The Economist on the “Beijing Consensus”
The Economist this past week published a powerful statement on the vital role of private enterprise — as opposed to state direction — as the driving force behind China’s economic progress, one that echoed my earlier writings on the subject (which you can read here and here).
The Economist begins by observing that China’s astonishing economic performance:
is often vaguely attributed to “capitalism with Chinese characteristics” — typically taken to mean that bureaucrats with heavy, visible hands have worked much of the magic. That, naturally, is a view that China’s government is happy to encourage.
To the contrary, it argues, the miracle has been mainly due to efficient and innovative private entrepreneurs, often laboring against significant disadvantages. It concludes that:
Too many people—not just third-world dictators but Western business tycoons—have fallen for the Beijing consensus, the idea that state-directed capitalism and tight political control are the elixir of growth. In fact China has surged forward mainly where the state has stood back. “Capitalism with Chinese characteristics” works because of the capitalism, not the characteristics.
It’s gratifying to hear The Economist driving home the point I made back in August, when discussing the phenomenon of guo jin min tui (“the state advances, the private sector retreats”):
As for China, my concern is that its leaders, its policy-makers, and to some extent its people have forgotten what made the economic miracle of the past 30 years possible. It was not the product, as is commonly portrayed these days, of a series of five-year government plans, in which entrepreneurs played their cooperative but subordinate part. It was the courageous and far-sighted decision, on the part of China’s leaders, to get out of the way and allow the Chinese people to create better lives for themselves — starting with the humble step of allowing farmers to grow and sell their own surplus crops. When the state advances, and the people retreat, China wanders and backtracks on the very path that has led it to accomplish so much.