It’s a warped mirror into which Than Shwe stares

As part of the Senior General’s visit to ‘big brother’ China, he paid an impromptu visit to Shenzen, the Chinese city which in 1980 became a Special Economic Zone (SEZ) and thus one of the country’s first forays back into commercialism.

Than Shwe spoke of his desire to emulate China’s remarkable and highly successful transformation into one of the most successful capitalist stories ever, where over a 30-year period the average income of every citizen has doubled every nine years. But what is behind China’s successful growth, and what can Burma learn from this?

Sadly for the generals, it may be more salient to look back to pre-1978 China than to the present epoch, for 1978 is broadly viewed as the year in which open market principles were introduced through the ascendancy of Deng Xiaoping, and the growth paradigm was unleashed upon the ‘middle kingdom’. Pre-1978 China would be viewed by many as similar to Burma pre-1988, but the differences are stark and, it must be noted, extremely significant.

Whilst China’s Maoist revolution brought about a draconian single-party state, infamous for brutal collective actions like the Great Leap Forward and the Cultural Revolution, the reforms that were made on the base level – healthcare provisions, for instance – are in many ways the bedrock of China’s current success. In human development terms, these are probably more significant than the double-digit growth rates that have had commentators salivating.

When China’s Communists won independence in 1949, life expectancy was a deplorable 41 years; by 1978, it had risen to 65 years. Figures for infant mortality are even more remarkable: in 1949, 195 babies out of every 1,000 did not make their first birthday, and 29 years later this had dropped to 52. In Burma, infant mortality is roughly equivalent to Ethiopia.

Prior to 1978, China’s economy was maligned globally, with economic growth negligible. The ubiquitous ‘Made in China’ label was still a dream and as of 1978, China’s populace was predominantly rural, as it is in Burma today where roughly 70 percent of the population is engaged in agriculture.

World Health Organisation (WHO) figures for today show that Burma has an infant mortality rate of around 80 per 1000 births, while China’s is around 20, with a rough decrease year-on-year of about four percent over the past decade. Meanwhile, Burma’s life expectancy remains lower than China’s 30 years ago.

Burma supposedly took the steps to liberalise its economy in the early 1990s, but it is here that we perhaps see the issue: unlike Burma, China’s austerity – its climb up the economic ‘dialectic’ or transitions – was whole-hearted and not rushed.

China did not seek the prosperity that she is now and that Burma now seeks before certain criteria was met – it did not myopically build a shiny new airport, a new capital city, various ‘cyber parks’, whist children starved. China, even after its transformation, was a fairly drab, disciplined place; the majority of its populace had only recently left collectivised farms on which they were guaranteed a price for their goods and had the so-called ‘iron rice bowl’ – a guarantee of food.

Upon liberalisation of these farms the land was, by all accounts, distributed in a fairly egalitarian manner. Moreover there was not a crisis, far from it – peasants who had the basis of education and healthcare proved more than able vassals to transform the economy and the destiny of China. Into the agricultural family-run units a new sense of competition was injected, and as fewer hands were required on the farms so a generation of sons and daughters headed east to cities like Shenzen to begin producing the labour-intensive products that would traverse the globe.

In Burma then, this past year has seen possibly the most significant economic transformation since the early 1990s, with large tracts of Burma’s state-owned assets sold off. While this could be seen to emulate China, it is in fact almost the opposite.

For a start, Burma’s population is not equipped to compete globally: the infrastructure for sustained economic growth is not there. By this point in China, basic infrastructure like power and roads had been installed and, crucially, economic liberalisation was limited to highly labour-intensive manufacturing. This would ultimately take the strain of liberalisations that take jobs out of the economy.

According to the Burmese government’s statistics (fiction) department, the economy has in the past decade mirrored the cherished symbol of China’s rise: double-digit growth. The figures are however roundly shot down by senior economist U Myint, who tellingly says in a December 2009 report that, “Such sustained double-digit growth represents a sharp break with the country’s development experience in its entire post- independence era.”

He highlights how the said GDP growth has not been accompanied by a coinciding growth in investment, concluding that “decision-makers in Myanmar [Burma] have a fixation with high GDP growth rates, which are believed to indicate the country’s growing prosperity and well-being. Hence these growth rates have become highly politicised, and in the process, credibility and good sense have fallen by the wayside.”

Much of Burma’s economic growth and liberalisation has however been in the extractive sector, as Nobel laureate Joseph Stiglitz commented in Forbes Asia: “They produce natural resources but no jobs. You can see this all over the world where you have rich countries and poor people. That’s why it’s so important to manage the natural resources from a macro-economic point of view…You’re poor, because you’re destroying your asset base. If you squander your assets, you’re jeopardising the future of your country.”

To this day, much to the chagrin of the EU and the US, the Chinese have done precisely the opposite of their ‘puppets’ by the Bay of Bengal. China has banned the export of certain commodities which are key to the upstream economy. Preventing these commodities from leaving the country keeps their price down for the internal market – for factories that employ millions of Chinese and keep the trade surplus rosy. This in turn keeps China’s Sovereign Wealth Fund (SWF) buoyant and world-beating, with an estimated post-2008 crash value at around US$300 billion.

In terms of Stiglitz’s comments regarding the management of natural resources it may be interesting to note the case of North Sea oil: at just about the time that China’s economic reforms were coming ‘online’ in the early 1980s, oil was struck in the North Sea between Norway and the UK.

The then-UK Prime Minister, Margaret Thatcher, was obsessed with privatisation, but her regime was urged to invest the proceeds of the oil into a SWF, as have the Chinese from their manufacturing boom, the Kuwaitis from their oil or the Singaporeans from their mercantilism. She refused, seeing state management of economic resources as regressive. Instead she deregulated the economy as much as possible and created a stock market boom, which has subsequently crashed twice with spectacularly destructive consequences. Such an ethos is blamed by many for the 2007-08 crash which has asked serious questions of the UK economy. This year Price Waterhouse Coopers, a London-based management consultancy firm, estimated that had Thatcher created the SWF, pre-recession it would have been worth some US$450 billion.

Like a child who is given nothing and the child who is given everything it is remarkable to note what is described by Stiglitz as the “natural resource curse”. For when Britain industrialised, the first such example in history, it was not as a result of a natural resource bonanza that she had in the 1980s.

Economist Adam Smith and others since have hypothesised why, and indeed some natural or topographic elements may have helped the transition. But likely underlying it is a smooth transition from agrarian society to industrial, in which no part of the society pays too heavily for the change.

Britain’s was probably not as smooth as China’s and her industrialisation could, indeed most probably is, the single greatest reason for Marx’s world-changing work, spawning as it did the multitude of social movements and clamours for reform, including China’s.

If we consider then why the Burmese Way to Socialism failed while Mao’s succeeded, it must be noted that Burma’s ‘path’ was characterised by one man, and one man only – General Ne Win, the country’s first military dictator. He did not write any books, and regardless of his moniker, he was not a socialist; in fact he actively fought the communists to the north. Despite the vaguely Maoist steps taken to ban most entertainment and to nationalise enterprise, his policies did little to disrupt the feudal relationships that entomb many societies and prevent a redistributive effect from planning. He was, like Hitler, a ‘national socialist’ – his efforts that could appear ‘socialist’ were not, for all extents and purposes, ‘people-orientated’.

Whilst economically the brash army general was not a planner, exports were and have always been strong in extractive industries, strong at times in agriculture, and throughout the post-independence period strong in the illegal sector, namely drugs. This a fact that reflects Burma’s and Ne Win’s past relationship with China, for it was northern Burma that British companies such as Jardine Mathesen introduced opium for forced export to China. And in the 20th century Ne Win’s ‘neutralism’ led him to allow US-backed Chinese nationalists to carry on the practice, selling opium to fund their anti-communist struggle.

Agriculture was another key. Whilst China’s agricultural system was viewed as inefficient by the early 1980s, it was initially heralded in through greater yields; a ‘green revolution’ with new techniques and seed varieties and much more egalitarian distribution. In contrast, with typical Orwellian aplomb Ne Win criminalised all trade unions soon after his ascension to power in 1962.

Meanwhile, Ne Win’s agricultural reforms were “a mess”, as political scientist Josef Silverstein noted in 1966, four years after the coup that began Ne Win’s ‘revolution’. In an incredibly brazen statement, Silverstein quotes Ne Win admitting that “if Burma were not a country abundant in food we would be starving”. But the decline in agricultural output in Burma under Ne Win is staggering, with rice exports falling from some 3.3 million tons in 1938 to around 250,000 today.

It seems that problems in Burma were upstream, not necessarily at farm level – output fell as farmers were not provided with the abilities to increase production and were not guaranteed prices as they were in China. When things got bad in Burma as a result of mismanagement of the economy, the government simply reduced the prices at which grain could be sold. Silverstein reports that the trading of grains was done by “young [military] officers assigned this task as their duty”.

Indeed this seems the enduring problem. As Than Shwe toured Shenzen on the 30th anniversary of its formation as an SEZ, he wants to copy what looks nice, what has worked, what enables China to be successful – but he is not quite sure why.

China’s rulers, for all their faults, have had a plan, an idea based on utilitarianism, Marxism and technical understanding for the development of their country and for how to distribute wealth in order to fix society. And in doing so they have forgone all the trappings that have characterised the Burmese junta: the quick profits, the massive corruptions and the illegitimacy that this has entailed.

All these have created the ultra-nationalist notion of union of the country and maintenance of power as a sought of military religion – in a word, an obsession. They cannot run the economy efficiently because they cannot open up to criticism and rise instead as a result of military cunning, as opposed to any academic prowess or knowledge. Burma’s path to emulate China’s miracle, it seems, needs to begin at the drawing board, and it needs a dose of thought.

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