What Xi Jinping thinks about development economics

In September 2001, when he was still merely the governor of Fujian province, Xi Jinping published an article on development economics in the journal of the Fujian Academy of Social Sciences. This is not perhaps as unusual as it might sound: Chinese leaders are expected to be scholars as well, and to make their own contributions to Marxist-Leninist ideology. The article has recently been recirculated on the Chinese internet, and makes for fascinating reading.

The General Secretary has never been a specialist in economic policy, and these days appears to spend most of his time on foreign affairs, the military, and ideology. But he clearly does have views on the economy, and this piece gives us a glimpse of their foundations. Xi seems to be a very consistent thinker: many of the key elements of later policy and rhetoric are already apparent in this early work. The most fundamental of these is that China is essentially different from the West, a difference that has deep roots in both Chinese traditional culture and the post-1949 socialist system.

The article is titled “Development Economics And Developing Economies: On The Theoretical Lessons From Development Economics For Developing A Socialist Market Economy” (the Chinese citation is 习近平, “发展经济学与发展中国家的经济发展—兼论发展社会主义市场经济对发展经济学的理论借鉴” 福建论坛 (经济社会版) 2001年09期4-9). While Xi praises development economists for paying attention to real problems and making progress in understanding them, his overall take on the field is not hugely positive:

Although development economics has developed into one of the newest, most exciting and most challenging branches in the field of contemporary economics, on the whole it has not achieved the status of a mature and perfected scientific discipline, and still has some obvious defects.

Many development economists use a large number of hypothetical assumptions in their research, allowing them to derive conclusions by assuming what they wish to be true. …It is incomprehensible that although some people already know that it is incorrect to assume that the market economy of developing countries is mature, complete and unified, they are still eager to use a theory derived from this incorrect assumption to guide practice.

This is…not all that wrong. Xi sees that development economics as a discipline was largely created by Western economists using their own economies as a model, rather than being an indigenous creation of developing economies. This history supports his view that development economics has rarely been able to successfully prescribe a course of action that would allow developing nations “to raise their overall national strength and throw off the control of Western developed economies.” Nonetheless he recognizes that in more recent decades, development economics has gone through a process of self-reflection and correction, and has come to a “deeper understanding” of the problems of developing countries. And he does think it has come up with some useful insights, the most important of which is the following:

Economic development cannot be simply equated with industrialization and the growth of gross national product or national income: economic development is not equivalent to economic growth, but includes economic growth. …Economic development refers to a level of social development, that is, a process of economic growth that is accompanied by changes in economic structure, society and the political system. It includes growth in output, changes in the structure of output and income, and change and development of economic conditions, political conditions and cultural conditions.

Almost two decades after writing this piece, Xi would put this idea into practice. In his report to the Nineteenth Party Congress in 2017, Xi broke with the practice of his predecessors and declared that the “principal contradiction,” in Marxist jargon, was no longer how to meet the Chinese people’s material needs, but instead how to meet their desire for a “better life.” This broader concept encompasses social, cultural and environmental factors, and is as much about quality as quantity. While bound by his predecessors’ promise to double China’s per-capita GDP by 2020, Xi reinforced the shift by not setting a new goal for GDP after that. And indeed since Xi’s speech, it has become quite clear that goals for economic growth, while far from being ignored, no longer trump all other policy aims.

Yet aside from the important idea of development as a multidimensional rather than solely economic process, Xi does not not actually seem to find much of value in development economics. Much of his article is devoted to undermining the premise of the title: although he says that China needs to make use of theoretical tools to plan its development, he does not think that it can directly apply insights from this academic discipline. Theoretical ideas from abroad are only useful after they have been adapted to Chinese conditions. This discussion is worth quoting at length:

China is a socialist country, and the market economy we are building and developing is a socialist market economy. There is an essential difference between the socialist market economy and the capitalist market economy. This is that the socialist market economy is an organic combination of the basic socialist system and the management system of the market economy: it is using the means of the market economy to develop the basic system of socialism. The relationship between the two is that socialism is the foundation, the basis. Therefore the essential difference between the socialist market economy and the capitalist market economy is that the basic social system is different.

Since development economics was born in Western developed countries, its theoretical basis is bourgeois economics. Its purpose is to use the market economy to develop capitalism in developing countries. This value orientation runs through all the research and practice of development economics, which makes some of its theories not suitable for guiding the development practice of the socialist market economy.

For example, the catch-up strategy based on the model of Western developed capitalist countries, the radical “shock therapy” reform based on the premise of changing socialist public ownership, and the so-called international economic integration theory that completely accepts the rules of the game of Western monopoly capital, and so on, are not suitable for China’s specific situation.

Using a Chinese idiom, Xi sums up his argument by saying that the “shoes” of development economics should be cut to fit the “feet” of socialism, and that socialism cannot be cut to fit the ideas of Western development economics. Since the “basic socialist system” means the rule of the Communist Party, this means that economic reforms cannot be allowed to challenge the nation’s political framework.

More generally, Xi clearly believes that the economic ideas and practices of the West are based on its particular interests, rather than being based on universal values or truths. They do not automatically have any validity outside of the context in which they were created. China can and should study these ideas, because it should try to learn from the experiences of all human civilization. But ultimately these are just raw material that China will use to learn its own lessons and find its own way:

In our building and developing of the socialist market economy, we must be good at absorbing nutrition from the independent discipline of Western development economics, study and learn from its useful results, use them to guide our practice, and combine them with our own explorations to establish a socialist development economics.

All told, this article could not be a clearer statement of the view that China’s model will not and cannot converge with that of Western developed countries. And Xi had all this worked out all the way back in 2001, at the height of the euphoria surrounding China’s entry into the World Trade Organization and its integration with the global economy. You can’t say he didn’t warn us.

Xi Jinping visits a village in Fujian on September 4, 2001

One Comment

  1. Xi’s thought is apparently pretty consistent throughout the years. He’s also consistent in the sense of enacting policies based on the content of his speeches. So it looks like there are in fact few mysteries on how he views the world. If that’s the case, it would take only a moderately enterprising writer or journalist to read through everything he’s ever written, map those ideas to already-enacted policies, and then gesture towards what else might be coming down the line. I hope that someone is working on that project, or perhaps it’s already out there and I haven’t seen it.

    Reply

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