DAVOS, Switzerland — A lot of people at the World Economic Forum are talking about the Beijing consensus. But there is no consensus about what the China’s economic growth model actually is.
Concern about that model somehow challenging Western democratic capitalism runs deep here at a time when China has become the No.2 economy, surpassing Japan and gaining on the United States. It faces none of the problems many rich countries are grappling with after the financial crisis: debt mountains, high unemployment and political gridlock.
But what actually characterizes the Chinese model? A Chinese economist here at Davos, who preferred to remain anonymous, tried to shed some light on the question, citing four key characteristics he said defined Beijing’s communist-capitalist-Confucian system.
Policy toolkit: The Chinese authorities have a much larger toolkit to interfere in the economy, he said. They can regulate and tax and hand out contracts like in the West. But they also can — and don’t hesitate to — meddle in financial markets if they feel a share price, for example, is not at the right level.
Corporate allegiance: Many companies are not only state-owned, but are accountable to the government as well. The government picks the management and managers report to the government. They are motivated less by pay than their Western counterparts, mainly because they are paid less: Even the boss of the Industrial and Commercial Bank of China, the world’s biggest bank by some measures, reportedly earns less than $200,000 a year.
Resources: Beijing controls unusually large resources. They not only have nearly $3 trillion in currency reserves and get a steady stream of profit from state-owned business but they also control all the land. “Fiscal problems do not exist in China,” the economist said. “If they authorities need money they can just sell some land.”
Long-term planning: The authorities in Beijing set long-term strategic priorities and then systematically pursue them in five-year-plans.
For democracies committed to the rule of law and the free — although perhaps more regulated — market, there is not a whole lot that can be adopted from this list. But several Western economists here are urging that at least more long-term strategic thinking be tried, even if Western electoral politics makes that difficult.
