Written by Laurence Brahm - Published by South China Morning Post on 06/08/2004

Ironically, the World Bank chose Shanghai as the venue for its conference on poverty alleviation last month. China offers one of the rare locations where the group can meet without requiring police cordons to hold back angry protestors. Like its sister the International Monetary Fund, the World Bank symbolizes to many in developing countries Washington’s consensus policies, which perpetuate poverty rather than alleviating it.

In 1978, when Deng Xiaoping came to power, China had 250 million people in rural poverty. By the end of the century, that figure had been cut to 34 million. China spurned the US models, gradually developing its own alternatives for development. Now, Beijing is applying these to a new problem: the growing gap between rich and poor.

After listening to rhetorical clichés in Shanghai about the benefits of globalization (read: global Americanization), China’s policymakers quickly got back to business, holding their own conference on expanding the successful Pearl River Delta experiment across southern China, creating a pan-Pearl River Delta, with the aim of alleviating poverty and closing income gaps in this densely populated region.

Taking part will be Guangdong, Fujian, Jiangxi, Guangxi, Hainan, Hunan, Sichuan, Yunnan and Guizhou provinces, plus Hong Kong and Macau. So, will China’s entire south become one vast mega-economic zone within this decade? That is what central policymakers have in mind.

Aside from Guangdong, Hong Kong and Macau, where development has peaked, these provinces have dense rural populations and are largely backward. Labor is still mobile. Coordinating competitive advantages and promoting inter-regional cooperation is vital, as the region accounts for one-fifth of China’s landmass, one-third of its population, and one-third of its gross domestic product.

Provinces compete intensely, protecting markets and withholding resources. Central policymakers want to enhance, not dilute, the competitive advantages of each through a guided integration of resources. Beijing’s role will be to standardize, regulate, coordinate where necessary, and provide the infrastructure to avoid bottlenecks in resources, labor and information.

The basis for inter-province cooperation already exists. For example, one-third of all investment in Hunan province comes from Guangdong. Hunan supplies 40 per cent of all pork consumed in Guangdong, in turn absorbing 10 million yuan of electronics and consumer goods produced in Guangdong.

Skeptics rightly fear that such integration may create “economic warlord” kingdoms. But policymakers believe that by raising each region’s standard of living and economic capacity, gaps will close.

Stimulating regions to get ahead of others was Deng’s idea with the establishment of special economic zones. While he was criticized for unbalancing the economic conditions between regions, the model has worked in driving China’s growth, but with the predictable result of creating regional disparity and income gaps. The answer is to close the gaps by creating more regions of economic growth.

Developed western capitalist economies do not have all the answers, and their models grew from experiences and conditions which are, at best, only partially applicable to developing, densely populated nations in Asia, Africa and Latin America. Groups like the World Bank and the IMF, which often tie political agendas to aid, do not necessarily have the answers, either. Because external models proved inapplicable to China, it created its own, which may be a practical prototype for other developing nations to follow. The Washington consensus needs to be returned to the drawing board.

Laurence Brahm is a global activist, international mediator, political columnist and author. He is the leading advocate of a fresh development paradigm - The Himalayan Consensus - an innovative approach to development.

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