Growth is a decision that takes resolve

their diversity to enrich their planning will record growth beyond measure. For Zimbabwe this has been a cumulative growth of 23 percent. Granted, this takes resolve.
This level of growth is achieved through an intense resolve at national level by political and business leaders to drive the country boldly into a better future unhampered by racial, ethnic, political and gender divide. The same kind of resolve and commitment drove Singapore from a US$2 billion economy to a US$257 billion economy in a space of 60 years (1950-2010).
It registered a whopping 12 750 percent growth traced back to 1973 (US$13 billion) and 1990 (US$43 billion). The same kind of resolve drove China from an unrecognised economy in the world in 1977 to a powerhouse which today cannot be ignored at a GDP of US$6 trillion as at 2011.
The 1979 to 2011 period of high economic growth led China to the position of economic superpower in a world where the Western economy is experiencing unprecedented turbulence.
Once the decision is made to grow the economy, the stakeholders must engage and start planning this growth in unison. Tackling the global economy requires such resolute planning. Zimbabwe is on the threshold of such unprecedented growth towards the US$100 billion target and we continue to urge all Zimbabweans to derive value from the experiences of those who have preceded us such as China.
This series of articles have been compiled by Mr Joseph Mverecha of ZB on the theme of building a US$100 billion economy for Zimbabwe by 2040.
The Chinese Economic Miracle – Lessons for Zimbabwe
Deng Xiaoping’s Legacy – Understanding Global Dynamics
The Chinese understand the dynamics of the global economy; its flows, discontinuities, ebbs, and tides. They know how to apply the dynamics of global economics to their advantage. Firstly, globalisation implies limitless possibilities for growth and economic development, but there are significant and amplified downside risks that must be managed proactively.
For the Chinese, the interplay of a large domestic market, the excess supply of low cost labour coupled with falling barriers to international capital flows combined to create a level of potency rarely witnessed since the rapid industrialisation of North America over 100 years ago.
The Chinese duly obliged. Steadily and consistently, they have implemented the kind of economic, institutional and regulatory reforms that amplified Foreign Direct Investment flows, from an average of US$1,5 billion per annum in 1980, to about US$40 billion per annum in 1999 and currently over US$80 billion per annum.
Deng Xiaoping reasoned that the task of transforming China would be much easier and readily realisable if China’s comparative advantage was put to good use. China is a huge country with a lot of cheap labour and a large domestic market, thus offering limitless opportunities to industrialists, hence the setting up of Export Processing Zones initially across the coastal areas of China.
Deng went to great lengths to court foreign direct investment and to assure investors that their investments were secure in China.
The Chinese understood that international capital is timid and it is to their eternal credit that they signaled a consistent message that investment is safe in China; right from the inception of reforms in 1979.
They never prevaricated. Property rights laws were upgraded to strengthen security of tenure and ownership laws were revised and improved on a continuing basis. For all their political issues (such as Tiananmen Square) the Chinese never tamper with the sanctity of property rights and they give due priority to prudent macroeconomic management.
Deng’s crusade for FDI had no limits. He painstakingly courted the Japanese investors, despite their longstanding painful history going back to imperial Japanese brutal occupation of Manchuria and parts of China in the 1930s. He was following a fundamental and time tested principle – in order to advance the long-term economic and political interests of China, it was important to build bridges – even with former foes and vicarious enemies.
Secondly, the global economy prizes certainty and political stability – these are key ingredients for investment growth. Deng knew that the international community had serious doubts regarding China’s political stability; following events of 1966-76. Deftly, he assuaged their concerns by putting in place mechanisms for smooth transition, guaranteeing political stability. Thus, while Deng was still paramount leader, the next generation of leaders was identified and appropriately single filed for succession – Jiang Zemin and after him Hu Jintao and their premiers for perfect seamless transition.
The Chinese have, to this day, kept the same tradition. In response, FDI has poured into China.
Thirdly, the Chinese understood that globalisation is characterised by amplified capital markets volatility – a destructive tendency towards a “herd” instinct. Particularly for short-term flows, investors can rapidly pull out of an economy, just as quickly as the blink of an eye, with all the dislocative implications on exchange rate and the wider real economy. As such, they set out elaborate mechanisms to insulate the Chinese economy from the excesses of the global economy.
Thus when, the East Asian crisis hit the global economy beginning July 2 1997 with the collapse of the Thai baht and the subsequent unravelling of East Asian economies, China was a sea of tranquil.
Yes there were jitters, but not anything that mirrors the havoc wreaked on Malaysia, South Korea, Indonesia and other South East Asian economies. The Chinese understand the dynamics of the global economy.
l To be continued