Global Eyes on China｜David Blair: Rural revitalization drives transformative growth

南方财经全媒体记者 李依农 北京报道

Rural revitalization is a key part of 2024 government work report. China has long been dedicated to boosting rural areas and improving the lives of rural residents. Over the past decades, significant progress has been made in improving people’s livelihoods. How does rural revitalization make people’s life better? From poverty alleviation to comprehensively promoting rural vitalization, what changes have occurred in China's countryside? How do these changes contribute to China's economic growth and prosperity? David Blair, U.S. Senior Economist, has conducted an exclusive interview with SFC journalist. 

“China's investments, particularly in rural revitalization and infrastructure, have played a crucial role in driving transformative economic growth.” David Blair has an experience of living in Yuxi, Yunnan province where he witnessed Chinese farmers’ life improving significantly over the last decades of years. He emphasized that no one cares about GDP statistics if people's lives have not been changed while China has always been thinking about raising people’s life standard.

People's lives bettered

SFC Markets and Finance: You have been in China for many years. Could you share your feelings and experiences in China over the years, and how you have witnessed the country's development and changes? 

David Blair: Unfortunately, I never came to China before about 2002. So I never really saw the sort of old China of the previous generation. I've talked to a lot of people that grew up during that time. And it was obviously a very different place. I visited mostly Beijing and Shanghai, short business trips, during the 2000s, and then I came here for a year in 2013. And I've lived here continuously since 2016. I think the main thing is what I call transformative growth. I mean, some countries get economic growth, you get rising GDP, but it doesn't really have a fundamental difference in the way people live. But what's happened in China, especially over the last 20 years, and even the last 10 years, is people's lives have been transformed. It's a lot better, I think. The main thing about the growth is who cares about GDP statistics if people's lives have not been changed. And I think what I see is very fundamental changes.

SFC Markets and Finance: You mentioned that people's lives have been transformed fundamentally. What are the main aspects of this?

David Blair: I lived in Beijing for good many years. But last two years, I've lived in Yunnan province, a small city called Yuxi. It's not one of the tourist areas and it's a small city, but there's agricultural land and mountains nearby. I can go hiking around the mountains a lot, and I talked to farmers quite a lot as I can. And I have found they are absolutely friendly people and very welcoming and warm. Not only to me, but to each other as well. The transformation in the economic circumstances also changes people's psychology, I think in term of what makes you happy, a lot of that has been achieved for a lot of people.   

In the 2000s people in the West believe that Beijing, Shanghai, may be Guangzhou and Shenzhen are really getting developed, but nothing is happening in the rest of China. That's just not true. And I think it's good for a country not to have its wealth concentrated in a few small places, among small group of people. It's good to see that wealth spread.

One of the things that really impresses me is how good people's daily lives are throughout everywhere I've been, including farmers. One of the things that changed in the last 10 years is the improvement in lives of farmers. I guarantee you that they seem to live a quite a nice lifestyle. So that really impresses me. One thing I think the country has done right is if I look at economics, there's one number I look at, median real wages, and what happened to wages. Wages went up very rapidly in China for last 20 years, and that's been transformative to average people's lives.  

I always contrast that with in the U.S., median real wages have been constant, they have not gone up a bit since 1979. And they've gone down 5% or 6% in the last two or three years. That's a big negative change in people's lives. I think people get meaning in their life from working and what making wages, and being sure that the average person can do that is a fundamental thing for any country.  

Investment in infrastructure has been fundamental

SFC Markets and Finance: What unique strengths of China's economy are reflected in the revitalization of the countryside? How do you think China will utilize these advantages to sustain economic growth in the future?

David Blair: China has in terms of purely economic model, and the problem they were trying to solve is at the start and poor, how do we get the capital needed to lead to growth? There are a lot of things that I think China did right. 

I think the investment in infrastructure has been fundamental. Because we're talking about spreading the capabilities around the country. The fact that I can go to a small village in Yunnan or Guizhou or all the western provinces and there's not only a good road, but there's a nearby high-speed rail, and there's 5G,  opening up a world of opportunities for the people in those areas. 

If you talk to people here in Yunnan from 40 years ago, they didn't really know very much about the world.  And now that's totally different. They can see opportunities and they're taking advantage of it. I see people building very good small businesses that are keeping their family in good shape and employing people.

One of the reasons that wages are not going up in the United States is increased monopolization of the economy. You look at just about any sector, is becoming controlled by very small number of firms and often they have a connection with the government that allows them to control it. And China has been more active at ensuring that markets work by enforcing antitrust law. That's really been a crucial factor in ensuring that the people's wages go up. The company no longer has the power over their workers, so they have to raise the wages. That's one lesson.  

And there are a lot of places that have built infrastructures, and it didn't work. It wasn't transformative.  There's a road built, and then that road just falls apart within a few years. And that's because the infrastructure wasn't accompanied by the economic reforms that allow people to take advantage of the new infrastructure. But that's happened here. China has reached the point where infrastructure is now really, I think the best in the world. I don't think there's any other place has that sort of physical infrastructure, the roads, railroads and the telecoms infrastructure. Now, there's no way, you look at Europe or the United States, the infrastructure is not nearly as good.  

The other thing that's going on in that regard is that Chinese manufacturing quality in my opinion has gone up a lot and the foreign markets will consider it a threat. I just bought a Xiaomi phone yesterday and the reason I bought it is I'm most interested in the camera. I've been using Apple, Xiaomi has much better camera than anything Apple's got. And I also own a Chinese car, a Geely and it was half or maybe less than half the price of the equivalent of a European or North American product, and it's just as good.  

I think the government's emphasis on dual circulation, grow exports, but realize they probably won't be growing as fast, and grow capabilities, consumption around China, I think that makes a huge amount of sense to meet the current situation. If we can continue to see people's lives and for incomes increase throughout China, it's going to be a huge market not only for Chinese companies, but for everybody's companies.  

To summarize, the investments China have made, especially the rural revitalization and infrastructure investments have been very smart. And they were very crucial to achieving transformational growth. There's also been an emphasis on creating opportunities for people. Not only a few people in Beijing and Shanghai are innovative, you've got innovative people all around the country, and they think of little businesses that not only can feed their families, but they employ 10, 15, or 20 people, that makes a huge difference in people's lives. I think that's the direction China has to go, rural revitalization, and very widespread innovation, I can picture it being a very beautiful economy 10 to 15 years from now.  

Innovative entrepreneurs drives progress

SFC Markets and Finance: The beautiful economy you pictured in 10-15 years from now, what will it be like? Will innovation and talent be the key words?

David Blair: One of my favorite economists is a man named Edmund Phelps, who teaches at Columbia. And he wrote a book that was very influential in China called Mass Flourishing in 2013. His main point is that people are not only happy, they feel productive.

It's not only 10 people in Tsinghua University that are going to be transformative. It's people that they might be in their 50s, and they only got a middle school education but they're smart. And they're going to think of things that transform people's lives. And that's just as big an innovation as you see out of established laboratories.

One of my favorite examples is the Wright brothers. They were bicycle mechanics with a high school education. And they invented the airplane. And there's that kind of spirit. And I think the thing China needs to be thinking about is how do you encourage the spirit of the people to do that kind of development. I can picture that China (in) the late 21st century is going to be one of the most beautiful economies you've ever seen.  

SFC Markets and Finance: As an economically developed region, how is Guangdong's performance in terms of technological innovation and talent attraction? What role do you see Guangdong playing in future development? 

David Blair: I think Guangdong is an amazing place. But I want to push back a little bit about the word talent. I know talent here is usually used, it often means somebody that graduated from a top tier university with a PhD in something or other. There's a lot of other kinds of talent. It's the guys who went out and built little factories, innovated, very fast change, highly, highly, highly competitive market. 

And I think what was really crucial about Guangdong and some of the other (places) Zhejiang and so on, have similar kind of situations, how fast they changed, and how they integrated thinking about the technology with manufacturing. There was this crazy idea in U.S. business cycles, that you don't have to manufacture anything, we just think up the ideas and hire somebody else to do it. After a little while, you really don't know how to do anything. And what's so nice about Guangdong is they know how to do stuff. I expect to see a lot of interesting stuff coming out of Guangdong. 

The governance approach in China is educational

SFC Markets and Finance: China's Two Sessions is seen as an important demonstration of Chinese-style democracy. What do you see as the advantages of this mechanism in political decision-making and national governance?

David Blair: Giving ideas about the way the future should work is important for people. One thing that really impresses me about the way governance works in China is that a lot of them are educational.

I've been going around taking pictures of them. There are lots of photos, pictures or drawings on walls in Yuxi, and it's throughout China. It's stuff like that ‘help the old ladies across the street’, ‘be clean’, ‘go to school’, ‘be productive’. There are some statues in a park, like a statue of a young child massaging their grandmother's back, that kind of thing. Some people might laugh at that, but I think it's very educational.

In the West, we wouldn't think that's governance, which you got to get this regulator there and you got to watch them and that kind of stuff. But that teaches people things. I've talked to farmers here and they said, yeah, we heard that, we cleaned up our yard that kind of thing. Or we put in new toilets and we've been sure the sewage is properly processed. 

That's important as a way of governance, people are given, I don't even know the right word this sort of Confucius guidance from the Dang（CPC), this is a good way to live, and people think about it seriously. So that's sort of at a small level, but the guidance we will see at the Two Sessions is at a bigger level. And if the government says we're going to continue allowing private sector to develop, and we're going to continue to reform, and we're going to continue opening up for foreigners. That means something, even if it doesn't exactly turn into regulations immediately that local governments take that as a sense of direction.

One thing I'm very disturbed about in my own country and in Europe is the increased influence of a highly moneyed and entrenched elite trying to control democracy, so called. I mean, there are elections, but I think we're seeing more and more control from a smaller elites in Western countries. And that disturbs me greatly. That's not the kind of world that I thought I was growing up in. I'm not immersed in the Chinese political system, I'm a foreigner. I'm not directly involved with it. But from what I've seen, there seems to be a respect for average people which I'm not seeing in North America or Western Europe.

I've had the opportunity of talking to quite a few mayors in cities around China, and the first thing they're thinking about is how do we improve the lives of average people? That's not what the mayors of big American cities are thinking about. I'm not saying everything's perfect here. But the general direction, I think of, again, I'll say median real wages. Median means the average person, if their wage goes up, they have good job, that's a good life. If you accomplish that, you've accomplished a lot. And if you don't accomplish that, you failed as a society. Therefore, anything that promotes that, I think is great.

One more thing, I keep comparing what China is doing to what the West has been doing, especially the United States. And one of the reasons China has been so successful over the last 45 years, is there hasn't been war. And my country keeps getting involved in stupid wars. And it's been devastated not only the waste of resources, but it's increased the power of these entrenched groups I've talked about. It's caused terrible problems for the world. So I'm hoping that China can be a leader for peace in the world, a new type of international relations, would be a big contribution not only to China, but to the world.

China is at a transition period

SFC Markets and Finance: Finally, could you share your prospect on China's future development, and how do you envision China's role on the global stage evolving? 

David Blair: I think China is at a transition period. And the Chinese economy is like any economy, (where) you're gonna have slow periods and fast periods. And right now, it is looking like China's in a slow period. But it's a slow period driven by the need to make this fundamental transformation I was talking about, the sort of the drivers of the past period, infrastructure investment, real estate investment, export growth, they're not available in the future. China has to make a real change in its economy, toward this sort of highly innovative, highly dispersed kind of growth, where you see growth bubbling up from the bottom all around the country. It'll be matched by big companies, and by government investment, and by scientific research, but the fundamental is this innovative, mass flourishing. And it won't be an easy transition. But they can be transformative again.

One thing that really excites me is I'm seeing schools built throughout. I see a lot of nice schools here. And I think the new AI technology applied to schools, could mean the next generation is well educated. Making that kind of really good education and also good healthcare available to everybody in the country should be, in my opinion, the next big government investment push, but I think they're already a good way along that road.

I think if China is three years behind in chips, catch up, eventually, you got a lot of smart people that figured out. So that's not really what worries me. What worries me is don't buy into this U.S. and European system of encouraging subprime growth and extreme stimulus, and extreme concentration of wealth that we've seen in the U.S. and Western Europe over the last 30 years. Emphasize spreading the wealth. And by spreading the wealth, I mean creating opportunities for people, and not allowing people to use monopolies to unfairly grab wealth. I think if China continues to succeed in doing that, it could be very successful.

（市场有风险，投资需谨慎。本节目嘉宾意见仅代表本人观点。）

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记者：李依农 杨雨莱

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