China and development: six things to read in December

17 December 2018
Insight
Guomao, in Beijing's central business district, at dusk. 2013 Jens Schott Knudsen. CC BY-NC 2.0
In this second issue of the China resources round-up, we talk about the biggest development story of the last 40 years, political and bureaucratic transitions in China, the Chinese aid system, and the Belt and Road Initiative (BRI). 

The biggest development story of the last 40 years

This month marks a significant milestone for China: it’s the 40th anniversary of the Chinese economic reform (改革开放 gaige kaifang, literally, ‘reform and opening up’). This process transformed China from a poor country to the world’s second largest economy in the space of 40 years, lifting hundreds of millions out of poverty. 

But China’s success came at a cost. Rapid economic growth has increased inequality between provinces, and between rural and urban areas. It has also brought huge environmental and health costs. Other countries can draw important lessons from China’s experience – both on what to do, and what to avoid. 

There are plenty of excellent resources covering China’s economic reform, past and present. One I recommend is China’s 40 years of reform and development: 1978–2018 which looks at the economic, social and environmental aspects of the transition.  

How the west got China wrong

A podcast that caught my attention this month was ‘How the west got China wrong’, the recording of a lecture by Yuen Yuen Ang at the Global Development Institute in Manchester. 

Elaborating on her Foreign Affairs piece (paywall), Ang explains why China’s economic growth has not been accompanied by the transition to a more democratic political system that many observers had predicted.  

Ang argues that China has in fact enacted reforms, but not in the way many expected. While politically China remains a single-party state, major public administration reforms have been implemented delivering greater accountability, competition, and partial limitations on central power. 

Now that China has achieved middle-income status, this ‘autocracy with democratic characteristics’, as Ang coins it, will require further reform. However, Ang says, this may well not result in a multi-party democratic system; it is increasingly clear that whatever form China’s political structure takes, it will be quite different to what experts in the west consider an adequate model. 

Aid rules

In November, the new China International Development Cooperation Agency (CIDCA) published a draft set of measures for the administration of foreign aid.

The China Aid Blog has helpfully translated these into English, marking where they differ from the aid measures of the Ministry of Commerce (MOFCOM), the body previously responsible for China’s foreign aid budget. 

The newly-proposed measures make the remit of CIDCA broader than that of MOFCOM, to include not only the strategic planning and coordination of aid projects, but also the ‘strategic implementation’ of the BRI. 

Many other aspects of the aid system remain unchanged – for example, aid projects remain implemented by the relevant ministries. This means that agencies such as the Ministry of Health and of Agriculture will continue to implement aid projects in their respective domains. 

A brief by the German Development Institute (DIE) provides insightful comments on the proposed measures, such as that CIDCA will now be responsible for the supervision and evaluation, budgets and accounts of development projects. The authors hope this will improve the perception of limited transparency around Chinese aid projects. 

They also argue that CIDCA will be mandated to engage internationally on behalf of the Chinese government on matters of foreign aid, which is a new and welcome development. 

More on Belt and Road

More on Belt and Road, this month drawing on Chinese- and English-language resources. 

Xue Li of the Institute of World Economics and Politics, Chinese Academy of Social Sciences, writes an interesting blog on Caixin. In one recent post, he explores how China should engage with low- and middle-income countries in the context of the BRI. Compared with previous Chinese foreign policy and economic initiatives, the BRI involves close cooperation with these countries, so it’s critical to establish a thoughtful and coherent strategy.

Xue Li argues that the Belt and Road Initiative should prioritise poorer regions, starting with China’s neighboring countries in Asia, and with sub-Saharan Africa. It should focus on building relationships with key partners (and even specific sectors) in each region – for example Pakistan in South Asia, Uzbekistan in Central Asia, Kenya and Tanzania in Africa, and Egypt in the Middle East.

Xue Li adds that China must ensure that host countries have the capacity and resources to handle the management, costs and requisite speed of execution for BRI projects; and the BRI should avoid producing so-called ‘white elephants’ – infrastructure of little use to the host country. He suggests developing indicators and principles to guide decision-making and management of BRI projects – for example, these should not exceed a certain percentage of total foreign investment or GDP of the host country. 
 
There is plenty of thinking going on about the BRI, which should feed into strategic decisions about how to make it more inclusive and sustainable. Another interesting article describes how the BRI’s initial stages were characterised by scale and speed of execution, raising issues around its sustainability. Hopefully this model is coming to an end, and will be replaced by one with greater attention to the planning and delivery of the projects.  
 
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Authors

Research Fellow
Linda is a development economist. Her research interests include trade and regional integration, [...]