Mbeki looks East

South Africa is increasingly tempering liberal economic policies based on the Washington Consensus with a state-led growth model that draws its inspiration from a very different capital — Beijing.

President Thabo Mbeki’s policy agenda, which he assesses in his State of the Nation speech on Friday, is being shaped by the high-growth, government-led Chinese model.

Last September, when a group of Presidency officials toured China’s boom towns, they saw crowded harbours, new roads and rail links, and cities under continual construction.

But what impressed them most was the Chinese government’s ability to implement a radical economic and social transformation strategy. Despite very different conditions, they want to replicate some of that success here.

Instead of privatising, South Africa’s parastatals are being recapitalised.

A New Deal for social transformation is also in the works, including the Expanded Public Works Programme, the extension of the social safety net to 7,7-million people and a fresh housing plan. Increasingly, it is the Presidency’s policy coordination unit that manages the process from the centre.

Will Hutton, a British journalist whose writing on global inequality has informed Mbeki’s vision, says of China: ”It is a new economic model combining capitalist dynamism, but guided by a state constantly aware of the need to raise living standards and the quality of life for hundreds of millions of people — or it will suffer a crisis of legitimacy.

”The scale of the infrastructure investment … makes your head spin.”

That is precisely the approach articulated by Mbeki in his last State of the Nation address, which put state enterprises at the heart of plans to ease infrastructural barriers to growth, and set a timetable for expanded social service delivery.

Government spokesperson Joel Netshitenze chalks up substantial progress to this approach: ”Fundamental interventions are happening in the economic arena with regard to infrastructure investment in order to facilitate private sector investment by lowering the cost of inputs. We’ve more clearly defined social security needs … and thirdly, we have a clearer conception of interventions required like the expanded public works programme; micro-credit and skills development.”

In this sense South Africa forms part of what Hutton calls the ”Beijing consensus”. But Netshitenze prefers not to characterise the current approach as a shift. ”It was necessary to create the appropriate macro-economic balances and as a consequence we had the state resources to allocate to economic and social spending. This created a new developmental trajectory.”

Unlike China, South Africa is a democracy, and cannot force its plans through with the same brutal efficacy. More closely analogous are the dominant party systems in Japan, Singapore and Malaysia, where the state uses legislation, patronage and persuasion to ensure national backing. When the market cannot or will not create conditions for growth, government steps in with investment or legislation.

Public rebukes for Sasol CE Peter Cox and AngloAmerican chief Tony Trahar over remarks about risk that Mbeki saw as undermining confidence in South Africa were symptoms of a more general disappointment that local business is refusing to join the transformation train.

The push to build a consensual, developmental state is also behind moves toward a more robust model of black economic empowerment, calls for a ”new patriotism”, and pressure on institutions to play a developmental role.

But in an apparent contradiction, the National Economic Development and Labour Council, created to foster the kind of consensus economic management prevailing in Germany and the Netherlands, has been sidelined, along with the Congress of South African Trade Unions and the South African Communist Party.

To some observers it seems the Presidency is seeking to build consensus around its plan, rather than using consensus-building to develop a plan, an allegation Netshitenze denies: ”I would say the opposite might be happening: in defining the kinds of things that need to be done with regard to the economy, presidential working groups have been key. We’ve asked them all: What are the other constraints you face?” 

Nevertheless, when Mbeki says he welcomes debate, it is against the backdrop of an insistence that a party which won 70% of the vote is more likely to know what the country needs than its critics. He believes the ANC must be a hegemonic force for change, and that mass support legitimises that approach. 

As the rifts in the party over succession begin to surface in a proxy battle between the youth league and the women’s league, Mbeki must be keenly aware that the time is fast approaching when members of his Cabinet will no longer look to him to secure their futures, and his power begins to wane.

In many ways the 2007 ANC congress has already begun. Mbeki wants to finish the job of liberation on his own terms, and this may be his last chance.