I will leave the global-historical analysis of China’s development to Professor Milanović. I will only note that the suggestion that the tragedies of the Great Leap Forward had as much to do with international conditions, as with Mao’s utopian idea that human will could trump economics, is, dare I say, naïve. Also nowhere have I made the argument that China should have followed an export-oriented strategy in the 1950s—whether that would have been wise or even an option isn’t something I have examined.
I am far more interested in what has occurred on the ground in China than global development paradigms. And of particular interest to me is the development of China over the last couple decades when I lived there and had the privilege to report from every province and region, while interviewing hundreds of workers, farmers, factory managers, and Chinese economists and officials.
What’s obvious for anyone that has spent significant time in China trying to understand its economy – made even easier by the fact that its officials have been very clear about this – is that the country today faces significant obstacles in making a needed transition from a more investment, export-led economy, to one that is far more driven by the spending power of its own people. It is also obvious that this transition is hindered by its deeply unequal economic system which in turn is tied to lack of progress in reforming its household registration or hukou policy as well as the dual land system, that makes it difficult for rural people to monetize the land they hold. These policies date from the Mao era, with the hukou largely adopted from Stalin’s Soviet Union, and the dual land system a relic of the Chinese Communist Party designation of all rural land as belonging to the “collective.” They of course had nothing to do with U.S. policies.
The hukou and land system today help explain why household consumption has been constrained, and still makes up a relatively small portion of GDP. Again, while spending time living and working in China and traveling throughout the countryside helps one realize how much of an obstacle they are to the country’s economic future, one however can simply listen to the Chinese leadership itself; since at least the 2013 Third Plenum, they have made it very clear that their continued existence lies at the heart of China’s development dilemma.
The continuing struggles China faces in reforming them, a combination of the perceived costs of integrating migrants into the cities, the unwillingness to give up the land—related revenues that local governments are so reliant on, and the resistance of urban Chinese who have no desire to share their schools and medical facilities with rural people, plus fears of the Chinese Communist Party about loosening control, mean the future of China’s economic development is far from certain. China’s challenges today are in large part of its own government’s creation.