On account of its subject matter as well as its approach, this work is a valuable contribution towards understanding the general conditions, causes and development of the transitions taking place in Asia. These are changes whose success, at least until the recent regional financial crisis, has given a distinctive character to what the writers in this volume call an Asian model for reform. Their work has two goals: first, to specify the outlines of this Asian model, as distinct from the transitions in central and eastern Europe (with due allowance for the fact that these transitions have been occurring under very specific circumstances), and second, to identify the similarities and contrasts in the approaches followed by the two Asian countries in question.

The forms of economic organisation and social control in these two countries draw extensively on the Leninist model, even though this is combined with elements from Confucian culture and these countries’ own state bureaucratic traditions. The presence of foreign powers, varying in impact and duration in the two countries, has reinforced a shared feeling of dispossession, and has given a pronounced nationalist character to the communist leaderships in their struggle for power, particularly in Vietnam.

The governments of China and Vietnam share a common past in their long wars of liberation before taking power. In both countries the communist leaderships forged enduring links with the peasant masses, who are the overwhelming majority. But even in that respect there are striking differences. In China the main enemy, to use Chairman Mao’s famous phrase (leaving aside the anti-Japanese war), was the power of the big landowners and the emergent bourgeoisie, whereas in Vietnam the two liberation wars, even though they may have had the same enemies, were mainly anti-colonialist and anti-imperialist, and relied on a broad united front (2). Another feature shared by the two countries was their very low initial level of economic development. This set a limit to the ambitions and capacity of the new leaderships to carry out rapid industrialisation. The Chinese attempts to accelerate matters (the Great Leap Forward) were not matched in Vietnam. In China, the initial scarcity of natural resources had at least two important consequences: 1) the need to keep a large part of the population in the rural areas, and 2) the need to ensure that the application of socialist measures in the countryside (the People’s Communes, the system of requisitions and compulsory purchases imposed on the peasants) should not lead to the destruction of the peasantry as a class. The need to feed a huge population entailed a search for improved methods of production, so that there would be more available for distribution. It was the peasantry that provided the Chinese reformers with the impulse for dynamic economic development, which then gradually spread to every sector of the economy. By contrast, the Vietnamese reformers started with the large-scale state enterprises.

The failure of the first industrialisation projects was largely due to the low level of development from which they started. These projects were always ambitious but impossible to carry out, despite the coercion or voluntary co-operation of the newly favoured classes.

In Vietnam the low level of development and the persistence of armed conflict restricted the speed and extent of industrialisation. In the North it was limited by the scarcity of available resources and the constraints imposed by the war (the dismantling and dispersal of industrial complexes, and production below minimal cost efficiency). Reliance on the Chinese experience of the Great Leap Forward, by decentralising industrial production through breaking it down into small-scale units, did not provide any basis for new activities in the countryside. In China, by contrast, the enterprises based in the townships and communes, which spearheaded economic development for several years, were the paradoxical outcome of the period of decentralisation. In South Vietnam after national reunification, the change to a socialist economy only affected light industry like textiles and breweries, since this area of Vietnam had not even begun to industrialise while it was still under the control of the successive foreign occupiers.

The acceptance and the development of market mechanisms has taken place within the perspective of developing a socialist order. This has given rise to a somewhat schizophrenic justification of the single party’s control over society at the very same time when its control over the economy is being reduced. The writers draw attention to the ideological vacuum occasioned by the abandonment of Marxist-Leninist beliefs, and to the fact that this cannot be filled by nationalist tendencies. Harping on about nationalist themes is risky and can run out of control. Given the opening up to the global economy, and its presentation as a necessary part of the strategy for modernisation, it is difficult to make use of an appeal to nationalism, because that could easily rebound. For example, China’s forthcoming membership of the World Trade Organisation (WTO) sets a limit to the political leadership’s incitement of nationalist feeling, since that could later turn into a reaction against possible negative effects of its integration into the global economy. In the case of Vietnam, nationalism is a component of official ideology, even though it seems to be greatly watered down in relation to its former foreign enemies; it is more intense in relation to the conflict between Vietnamese interests and those of its large northern neighbour (the border dispute, and the claims to the Paracels and Spratley Islands). Vietnam’s membership of ASEAN is partly owing to its desire to escape from Chinese influence. Furthermore, just as in China, the depoliticisation of a large section of the population, particularly among the youth, has reduced the opportunities for exploiting nationalist sentiment. In both countries, the feelings and attitudes among the youth in the reform period throw a good deal of light on the ambiguities of the reforms themselves. This is particularly marked in China. In Vietnam, the most striking feature is the strong family restraint on the independence of the youth, despite their being in the majority. Another striking feature in the case of Vietnam is the series of measures to put a brake on industrial co-operation with foreign enterprises (for example the restrictions on access to the money market imposed on foreign banks and companies set up in Vietnam). These measures have led to the rapid withdrawal of direct foreign investment. On the other hand, China, currently finding itself facing a reduction in inward investment, is reacting to the situation by setting up more autonomous programmes, and is relaxing the constraints on the decision-making independence of foreign or jointly owned enterprises. A large number of these are beginning to compete with state enterprises in the domestic market.

In the light of the effects of the financial crisis and the increasing internal constraints and imbalances in both countries, a question mark could be put over the virtues of Asian gradualism. The transition towards a free market (though official ideology does not openly recognise this as the final goal) is characterised by a gradualist approach. Shock therapy must contain at least the two following elements: on the one hand, a sharp break with the former political and economic system, and on the other, the adoption of radical economic measures aimed not only at a swift break from former modes of behaviour, but also at the introduction of new economic mechanisms to permit the rapid redeployment of resources for more productive use within the context of a free market. Large-scale economic constraints (i.e. strict budgetary control) and competition in the global marketplace are essential components of this programme. They must be accompanied by the redistribution of property (in the form of privatisation), the introduction of new enterprises (local and foreign), and the permitted demise of companies unable to compete (bankruptcy laws). A further argument in favour of adopting the rapid approach would be to point to the persisting recession besetting these economies.

The contrasting “gradualist approach” followed by China and Vietnam, is due to their adoption of a step-by-step strategy, aimed in the first instance at influencing certain specific areas (the partial liberalisation of the agricultural sector, and the controlled opening to foreign trade), followed by a progressive widening of liberalisation to other sectors, to the relaxation of price controls, etc. The economic results in these two countries seem to give a justification for this option, and this is the approach defended in the analyses advanced in this volume, as well as by other specialists, like Barry Naughton.

However, it is open to criticism and has been questioned by several other writers. The high growth rates, which are typical of late developing economies, are largely due to their generally very low starting level. Moreover, the external environment, and in particular the high growth rates in other Asian countries, has necessarily led to a growth in exports, especially in non-competitive cheap labour-intensive products. And finally, it is not certain that the result of these policies is directly related to any a priori intention underlying the reforms. In this connection, Wing Thye Woo writes of the reform approach in terms of “ex-post facto reasoning” (3). According to this view, the gradualist concept has been justified a posteriori by a simple observation of the facts. Most frequently, as has been shown by experiments in Eastern Europe before 1989 and for the last twenty years in Asia, it is impossible to predict the impact of reforms introduced by communist leaderships, in terms of the growth in GDP or exports, or in terms of the development of the different economic sectors etc. Furthermore, as many writers have noted (including the contributors to this volume), the reforms, and such factors as their rates of development, are often the outcome of political compromises within the Party apparatus. Another question worth discussing here concerns the control over the economic cycles in the reform period. Is there a continuous upward spiral of reforms, and if there is, what is it heading towards? Or else, do the reform cycles tend to die down, in which case how can the leaders start them up again?

It seems that at present both the Chinese and the Vietnamese cycles are dying down. GDP growth rates are beginning to falter, and the impact of the Asian crisis is beginning to be felt, particularly in terms of competitive exports on the one hand, and the inward flow of foreign capital investment on the other.

Nonetheless, there remain important differences between the experiences of the two countries, and these are shown quite clearly by their reactions in the face of the Asian crisis.

In China, the dual economy brought on by the reforms has opened up a huge space for the arrival of new operators, for the extension of the reforms in the countryside, and for the development of a new class of entrepreneurs, who are less and less under the control of the centre. In addition, the Chinese government has always leaned towards the reformist side (as in its attitude towards future membership of the WTO). Its current economic strategy tends increasingly towards decentralising, launching vast privatisation programmes, allowing non-strategic state enterprises to go bankrupt, and supporting the development of privately owned small and medium enterprises as well as large industrial conglomerates (4). In contrast to all this, the Vietnamese government, despite Vietnam’s membership of ASEAN, appears more conservative, particularly where the consequences of opening too much to the outside world are concerned. Whereas the Chinese government is adopting liberal measures to maintain and attract new foreign enterprises (which include the right to establish firms with 100% foreign shareholding), Vietnam is witnessing a withdrawal by overseas investors. In 1998 foreign investment amounted to just one quarter of its 1992 level.

There is a whole range of differences within the similarities between these two nations’ reforms. They arise from historical and geopolitical factors just as much as from economic factors. And this is despite the fact that the two countries continue to adhere to the same political ideology, and that they are currently engaged in managing the same transition towards a system over which neither has complete control.

This volume makes a considerable contribution to our understanding, through its analyses of the characteristics of the separate reforms, and of their areas of convergence and principal differences. These collected studies cover the whole spectrum of the problems raised by the reforms, which will continue to be pivotal issues in the years that lie ahead.

Translated from French original by Jonathan Hall