Friday, September 20, 2013

Multi-Dimensional Chinese Lessons for Pakistan

Majyd Aziz

“The friendship between China and Pakistan is deeply rooted in the hearts of the two peoples. It is in our blood, and has become our noble and firm conviction.” Wen Jiabao, former Premier of China, December 2010. “The China-Pakistan all-weather strategic partnership of cooperation has gone beyond bilateral dimensions and acquired broader regional and international ramifications.” Joint statement issued after his state visit to Pakistan in December 2010.

The comforting exhortations do echo the sensitivities of this all-weather friendship and creates a rhapsodic emotion among the Pakistanis. The disconcerting fact is that it is very seldom that a serious effort is undertaken either by political leadership, by economic planners, by trade and industry or by media to actually adopt Chinese lessons. China is focused on long-term commitment to the policies and reforms that have been undertaken. This allows the policymakers to introduce practical aspects in a gradual and evolutionary manner rather than mid-term second-guessing. The emphasis is on institutions and rarely on individuals. This concept is, regretfully, anathema to the mindset of Pakistani leadership and is probably one of the reasons why Pakistan’s economy or other state matters dive into troublesome waters. 

It has been the avowed policy of Chinese leaders to assiduously go for development through a focused transformational process. The guiding principle is what is known as the Beijing Consensus rather than the oft-emulated Washington Consensus forced on, or followed by, many a country.

In 2004, the United Kingdom's Foreign Policy Center published a paper The Beijing Consensus by Joshua Cooper Ramo , a former senior editor at Time magazine. Ramo laid out three broad guidelines for economic development. The first guideline involves a "commitment to innovation and constant experimentation." The second guideline states that Per Capita Income (GDP/capita) should not be the lone measure of progress.” The third guideline urges a policy of “self-determination”, where the less-developed nations use leverage to keep the superpowers in check and assure their own financial sovereignty. In his January 2012 article in Asia Policy, John Williamson, an English economist who coined the term Washington Consensus,  described the Beijing Consensus as consisting of five points: 1. Incremental Reform (as opposed to a Big Bang approach) 2. Innovation and Experimentation 3. Export Led Growth 4. State Capitalism (as opposed to Socialist Planning or Free Market Capitalism) and 5. Authoritarianism (as opposed to Democracy or Autocracy).

The result has been phenomenal for China and is reflected in a stellar growth in foreign exchange reserves, in formidable GDP growth in the past three decades, in developing a process of political, socio-economic influence in many countries, blocs, and regions, and a resolute reliance on traditional perspectives rather than borrowing theories or dictates. Until 2008, China still followed Premier Deng Xiaoping’s vision to build China’s strength while maintaining a low profile in international affairs. But in 2008-09 when the global economic crisis devastated the economies of most of the democratic countries, China survived the downward spiral and emerged in a dominant position. A re-thinking then evolved and China ventured to become a global force.

China’s model of development is actually more complex and highlights steps designed to ensure that the government remains the focal point of economic and political policy-making and maintains a high degree of control over the economy. China has created substantially favorable strategies to attract foreign investment. Beijing has developed a mixed form of capitalism in which there is an open-economy to some extent, yet it ensures governmental control of strategic industries, encourages entrepreneurship, decides the investing of state funds, and allows the banking sector to prop up profitable and innovative enterprises. Thus there are now over 300 billionaires in China.

An important point within the Beijing Consensus guidelines is emphasis on export-led growth. That has been the hallmark of the Chinese economy and it is through this determined policy that today China has been able to become the envy of other nations and has enabled Beijing to play a leadership role in the global marketplace. The prediction is that Chinese exports would cross US$ 2.75 trillion in 2013. Of course China is also a major market for global goods and in 2013 imports may exceed US$ 2.25 trillion. China’s foreign exchange reserves are a mind-boggling US$ 3.50 trillion. These figures are a manifestation of adherence to Beijing’s own thinking process rather than allowing external influences to dictate strategies.

“Indigenous Innovation”, or “zizhu chuangxin”, has been a cornerstone of China’s march towards self-sustainment. When Deng Xiaoping launched the reform process and opening up of the economy in 1978, he counseled that supremacy in science and technology should be the key to China’s modernization. Some 20,000 experts were at that time directed to draft a new blueprint for science to serve as a conducting force for restarting China’s economy. The importance accorded to science and technology is evident even today by the fact that state leaders themselves control the science policy. The prime factor of this policy is to reduce China’s overall reliance on foreign technology to below 30% from an estimated 50% at present. More importantly, China is embarking upon a campaign to inculcate “Buy China” on the domestic front. This would be a monumental boost to domestic industry and would become a source of concern for countries that do bilateral trade with Beijing. Furthermore, even foreign companies now have to conform to the Chinese demands for co-innovation and re-innovation, a conditionality that is agonizing and difficult to fathom.

The reliance on this policy has enabled the Chinese government to undertake mega reforms that has resulted in China making tremendous headway into solving the infrastructure shortages, development  of efficient physical infrastructure like high-speed railways,  excellent road network, and utilization of automotive vehicles, etc. Four basic research sectors have been provided extensive support and significance. These are protein science, nanotechnology, quantum physics, and developmental and reproductive science. The decision makers have a target of increasing gross expenditure on R&D to 2.5% of GDP by 2020 with basic research reaching 15% of R&D spending by 2020. More importantly, the Chinese policy is to ensure that essential goods, services, and privileges are provided to assure quality of life. One fact that exemplifies this is that official poverty that was 15% in 1984 is less than 2% today. This is possibly the most dramatic poverty reduction achievement in recorded history.

Pakistan has to learn a lot from the Chinese Model. The potential lessons that deem consideration include ownership of policies at all levels of society. Recently, the political and establishment leadership displayed such an ownership during the All Parties Conference on National Security. This sincerity can and should be replicated in other sectors too. It is imperative that there should be an Islamabad Consensus on the economic vision that is notoriously deficient in Pakistan’s policymakers. An APC should have been convened long time ago in association with representatives of trade and industry to discuss and agree on a three-tier economic vision, containing short, medium, and long-term strategies and targets.

Another lesson to be learned from China is that reliance should be on homegrown or indigenous solutions rather than depending on imported or abstract answers to resolve the country’s myriad issues. It is important to understand that the encouragement accorded to grassroots initiatives would generally indoctrinate commitment to reforms, a feature that is seriously missing in this nation of nearly 190 million denizens. A paradigm shift is crucial and this may even be requiring an unorthodox approach and revisit of established parameters. It seems that building constituencies, scaling up the initiatives, and shedding unworkable decisions just do not factor in any successive Pakistani government’s thinking.

There is a fundamental need to change the equation by stepping onto a higher plateau and imbibing the wisdom oozing out of the Chinese success of becoming a great nation. Pakistanis should now literally follow, in more ways than one, the Hadith of Prophet Muhammad (PBUH): “Seek knowledge even as far as China.”

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