YH: I honestly do not know. I am fascinated by the fascination that many people have about predictions that Chinese or Indian economies will overtake the United States’ by 2035 or 2050. There are as many estimates of the current size of the Chinese and Indian economies as there are people estimating. Recently, the World Bank reduced its purchasing power parity estimates of Chinese and Indian economies by 40 percent. Just like that.
These data issues aside, the thing that really matters is not the aggregate size of the economy but GDP per capita. The most remarkable story of economic catch-up is that of South Korea, if measured in those terms. In 1960, that country had a per-capita GDP that was comparable to that of many African countries. Today, it is approaching Western levels of living standards. India and China have a long way to go before they achieve what South Korea already has.
Q: In your article, you credit liberalism for China’s economic successes in the 1980s, and its illiberalism in the 90s for its subsequent decline. While the country’s actions during the 90s were designed to stymie a nascent democratic movement, a growing environment of religious (usually Christian) freedom—even among some communist officials—rescued the economy during this transition and may be the best solution to controlling corruption.
Do you agree that religious freedom can be an even more potent economic force than democracy, regardless of whether it is aided by democratic institutions?
YH: First, let me be clear—I did not say that Chinese economy experienced a decline in the 1990s. Its economy continued to grow in the 1990s but the distribution of economic gains became far less equitable and that the country increased its illiteracy rate, even though its GDP powered forward. So the turn from liberalism to illiberalism affected not the growth rate per se but the people who gained and lost from that growth. It is important to draw this distinction between growth and the effects of growth—because it is this distinction that illustrates the role of the politics most clearly.
I am not sure that religion is the “best solution to controlling corruption.” It would probably help in reigning in the immoral behavior of officials and businesspeople. But at most, religion, I think, works on the margins to curb corruption. The most important mechanism to reduce corruption is to streamline and constrain the interventionist role of the government in the economy. For both China and India, I believe that there is substantial room for further economic liberalization and reforms. Then we need the rule of law, transparency, and accountability to deal with the residual cases of corruption. Maybe religion and civic values can function as the third-tier defense against corruption, but religion alone would not do much if a government remained highly interventionist and its conduct is not duly constrained.
Q: In your opinion, which other illiberal or politically closed societies would benefit the most economically from a modest liberalization of their political systems?
YH: There are so many but let me focus on one country here—North Korea. In the 1950s, North Korea was richer than South Korea. It had a decent industrial base and a lot of raw materials. South Korea today is an industrial powerhouse, and North Korea is languishing in poverty. It is one of the world’s greatest tragedies. For two individual Koreans separated by a completely arbitrary line called the 38th parallel, they have had totally different lives.
The point here is that North Korea has had an equal chance of becoming a rich country as South Korea but it did not. North Korea is beginning to reform a bit, by setting up special economic zones, for example. Some commentators have compared North Korea’s reforms to Chinese reforms in the 1980s.
This comparison is factually incorrect (and an insult to the Chinese leaders of the 1980s). As I pointed out in the article, the first moves made by the Chinese leaders in the late 1970s and 1980s were political. They explicitly repudiated the Cultural Revolution and put out a fairly severe criticism of Mao Zedong. (My own opinion is that they should have gone further in their criticism.) That is not what North Korea is doing at all. Today the country is led by the son of the leader who was single-handedly responsible for the economic decline of that country. Can you imagine what China would look like today if the biological and/or the political offspring of Mao ruled the country instead of Deng Xiaoping (a man, I should add, who was purged by Mao no less than three times)? China achieved a noticeable political break from its past in the late 1970s. There is nothing but continuity in North Korea today.
