china imitates japan -- 4/03/15

Today's selection -- from War and Gold by Kwasi Kwarteng. In 1853, Japan learned how far behind the world it had fallen when Commodore Matthew Perry sailed into its harbors. After a resulting civil war, Japanese officials toured the globe to learn the advancements of the world and bring them back to Japan. In 1975, Deng Xiaoping, who had assumed power after the death of Mao Zedong, did the same for China:

"To understand the transformation of China, it is perhaps instructive to consider the experience of Japan at the end of the nineteenth century when, under the Meiji restoration, a deliberate plan of modernization was initiated. From December 1871 to September 1873, fifty-one Japanese officials travelled by ship and rail to a number of different countries to study the ways of the world. They returned to Japan to implement the lessons they had learnt. Likewise in China, one hundred years later, many separate 'study tours' took place. Senior Chinese officials were similarly eager to learn from their travels and to introduce reforms in their home country. Deng himself had embarked on a five-day visit to France in 1975. He had taken with him a number of technical bureaucrats, in the transport and industry sectors. The tour was not so significant in terms of what Deng learnt. Rather, it converted him to the whole process of tours, which he undertook with enthusiasm, while encouraging other study groups to travel abroad. It was some months after Mao's death before foreign travel could be organized, but in 1978 Chinese officials, under Deng's encouragement, began to make those visits. They were exhilarated by what they saw.

French Prime Minister Jacques Chirac (left) welcomes Chinese Vice Premier Deng Xiaoping to
Paris on May 12, 1975 

"As Deng himself observed towards the end of 1978, the 'more we see, the more we realize how backward we are'. Prominent Chinese bureaucrats and other technocratic figures visited such diverse parts of the world as 'Eastern Europe, Hong Kong, Japan, and Western Europe'. It was obvious to them that China had to change. Japan, in particular, was a source of interest. The Japanese recovery after the disaster of the Second World War showed the Chinese how a 'strong central government' could direct an economy rapidly to catch up with the West. In a report to the Politburo on Japanese economic progress since 1945, Chinese officials recounted with awe and admiration how the Japanese 'had boldly introduced foreign technologies, made use of foreign capital, and vigorously developed education and scientific research'. A trip to Western Europe, undertaken in May 1978, made an even more profound impression. A visit to the United States was out of the question, given the dispute over the Republic of China on Taiwan, which until April 1979, the United States recognized officially as the only legitimate Chinese government.

"Deng's reforms have been characterized as essentially pro-capitalist. The story often told is one of China, a country ruled by avowed Communists, turning its back on Mao Zedong and Karl Marx and embracing the freemarket capitalism of the West. This, of course, is a simplification of what happened. The type of capitalism which China adopted was distinctive and, in many of its features, differed widely from the capitalism preached by the neo-liberals who dominated US and British administrations in the 1980s. The key to understanding China's impressive economic growth in the 1980s and 1990s starts inevitably with the state. China did not grow like neighboring Hong Kong, as a free-market trading area, whose political economy was governed by the 'invisible hand' of Adam Smith. While free-market impulses were given some leeway, China's path to success was dictated by the state. In this way, China represented a triumph of 'mercantilism', ... [first described by] Eli Heckscher, the Swedish economic historian ... in his two-volume work Mercantilism, first published in Sweden in 1931. Very simply put, mercantilism was a system [used in the previous centuries] which sought to boost exports in order to gain gold, which would form the basis of a state's power. 'With a large population and low wages,' wrote Heckscher, 'it was hoped to effect a large export surplus of manufactures and a large import surplus of gold and precious stones, and this desire became itself a part of the state's policy of power.'

"To many critics and observers of Chinese economic policy, particularly in the United States, Heckscher's account perfectly summarized Beijing's approach to economic development."



Kwasi Kwarteng


War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt




Copyright 2014 Kwasi Kwarteng


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