Assessing China’s Economic Catch-up in a Comparative Perspective

Abstract

Chapter 5 assesses China’s catch-up model, often called the Beijing Consensus, in a comparative perspective. China’s model shares several elements of the East Asian model because it also pursued the export-oriented, outward-looking growth strategies. A further commonality lies in its emphasis on the elements missing from the Washington Consensus, namely, technology policy and higher education revolution. However, the Chinese catch-up model has several unique elements that are not found in that of Taiwan or Korea. These unique features include the following: first, parallel learning from foreign direct investment firms, followed by active promotion of indigenous firms; second, forward engineering (the role of university spin-off firms) in contrast to reverse engineering adopted in Korea and Taiwan; and third, acquisition of foreign technology and brands through international mergers and acquisitions. In general, these strategies help China achieve a “compressed catch-up” and avoid several of the risks involved, including that of the “liberalization trap,” where premature financial liberalization leads to macroeconomic instability.