Friday, November 7, 2008

Chinese model of development suits 21st century

BRUSSELS, Nov. 6 (Xinhua) -- It's amazing that China, with 20 percent of the world's population, managed to accomplish tremendous economic feats through relatively smooth reforms in three decades, former Dutch cabinet junior minister Annette Nijs told Xinhua in a recent interview.

"It's intriguing that China carried out far-reaching reforms without serious upheavals," said Nijs, who was recently named Executive Director Global Initiative of the China Europe International Business School in Shanghai.

The Chinese model of development, which favors prudence in market opening-up and maintains state regulation, has been increasingly recognized as a better alternative in this century to the Washington Consensus which champions free trade, she said.


Nijs praised the Chinese government for introducing reforms in a steady and stable way.
"Often you see an opening-up of a country after a war. But in China it is a well-planned shift rather than a shock, which is gradually carried out with sufficient control," she said, noting the remarkable balance China developed between its political system, the market economy and the social stability.

"Although there are internal clashes sometimes, China on the whole is a stable country. We all thank China for that because if China is not stable, the rest of the world will see unrest," said Nijs, who was the Dutch state secretary for education, culture and science between 2002 and 2004.

Nijs also spoke highly of China's ability to maintain a coherent policy in the pursuit of prosperity. "China is one of those countries which are very clear in their long-term planning. It planned and set targets far more clear than most European economies," she said.
"Most countries have a budget for a few years and they don't look beyond those years. But China has long-term and short-term planning. All the national five-year plans are moving towards the long-term targets. That is a very practical approach," said Nijs, who made numerous visits to China since 1987.

Although some people complain that China is not opening its market fast enough and the country is still asked to go further in its system reforms, Nijs said she believes China has done a good job.

China has delivered many fundamental reforms including introducing nine years of free education, she said.

The country aims to increase its per capita income from 2,000 U.S. dollars to 5,300 dollars by 2020 and raise the percentage of rural population with health care from a quarter to 80 percent. "If all those targets are met, China is going really fast," she said.


In Nijs' view, China has lifted hundreds of millions of people out of poverty and enriched the middle class, which are its biggest achievements in the past 30 years. "Millions of Chinese now have a living standard similar to the Europeans," she said.

Nijs is also impressed by the fact that almost 40 percent of China's GDP are generated in the science and technology sectors. "This means China has been able to make the shift from 'made in China' to 'created in China' which is a remarkable achievement," she said.

Another positive sign is China's decreasing dependence on energy consumption for its growth. In 2005, China had to retain a double-digit GDP growth with double-digit energy consumption growth. But now the annual growth of energy consumption has been reduced to 4-5 percent.

"China may still has a long way to go to increase the energy efficiency, but what it has done is a big shift," she said.

Meanwhile, a growing number of Chinese companies are going global and some 30 have listed in the renowned Fortune Global 500 rankings, which Nijs considered a major accomplishment.

She said these companies are taking stakes in or acquiring other companies especially in the energy and the financial sectors across the world. In some sectors Chinese companies are having a large market share in the world, such as container transportation, steel production and kitchen appliances. Chinese automotive companies are even reaching to the United States.

"This shows that Chinese companies have moved from trade to production, logistics, marketing and sales in foreign countries. That is a major achievement in merely three decades," she said.


Nijs believes that the Chinese model of development, the so-called Beijing Consensus which emphasizes prudence in market reforms and national sovereignty, has its advantages.

"The West are used to telling African countries that if you are liberalized, privatized and become more democratic, we will help you. But China treats African countries as equal partners -- the partnership rather than conditional relationship," she said.

"More and more economists, including me, are considering the Beijing Consensus a better model in this century than the Washington model," Nijs said.

China should not be forced to change its characteristics. "People sometimes make the mistakes that modernization equals Westernization. It's not the case. We cannot force the Western model on anything in the world," she added.

Instead, the West should see China as a stakeholder in its own right, and a co-maker of a new world order. "China's rise lies on the changing of geo-economy which is tilting towards the East, not the financial crisis in western countries. China is expected to represent 15 to 20 percent of global GDP in 15 years. It's not wise to close eyes to it," she said.


China has been affected by the current financial crisis, but Nijs does not expect China's economy to make a sharp downturn. Compared with those of the United States and the Europe, Chinese stock markets experienced less volatility in recent weeks and so did the Renminbi exchange rate. Inflation in China is far less a cause of concern than that in Iceland, she said.

"I think we will see China as the motor of world economic growth in the next few years with its growth rate of 8 percent maybe," she said.

Nijs said major challenges for China are from internal rather than from external.
China has to secure the main resources it needs, such as energy, steel, clean water and soya beans. "The society will be under pressure if such needs are turned down, which could lead to social unrest," she said.

Another challenge is to continue the system reforms, including enhancing the rule of law, fighting corruption and further developing the private sector.

Nijs said the Chinese government has taken initiatives to tackle the problems by putting into place programs to meet international accounting standards and efforts to improve the rule of law.

China is also trying to bring back traditional ethical standards, such as Confucianism, to counter the influence of materialism, she said.

The Chinese government, Nijs said, is trying hard to keep what she called "five balances": the urban vs. the rural; the western region development vs. that of the eastern regions; the nature vs. the human needs; economic growth vs. stability in the society; and the internal development vs. going global.

"These five balances are essential to China's long-term development," she said.
With the rise of China as a trading power comes increasing frictions between China and its major trading partners. Nijs suggested that China handle them carefully, such as the issues concerning anti-dumping and safety of productions with the European Union.

In Nijs' opinion, Europe and China should favor each other in order to improve their relations. "It is time for Europe to recognize China as a market economy and on the other hand for China to start creating jobs in Europe," she said.

When Chinese companies set up production lines or open research and development centers in Europe, like what Chinese auto industry is doing in North America, Europeans will treat China more positively, Nijs said.

"Like Germans who are proud to work for the American company of Opel, more and more Europeans will be proud to work for big Chinese multinationals such as the China National Offshore Oil Corporation, Haier and Bao Steel. It will demonstrate that the rise of China is an opportunity for the world," she said.