Kerry Brown, for one, has explicitly drawn this analogy.

Nor do traditional models rule out the possibility of centralised control leading to development success. The argument is instead that self-organising capitalist systems are more robust. But these things can play out over long periods of time. The now much-maligned Soviet Union delivered high rates of industrialisation for several decades before it didn’t.

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So it may still be early days for what Heilmann calls the Chinese “approach”. The book provides a robust discussion of the risks as well as the benefits, with the penultimate section succinctly entitled “The systematic risks of a top-down policy process”.

One can’t leave the book without commenting on the title, which is a riff on Nassim Taleb’s Black Swan. The point of the “black swan” concept, however, is that black swans actually exist. To call a communist black swan a red swan is not just “a challenge to the social sciences”, as Heilmann would have it – it is also a mixed metaphor.

Asian Review of Books