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Learning from China

By Mark Loyka

China’s influence in the global economy has grown exponentially in recent years, but fears of currency manipulation and ideology have ignited debate over what exactly China’s role is and how it got there. As Chinese GDP continues to grow, various forecasts predict that China will pass the United States’ longstanding title of the world’s largest economy within this decade. China’s rapid success that pulled hundreds of millions of out of poverty is no accident. It was the result of able technocrats, harnessing aspects of human nature. With its stagnant economy, the United States should pick out the best ideas from the Chinese model of economic development and fit them to work for its own system.

On February 6, 2012, the World Policy Institute, Eurasia Group, and Demos presented the latest edition of the Political Salon series. Speaker Ann Lee, a former investment banker and hedge fund manager and current Demos Senior Fellow and professor at New York University, discussed her new book What the U.S. Can Learn From China: An Open-Minded Guide to Treating Our Greatest Competitor as Our Greatest Teacher. Ian Bremmer, Senior Fellow at WPI and President of the Eurasia Group, provided an introduction, as Michele Wucker, President of WPI moderated the discussion. 

Many China critics argue that much of its growth is only due to extremely cheap labor, buttressed by its artificially low currency value—contributing to outsourcing in the United States and redirecting jobs away from areas such as Central America and Africa. Yet cheap labor does not necessarily result in tremendous growth. “If it was just cheap labor, why didn’t Africa achieve the same dynamism?” asked Lee hypothetically. Her answer was China’s government policies, which are not married to any particular ideology and are only focused on meeting carefully set goals. 

Entrenched in a volatile political campaign season, the United States could look to the Chinese political system for examples on how to temper some of the bitterness and anger in American politics. Lee’s answer is that there should be “more meritocracy in democracy.” With Congressional approval ratings at an all-time low and the “Occupy Wall Street” movement spreading throughout the nation, the lack of confidence in government “is a dangerous trend.” One source of this discontent is the sentiment that many U.S. government officials are simply incompetent. This lack of domestic confidence is accompanied by deteriorating reputation abroad.

In contrast, with rigorous competency tests for officials that attract the brightest candidates, China is viewed by other nations as having sophisticated leaders and capable technocrats. Furthermore, two-year term limits and position rotations prevent corruption and ensure efficiency while frequent evaluations force officials to work hard and effectively in order to be promoted. In all political systems, there are a few bad eggs which use their position of power for monetary gain, however in general, “what drives Chinese leaders is not money, but the belief they are doing a greater good,” Lee said. Right now, the only competency test administered to U.S. officials is the Foreign Service exam. Lee says the U.S. needs a modern civil service exam for all government positions in order to ensure competency.

Lee highlighted one important factor that was harming the future of the United States—short-termism. Caught in two-year election cycles, there are few incentives for politicians or government figures to think even five years down the line. There needs to be “more long-term vision and long-term planning,” Lee said, even calling for American five-year-plans, an idea which conjures up memories of Maoist China and the Soviet Union. In contemporary China, however, performance targets differentiate new planning strategies from old communist ways. As Lee stated, the five-year plans implemented today are “no longer our grandfather’s five-year plans.” As long as the performance targets are met, government leaders are given a degree of autonomy to experiment and find new, innovative ways to increase growth. In the U.S., performance targets, coupled with government accountability, could ensure more efficient spending, leading to higher growth. With a focus on clearly defined metrics, Chinese political figures are more like McKinsey consultants than anyone in the U.S. Congress.

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Mark Loyka is a research, communications, and development intern at the World Policy Institute and recently graduated with an M.A. from the John C. Whitehead School of Diplomacy and International Relations at Seton Hall University.

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