DISTINCTIVENESS AND TRANSFERABILITY OF THE CHINESE

DEVELOPMENT MODEL

China's economic performance must be considered as impressive, based on the overall assessment in the preceding section. There is very little doubt that the Chinese economy has been growing quite rapidly, so that a marked rise in per capita consumption was sustained despite a significant increase in the rate of investment. At the same time, the very wide disparities in income characterizing Chinese society before 1949 have unquestionably been narrowed; precisely to what extent cannot be ascertained on the basis of the available data. Based on partial and tenative evidence, it seems that income inequalities may today be narrower in China than in many-but not all of the other developing countries and perhaps also in the Soviet Union.

This suggests that after a process of trial and error, Chinese leaders and planners evolved a set of development policies that worked and in essence achieved their principal objectives. This does not mean that no other policies could have been adopted or that the development strategy pursued was necessarily the optimal one. For instance, theoretically, instead of investing so heavily in the intensification of land use in North China where natural conditions are unfavorable and where therefore capital-output ratios are bound to be high, they could have embarked upon an ambitious and far-reaching program of railroad development. Construction of a wide-ranging and reasonably dense transport network would permit much greater inter-regional specialization and economic integration. This would enable China to substitute what may turn out to be relatively cheaper grain imported from overseas, instead of expanding grain production under the rather inhospitable conditions of the North. Under these conditions, resourecs released in "farmland capital construction," could be devoted to producing farm and industrial products in which China enjoys a comparative advantage.

Such an approach would automatically mean a sacrifice of agricultural self-sufficiency and a much more open foreign trade orientation. It would represent not only a change in strategy but a shift in the Chinese leaders' objectives. It would not only dilute the pursuit of selfreliance but would almost certainly lead to some major changes in rural-urban relations and employment patterns in ways that would run counter to the planners' preferences. At the same time, the leaders could not be assured that this alternative development path would lead to greater stability, higher growth, and better income distribution than the strategy pursued since the early 1960's. In the transition period, while the railroads were being built, China could be exposed to more or less severe balance of payment pressures since food imports would have to be increased before new export commodities were produced with which to pay for these expanded purchases from abroad. This in turn might require foreign loans to bridge this gap, which would also run counter to leaders' objectives.

Even if the policies and measures adopted were reasonably well designed to accomplish the principal leadership objectives, how efficiently were resources utilized in China? On the basis of the highly fragmentary evidence at our disposal, no conclusive judgment is possible. Nevertheless, there is no doubt that the process of resource allocation in China is peppered with numerous instances of inefficiency. This is apparent in the allocation of factory labor, with hoarding of labor

and its underutilization in a number of cases. It is also evidenced by the frequent accumulation of large inventories of finished products. crated in factory yards but not shipped for considerable periods. It is also illustrated by periodic breakdowns in the production process, particularly in the initial stages of plant operation.

These examples and a number of others one could cite clearly demonstrate that the Chinese economy is not operating at full efficiency. In many instances it may be operating quite inefficiently; but so is every living economic system. The crucial question one would need to address is whether the Chinese economy is operating less efficiently than those of other less developed countries. This question is impossible to answer, not only due to inadequate data but also because of some very complex conceptual problems. All of the instances cited represent cases of static inefficiency. However, in a rapidly growing and changing economy we must consider dynamic efficiency as well. An operation that seems high-cost, inefficient, and technically deficient at one moment in time may become quite efficient over a period of time. Among the crucial variables in this context are learning effects, that is, the capacity to "learn by doing," to learn from mistakes, and the speed at which this can be accomplished. In this respect, however, cultures, societies, and economic systems differ a great deal.

Irrespective of whether China's development strategy is in some sense optimal or whether it is implemented with a high degree of efficiency, the question that needs to be addressed now is in what ways can this strategy be considered as distinctive in comparison with other developing countries on the one hand and socialist economies on the other. As noted earlier, China shares two major objectives with other less developed countries: the quests for increasing power and modernization. This leads all of them to pursue rapid economic growth and technological progress, as the necessary bases for a share, of power in the international system and for modernity in the contemporary world. For most of the less developed countries these goals are coupled with a strong striving for a rapidly rising standard of living. This objective is more muted in the Chinese case, at least as an explicit, high-priority one.

On the other hand, the strong commitment to self-reliance and to a socialist and egalitarian pattern of development is a distinctive feature of China's approach to development. Many other developing countries talk of socialism, but only rarely is this translated into concrete operational policies and programs for narrowing inequalities of income. On the basis of partial evidence at least, it seems that in most low-income countries the development process may be associated with growing disparities between regions and between different income groups.

The periodic attacks on status barriers represent perhaps one of the most striking features of the Chinese model. There are no counterparts to the rustication movement in other socialist countries—in the Soviet Union or in Eastern Europe-or in other underdeveloped areas. Nor does one find elsewhere institutionalized measures designed to systematically break down the role differences between mental and manual labor.

In a most fundamental sense, China's development strategy rests on a mass-based mobilization approach evidenced not only in the policies referred to above but also in the distribution of communal services, most notably in the field of health delivery and technology. This is

reflected in mass involvement and mass participation not only in the construction of the health delivery system, but also in the diffusion of new technology, in farmland capital construction, in the development of rural industry, and in a wide variety of other measures that are ultimately designed to substitute labor for land and capital.

This whole mass-based development drive seems to be infused with a powerful set of motivations in part based on material aspirations and expectations of a rising standard of living. But these material incentives are combined with strong normative appeals rooted in a vision of a powerful China in which indignities, major inequalities, poverty, human misery, and deprivation will have been eliminated. This combination of material and normative appeals also characterizes the development process in other low-income countries, and in the Soviet Union and Eastern Europe as well. However the weight of patriotic and other ideological appeals as motivators of this drive seems to be much more pronounced in China, at least at this stage of development. Moreover, the whole process is reinforced and lubricated by a continuous push for model emulation and an exhortation to serve the people.

All these features, combined with China's approaches to agricultural development, rural industrialization, methods of industrial planning, and economic administration, do add up to a distinctive development model. Basically this model reflects an interplay between scarcity, ideology, and organization. The harsh realities of poverty and of scarce land, capital, and highly skilled manpower are imposed by China's factor endowments. The objectives of development, stressing a strong, powerful, self-reliant, egalitarian state and society, grow out of China's modern history and contemporary ideology. The systematic massing of labor and its substitution for land and capital is a manifestation of the scarcity of these resources. The methods of mobilizing and motivating labor and all of the human actors in the system is a function of ideology and organization.

To what extent is this model transferable? Are there any lessons to be drawn from the Chinese experience that could be applied in formulating development programs for other low-income countries? The model is the product of a socialist economic system in which the means of production are publicly owned, that is, property is nationalized and collectivized. The economic activities of factory enterprises, communes, and production teams are planned and carried out within a framework of controls. Resources are allocated principally through administrative channels rather than through the market, and prices are for the most part fixed by state authorities.

Moreover, the economic system is permeated from top to bottom with ideology and political organization. Ideology defines values, objectives, models, and attitudes, while organization provides the avenue for indoctrination, education, peer pressure, and more or less subtle forms of coercion (if necessary) through which these are transmitted to and inculcated in the masses. This then becomes manifested in certain patterns of human behavior absolutely critical for the functioning of the economic system and the success of the Chinese development model. These include a highly pronounced work ethic, a capacity for hard work, dedication, self-abnegation, subordination of the self, and willingness to sacrifice for the common good. The Communist Party constitutes a most essential ingredient in this

process, both as the source of the ideology and the agent for its dissemination.

In exploring the question of transferability, it is essential to identify the settings in which the Chinese experience might be applicable. In China, the development process is unfolding in a country of unprecedented size; the territorial expanse of the Soviet Union is much larger, while the United States mainland encompasses roughly the same land area as China. However, in terms of population China is in a class by itself, approximated only by India. Size in and of itself carries with it many crucial implications for economic development.

A large country is likely to be endowed with considerable mineral resources and a sizable internal market. Therefore, it is much easier for a large country to pursue a self-reliance policy without sacrificing economies of scale or efficiency. At the same time, a large country necessarily faces much more serious internal transport barriers, which may serve to reinforce the advantages of a regionally based selfreliance policy. These options are not open to a small economy which, given its limited resources and internal markets, must necessarily take advantage of international specialization and international division of labor if it is to develop. Therefore the issue of self-reliance poses itself in a quite different way for a small country. It does not mean reducing its involvement in the international economy, but rather maximizing the degree of national control over the process of resource allocation so that the benefits of development will be distributed to the population at home rather than be transferred abroad. As a result, self-reliance policies as implemented in China are applicable only to a limited number of countries. Other less developed economies may still wish to adopt this posture but its implementation requires a rather different set of policies.

There are also underdeveloped countries that are not as land-short as China. In parts of Africa and Latin America land is a relatively abundant resource. In these cases great reliance can be placed on bringing new lands under the plough, in extending the cultivated land area, and in this way increasing farm production. Since all underdeveloped economies are more or less capital-scarce and such new land programs require vast investments, they may call for a far-reaching substitution of labor for capital. For this reason a major emphasis on "farmland capital construction" may be a necessary feature of development programs in these areas as well, although their form would necessarily differ from that carried out in China.

Therefore, differences in size and resource endowments limit the transferability of China's development model and some of its features. to other developing areas. However, there are many more fundamental constraints to this transferability, even to settings in which resource configurations are more akin to those prevailing in China. These limits are largely imposed by systemic differences, although cultural factors may also play an important role here. For instance, in the case of India, transferability may be impeded not only by its vastly different economic system but by the lack of linguistic unity, the persistence of the caste system, and a number of other differences in the two traditions.

Leaving aside these very important but quite elusive cultural elements, one of the most crucial questions to be faced is whether the Chinese development model can be transferred to more or less private

enterprise-oriented market economies embedded in a variety of noncommunist political and social systems. As indicated above, the Chinese redistributed income through a series of confiscatory measures which then gradually led to the virtual elimination of private property. To the extent that regional disparities in stages of development and per capita income levels were narrowed, this was achieved through a highly centralized fiscal system with vast resource-allocating powers.

Can inter-personal and inter-regional income inequalities in other developing economies be narrowed without these vast controls over resource allocation and without resorting to these confiscatory measures? Can status barriers between peasants, workers, and intellectuals be attacked on a purely voluntary basis without ideological indoctrination, peer pressure, and a vast organizational effort by a highly disciplined and dedicated political movement? Can the spirit and motivation for hard work, maximum effort, innovation, and selfabnegation be replicated in other developing economies?

There are a number of underdeveloped countries, including Asian countries (e.g., Taiwan, South Korea, Thailand, Malaysia, Indonesia) that have experienced rapid economic growth, marked structural transformation, and a gradual process of modernization since World War II. However, they have accomplished this through development strategies, policies, and instruments markedly different from those applied in China. Except for one or two countries (e.g., Taiwan), in most cases this development was not associated with improvements in the distribution of income. On the contrary, available evidence tends to suggest that growth was coupled with a widening of income inequalities in the lessdeveloped countries.30

While it may not be too difficult to design redistributive tax or income-transfer policies for these developing economies, there are enormous political and administrative obstacles to implementing these. Tax morale in these countries tends to be low, the administrative capacity of the government bureaucracies tends to be limited, and last but not least, powerful vested interests can and do bar the implementation of such programs. It is also very doubtful that the kind of spirit, motivation, and social controls prevailing in China can be transferred to the entirely different systemic settings of other developing areas. In essence it is difficult to visualize how particular elements of the Chinese experience can be pulled out of their total context for possible inclusion in the development programs of other countries. The different facets of what may be termed the Chinese development model are quite interdependent and deeply imbedded in the economic, political, and social system as a whole. Therefore it is not at all clear how elements of the model or the model as a whole can be tranferred without adopting the essential features of this system as a whole.

PROSPECTS AND DILEMMAS

The year 1976 may present a particularly uncertain vantage point from which to forecast China's future course of development. With the passing of both Mao and Chou En-lai, it marks a major change in

30 See Hollis Chenery, ed., Redistribution with Growth, London, 1974, pp. 3-27; Simon Kuznets "Economic Growth and Income Inequality, "American Economic Review, vol. XLV, No. 11, March 1955, pp. 1-28; Simon Kuznets, "Quantitative Aspects of the Economic Growth of Nations, Distribution of Income by Size," Economic Development and Cultural Change, January 1963, part. II.