Combination of central government with free market is key to China's development: Norwegian expert

10:57, April 16, 2011      

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The key to China's rapid economic growth in the past three decades is a well-balanced combination of a central government with a free market, says a professor at the BI Norwegian School of Management.

Torger Reve, who was president at BI for eight years and has worked at Fudan University in Shanghai, said Thursday he has been focusing his research on strategy and business competitiveness.

The job at the Nordic Center, set up through cooperation between Fudan University and BI, gave Reve a good chance to observe China's development directly from the country's largest commercial and industrial hub.

"I think Chinese experience in economic development is an extraordinary one," Reve told Xinhua, "I don't think we see any historic example of how a big economic transition has taken place over such a short period."

The professor said that China was a developing country with many people using bicycles when he came on his first visit. Since then, China is now the second largest economy in the world and more people are being brought out of poverty as a result.

The transition is "remarkable" and the economic development in China is "impressive," the professor said.

"We have to go beyond that to see why it could happen because many countries would need that but only China has achieved such a high goal in such a short time," Reve said.

"China, in a way, through its combination of a central government and free market, which I guess is a key thing, would pinpoint industries and say we want success in this industry," for example shipbuilding or shipping, which is a big industry in Norway, then it just performed that to achieve the goal, the professor said.

Chinese corporations are globalizing and working like multinationals just a little more than 30 years after the Communist Party of China, which will be celebrating the 90th anniversary of its founding around the middle of this year, decided to carry out reforms at home and open up to the outside world in 1978.

To make it an integral part of the global economy, China had to open up to foreign companies, business schools like BI, and investors. "And now it is becoming that," Reve said.

The professor said that the Communist Party (of China) has a facilitating role to play in China's development and that if the party could keep a balanced combination of top-down and bottom-up, the country would succeed in achieving further development goals by adopting the model.

"It has been doing well so far. But you know, it works perhaps good as you do it in China. The question is that: Can you use the model globally as you do now?" Reve said.

He pointed out that the West is different in terms of how people get influenced, democracy and social movements.

In that regard, the professor emphasized the importance of two different cultures starting to understand each other. "And I think there are only winners," he said.

Norway has benefited tremendously from China's development through importing and exporting, and by setting up and running businesses in China, he said. Chinese companies are also operating in Norway.

"We have several acquisitions from Chinese companies in Norway," with the most recent case being Bluestar purchasing the Norwegian energy company Elkem, the world's largest player in solar energy, Reve said.

Will China really use Norway as its production base or just simply take the technology?

"We will follow it very closely to see what Bluestar will do with Elkem," Reve said.

Source: Xinhua

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