[칼럼]The impetus behind China's sudden economic growth

• 이 글은 2018년에 작성된 글로, 휴지통에 보내기 전 아쉬운 마음에 여기에 올려봅니다. 부족한 글이기도 하고 당시에 쓰인 내용 중 일부는 현재 수정되어야 하는 내용일 수 있으나, 편하게 읽어주시면 좋겠습니다.

Via the inter-Korean summit this year, the possibility of Korea’s reunification has come to the fore. Good or bad, it is clear that the reunification will bring upon a great impact on international affairs, for several major powers such as the ASEAN, the united states of America, China, etc. have shown great caution to prevent conflict in Korea for the previous years. Besides international impact, Korea will be experiencing internal problems especially with the conflict between capitalism and socialism. To face these problems, the need of understanding the economy based on socialism seems vital. China, the country rated as the No.2 strongest country seems to be a reasonable model for future Korea.

Only 50 years ago, China was suffering from a big economical downfall due to the Great Proletarian Cultural Revolution (GPCR), and the Great Leap Forward Movement. The main cause was Mao Ze dong’s dictatorship and failure in the mass production policy around 1957. The blame, of course, went to the government, for in china the country takes the burden of economic circulation. Ironically, however, the socialism based market is now revaluated as the key to how china made such quick economic growth. Economists today say the early china’s economy could be considered as a model that succeeded in overcoming the Keynes principle. The Keynes principle talks that extreme economic situations such as deflation can only be stopped by a bigger cell of the economy, for instance, the country itself. In China, however, such Keynes principle is not needed. For the country itself already supervises most of the economy, there is no need to worry about deflation caused by a breakdown in certain conglomerates. Take Samsung for example. When Samsung decides to dividend half of their profit to the shareholders, over 53% goes to the foreign shareholders, and about 40% will be shared among the bigger shareholders. Then not much comes back for the public. However, in China, things are different. As we can see in the chart below, the companies that make the most profit are the public enterprise. In this case, most profit goes to the biggest shareholder, the country, and the money is eventually used for the welfare of the public, defusing the limit of the Keynes principle.

To conclude, china’s one-party authoritarian system successfully maintained political stability, while refreshing the market by venturing to introduce a new type of market economy at the same time. This seems to be the most ideal way to succeed in damaging neither systems of the north and south. There is a theory made by Deng-Shao-ping called the cat theory. It doesn’t matter whether it is a black cat or a white cat that catches the mouse. What matters is only whether we caught the mouse or not. I hope South Koreans could let go of preconceived ideas towards socialism and successfully reunite to build Korea as a strong country leading the economy of East Asia, and the world.