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Peking University Economist Criticizes the “China Model”

On October 23, Zhang Weiying, a professor at Peking University, who is also regarded as a liberal scholar, published an article entitled “Understanding the World and the Chinese Economy” on the official website of the National Development Research Institute of Peking University. The article criticized the touted theory of the “China Model,” which believes that China’s 40-year economic rise has benefited from the unique “China model,” namely, a strong government, a large body of state-owned enterprises, and a smart industrial policy.

Citing the marketization data from the Beijing National Economic Research Institute and the economic growth data from the China Statistical Yearbook, Zhang points out that the changes in the marketization index are always positively correlated to the growth rate of the gross national product. Statistics such as the proportion of the urban state versus the private sector employment, the proportion of state-owned versus foreign and private capital, and their relationship to the per capita GDP growth rate, show that the larger the state sector, the slower the economic growth rate. Regions where “the state retreats while the private advances” show better growth performance.

Zhang concluded that China’s rapid economic growth over the past 40 years has come from marketization and the opportunities offered by the second-mover advantage rather than the so-called “China model.” Second-mover advantage refers to the advantage a nation receives from following others or mimicking an existing model.

Zhang warned that if one blindly uses the “China model” to explain China’s economic development one will “mislead oneself and destroy one’s own future. Moving toward a bigger state sector, expanding the government’s power, and relying on industrial policies will led to the reversal of the reform process, waste all previous efforts, and lead the economy into stagnation.

Externally, the “China model” has set China apart from the common sense market economy that the West has acclaimed, and has led to conflicts between China and the West. According to Zhang the unfriendly international environment China is currently facing is not unrelated to some economists’ misinterpretations of China’s achievements over the past 40 years.

Source: Radio France International, October 25, 2018