‘New model for human civilisation’: What is so unique about China’s style of modernisation?

SUZHOU: Over the past few decades, Ye Pei Yuan has seen his neighbourhood transform from a collection of lakeside villages with cottage industries to a high-tech hub.

The Suzhou native, now aged 59, told CNA that the launch of the China-Singapore Suzhou Industrial Park in 1994 was an eye-opener for everyone.

“The firms there were nothing like our village enterprises. They were huge companies operating with technology we’ve not heard of,” he added.

Ye’s wife eventually found a job with a Singapore firm in the Park, where she took home a monthly salary of about 7,000 to 8,000 yuan (US$960 to US$1,100). That was “quite good then”, he said.

The couple can be considered among millions who benefited from China’s economic boom.

According to World Bank data, the world’s second-largest economy has lifted 800 million people out of poverty, making up three-quarters of the global reduction in poverty.

This is in line with China's Communist Party (CCP) doctrine. 

China’s founding and ruling party sees the country’s large population, along with the pursuit of common prosperity for all, as defining features that set China apart from Western modernisation.

In the same document, the CCP also pledged not to tread the path of colonisation or hegemony as it grows in power.

THIRD PLENUM

This week, one of the party’s most important political meetings got underway behind closed doors – the third plenum.

According to state media, the meeting – which takes place every five years – will focus on deepening reforms and advancing Chinese modernisation.

It is expected to throw up a series of economic measures to address issues hindering growth, and will also likely further cement the CCP’s leadership and socialist values.

Known as the San Zhong Quan Hui in Mandarin, it is traditionally a launchpad for major economic and social development goals that set the nation’s agenda for the next few years.

Political observers said the CCP is not expected to deviate much from this Chinese style of modernisation – the country’s self-declared path of development – in this year’s third plenum.

The concept was first announced at a CCP centennial speech in 2021, with President Xi Jinping calling it a “new model for human civilisation”.

WHAT IS DISTINCT ABOUT CHINESE MODERNISATION?

A unique characteristic of Chinese modernisation is how the government actively considered its centuries-long history as an asset in developing the modernisation process, said political economist Miguel Martinez from Xi’an Jiaotong Liverpool University.

This differs from other countries that decide to “draw a clear line between their past and their future” when they begin modernising, he added.

Keyu Jin, Associate Professor of Economics at the London School of Economics and author of The New China Playbook, said its modernisation model is unique due to state and private collaboration.

“There’s substantial state mobilisation and coordination allocation, but in the very beginning, and then really market forces being unleashed and markets playing an extremely important role,” she told CNA’s East Asia Tonight programme.

Several pockets in China remain untapped, including land reforms and the “hukou” system of household registration, Jin added.

The system determines where residents can access credit, government jobs, education, subsidised housing, welfare and other social services.

“(It) prevents migration and the movement of people, and barriers to trade across the provinces and substantial barriers to entry in the service sector, which should account for 80 per cent of GDP (gross domestic product) as is the case for most advanced economies,” Jin said.

“In today's China, it's only 50 per cent of GDP, and of course, a mass of close to hundreds of millions of under-educated, under-employed rural population.”

LOCAL GOVERNMENTS

Another defining feature of China’s modernisation is the role of local governments, which is evident in Suzhou.

Martinez noted: “Their active involvement through urban planning, and then the subsequent development of high-end industries, creativity and innovation  – these are all areas in which the local governments, the city governments in China are heavily involved.”

Suzhou Industrial Park is one of China’s top industrial zones, churning out innovative tech products while drawing on the city’s long history of making sought-after consumer goods.

Since the 14th century, the city in Jiangsu province has also been China’s leading producer of silk  – arguably the tech product of its time.

HOUSING SLUMP AMONG OTHER HEADWINDS

However, three years into an unprecedented housing market slump, some local governments – which typically get more than 40 per cent of their revenue from land sales – are now financially hamstrung.

China also faces other headwinds including youth unemployment, an ageing population, and powerful countries wary of sharing technology with it.

Jin said that China needs to revive its equity and bond markets, as well as reform its financial system in the long run.

“Geopolitical tensions have taken a toll, but that has led to reorganisation and a rethink of globalisation around the world,” she added.

“I think that there's an enormous potential to reduce the skill and education mismatch of the young generation to take care of some of the job creation problems.”

DBS China investment strategist Raymond Deng said that China needs to raise its technology and help companies get more funding.

“In the 2008 financial crisis, many countries implemented quantitative easing, but for China, shortly after 2008, we started slowly soaking up the excess money supply,” he added.

“So now when we need the stimulus, we do have the headroom and monetary position to help develop the key industries that we need.”

China did just that to boost its electric vehicle industry – a sector it now dominates. But the move has also sparked retaliatory tariffs from the West, including the European Union and the United States.

With China having options for growth, the ripples from whatever it picks will be felt worldwide - and may even ricochet backwards.