Paths to Modernization in China and Latin America and the Caribbean
Karina Batthyány is executive secretary of the Latin American Council of Social Sciences.
Today, I will talk about the modernization process in Latin America and the Caribbean, and compare it with the modernization process in China.
Widening inequality
Latin America and the Caribbean is widely known as one of the world’s most unequal regions. We believe a major cause of inequality is its endogenous structure. Wealth is concentrated in the hands of a few people and a few companies, who create GDP but do not create conditions of equality.
From the perspective of race and ethnicity, inequality has also become deeply entrenched. Indigenous people and Afro-descendants are still at a disadvantage, both in terms of economic well-being and access to development opportunities. On average, 43% of the indigenous population and 25% of the Afro-descendants are poor in the countries of this region, and the wage gap between them and the rest of the population remains wide.
Besides, there are also other issues regarding environment, climate change, immigration, and uncertainty brought about by technological progress, which further complicates the situation in Latin America.
The COVID-19 pandemic broke into the inequality. Latin America and the Caribbean is currently one of the hardest-hit regions in the world. Both the economy and the medical system have been shocked by the pandemic, and this impact will continue into the post-pandemic period. It will take years for all aspects affected by this crisis to recover.
Comparison of modernization paths
In this framework, we must raise a question of modernization which we discuss today.
Undoubtedly, the meaning of modernization in Latin America is very different from its meaning in China today. Perhaps the so-called modernization process in Latin America is more similar to the process that China experienced in that humiliating era after the Opium Wars.
As a huge semi-colonial country, China was forced into the modern world system, headed by the capitalist imperialism of the Western powers. The concept of modernization in Latin America is largely defined by projects that reinforced the region’s place as a periphery, primary exporter, and prevented autonomous developments with negative social consequences.
Since the 1970s, the contrast between China and Latin America has been extremely obvious. These modernization projects actually imposed the neoliberal initiatives of the Washington Consensus in the region, leading to a process of peripheralization here, which means the development of the primary economy, the loss of government and national capacity, and the decline in per capita GDP. This is a comparison with core countries.
While Latin America was experiencing all these, China, on its own path of modernization, lifted 800 million people out of extreme poverty, and also became a positive driving force for the world economy. China has nearly one-fifth of the world’s population and one-quarter of the workforce. China’s economy has continued to grow in the past 40 years, with high annual growth rate, while the world average is only 3%. In terms of purchasing-power adjusted GDP, China surpassed the US to become the world’s largest economy seven years ago, and China became the world’s biggest trader in goods in 2013.
In general, the concept of China’s modernization is inseparable from market reforms. Deng Xiaoping presided over the market reform in the late 1970s, and enacted the Four Modernizations of agriculture, industry, national defense, and science and technology. This is very different from the Washington Consensus on neoliberal capitalism. The Four Modernizations are a process of gradual liberalization, encouraging capitalists and state-owned enterprises to compete with each other. There have been tensions and contradictions, but the government’s policies have not been swayed by neoliberalism, and not sacrificed people’s well-being for economic benefits.
Contrary to the privatization in Latin America and the Caribbean, China has retained strategically significant state-owned enterprises, modernized and upgraded them, and implemented social ownership of key means of production. Agricultural markets have been reformed to ensure the people have access to basic food. China retains collective ownership of the land, but allows private exploitation through reforms. The country develops productivity by formulating a five-year plan. The plan is an important tool for adapting accumulation to development.
In Latin America, however, national capabilities have been undermined. Certain game rules are set in China to attract foreign investment from multinational companies seeking technology transfer or profitable investment. The state also retains control over capital flows, information, and capital accounts. It’s the exact opposite in Latin America.
China also combines national strategic planning and local planning, the ability to effectively allocate resources based on the development goals of productivity and employment, and the ability of local governments to allocate resources based on their social welfare.
It is undeniable that these key elements can help us understand the development of China in recent years. There is no one path that can be followed blindly. It’s unique, and indeed brings us inspiration and experience, especially for the people of the Global South.
To summarize the key points, it is that development, progress, and modernization should be achieved through our own people, not imposed from the outside. Moreover, we should center on improving the living standards of all people, rather than serving only a few privileged groups.
Latin American countries cannot make necessary changes alone. At this time, Latin America and the Caribbean can discuss and redefine the social-state equation together, which was greatly influenced by the neoliberal reforms I mentioned at the beginning. Meanwhile, we can use this as an opportunity to explore a new social contract and to create a more just world that is free from the neoliberal modernization narrative.
This is an excerpt from Karina Batthyány’s video speech at The International Academic Forum in China.
Edited by BAI LE