Moscow Economic Forum: How Russia Can Create a ‘China’ Economic Miracle
April 10, 2023, 2022 (EIRNS)—Sergey Glazyev, Academician of the Russian Academy of Sciences, and Minister for the Integration and Macroeconomics of the Eurasian Economic Commission, addressed a panel discussion on April 4 at the April 4-5 Moscow Economic Forum, entitled, “China. Modernization Experience for Russia.” He addressed the questions as to whether the process of modernization in China become a winning experience for Russia and where is the key to economic growth.
In brief, Glazyev posed that the Chinese economic success means that it is possible, even if not easy, to manage economies in today’s world. China calls what they’ve done, “Socialism with Chinese Specifics,” but it doesn’t matter whether the term “socialism” is used or not. At its core, what they did is that they gave priority to public interests, not just private interests.
Indeed, markets help entrepreneurship, but China used regulation to make the market work for the country. Those who are seeking super-profits got repressed. Strategic priorities are set by government, and the private sector looks to those priorities. There’s intense competition in that sector, and it leads to those who best match the stated priorities being the winners. At this point, Glazyev added, in passing, that India shares some of this approach. He named Mohandas Gandhi and Jawaharlal Nehru as being at the core of India’s healthy social values.
What happened to Russia? The shock therapy of the 1990s put Russia behind China.
“Russia has implemented all the regulations that were recommended by the Washington financial institutions and the European Economic Commission. Here is the result: China grew five times in terms of GDP, and we grew together with the core of the outgoing world economic structure, at the same pace as the United States and the European Union. We have slid down from the center of the world economy to the raw material periphery.”
However, now we’re entering a new phase, not the American model. China’s investment policy works. But the question is: Where did China get its loan base from? Monetization is twice as high in China than Europe and the U.S., but somehow they avoid all the bubbles of the West.
Glazyev displayed several charts on how investments work through the physical economy, and made the point that China created a sophisticated managerial system to address this reality. There, monies are not being emitted just to finance a budget, which ties countries up in speculative bubbles. Rather, in China, it is funneled into production growth.
The problem is that the Central Bank of Russia has been emitting rubles to purchase foreign currencies. He linked that act to the erratic behavior of the exchange. By primarily servicing foreign currencies, it imports speculation. But the Chinese approach is possible. China’s scheme of organizing the financial supply is a good model. Imprudently printing money as in America will merely leave things in the air, unsound, unsupported and unhealthy. We need target-specific loans.
He ended his introductory presentation by holding up his new book, Chinese Economic Miracle. Lessons for Russia and the World (in Russian).
The video of his remarks is dubbed in English; to the left of the first screen, slide the program down to Session No. 2 and click on “China. Experience of Modernization for Russia.” Glazyev’s remarks begin about minute 6.07; In the Program section, there is a writeup of Glazyev’s speech (in Russian) with extensive quotes.