China's growth strategies

This paper reviews the major views on China’s development and reform strategies. It discusses why the same forces behind China’s rapid growth also create new challenges and concludes with some remarks on the Chinese experience, key lessons, and their transferability to other countries.

It is argued that since the late 1970s a number of reforms (the household responsibility system, dual track pricing, township and village enterprises, and special economic zones) have helped China achieve rapid economic growth and lift hundreds of millions of its people out of poverty. These achievements have generally surprised most observers, including economists, because many of China’s development strategies seem to be unorthodox and in defiance of conventional theories of growth and development. China’s experience since 1978 has taught economists many lessons about the process of development, but also about the study of economic development.

Conclusions and lessons include:

• given the uniqueness of Chinese history, perhaps the key lessons of China’s reform experiences are most valuable for China itself. With rapid economic growth and ballooning revenues, policymakers can easily become complacent and over-confident, ignoring the pragmatic and experimental approaches of yesteryear
• the reform stories presented in this volume highlight the virtue of pragmatism and experimentation in the reform process. To overcome the emerging challenges, it is important for Chinese policymakers to maintain a pragmatic attitude to reform, and to keep focusing on innovations from the ground
• when policy makers become more complacent, they are more likely to make centralised autocratic decisions, neglecting the wisdom of local knowledge and the virtues of experimentation. In essence, China runs the risk of kicking away the ladder by which it has reached its current heights.