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The Economic Development of China: A Comparison with the Japanese Experience.

The book addresses a topic of growing importance in today changing international political and economic landscape: the emerging global power of the People Republic of China, and the present and future prospects of its economic development. No study of the economic performance of the Third World, and no assessment of economic growth in East Asia would be complete without consideration of China's current transformation and performance. Presently, China is Asia's second largest economy, after modern Japan, in terms of GNP. As Asia's largest country with nearly a quarter of world population, what happens in China will not only influence the development of Asia as a whole, but will also affect the world economy at large.

Ryoshin Minami, a professor of economics at the Institute of Economics Research, Hitotsubashi University, Tokyo, offers a comprehensive analysis of China's economy since 1949, but with a particular emphasis on the recent period under Deng Xiaoping's gradualist approach to economic liberalization (1978-1990). The main questions Ryoshin Minami attempts to answer are: What are China's current economic problems and their causes? What are the difficulties regarding China's economic reforms? Where should China's economy go from here? Thus, the author provides information about several important aspects of the Chinese economy. He identifies the problems that China must face to develop its economy and elucidates the structural deficiencies which lay behind these problems. If China is to have some lasting economic prosperity and growth, it must, as the author suggests, continue and expand the reform of its economic and financial structure, a reform that was initiated in 1978.

First, the author recommends a vigorous continuation and expansion of rural and urban reforms. Rural reforms began in the agricultural sector when the people's commune system was abolished and farmers became responsible for their own profits and losses. Urban reforms began in 1984, stimulated the China's economy by increasing individuals' incentive to work. Today, the inefficiency of the old Chinese planned economic system, which China imported from the former Soviet Union during the 1950s, has become apparent to everyone. To make the operating process of the Chinese economy more effective, the above reforms must be continued.

Second, China should develop its basic markets - financial and labor markets. An efficient operation of capital and credit flows will be vital to the modernization of China. A well developed labor market will help the unemployed to find new jobs and contribute to a better allocation of labor resource.

Third, more political reforms are still needed for the transformation of the Chinese economy. The author concedes that China's government has already embarked on bold economic and financial reforms, and, up to now, has achieved significant results. Although there have been discussions about political reform, the status quo remains practically unchanged, especially after the 1989's Tiananmen Square's unfortunate event. The necessity of economic and political liberalization is now publicly recognized throughout Eastern, former socialist countries. The remarkable ideological change in those previously centrally planned economies and their ensuing political reforms will creme no doubt a profound effect on the Chinese people. Here, professor Minami wonders whether democracy and liberalism, which were born and developed in many capitalist societies, can be suitable for China? However, given the present worldwide trend toward a qualitative transformation of socialism, it seems impossible that the China's government will be able to continue its current, rather rigid, political stand. One should be noted also that economic development and modernization often bring about social and political changes with them, because an open economy cannot avoid the persistent inflow of foreign ideas and trends. It is a common notion that economic reforms cannot be completely successful unless they are accompanied by a modernization of the social, political structure of the economy.

In The Economic Development of China, the readers will find something more interesting than just the analysis of the important characteristics of the Chinese economy. First, the author makes an extensive use of ample and available statistical data collected from various sources for his analysis of the Chinese economy. Second, the presentation becomes more incisive when it is built upon a detailed comparative analysis of development experiences between Japan and China. Historically, these two countries belong to the same broad civilization. Japan's economy began taking off under the Meiji Restoration (1878-1900), and experienced a tremendous growth after World War II ending up today as an advanced industrialized country. Therefore, it is possible for China to draw some lessons from the Japanese experience. Many leaders in China, implicitly or explicitly, believe that it is possible for them to duplicate Japan's record of high growth. One should realize that the Chinese economy is not at the same stage of economic development as Japan was just after World War II: the experience of postwar Japan can not be applied to China today. The comparison is still useful in the sense it helps to define China's developmental stage in a broader international context.

As more economists and students of China begin to examine the internal mechanisms that are operating in the vastness of China it is likely that many may discover something real and practical for the China's problem. For the present, Minami's The Economic Development of China is an interesting and useful book. Clearly, individuals who are interested in the economic future of China and its international influence on the global scene will benefit from reading this scholarly book. At the same time, it may be Professor Minami's incisive comments and suggestions about structural reforms of China that will yield the greatest benefits to general readers just wanting some general knowledge on the "Chinese Miracle" - aside from the high-performing Asian economies of Hong Kong, Indonesia, Malaysia, South Korea, Singapore, Taiwan, Thailand, no other country in the world achieved such rapid and sustained growth during the 1980s.

Dominique N. Khactu University of North Dakota
COPYRIGHT 1995 Southern Economic Association
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Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Khactu, Dominique N.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Jul 1, 1995
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