NCPA - National Center for Policy Analysis

"Capitalist-Roaders" In China

February 21, 1997

China-watchers say the late Deng Xiaoping had a magical touch in leading his country's economy from communism to a sort of capitalism. But they question whether his successors have the will and means to carry the transition further.

  • China's economy grew nearly 10 percent in 1996, saving rates are high and labor remains cheap.
  • Foreign direct investment in China has gone from nearly nil in 1982 to over $35 billion in 1995.
  • But some analysts say the country must improve its public works and legal systems for progress to continue -- and certainly turn around its deplorable human rights record.

Observers say Deng had the influence to override those who thought economic modernization should proceed at a slower clip. And he had sufficient vision to embrace some painful, but necessary, economic reforms.

  • He began to allow companies to lay off workers and gingerly began to accept the concept that companies could go bankrupt.
  • Part of his legacy is that economic restructuring is no longer an ideological concept, but a technical one.
  • When the Chinese leadership debates how to introduce capital markets or dissolve inefficiencies in the state sector the debate is no longer over whether these steps are allowable -- but about the concrete processes of how to orchestrate the change.

Some economists say there may be possibilities for faster and more substantial progress if younger, well-informed technocrats replace the ideological old guard and are allowed to proceed with restructuring and reforms.

Source: Sheryl WuDunn, "Can Deng's Heirs Finish the Long March to Capitalism?" New York Times, February 21, 1997.

 

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