Is Ghana modelling China’s development?

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Gideon Safo

The recent visit of President Akufo-Addo to China and matters arising from the trip have generated debate on whether Ghana stands to benefit economically from an enhanced relationship with China. Some economic analysts have suggested that, perhaps, Ghana could be following the economic development path of China in future.

The two controversial issues that have triggered the debate include the bauxite for infrastructure deal. But the opposition sees the deal differently, raising the red flag that the deal amounted to nothing but a loan that will increase Ghana’s debt portfolio. They were reported to have written to the International Monetary Fund to determine whether the deal is a loan or a grant.

The other controversy is on the digital migration platform, in which the government is criticised for offering the contract to Star Times on a silver platter. The fear is that handing a national spectrum to a foreign entity could compromise our sovereignty. Followers of the rejuvenated Ghana-China relationship are wondering whether our government is giving too much to China. This concern has permeated every debate over the China-Africa relationship for years.

The Ghana-China political and economic relationship dates back to the First Republic under President Kwame Nkrumah. And at the meeting in early September, both President Xi Jinping and President Nana Akufo-Addo agreed to inject new vitality into their bilateral relations.

The news media quoted President Akufo-Addo as saying that the Ghana-China friendship is unbreakable. It was sealed when Ghana cast its vote in support of China regaining its rightful seat in the United Nations, and has been upholding the one-China policy.

 

What can we gain?

On the strength of its socialist development model, China plays an important role in world peace and development, especially in supporting Africa’s stability and revitalisation.

Available data indicate that since the establishment of diplomatic relations between China and Ghana 57 years ago, the two countries have enjoyed fruitful cooperation in the economic and trade fields, bringing tangible benefits to people of the two countries. Last year alone, the China-Ghana trade volume registered US$5.976billion – making Ghana the 7th-largest trading partner of China in Africa. China’s imports from Ghana was US$1.305billion and export to Ghana was US$4.671billion. China’s non-financial direct investment inflows into Ghana hit US$154million.

The value of China’s newly-signed contracts in Ghana reached US$2.511billion. The Chinese Ambassador in Ghana recently indicated that the trade achievements between Ghana and China were reinforced by numerous landmark and game-changing projects aided or financed by the Chinese government. The recent bauxite deal and digital migration are two recent cases critics are chewing on.  Small wonder that the nature of investment and trade agreements have come under serious scrutiny by both the opposition and independent analysts.

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The fear has always been about the long-term effects of unfettered Chinese dominance in Ghana’s economy. The penchant of the Chinese to dominate any system with their technical, vocational,  entrepreneurial skills is genuine fear; but rather than just fearing their dominance, our government should insist on a win-win situation – culminating in technological transfer for mutual economic benefit.

 

Any lessons from China’s economic model?

Since the 1980s, China’s Communist Party has been using “socialist market economy” to describe their nation’s economic system. China’s economy is subject to market forces, and capitalists are involved; but the Party does not believe that capitalists run their economy.

China is the world’s largest emerging market economy, both in terms of population and total economic product. The country is arguably the world’s most important manufacturer and industrial producer, and those two sectors alone account for more than 40% of China’s gross domestic product, or GDP.

The economy is no longer driven primarily by huge investment in manufacturing to produce cheap goods destined for export markets. It is now moving from an export-led, low-cost producer economy toward one driven chiefly by domestic consumption and underpinned by services, innovation and entrepreneurship

 

State-led model

What is the China Development Model? In his recent book, Daniel Bell argues that Westerners tend to divide the political world into “good” democracies and “bad” authoritarian regimes. But the Chinese political model does not fit neatly in either category. Over the past three decades, China has evolved a political system that can best be described as “political meritocracy” (Bell, 2015).

In the China Wave, Zhang Weiwei defines China as a rising civilisational state and argues that as such it should not accept the Western political model, otherwise it will lose its advantages and risks disintegration.

Li (2014) also adds that unlike the politically diffuse civilisations of Europe, the Middle East and Indian subcontinent, China has managed to establish political unity over most of its territory. Zhang considers that China’s reform performs much better than the reform efforts in many other countries that have tried to emulate Western ways. With its State-Led Development Model, the Chinese economy has done remarkably well over the last three decades, consistently ranking among the fastest-growing in the world.

It has attracted significant amount of foreign direct investment and has become the largest trading country. Such remarkable successes are attributable to the model of the developmental state (Zhang, 2011,in Kelly, 2011).

The Chinese reform since 1978 ranks as one of the most extraordinary episodes of social and economic transformation in history: industrialisation, marketisation, urbanisation, and globalisation all occurring at the same time (ibid).

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The Chinese success story has probably re-established the state as a major player in economic development. A recent study found that China’s stunning growth rates have corresponded with the rise of “state capitalism”. Since the mid-2000s, China’s political economy has stabilised around a model wherein most sectors are marketised and increasingly integrated with the global economy; yet strategic industries remain firmly in the grasp of an elite empire of state-owned enterprises (Naughton & Tsai, 2015, in Li, 2015).

 

Development as a priority

After the Tiananmen Square protest in 1989, many pundits predicted that China would soon collapse. They claimed the Chinese model looked good on paper but in reality had serious limitations. Some studies find that as China still confronts many challenges, it is too early to suggest a Chinese development model for other developing countries.

But Xi Jinping, China’s party chief, was reported as saying that he sees nothing wrong in pursuing deeper market reforms to achieve his national objectives while implementing new restrictions on individual political freedom. In fact, he sees this as the essence of “the China model” in contrast to the liberal democratic capitalism of the West – which he describes as totally unsuited to China (Rudd, 2015, in Li, 2015).

In spite of coming under criticism for its autocratic rule, good governance is increasingly reflected in reform practices at all levels of government in response to emerging social, political, economic and environmental issues, as well as to challenges posed by China’s market-oriented reforms and rapid modernization. There is a growing consensus among Chinese scholars that good governance is crucial for the establishment of a functioning democracy.

The liberal writers, in contrast, work against the party-state and demand radical change in the hope of replacing China’s one-party rule with liberal democracy. They argue that proponents of the China model need more empirical evidence to help people understand how the China model really works.

The widespread view in the West is that China’s success results from its “vast, cheap labor supply”, its “attractive internal market for foreign investment”, strong government support, and its access to the American market, which provides a perfect spendthrift counterpart for China’s exports and a high savings rate.

Besides, China has an enormous population, a huge amount of low-cost labour, and a gigantic domestic market that give China leeway to negotiate the introduction of technology. Perhaps one thing Ghana can learn from China is developing its domestic market to consume local goods.

 

Is the China Model Applicable to Other Countries in the Developing World?

Whether China’s experience provides useful lessons for other transitional economies is being debated at the academic development levels. Some economists argue that China’s success demonstrates the superiority of an evolutionary, experimental, and bottom-up approach over the comprehensive and top-down “shock therapy” approach that characterises the transition in Eastern Europe and the former Soviet Union.

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Other critics, mostly from the West, say there is a dark side of the China model. They say rampant official corruption and social injustice have violated the principles of what the people believe to be good governance. According to them, the most disappointing aspect of China’s reforms is under-development of the rule of law – which leads to institutionalised state opportunism, self-dealing of the ruling class, and rampant corruption. But the question remains: which country in this world can claim its political leadership is not corrupt? So, to cite corruption as the reason the Chinse model is not worth replication cannot hold water.

The criticism aside, it is well-documented that China’s growth remains a bright spot for the global economy. As countries in the developing and post-Communist world continue to search for new models of development and governance, the China model is a temping option.

What China did in the past was to redefine its economic preferences, taking a state-led option. Under it, state enterprises remained important in the socialist market economy. In China, the state continues to enable development by supporting private enterprises through special economic zones and exemptions and investment incentives. Thus, China’s vision of development seems to revolve around creating a richer, more productive consumer-rights society, where private enterprises, skills and efficiency are rewarded.

To the extent that this model has catapulted China to the second-biggest economy in the world, it cannot be entirely written-off. In every system the state must play its oversight role of steering development. Perhaps Ghana is following the Chinese example by declaring a development beyond aid agenda, embedded in the One District-One Factory policy. Perhaps Ghana can take a cue from China’s practice, whereby indigenous private sector players and foreign investors are involved in enabling development.

 

References

Kelly, D. (2011). Chinese political transition: Split in the princeling camp? In East Asia Forum. Retrieved from http://www.eastasiaforum.org/2011/

Li, H.  (2014) The Chinese Model of Development and Its Implications * 1 Department of Political Science, Merrimack College, N. Andover, Massachusetts, USA.

Li, H. (2015). Political thought and China’s transformation: Ideas shaping the reform in Post-Mao China. London: Palgrave Macmillan.

 

(***The writer is a Development and Communications Management Specialist, and a Social Justice Advocate.  All views expressed in this article are my personal views and do not represent those of any organisation(s). (Email: safoamos@gmail.com. Mobile: 0202642504/0243327586/0264327586)  

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