Thread by @kamilkazani

The greatest Western delusion about China is, and always has been, greatly exaggerating the importance of plan. Like, in this case, for example. It sounds as if there is some kind of continuous industrial policy, for decades

Which is a huuuuuuge misrepresentation of reality

https://twitter.com/kyleichan/status/1982087859684421815

It is more like:

1. Mao Zedong dies. His successors be like, wow, he is dead. Now we can build a normal, sane economy. That means, like in the Soviet Union

2. Fuck, we run out of oil. And the entire development plan was based upon an assumption that we have huge deposits of it

3. All the prior plans of development, and all the prior industrial policies go into the trashbin. Because again, they were based upon an assumption that we will be soon exporting more oil than Saudi Arabia, and without that revenue we cannot fund our mega-projects

4. Okay, let's try to figure out something. Let's try to bring foreign investors, may be they will help. As we cannot bring them to Shanghai - that's too politically dangerous - we will bring them to the far off and politically unimportant south

5. Whom will we be bringing though? What logic are we following? Like, what investments do we even want to get?

6. By and large, the general logic of 1980s economic planners was very soviet. Focus on heavy industry & productions of the means of production, for the most part

7. Some of these original heavy industry projects worked out. Most didn't. Overall, the original plan of 1980s brought very little success

8. What worked out, eventually was not that the economic planners in Beijing planned. Not anything they were even thinking about, back then

9. If you want a short and simple formula, what brought the ultimate success was an explosion in the small scale, light industry private enterprises, that not only were not a part of any government plan, but largely existed outside of the normal legal & institutional framework

10. They key export revenue generating sector of China existed outside of the legal framework - for decades! - not necessarily because it wanted to, but also largely because such framework just did not exist back then

That is a crucially important point

11. So, basically, the rules as they were - they effectively made any kind of export-oriented private entrepreneurship impossible. Like, you could not just do that, following the rules

12. As a result, the explosion in private industry happened, but outside of the legal space

13. Then, decades later, all of this export oriented industry was normalised, legalised, and basically amnesties. But, that came later, much later

It was more like this. A footpath, made in a very organic, chaotic way, largely outside of the regulation. *Then* it was paved

14. I think part of the reason it worked out in the south, is that south was just more criminal. Far off from Beijing. Further from the sight of government, further from any kind of regulation, good or bad. Dirty, slummy, lots of illegal immigrants. Open sewage, basically

15. Which makes sense. In normal places, authorities do not allow slummification. Or at least, they try to fight it. In the third worldish criminal south of China, they just do not make any honest effort to

16. Swarms of illegal immigrants come -> You have labour market

17. I guess this kind of story is not very popular, because it contradicts both the official Chinese (genius government pursuing genius policies based on their genius vision) and American narrative (we have free market capitalism, they are socccccccccialists)

18. So, the alternative model - the triumph of China is the triumph of the unregulated free market that was possible only far away from the government oversight - is not really palpable to any side in the new cold war