As China emerged from protracted isolation during the 1970s, visitors encountered massive gaps in economic knowledge. As late as 1986, this reviewer's participation in a World Bank-sponsored review of economics education revealed an appalling landscape of rote learning, ignorance and dogma.
The ensuing decades have brought massive change. Chinese universities, research institutes, government agencies and companies now employ legions of economists, including numerous graduates of leading overseas institutions, among them Tian Zhu, the author of this volume, whose many accomplishments include receipt of the 2017 Bergson Prize for the best article published in the Journal of Comparative Economic Studies.
Zhu focuses on two topics. He first addresses “the China puzzle” – why did reform-era China not only outpace the growth of the United States and other advanced economies between 1980 and 2012, but also advance “much faster than other developing countries” with which it shared what economists have termed the “latecomer advantage,” even though many of these low-income states “have freer markets than China” (pp. 5–6, 210).
After weighing multiple alternatives in discussions filled with illuminating, jargon-free and nicely explained tables and graphics that place China's remarkable growth spurt in a global context, the author concludes that “Confucian culture's emphasis on hard work, thrift and education . . . is the principal differentiating factor” separating China (and several dynamic East Asian neighbours) from the mass of low-income nations (p. 162).
Since citizens of low-income economies beyond East Asia are hardly allergic to work, thrift or education, the next step is to determine exactly how these features of Confucian culture supported China's recent growth and, equally important, why China endured many centuries of limited prosperity despite the presence of growth-promoting cultural underpinnings. Zhu confines himself to repeating insightful comments from several scholars, particularly Edwin Reischauer's prescient 1974 prediction that China (and other East Asian laggards) could share the prosperity of their dynamic neighbours once “policies change enough to afford room for the economic drive of which their people are undoubtedly capable” (p. 164). Even though this book makes no effort to pursue this important analytic thread, neglect of Zhu's insistence that China's meteoric economic rise rests on deep historic foundations undermines many studies of China's contemporary economy.
The final chapters focus on issues surrounding the growth slowdown of the past decade and China's future economic prospects. Regrettably, Zhu's analysis wilts as the discussion approaches recent developments and current policies.
Chapter eight asks “Why is China Slowing Down?” No clear answer emerges: the author concludes that the downturn “is neither simply a normal business cycle nor just the result of lower external demand or some internal structural problems,” nor was it caused by “the trade war” [with the US] (pp. 206, 219). Avoiding a direct answer to his own question, the author ventures the thought that the recent slowdown “is also the result of China's policy choices” (p. 206). Yes, but which choices, and with what consequences?
In discussing the future, the author deploys uninspired projections showing “a good chance” that China's future economic advance will match the long-term success of its dynamic East Asian neighbours, which would enable China to attain Jiang Zemin's goal, announced in 1997, of building “a strong and fully modernized country by 2049” with GDP far above that of the US and per capita income reaching “about 50% of the [2049] US level” (pp. 207, 216). The discussion focuses on macroeconomic generalities – likely trends in GDP growth, population size and exchange rates. Detailed analysis of prospective future developments surrounding institutions, savings, investment, education, technological progress and innovation – all emphasized in the author's discussion of economic performance between the late 1970s and 2012 – is notably absent.
The volume concludes by suggesting that “the US-led alliance should pursue a … strategy that . . . aligns with China's long-term interests by pushing for more market-oriented policies and institutional reforms and better IP [intellectual property] protection in China … [which] is also what many Chinese economists and reform-minded policymakers have called for” (p. 227). If proposals from “many Chinese economists” have fallen on deaf ears in Beijing, how can readers imagine that similar advice from abroad will influence the economic agenda of China's proud and nationalistic leaders, whose recent initiatives suggest limited interest in “market-oriented policies and institutional reforms”?
Amid the revival of economically damaging Mao-era policies – universal Communist Party leadership, self-reliance, channelling vast resources toward state-controlled enterprises, top-down investment and innovation priorities – the author's unwillingness to consider possible obstacles confronting China's economy other than “speed bumps” arising from COVID-19 and from friction with the US may signify a retreat from robust public discussion of economic policy, trends and prospects – a particularly unfortunate manifestation of China's not-so-distant past.
