CHINA’S DEVELOPMENT TRAJECTORY: A STRATEGIC OPENING FOR INDUSTRIAL POLICY IN THE SOUTH
No. 218 December 2014
China’s Development Trajectory: A Strategic Opening for Industrial Policy in the South
Daniel Poon
No. 218 December 2014
Acknowledgement: The author is grateful to Richard Kozul-Wright, Dic Lo, Jörg Mayer, Nimrod Zalk, Alice Sindzingre, Manfred Bienefeld, Ricardo Gottschalk, Janvier Nkurunziza, Mussie Delelegn, Junior Roy Davis, Zhang Yan, Kris Terauds, Shaun Ferguson, Ngoc Nguyen, and an anonymous referee, for comments and suggestions on draft versions of this paper. A special thanks to Zhang Moxi for editing assistance. All remaining errors and omissions are the author’s sole responsibility. Email: [email protected].
UNCTAD/OSG/DP/2014/4 ii
The opinions expressed in this paper are those of the author and are not to be taken as the official views of the UNCTAD secretariat or its member States. The designations and terminology employed are also those of the author.
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Comments on this paper are invited and may be addressed to the author, c/o the Publications Assistant, Macroeconomic and Development Policies Branch (MDPB), Division on Globalization and Development Strategies (DGDS), United Nations Conference on Trade and Development (UNCTAD), Palais des Nations, CH-1211 Geneva 10, Switzerland; e-mail: [email protected].
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JEL classification: O2, L52, L60 iii
Contents
Page
Abstract ...... 1
I. Introduction...... 1 II. a tale of two Chinas...... 5 III. investment-led growth through dual-track reforms...... 9 IV. lewis’ self-sustaining growth? Sino-redux...... 14 Country case – China and oil refining in Nigeria...... 21 V. state capitalism meets monopoly capitalism...... 22 VI. anti-monopoly policy with Chinese Characteristics...... 27 VII. Concluding Remarks: Can China be Leveraged?...... 28 Annex ...... 31 References...... 32
List of figures
1 BRICS exports of goods to Africa, 2001–2012...... 3 2 Trends in China’s conventional and processing trade, exports and imports, 1990–2011...... 6 3 Share of Chinese exports to OECD countries, various motor vehicles, parts and accessories, 2001–2012...... 8 4 Share of Chinese exports to OECD countries, Lewis’ four key sectors, 2001–2012...... 15 5 Changing structure of China’s machinery exports (HS-84), 2001–2012...... 17 6 China domestic excavator market share trends, by quarter, 2010–2012...... 18
List of tables 1 Breakdown of financial sectors and markets as a share fo GDP, 1999–2010...... 11 2 China excavator exports, by weight class, 2011–2012...... 19 3 Global exports shares of HS-8429 self-propelled bulldozer, angledozer, grader, excavator, etc., 2001–2012...... 20 4 China’s industrial policy toolbox: Overview...... 24
China’s Development Trajectory: A Strategic Opening for Industrial Policy in the South Daniel Poon United Nations Conference on Trade and Development (UNCTAD)
Abstract
A revival in South-South economic relations has raised the possibility of a shift in global power with profound implications for economic progress and poverty reduction in the developing world. This discussion paper delves behind the headline numbers to examine the underlying factors driving South- South relations and areas of strategic developmental cooperation. For now, South-South economic flows are being driven by China and its ability to deploy an unorthodox growth model that tilts the economy in favour of investment, which is crucial to its ambitious climb up the industrial value chain. Five key sectors (food, fertilizer, cement, steel and machinery) outlined by Arthur Lewis are used to assess China’s economic trajectory, which clearly remains a work in progress, but show