Economic revolution: Like Deng, like Jonathan (1)

by Odilim Enwegbara

He came at a time when Maoist radical socialist ‘Great Leap Forward’ and ‘Cultural Revolution’ had left China bleeding like a failed state. He came exactly at a time Chinese finally discovered that radical socialist adventures had finally reached the end of the road. In short, timely, he came when the graveyards of radical socialism had been filled with no more space for any further experimentation.

So determined, Deng Xiaoping came not only to clean up the entire mess Maoist (1949-1978) socialist radicalisms had caused his beloved China, but also to now take this giant dragon on a tempestuous economic voyage, an unheard of one-way social-capitalist journey.

So, yes, he came looking unassuming with his cherubic and rounded face, looking weak and undetermined comrade. But behind all his powerless looks, was belied a steel-willed man, a political bulldozer, and above all, an immensely endowed leader with infinite commonsense wisdom. In other words, behind those naïve-looks, was hidden a highly gifted larger-than-life patriarch on economic mountain-moving mission. And behind that easygoing Deng, was also a ferocious political tactician, a hardened Sun Tzu master strategist, a lion-hearted leader ready to bring to his beloved China – and in his own life – a never witnessed economic prosperity, never ever in any known human history.

And that he began exactly on December 18, 1978 during the Third Plenum. Bravely standing, piecing the minds of members of his China’s omnipotent Communist Party political elite, unyieldingly, he demanded and got a wholesome support to freely set China on those seismic economic reforms.

Emerging from the Third Plenum, he was quick get to work, setting China on a tempestuous voyage, starting with agriculture. Dismantling communes and collective farms he turned peasant farmers overnight into ferocious entrepreneurs and ordered that henceforth Chinese farmers should earn and keep all their farm profits. Followed was ordering that China’s vast stolen money kept overseas be quickly brought back home and invested in productive enterprises; that order, was obeyed as if coming from God.

Next was time to take full advantage of the newfound Sino-US friendship. Recognized as decisive game-changer, and knowing that opening up China’s coastal regions of Guangdong, Fujian, and Shanghai to the ever-waiting army of overseas Chinese businesses (notably in Hong Kong, Taiwan, and Macau) for Washington’s green light, would rush in investing in mainland China, he wasted no time in doing that.

Doing that led millions of overseas Chinese to troop into China, wanting to exploit the innumerable business attractions China could offer. But, completely wining their hearts and souls, Deng the Great, not only provided them with fully subsidized land, cheap and reliable power, and water, as well as other business infrastructure, he also ordered China’s endless supply of cheap and disciplined labor be fully available for them. Ensuring they invested without regrets, Deng offered them outright capital grants, tax holidays, and export tax rebates. As if not enough, besides ordering everyone to work patriotically, he demanded high saving and sacrificial living on life’s essentials so to free more money for expanding and upgrading infrastructure.

In an historic investor stampede, never seen in human history, millions of foreign investors rushed in, wanting to take advantage of these unbelievable investment treasures while they lasted. Mostly millions of overseas Chinese manufacturing entrepreneurs quickly dismantled and relocated their factories to China. Brought along with world-class management, marketing channels, and technology, soon China’s foreign trade exploded.

Excited and confident competing side-by-side with their overseas brothers and sisters, millions of deep-asleep local entrepreneurs, not only woke up from their slumber, but also shrewdly joined an unmatched entrepreneurial race, a race to make China the world’s manufacturing workshop. With this came a matchless growth in GDP averaging 10% annually, and unheard of job breeding averaging 12 million yearly. So, the race to reclaim China’s past economic and military glories had just begun.

A sky-rocketing economic boom now lifting 600 million Chinese out of poverty making 300 million (double Nigeria’s population) enjoy middle-class lifestyle (all thanks to innovative small businesses), now leads to an unstoppable rise in per capita income and bulging wallets. Hundreds of millions of Chinese now not only take expensive gadgetry of advanced industrialism such as appliances, computers, completely for granted, but with this newfound opulence, luxuries like BMW and expansive homes too are taken for granted. Not only that, private wealth in stocks, bonds, and bank deposits are a commonplace.

Leaving nothing to chance in its mercantilist policy, draconian import substitution and export promotion industrialization policies – high tariffs and multiple nontariff walls with listless administrative discretions – are promulgated to reinforce the shielding of China’s strategic industries from foreign intruders.

To continue unhindered China’s export-boosting growth, and also to ensure industry-by-industry and sector-by-sector economies of scale, key game-changer industries and sectors – including automotive, construction, electronic information, equipment manufacturing, iron and steel, non-ferrous metals, and science and technology, as well as aviation, defense, power, oil and petrochemicals, shipping, and telecommunications – have to remain iron-cast in state’s hand.

Now that the goal is not joining the exclusive club of industrial nations as a mere member but as its omnipotent leader, the architects of this ambition are fast discovering how taking power from the west is as difficult as trying forcing a hungry crocodile to vomit what’s already inside its belly. But is China frightened? Just take a look at China’s aggressive pursuit of high-tech catch up with the west, its mandating corporate China to begin replacing critical foreign technology (chips, software, and communications hardware) with Chinese technology, and you know how a face-to-face battle with the west is beginning.

In this economic power rivalry, pushing extensive list of discriminatory policies, including foreign-focused anti-monopoly law, mandatory technology transfers, compulsory technology licensing, local content requirements, and mandatory revelation of encryption codes, as well as full disclosure of scientific and technology contents of patents, and above all, the non-domestication of the Paris Convention on international intellectual property rights is showing that the Chinese are fully determined.

Pushing such technology leapfrogging recently by handing mind-boggling $2.3 trillion to Assets Supervision and Administration Commission (ASAC), China’s sovereign wealth fund, and mandating it to use it to create some 45 mega multinational corporations that’d go out there to prey on western rivals, is only indicating how messier this emerging economic cold is going to be. It’s already messy given the ravaging financial and social graveyard the ‘China effect’ (like ‘America effect’ of early 20th century) is fast turning the west into. It seems China is now increasingly succeeding in using the same western cunnings against the west.

Let’s end here by asking: Had China’s economic revolution followed traditional western development route, the usual ‘big bang’ neoclassical path; had it accepted the usual, ”Don’t do as we in the west do, but do as we in the west say you’d do,” would China have ever risen to these economic heights today? In other words, the how come such startling economic miracle has successfully taken place (and still taking place) in Communist China and under a single party rule seems to be eliciting more questions than answers.

While analysts go on disagreeing, one thing everyone agrees is that there isn’t any wa

y it’d have taken place and survived under western democratic setting. In short, the consensus is that western democracy rather than helping China grow, should have severally obstructed it. Exploring Nigeria’s own version of economic revolution based on some set of unconventional development routes that mirror Nigeria’s realities – the same way China triumphantly did – will be the focus of the final part of this article.

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1 comment

Mike Ibezim January 8, 2012 - 2:01 pm

An exciting piece


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