Other rising powers are eager to emulate China’s success and pursue statist policies that quickly deliver a short-term jolt, notes Dambisa Moyo, the author of “Winner Take All: China’s Race for Resources and What It Means for the World.” Under state capitalism, China has delivered phenomenal growth, brought hundreds of millions out of poverty, bulked up infrastructure and delivered social services, she writes for the Wall Street Journal.
Moreover, as autocratic China has surged, democracy and capitalism have suffered a series of setbacks that make them less tempting options. But the Chinese model isn’t as viable as its admirers in the emerging world often think, she contends:
First, unlike many emerging markets, China’s growth has been driven largely by exports. Its success has been dependent on the free markets of the West. Most other emerging-market economies are based on agricultural commodities—just the sort of produce that the U.S. and Europe undercut with their own domestic subsidies.
Second, an economic system with the state at its heart is inefficient because it dislocates markets. When the government is the ultimate economic arbiter, assets are inevitably mispriced, which hinders sustained, longer-term growth. …
Finally, policies that mimic China may yield a short-term burst in employment, but they also produce serious negative externalities and economic dead weight. China itself is now grappling with massive debt woes in its financial sector, a property bubble that could burst at any time and pollution that slows growth.
“It should worry us all that, in the face of growing popular unrest, many leaders in emerging markets are turning to authoritarian, state-centric models,” Moyo argues. “Whatever the short-term political appeal of such policies, they are likely, in the long run, to exacerbate social turmoil and create a vicious cycle for both emerging markets and the world as a whole.”