By Henrique Schneider

As China seems to lead the world out of recession and crisis, many erupt in triumphalism about the effectiveness and efficacy of a managed economy.

The Chinese state's and party's dirigisme put together the biggest economic program the world has ever seen and structured the economy making it able to cope with critical challenges.

In a recent book, Harvard economist Robert J. Barro tries to explore what determines growth. And yes, some interpret the book as a high-chant on China's approach.

Soft issues seem not the way to go. Instead, increasing the output, productivity as well as better understanding capital flows, focusing on a few but important investment activities are all stronger correlated to economic growth than, say education, press freedom, the nature of investment, the working of institutions, lack of corruption, rule of law, political issues, democracy, civil liberties and so on.

The first array of outcomes can be best provided by a central planning state while the second group could jeopardize the entire plan. Ergo, according to the eulogy, managed economies win the growth-contest against those soft, democratic, liberal markets.

There is however, another intuition. It may be that the second group of values does not correlate with high growth as strongly as efficiency does, but if people are asked, they surely will state that education is important.

They will say that rule of law is important, too. They will even go on about the importance of freedom and civil liberties. They might even point toward another correlation, to the one denoting that the freer a society is (therefore stressing the second group), the richer it tends to be.

It is true that the highest growing rates of Korean history were achieved under its managed economy's past, but real wealth started to growth under democracy.

This is due to the dynamic values championed by liberalism stressing innovation, free allocation of resources and entrepreneurship. Yes, it is important to move people out of poverty, as China does. But it is even more important to give them perspective, because wealth is only achieved by vision and visionary people being able to act freely and with responsibility.

It is not only China that is leading the world economy out of the dumps; India, Korea, Singapore and Brazil are also showing good growth records, credit expansion, investment and along the way, China is transforming, albeit slowly, into a social democracy, too.

A good proxy for this process is the corruption ranking by Transparency International, a European think tank. According to its findings, not only China but most countries in the Asia-Pacific region made progress.

New Zealand is now considered the least corrupt country in the world. Singapore, Taiwan, Hong Kong and Korea also appear prominently in the upper 25 percent.

Unfortunately, the lowest 10 percent, i.e. the most corrupt countries, have infamous members in Asia, like Laos, Myanmar (Burma) and North Korea. According to the think tank, internal instability and the financial crisis exposed those countries which are challenged most by exploitation. And yes, they are all ``managed'' economies.

According to the same think tank, however, China is trying hard to move upward on the rankings. Actually, it is in 79th position (Korea 39th), but 10 years ago, it was 86th (Korea 42nd).

Why is China trying to become less corrupt? If it were only focused on the growth figure, Beijing would not care to be or not to be counted as corrupt, but since it aspires to economic leadership, it needs more than just efficiency.

As China aspires for a leading role, it needs capital and, most important, high-end technology. Both need more or less integer environments to be found and to flourish. Both are part of the wealthy-economies' way of life and are not readily happy with central planning and efficiency.

Capital and technology need innovation, education, freedom, rule of law and well working institutions to perform. It looks like more liberal democratic qualities are needed to join the top-tier than just state-planning.

Taking Korea as an example, China could follow the smaller but by far wealthier and more modern country to the top league of the world's economy.

Henrique Schneider is a traveler in Asia as well as a political analyst. He works as a consultant and analyst in Vienna, Austria, and publishes regularly in German and English on economic and security issues related to China and other Asian countries. He can be reached at hschneider@gmx.ch.