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Motivations for Economic Policies in Western China

Summary:
I’m not a China expert, but 20 years ago, I had the opportunity to hear the Chinese explanation for their planned policies in Western China (Xibu Dakaifa), translated in English journalistic accounts as “Develop the West” (I was the international finance economist on the Council of Economic Advisers at the time, and the Chinese counterpart, the State Development Planning Commission, was coming to Washington to meet with us; I was tasked with overseeing elements of the meeting). As I recall (not having retained the briefing materials), we (the CEA) tried to convey our views that a capital intensive, infrastructure heavy, water-consuming approach to development would likely be counterproductive, or at least wasteful of resources, both economic and natural. Victor Shih argued (in

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I’m not a China expert, but 20 years ago, I had the opportunity to hear the Chinese explanation for their planned policies in Western China (Xibu Dakaifa), translated in English journalistic accounts as “Develop the West” (I was the international finance economist on the Council of Economic Advisers at the time, and the Chinese counterpart, the State Development Planning Commission, was coming to Washington to meet with us; I was tasked with overseeing elements of the meeting).

As I recall (not having retained the briefing materials), we (the CEA) tried to convey our views that a capital intensive, infrastructure heavy, water-consuming approach to development would likely be counterproductive, or at least wasteful of resources, both economic and natural.

Victor Shih argued (in “Development, the Second Time Around: The Political Logic of Developing Western China,” Journal of East Asian Studies, 2004) that the “Great Development of the West” was really a project to redistribute rents:

…on closer examination, the types of policies implemented during the campaign are very different from that of the classic developmental state. Instead of creating the environment and incentives for local businesses to become internationally competitive, the GDW campaign was intentionally an enormous exercise of rent distribution. Politicized bureaucrats used the campaign as a means to consolidate their hold on the party and to increase the power of the central bureaucracy. …

On the policies themselves:

…the central government launched a program that more closely resembled Chairman Mao’s Third Front policy than East Asian developmentalism. Even at the beginning of the GDW campaign, central technocrats and officials in eastern China had great doubts about the
likely effect of the program. Officials within the regime questioned whether such a massive injection of capital would indeed generate sustained growth in the region given its poor natural endowments. Others questioned whether there should be a different mix of policies, one more geared toward promoting foreign direct investment (FDI) and private investment than massive state investment.

I’ve noted in previous posts the current conditions facing minorities in for instance Xinjiang ([1], [2]). Here is one interpretation of the impact specifically of the Develop the West initiative (Jeong, 2015)

An assessment of minority policies in and coinciding with the WDP brings to the surface the question of “who benefits?”: minorities or non-minorities, or the societal groups and cleavages crisscrossing the divide. On the one hand, we have evidence of fiscal and other
resources allocated primarily to minority areas. On the other, we are faced with a question: do the resources allocated to minority areas actually trickle down to minority residents? Although lacking comprehensive national-level statistical data on minority incomes, media,
lay and scholarly accounts bring evidence counter to state claims of WDP improving minority economies. In Tibet and Xinjiang, minorities report racial discrimination in employment opportunities, with new jobs created by construction and infrastructure projects mostly allocated to Han migrants newly settled in the area (Demick and Pierson, 2009; Gilley, 2001; Green, 2006). Xinjiang farmers report losing land and opportunities to Han farmers who are subsidized (Lipes, 2013). In terms of income, the Tibetan population is generally estimated to have considerably lower incomes than the Han (Lhundup and Ma, 2013), and Han residents are supposed to enjoy greater returns to education and employment in both areas (Hannum and Xie, 1998). Investment projects are often managed and owned by Han (Wong, 2010).

Of course, alternative interpretations exist, but for me (as a non-expert, but with some background understanding), this interpretation seems plausible to me. Hence, the resources being devoted to the West, and specifically Xinjiang, should be interpreted as something primarily different from trying to benefit the minority populations.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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