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
Reading unlocks intelligence!

Good news for all progressive parents! The British have completed a study of 70,000 people called the ‘1970 British Cohort Study’; researchers followed them for many years noting many aspects of their lives!They studied many details, including the activity of reading from an early age. Along with that they investigated the associated career benefits. One result discovered was that if a young person reads a lot, it develops his/ her general intelligence no-matter the development of his parents; it makes him smarter.
1970 British Cohort (Group) Study
It should be observed here that the ‘1970 British Cohort Study’ followed 70,000 people to examine various aspects of their lives.
It was found that reading brings life-long benefits; it improves mood, it helps with social skills, increases empathy, reduces anxiety, protects against depression and slows brain decay, the study found.
But, on the contrary, how many people are losing their reading ability? The consequences are that this brings poorer critical thinking, less empathy for others resulting in a dumbing-down of society.
People are urged to switch off their smartphones and read more of what they like, – perhaps try reading the newspapers!
We suggest they try reading some famous English literature.
English literature offers a rich heritage of wonderful ideas and thoughts. The reader can be intellectually uplifted – it brings refreshing new vistas and stimulating new ideas. It nourishes the psyche.
Unfortunately, most students of English work hard and learn all the hum-drum mechanics of the language, for which they get tested and graded, but then there is no payoff, no reward for their efforts. Ideally, grammar should be followed up with intellectual benefits for our students’ efforts – which is of course, the enjoyment of the works of literature of the many great writers in the English language. This is the great payoff for all their efforts.
One of the obvious reasons for the lack of “follow through” may be lack of time allocated in the curriculum – or, perhaps, more darkly, the teachers’ own lack of knowledge of the great range of good reading materials produced by the countless generations who have gone before. Such writers have laid down for us a heritage of glorious literary works in books and essays, all of which can be found in any good library. It is thought that much of this good literature ought to be introduced to all students of English “full stop,” as part of developing a fuller, deeper, cultured society. Reading English literature should bring intellectual enrichment to all those willing to drink from this Bacchanalian horn of plenty.
It must be said firstly, that it can be fairly expected that most young people, especially those learning English as a second language, are unaware of the many outstanding pieces of writing that propel English to stand tall amongst the rest. That is, students need to be first introduced to great writings and have a spark of interest ignited in this large landscape of literary works.
But, for young people new to English, it may be better to introduce suitable reading material in an organized fashion. Young people can very quickly become disillusioned and antagonistic to something new. Ideally, pleasant, understandable literature can be first introduced to the student to fire up his or her interest in this rich source of culture.
For example, by being introduced to “Daffodils,” a short descriptive poem by William Wordsworth, the student can get some very pleasant ideas to think on.
Do not overlook Conan Doyle’s “Sherlock Holmes” marvellous short detective stories, each one captivating the reader’s attention right to the end. It is in these short stories that the novice reader can first consolidate his power of reading.
For light reading Jerome K. Jerome’s book “Three Men in a Boat” is suggested. On one occasion he goes to the library suffering from a slight hay-fever (allergy) seeking a cure. He consults a book “Lexicon of Pharmacology” and recoils in horror as his symptoms fit most of those diseases. He concludes he cannot live much longer and staggers home to rest and recuperate! This is a well related tale in the book – although seemingly quite implausible!
Similarly, it may be necessary to explain the meanings of the poem: “What is Life if Full of Care?” by William Henry Davis – how he regrets that we humans are always in a hurry, too busy to notice or see the delights of nature, and scenes of natural beauty, e.g., a girl’s (beauty’s) agile steps as she steps across a stream and see her smile as she passes by; we have no time to make friends and even kiss her. Regrets! Explaining this to students would bring a certain intellectual enlightenment.
John Keats’s poem, “Ode to Autumn” is another great work describing the ripening fruits of the autumn season. He personifies how nature as a person, brings to fruition all the good things of a rural landscape quietly humming with warmth after a hot summer.
Again, it is likely necessary to explain to a young, inexperienced mind the meaning of the descriptive poetry found in this magnificent poem.
Treasure Island is another great children’s classic, waiting for thirsty drinkers, imbibers of English to eagerly read.
This is the real English to be tasted and then swigged at lustily in pleasure and satisfaction, not some writing airing historical grievances for children to study
Priyantha Hettige
Opinion
KOICA – Volunteer Partner’s Day Meeting 2025

On 20th May 2025, KOICA Volunteer Partner’s Day of year 2025 was held at the Courtyard by Marriott with the presence of the Country Director of KOICA Sri Lanka office Mrs. LEE Yooli, Mr. Samantha Bandara, the Director General of External Resources Department and officials from the Department of Technical Education & Training, National Institute of Education, Schools, Universities, National Youth Services Council, Colombo Public Library and over fifteen (15) volunteer partner organization representatives in Sri Lanka.
At present, there are thirteen (13) KOICA volunteers serving in Sri Lanka and the meeting organized by KOICA (WFK Division) was to share the know-how, experience and knowledgeable resources with the respective partner organizations. The main goals of the knowledge sharing session were to deliver relevant information about the KOICA Volunteer program and to generate insights from the partner organizations that will be useful in recalibrating WFK program’s future direction, including safety and security.
During the session, participants of partner organizations showed their strong need to obtain the services of volunteers, especially for the fields of Korean Language, ICT, Electronics, Social Welfare, Electronics and Auto-Mobile Engineering. Furthermore, they appreciated and emphasized the importance of expanding of KOICA Volunteer Program to rural areas in Sri Lanka.
Since the initiation of KOICA Sri Lanka office in 1991, volunteer dispatch activities have taken place throughout most regions in the country. There has been a significant demand for KOICA volunteers in the educational sphere targeting areas of Korean Language, ICT, etc. The expertise received from Korea has not only shown developmental potential in partner organizations but has also provided invaluable expertise for the youth to excel in the job market.
The Country Director of KOICA Sri Lanka office Mrs. LEE YOOLI expressed her gratitude to all the participants of partner organizations and added “KOICA Headquarters, together with the Sri Lanka Office, is pleased to continue the volunteer program under its ODA endeavors towards Sri Lanka; while introducing new focused volunteer fields in alignment with the SDG goals and the Sri Lankan government priorities.”
In the meeting, Mr. Samantha Bandara, Director General of the External Resources Department, extended his deep appreciation to KOICA for overall technical cooperation towards Sri Lanka and especially, appreciated the services of volunteers who contribute for the social and economic growth of the country, by sharing their expertise and Korea’s development experience.
The Korea International Cooperation Agency (KOICA), the grant aid division of the Embassy of the Republic of Korea, is the Korean government agency for grant aids under the mission of “Contributing to the common prosperity and the promotion of world peace through inclusive, mutual development cooperation leaving no one behind.”
Opinion
Has AKD lost the plot?

The election of the JVP/NPP leader as the executive president of Sri Lanka was no doubt momentous, perhaps, second only to the election of Ranasinghe Premadasa to the same coveted position. Though it was the first time the ‘caste barrier’ was broken, unfortunately, instead of hailing this social revolution Premadasa had other ideas; he attempted to rewrite history by attempting to change his heritage thus missing a great opportunity to show that Sri Lanka indeed was a country of equality and opportunity! AKD shares with Premadasa the same great achievement of reaching the top from very humble beginnings. In addition, AKD is the only leader of the country to be elected from a party with a ‘terrorist’ heritage and many were hopeful that this would not be a baggage. As recent events have shown, it looks as if he is not able to shed that baggage. It is said that a leopard cannot change its spots! This is past repeating itself, as well illustrated by the actions of our first executive president JRJ; he was a manoeuvrer who could not stop doing so, even when he reached the top, which no doubt contributed to his downfall!
AKD started well, just like all his predecessors have done, but wheels seem to be coming off the wagon pretty soon! He continues to behave like an opposition politician continuing with attacks on his opponents, past and present, instead of concentrating on statecraft, to take action to alleviate the suffering of the masses burdened with severe economic hardships and chart a course for future prosperity. Perhaps, this may at least be partly due to his having to face election after election but this should not be an excuse. Prior to the presidential election he portrayed that he was surrounded by groups of experts, of all modalities, who were ready with policies for rapid implementation but these experts seem to have disappeared into thin air! Only experts in economics seem to be from the much-maligned IMF. The message from the voters seems to be falling on deaf ears as shown by absurd explanations given for the erosion of the vote at the last local government elections.
He seems to be a one-man band which, worryingly, dashes hope for the long-promised abolition of the presidency. He would be totally ineffective without the executive powers of the presidency. This seems yet another addition to his unfulfilled promises. He is apparently being supported by a group of amateurs! Prior to elections there was much hype about the PM, a respected academic, who seems to have been pushed to the background. She does not seem to be functioning efficiently even as the minister of education. Ragging continues in universities resulting in suicides. Even worse was the suicide of a student sexually molested by a teacher, humiliated by a friend of the accused teacher, a private tutor who contested on the NPP ticket. The initial punishment for the teacher, till public protests erupted, was a transfer to a distant school. To make a terrible situation even worse was the action of the minister tasked with ensuring the safety of women and children. She claimed that the parents had not met her and handed over a petition.
This lack of leadership is replicated by the President himself. AKD’s mantra during the parliamentary election campaign was cleansing of Diyawannawa but no sooner had the guardian of the house been elected than his doctorate from a private Japanese university was questioned. After much hesitation, the speaker resigned, claiming that he would prove his academic qualifications. He has not done so and he is still an ‘honourable’ MP! Another MP, a female lawyer had the audacity to state that under the NPP government anyone was free to lie and admitted that she had lied about billions of dollars airlifted to Uganda by the Rajapaksas! AKD has taken no action against these MPs.
AKD also had an exposition of the Sacred Tooth Relic to be held in the run-up to the recent local elections. It did not pay dividends may be because the arrangements were in shambles. He visited Vietnam to deliver a lecture for the International Vesak Day but apparently did not find time to pay homage to the Buddha’s sacred relics on display a short distance away from the conference hall. He did find time to lay a wreath at the memorial of the war dead and flew back on a private jet so that he could vote in the LG elections! Another promise broken but it is claimed that a Buddhist society had paid for the private jet!
AKD’s actions regarding the ceremony to remember and honour war heroes clearly shows that he has completely lost the plot. To the shock and horror of all patriotic Sri Lankans, an announcement was made a couple of days ago by the secretary of defence that the ceremony would be presided over by the deputy minister of defence! In short, the commander of the forces is too busy or too reluctant to attend the remembrance of those who sacrificed their lives for the integrity of the country. I doubt it has happened in any country! If he was of the opinion that this event was superfluous or that it hampered reconciliation, he should have had the guts to issue a statement to that effect. Coming from a ‘terrorist’ heritage, the JVP may be having a soft corner for the terrorists killed by the armed forces and may have thought it was hypocritical for him to attend!
As the public outcry could not be patched over, he decided not only to attend the ceremony but also visit the disabled and allow them to take selfies. It is a shame that AKD seems to have developed selective amnesia for his past statements. During the time Rajapaksas were leading the campaign to eradicate the Tigers, AKD was a strong supporter and at times claimed that he told them what to do! What has brought about this change? Was it the backing from the pro-LTTE groups in other countries?
To add insult to injury, during his speech he alluded that the ‘war’ had been fought for political gains. Though it may have produced political gains, doesn’t he realise that it was fought, at a tremendous cost, to defeat terrorism for the purpose of continuing the integrity of the country? He and his acolytes are spreading the canard that this is different as we did not fight a foreign country. Had the Tigers succeeded, we may well be fighting a different country in our little island! His virtual equation of dead terrorists to our fallen heroes added further insult.
Unfortunately, we seem an ungrateful country insulting our fallen war heroes and allowing hypocritical Western nations insulting our living heroes.
by Dr Upul Wijayawardhana
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