凯闻
几个星期前，在耶鲁大学杰克逊国际问题研究所，我有幸在研讨会上向大家介绍史蒂芬•罗奇先生，并在他发表对亚洲崛起的精彩演讲之前，与他作了一个对话访谈。作为中国问题专家，罗奇先生其实不用介绍。他曾是摩根士丹利的首席经济学家和亚洲区主席，在亚洲生活和工作了几十年，多次提出了关于亚洲各国经济的很有见地的观点，是我一直尊重的人。相关报道
我们还讨论了人口规模的作用。我同大家分享了今年初在世界经济论坛达沃斯年会期间与联合利华一位高管的谈话。当时，中国还没有公布新的人口普查结果，有传言说，由于统计误差中国人口可能被低估，真正的中国人口总数很有可能是15亿，而不是13亿人。我能感觉到这位高管的兴奋。由于统计误差，联合利华的牙刷和洗衣粉可能会有200万额外的潜在客户吗？传闻后来被证明不是真的，但它说明了中国的人口规模能对商业和政策产生的深远影响。
罗奇先生和我持不同意见的是中国在可预见的未来是否会持续发展以及是否需要一些根本性的改变。罗奇先生引述了温家宝总理2007年有关中国经济增长模式"不稳定、不平衡、不协调和不可持续的" 的论述。用罗奇的话说，他不敢妄自推测中国经济增长的可持续性。
我同意中国的经济发展模式需要进一步改进和调整，但我认为所谓的"中国模式"中更重要的是中国的治理模式。和西方比，中国的治理模式有四个系统优势。
第一是政府愿意而且有能力计划和干预经济事务。中国政府的干预没有任何思想包袱，相比之下，美国政府处理雷曼兄弟事件时，即使是在危机形势下，鲍尔森或贝南克要直接干预市场也是很困难的。
经过三十多年的市场化改革，中国的私营经济充满活力，有超过40万的中小企业，创造了70%的GDP。然而，政府在战略性产业上的作用还没有从根本上改变。在中国，政府干预时，大家有可能就某次特定干预的可取性或有效性进行辩论，但很少有人质疑政府干预本身的合法性。
除了意愿和合法性，中国政府的干预能力很强，而且，决策模式既集中又靠共识驱动。重大的政治和经济决策源自北京的党的系统内。尽管说由25人组成的中央政治局或由9名成员组成的政治局常委做所有重大决定，未免过于简单化，但我们可以肯定地说，中国的决策过程比任何一个典型的西方国家管理系统都要集中得多。值得注意的是，在过去十年中，中国政府在决策过程中极其重视且力求达到内部的共识。
一旦做出决定，多年形成的执政党组织机构具有强大的渗透力，可以确保即使在偏远地区也能实施。中国政府有一系列广泛的政策工具，可以从多个角度以高度协调的方式解决一个问题。最近的一个例子是政府治理过热的房地产市场。政府提高了基本利率，确定银行贷款的上限，限制个人房贷的数量，提升按揭贷款首付比例，并开始在某些城市试收房地产税。上个月，国务院总理温家宝表示，"在这里我特别要强调，对于房地产一系列的调控措施，决不可有丝毫动摇，我们的目标是要使房价回归到合理的价格"，结果呢？自十月起住房价格已明显下降。
第二是系统内部的问责制，包括多种多样的反馈机制。
中国的政治生态系统中有着激烈的竞争。大多数决策者可能不会直接向选民负责，但他们总被他们的上级、同行、下属、竞争对手、公共知识分子和当地媒体和许多其他的团体监督。虽然媒体仍普遍被审查，在某些情况下被严格控制，但媒体已经能够公开地批评政府的某些政策。公众舆论也发挥着极其重要的作用且被官方密切关注，尽管公共舆论也受到新闻审查制度的影响。而中国共产党的人力资源管理体系，所谓的"组织部"，也努力地审查各级政府官员，他们通常有量化的关键绩效指标来衡量各级官员的成败。
在过去30年，认为中国政府官员不用面对选举因此可以随意决定政策的看法是完全有悖于事实的。相反，我们看到的是一个利用多种反馈机制，对自己的政策负责的政府。
第三是政府愿意做局部试验并从试验中学习。邓小平的"改革开放"政策本身就在农村地区开始试验。其他著名的试验还包括像深圳经济特区，1982年从一个小渔村开始的市场经济试验造就了今天1200万人口的大都市。
我最近在新加坡参加了与重庆市长黄奇帆的讨论。他列举了重庆的几个主要的政策试验，包括给300万在城市工作的农村劳动力发放城镇户口，这和中国极其严格的户口制度大相径庭，城镇户口将赋予这些劳动者获得城镇医疗和子女教育等公共服务的权利。此外，还承诺给这300万新城镇居民提供可负担的公租房。在土地所有权的领域，重庆还进行了"土地银行"试验，农村居民可以交易"土地使用权"，创造土地所有权的流通价值。北京表面上似乎同意这些试验，甚至还不时鼓励一下。
这些局部政策试验可以让北京尝试不同的办法，并在决定全国性的政策改变之前先评价什么有效什么无效，也从而加强了此前提到的反馈机制。
第四是适合中国经济发展周期的长期视野。在政治上，北京的高层领导变动每十年只发生一次，省和地方政府的领导层变动也是在相对长周期地运作着。这就减少了短期机会主义行为，就像我们经常看到的，在短期选举政治的国家做真正的长期决策打算几乎是不可能的。在经济上，中国的制度体系试图抓住决策的长期战略价值，而不是短期的现金流。今天用处不大的"通往无人问津地方的高速公路"可能是十年后将被充分利用和促进生产力发展的公路。坦率地说，它在最初五到十年不赚钱并不重要。目前西方观察家也在担心中国在建的这些"鬼城"，但只有在短期视角下，这些忧虑才是合理的。
中国的治理模式除了这四个长期的系统优势外，我们还可以看到在中国有几个因素降低了重大的经济危机或政治动荡的可能性或影响力。我称这些因素为"减震器"。
在我看来，最重要的四个减震器是：1、家庭关系和儒家社会的支持系统; 2、执政党通过"心理定格"使公众普遍理解和期盼社会稳定；3、种种历史和结构上的原因导致国家积累了大量财政资源；4、党组织的广泛政治构架。在下一篇专栏文章中，我将详细介绍这些减震器。
这四个系统优势和四个减震器最大限度地提高了"中国模式"在经济领域取得成功的可能性。相反，西方治理模式所依托的民主选举，虽然保证了理想的过程，并不一定会导致理想的结果。如果布什做不好，我们让他碌碌无为四年，再给奥巴马选进白宫。如果奥巴马也干不好，我们也给他四年，然后再投票选举另一个人。如果经济令人失望，领导人不能改变，这真的不是他们的错，是选民把他选进了办公室，选民是自作自受。"占据华尔街"给我们提供了一些非常有趣的提醒。占领者没有声称华尔街违反任何法律或政治领导人缺乏合法性，他们质疑为什么一个以看似完美的以法治为基础的程序会产生这种不公平的分配结果。
西方往往从民主选举的道德制高点轻视中国的治理模式，称中国政府只具有"政绩合法性"，即其合法性只来自于它发展了经济和给人民带来了富裕。传统自由民主主义的观点认为，只有民主选举是真正合法性的唯一基础，我称它为"选举原教旨主义"。正如斯蒂格利茨教授所说，"市场原教旨主义"已经不灵了，盲目信任市场的优越性已经引起了严重的全球危机。
在政治领域，我们今天面临的问题是"选举原教旨主义" 是否真的成立。人们不久就会认识到，在百事可乐或可口可乐之间的选择不会带给我们健康的饮食习惯，不管在超市结账出口处让我们选择纸袋或塑料袋的机会带来多大的心理满足，实际上对于解决我们面临的环境挑战不会做出多大贡献。提供选择，尤其是虚假的选择，对确保良好的结果可能作用不大。"选举原教旨主义"极端的结果就是"合法选举出来的无为政府"。再好不过的例子就是最近关于美国债务上限的辩论和此后国会债务超级委员会的失败。如果西方过多地注意固定程序，而不是实质问题，我们将看到更多这样的失败。
当然，每一个国家的公民都可以通过不同的角度来观察这些不同的治理模式。对于中国这个一个人均国内生产总值才4000美元的穷国，13亿中国人民需要也期望他们的政府可以提供长期稳定的经济发展。如果我在中国生活，我会毫不犹豫地选择有"政绩合法性"的政府，而不是合法选举出来的无为政府。
中国政府在过去30多年，保持了一个庞大而复杂的国家政治的基本稳定，帮助六亿人口摆脱贫困，并且显示出极强的适应能力。而且，在今天的中国，文化、历史和心理方面的减震器可以减少短暂的经济低谷期所带来的负面影响。所以我愿意推断，中国模式的经济成功是很可能的，而这个推断却很可能是罗奇先生不愿接受的。
（作者凯闻是世界银行集团多边投资担保机构（MIGA） 亚太局局长，华盛顿国际金融研究所（IIF）新兴市场顾问委员会委员。本专栏旨在关注与新兴市场和中国最为相关的国际财经政策问题, 并在新兴市场日益强大的背景下对西方政治经济体系发生的结构性变化发表评论。文中所述仅代表他的个人观点。）
（本文版权归道琼斯公司所有，未经许可不得翻译或转载。）
Kevin Lu
A few weeks ago at Yale's Jackson Institute of International Affairs, I had the honor of introducing Stephen Roach and giving an 'interlocutor' talk before his excellent speech about the rise of Asia. As a China expert, Mr. Roach really did not need an introduction. He was Morgan Stanley's Chief Economist and later Chairman of Asia, lived and worked in Asia for decades, made several insightful calls about Asian economies along the way, and is someone I have always respected.
We agree on a large number of issues. For example, we agree that the 'emerging economies' in Asia, especially India and China, are simply 're-emerging' if we take a long term historic view. In 1820, Asian economies accounted for 59% of world GDP. That share went down to about 28% in 1900 and to about 20% in the early 1960s. Since 1960s, Asia's economic weight has been climbing back, first driven by Japan, then by the Asian Tigers and now by India, China and many other emerging Asian countries. Asia's share in the world economy was about 40% in 2000 and now approaching 50s, reflecting a return to a historic norm.
We also discussed the role of population and scale. I shared with the group a conversation I had with a senior executive of Unilever during this year's World Economic Forum Annual Meeting in Davos. At that time, China had not released the outcome of its new census. There was a rumor that China might have been underreporting its population due to a statistical error and that the real Chinese population might well be 1.5 billion, instead of 1.3 billion. I could sense the excitement of this executive. Are there really 200 million extra customers for Unilever's toothbrushes and washing detergent due to a mere statistical error? The rumor turned out to be untrue, but it illustrates the profound implications of the sheer scale of China on business and policy.
Where Mr. Roach and I disagree is whether the China story continues in the foreseeable future and whether some fundamental changes are needed. Mr. Roach quoted a 2007 speech by Premier Wen Jiabao about China's growth being 'unstable, unbalanced, uncoordinated and unsustainable'. To use Mr. Roach's words, one cannot 'extrapolate' China's growth.
While I agree that China's economic development model needs further adjustments, China's governance model is the more important part of the so-called ※China Model§. On the governance side, I see four system advantages:
The first system advantage is the willingness and capacity of government to plan and to intervene in economic matters. There is no ideological baggage preventing such government intervention in China. Those who followed the handling of the Lehman crisis by the US government would understand how difficult it is for Henry Paulson or Ben Bernanke to make interventions, even in a crisis situation.
Through thirty years of market-oriented reforms, China has produced a sizeable and vibrant private sector, with over 40 million SMEs and generating approximately 70% of the country's GDP. However, the role of government in strategic matters and industries has not fundamentally changed. In China, when the state intervenes, there might be debates about the desirability and/or usefulness of a particular intervention, but there is very little debate about the legitimacy of the role of state itself.
In addition to the willingness and legitimacy, there is ample state capacity to intervene based on concentrated but consensus-driven decision-making. Major political and economic decisions are taken in Beijing, within the Party's system. It would be overly-simplistic to say that the 25-strong Politburo or the 9-member Politburo Standing Committee make all major decisions, but it is safe to say that the Chinese decision-making process is far more concentrated than a typical Western governing system. One interesting point though is that for the last decade, the Chinese system has placed a large premium in reaching at least internal consensus within the decision-making processes.
Once decisions are made, the legacy communist system has enormous reach to ensure that implementation steps are taken, even in remote areas. The government has a broad policy toolkit at its disposal and can therefore address an issue from multiple angles in a highly coordinated fashion. A recent example is how the government has reacted to over-heated housing market. The government has raised interest rates, set limits on bank lending, limited the number of mortgages for each individual borrower, raised the down payments for mortgages, and begun experimenting with the introduction of real estate taxes in certain cities. Last month, Premier Wen Jiabao made it clear that 'We would like to stress that there is no possibility of loosening the real estate policies , our target is to let the property price fall to a reasonable level.'The result? A significant correction of housing price has bene occurring since October.
The second system advantage is the internal accountability in the system, including elaborate feedback loops.
There are fierce competitions in the political ecosystem. Most policy makers may not be accountable directly to voters, but they are being evaluated by their supervisors, peers, subordinates, competitors, public intellectuals, local media and many other constituencies. The media, while still generally censored and in some cases tightly controlled, has been able to be openly critical to government policy for some years. Public opinions play an extremely important role and are closely watched, even though censorship makes sure that such opinions are influenced and managed. The Party's HR management system, the so-called ※organizational department§, goes to great lengths to be deliberative and government officials at all levels typically have quantitative key performance indicators to measure their successes or failures.
The assumption that governmental officials can make willful decisions because they have no election to face is entirely untrue in the past 30 years. On the contrary, what we see is a government that utilizes multiple feedback loops and is being held accountable for consequences of their policies.
The third system advantage is the willingness for local experimentation and to learn from social experiments. Deng Xiaoping's reform and opening up policy itself starts with experimentation in the rural area. Other famous experiments include special economic zones like the city of Shengzhen, the spawning 12 million-strong metropolitan today that grows out from a market economy experiment in a small fishing village that started in 1982.
I recently participated in a discussion in Singapore with Mayor Huang Qifan of the southwest Chinese city of Chongqing. He outlined several major policy experiments, including granting urban resident cards to three million laborers from rural areas who work in the city, a dramatic departure from China's notorious strict 'hukou' system. The urban resident cards entitle these laborers access to public services such as health care and education for their children. Furthermore, the mayor has promised all these three million new urban residents affordable public rental housing. In another area of land ownership, Chonqing is experimenting with a 'land exchange', through which rural residents can trade the right of land use§, which circumvents the communist ban on private land ownership and creates de facto tradable value for such ownership. All these are happening with Beijing's seeming consent, and even encouragement from time to time.
These localized policy experiments allow Beijing to try different approaches, evaluate what works and what does not before committing to a nation-wide policy switch, and strengthens the feedback loops mentioned in the previous point.
The final and fourth system advantage is the long time horizon that fits China's economic development cycle. Politically, the top leadership transition in Beijing happens only once every decade, and the leadership changes in provincial and local governments also operate with relatively predictable and long cycles. This discourages short-term/opportunistic behaviors or knee-jerk reactions, as we often see in countries where short-term electoral politics make real long-term decision-making all but impossible. Economically, the Chinese system creates opportunities to try to capture long term strategic value of decisions, rather than short term cash flows. A highway to nowhere today may be a highway that will be fully used and contributing to productivity in 10 years. And the fact that it does not make money in the first 5-10 years is frankly not important. Western observers now worry about ghost towns that are being built in China, but these worries are only justified if one operates in a short horizon.
In addition to these four long-term system advantages that are embedded in China's governing model, we can also see several elements in China that reduce the probability of major economic downtowns or political volatility, or the impact of such volatility. I call these 'shock absorbers'.
The top four shock absorbers in my view are: 1) family ties and support systems associated with a Confucious society; 2) the strong and sustained use of historical 'framing' by the ruling party and the appreciation by the population of the 'stability premium'; 3) financial resources accumulated by the state as a result of multiple historical and structural reasons; 4) the extensive political infrastructure organized by the Party. I will elaborate on these shock absorbers in my next column.
Each of these four system advantages and four shock absorbers helps to maximize the probability of the 'China Model' to deliver desirable economic outcome. On the contrary, what is supporting the Western governance model is electoral democracy, which, while ensuring a desirable procedure, does not necessarily lead to desirable outcome. If Mr. Bush does not perform, let's give him four years of non-performance and vote in Obama. If Obama does not work out either, let's also give him four years and then vote in another person to the While House. If economy is disappointing and the leaders cannot perform, it is really not their fault, because we the voters voted them in office and we the voters are to blame. 'Occupy Wall Street 'gives us some very interesting reminders. Occupiers are not claiming that Wall Street is violating any laws or that political leaders lack legal legitimacy. They are questioning why procedures based on a seemingly perfectly legal system generate such unfair outcome.
The West often looks down upon the modern-day Chinese governing system as 'performance legitimacy' from the moral high ground of electoral democracy, and believes that the Chinese government derives its legitimacy merely from the fact that it has performed and delivered economic success to its people. The traditional liberal democratic view holds that democratic election is the only basis for real legitimacy. I call that 'electoral fundamentalism'. The current dire circumstances in the global economy have revealed that 'market fundamentalism', as Professor Joe Stiglitz called, does not really work, and that a blind trust to the superiority of markets has caused a severe global crisis. In the political sphere, the question we face today is to what extent this 'electoral fundamentalism' is valid at all. It may not take long for people to realize that being offered the choice between Pepsi or Coke would not give us healthy diet, no matter how good we feel about choosing between them, and that the opportunity to choose between paper or plastic at grocery check-out, while physiologically satisfying, may not actually do much to our environmental challenges. Being offered choices, especially false choices, does nothing to ensure a good outcome. The result of extreme electoral fundamentalism is electoral impotence. There is no better example of such electoral importance than the recent US debt ceiling debate and the subsequent failure of the Super Committee on Debt. Given the fixation of procedures rather than substance in the West, we will see more, not less of such failures.
Of course, citizens of every country look at these alternative governance models through different lenses. For China, a still poor country with per capita GDP at $4000, long-term consistent economic performance is what 1.3 billion Chinese people deserve and expect from their government. If I were living in China, I would choose performance legitimacy over electoral impotence any day of the week. If a government has performed for the past thirty odd years, by delivering overall political stability for a vast and complicated country and helping 600 million people pulling themselves out of poverty, if it has the ability to adapt itself to face changing circumstances and in turn to deliver future performance, and if a number of cultural, historical and psychological shock-absorbers exist to reduce the pain of the rainy days when that performance might be temporarily absent, I am willing to bet that the economic success under the 'China Model' is likely to extrapolate. This is what Mr. Roach is unwilling to accept.
(About the Author: Kevin Lu is Director of the Multilateral Investment Guarantee Agency (MIGA), the private sector investment guarantee arm of the World Bank Group. He is a Council Member of the Emerging Markets Advisory Council at the Institute of International Finance (IIF) based in Washington, DC. This column focuses on policy issues related to international finance and political economy, especially those relevant to the emerging economies. It also examines many fundamental changes that are occurring in the advanced economies, in the context of the significant shifts of economic weight towards emerging markets. The opinions are his own. )
A few weeks ago at Yale's Jackson Institute of International Affairs, I had the honor of introducing Stephen Roach and giving an 'interlocutor' talk before his excellent speech about the rise of Asia. As a China expert, Mr. Roach really did not need an introduction. He was Morgan Stanley's Chief Economist and later Chairman of Asia, lived and worked in Asia for decades, made several insightful calls about Asian economies along the way, and is someone I have always respected.
We agree on a large number of issues. For example, we agree that the 'emerging economies' in Asia, especially India and China, are simply 're-emerging' if we take a long term historic view. In 1820, Asian economies accounted for 59% of world GDP. That share went down to about 28% in 1900 and to about 20% in the early 1960s. Since 1960s, Asia's economic weight has been climbing back, first driven by Japan, then by the Asian Tigers and now by India, China and many other emerging Asian countries. Asia's share in the world economy was about 40% in 2000 and now approaching 50s, reflecting a return to a historic norm.
We also discussed the role of population and scale. I shared with the group a conversation I had with a senior executive of Unilever during this year's World Economic Forum Annual Meeting in Davos. At that time, China had not released the outcome of its new census. There was a rumor that China might have been underreporting its population due to a statistical error and that the real Chinese population might well be 1.5 billion, instead of 1.3 billion. I could sense the excitement of this executive. Are there really 200 million extra customers for Unilever's toothbrushes and washing detergent due to a mere statistical error? The rumor turned out to be untrue, but it illustrates the profound implications of the sheer scale of China on business and policy.
Where Mr. Roach and I disagree is whether the China story continues in the foreseeable future and whether some fundamental changes are needed. Mr. Roach quoted a 2007 speech by Premier Wen Jiabao about China's growth being 'unstable, unbalanced, uncoordinated and unsustainable'. To use Mr. Roach's words, one cannot 'extrapolate' China's growth.
While I agree that China's economic development model needs further adjustments, China's governance model is the more important part of the so-called ※China Model§. On the governance side, I see four system advantages:
The first system advantage is the willingness and capacity of government to plan and to intervene in economic matters. There is no ideological baggage preventing such government intervention in China. Those who followed the handling of the Lehman crisis by the US government would understand how difficult it is for Henry Paulson or Ben Bernanke to make interventions, even in a crisis situation.
Through thirty years of market-oriented reforms, China has produced a sizeable and vibrant private sector, with over 40 million SMEs and generating approximately 70% of the country's GDP. However, the role of government in strategic matters and industries has not fundamentally changed. In China, when the state intervenes, there might be debates about the desirability and/or usefulness of a particular intervention, but there is very little debate about the legitimacy of the role of state itself.
In addition to the willingness and legitimacy, there is ample state capacity to intervene based on concentrated but consensus-driven decision-making. Major political and economic decisions are taken in Beijing, within the Party's system. It would be overly-simplistic to say that the 25-strong Politburo or the 9-member Politburo Standing Committee make all major decisions, but it is safe to say that the Chinese decision-making process is far more concentrated than a typical Western governing system. One interesting point though is that for the last decade, the Chinese system has placed a large premium in reaching at least internal consensus within the decision-making processes.
Once decisions are made, the legacy communist system has enormous reach to ensure that implementation steps are taken, even in remote areas. The government has a broad policy toolkit at its disposal and can therefore address an issue from multiple angles in a highly coordinated fashion. A recent example is how the government has reacted to over-heated housing market. The government has raised interest rates, set limits on bank lending, limited the number of mortgages for each individual borrower, raised the down payments for mortgages, and begun experimenting with the introduction of real estate taxes in certain cities. Last month, Premier Wen Jiabao made it clear that 'We would like to stress that there is no possibility of loosening the real estate policies , our target is to let the property price fall to a reasonable level.'The result? A significant correction of housing price has bene occurring since October.
The second system advantage is the internal accountability in the system, including elaborate feedback loops.
There are fierce competitions in the political ecosystem. Most policy makers may not be accountable directly to voters, but they are being evaluated by their supervisors, peers, subordinates, competitors, public intellectuals, local media and many other constituencies. The media, while still generally censored and in some cases tightly controlled, has been able to be openly critical to government policy for some years. Public opinions play an extremely important role and are closely watched, even though censorship makes sure that such opinions are influenced and managed. The Party's HR management system, the so-called ※organizational department§, goes to great lengths to be deliberative and government officials at all levels typically have quantitative key performance indicators to measure their successes or failures.
The assumption that governmental officials can make willful decisions because they have no election to face is entirely untrue in the past 30 years. On the contrary, what we see is a government that utilizes multiple feedback loops and is being held accountable for consequences of their policies.
The third system advantage is the willingness for local experimentation and to learn from social experiments. Deng Xiaoping's reform and opening up policy itself starts with experimentation in the rural area. Other famous experiments include special economic zones like the city of Shengzhen, the spawning 12 million-strong metropolitan today that grows out from a market economy experiment in a small fishing village that started in 1982.
I recently participated in a discussion in Singapore with Mayor Huang Qifan of the southwest Chinese city of Chongqing. He outlined several major policy experiments, including granting urban resident cards to three million laborers from rural areas who work in the city, a dramatic departure from China's notorious strict 'hukou' system. The urban resident cards entitle these laborers access to public services such as health care and education for their children. Furthermore, the mayor has promised all these three million new urban residents affordable public rental housing. In another area of land ownership, Chonqing is experimenting with a 'land exchange', through which rural residents can trade the right of land use§, which circumvents the communist ban on private land ownership and creates de facto tradable value for such ownership. All these are happening with Beijing's seeming consent, and even encouragement from time to time.
These localized policy experiments allow Beijing to try different approaches, evaluate what works and what does not before committing to a nation-wide policy switch, and strengthens the feedback loops mentioned in the previous point.
The final and fourth system advantage is the long time horizon that fits China's economic development cycle. Politically, the top leadership transition in Beijing happens only once every decade, and the leadership changes in provincial and local governments also operate with relatively predictable and long cycles. This discourages short-term/opportunistic behaviors or knee-jerk reactions, as we often see in countries where short-term electoral politics make real long-term decision-making all but impossible. Economically, the Chinese system creates opportunities to try to capture long term strategic value of decisions, rather than short term cash flows. A highway to nowhere today may be a highway that will be fully used and contributing to productivity in 10 years. And the fact that it does not make money in the first 5-10 years is frankly not important. Western observers now worry about ghost towns that are being built in China, but these worries are only justified if one operates in a short horizon.
In addition to these four long-term system advantages that are embedded in China's governing model, we can also see several elements in China that reduce the probability of major economic downtowns or political volatility, or the impact of such volatility. I call these 'shock absorbers'.
The top four shock absorbers in my view are: 1) family ties and support systems associated with a Confucious society; 2) the strong and sustained use of historical 'framing' by the ruling party and the appreciation by the population of the 'stability premium'; 3) financial resources accumulated by the state as a result of multiple historical and structural reasons; 4) the extensive political infrastructure organized by the Party. I will elaborate on these shock absorbers in my next column.
Each of these four system advantages and four shock absorbers helps to maximize the probability of the 'China Model' to deliver desirable economic outcome. On the contrary, what is supporting the Western governance model is electoral democracy, which, while ensuring a desirable procedure, does not necessarily lead to desirable outcome. If Mr. Bush does not perform, let's give him four years of non-performance and vote in Obama. If Obama does not work out either, let's also give him four years and then vote in another person to the While House. If economy is disappointing and the leaders cannot perform, it is really not their fault, because we the voters voted them in office and we the voters are to blame. 'Occupy Wall Street 'gives us some very interesting reminders. Occupiers are not claiming that Wall Street is violating any laws or that political leaders lack legal legitimacy. They are questioning why procedures based on a seemingly perfectly legal system generate such unfair outcome.
The West often looks down upon the modern-day Chinese governing system as 'performance legitimacy' from the moral high ground of electoral democracy, and believes that the Chinese government derives its legitimacy merely from the fact that it has performed and delivered economic success to its people. The traditional liberal democratic view holds that democratic election is the only basis for real legitimacy. I call that 'electoral fundamentalism'. The current dire circumstances in the global economy have revealed that 'market fundamentalism', as Professor Joe Stiglitz called, does not really work, and that a blind trust to the superiority of markets has caused a severe global crisis. In the political sphere, the question we face today is to what extent this 'electoral fundamentalism' is valid at all. It may not take long for people to realize that being offered the choice between Pepsi or Coke would not give us healthy diet, no matter how good we feel about choosing between them, and that the opportunity to choose between paper or plastic at grocery check-out, while physiologically satisfying, may not actually do much to our environmental challenges. Being offered choices, especially false choices, does nothing to ensure a good outcome. The result of extreme electoral fundamentalism is electoral impotence. There is no better example of such electoral importance than the recent US debt ceiling debate and the subsequent failure of the Super Committee on Debt. Given the fixation of procedures rather than substance in the West, we will see more, not less of such failures.
Of course, citizens of every country look at these alternative governance models through different lenses. For China, a still poor country with per capita GDP at $4000, long-term consistent economic performance is what 1.3 billion Chinese people deserve and expect from their government. If I were living in China, I would choose performance legitimacy over electoral impotence any day of the week. If a government has performed for the past thirty odd years, by delivering overall political stability for a vast and complicated country and helping 600 million people pulling themselves out of poverty, if it has the ability to adapt itself to face changing circumstances and in turn to deliver future performance, and if a number of cultural, historical and psychological shock-absorbers exist to reduce the pain of the rainy days when that performance might be temporarily absent, I am willing to bet that the economic success under the 'China Model' is likely to extrapolate. This is what Mr. Roach is unwilling to accept.
(About the Author: Kevin Lu is Director of the Multilateral Investment Guarantee Agency (MIGA), the private sector investment guarantee arm of the World Bank Group. He is a Council Member of the Emerging Markets Advisory Council at the Institute of International Finance (IIF) based in Washington, DC. This column focuses on policy issues related to international finance and political economy, especially those relevant to the emerging economies. It also examines many fundamental changes that are occurring in the advanced economies, in the context of the significant shifts of economic weight towards emerging markets. The opinions are his own. )
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