South Africa looks to China
NEARLY everyone at Davos is talking about China. Finance ministers fret about the future of the yuan. Corporate titans feverishly swap tips on how to make things in Guangzhou or sell things in Zhejiang. Chinese academics engage cautiously with Western reporters about the possibility that some day Chinese people may be allowed to vote.
There is wide disagreement as to why China’s economy has grown so fast. Those who know the least about China often have the strongest views. Some see it the way Barack Obama once said American voters saw him: "as a blank screen on which people of vastly different political stripes project their own views."
Free-market types tend to argue that China has prospered because, since the late 1970s, it has abandoned or relaxed the state controls with which Mao Zedong once throttled it. By this argument, China is like a spring which was trodden down for decades and from which the boot has been removed, allowing it to bounce back to its natural shape.
Others take the opposite view. Dirigistes insist that the secret of China’s success is that its state is still highly interventionist. South Africa’s president, Jacob Zuma, inclines to this view. He and his circle are convinced that “market fundamentalism” was the cause of the global financial crisis, and have started looking to China for an alternative. Top members of the African National Congress (South Africa’s ruling party) have been making study trips to Beijing to observe how things work there.
Late last year, Mr Zuma’s government unveiled a plan called the “New Growth Path”. Some of its suggestions, such as a freeze on private-sector wages, sound impractical. And although the details of how it will be implemented are as clear as lumpy sorghum beer, the overall thrust alarms South African businessfolk. Mr Zuma wants a “developmental state”, with substantially more government intrusion in the economy.
Why, asks a South African businessman, did Mr Zuma not look to India for an example of how a poor country can grow fast? Culturally, South Africa has much more in common with India than with China. But the ANC rather likes the idea of extending its power over private business and the allocation of capital, he fears. And this will end in tears, he predicts, for a simple reason. China, for all its flaws, has a reasonably competent bureaucracy to implement the central government’s plans. South Africa conspicuously does not.
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