Thursday, October 21, 2010

China's economic reform model won't necessarily work for Cuba, says scholar

China's economic reform model won't necessarily work for Cuba, says scholar
BY VERNON DAVIDSON Executive editor — publications
Thursday, October 21, 2010

BEIJING, China — A Chinese scholar believes that his country's
incremental approach to economic reform may have provided Cuba with a
template. However, he is suggesting that the Caribbean country needs to
bear in mind its own conditions as it implements the changes.

"In the case of Cuba, I've heard some things about the processes they
have adopted [and] there are some similarities. They might have learnt
something from China and want to try them out, but they have to do so in
light of their own conditions, because China and Cuba are quite
different in many ways," Professor Chu Guangyou said in response to an
Observer query on the issue during a break in his lecture on the Chinese
economy here on Monday.

Professor Chu had outlined to Caribbean journalists a number of reasons
for China's successful reform of its economy from one that was planned
to a market-driven system.

Among the strategies China adopted, Chu said, was an incremental
approach, starting with the sectors that the country believed would be
easiest to reform. That included farming.

Chu also said that China's coastal areas, particularly those close to
Hong Kong, were targeted and special economic zones established in order
to stimulate investment and gently push the reforms.

"Then gradually, 40 more coastal areas were opened up," he said, adding
that today more than 700,000 foreign companies have set up business in
China bringing with them advanced technologies and managerial expertise.

The result was that China did not suffer the type of fall-out from the
global economic crisis as did other countries, recording year-on-year
growth rate of 9.1 per cent last year. At the end of 2008, its foreign
exchange reserves stood at US$1.94 trillion, while foreign direct
investment totalled US$92.4 billion.

And even while the country is still grappling with the fact that 150
million Chinese are still living below the poverty line, it has, since
the start of the reforms in 1978, pulled more than 200 million people
from poverty.

Since early 2008 when Raul Castro took over as president of Cuba after
his brother Fidel Castro stepped aside due to illness, the Caribbean
country has been subjected to moderate reforms.

According to a recent Reuters report, the Cuban Government intends to
legalise self-employment in 178 fields from restaurant ownership to
transportation to construction.

In addition, small businesses will be allowed to hire their own workers
for the first time since small businesses were nationalised in 1968.

The Economist magazine has also reported that under the reforms
employees will be able to take control of some small state-owned firms.

But even though some analysts may draw comparisons to the reforms in
both Communist countries, Professor Chu is quick to point out that the
policies adopted by China were unique to his country.

"Some people say that China has a model to offer to the rest of the
developing world, I don't think so. China is still changing," he told
the Observer.

"Second thing, even if we admit that there is a China model, that model
can only fit the situation in China, not other countries."

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