Turkey is breaking free from the 40-year neoliberal economic model that started on January 24, 1980, attacking the foundations of the production economy established during Atatürk’s era. President Erdoğan declared an “economic war of independence” against currency and interest rate manipulations and hot money brokers, promoting production, investment, and employment. Erdoğan’s statement, “China grew with this model,” also garnered attention.
As Aydınlık newspaper, we have been advocating for years that a production-focused economy is the essence of economic independence. We strive to convey China’s development experience, the most significant recent example of state-led planned economy globally, to our readers and the Turkish public. Let’s take a closer look at China’s economic and social development, known as the “Chinese miracle,” based on public policies and real production:
FROM A POOR COUNTRY TO A NATION REACHING MARS
China’s miraculous development in social and economic fields since its establishment has lifted approximately 800 million people out of poverty, doubled the income per capita in the last decade, and transformed from a feudal country dependent on the land into a nation exploring the dark side of the Moon and Mars today. The average life expectancy at the founding of New China was 35, which has now reached 78 years. Thus, under the leadership of the Communist Party of China (CPC), people’s lifespan has increased “a lifetime”!
The foundation of China’s development rests primarily on two pillars: persistence in public policies and the rediscovery that society is the fundamental force of social advancement.
FOUNDATIONS LAID DURING MAO’S ERA
China’s remarkable success became even more apparent with its openness to the world, incorporating capitalism’s dynamic elements, especially after the policy of opening up.
The foundation of the system was laid during the era of China’s great leader Mao. The significant economic and social steps taken during Mao’s era left a legacy of a China self-sufficient in energy and many raw materials. The economic and social development will initiated by Mao and named “Four Modernizations” by Deng, led to significant growth figures and a reduction in poverty expressed in hundreds of millions. Chinese President Xi Jinping (Şi Cinping) describes China’s economic policy as “Mao established it, Deng developed it.”1
The CPC leadership increasingly emphasizes that China’s foundations were laid during Mao’s era. Aydınlık newspaper writer Adnan Akfırat made this observation while reviewing Xi Jinping’s latest book “A Brief History of the CPC”:
“With this book, the Chinese state and the Communist Party of China declare a change from the erroneous attitude that downplayed or even ignored the significance of its founder Mao Zedong. Under Xi Jinping’s leadership, China declares its adherence to Mao Zedong’s revolutionary line.”2
INSISTENCE ON COMMUNALISM
From Mao to Xi, China has made groundbreaking strides in fighting poverty and announced the eradication of absolute poverty by the end of 2020, leading the world in this field. The system’s foundation is the implementation and persistence of the People’s Program under conditions unique to China (similar to the program implemented under Atatürk’s leadership in Turkey, which formed the basis of the country’s first constitution, the 1921 Constitution).
HUMAN-CENTERED PHILOSOPHY
At the heart of Populism is the improvement of working people’s living conditions. The CPC leadership strengthens the roots of economic and social development by improving distribution relations and regional growth imbalances and solidifying the majority of the population’s livelihoods.
When basic life needs are met, the profitability of enterprises is secured, consumption is balanced, and economic development is encouraged. A mutually supportive and complementary populist plan is in place. Economic growth is considered a means, not an end, with a development philosophy centered around the human being.
CONTROLLED EXCHANGE RATE REGIME
Even after opening up, China continued to command the world’s largest public economy. By implementing a controlled exchange rate regime and not leaving the economy to the mercy of markets, China remains the world’s most attractive country for foreign investment.
Foreign capital inflows are subject to strict control. In China, foreign capital that could disrupt the economic structure and open markets to speculation is regulated, and a “negative list” is created for such foreign capital, banning its entry. Not only foreign capital but also capital outflow and domestic currency circulation are strictly controlled, preventing dollarization. The top 4 commercial banks in China are state-owned, and 19 out of the 20 largest companies are state enterprises, proving the extent of the state-led economy.
THE FOUNDATION OF ECONOMIC STABILITY: FIVE-YEAR DEVELOPMENT PLANS
Since 1953, China has been setting five-year development plans, which define the country’s social, economic, cultural, and political goals. The Five-Year Plan illustrates the Chinese government’s fundamental approach. State institutions, companies, and local governments develop their work within this framework.
Every five years, the plan is adopted by the National People’s Congress, the world’s largest assembly with 3,000 members, and put into practice. The plan is a living document, continuously evaluated and improved over the next five years. Government units at every level are responsible for adjusting the country’s plan according to their region. Annual plans are made and implemented according to the main document every year. These plans are diligently implemented by local administrators and strictly monitored from the center.
THE 100-YEAR-OLD GIANT WITH 95 MILLION MEMBERS: CPC
Founded in Shanghai in 1921 with 50 people, the CPC now has 95 million members, making it one of the largest parties governing a country worldwide. Looking at the CPC’s membership structure, 40% are from the working class and farmers, over 20% are professional state administrators, and the rest are students, civil servants, and retirees. The majority of China’s members coming from the working class gives us a hint about the country’s governance. Becoming a CPC member is not easy; candidates are thoroughly vetted, and only the most talented, leading, brave, and knowledgeable individuals are accepted into the party after a lengthy candidacy period.
WORKERS, YOUTH, AND WOMEN AT THE FOREFRONT
With Xi as the General Secretary, the profile of new members joining the party is significantly more from the working class: 50% of new members are from the working class, over 80% are under 35 and educated. Women are also at the forefront, with the CPC having nearly 30 million female members! Moreover, with over 30 million young members, one-third of the members are youth. Today, there is a widely accepted fact in China: without the CPC, there would be no New China!
OPENING UP AND REFORM
On top of the solid and statist economic foundations formed during Mao’s era, China achieved record levels of economic growth, employment, and export rates with the “Opening Up and Reform” initiated by Deng Xiaoping in 1978.
The egalitarian character of China’s economic system has managed to consistently preserve itself. Deng aimed to unleash individual and local initiatives to increase efficiency and ignite economic growth while maintaining the goal of creating an ideal society where the needs of all citizens are met. While benefiting from the advanced elements of capitalism, the capitalist production relations and the intra-party two-line struggle emphasized by Mao in theorizing the Soviet experience were kept in mind. When Deng declared the opening up in 1978, he stated, “We will cross the river by feeling the stones.”
SUCCESSFUL TECHNOLOGY TRANSFER
With the opening up, the market pricing was introduced, but the initiative was never fully handed over to the market. Initially, the opening up experience started in Guangdong province, close to Hong Kong, with one of the main objectives in joint ventures between Chinese and foreign capital being technology transfer. This allowed foreign capital to flow in and gain momentum in a controlled manner throughout the 1990s, creating a significant employment offer in areas opened to foreign capital (such as Guangdong province and cities like Shanghai).
CREATING THEIR OWN BRANDS
China closely observed the capitalist developments in Western countries and the Japanese modernization next door, drawing necessary lessons. From the mid-1990s, most foreign companies (including General Motors, Microsoft, Motorola, IBM, and Intel, among over 200 organizations) began significantly shifting their research and development activities to the Chinese market. This facilitated the development of technology-intensive Chinese companies such as Huawei, Lenovo, ZTE, Tencent, Baidu, and BJI, by filling the necessary infrastructure gaps.
THE REPUBLIC’S DEVELOPMENT DRIVE
Years later, Turkey has rediscovered production. However, it was already discovered by the Unionists and Republicans who escaped from the great depressions and centuries of backwardness. The Ottoman Empire took its first foreign debt in 1854, gradually becoming entangled in this spiral, significantly contributing to its disintegration. The Unionist revolutionaries suffered greatly from this. At times, Ottoman officials and soldiers went months without pay. İsmet Paşa recalled in his memoirs, “There were times when we, as young officers in Edirne, did not receive our salaries for three months.”
A significant factor that broke the Ottoman Empire’s back was the capitulations – economic and political privileges granted to foreigners over the years. These were a heavy shackle on the Empire’s feet. The Unionists abolished the capitulations on October 1, 1914, during the World War, providing significant contributions to the war economy. They also sought economic policies for development to overcome centuries of economic backwardness. They initiated the establishment of companies, banks, and cooperatives to create financial institutions for development. Many banks, companies, and cooperatives were established during their time. Although the World War interrupted this effort, an important step towards a national state was taken.
İZMIR ECONOMIC CONGRESS
The Republicans continued this development drive started by the
Unionists. They implemented policies that mobilized the people during the War of Independence. They efficiently used the resources provided by friendly Soviet Russia to conduct the war. After the victory, they convened the 1st Economic Congress in İzmir on February 17, 1923, to “crown the victory won with arms with the plow.” The most contentious issues at the Lausanne Conference were the Ottoman Empire’s foreign debts and the capitulations! Atatürk preferred to eliminate the heavy economic and political agreements that shackled us more than gaining an extra inch of land. Because for him, true independence could only be achieved through economic independence, and the victory won with blood could be crowned with economics.
From the first day, they rolled up their sleeves to create the tools and policies for development. Between 1923-1930, they worked on healing the severe wounds of the war, abolishing the Tithe Tax that shackled the peasant, splitting the foreign debts into manageable installments to prevent them from causing distress, nationalizing railways, factories, and businesses in foreign hands. Between 1930-1939, they launched the Planned Development Movement. The severe economic depression of 1929 was the catalyst for this.
The severe economic crisis that started in the US enveloped Europe and then the entire world. It brought bankruptcies, unemployment, and a halt in production. Despite Europe’s situation, Turkey discovered “Statism and Planned Development” during this period, making significant strides in this field. Celal Bayar, the successful economist who founded and managed İş Bankası between 1924-32, was appointed as the Minister of Economy on November 10, 1932, elevating his experience to a higher level. At that time, Prime Minister İsmet Paşa visited our neighbor, the Soviet Union, and was amazed by the developments he witnessed there. He was impressed by the planned development and investments in the Soviet Union, which had also started its industrial movement and planned economy after 1929.
During the visit between April 25 and May 10, 1932, it was agreed to provide the necessary technical support for Turkey to develop with a plan. After the visit, a group of Soviet experts came to Ankara, conducted surveys, and rolled up their sleeves for a development plan. The First Industrial Development Plan was prepared in 1933 and started being implemented in 1934. Significant moves were attempted with the financial and technical assistance from the Soviet Union under the 5-year plan. The establishment of the Nazilli and Kayseri Textile Industry Factories is a typical example. Similar factories were also established. The Soviet Union provided an 8 million dollar credit support, interest-free, repayable in 20 years, and payable with agricultural products. Soviet leader Stalin also advised İsmet Paşa, “Industrialize. If you do not industrialize, they will not let you survive.” Turkey did just that.
WHAT WAS ACHIEVED DURING THE REPUBLICAN ERA?
During Atatürk’s era, Turkey grew by an average of 7.4%. From 1923 to 1938, the national income increased 2.9 times in 15 years. After the industrial leap, our exports began to exceed our imports significantly: in 1929, the trade deficit was 101 million. In contrast, in 1930, exports were 151,454,371 and imports were 147,553,703; in 1931, exports were 126,939,239 and imports were 126,382,085 million. Similarly, the cost of living statistics published by the Istanbul Chamber of Commerce for the same years reflect the decrease in prices. After 1934, exports were notably ahead of imports.
Atatürk managed our country without inflation between 1919-1931. By establishing the Central Bank in 1931, Atatürk made a significant move in the financial field. He tightly controlled monetary policies. For instance, in 1936, while the public sector received 27 million in loans, the private sector received 15.3 million lira. In 1937, these amounts were 2.5 million for the public sector and 15.2 million for the private sector; in 1938, it increased to 88 million for the public sector and 17.1 million for the private sector. Between 1933-38, the GDP grew by an average of 8.8% annually. Turkey’s population was 13.6 million in 1927. The Tithe Tax was abolished in 1925. The tax burden on peasants, which was 40 million in 1924, dropped to 19 million in 1929. That same year, land was distributed to landless peasant families to be paid for over 20 years. Atatürk considered it a necessity for every peasant family to have enough land to cultivate.
During the fifteen years of Atatürk’s rule, an average real growth rate of 4-6% was achieved without inflation, and the annual average growth rate in industrialization reached 9.6%. The success of the Statism model later became a driving force for the birth of the private sector.
At that time, we had the State Railways (DDY) leading the construction of 3,000 km of railways, ports, Sugar Factories (1926-30), Bakırköy Cloth Factory, Keçiborlu Sulfur Factory 1934, Kayseri Cloth Factory, Paşabahçe Glass Factory, Zonguldak Turkish Anthracite Factory 1935, İzmit Paper Factory, Çubuk Dam 1936, Nazilli Printing Factory, Kayseri Sümerbank Weaving Factory, Ereğli Iron and Steel Factory 1937, Gemlik Artificial Yarn Factory, Bursa Merinos Factory, and Divriği Iron Mine Operation 1938. Other institutions and enterprises included Tekel, PTT, THY, Sugar Factories Directorate General, MTA, EIEI, DDY, General Directorate of Land Registry and Cadastre, TMO, Etibank, Sümerbank, İş Bankası… If we also mention that we used to manufacture and sell airplanes abroad during those years, the achievements become even clearer.
