Zim must take a cue from China’s 5-year plans

THE five-year plans are a series of social and economic development initiatives issued since 1953 in China establishing foundations and principles of Chinese communism, mapping strategies for economic development, setting growth targets, and launching reforms.

This article intends to summarise the first five-year Chinese plan (1953-1957) and how Zimbabwe can take a leaf from its longtime all-weather friend.

Chairman Mao Zedong and other Chinese revolutionaries embarked on an intensive programme of industrial growth and socialisation.

For this purpose, the administration adopted the Soviet economic model, based on State ownership in the modern sector, large collective units in agriculture, and centralised economic planning.

This was manifested in the first five-year plan.

In terms of economic growth, the first five-year plan was successful.

Key industries, including iron and steel manufacturing, coal mining, cement production, electricity generation, and machine building were greatly expanded and put on a firm, modern technological footing.

Industrial production increased at an average annual rate of 19% between 1952 and 1957, and national income grew at a rate of 9% a year.

Agricultural output increased substantially, averaging increases of about 4% a year.

Like China, Zimbabwe’s NDS1 vision 2030, meant to transform the economy into middle class, is brilliant.

However, it is my opinion that government strategies must be revisited. A clear policy on property rights is essential.

The late Greek philoshopher Aristotle argued that “property should be private but the use of it common”.

Equip farmers with leases so that they can secure loans from investors to fully utilise the land which is a common thing to all farmers.

If agricultural production increases, Zimbabwe will have something to offer as a signatory to AfCTA and as a regional trading partner.

Thumbs up to the new dispensation for choosing to compensate Bilateral Investment Promotion and Protection Agreements farmers as a way of respecting property rights.

Aristotle himself highly disapproved of usury and cast scorn on making money through a monopoly.

Aquinas (1225 –1274) dealt with the concept of a just price, which he considered necessary for the reproduction of the social order.

Similar in many ways to the modern concept of long-run equilibrium, a just price was just sufficient to cover the costs of production, including the maintenance of a worker and his family.

It is my humble request to Finance minister Mthuli Ncube to consider his stance on a free market as it does not favour a just price.

Aquinas taught that high prices in response to high demand were theft. Free market promotes monopoly and corruption in business.

China had to regulate production of goods, services and market prices through centralised decisions from the government which Zimbabwe must adopt.

Precisely, Jean Buridan (1300 – 1358) argues that aggregated, not individual, demand and supply determine market prices.

For him, a just price is what the society collectively, and not just one individual, is willing to pay.

Before regulating prices, Zimbabwe must consult with its populace to come up with a just price.

Ibn Khaldun (1332–1406)’s idea on taxes bore a striking resemblance to supply-side economics’ Laffer curve, which posits that beyond a certain point higher taxes discourage production and actually cause revenues to fall.

Higher taxes scare away investors, leading to loss of foreign direct investment.

This contravenes the World Trade Organisation and General Agreement on Trade and Tariffs requirements of equal treatment of trade partners.

Tax thresholds must be based on most-favoured nations and transfer factor principles of international trade which must not be discriminatory, for instance, giving tax holidays to Chinese companies alone is discriminatory and can promote anti-development.

Zimbabwe must emulate China in applying a mercantilism economic approach which advocates for the use of the State’s military power to ensure that local markets and supply sources are protected, spawning protectionism.

Mercantile theorists hold the view that international trade cannot benefit all countries at the same time.

Money and precious metals were the only sources of riches in their view, and limited resources must be allocated between countries. Therefore, tariffs should be used to encourage exports, which bring money into the country, and discourage imports which send it abroad.

In other words, a positive balance of trade ought to be maintained through a surplus of exports.