Opinion
Some aspects of China’s development model
by Shiran Illanperuma
China’s rapid development over the last few decades has been the source of much debate among economists. Some claim China as the model par excellence of market liberalisation and the superiority of private sector driven growth. Others equally argue that China’s model is one of planning and state intervention.
On 28 March, I was invited by Nexus Research to deliver a presentation on China’s development model alongside former Ambassador to China Dr. Palitha Kohona. Unfortunately, the contents of this presentation have been misreported in an article in the Island published on 4 April (Dr Kohona: developing countries should covet China model). The article claimed that my presentation touched on “low-cost labour, foreign direct investments, and global trade agreements”. In fact, such simplistic tropes were precisely what I had intended to counter.
China’s development model challenges many of the axioms of neoclassical economics. If low-cost labour were the decisive factor for take-off, then investment should be pouring into much-cheaper labour markets in sub-Saharan Africa. On the contrary, rising wages in China have not led to the outflow of capital one would expect under such a model. This is because the advantage China offers is a healthy and skilled workforce (relative to price) and an infrastructural system that keeps non-wage operating costs (such as transport and energy) low. This, combined with a domestic value chain, is China’s main strength and why economic growth has been combined with rising wages and standards of living.
While foreign direct investment (FDI) has been a huge part of China’s success story, it is possible to overstate their importance. First, FDIs only really took off from the 1990s onwards, yet to begin there would be to ignore the decades of work done to develop the country’s agricultural self-sufficiency, basic industrial system, and institutional structure. Second, what has mattered for China is the quality of FDI, which is determined by government policy. By the standards of the OECD Foreign Direct Investment Regulatory Restrictiveness Index, China remains fairly selective on what FDI is allowed and encouraged. FDI is promoted not as an end in itself but as a means to acquire technology that should be transferred to national champions.
Role of Local Government
A significant portion of my presentation for Nexus Research was on the role of local governments economic policy – something that is often neglected (though there is a growing literature on the subject). China has a fairly decentralised system of governance, a product of its vast size and geography, as well as the institutional changes and experiments in direct democracy during the period of the Cultural Revolution.
Chinese economist Xiaohuan Lan, in his book How China Works (2024), has said that “In China, it is impossible to understand the economy without understanding the government.” While the central government in China formulates indicative plans and the overall goals and trajectory for development, implementation of these plans is delegated to local governments. Local governments have a broad remit to interpret these plans, experiment with implementation, and compete with each other for investment. This leads to a much more dynamic and decentralised development process that encourages grassroots participation.
A comparison between China and India on the share of public employment at different levels of government is very revealing. For China, over 60% of public employment is at the level of local government, with federal and state governments comprising less than 40% of employment. In contrast, less than 20% of Indian public employment is in local government. India, therefore, despite its much-touted linguistic federal system, is far more centralised than China. The weakness of Indian local governments remains a significant barrier for its development.
The Role of SOEs
State-owned enterprises (SOEs) are the elephant in the room when it comes to China’s development model. Chinese political scientist Prof. Zheng Yongnian said in 2011 that “the state sector is in fact important for China’s macroeconomic stability.” This is a radically different approach from neoclassical economics, which views macroeconomic policy purely through the lens of fiscal and monetary policy.
Broadly speaking, SOEs in China perform four ‘macroeconomic’ functions. First, they conduct the low-cost production of upstream inputs such as metals, chemicals, and rare earth minerals. Second, they manage essential commodity reserves and intervene in commodity markets to stabilise prices. Third, they engage in countercyclical spending on public works during economic downturns. Fourth, they are deployed to respond during emergencies and external shocks such as the 2008 Sichuan earthquake and the COVID-19 pandemic. The through line in these functions is to keep costs low and smoothen out business and commodity cycles. This is why China has not yet faced a recession comparable to many capitalist economies.
As a consequence of this model, SOEs remain a significantly large part of the Chinese economy in quantitative terms. According to data compiled by the Peterson Institute for International Economics, SOEs accounted for around 75% of the aggregate revenue of Chinese firms in the Fortune 500. While it is true these firms are often not as profitable as the private sector, this is by design, as they pass on low prices to domestic manufacturers.
China has entities such as the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) which facilitate the centralised governance and oversight of SOEs. This model is crucially different from the Temasek model often discussed in Sri Lanka. Under Temasek, SOEs are almost entirely market-oriented and depoliticised. This is not the case in China, where SOEs continue to play crucial social and political functions.
The Role of Competition
What confuses most observers of China is the fact that it very obviously has a fiercely competitive and dynamic private sector. How then to reconcile the preceding elaboration of the role of local government and SOEs with a competitive private sector? Local governments and SOEs provide the basic institutional framework and economic building blocks for the private sector to play its role in capital accumulation and innovation.
The competitive cycle in China could be broadly divided into four phases. In the first phase, incentives created by the central and local governments lead to a flood of investment in desired sectors and sub-sectors, resulting in the establishment of new firms and production capacity. In phase two, these incentives are eased, leading to fierce competition and survival of only the fittest firms. In phase three, once the market has reached a stage resembling monopoly, one of three tactics may be used: 1. Firms are forced to compete internationally and export; 2. monopoly firms are broken up by the state; or 3. monopoly firms are nationalised or brought under stronger state supervision. The system is designed to resist the market’s natural tendency towards monopolisation.
Political Leadership
The Chinese state has an exceptional ability to maintain what political sociologist Peter B. Evans calls ‘embedded autonomy’. It is close enough to the private sector to understand economic conditions and formulate policy but politically independent enough from capital to resist capture by private interests. This is a key difference between China’s development model and the developmentalism of East Asian states such as Japan and South Korea, where large private firms (zaibatsu in the former, chaebols in the latter) dominate political life.
China’s development model cannot be understood in isolation of its leadership system. The Communist Party of China, which has around 100 million members (almost five times the population of Sri Lanka!), has been key to the process of China’s development. The party remains committed to developing Marxist-Leninist philosophy and applying it to the country’s concrete conditions. It retains deep roots in all levels of Chinese society, engaging in consultation during the policymaking process.
To what extent China’s model can be replicated by other countries is an open question. While the CPC has often invited academics and political parties to study its system, this does not equate to the party attempting to export said system. There is no real ‘Beijing consensus’ that is equivalent to the ‘Washington consensus’. On the contrary, President Xi Jinping, in 2023, cautioned that modernisation “cannot be realised by a cookie-cutter approach”.
“For any country to achieve modernisation, it needs not only to follow the general laws governing the process but, more importantly, consider its own national conditions and unique features.”
(Shiran Illanperuma is a researcher at Tricontinental: Institute for Social Research and a co-editor of Wenhua Zongheng: A Journal of Contemporary Chinese Thought. He is also a co-convenor of the Asia Progress Forum which can be contacted at asiaprogressforum@gmail.com)

Opinion
The policy of Sinhala Only and downgrading of English
In 1956 a Sri Lankan politician riding a great surge of populism, made a move that, at a stroke, disabled a functioning civil society operating in the English language medium in Sri Lanka. He had thrown the baby out with the bathwater.
It was done to huge, ecstatic public joy and applause at the time but in truth, this action had serious ramifications for the country, the effects have, no doubt, been endlessly mulled over ever since.
However, there is one effect/ aspect that cannot be easily dismissed – the use of legal English of an exact technical quality used for dispensing Jurisprudence (certainty and rational thought). These court certified decisions engendered confidence in law, investment and business not only here but most importantly, among the international business community.
Well qualified, rational men, Judges, thought rationally and impartially through all the aspects of a case in Law brought before them. They were expert in the use of this specialised English, with all its meanings and technicalities – but now, a type of concise English hardly understandable to the casual layman who may casually look through some court proceedings of yesteryear.
They made clear and precise rulings on matters of Sri Lankan Law. These were guiding principles for administrative practice. This body of case law knowledge has been built up over the years before Independence. This was in fact, something extremely valuable for business and everyday life. It brought confidence and trust – essential for conducting business.
English had been developed into a precise tool for analysing and understanding a problem, a matter, or a transaction. Words can have specific meanings, they were not, merely, the play- thing of those producing “fake news”. English words as used at that time, had meaning – they carried weight and meaning – the weight of the law!
Now many progressive countries around the world are embracing English for good economic and cultural reasons, but in complete contrast little Sri Lanka has gone into reverse!
A minority of the Sinhalese population, (the educated ones!) could immediately see at the time the problems that could arise by this move to down-grade English including its high-quality legal determinations. Unfortunately, seemingly, with the downgrading of English came a downgrading of the quality of inter- personal transactions.
A second failure was the failure to improve the “have nots” of the villagers by education. Knowledge and information can be considered a universal right. Leonard Woolf’s book “A village in the Jungle” makes use of this difference in education to prove a point. It makes infinitely good politics to reduce this education gap by education policies that rectify this important disadvantage normal people of Sri Lanka have.
But the yearning of educators to upgrade the education system as a whole, still remains a distant goal. Advanced English spoken language is encouraged individually but not at a state level. It has become an orphaned child. It is the elites that can read the standard classics such as Treasure Island or Sherlock Holmes and enjoy them.
But, perhaps now, with the country in the doldrums, more people will come to reflect on these failures of foresight and policy implementation. Isn’t the doldrums all the proof you need?
by Priyantha Hettige
Opinion
GOODBYE, DEAR SIR
It is with deep gratitude and profound sorrow that we remember Mr. K. L. F. Wijedasa, remarkable athletics coach whose influence reached far beyond the track. He passed away on November 4, exactly six months after his 93rd birthday, having led an exemplary and disciplined life that enabled him to enjoy such a long and meaningful innings. To those he trained, he was not only a masterful coach but a mentor, a friend, a steady father figure, and an enduring source of inspiration. His wisdom, kindness, and unwavering belief in every young athlete shaped countless lives, leaving a legacy that will continue to echo in the hearts of all who were fortunate enough to be guided by him.
I was privileged to be one of the many athletes who trained under his watchful eye from the time Mr. Wijedasa began his close association with Royal College in 1974. He was largely responsible for the golden era of athletics at Royal College from 1973 to 1980. In all but one of those years, Royal swept the board at all the leading Track & Field Championships — from the Senior and Junior Tarbat Shields to the Daily News Trophy Relay Carnival. Not only did the school dominate competitions, but it also produced star-class athletes such as sprinter Royce Koelmeyer; sprint and long & triple jump champions Godfrey Fernando and Ravi Waidyalankara; high jumper and pole vaulter Cletus Dep; Olympic 400m runner Chrisantha Ferdinando; sprinters Roshan Fernando and the Indraratne twins, Asela and Athula; and record-breaking high jumper Dr. Dharshana Wijegunasinghe, to name just a few.
Royal had won the Senior & Junior Tarbats as well as the Relay Carnival in 1973 by a whisker and was looking for a top-class coach to mould an exceptionally talented group of athletes for 1974 and beyond. This was when Mr. Wijedasa entered the scene, beginning a lifelong relationship with the athletes of Royal College from 1974 to 1987. He received excellent support from the then Principal, late Mr. L. D. H. Pieris; Vice Principal, late Mr. E. C. Gunesekera; and Masters-in-Charge Mr. Dharmasena, Mr. M. D. R. Senanayake, and Mr. V. A. B. Samarakone, with whom he maintained a strong and respectful rapport throughout his tenure.
An old boy of several schools — beginning at Kandegoda Sinhala Mixed School in his hometown, moving on to Dharmasoka Vidyalaya, Ambalangoda, Moratu Vidyalaya, and finally Ananda College — he excelled in both sports and studies. He later graduated in Geography, from the University of Peradeniya. During his undergraduate days, he distinguished himself as a sprinter, establishing a new National Record in the 100 metres in 1955. Beyond academics and sports, Mr. Wijedasa also demonstrated remarkable talent in drama.
Though proudly an Anandian, he became equally a Royalist through his deep association with Royal’s athletics from the 1970s. So strong was this bond that he eventually admitted his only son, Duminda, to Royal College. The hallmark of Mr. Wijedasa was his tireless dedication and immense patience as a mentor. Endurance and power training were among his strengths —disciplines that stood many of us in good stead long after we left school.
More than champions on the track, it is the individuals we became in later life that bear true testimony to his loving guidance. Such was his simplicity and warmth that we could visit him and his beloved wife, Ransiri, without appointment. Even long after our school days, we remained in close touch. Those living overseas never failed to visit him whenever they returned to Sri Lanka. These visits were filled with fond reminiscences of our sporting days, discussions on world affairs, and joyful moments of singing old Sinhala songs that he treasured.
It was only fitting, therefore, that on his last birthday on May 4 this year, the Old Royalists’ Athletic Club (ORAC) honoured him with a biography highlighting his immense contribution to athletics at Royal. I was deeply privileged to co-author this book together with Asoka Rodrigo, another old boy of the school.
Royal, however, was not the first school he coached. After joining the tutorial staff of his alma mater following graduation, he naturally coached Ananda College before moving on to Holy Family Convent, Bambalapitiya — where he first met the “love of his life,” Ransiri, a gifted and versatile sportswoman. She was not only a national champion in athletics but also a top netballer and basketball player in the 1960s. After his long and illustrious stint at Royal College, he went on to coach at schools such as Visakha Vidyalaya and Belvoir International.
The school arena was not his only forte. Mr. Wijedasa also produced several top national athletes, including D. K. Podimahattaya, Vijitha Wijesekera, Lionel Karunasena, Ransiri Serasinghe, Kosala Sahabandu, Gregory de Silva, Sunil Gunawardena, Prasad Perera, K. G. Badra, Surangani de Silva, Nandika de Silva, Chrisantha Ferdinando, Tamara Padmini, and Anula Costa. Apart from coaching, he was an efficient administrator as Director of Physical Education at the University of Colombo and held several senior positions in national sporting bodies. He served as President of the Amateur Athletic Association of Sri Lanka in 1994 and was also a founder and later President of the Ceylonese Track & Field Club. He served with distinction as a national selector, starter, judge, and highly qualified timekeeper.
The crowning joy of his life was seeing his legacy continue through his children and grandchildren. His son, Duminda, was a prominent athlete at Royal and later a National Squash player in the 1990s. In his later years, Mr. Wijedasa took great pride in seeing his granddaughter, Tejani, become a reputed throwing champion at Bishop’s College, where she currently serves as Games Captain. Her younger brother, too, is a promising athlete.
He is survived by his beloved wife, Ransiri, with whom he shared 57 years of a happy and devoted marriage, and by their two children, Duminda and Puranya. Duminda, married to Debbie, resides in Brisbane, Australia, with their two daughters, Deandra and Tennille. Puranya, married to Ruvindu, is blessed with three children — Madhuke, Tejani, and Dharishta.
Though he has left this world, the values he instilled, the lives he shaped, and the spirit he ignited on countless tracks and fields will live on forever — etched in the hearts of generations who were privileged to call him Sir (Coach).
NIRAJ DE MEL, Athletics Captain of Royal College 1976
Deputy Chairman, Old Royalists’ Athletics Club (ORAC)
Opinion
Why Sri Lanka needs a National Budget Performance and Evaluation Office
Sri Lanka is now grappling with the aftermath of the one of the gravest natural disasters in recent memory, as Cyclone Ditwah and the associated weather system continue to bring relentless rain, flash floods, and landslides across the country.
In view of the severe disaster situation, Speaker Jagath Wickramaratne had to amend the schedule for the Committee Stage debates on Budget 2026, which was subsequently passed by Parliament. There have been various interpretations of Budget 2026 by economists, the business community, academics, and civil society. Some analyses draw on economic expertise, others reflect social understanding, while certain groups read the budget through political ideology. But with the country now trying to manage a humanitarian and economic emergency, it is clear that fragmented interpretations will not suffice. This is a moment when Sri Lanka needs a unified, responsible, and collective “national reading” of the budget—one that rises above personal or political positions and focuses on safeguarding citizens, restoring stability, and guiding the nation toward recovery.
Budget 2026 is unique for several reasons. To understand it properly, we must “read” it through the lens of Sri Lanka’s current economic realities as well as the fiscal consolidation pathway outlined under the International Monetary Fund programme. Some argue that this Budget reflects a liberal policy orientation, citing several key allocations that support this view: strong investment in human capital, an infrastructure-led growth strategy, targeted support for private enterprise and MSMEs, and an emphasis on fiscal discipline and transparency.
Anyway, it can be argued that it is still too early to categorise the 2026 budget as a fully liberal budget approach, especially when considering the structural realities that continue to shape Sri Lanka’s economy. Still some sectors in Sri Lanka restricted private-sector space, with state dominance. And also, we can witness a weak performance-based management system with no strong KPI-linked monitoring or institutional performance cells. Moreover, the country still maintains a broad subsidy orientation, where extensive welfare transfers may constrain productivity unless they shift toward targeted and time-bound mechanisms. Even though we can see improved tax administration in the recent past, there is a need to have proper tax rationalisation, requiring significant simplification to become broad-based and globally competitive. These factors collectively indicate that, despite certain reform signals, it may be premature to label Budget 2026 as fully liberal in nature.
Overall, Sri Lanka needs to have proper monitoring mechanisms for the budget. Even if it is a liberal type, development, or any type of budget, we need to see how we can have a budget monitoring system.
Establishing a National Budget Performance and Evaluation Office
Whatever the budgets presented during the last seven decades, the implementation of budget proposals can always be mostly considered as around 30-50 %. Sri Lanka needs to have proper budget monitoring mechanisms. This is not only important for the budget but also for all other activities in Sri Lanka. Most of the countries in the world have this, and we can learn many best practices from them.
Establishing a National Budget Performance and Evaluation Office is essential for strengthening Sri Lanka’s fiscal governance and ensuring that public spending delivers measurable value. Such an office would provide an independent, data-driven mechanism to track budget implementation, monitor programme outcomes, and evaluate whether ministries achieve their intended results. Drawing from global best practices—including India’s PFMS-enabled monitoring and OECD programme-based budgeting frameworks—the office would develop clear KPIs, performance scorecards, and annual evaluation reports linked to national priorities. By integrating financial data, output metrics, and policy outcomes, this institution would enable evidence-based decision-making, improve budget credibility, reduce wastage, and foster greater transparency and accountability across the public sector. Ultimately, this would help shift Sri Lanka’s budgeting process from input-focused allocations toward performance-oriented results.
There is an urgent need for a paradigm shift in Sri Lanka’s economy, where export diversification, strengthened governance, and institutional efficiency become essential pillars of reform. Establishing a National Budget Performance and Evaluation Office is a critical step that can help the country address many long-standing challenges related to governance, fiscal discipline, and evidence-based decision-making. Such an institution would create the mechanisms required for transparency, accountability, and performance-focused budgeting. Ultimately, for Sri Lanka to gain greater global recognition and move toward a more stable, credible economic future, every stakeholder must be equipped with the right knowledge, tools, and systems that support disciplined financial management and a respected national identity.
by Prof. Nalin Abeysekera ✍️
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