That is not to suggest that Chinese capitalism may not yet unravel. Because despite its strong fundamentals, “China has faced and continues to face very serious structural problems (Orlik, 2020).” Still, the system has held up astonishingly well thus far. Why is that? Orlik (2020) identifies four factors at play: (1) “China has underappreciated sources of strenght” (2) “The tradeoff between policy choices is overstated” and (3) “As a single-minded, single-party state, China has unique resources”.
Put another way, “one reason they’ve been successful: something economists call the “advantage of backwardness,” a path to growth simply by following in the technology and management steps traced out by global leaders (Orlik, 2020).” But is that enough? African countries are similarly poor as China once was but are yet to excel like it did. Orlik (2020) obliges: “What’s accelerated China up the development ladder is its 1.3 billion population and can-do-government.”
Besides, foreign firms did not mind giving away their technology in exchange for market access to more than a billion potential customers once the government insisted. A similarly determined African government could hardly muster as much clout. That could change, though. A continental free-trade area of as many customers on the continent means if similar cooperation can be inspired towards technology transfer, there might still be hope for Africa in this regard.
Besides, China was at a vantage point to observe the successes and misadventures of neighbouring Japan, South Korea and Taiwan. “The combination of space for development, enormous size, access to foreign technology, and a ready-made blueprint for development gave China a major head start (Orlik, 2020).” “A high savings rate, controlled capital account, and a state-owned banking system” also helped (Orlik, 2020).
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A continental free-trade area of as many customers on the continent means if similar cooperation can be inspired towards technology transfer, there might still be hope for Africa in this regard
Also bear in mind that the state actually plays a more active role in Western democracies than is let on. This is the main point made by University College London economics of innovation and public value professor, Mariana Mazzucato, in her 2013 book “The entrepreneurial state: Debunking public vs private sector myths”.
According to Mazzucato (2013), “despite the perception of the US as the epitome of private sector-led wealth creation, in reality it is the state that has engaged on a massive scale in entrepreneurial risk-taking to spur innovation.” Four prominent examples are the US government’s “Defense Advanced Research Project Agency (DARPA), Small Business Innovation Research (SBIR), the Orphan Drug Act (the EU passed its own in 2001, imitating the US act passed in 1983) and the National Nanotechnology Initiative (Mazzucato, 2013).”
In his 2020 book, “Has China won? The Chinese challenge to American primacy”, a distinguished fellow at the Asia Research Institute, Kishore Mahbubani, assesses the seeming American lethargy as follows. “One reason the West can no longer dominate the world is that the rest have learned so much from the West. They have imbibed many Western best practices in economics, politics, science, and technology. As a result, while many parts of Western civilization (especially Europe) seem exhausted, lacking drive and energy, other civilizations are just getting revved up (Mahbubani, 2020).”
And on China, Mahbubani (2020) had this to say: “Chinese civilization has had many ups and downs. [Thus] it should be no surprise that it is now returning in strength.” Thus, what may seem like maverick or courageous divergence from orthodoxy on China’s part, could be traced to its complex history and evolution, which was characterised by huge failures and successes in almost equal measure.
