“It doesn’t matter if a cat is black or white as long as it catches mice,” goes a famous quotation by Deng Xiaoping, a Chinese politician and the most powerful Communist Party figure in China in the late 1970s, explaining the Chinese economic and political system. Despite the existence of political and ideological disparities in China today, its economic success has been indisputable.
During a lecture organised by the Egyptian Centre for Economic Studies (ECES), an NGO, on “China: Forty Years of Remarkable Economic Development,” Ziad Bahaaeddin, Egypt’s former deputy prime minister for economic development, outlined the distinctiveness of the Chinese economic model that balances between the role of the state in directing the economy and the inclusion of the private sector in economic activities.
Bahaaeddin said that one of the strongest factors explaining the development of the Chinese economy was the continuity and consistency of the country’s policies, which had played a key role in mediating between the public and private sectors. In contrast, the lack of policy continuity in Egypt had been one of its great weaknesses, he said, stressing that even if policies are not entirely sound, consistency is better than swinging between them.
The state’s role in the Chinese economy is supportive not competitive, as it contributes to economic growth and has played a crucial role in reducing poverty rates in the Chinese miracle of the last 40 years, he added. Bahaaeddin, who had been teaching at Beijing University in China over the past three months, said this was an achievement not just for China, but for the world as a whole since China was the world’s most populated country.
In order to understand China’s economic miracle, it was necessary to understand its single political party as this has played a key role in its development, said Han Bing, minister counsellor for economic affairs at the Chinese Embassy in Cairo. Bahaaeddin said that the Chinese political system, in which there was a single party, was not democratic in the conventional sense of the word.
Bing explained that the Chinese people had explored a different understanding of democracy, however, and that China had a fully democratic system, but not in the conventional western definition. China’s experience with the old notion of democracy had resulted in the outbreak of a bloody civil war in China in the 1940s, he said, and so history had taught which system was suitable for China.
He said that Western notions of democratic government, as imposed by the West, could lead to instability or even civil war. China’s model of democracy was different because the presence of nine subsidiary democratic parties in China could contribute to forming policies as part of a five-year development plan that secured the sustainability and consistency of the policies adopted, Bing said. These policies were crafted by the Chinese Communist Party and submitted to the National Congress, forming an ideal internal democratic process.
He said that the consistency of Chinese policies had been important to the efficiency of government in reducing poverty and had put China well on the way to eradicating it.
The opening up and reforms that had taken place in 1978 were a challenge to the party, since there had been a struggle between the openness policy to include the private sector and the state’s control over the economy, Bing said. During the reform period, China had moved gradually from an economy dominated by the state to a country open to both foreign investors and private businesses and entrepreneurs, resulting in unprecedented growth rates.
Bing said it had been rewarding for the Chinese economy to balance between stability and reform in policy-making, and he said that the Chinese Communist Party was always ready to admit any mistakes and correct and recover from them. Despite China’s being the second-largest world economy today, Bing said it was still a developing country with 12 million people still being poor and land and regions still needing to be developed.
For Anwar Al-Hawari, a journalist at Al-Ahram present at the seminar, in order to understand China, it was necessary to understand its institutions. He explained that what made the Chinese model different from that of the West was the fact that it was more economics based. China invested in human capabilities and the middle class, he said, which made the Chinese experience relevant to Egyptian society.
He also stressed the importance of directing Egypt’s economic cooperation towards Asia, since this was where the future lies. He said that China and Egypt had a lot in common since they were both eastern countries that had experienced foreign conquests in the past and managed to recover from them.
Bahaaeddin said that in the future Chine would need to meet the challenge of raising the lower-income and poorer classes to the middle class and the expectations and pressures that accompanied it.
Speaking on China’s Belt and Road Initiative that aims to spread China’s success abroad, Mohamed Hilal, a member of the Egyptian-Chinese Business Council, provided a business perspective highlighting the fact that the economy is the building block for both cultural and social development.
As China was the only country today not facing any obvious economic crises, this made it a reliable partner for economic cooperation, Hilal said, adding that Egypt’s economic relations with China depended more on imports with the goal of attracting investors, but that these investments were not commensurate with the size of the Egyptian or Chinese economies. Chinese investments in Egypt are estimated at around $7 billion today.
It was important for Egypt to detect current needs in China and to convert its current policies from focusing on importing to exporting, Hilal said. China’s huge population meant that there were markets for different tastes, making the country fertile ground for importing from different countries. He said it was important for Egypt to find the right investors in China, as there were large economic gaps between urban and rural communities.
For Egypt to export to China, it needed to adopt research and innovation to develop products fitting within the global market, he said. Egypt could provide more competitive prices for exported products than Europe, he said, since Europe produced at higher costs.
Bing praised Egypt as an ideal location for investment because of its geography, huge domestic market, and good infrastructure, all of which made it appealing for foreign investors. However, he said work was still needed in cutting the bureaucracy that could make investors’ lives more difficult and time-consuming.
For Bahaaeddin, the lesson of the Chinese model for Egypt was the importance of transforming relations between the public and private sectors to complement rather than compete with each other. Continuity of economic policies was crucial, he said, since this encouraged both domestic and foreign investors.
Finally, Al-Hawary said that Egypt’s greatest treasures lay in its human wealth, and investing in the Egyptian rural middle classes would assist on the road to development.
*A version of this article appears in print in the 30 January, 2020 edition of Al-Ahram Weekly.
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