The Limits of China’s Economic Model

Daniel Gross in Slate sees Google’s decision to stop acquiescing to the Chinese government as a portent of troubles for the nation – as a sign of a problem that will undermine China’s global economic position going forward, pointing out that the political decision to censor and even alter history as it was, has consequences:

Yes, Shanghai feels a lot like New York. But don’t presume that just because Americans and Chinese share a consuming culture that they also share a political one. As I stood in Tiananmen Square on a chilly November day, I turned to my guide. “That was really something, what happened here 20 years ago,” I said. “Yes,” he responded in his near-fluent English. “Those terrorists really killed a lot of soldiers.”

Gross sees the strength of China’s model:

For the last 30 years, China has been testing a new, inverted model: breakneck economic development while retaining strict limits on personal liberty. The Communist Party has wrenched the nation into the 21^st century. The hardware is certainly impressive—the maglev trains, shiny new airports, and modern skyscrapers.

But he believes that manufacturing can only go so far – agreeing to some degree with David Brooks who describes the economic innovations of the future as being the result of a “protocol economy.” Gross explains:

And that’s the rub. Any type of political system can produce excellent hardware. The Soviet Union, which ruled Russia when Google co-founder Sergey Brin was born there in 1973, managed to produce nuclear weapons and satellites. Likewise, China has built truly impressive hardware: some 67 bridges now spanning the Yangtze River, a superfast supercomputer assembled entirely from parts made in China, high-speed trains. But in the 21^st century, a country needs great software in order to thrive. It has to have a culture that facilitates the flow of information, not just goods.