A Brief History of Chinese Industrial Policy

The most impressive economic success story of the past 30 years has been the

astonishing resurgence of China, which is likely to become the world’s third-largest

economy this year. The length of time that the country has managed to grow

at double-digit rates has astonished even the biggest China bulls, and the transformation

which has been effected in the country – including, by the way, the largest

and fastest decrease in poverty that the world has ever seen – has been

nothing short of breathtaking.

Brad DeLong’s story

of China since 1978, told in response to a blog

entry by Dani Rodrik, is an encapsulation of the Great

Man theory of history:

In 1978 China had its first piece of great good luck in a long, long time–perhaps

the first time some important chance broke right for China since the end of

the Sung dynasty. China acquired as its paramount ruler one of the most devious

and effective politicians of this or indeed any age, a man who was quite possibly

the greatest human hero of the twentieth century: Deng Xiaoping.

Tyler Cowen Alex Tabarrok says the whole

post is "superb,"

and "one of Brad’s best ever". I like it too, although, apropos Brad’s

conclusion, I’m still a bit confused as to exactly what the crucial difference

was between Deng and Juan Peron, that the former’s policies were so successful

and the latter’s were so disastrous. In any case, if you want a summary of Chinese

industrial policy in a thousand words or less, as well as an object lesson in

the high level of debate that often occurs in the econoblogosphere, this is

a great piece to read.

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