China Research and I

By Ryoshin Minami

My association with China began not too long ago. One day in 1983, Professor Xue of Nankai University in Tianjin City, who was attending my seminar on Japan's economy at Hitotsubashi University, visited my office and asked if I would lecture at his university. If it were possible for me to do so, he said, assistance could be requested from the Japan Foundation. At the time, I had almost no knowledge of China but I was easily persuaded by my interest in a land unknown to me and the appealing demeanor of Prof. Xue.

The first time I set foot in China was in autumn of 1984. I then lectured for one month, after which I visited Beijing, Xian, and Shanghai before returning to Japan. That experience was one which I will never forget. @@Upon returning home, I wrote an essay entitled "A Sketch of China's Economy" for the Easy Economics Study Column of the Nihon Keizai Shimbun [Japan Economic Newspaper] and, the following year, had a series called "Where is China's Economy Going?" appear for one year in the journal Keizai Seminaa [Economic Seminar]. These were published as a collection in a book titled Where is China's Economy Going? in 1985.

These writings commented on the post-liberation Chinese economy while making comparisons with Japan's economic development from Meiji. For better or worse, I flatter myself that these were the first works on China written by a scholar who was not a China specialist. I wrote some pretty harsh things about China. The main observation was that the foundation for sustained economic growth, comprising elements such as education, infrastructure, and institutions, were not ready in China, and that the economy would eventually run up against barriers to further growth. This was the impression that I had formed while in China, and it was confirmed by every type of statistical data.

At that time, there was still no compulsory education. The illiteracy rate had reached 31.9% (1982 figures), much lower than India's 64% rate, but quite high compared to the 20% range for Thailand or the Phillipines. In Japan, compulsory education was enacted quite early, in 1872, in the Meiji era (1868-1912); that it predated the beginning of modern economic growth, which started in the mid-1880s, is an experience unique in world history. What is more important is the fact that elementary education was widely diffused during the Tokugawa era (1600-1868) through the terakoya, classrooms set up in people's houses, in which reading, writing, and arithmetic were taught. Conditions in China were quite bad at the secondary and higher levels also. Seeing the terrible state of Chinese university facilities made me feel that it would be difficult to train the large numbers of first-rate enterprise managers and technicians necessary to economic growth. The university attendance rate of 1% (in 1981) is extremely low compared to India's 8% rate, or the 20-30% rates in Thailand and the Phillipines. According to the data, the illiteracy and school attendance rates of early 1980s China are quite similar to Japan of the 1900 to 1920 period.

The undeveloped infrastructure was the worst problem I had to cope with during my stay in China. Getting a taxi in any city was a daunting task, and the difficulty of obtaining domestic train and plane tickets and finding hotels is engraved in my mind. Excursion tickets for Beijing, Xian, and Shanghai simply do not exist. Buying a ticket from Beijing to Xian means waiting in a long line in Beijing, and getting a ticket for Xian to Shanghai requires repeating the process again in Xian. Taking the railways as another example of the state of transportation facilities, there were no more than 0.5 kilometers of track for every thousand square kilometers of territory, a level comparable to late 19th century Japan.

Hotels will not make reservations by phone -- they must be made directly at the front desk. Ultimately, I could not get a hotel in Beijing and ended up staying in the apartment of a Japanese I had met by chance. In Xian, a major tourist center, I searched for a hotel for three hours. I finally had to go to a cheap place catering to the Chinese, where I was bothered by the noise and smell from the shared bathroom next to my room. What's more, when I opened the bathroom door, I beheld the view of a wide-open space packed with people lined up to do their business. I fled without a thought.

There were few phones at that time, and university professors rarely owned one. Moreover, professors did not have offices and were forced to do their work at home, making it even more difficult to get in touch with them. There were only 1.3 phones per thousand people in 1982, far fewer than the ratio in India (4 per thousand) or Thailand and the Phillipines (around 10 per thousand). This was about the same as Japan in the first decade of the 20th century.

Compared to Japan, China was behind by around 60 to 80 years, or in some cases a century, in terms of education and infrastructure. I thought the condition would hinder sustained economic growth. But is it so? Soon after my stay, China began rapid growth, at a rate which is expected to make it one of the world's largest economies during the 21st century. My prediction was completely mistaken. I have realized that the reason for the error was believing that sustained growth becomes possible once the economic foundation is ready; in fact, once growth has really begun, it can steadily propel the development of the basic infrastructure as it proceeds, making it possible to avoid running up against bottlenecks. (Of course, some degree of basic infrastructure is necessary for growth to begin.)

During the course of the last ten years' high growth in China, educational levels and infrastructural development have advanced rapidly. Beginning in 1986, compulsory education spread from the cities to the rural villages. As a result, illiteracy fell to 22.2% (in 1990). University education has also improved markedly, and the attendance is up to 2%. It was the early 1920s when Japan's university attendance rate surpassed 2% (Sekai no Tokei [World Statistics], 1995 edition).

Telephones have also diffused quickly, and now most university professors have one at home. The ratio has climbed to 15 per thousand people (United Nations, Statistical Yearbook, 1993). This is comparable to the late 1930s in Japan. The development of the transportation system has also been remarkable. Highways, which did not exist in the early 1980s, have been built here and there. In particular, many people must have felt tremendous gratitude for the one from Beijing's airport into the city. Streets are full of taxis, transportation in cities has become convenient, and, thanks to the development of train and air service, it has become fairly easy to get tickets.

In Japan as well, basic infrastructure was not completed prior to the beginning of modern economic growth, but during the process of growth. Despite the early start of compulsory education, the attendance rate in elementary schools did not reach 50% until the mid-1880s, and did not surpass 90% until the beginning of the 20th century. University attendance did not reach 0.5% during the 19th century, and it was the early 20th century before it reached 1%. Railroad track length showed its greatest growth for the twenty years from the mid-1880s, and a national network was completed as the nation entered the 20th century.

Thinking on the relationship between infrastructure and economic growth recalls the well-known controversy over the relationship between the beginning of industrialization and agricutural growth. This controversy pitted the prerequisite thesis of Thomas Smith and James Nakamura against the concurrent growth thesis of Kazushi Ohkawa. The former believed that agriculture attained a relatively high level of growth before industrialization commenced in the mid-1880s, and served as a foundation for industrial growth. Ohkawa counters with the argument that agriculture and industry together managed a relatively steady growth rate, easing the process of industrialization. What I learned from my research on China, with regard to the controversy, is that we should reconsider whether we put too much emphasis on early conditions. This indicates that developing countries which are building up their infrastructures also have the possibility to grow. This might be an encouraging idea for developing nations. However, at the very beginning of economic growth, needless to say, some degree of infrastructural development is necessary. To completely deny the prerequisite thesis, therefore, would be to commit another error.

As described in this essay, my cursory research into China has newly stimulated my thinking about Japan. This provides one example of how research on another country can serve as a point of reference for research on Japan. The progress made in historical research on Asia through the Asian Historical Statistics Project will also greatly advance research on Japan and should yield some surprising rewards.

Hitotsubashi University, Institute of Economic Research