The abject failure of the democratic system, in the last five years, to address the problems faced by the Muslims of Pakistan has led to widespread disillusionment within the country from democracy and civilian rule. This has created political and intellectual space in Pakistan for a debate on a new system and new leadership. While Imran Khan has attempted to fill the political space with the backing of the establishment, America through her agents in the political and military leadership is promoting through the media a discussion about a technocratic government and has tried to fill the intellectual vacuum in the country with this governance model. Whether America and its agents in the political and military leadership are serious in actually bringing such a setup in Pakistan is something which remains to be seen, but over the years the US has used such debates to create pressure on the civilian governments in Pakistan and gain concessions to handpick and install technocrats in key ministries. The recent example being Dr. Hafeez Sheikh, the recently retired Finance Minister.
Several names are used to describe this governance model, "The Bangladesh Model" being the most commonly used in the Pakistani Press. Other names include "The Italian Model", after liberal economist Mario Monti took over as Prime Minister of Italy to steer Italy out of the Economic Crisis it was facing. Although both the Bangladesh and Italian models were temporary governments tasked with stabilizing the country's economic trajectory before allowing politicians to take the reins of the country back, the two differ in the political arrangements which brought them to power. In Italy, it was a parliamentary consensus while in Bangladesh it was the backing of the military. It is this idea of economic prosperity under authoritarian rule which appeals to some amongst the intelligentsia and in the military circles in Pakistan as well as the wider international community. Such inclination towards authoritarian rule and the promise of economic prosperity is advocated by some as a permanent governance model which the developing world should adopt in order to achieve revival. The Singapore model and most recently the China model is quoted as examples of how functional governments with a strong promise of economic prosperity can be achieved under authoritarian rule. Such a governance model is presented as an alternative to Western Liberal Democracy and enjoys a degree of support amongst the elite of countries disillusioned with Western imperialism and political and economic instability witnessed in countries where the West tried to promote democracy. Robert Kagan, in an article for the American thinktank Carnegie Endowment For International Peace, published on 23rd April 2008 which was titled "The End of End of History", rejected Francis Fukuyama's theory that liberal democracy has triumphed as the ultimate governance model for humanity and humanity's intellectual quest for the perfect governance model has ended resulting in the end of history. Robert Kagan discussed the challenge of successful autocracies as an alternative to democracy as a ruling system, he wrote, "It is a mistake to believe that autocracy has no international appeal. Thanks to decades of remarkable growth, the Chinese today can argue that their model of economic development, which combines an increasingly open economy with a closed political system, can be a successful option for development in many nations. It certainly offers a model for successful autocracy, a template for creating wealth and stability without having to give way to political liberalization. Russia's model of "sovereign democracy" is attractive among the autocrats of Central Asia. Some Europeans worry that Russia is "emerging as an ideological alternative to the EU that offers a different approach to sovereignty, power and world order." In the 1980s and 1990s, the autocratic model seemed like a losing proposition as dictatorships of both right and left fell before the liberal tide. Today, thanks to the success of China and Russia, it looks like a better bet."
The Muslim World is boiling with anger over its humiliation and subjugation by Western colonialists. In an attempt to reject Western interference from its lands it is moving away from Western ideals and moving towards Islam. Pakistan tops the list of countries having a negative view towards the US. While the march of the Ummah towards Islam and its solutions is passionate and powerful with a growing consensus towards adopting the caliphate as the governance model for the Muslim World, for the sake of clarity and understanding, this article will discuss the reality of China and its transformation, especially its economic growth which has dazzled the world and will try to establish the case as to why the Chinese model is not the way forward for the Muslim World. "And when Ibrahim submitted, 'O my Lord, show me how You shall give life to the dead.' Said He, 'do you not believe.' Submitted he, 'why not, but I like that my heart may be at rest." [Surah Al Baqarah: 260]
A close study of the rise of China's economic power reveals that the Chinese leadership pragmatically shifted its economy from socialist principles to capitalist ones. In doing so, they gave up the communist ideology and moved towards embracing Western economic solutions and ideals, the very same ideals which are being questioned today on the streets of Greece and Italy. However in doing so, they were careful in not repeating the mistakes of Soviet Russia under Mikhail Gorbachev. So in essence the Chinese leadership accepted Western intellectual leadership and borrowed Western Ideas to restructure its economy and institutions of state. Those who advocate the Chinese model miss this point. That the Chinese model is in reality a Western model which has been tailored to a certain extent to fit the socialist state infrastructure which is present in China. To fully comprehend China's transformation from a socialist economy to a capitalist one a brief overview of the economic principles of both ideologies is presented below.
Karl Marx, the most prominent of communist thinkers presented his views about economics after studying the oppression of the people under the capitalist system. Marx specifically focused his works on the working class and their misery. Marx believed that capitalists exploited the working class by using their labor and effort to earn profits which originally belonged to the working class. According to Marx everything in the society is produced by the working class, so the effort in production of goods and services is done by the working class, however the capitalists, after paying the workers their salaries, make profits. These profits, in his views, should not go to the capitalists but to the working class as it was generated as a result of their efforts. According to Marx this extra profit going to the capitalists and not to the workers was injustice. To end this injustice private ownership should be abolished and everything should be owned by the working class. After all everything which is present in the society, in terms of goods and services, is produced by the working class. According to Marx goods and services should not be produced on the motivation of earning profit, rather they should be produced according to the needs of the society. So everything in the society should be collectively owned and production should take place keeping the needs of the society in mind. In the cycle of production, the capitalist who only cares for his profits should be taken out and the working class should produce directly everything they need. When China and Russia adopted communism they adopted Marx's ideas and abolished Private ownership and the state owned the means of production on behalf of the people. The economies in both these countries were centrally planned. This means that the state used to decide production quota targets for different industries and different segments of the economy. A Planning agency or department decided the amount of goods and services to be produced in the country. These targets would then be sent as instructions to different departments like agriculture and manufacturing departments so that these quotas could be achieved. The state would then distribute these goods and services amongst the people according to certain quotas and criterions.
Capitalist thinkers like Adam Smith and David Ricardo very strongly believed in private ownership. They believe that private individuals and companies should be allowed to produce goods and services. The motivation for providing these goods and services is the profit which these individuals or companies earn on these goods and services. The motivation of profit leads to high production and creativity which is not present in a centrally planned economy. In their effort to maximize their profit, these individuals or companies will naturally meet the needs of the society. If the society needs something then it will be willing to pay for it which will bring profit for anyone who produces what the society needs. If the society doesn't want something it will not be willing to pay for it hence there would be a discouragement for the production of that thing. In this way the number of goods and services which should be produced in the country would be decided by the market. Those things which have a high demand and reasonable profit will continue to be produced. Those things which have a low demand and low profits would not be produced. In this way, if the markets are free and unregulated they will help in distribution of goods and services in the society. There is no need for state planning everything, in fact the state should not interfere in the market at all.
So one of the fundamental differences between Capitalism and Communism is their viewpoint about ownership and consequently how production and distribution takes place within an economy. In Communism the state leads and carries out the production as well as the distribution while in Capitalism the market ensures production and distribution.
China is governed by the Communist Party of China (CPC) which took power on 1st October 1949 under the leadership of Mao Zedong after the communists defeated the Chinese nationalists in a bitter civil War. The CPC is the world's largest political party claiming over 80 million members at the end of 2010 which constitute about 6% of the total population of mainland China with a large number of military and civil officials being party members. China was governed by Socialist principles till the death of Mao Zedong in September 1976. In 1958 in an attempt at massive industrialization Mao Zedong initiated a set of economic and social polices called the "Great Leap Forward". These policies included increasing agricultural productivity and production of Steel. Very aggressive production targets were set, private production was prohibited and the population was forced to meet the production targets set by the state officials. The "Great Leap Forward" was an economic disaster which led to widespread shortage of grain in the country resulting in the deaths of millions of Chinese through starvation. An estimated 18-45 million people died during the three years of the "Great Leap Forward". The failure of Mao's economic and social policies during these years led to his criticism from within the CPC thus weakening Mao's influence within the party. The CPC was split in to two factions, the hardcore socialists led by Mao and the moderates led by Liu Shaoqi and Deng Xiaoping who emerged as critics of Mao's policies. In order to regain his control and influence in CPC, in 1966 Mao launched the "Cultural Revolution" aimed at purging the CPC from "revisionists" or "capitalists" those who would not adhere to socialist ideas. This led to a ten year campaign of terror and harassment within China where critics of Mao and his harsh socialist policies were persecuted. Millions suffered at the hands of Chinese youth who answered Mao's call for violent class struggle. Many senior officials, who were considered moderate or capitalists were purged from the party. After Mao's death the moderates within the Party rose to power and cleansed the party from Mao loyalists. Deng Xiaoping rose as the defacto leader of the CPC and China and initiated a major reforms campaign to stimulate China's economy.
Deng Xiaoping is credited as the man who changed China. In the 1980s, after gaining power he initiated economic reforms in the rural side such as allowing farmers to sell their surplus produce. The farmers were allowed to cultivate their own lands on long leases instead of working as a collective group (called commune) on farms producing for the state. He encouraged village and town level enterprises which grew in size and focused on earning profits. He established Special Economic Zones with operated on capitalist market principles. In socialist China, the prices of goods and services were decided by the state. When Deng Xiaoping initiated his reforms he initially kept both the state decided pricing system as well as market pricing system. So goods produced by the state and whose prices were determined by the state were available at low prices, which were bought by people with strong connections and sold on market prices, which were high. This led to massive inflation and shortages of goods. Following the capitalist principles, the government started printing money at a large pace to stimulate the economy. This led to further inflation. When the government abolished the state pricing mechanism and shifted to market based price mechanism, a wave of buying and hoarding gripped China. Although the market based pricing system was withdrawn two weeks later the effects remained. Establishment of private enterprise had led to profit making for some and this further fuelled popular anger in China. In parallel some Chinese leaders and intellectuals had started pushing for political reforms based on Western ideals. The General Secretary of the CPC Hu Yaobang was one of the moderates who favored political liberalization. When Hu Yaobang died of a heart attack on 15th April 1989, this provided a channel for the Chinese youth to mobilize to mourn him and demand major reforms to address their grievances. This led to a popular wave of protests in China culminating in the protests at Tiananmen Square on 4th June 1989. The CPC was split on how to deal with the protestors. One group of moderates favored negotiations and soft handling of the protestors while the other group, led by Deng Xiaoping favored brutal suppression by using the military. Eventually the hardliners had their way and the military was called in to crush the demonstrators. Casualty figures varied to a few hundred according to the government, to thousands according to the demonstrators.
The Tiananmen Square protests and their subsequent suppression led to a widespread debate within the CPC. Some feared that the reforms introduced by Deng Xiaoping based on capitalist principles and ideals would result in chaos and instability within China and therefore they should be stopped. This group held sway in the immediate aftermath of the Tiananmen Square protests. The CPC also feared the chaos and instability witnessed in the Soviet Union under Mikhail Gorbachev which resulted in the disintegration of the Soviet Union. Eventually the CPC decided on going forward with reforms within the economy, however not in the political structure of the state. This is the Chinese model as we know it today and to which Robert Kagan referred to. This model advocates a closed and authoritarian political system controlled directly by the CPC with an economy centered on capitalist principles. However some Western economists and academics dispute the capitalist nature of China's economy. They consider it an economic model which is unique to the China and which is often referred to as "State Capitalism" or "Market Socialism". For them it is an economic model which has combined some aspects of Central Planning which is a hallmark of the communist economic system and some aspects of market based system of production and distribution. The CPC itself considers such a model as being socialist. According to the CPC interpretation Mao incorrectly tried to reach directly to communism without first going through the capitalist state as Marx has originally postulated. Karl Marx has advocated that the society changes when a class struggle takes place in the society between the working class and the capitalists. This struggle takes place due to concentration of wealth in a capitalist society. As the concentration of the wealth increases, the number of working class increases and the number of capitalists decease. This process continues till only working class remains. This state is called communism. So in Karl Marx's opinion, for communism to be established, the society should first be capitalist. The CPC used this theory to justify its compromise on socialist principles. It also said that the march towards communism requires modernization of the means of production. As in the present day modernization of the means of production is possible only through market economy, they have no choice but to adopt it. Such discussions took place within the CPC when it was going through reforms. Once widespread consensus was established for adopting a market economy, the ideological left in the CPC weakened and its influence has almost diminished to the extent that in early 2000s the party debated dropping the term Communist from its name however it decided against it. The disgraced Chinese leader, Bo Xilai who was recently expelled from the 25 member ruling Politburo Committee of CPC for allegations of corruption and abuse of power and for the involvement of his wife in the murder of British Businessman Neil Heywood, was known to be very popular in the Left circles and advocated Maoist polices to distribute wealth equally amongst the economy. His fall from power also implicitly suggests the CPC's current priorities. They are no more interested in socialist policies.
In the 1990s the New General Secretary of the CPC, the powerful Jiang Zemin further opened China to economic reforms. The new Chinese economic model which was championed by Deng Xiaoping and Jiang Zemin was to use the capitalist idea of production and distribution of goods and services through the market instead of producing and distributing them directly by the state. However the CPC, extremely wary of the Soviet experience and aware of the disastrous consequences of wide scale privatization and the inequality of wealth which is so typical of Capitalist economy, was not ready to give up state control of economy to private businesses. Yet CPC wanted to take the state out of directly managing the business. The solution it opted for was the idea of State Owned Enterprises which will operate on capitalist market principles but which would be owned by the state. So these enterprises would actually be big businesses which will operate as corporate entities and compete like other firms on the market. Their motive would, like other businesses be to earn profits, however as these firms would be owned by the state, these profits would go to the Chinese government. Moreover the Chinese government would, through the control of flow of capital and the governing boards of these firms, maintain the strategic control over them without directly managing the day to day operations of these firms which would be run by corporate managers like in any other business or company. To achieve this CPC started a major restructuring of these firms in line with Western standards to register these firms on stock markets in London, Washington, Paris and Hong Kong. Their registration in the stock markets meant their entrance in global trade and market competition along with other capitalist firms. However the shares sold in the stock markets to private investors were minority shares and the majority of the shares were kept by the Chinese government. Western corporate leaders were invited to join these State owned enterprises and were given representation in the executive boards which ran these firms. The idea was to use Western corporate expertise to run these firms on free market principles and to make profits. In adopting the capitalist economic model which focuses on increase in production the CPC totally abandoned the socialist idea of production and distribution of goods and services through the state and now believes that this production and distribution in China should take place through the market. The idea of State owned enterprises, in the mind of the CPC, give some degree of protection against accumulation of capital by the few. So the state owned enterprises ensure social and economic security for the masses by providing jobs to the population and revenue to the state. As long as there is strong economic growth in China in which these state owned enterprises as well as the private sector which has now developed in China, continues to make profit, China will be able to keep its domestic population satisfied.
To get an idea of the size and volume of these state owned enterprises consider the following figures. A report published on The Wall Street Journal on 16th Nov 2010 stated, "that according to China's Ministry of Finance, assets of all state enterprises in 2008 totaled about $6 trillion, equal to 133 percent of annual economic output that year. By comparison, total assets of the agency that controls government enterprises in France, whose dirigisme policies give it one of the biggest state sectors among major Western economies, were €539 billion ($686 billion) in 2008, about 28 percent of the size of France's economy." Richard McGregor in his book The Party, The Secret World of China's Communist Rulers states: "In 2007, the year which marked the historic high point of fast economic growth in China, the combined profitability of centrally owned state enterprises reached about $140 billion, compared to close to zero a decade previously and triple the earning of five years before." By controlling the banking sector the CPC helped subsidize these stated owned enterprises (SOEs) by providing them with cheap credit at very low interest rates. This gave these firms an unfair advantage in the market competition against other Western companies and private businesses. A 2009 study by the Hong Kong Institute for Monetary Research found that if state-owned firms were to pay a market interest rate, their profits "would be entirely wiped out". An article published in The Economist on 6th October 2012 titled "The State Advances" states, "Unirule, a Chinese think-tank, reckons not having to pay for the land SOEs sit on was a subsidy worth some 4 trillion yuan ($640 billion) in 2001-09."
Historically, China has been a nation which has not had global ambitions. However never has China been more confident and more prosperous in its history than today. The rise of economic power of China has generated widespread debate about China being a future super power and a global actor. Such pronouncements were given more credit after China emerged stronger from the economic crisis which now grips the Western World and continues till today. A close scrutiny of the Chinese political and economic model and its foreign policy initiatives however reveal a different picture. China has modeled its economy on an export based economic model. In essence China is the world's workshop. It provides the world with cheap labor and raw material in return for meager profits to what it actually should have earned. The Western World has exploited this to her advantage with China being the actual looser. Consider the example of Sino-US Economic relations. For the year 2012, the US had a trade deficit of $315 billion dollars with China. This means a net of $315 billion flowed from the US to China. According to US treasury figures released in September 2012, China held $1.16 trillion in US treasury bonds which amounts to over 21% of the U.S. debt held overseas and more than 7% of the United States' total debt load. So not only is China making cheap goods for the US and earning the profits, those profits are being diverted back in to the US economy in the form of loans to the US government. The prime objective of the Chinese government for a greater economic role in the world is not to act as a global power or to control the affairs of the World. China's increasing international clout is aimed at ensuring social and economic security at home. This is the philosophy which defines China's foreign policy. It's a foreign policy based on domestic considerations aimed at keeping the domestic audience at home satisfied. This is necessary because during the economic reforms in which SOEs were restructured, many non-performing SOEs were closed and apart from the big strategic enterprises many small ones were privatized. During this drive of restructuring the big enterprises and privatizing the small ones many workers were laid off and millions of people lost their jobs. Although many were later employed when economic growth picked pace the number of unemployed in China remain high. This has caused increasing discontent within the Chinese society. Capitalist economic reforms have also increased income inequality within the Chinese society. A new billionaire class, mainly members of the CCP and business executives running the large SOEs, has emerged. This has fuelled anger and resentment in a society with socialist roots. Corruption is also a source of discontent in the society. Another factor fuelling the popular discontent in the society is the phenomenon of urban migration. China's export based economic model has led to disproportionate urban development at the cost of rural China. This development is mainly focused on China's Eastern coasts where most of production is taking place. This disproportionate allocation of state resources has led to the phenomenon of urban migration and migrant workers (from rural area). These low skilled workers are struggling to find jobs in urban China. In an analysis published by the US thinktank Stratfor on 30th March 2010 titled "China: Crunch Time" it was mentioned, "The Chinese people rebel when work is not available and conditions reach extremes. It must be remembered that of China's 1.3 billion people, more than 600 million urban citizens live on an average of about $7 a day, while 700 million rural people live on an average of $2 a day, and that is according to Beijing's own well-scrubbed statistics." Explaining the flaws of the Chinese economic model Richard McGregor in his book The Party the Secret World of China's Communist Rulers states, "The Chinese growth model has well documented flaws and is unsustainable in its present form. Martin Wolf, the Financial Times economic commentator, summed up in late 2009 the deep distortions of a system that has suppressed personal consumption in favor of investment and exports with a devastatingly simple calculation. ‘In 2007, personal consumption was just 35% of the GDP. Meanwhile, China was investing 11 percent of GDP in low yielding foreign assets via its current account surplus' he wrote.' Remember how poor hundreds of millions of Chinese still are. Then consider the net transfer of resources abroad was equal to a third of personal consumption.'"
After a detailed analysis of China's economic transformation from a socialist economy to a capitalist economy it is clear that "China's Economic Miracle", is based on intellectual ideas borrowed from the West. China has shown its willingness to work with international multilateral institutions like the United Nations, IMF and the World Bank and is willing to work within the liberal international order set up by Western Powers after the Second World War. Although China has entered in to some military alliances at the international stage like the Shanghai Cooperation Organization and has tried to diversify its energy sources by reaching out to Africa it has generally avoided actively challenging Western interests at the global level. China's massive defense spending to modernize its armed forces is aimed at securing its regional interests and is intended to be a deterrent against foreign aggression. China therefore does not qualify to challenge the West and its hegemony over the globe because China itself has adopted Western ideas. It can challenge the West politically but for this to take place practically it must challenge Western interests at the global and not regional level, a policy for which it has shown no willingness. So while China's rise as an economic power gives her an opportunity to challenge the West politically if she wants to, China is in no position to challenge the Western civilization. If China eventually decides to go global politically, this may contribute to changing the balance of power at the international level between the great powers of the world but it would not result in the downfall of the Western Civilization. Such a downfall would only be witnessed if Western interests are challenged politically by a global power which advocates an alternative civilization and which challenges Western solutions at an intellectual level. That global power would be the Islamic caliphate, InshAllah. We pray to Allah that we witness the establishment of the caliphate very soon that we are from amongst its soldiers who carry the light of Islam to the world and especially to China.
Moez Mobeen
