Wei Jingsheng Foundation News and Article Release Issue: A896-W577

魏京生基金会新闻与文章发布号: A896-W577


Release Date: October 18, 2015



Topic: The Way Out for the Chinese Economy -- Wei Jingsheng

标题:中国经济的出路 -- 魏京生


Original Language Version: Chinese (Chinese version at the end)



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The Way Out for the Chinese Economy

-- Wei Jingsheng



Recently, there is news that Chinese imports have been in decline for eleven consecutive months, with more than a 20% decline in September.  There are also reports of increasing empty shipping container rates month after month at the US Pacific coast ports, which further illustrates the weakening of Chinese imports.  Chinese exports to the US have also dropped 5% in the past few months.


Putting these messages together, they illustrate an important trend that China's foreign trade is rapidly shrinking.  The export-oriented economic environment secured by Deng Xiaoping and Jiang Zemin is rapidly falling.  The model of development through cheap labor has come to an end.  Even without Obama's Trans-Pacific Partnership Agreement (TPP), China's foreign trade-oriented development model has already come to an end.


What to do afterwards then?  It looks like Xi Jinping is not sure.  The so-called 13th Five-year plan of China that is being discussed is full of nonsense and jargon -- it is even returning to Hu Jintao's "Scientific Development Concept," which is almost as to talk about the utopia of Communism.  I think that is because Xi Jinping is not sure what to do, besides helplessly kowtow to the politics ruled by the elder leaders.


According to the normal rules, or according to others' experience, the initial stage of trade-oriented development was not wrong.  It is the model of rapid economic development relying on the developed economies.  After World War II, Europe, Japan, Taiwan, Korea, etc. all successfully took this path.  With different situations, the experience was also different.


The experiences of Europe and Japan were the first type.  After they restored their economy with the assistance from the USA, they soon embarked on a development path consisting of a combination of independent development and relying on the huge US market.  Although their growth was not particularly fast, one step followed another; their development was very uniform.  Till this day, they are neck and neck with the United States, and now are among the several largest entities in the world economy.  This type is typical of sustainable development.


The experiences of Taiwan and other Asian Tigers were the second type.  This type may also include Brazil and some other initially developed countries that have been remaining at the second level.  They also began like Japan and Europe, gaining rapid development by relying on an export-oriented economy.  However, they did not embark on the path of independent development.  They were overly reliant on exports, and finally ran into the bottleneck of that development.  After their ultra-high-speed development, they have spent years of stagnancy, with slow development.  They have to come back for make-up classes, as the remedy of the development difficulties.


The third type is that of the Soviet Union and Eastern Europe, and perhaps China as well.  This type of development followed the scholarly utopia of a planned economy, coupled with authoritarian politics that excluded the role of a market.  Its intensive industry was capable of rapid development, while the serfdom-like development of agriculture and light industry could not keep up with that pace.  This example is called a shortage economy.  The overall growth rate was very slow and not sustainable.  Finally, the overall political and economic system collapsed.


During the earlier period of the Communist rule, China took the Soviet model, with a rapidly developed industry, while being always short of supplies in people's lives.  If Mao Zedong died ten years later, China might have finished the same path in the 1980's that the Soviet Union finished in 1990's.  This possibility is because the Chinese traditional culture is built on the basis of a market economy, and is even less adaptable to serfdom and despotism.


The Communist leadership of Deng Xiaoping, Hu Yaobang and Zhao Ziyang, just had the chance to change the development type.  China was able to jump from the third type to the second type of economic development, to get on the export-oriented economy of the development model that the Four Asian Tigers followed.  Of course it would be the best result if China had timely jumped into the first type of development model.


Unfortunately, the Communist Party leadership has an immutable goal that is to maintain the political system of the one-party dictatorship.  The suppressed Democracy in 1989 was not just a political setback, but also a setback of the opportunities for economical transitions.  Jiang Zemin was successful in opening the markets in the United States and the West, which only prompted China to continue its even more deformed path of export-oriented development through cheap labor.


Because of political tyranny, inevitably there is unfair distribution.  The minority ruling class in China inevitably tends to gain the extreme exploitation of early capitalism.  It uses so-called completely free market economic laws to treat labor; and a combined market economy with a monopoly of a semi state-owned economy to deal with the market.


China's domestic market is shrinking, thus it needs to rely on foreign markets.  The growth of the living standard of the Chinese is slow, which brings social problems.  Unfairness brings highly developed rent-seeking behavior in the market, which is commonly referred to as the rapid spread of corruption.  In addition, the widening wealth gap is causing psychosocial anger in the society, even social unrest.  It already is not as simple as if the economic development was merely not sustainable.


Now with the changes in the international environment, the export-oriented economy is certainly not able to carry on.  What will follow as a chain reaction is the rapid economic downturn, or even collapse.  In viewing the rule of bottleneck transitions represented by the Four Asian Tigers, China must reform the political system, develop the intellectual resources and production enthusiasm, replacing the import-type of intellectual property rights, or at least not impeding the import of intellectual property rights, for the sake of a sustainable economy of independent development.  For this purpose, South Korea, Taiwan, Brazil and other countries have embarked on the path of democratization.  The speed and extent of democratization is proportional to the speed of getting out of the bottleneck.


The development path of Xi Jinping is just the opposite.  He nailed down the biggest variable factor, the political reform, to set up the main obstacles for solving economic development.  This leads to lack of investment motivation domestically, with the fleeing of a lot of private capital, and without a foreseeable future for the industrial upgrading in China.


The official investment guidance has not been encouraging small and medium enterprises to upgrade.  Instead, the Chinese government is promoting so-called the Belt and the Road (The Silk Road Economic Belt and the 21st-century Maritime Silk Road) and the Asian Infrastructure Investment Bank.  It is trying to sell the steel, cement and railway technology, which is contributing to the official capital exodus.  This action is just like the preparatory work of the dictators in the Third World before they lost their power, instead being responsible to the Chinese economy.  The only difference is the scale.


To thoroughly review the behavior of the Xi Jinping and Li Keqiang clique since they took power, we can conclude that they do not have a clear understanding of the current situation and future development path of China.  They are also not knowledgeable of the coming plight that China is falling into.  This is not even comparable to "going across the river by reaching the rocks on the bottom" promoted by Deng Xiaoping and Chen Yun.  What Xi & Li did could be summarized by two Chinese proverbs: "a blind person telling of the shape of elephant by touching one part of its body" and "catching a fish by drilling through wood".


Just as Mr. Li Ka-shing (of Hong Kong) recently put it: ignorance is the greatest enemy of mankind.  Rigid political ideology is the greatest enemy of all inherited types of politics.  The ancient Chinese said: only when we know ourselves and know the others, could we win every battle.  This saying is not only true about war, but with even more true about economic and social development.



To hear Mr. Wei Jingsheng's related commentary, please visit:



(Written on October 14 and recorded on October 15, 2015.  Broadcasted by Radio Free Asia.)



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Wei Jingsheng Foundation News and Article Release Issue: A896-W577

魏京生基金会新闻与文章发布号: A896-W577


Release Date: October 18, 2015



Topic: The Way Out for the Chinese Economy -- Wei Jingsheng

标题:中国经济的出路 -- 魏京生


Original Language Version: Chinese (Chinese version at the end)









-- 魏京生





把这几个消息联系起来看,说明了一个重要的趋势,就是中国的对外贸易正在迅速地萎缩。邓小平和江泽民争取到的外向型经济环境正在快速地流失。靠廉价劳动力发展的模式已经走到了头。即使没有奥巴马的跨太平洋伙伴关系协定,简称TPP(The Trans-Pacific Partnership),中国的外贸导向型发展模式也走到了头。











































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