The Future of Development: Lessons from China’s Success (and Failures)

Our series on the big challenges and opportunities for developing countries over the next couple of decades has so far largely focused on specific sectors: agriculture, health and finance. The fourth took a different tack, considering instead what we should—and should not—learn from the most dramatic development success of the past century: China.

It’s hard to overstate just how dramatic China’s economic growth and poverty reduction have been. Between 1979 and 2018, Chinese GDP per capita (measured in 2011 international dollars, and thus comparable in terms of purchasing power across countries and time) increased by more than six times; by comparison the UK’s less than doubled. And this was not simply concentrated among the richest—poverty declined so substantially, contributing so much to the global trend in poverty that Our World in Data were moved to produce a graph to show that the global decline in poverty was not solely a Chinese phenomenon.

Figure 1. Global poverty reduction, including and excluding China

Source: Our World in Data, accessed 08/21

Unsurprisingly, many countries and development economists have turned to China for ideas on how to reduce poverty elsewhere, with decidedly mixed results. Yuen Yuen Ang’s presentation was built around this impulse, and why it leads so many astray. She argued that we must look at both the successes and the failures of Chinese development (the latter too often glossed over, or not even registered by most observers), to carefully understand what the right lessons from China are, and to adapt these to local contexts, rather than blindly copying the Chinese policy handbook. 

She started by arguing that focusing on success only leads to bad policy: every success comes with failures and—even absent failures—costs. Good comes with bad, and determining which policies should be emulated requires understanding what was undertaken, what it cost, and what weaknesses were inherent in the system adopted. By trying to focus only on the positive sides, without understanding the attendant costs (or vice versa), we acquire only a shallow understanding of how and why China eventually achieved development success and therefore fail to understand what parts of the model can be adopted and adapted elsewhere.

But this leads directly to a further point Yuen made: there is no single ‘Chinese’ model. There have been at least three distinct approaches taken—that by Mao, that by Deng Xiaoping, and that by Xi Jinping. What’s more, even within the approach under Deng (when Chinese growth really took off), one can identify multiple models and experiments to achieve growth. The unifying factor across regions within China was not a common method for delivering development, but the approach of ‘directed improvisation’ (which she goes into in more detail in her book, How China Escaped the Poverty Trap), searching for global methods that work locally. But the flip side to this approach was the discipline—the ability to identify and shut down failed experiments and reward and expand successful ones. What this means is that adopting a toolkit modeled on what China did is, perversely, to fail to adopt the Chinese ‘model’, since Chinese policymakers were themselves not dogmatic about how they achieved their development objectives and tried multiple approaches before sticking with the best.

Shang-Jin Wei’s comment focused more on the content of what Chinese policymakers did change in the economy, highlighting three transitions: from an agricultural economy to an industrial one; from a Marxist economy to a market one; and from an isolationist strategy to an internationalist one. His central point was that, similar to what Yuen had argued, there is no magical Chinese model—no new economic principles were discovered. Rather, good policy was identified, implemented, and scaled up. The secret to Chinese success appears to be that there is no secret.

Taken together, the arguments presented provide reasons for both hope and caution among other developing countries. That there is no complex ‘method’ to achieving rapid development means that the tools for doing so are available to virtually every poor country. But doing so requires that the basics of state capacity, political commitment to growth and development, and the ability to identify and shut down failure quickly means also that many countries are well short of the necessary ingredients to begin to emulate China. It’s this thread that we will pick up at the next Future of Development seminar, on the role of politics in development, featuring Leonard Wantchekon and Sarah Khan, on September 9^th at 9:00am ET. Don’t miss it!