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A review by mkesten
How China Escaped the Poverty Trap by Yuen Yuen Ang
4.0
One of the strengths of Yuen Yuen Ang’s analysis of China’s phoenix-like rise is to distinguish what is and what is not uniquely “Chinese” about the economic miracle of the past fifty years.
And for the record, a lot of it has nothing to do with being Chinese or being an authoritarian regime.
Coastal provinces succeeded because of their proximity to other eastern powerhouse economies which themselves had become cost uncompetitive through their success.
Coastal provinces also succeeded because of their huge draw on really cheap labour from inland provinces.
In turn, as the coastal provinces lost their competitive advantages because of rising wages and rising land costs the inland provinces made their gains.
Indeed, Deng Xiaoping opened the door to experimentation, to price relaxation, and to privatization of commercial surpluses. Early on, the CCP’s predilection for somewhat vague policies also worked to their advantage. People could begin innovating on a local level with much less fear it would land them in prison.
But the leadership was also pretty clear on what success was supposed to look like.
Capital did not immediately begin to flow into China without a few tried and true methods used in other jurisdictions in earlier times, says Yuen.
Like early America before it, China used taxless financing to spur investment, issuing monopolies, charter rights, and land financing. And like America before it, there were big incentives for corruption at the highest and lowest levels of society.
Some things have changed, some have not. Even as stronger institutions have grown up in China to help accommodate growth, corruption while evolved is still prevalent. The definitions of success have become way more complicated and much harder to achieve, much like in other advanced economies.
The final chapter in this story has yet to be written. China, like America, is a huge polluter. Also, like America, a lot of its wealth is contingent on pushing off the real costs of environmental degradation to the hinterlands, somebody else’s backyard. Many of the elements for its success have moved offshore and real estate speculation has become a national catastrophe on so many levels.
And for the record, a lot of it has nothing to do with being Chinese or being an authoritarian regime.
Coastal provinces succeeded because of their proximity to other eastern powerhouse economies which themselves had become cost uncompetitive through their success.
Coastal provinces also succeeded because of their huge draw on really cheap labour from inland provinces.
In turn, as the coastal provinces lost their competitive advantages because of rising wages and rising land costs the inland provinces made their gains.
Indeed, Deng Xiaoping opened the door to experimentation, to price relaxation, and to privatization of commercial surpluses. Early on, the CCP’s predilection for somewhat vague policies also worked to their advantage. People could begin innovating on a local level with much less fear it would land them in prison.
But the leadership was also pretty clear on what success was supposed to look like.
Capital did not immediately begin to flow into China without a few tried and true methods used in other jurisdictions in earlier times, says Yuen.
Like early America before it, China used taxless financing to spur investment, issuing monopolies, charter rights, and land financing. And like America before it, there were big incentives for corruption at the highest and lowest levels of society.
Some things have changed, some have not. Even as stronger institutions have grown up in China to help accommodate growth, corruption while evolved is still prevalent. The definitions of success have become way more complicated and much harder to achieve, much like in other advanced economies.
The final chapter in this story has yet to be written. China, like America, is a huge polluter. Also, like America, a lot of its wealth is contingent on pushing off the real costs of environmental degradation to the hinterlands, somebody else’s backyard. Many of the elements for its success have moved offshore and real estate speculation has become a national catastrophe on so many levels.