¿THATCHERISM… IN CHINA?

THATCHERISM WITH CHINESE CHARACTERISTICS

Conditions in China are similar to what Britain faced during Thatcher's reign, something the new leadership should note

Deng Tishun

Caixin, May 10, 2013

As the world mourned the passing of former British prime minister Margaret Thatcher, and remembered her belief in small government, free enterprise and monetarism, we should look at what today's China can learn from her legacy.

At almost exactly the same time Thatcher was leading Britain out of an economic slump, China under Deng Xiaoping embarked on its own social and economic reform, which had tenets similar to what was later known as Thatcherism.

Deng understood how the free market functioned, giving people more power over their lives by granting private property ownership, motivating the formation of private enterprises and rolling back omnipresent government controls. China has since enjoyed dramatic ascendance.

Despite its eye-catching growth, China remains a developing country with per capita GDP well below the global average. Its growth momentum has slowed noticeably over the past few years, partly due to a lack of reform breakthroughs. Many economic challenges faced by Thatcher in the 1970s pose the same threats to today's China. These include:

Big government. China's fiscal revenue as a percentage of GDP increased to 23 percent at the end of 2012 from 12.9 percent in 1992. Its fiscal expenditure as a percentage of GDP increased to 24 percent from 13.9 percent over the same period. These figures are now back to the levels they were at in 1981 when China embarked on economic reform programs.

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