Foreword: What Are the Roots of the China Miracle?

I. From transporting eggs to the China Miracle

In the early 1980s, in the lead up to the Chinese New Year, the railway station in Beijing, an iconic building built in the 1950s, was particularly crowded. Passengers, all laden with baggage, struggled to make their way into the building.

I was one of the passengers in this tidal stream. At that time I was a graduate student from Nanjing Normal University. I had passed the enrollment test and become one of the first cohort of postgraduate students at the Central Party School of the Communist Party of China. I stayed at the Central Party School as a teacher upon my graduation. During this period I had to return to Nanjing, the capital city of Jiangsu Province, every Chinese New Year. I always carried a lot of things with me, loaded on my back, my hands, my shoulders and even my neck. Sometimes I had to hold my ticket in my mouth to let the conductor check it.

There was one incident that I can still recall vividly today. I once bought a batch of eggs in Beijing prior to a Chinese New Year. I put them in layers inside a carton, and I even put some sawdust inside the box to protect them. I travelled with this carefully packed carton, first taking a bus and later forcing my way into a train carriage. Eventually I reached my hometown, 1,162 kilometers from Beijing.

Young people nowadays might think it odd to carry a carton of eggs on a homecoming trip. To me the reason was very simple. This was the time when China had just started reform and opening up to the outside world; but the supply of eggs was rather limited. People in some places such as Nanjing still used food coupons to buy eggs. In Beijing, however, since the introduction of reform and opening up, several large-scale chicken farms had been built and the supply of eggs was no longer part of the planned economy. My wife was pregnant at that time and eggs were considered to be a very suitable food of high nutritious value. That was why I needed to buy eggs in Beijing and transport them to Nanjing.

Transporting eggs was not an isolated phenomenon. Prior to reform and opening up, China was in a state of “class struggle”, with backward industry and a shortage of consumer goods. A planned distribution system was employed to ensure that the basic subsistence needs of the general public were met. A great variety of food coupons were issued, covering rations of rice, noodle, cloth, oil, sugar, wine, fish, soap, pork, more expensive items such as watches, bicycles, sewing machines and radios, and even small luxuries like candy, biscuits, sesame, peanuts and dried persimmon during the major holidays. This phenomenon is beyond the imagination of young people nowadays. With China’s adoption of reform and opening up, more and more consumer goods became available in the market place. Food coupons gradually fell out of use, and were abolished in the 1990s.

Of course this was not a phenomenon unique to China. In the past almost all socialist countries suffered from shortages of goods, a deep-rooted problem that was caused by backward industrial capacity. Some socialist countries in Eastern Europe even created a new academic discipline, titled Shortage Economics, suggesting that supply problem was an inevitable feature of socialist countries.

Now we look back, reviewing this part of the history, and ask this question: Which country was most successful in tackling this problem? Of course, the answer is China. When was the problem solved? The problem was solved in the 1990s, in the not-so-distant past. At that time the Chinese government was fully aware of the negative impact of insufficient domestic supply and decided to take effective measures to tackle this problem, but from a much broader historical perspective. It was determined to develop the productive forces in society by introducing reform and opening up. As a result, China succeeded in realizing the transformation from inadequate supply to relatively oversupply, or from a seller’s market to a buyer’s market. It is true that Chinese people still suffer from relatively low purchasing power, but in general they no longer worry about inadequate supply in the market place; instead an excess of supply over demand causes shopkeepers to worry about not being able to sell their goods quickly.

This kind of historic change took place in every aspect of social life in China, and almost everyone could feel the change in their daily life. Foreigners, especially those who have visited China at different times, can feel the changes more vividly.

China’s remarkable achievements in development are best reflected in its economic aggregate. China’s status as a world economic power rose steadily with the advance of reform and opening up, and its economic aggregate currently ranks 2nd in the world. In 1997 China ranked 7th in the world in terms of economic aggregate, in 2001 China replaced Italy as 6th, and in 2005, 2006 and 2007 China surpassed France, the UK and Germany respectively. In 2009 I attended a conference in Japan. A Japanese reporter asked me a question: When would China replace Japan and become the world’s second largest economy? And what would be China’s attitude to Japan if this happened? This question was answered by 2010; China did surpass Japan as the world’s second largest economy and has continued to remain so.

The historic change or achievement has been recognized by our foreign friends as the “China Miracle”.

On July 11, 2011, Reference News published an article, titled China vs. America: Which Is the Developing Country? It was written by Robert J. Herbold, former chief operating officer and executive vice president of Microsoft. I have seen many articles written by foreigners expressing their opinions of China, with either a positive or negative slant, but this question succeeded in attracting my attention, as its angle was rather unique and interesting.

The question appears to be a silly one, as the answer is self-evident; however the author addressed it in a serious manner. He drew a comparison between the two countries in a series of key areas. For example, in terms of infrastructure, he said, “Let’s face it, Los Angeles is decaying. Its airport is cramped and dirty, too small for the volume it tries to handle and in a state of disrepair. In contrast, the airports in Beijing and Shanghai are brand new, clean and incredibly spacious.” In terms of government leadership, “Here the differences are staggering. In every meeting we attended, with four different customers of our company as well as representatives from four different arms of the Chinese government, our hosts began their presentation with a brief discussion of China’s new five-year plan. Each of these groups reminded us that the new five-year plan is primarily focused on three things: improving innovation in the country; making significant improvements in the environmental footprint of China; and continuing to create jobs to employ large numbers of people moving from rural to urban areas. Can you imagine the US Congress and president emerging with a unified five-year plan that they actually achieve (like China typically does)?” As for government finances, “This topic is, frankly, embarrassing. China manages its economy with incredible care and is sitting on trillions of dollars of reserves. In contrast, the US government has managed its finance very poorly over the years and is flirting with a Greece-like catastrophe.”

To me, Robert J. Herbold’s analysis is objective and factual. I paid a visit to Vienna in 1985 and chose Paris as a stopover city. I can still recall the thrill and excitement when I entered the dome-shaped departure hall of Charles De Gaulle Airport for the first time. I was deeply impressed by its classical architecture and state-of-the-art facilities, like Granny Liu in the Chinese classic Dream of Red Mansions visiting the Grand View Garden for the first time and being dazzled by the amazing views. However, when I visited Paris once again in the 1990s and the beginning of the 21st century, I found the same departure hall looking old-fashioned and poorly maintained. Why was this the case? It was because my frame of reference had changed. More and more beautifully designed modern architecture was being built in China, and naturally I had a growing sense of style whenever I saw a new building.

Of course compared to the US, China is still a developing country; while the US is the world’s largest developed country. There is no doubt about it. I don’t think that Mr. Robert J. Herbold seriously regards China as a developed country. He just wants to sound the alarm to the American people, encouraging them to make necessary changes.

To answer this question accurately and scientifically, we must apply dialectical analysis. From the dialectical point of view, China has seen dramatic changes and impressive progress in the past 40 years, and the world has been astonished by China’s great achievements. However, there are many complicated problems that remain unsolved in China. So, generally speaking, China is not a developed country, but a developing country which is working very hard to catch up.

We can give more examples to demonstrate the achievements China has made in the past four decades. The expression that best describes China’s historic changes is the China Miracle. If we search “China Miracle” on the internet, how many research results do we get? I once did such a search, and got 5.54 million returns.

People show great interest in the China Miracle, and are keen to find out why and how it has happened.

In early 2008, I was sent by the the Central Committee of the Communist Party of China (CPC) to visit the US and Canada, to present the results of the 17th CPC National Congress to local audiences including government officials, congresspersons, think tanks, mainstream media, universities, business people, cultural celebrities, overseas Chinese, the Organization of American States and others.

In particular I delivered a keynote speech titled China’s Development and Its Future Trend, answering questions and interacting with local audiences. A total of 29 events were held in my 12-day stay. I once attended 5 events in a single day, talking to more than 150 participants and answering around 16 questions at each event. In line with a calculation by staff from the Chinese embassy, I ended up answering more than 160 questions concerning China’s politics, economy, culture, society, environment, energy, democracy, human rights, freedom of the press, reform of political structure, religious belief, anti-corruption campaign, social security, income gap, medical care, enterprise reform, financial risks, RMB exchange rate, foreign trade, Tibet, Taiwan, international strategy and foreign policies, China’s bilateral relations with the U.S. and Canada, Iranian nuclear issue, DPRK nuclear issue, Iraq and Afghanistan problems. In addition, I also held many individual conversations with event attendees. I believed that a guest should adapt himself to suit the convenience of the host, and tried my best to answer every question. On many occasions, the participants would ask me, “May I ask any kind of question?” and I always replied in an assured manner, “Yes, any question you want to ask.” I tried my best to give a polite and proper answer to each question, and did not try to parry any question.

Mr. James A. Fox, assistant deputy minister for the Department of Foreign Affairs and International Trade of Canada, chaired a welcome luncheon party for me, an event attended by eight assistant deputy ministers. He said, “China has been the focus of attention for the entire world in the past decades. The rapid development of China enables us to see the rise of an ancient civilization. However, as President Hu Jintao and Premier Wen Jiabao put it, the 30 years’ rapid growth also presented many enormous challenges to China. The recently concluded 17th National Congress of the Communist Party of China pinpointed the development paths of the next five years and formulated effective policies to fight off these challenges. China is of great concern to Canadian people. China’s stability, prosperity and peaceful development are not only important to China, but also to Canada and the rest of the international community.”

During my visit to RAND Corporation in the US, I asked them what they most wanted to learn about China. Mr. Michael D. Rich, vice president of RAND Corporation, answered, “China is developing so fast, and it is a vibrant nation with huge potential. It is so difficult to select one question. Firstly we are keen to learn more about China’s economic development and policy innovations, and China’s handling of its diplomatic relations with other countries is one of our priority concerns. Our other concerns include China’s latest plans to deal with environmental pollution, infectious diseases and new initiatives to develop its military capacity.”

So where can we find the source of the China Miracle? How has China succeed in realizing the transition from transporting cartons of eggs to the China Miracle?