Chinas Success A tale of vision & faith

This week when I visited China I returned with a clear ambition; to build a lasting friendship that can become a blueprint for future cooperation between both the countries. This is a partnership for growth and reforms that can help to realize the Chinese dream and long-term prosperity for Pakistan too.

Our people particularly the Middle Class, view growing China as a fantasy land where they arrive at magnificent airports or harmonious train lines running at three-hundred kilometers per hour, a land they can shop any- where from, in wealth of international and Chinese stores catering to Chinese middle class.

In addition to this situation, when these people are in their own country they see newspapers load- ed with articles such as China-the upcoming largest economy or Chinas way to progress. Similarly, book stores are occupied with books titled as, The Dragon Awakes; Chinas Rise, As China Goes, So Goes the World and most prominent, When China Rules the World!

Pakistani middle class has dream of a better lifestyle, a home that one owns; a car to drive, a national network of modern highways on which to drive; proper college education for their child, a country with a powerful government that appears respectful in the world and faces no external threats to its security. But, unfortunately this vision lasts no longer, whereas, the neighbour next to you is living that dreamsighthis vision and this dream may not be realised in the presence of bad governance and strategies like we have in Pakistan. This is what we say while concluding our debates on prosperity and growth.

I look upon at China as a country and a project, a model of growth and prosperity for every nation who aspires for sustainable economic development. Chinas transformation is one of the defining facts of our lifetime. Last year, it became the worlds largest trading nation and sooner it will be- come the worlds biggest economy.

We should become clear that there is a genuine choice for every country on responding to this growing openness and success. They can choose to see Chinas rise as a threat or an opportunity. They can protect their markets from China or open their markets to it. They can try and shut the country out or welcome it as a partner at the top table of global affairs. My answer is clear-we want to see China succeed, whether by welcoming Chinese investment in our nuclear energy sector, or creating innovative automobiles. I believe that the right way forward is openness, dialogue, trade and investment; working together for mutual benefit not against each other.

Behind the growth of China is the struggle, dedication, hard work and of course effective policies of its government and above all the vision and ideology of great Chinese leaders such as Mao Zen Dong who taught his people it is the people, and not things, that are decisive a great meaningful ideology. Mao told his people about the two worlds one is the rigid world of figures and prospects based on economic facts and the other is the world of faith. This brings us to the human side of the Chinese

struggle in creation of a new world. They proved Thomas Hobbes wrong when he wrote that mans condition is a condition of war with everyone against everyone whats happening in China today is education and re-education of man. Selfishness is being killed today and selfless dedicated men whose happiness lies in serving their fellow-men are brought into existence. Hence, it is obvious now that economic revolution in China today is not just the outcome of good governance and strategies but due to the belief, faith and harmony among its people.

So, this was all about the vision and ideology of the Chinese state. Now, I will throw light on the strategies policies and reforms that have successfully transformed the whole picture. China is the largest developing country in the world and a member of the G20, the Asia-Pacific Economic Cooperation (APEC) and other multi- lateral economic mechanisms. Its economic health and trends have a major impact on the world economy.

Currently, the Chinese economy, while maintaining stability, has taken a turn for the better, with no- table achievements and improved performance. In 2013, Chinas gross domestic product (GDP) grew by 7.7pc, which remains mid- to-high growth in the world. The rise of the consumer price index (CPI) was kept at 2.6pc. Over 13 million new urban jobs were created, more than in any previous year, and per capita disposable income of urban residents and per capita net income of rural residents rose by 7pc and 9.3pc in real terms, respectively.

Last year, Chinas import, export and use of overseas investment all achieved considerable growth. Total imports approached $2 trillion. Overseas direct investment by Chinese enterprises exceeded $90 billion. Given the lingering international financial crisis, the unrecovered world economy and Chinas effort of economic restructuring and upgrading, such a score re- port is indeed a hard-won achievement, proving once again the resilience and vitality of the Chinese economy. They promoted energy-saving, environmentally friendly and other emerging industries. They persisted in our effort to drive domestic demand and improve supply through structural readjustment and to boost domestic demand through greater openness.

Curious about why China has done so well, an IMF research team recently examined the sources of its growth and arrived at a surprising conclusion. Although, capital accumulationthe growth in the countrys stock of capital assets, such as new factories, manufacturing machinery, and communications systemswas important, as were the number of Chinese workers, a sharp, sustained increase in productivity (that is, increased worker efficiency) was the driving force behind the economic boom. During 1979-94 productivity gains accounted for more than 42 per cent of Chinas growth and by the early 1990s had overtaken capital as the most significant source of growth. This marks a departure from the traditional view of development in which capital investment takes the lead. This jump in productivity originated in the economic reforms begun in 1978.

By welcoming foreign investment, Chinas open-door policy has added power to the economic transformation. This foreign money has built factories, created jobs, linked China to international markets and led to important transfers of technology. These trends are especially apparent in the more than one dozen open coastal areas where foreign investors en- joy tax advantages. In addition, economic lib- eralization has boosted exportswhich rose 19 per cent a year. Strong export growth, in turn, appears to have fueled productivity growth in domestic industries.

Although, China occupies a unique niche in the worlds political economyits vast populace and large physical size alone mark it as a powerful global presenceit is still possible to look at the Chinese experience and draw some general lessons for other developing countries. Most important, while capital investment is crucial to growth, it becomes even more potent when accompanied by market-oriented reforms that introduce profit incentives to rural enterprises and small private businesses. That combination can unleash a productivity boom that will propel aggregate growth. For countries with a large segment of the population under- employed in agriculture, the Chinese example may be particularly instructive. By encouraging the growth of rural enterprises and not focusing exclusively on the urban industrial sector, China has successfully moved millions of workers off farms and into factories without creating an urban crisis. Finally, Chinas open-door policy has spurred foreign direct investment in the country, creating still more jobs and linking the Chinese economy with international markets.

Now keeping in mind the above economic pace of China, Pakistan had to devise a strategy to communicate with a country moving on such a rapid economic rail.

First, we must continue to develop our bilateral trade and commercial relationship. We are now making fast progress. Chinese investment in Pakistan has almost doubled in one year, making us the most popular investment destination in International Market.

As Chinese cities expand dramatically and Chinese people become more prosperous, Pakistan has the world-class goods and services they need: from health care and education to premier luxury brands. At the same time, we are working to make Pakistan even more open to Chinese investment. This includes cutting the corporate taxes and signing tax free agreements, the promise for an economy with a more predictable legal environment and with stricter enforcement of protection for intellectual property rights.

We had to now believe in the vision.the vision that businesses thrive in a stable, secure and corruption-free environment that limits the risk of shock, provides certainty of dispute resolution and offers protection of capital and intellectual assets.

There is a Chinese saying that one generation plants the trees in whose shade another generation rests. I hope that by advancing and ex- tending our bilateral trade, by working together on the global issues that affect us all, and by maintaining an honest and open dialogue we can plant the seeds of a long-term relationship which will benefit China, Pakistan and the world for generations to come.

The author is renowned businessman of Pakistan and Chairman of Ruba SEZ Group & Pak China Joint Chamber of Commerce & Industry (PCJCCI)