West can learn from China's financial success
Updated: 2011-09-26 10:45
By John Ross (chinadaily.com.cn)
The International Monetary Fund's (IMF) meeting last weekend registered the deepening concern about the state of the European and US economies. The Eurozone debt crisis dominated media coverage, but the sharp slowdown in the US economy, and negative market reaction to last week's Federal Reserve's policy meeting, also led to severe falls on Wall Street.
US Treasury Secretary Timothy Geithner warned of 'catastrophic risk' regarding the Eurozone. For the US the division was between those who believed there was a significant risk of a double dip recession versus those, such as US economist Nouriel Roubini, who believe the US economy is definitely entering a recession, and those, such as French bank BNP Paribas, who analyze that it has already done so.
An increasing body of opinion believed the US and Europe lacked effective levers to deal with these negative economic trends. The Wall Street Journal noted: "The week highlighted a growing sense of despondency among investors concerned that policy makers have neither the will nor power to juice their economies."
But if Western policy makers want to learn demonstrably effective measures to deal with the financial crisis they should study China successes. The contrast between China's record and that of the US and Europe since the international financial crisis began is rather like day and night. China's GDP has grown by over 30 percent in the last three years while the US and European economies are smaller than three years ago. Therefore sense indicates it would be a good idea to study the proposals China's government has put forward for the international economy and the policies it has pursued itself.
Naturally, such a study should be carried out in the way China's policy makers analyzed other countries. China's government always stresses it is not urging other countries to copy China's policies or to adopt it as a 'model'. Every country is unique. But Deng Xiaoping himself noted, when launching the reform and opening-up policy, that while China, like every country, has to rely primarily on its own resources, this is far from meaning nothing is to be learned from others. The view any country has 100 percent of the world's good ideas is ridiculous. China's policy makers studied and drew lessons from many other countries. They stressed such an objective, non-arrogant approach served their country well.
What, in this sense, and taking account of the present situation, might be some of the most important things the US and Europe might fruitfully study from China's successful policy in dealing with the financial crisis?
First to oppose false solutions which make the situation worse. One is protectionism – supported in parts of US politics. The world economy's growth since World War II has been based on an increasing openness of the international market for the fundamental reason that only this can permit the large scale division of labor and scale of production which are bases of productivity of a modern economy. Shutting economies into closed national borders, that is pursuing the type of policies followed after 1929, will lead to disastrous falls in production for those practicing them. The US or Europe would no more escape the serious consequences than anyone else. Their governments should therefore continue to make common cause with China against any protectionist pressures.