The most obvious one-word answer to the question why did China boom is capitalism. As Peking University economist Michael Pettis puts it, China boomed simply because the government got rid of "idiotic policies" rooted in Stalinist and Maoist economics, letting the market do its magic. Indigenous market energy attracted diaspora, East Asian, and eventually global capital investment, allowing Chinese products to reach markets worldwide. The Behemoth was born. But questions remain as to the nature of China's economic model, as opinions range from skeptical to triumphalist. Capitalism is at the essence of the boom-- but what kind of capitalism? And where will it lead?
Akio Takahara teaches contemporary Chinese politics at the University of Tokyo's Graduate School of Public Policy. His first visit to China was in 1983 as a post-graduate student at the University of Sussex's Institute of Development Studies. In the late 1980's he lived and worked in China as a researcher at the Consultate-General of Japan in Hong Kong. Over the years, he has also held visiting positions at the Embassy of Japan in the People's Republic of China and at Harvard University.
First, Japan was seen as a model of modernization. Deng Xiaoping visited Japan first in 1978 and many, many public leaders followed. And they were greatly interested in the way that Japanese businesses were run, the Japanese industrial policies. For sometime after that, Japan became the model of China. So that was one way. And the second way is, from the late 1970s, the Japanese government decided to provide ODA to China, and China accepted it. As far as the Japanese government was concerned, they did not want China to go back to the Cultural Revolution days and they thought that by supporting the Reform and Opening policies, by supporting China's economic growth, they were actually supporting the Chinese leaders who were trying to push China forward into further reforms and opening. Thirdly, the Japanese businesses also played a large role, because many of the Japanese business leaders at that time had personal experiences with China before and during the war. And a lot of the Japanese leaders felt remorse about Japanese deeds during and before the war and they wanted to compensate for that. And we cannot deny that that that has also played a big role in Japan's cooperation with China.
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