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'Unique' China defies world's predictions
By Xu Binglan (China Daily)
Updated: 2004-06-21 08:32

Editor's note: After serving as the World Bank's China Programme director for seven years, Yukon Huang is bidding farewell to what he says is a "truly unique country" next month. In the bank's new Beijing office, the Chinese-born American talks to Xu Binglan.

China Daily: What has most impressed you during your time in China?

Huang: When I first came here seven years ago, internationally, the view of China was that this was a country where the pace of reform was gradual. When they compare (China) with other countries, they say other countries go for shock therapy or rapid reform. China believes in phased and gradual reform.

Now I have been here for seven years, I actually think this view of China undergoing gradual change is incorrect. This is a country that is undergoing rapid change, rapid reform.

But there is a difference here in China. The difference here is that the reform process is well managed. It is not by luck or chance, it is more systematic.

A 160-meter portrait of Deng Xiaoping, architect of China's reform and opening policies, is made to commemorate his 100th birthday in August in Guang'an, his hometown in southwest China's Sichuan Province. [newsphoto]
The second thing that is different here to other countries is that policies, once they are accepted, are more or less acted upon uniformly throughout the whole country. You don't have differences of views, priorities, objectives. You have a unified approach throughout China.

That is the major reason for China's success, unity of purpose and consistency in terms of objectives. We don't see this in many other countries.

There is another thing I think is extraordinary. This is still, in some ways, a transition economy, moving from a centrally planned system to a market-oriented system. Before I came here, I worked in Russia and former Soviet Union republics.

Most centrally planned economies are extremely inefficient and are unable to compete globally, and sometimes even domestically in providing high quality products at reasonable cost. And to some extent, that is still a problem for Eastern European countries and Russia. They are still not able to compete globally, except in natural resources.

But China is able to compete. And what I want to emphasize here is for some set of reasons, which are unique, China, as an overall economy, is able to compete, and has adjusted more rapidly than everyone had ever forecast or predicted.

I still don't, frankly, know why. But that is ultimately the reason why China is so strong compared to other countries. And as to why its pace of change has been so rapid, I can only guess why.

A farmer in Guang'an, Sichuan Province, remembers late Chinese leader Deng Xiaoping, architect of the reform and opening policies, by hanging Deng's portrait at home. [newsphoto]
One of the reasons is that even if you go back 20 years, China still had a degree of openness to exporting, to producing for the export market, which meant they had to be competitive in terms of price and quality. The centrally planned economies in Eastern Europe didn't do that.

And the second thing I think that is unique in China in some ways it is a problem and in some ways it is a benefit, is that provinces compete with each other. When I say it is a problem, I mean the duplication of production capacities cause lots of waste, and we all realize this. This has to be rationalized. But there is also a good aspect because you are competing with companies in other provinces, you put pressure on all firms to improve quality and keep costs down.

I think this kind of competition has made China unique in being able to compete globally.

And I don't think anyone was able to forecast in the last 10 years how successful China would be. They probably thought it would take 20 years, 30 years. In fact, China has done it in half the time people had predicted.

Take the WTO (World Trade Organization), for example. People thought under WTO, at least for four or five years, China would suffer. They will liberalize trade, imports will come in.

It will take time for China to become strong enough to compete externally. It didn't happen. China was able to compete externally immediately.

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