By Jeffrey Sachs
I first visited China almost 40 years ago. In 1981, when I toured Beijing, Shanghai and Guangdong Province, things were still pretty basic. Over the years, I have witnessed much of the remarkable transformation of China from a rural and poor country to a modern, sophisticated land on the verge of completely eliminating extreme poverty.
Way to Ending Poverty
When I was advising Poland in 1989, they had eyes on joining Europe as the Cold War came to an end. They asked me how to reestablish economic relations between Poland and Western Europe as quickly as possible.
That era was when the medical term “shock therapy” was first applied to the economic realm. Inspired by success in tackling Bolivia’s economic crisis, I introduced a complete set of economic guidelines and policies centered on economic liberalization, private ownership and economic stability as well as tight fiscal policies. Because implementation of this set of economic guidelines and policies was poised to exert an impact strong enough to causevolatility in economic and social lives akin to a “shock,” economists dubbed the guidelines and policies “shock therapy.”
This term was embraced by journalists hyping the economic reform policies I designed for Bolivia and Poland, which proved successful. Macroeconomics is a profound science. Since national conditions vary from country to country, many factors must be considered when policies are planned to economically reform a certain nation. They could be economic, political or social issues.
In 1978, China was still a very poor rural society facing considerable upheaval. The first step forward was rural reform under the household responsibility system, which brought earthshaking changes. Within just five years, the entire rural region had adopted the household responsibility system and it covered hundreds of millions of people—a very fast economic change. Then, the early 1980s brought urban transformation beginning in the coastal areas and special economic zones. China had specific conditions as well as specific needs, and I think it has done an excellent job.
Opening-up was really a breath of fresh air for the Chinese people. Economic development has moved faster in China than in any other place in history. Having passed through all the phases of urbanization and heavy industrialization, China is now accelerating development of an innovation-driven economy featuring high quality output and cutting-edge technology.
This all happened within a 40-year period. It is an amazing accomplishment. In my mind, China’s work should really set an example for other countries, and I often cite China’s success as a kind of model or approach for African countries. I wrote a book called The End of Poverty because I see poverty coming to an end in China as a great accomplishment and a great inspiration for places like Africa where many still toil in extreme poverty.
When I visited Africa, I told them that they should learn from China’s success fighting poverty and that they can do the same thing. Currently, the most pressing challenges facing African countries are shortages of hospitals, schools and roads, not the need to adopt a market economy. How can we think of attracting foreign investment and carrying out the most basic economic reforms while basic infrastructure demand has not yet been met?
I realized that in Africa, the most daunting issue to be resolved is not economic reform, but extreme poverty. The international community is duty-bound to provide the necessary aid to make a tangible difference in African people’s lives.
The historic change of China lifting a huge, mostly-poverty stricken population to complete eradication of poverty in a half century is a remarkable feat especially in such a short period of time. This development will go down in history as not only a record but also as an inspiration for others to follow.
The United Nations Agenda 2030 states that extreme poverty should be eradicated everywhere by the year 2030. I hope that China will play a global leadership role to help achieve this goal. China will have proved that it’s feasible, and I believe China can make a significant contribution to the remaining low-income parts of the world.
Sustainable Development an Inevitable Path
Sustainable development aims at coordinating economic growth, social equality and environmental protection, which is why the concept is often combined with environmental sustainability. I believe new growth models are necessary for the convergence of the three trajectories.
Why do we need to promote a new phase of economic growth? The world situation has experienced great changes, and new situations have arisen. Worldwide, economic activities have increased tremendously, becoming the number one reason factor in the health of the natural environment. Human activities such as fossil fuel consumption, water use, fishery, agriculture and infrastructure construction have been conducted at such massive scales that the geographical conditions of the Earth are challenged by our behavior. This suggests new economic models are needed to replace those which are clearly no longer safe, whether in the United States, China or Europe.
How did we get in such a situation? I want to stress that the steam engine developed by James Watt some 200 years ago was an important invention that fundamentally changed the world. After Watt invented steam engine in England, mankind began to utilize new energy sources—fuels. Later, the emergence of internal combustion engines and gas turbine engines heralded a new age in which human beings conducted various economic activities that consumed massive amounts of energy. Undoubtedly, energy consumption has driven the growth of world economy and brought great benefits to mankind.
Now, however, human beings need to pay the piper considering the tremendous challenges posed by energy consumption.
A glance at the timeline of world output shows that global economic aggregate over the past two millennia has been very low, and first 1,800 years saw almost no change. The invention of the steam engine triggered the industrial revolution, which led to more than 200 years of continuously rising economic growth worldwide. Of course, growth was not happening everywhere or simultaneously. Industrialization has prevailed in almost every part of the world, and China’s economic growth was a major driver of development of world economy over the past decades as the global population increased tenfold.
Progress in industrialization has facilitated greater production, and scientific farming has yielded more bountiful harvests. The development of agricultural technologies has enabled more extensive use of chemical fertilizer in farming which has resulted in remarkable output increase. When per capita output and global population both increase tenfold, they multiply each other and world economy grows 100 times, which has been demonstrated over the last 200 years.
As the world economy expands 100 times over, the size of the Earth remains unchanged. So, growth of our economy has far outpaced that of the supporting capacity of nature including water supply, air and ocean, so much so that crisis has emerged. The planet we call home is approaching a tipping point as it continues to be threatened by the inflated economic aggregate, with pollution, climate change and habitat all nearing their limits.
Clearly, China is moving in the direction of sustainable development considering its 13th Five-Year Plan (2016- 2020) or even the country’s plans for 2050—it’s now all about eco-civilization, beauty, a safe environment and social harmony and social inclusion. The big principles of sustainable development are tightly embraced by China right now.