Chinese philosopher Confucius said: "At 70, I am able to follow what I desire and not deviate from what is right." Applying this to China's 70-year economic development implies that the nation has found the way to achieve its goals.
David Hume, a Scottish philosopher, asserted that when arts and sciences come to perfection in any state, from that moment they naturally, or rather necessarily, decline and seldom, or never, revive in that nation where they formerly flourished.
China's science and technology had for centuries stood at the forefront before they lagged behind the West. The success of China's economic development and its catching up in science and technology have broken, and will continue to break, the Hume prophecy.
The first 30 years of the People's Republic of China laid the foundation for its long-term development, especially for its economic takeoff during the reform period.
First, the leadership set the goal of modernizing agriculture, industry, defense, and science and technology. Second, the modern industrial system, particularly for heavy industry, was built. Third, the demographic transition, characterized first by a rapid drop in the mortality rate and then a decline in the birth rate, along with developments in education and healthcare, created the necessary conditions that spurred growth during the reform period.
Lessons were learned from economic development in the first 30 years. The adoption of the planning system and a heavy-industry-oriented strategy took its toll, causing resource allocation inefficiency, absence of incentives, economic structural imbalance and violation of economic laws. As a result, the Chinese economy failed to catch up with the rest of the world.
Having realized its mistakes, the Chinese leadership initiated the reform and opening-up policies in the late 1970s. Since then, various measures of reform and opening-up have been carried out.
What lessons can be learned? First, the approach to and contents of reform should be chosen based on a country's own conditions. From the very beginning, China's reforms have focused on developing productive forces, enhancing national strength and improving people's livelihoods instead of copying any of the existing models. As a result, the gradual approach to push forward reforms allowed China to combine reform with growth, economic development with political stability and reform, and growth with sharing.
Second, reform, opening-up, growth and sharing require the elimination of institutional barriers, the granting of autonomy to State-owned enterprises, and encouragement of the development of the private economy and mixed economy. The Chinese economy has embraced globalization by establishing special economic zones, opening coastal cities and entering the World Trade Organization.
Finally, political stability, social cohesion and policy continuity are conducive to forming consensus on a host of decisions.
According to the road map charted by the Chinese leadership, after the celebration of the 70th anniversary of the People's Republic of China, it will set out on a new journey of building a socialist, modernized country in an all-around way.
China's new journey, though, will not be free from challenges.
First, it should avoid the "middle income trap", in which countries often diverge in growth when they are close to or just beyond the high-income threshold. At that stage, traditional sources of growth tend to weaken. Therefore, countries need to tap new growth drivers, which can be done only by deepening reforms and further opening-up.
Second, it must tackle growing pains. During transition of the growth pattern from an input-driven one to one that is driven by productivity, there will be more competition with developed countries. Further reforms will encounter more resistance from vested interests. All these will require the government to play a bigger role in redistribution.
Third, it must cope with the Thucydides Trap. The term derives from the ancient Greek historian's account of the Peloponnesian War, which unfolded in Greece in the 5th century BC, when the rapid rise of the city-state of Athens provoked fear in Sparta, the continentalist hegemon, and ultimately plunged the two city-states into war.
As China, the second-largest economy, moves toward scientific and technological frontiers of the world, the existing power tends to impede its development by means of trade conflict and exclusion from the global supply chains.
What China should do is to do its own things well－that is, deepen reform and further open up in order to sustain its healthy development.
Meanwhile, with a sincere desire for peaceful development, China will actively work to break unilateralism with multilateralism and to preserve globalization.
