CHILE AND CHINA

By José Piñera (Revista Ercilla, March 8, 1978)

China may be much more important for Chileans’ future welfare than most of the events monopolising our public debate at the moment. This is because such men as Hua Guofeng and Deng Xiaoping, who aim to steer the affairs of this great Asian nation with a large measure of pragmatism and rationality, could convert a poor country with little impact on the global economy into a modern nation and an economic superpower.

Despite the hindrances inherent in a communist system, the incorporation of the great technological advances of recent decades, the modernisation of agriculture, the establishment of an efficient industrial sector, and the development of the infrastructure needed to support the growth of such a country, could permit China to make a great leap forward. The strategy: an intelligent combination of central planning, market signals and material incentives to increase output. The economic “miracles” of other Asian countries will pale before the rise of a sub-continent whose population exceeds one billion people.

Unlike the Soviets, who discarded Liberman’s decentralizing blueprint in the name of preserving socialist purity, China’s current leaders appear not to suffer from these paralyzing reactionary tendencies. To Deng is attributed the phrase that the colour of the cat does not matter as long as it catches mice.

As we reach the end of the twentieth century, autarchic development is an illusion. China’s take-off will incorporate a continent into the flow of international trade; this will have very positive side-effects –of an unexpected magnitude—on the trade flows of those countries such as Chile which have decided to tie their economies into the enormous international markets.

It is necessary to include the China variable in any long-term projection of the copper price. China is already an importer of Chilean copper. Its future use may rise sharply in China because (a): economic take-off is always accompanied by high levels of infrastructure expenditure (particularly applicable in such a huge country); (b) China’s electrical and automobile industries are practically primitive and have a great deal of development ahead; and (c) tensions with the Soviet Union will continue to demand the development of an arms industry.

But we should not limit our analysis of the China factor to forecasts of the demand for copper and its price. The impact of a giant economy bursting into international markets may even change the dynamic comparative advantages of a country such as Chile. For example, we do not know the net effect on the forestry sector of the higher production and demand China will inspire. There is minimal information on the reserves of oil, gas and minerals. China is a large question mark we need to resolve.

It is possible to sketch out a quasi-domino theory in the economic area. If China, both feared and admired by many Asian countries, manages to move to a high growth track, a very strong stimulus will result for countries such as India, another sub-continent, to abandon their tortoise-like pace and accelerate the modernization of their societies. It is possible to foresee a chain of links, which, reinforcing each other, cause several Asian countries to move to emerging status, with an additional impact on world trade and growth.

However much it is fashionable to talk of a five polar world –U.S.A., U.S.S.R, China, Europe and Japan— the reality it that only the first two are true powers and they dominate world politics with barely any counterweight. China lacks economic strength, Europe does not have the will to be a superpower, and Japan is without nuclear weapons. China’s rise will change the present bipolar situation.

This eruption of a third force on to the world scene can only suit Chile, harassed and fenced in as it is by an unholy alliance of the two powers who seem unable to tolerate the path of its own that the country seeks in economic and political matters. China will constitute a revolutionary actor which resents the monopoly of power of the current powers.

To sum up: we need to make an attempt to foresee the future –even the distant future—and to be alert to the factors which could change the context of the world economy and balance of power. For a country such as Chile these factors are ever more important. We need to study China: Deng and Hua should be interesting more than just a few people in this country.