Why China's reform succeeded while others failed

AWANI

In the final episode of the three-part Woo Says series, Professor Datuk Woo Wing Thye and Melisa Idris explore how China’s gradual reforms fueled explosive growth, unlike Poland’s shock therapy or Russia’s failed big bang. What made China’s path so successful?

Transcript

00:00This week on Wu Says, we wrap up our three-part series on some of the biggest economic shifts of the 20th century.

00:08We've looked at Poland and Russia, and now the spotlight turns to China.

00:12Here is a segment from Melissa Idris' conversation with Professor Emeritus Dato, Dr Wu Wingtai.

00:20You have, in the agriculture side, there were too many workers.

00:26Okay, 80%.

00:2782% were farmers.

00:30And many of them were underemployed.

00:33You could safely take them out, and the output would not have been declined.

00:39But you don't see them, because China has the whole co-system.

00:44They cannot go and live in the urban areas and be back.

00:48So there was no kind of urbanization migration at that point in time.

00:51So, what happened was, when China integrated the global economy, the world wants cheap shoes, the world wants cheap textiles.

01:02So China opened new factories, and workers came from the countryside to work in these factories.

01:09And because these were surplus workers, agriculture output was not compromised.

01:16So you only had growth.

01:19There was no need to close any heavy industry, to release workers.

01:24There was no need to reform the state enterprises, because the state enterprises only employ 18% of the population.

01:32Whereas the huge growth of the industrial labor force did not come from the state-owned enterprises.

01:39They came from the countryside.

01:43That's amazing.

01:43So, that's the great boom.

01:46They had got all this excess labor that were underemployed.

01:52In fact, there was this famous story when they did the census.

01:56They go to a rural household, and they say, we're going to count people.

02:02And people from the household said, please don't come near.

02:05We'll come out to you one by one.

02:07And people came out one by one to be counted, instead of letting them in.

02:12Do you know why?

02:14They noticed that every one of them was wearing the same pair of pants.

02:19So, things were very poor.

02:21Oh, dear.

02:22Things were very poor.

02:23So, when jobs opened up in these coastal factories started by Hong Kong businessmen making goods for the rest of the world.

02:34So, that's when China became a big exporter.

02:38And with this export, they could buy foreign technology, and foreign technology could upgrade production.

02:46Catch the full conversation on Awani International and across our social media platforms.

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