Understanding China, One Blog at a Time

An American in China

China’s Economic Miracle Explained in Layman’s Terms

Posted by w_thames_the_d on March 18, 2011


We hear a lot about China’s economic miracle and I’d like to take a few moments to reflect upon that term ‘economic miracle’ and how it pertains to China. Although some of you may not be as well versed in all things economic like your humble author and servant, I will try to give you a quick lesson in economics and a little history.

Back in ’76 each Chinaman earned about $176 per year and lived in what could best be described in a cross between a Bedouin and caveman. They toiled away for state owned enterprises and their remuneration was nothing more than little coupons with which they could buy their allotted rice and a few times per year an egg. As a country they were dirt poor and of the two nickles that they had to rub together, one was usually fake.

That was then. Flash forward to today where 80% of all China’s billionaires are members of the communist party or their kids and the typical Chinaman no longer has to queue for his twice yearly ration of eggs. The skyline is littered with skyscrapers and pollution fills the air, a testament to her growth.

The scene I described is oft called ‘the economic miracle of china’. This country of
1, 340,000,000 souls who not thirty years ago lived like ravenous barbarians, now enjoy a lifestyle quite similar to our El Salvadorian neighbors (per GDP).

Now let me explain to you the economics of her transformation, no on second thought let me tell you a story. In Vietnam there was a guy named Nguyen Van Het, shown below.

Lottery1-024-10w.jpg

Nguyen Van Het and his wife in their charity house built by local authorities in Ho Chi Minh City’s District 11. After winning more than US$400,000 in a local lottery earlier this month, their home has been flooded by droves of people claiming to be long-lost relatives and demanding a piece of the windfall.

Here is a guy who was lucky to have a dime in his pockets on a good day and basically lived like the Chinese did back in the 60’s. He was 97 and had no savings so on a good day he’d feed himself with rice purloined from the local country side, also much like the Chinese of the late ’50s.

Then luck turned for this spritely old man as all of the sudden he found the winning ticket to the Vietnamese lottery in his hands. After cashing his U$400,000 check, he was no longer shackled to the countryside ditches. In a country where the average per capita income hovers around U$1000 per year (much like China’s of old), this guy now possesses the wealth of a king.

Do you get my drift… are you feeling me on this one? If not then let me be blunt.

The ‘Chinese Miracle’ is nothing less than the ‘Economic Miracle’ visited upon Mr. Nguyen. If we are to tout the astute powers of uncle chicom then too we should tout this man’s intelligence in purchasing a ticket which has lead to his newfound wealth, for the rise of China is nothing more than what this man has experienced.

If you consider this to be nothing more than capitalist propaganda meted out by a cynical American, and maybe it is, at least let me explain why I am making this statement.

Just like Mr. Nguyen, the China of 30 years ago had nothing. The miracle that has played out in China is nothing less than the effect of the massive infusion of international capital and technology to a dirt poor country whose government has played no other roll than siphoning off its hong baos (bribes) and impeding progress along the way. In other words, the economic miracle is nothing more than the consequence of allowing foreign capital to bring a country of poor into the 20th century.

How does a country go from living like the Flintstones to El Salvadorians in a matter of three decades? It’s easy. Look what foreigners have brought to the country. The Germans have provided the blueprint for their high speed trains, the world has written their constitution for them, the international community has provided motorcycles and cars for them to reverse engineer and copy, Cisco has given the blue prints for their networking devices, foreign profs have taught them a classroom is actually a place for discussion not torture and ‘self punishment’ sessions, foreign architects have designed their buildings for them. The truly remarkable thing is that a country of 1.3 billion waited so long to join the rest of the world in all things modern.

I guess the way I see it is that the ‘economic miracle’ visited upon China is nothing more than the ‘economic miracle’ that will happen in N. Korea and Cuba when they too are open to the west and the US (as in the case of Cuba).

Oh yeah, the little Vietnamese guy gave away a ton of the cash he won, so he definitely is not like the majority of the people here….

his story is here http://www.thanhniennews.com/2010/Pages/2010227113832055315.aspx

One Response to “China’s Economic Miracle Explained in Layman’s Terms”

  1. Awesome said

    This is one of the funniest posts I have read!

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