In interpreting structural change in China, many have drawn attention to the persistence of the past in shaping subsequent economic debates and policies. One should not press that familiar adage, “plus ça change, plus c'est la même chose,” too far. But few would deny the potency of continuities, as much as breaks with the past, in explaining China's shifts across important turning points in its history. Such continuities are a principal leitmotif of this book. In it the authors show how the antecedents of changes that have taken place since 1978 have influenced China's development trajectory, and they demonstrate persuasively the debt which many aspects of the “Chinese development model” owe to the past.
By skilfully marrying pre- and post-1978 narratives, Kjeld Erik Brødsgaard and Koen Rutten highlight the discursive foundations that underpin recent and current developments in China. Strikingly, they show the extent to which recent economic policy debates resonate with those that shaped strategic decision-making in the Mao era. At the heart of the pre-1978 discourse was a tension between “two rival paradigms,” captured by the authors as “Maoist revolutionary economics [and a] strategy of reform and readjustment” (p. 15). This found its post-1978 revisionist expression as a tension between the dictates of market forces and those of the state, which sought to resolve itself through the creation of a “socialist market economy” (shehuizhuyi shichang jingji).
Throughout the PRC's 70-year history, a strongly recurring theme in debates about both economic growth and development has been the role of capital accumulation. During the Mao era it was believed that the primacy of heavy industrialization demanded a ferociously extractive policy. Out of this emerged a growth model that was driven overwhelmingly by investment. By the end of the first Five-Year Plan in 1957 the accumulation rate of 25 per cent; two years later, at the height of the Great Leap Forward, it had reached 43 per cent; and in 1978 it was still 38 per cent.
The unsustainability of such high accumulation rates and the need for greater balance between consumption and investment was an important message that emerged from the famous 13th Plenary session of the 11th CCPCC at the end of 1978. But the authors point out that despite massive poverty alleviation and a profoundly far-reaching consumer revolution, the investment-driven nature of China's subsequent development record has, at least until the last few years, continued to be a prominent feature of its growth trajectory. In the early 1980s the investment share of GDP had fallen back to around one-third, but this rose steadily to reach a record high of 48 per cent in 2011. Much has been made of progress towards economic rebalancing in recent years, but it is instructive that in 2017 the accumulation rate was still well in excess of 44 per cent. By contrast, household consumption was less than 40 per cent of GDP – little higher than a decade earlier and seven percentage points below its share in 2000.
Whether or not the authors are correct in arguing that “China's economic development has come full circle” and “it is time to change [from reliance on resource mobilization] to resource efficiency” (p. 164), the fact that investment growth has been maintained since the 1980s is less surprising when looked at from the perspective of other countries’ experiences. In this respect, China's development narrative replicates that of many other countries, including Japan, South Korea and Taiwan, during their economic “take off.” Indeed, the value of China's capital stock is still significantly below that of the US and Japan. From today's perspective, even allowing for improvements in capital productivity, the potency of investment has yet to be exhausted. Not least, as Brødsgaard and Rutten point out, the Belt and Road Initiative will also make further extremely heavy demands on investment for infrastructure construction.
Nevertheless, they are right to draw attention to the “lacklustre” growth of household consumption in and after the 1990s (p. 141). Their reference to the potentially important role of the rural sector – a market comprising well over half a billion consumers – is also salutary. The rise in the consumption share of GDP in the last five years no doubt owes more to developments in cities than to those in the countryside. But the explosive growth of “Taobao Villages” and recent rapid expansion of rural e-commerce suggest that as rural wages rise the countryside will – alongside lower-tier cities – become the dominant driver of retail expansion in China.
By tracing the evolution of economic discourse since the 1950s this book throws important light on the forces that have shaped Chinese governments’ policy formulation down to the present day. Its nuanced analysis embodies exemplary scholarship and borrows from a remarkable range of Chinese-language materials, as well as drawing on an extensive secondary literature. In the face of so much comment about China that lacks awareness of essential historical context and derives from the use of secondary sources and translated – sometimes mistranslated – materials, these qualities make this book a particular pleasure to read. It is at once provocative, enlightening and authoritative, and it can be confidently recommended to anyone wanting to understand China's recent and current development trajectories.
