Does the Chinese economy still have advantages?
- By Zhu Tian
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E-mail China.org.cn, October 8, 2015
Culture and institution have to depend on their influence over a country's accumulation of material wealth, human resources and technology to influence the overall pattern of economic growth. In Chinese culture, diligence facilitates the accumulation of material capital, while the attention to education is good for technological advancement.
It is often said that China's prosperity was a result of its people's diligence. However, only when diligence is combined with frugality can there be real growth. In economic terms, frugality raises the savings rate that is a precondition for capital accumulation.
Developing countries mostly depend on their ability to learn new technology to achieve progress, and this calls for matching human resources nurtured by education. While East Asian countries' attention to education has long been world famous, this region did not report accelerating growth rate during recent years despite generally increasing education spending. Some scholars explain this by saying it is educational quality that is key to economic development.
Eric Hanushek of Stanford University and Ludger Woessmann of the University of Munich found that a country's growth rate has positive correlation with its cognitive capabilities. According to their data, all the countries and regions in East Asia ranked at the top.
Given China's comparative advantage due to a tradition of frugality and attention to education, as opposed to a strong role for institutions or policies, ideas that praise or downplay China's development mode have overrated the role played by institution.
Compared with most countries, China's advantage does not lie in its institutions, but its culture, which plays a more fundamental role in achieving continuous growth. In other words, given China is in the same development stage, lives by the same institutions and implements the same policies as other countries, its culture will help it to perform differently in economy.
After all, China's current growth rate of 7 percent still dwarfs most countries, especially when the global GDP growth is only 1 percent, and that for all developing countries merely stands at 3.5 percent.
As such an advantage will not diminish within one generation or two, there is a reason to remain confident in China's growth prospect, and in the prediction that China will join the ranks of the developed countries.
The author is a professor at China Europe International Business School (CEIBS).
The article was translated by Chen Boyuan. Its original and unabridged version was published in Chinese.
Opinion articles reflect the views of their authors only, and not necessarily those of China.org.cn.
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