TWQ: Updating the China Model - Fall 2011
October 1, 2011
China’s development model is undergoing dramatic change. No longer relying solely on cheap labor to manufacture exports, the Chinese Communist Party is updating its approach in three distinct but interrelated ways. First, it is actively trying to create “national champions” so that Chinese brands—not just Chinese goods—can compete in the global market. Second, it is moving away from its reliance on low-wage, low-skilled labor and encouraging the growth of a middle class and increased domestic consumption to spur economic growth. Third, long accustomed to investing vast amounts of capital on infrastructure projects, it is now devoting more resources toward other types of public goods in order to improve the quality of local governance. Each of these endeavors presents major challenges as well as opportunities for China, its neighbors, and other countries, including the United States. Collectively, they represent a significant updating of the now familiar China model based on export-led growth and a strong state.