The top four fastest growing economies since the neoliberal “Washington Consensus” was put forward all follow, or are highly influenced by, China’s development model. These countries are China, Vietnam, Cambodia and Laos. In contrast, capitalist development models, including the Washington Consensus, have been a failure. Pro-capitalists in China would clearly prefer these facts to be generally unknown since they damage the idea that China should abandon its socialist path of development and adopt a capitalist one.
These facts also have international political implications. The socialist development model followed by China is the creation of the Chinese Communist Party (CPC).
The Washington Consensus is the dominant economic strategy put forward by international economic institutions, such as the IMF and World Bank, and is taught in Western universities. Yet, the overwhelming economic superiority of countries following a socialist development policy, more in line with the Chinese model, shows that it not only outperforms capitalist alternatives but that the CPC has a better grasp on the situation than Western economists.
A factual comparison in the international results of the two economic development approaches – the neoliberal Washington Consensus versus the Chinese socialist development strategy – clearly shows how the latter outperforms the former.
Also telling is that supporters of the Washington Consensus appear to strongly dislike systematic factual comparisons of the two approaches for reasons evident in the following data.
In order to assess the competing strategies, we will consider China itself as well as three other countries. These are Vietnam, which defines itself as socialist and drew heavily from China’s socialist market economy approach, and Cambodia and Laos, both of which were highly influenced by China’s development model.
A summary of data on the annual average rate of per capita GDP growth, broken into three time periods – from 1993 when data on all four countries is available, post-Washington Consensus in 1989, and after China’s own reforms in 1978 – indicates the success of the Chinese model.
The data is extremely striking. From 1993-2015, China, Cambodia, Vietnam and Laos ranked, respectively, No.1, No.2, No.3 and No.4 in world per capita GDP growth – peripheral cases of countries with populations of less than 5 million or dominated by oil production are not included. From 1989 to 2015 China, Vietnam and Laos ranked, respectively, No.1, No.2 and No.3 in the world for countries in per capita GDP growth. And from 1978 onwards China ranked No.1 among all economies in terms of economic growth.
The degree at which economies influenced by the Chinese development model outgrew the world average has been huge. Since 1989 Vietnam and Laos grew three times as fast as the world average. Since 1978 China’s rate of growth was almost six times the world average.
The contrasts not only in average per capital GDP growth but also in the eradication of poverty are similarly overwhelming. Since 1981 China has lifted 728 million people out of World Bank-defined poverty. Vietnam lifted over 30 million people from poverty by the same criteria. In the rest of the world, in which the dominant model advocated by the IMF was the Washington Consensus, only roughly 120 million people rose above poverty. During this time, 83 percent of all poverty reduction was in China, 85 percent was in socialist countries and only 15 percent was in capitalist countries.
This data breaks down the claim that capitalism is the main drive behind rapid economic growth and poverty reduction. If capitalism were the motor of economic growth and poverty reduction, then growth would be the most rapid, and poverty reduction the largest, in capitalist countries. Instead it is in China and Vietnam that the greatest poverty reduction has taken place and in China, Vietnam, Cambodia and Laos where the fastest economic growth has occurred.
China’s socialist development model therefore should be considered a huge success in contrast to the Washington Consensus. Economic development remains the most fundamental issue for the overwhelming majority of the world’s population.
According to the latest World Bank data 84 percent of the world’s population lives in developing countries. Any objective analysis based on aiming to maximize a countries development potential would therefore start with China’s socialist development model.
The facts show that China’s policies, which included a dominant role by the State sector, large-scale plans to eradicate poverty and a socialist political orientation, are successful in producing both economic growth and poverty reduction.
The simple fact that the top four most rapidly growing economies since the Washington Consensus was outlined all use the Chinese socialist development model demonstrates of the superiority in China’s path to capitalist alternatives.
The author is a senior fellow at the Chongyang Institute for Financial Studies, Renmin University of China. bizopinion@globaltimes.com.cn
Source: Global Times
