How China is ahead of UK in development

By Tom Fowdy Source:Global Times Published: 2019/12/23 18:23:39

China's bullet train "Fuxing" departs from Beijing South Railway Station in Beijing, capital of China, on June 26, 2017. Photo: Xinhua/Xing Guangli

As a Briton having lived in China and as a frequent visitor to the country, I am constantly exposed to two very different political and economic systems. Both of course, have their advantages and disadvantages and there is much to be debated about this. Nevertheless, in some areas I have witnessed how China's successes are now eclipsing that of the UK's and leaving my home country behind, most predominantly in the realm of infrastructure development and state-led investment. 

The investment policies of the Chinese government have led to overwhelming achievements, including but not limited to an extensive high-speed rail network, state of the art airports, leading urban transit systems, impressive urban development and so on, all of which Britain's neo-liberal, laissez-faire market order which commenced in the 1980s, have failed to muster, despite being a much smaller, advantaged and wealthier country with overwhelming historical advantages. 

What are the baseline differences between the British and Chinese government attitude toward economic development? Since the 1980s, British economic policy has been dominated by a paradigm that believes an unfettered private market, without government intervention, is the recipe to all economic success including in core national infrastructure. The government of late prime minister Margaret Thatcher aggressively introduced this policy by ending state subsidy for industry, deregulating financial markets and privatizing national infrastructure which permitted total commercial procurement over the country's energy, telecommunications and key transport provisions including railways and bus services. It remains this way today. 

In contrast, China operates under the principles of a "socialist market economy" whereby the core aspects of economic development, key sectors and market forces are shaped and moderated by state leadership. Whilst China has obviously engaged in a pathway of reform and opening-up which has expanded the role and influence of market forces over the country's economy, nevertheless this has not come at the expense or absence of state guidance and investment as part of a bigger picture of securing growth and public need. In the field of infrastructure, this creates a big contrast between the two countries. 

Although British liberal economists have repeatedly argued that privatization of infrastructure induces efficiency and thus growth by forcing through competitiveness, the reality is that these assets in fact operate as private enterprises on a "for profit" basis which correspond to their own individual financial interests not aligned with public interest, need or broader national goals. This has caused a number of problems. As a case study, compared to China the British rail system lags enormously, with the network divided into a number of competing privately owned franchises. There is no "bigger picture" or vision and the government has no interest in its own investment.

Seeking only profit, these companies rarely invest themselves in rolling stock or new lines. Some companies, such as Northern Rail, covering northern England, are using train cars which they have owned since the 1980s. On the other hand, China, despite being a giant country, has a nationally comprehensive high-speed rail system with modern rolling stock. Another sharp difference between the two countries is prices. 

Despite offering a below par-service, the for-profit notion also makes British trains astronomically expensive, with no state subsidies. A train from major cities such as Newcastle or Manchester to London can cost up to £300 ($390) more than a commercial flight. Prices have persistently risen above inflation year upon year. The for-profit incentive has also led trains to become overcrowded during commuting hours. A seat is not guaranteed with a ticket. In China, while demand is high and the population numbers also drive prices down, the state nevertheless makes decisive investments to ensure quality rail services are both available and affordable.

While this example alludes to similar problems in many more sectors, moving on, China's regional development has also been more successful than Britain's. The current laissez-faire economic model employed in the UK has created a lopsided economy which is overwhelmingly centred upon London and the surrounding areas, with the dismantling of state industry in the 1980s sending areas in northern England, Scotland and Wales into decline and deprivation. 

Over-reliant on market forces, there has never been a sufficient level of investment to fix this imbalance. For the past nine years, the current UK government has in fact sought to dramatically reduce its investment in local governments and infrastructure throughout the country, pushing large scale austerity which has reduced and stripped social services across the board. Thus, not a single UK city comes close to competing with London, the country's only financial and market center. 

Again, China's state led investment and development policies illustrate a drastic difference. While every country has its regional imbalances, China included, nevertheless the policy has focused on strategy and investment, with success in creating a number of booming economic centers, including Shanghai, Shenzhen, Fujian, Qingdao, Tianjin and so on. If China followed Britain's model, then Beijing would be the only meaningful economic center in the entire country, and outlying rural provinces would be even poorer. Thus in contrast, many British cities remain undeveloped and far beyond their full potential.

Therefore as a whole, my experience demonstrates to me that China is starting to overtake Britain in certain aspects. Despite the fact that the two countries are very different in size, scope and history, nevertheless UK's current economic system has failed to secure its continuing development in the 21st century, resulting in inadequate infrastructure and regional imbalances, all of which have had extremely negative implications on consumerism, national growth and the flow of investment. 

On the other hand, China's state led investment has been able to beat these problems and quickly become a leader in these areas. Through focused investment in world class infrastructure and development, China has been able to more decisively link together vast regions (despite size disadvantages) and establish the potential for sustained national growth. The difference is showing, and it's only likely to grow.

The author is a British political and international relations analyst and a graduate of Durham and Oxford universities.

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