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The rise (or, rather, the return) of China as an economic superpower is disconcerting for us in the West. Not because the world’s most populous nation doesn’t belong in the first rank (it obviously does), but because the People’s Republic is, at least nominally, a communist state.
As David Fickling explains in an illuminating article for Bloomberg, we’ve been here before – not with China, but the USSR.
We’ve largely forgotten it, but, for most of the Cold War period, Soviet GDP was second only to America’s – the bear and the eagle were economic as well as a military rivals:
“Around the middle decades of the 20th century, Moscow presided over a China-style economic miracle that caused many in the West to fear they would be overtaken. In the 1950s, the Soviet economy grew faster than that of any other major country barring Japan.”
How did that happen? If communism is so inferior to capitalism, how did the world’s #1 communist power outpace America for so many years?
Actually, it’s not so difficult for a less developed economy to grow faster than a more developed one: not when it has an expanding, literate and reasonably healthy workforce; not when it has access to plentiful resources and to technologies tried-and-tested elsewhere. Those things give you a lot of low-hanging fruit, ripe for the plucking.
It takes a huge amount of corruption, inefficiency and bad luck to obliterate the productivity improvement that comes from introducing electricity and running water where they were previously absent; or from replacing dirt tracks with metalled roads or horse-drawn ploughs with tractors. As long as enough of the proceeds of such investment are recycled into other such investments, growth is pretty much inevitable.
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