Exporting the Chinese model of development

Edward Wong has a good article in today’s New York Times about how the use of Chinese labor to build and run Chinese foreign investments is generating a lot of anger in those countries.  Because China is investing in a lot of poor countries where jobs are hard to find, the anger is understandable. I think this gets to the central idea of why China’s model of capitalism is not a good one to export.  While many have praised China for its no-strings-attached model of foreign aid, this misses the danger the model presents. Minxin Pei recently pointed out that despite China investing and exporting all over the world, China plays a very small role in international institutions. Pei argues the reason for this is because the Chinese government is more concerned about domestic politics, specifically maintaining economic growth, than solving international problems.

I think this gets to the central problem of the Chinese model of development. China is perfectly happy to provide no-strings-attached-aid to get natural resources, for example. The reason for this is not because the Chinese are benevolent. Rather, its because access to the resources is important for China’s domestic policy. Exporting labor has the same effect: it creates jobs for Chinese workers. China’s model is not new; in fact its very old and it did not end well. It’s essentially economic colonialism. In the 19th century, all the Great Powers in Europe basically had China’s policy today and the result was World War I. The international institutions we have today – imperfect as they are – are based on the premise that coordination of foreign policy is necessary to avoid the problems that uncoordinated self-interested policy tends to create. If all countries followed China’s policies today, global war would be far more likely than global peace and prosperity.