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Economic historian speaks at Drake

Photo: Connor McCourtney

Wong, the director of the Asia Institute at the University of California-Los Angeles, laid out a set of arguments on the uniqueness of Chinese industrialization in the latter half of the 20th century, the inaccuracy of many academics in their characterization of Chinese economic growth and the current challenges China faces in the wake of the Great Recession.

It is the ethnocentric prerogative of many academics, in the various fields related to history and economics, to assume that industrial growth must necessarily follow the European model that began in England in the late 18th century and ended with the USSR in the early 20th century. In his lecture, Wong pointed out that Chinese industrialization did not necessarily parallel the European model. The industry that developed after the end of the War of Liberation in 1949 was directed by a central government power, as opposed to being a market-based evolution of technological and economical innovation. In that vein, the directed nature of the industrial capacity was, up until the 1970s, built in a way that many economists consider inefficient. The Communist Party spread the industry around rather than centralize it in a handful of locations because they feared a possible invasion by the United States and did not wish to risk their entire industrial capacity in key strategic points.

In the 1980s and into the mid-1990s, the pattern changed. Inefficient, labor-intensive industry began to grow in the interior rural areas. Due to the isolation of the Chinese interior, most of the industry was in the creation of consumer goods marketed at solely Chinese consumers. This eventually changed into centralized industrial centers in the urban areas that were characterized by higher levels of efficiency that replaced the rural model, resulting in labor migrations away from the interior to the coastal cities.

It is also important to note that China is incredibly unique in that it holds such a large geographic area and population. In terms of total land mass, it is comparable to the continent of Europe, yet its population is nearly twice as large. It has to be understood that, because of the massive land mass, industrial growth that occurs in the northeast portion of the country can easily be juxtaposed to the lack of growth in the southwest. Wong pointed out that, in terms of distance, such a disparity is comparable to the distance between England and the Baltic states. Economic historians would claim that British industrial growth in the 18-19th centuries had a significant impact on the Baltic, yet they do not seem to realize that such geographic disparity can exist within a single state, such as China. This is one of the chief challenges that China faces today; the extreme disparity in geography that prevents a single wave of industrialization improving the entire nation. It is technologically, logistically and economically unfeasible to have an entire landmass comparable to a continent to experience universal industrial growth, no matter what model is being followed.
Perhaps an even greater division that China faces today, according to Wong, is the sharp contrast between the urban and rural populations. It is hard for Americans to understand the division, because the land and people we would qualify as rural are hardly so compared to the rural Chinese. At a time when the urban Chinese are purchasing powerful computers and fancier automobiles, the rural peoples are just now receiving electricity, washing machines and television. It has been known to the ruling party since the inception of the People’s Republic that there were completely separate demographics on this basis, and they have been fighting to close the gap between them. Interestingly, the Great Recession has done more for this than anything; the insular nature of the interior rural markets meant that they were harmed little during the western financial collapse. In contrast, the eastern, urban markets, being more integrated in the world economy, suffered greater losses.

Beyond the lessons of ethnocentrism, false ideas of historical rigidity and the uncertain future of China, the greatest question that we must ask ourselves as global citizens, is to what extent do things like open markets, free trade and global capitalism result in mutual benefit? In China, the result has been mixed, with some areas prospering while others are simply being exploited. The most memorable line from the lecture was when Wong acknowledged that “China is a microcosm of what the world faces,” with global capitalism having a track-record of both helping and hindering human development within China and the rest of the world at large. What all of this means to the billions of human beings who have yet to be lifted out of poverty remains to be seen.

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