China 2012: Strategizing Sustainable Growth ed. by Hu Shuli (review)

China 2012: Strategizing Sustainable Growth was published by Jiangsu Literature and Art Publishing House in 2012. The authors mainly examine the economic and political cycles in 2012, a year of leadership change in the 18th National Congress of the Chinese Communist Party. The book reflects China’s search for new ways of reform in a critical period of social transition. By analyzing current issues, it seeks to decipher puzzles in China’s future development and discusses challenges and prospects against the background of international economic and potential social/political crisis .

There are three keywords in this book’s title: “sustainability,” “strategizing,” and “growth.” “Sustainable” growth means substantial development or development of the real sector, not growth through creating economic bubbles. “Strategizing” explains that China is “on the way” to pursuing development. “Growth” is not just an “increase” in statistical figures. It means comprehensive social transformation through development. By this the authors argue that a singular emphasis on GDP has created a mode of growth in the past three decades that simply cannot be sustained.

This book is divided into four sections: a review of China’s development pattern, analysis of the current issues in China’s transformation, exploration of new ways of reform, and identification of key immediate challenges to China in 2012. From our perspective the book unfolds its assessment of China’s current state of affairs in three main ways.

The first is a reflection on China’s realities. Contemporary China is in a period of massive transformation. Affected by economic globalization and cultural diversity, a wide range of challenges have emerged to test China’s governance. These include a potential debt crisis at the central and local levels, inadequate financial reform that causes overt state monopoly, and bottleneck problems, such as a structural shortage of capital that prohibits growth in small and medium-sized enterprises. Many articles express serious concerns about these realities. First, they point out that rent seeking that is embedded in state control of market operations will generate grave long-term adverse effects on China’s socioeconomic development. Second, they analyze crisis-generating problems of inadequate social welfare mechanisms, polarization of wealth distribution, the ill functioning of legality, and privileges of state-owned firms. These have given rise to the emergence of vested interest groups that persistently delay political reforms. Finally, the combination of failure in governance and market failure worsens environmental degradation and resource constraints. For example, Li’s chapter, “Three Distortions of China’s Financial Resources,” reveals that excessively high savings have actually put real interest rates in the negative territory. The causes for this phenomenon lie in a lag of financial market maturity and a lack of commercialization in interest rate setting. Consequently, the members of the public are deprived of suitable investment channels and cannot earn great returns in interest rates on investments.

The second theme of the book is a philosophical refection on “Chinese pattern.” The Chinese pattern is a generalization of unique Chinese approaches toward development and systematic transition. The model is sustained by four pillars. First, China maintains a higher speed of economic growth. Second, the realization of such growth is based institutional transition, reform, and innovation, which have created the “Chinese miracle.” Third, the Chinese approach distinguishes patterns of change from those of other transitional countries. By nature, this underlines the debate between the “Beijing Consensus” and the “Washington Consensus.” Last, the base of the Chinese pattern is powerful government control of society and state intervention in the market.

Compared with other developing countries’ development patterns, the Chinese pattern is constructed of three building blocks. In contrast to weak central government management of the economy, China’s government is driven by a strong sense of responsibility to promote growth. The state capacity in running the economy is reflected by formulating strategic plans, organizational mobilization, and forceful implementation. This has ensured effective resource allocation and orderly progress in industrial upgrading. Differing from development patterns of overt interdependence elsewhere...