1. China: Opportunities and Obstacles
National Economy
China’s rapid economic development over
the past twenty or so years has lifted millions out of severe poverty and
propelled many into extraordinary wealth.
China has emerged from virtual isolation to become the seventh largest
trading nation and the sixth largest economy in the world. Following Deng Xiaoping’s reinstatement in
the late 1970s, the central government initiated a set of reforms that
completely revitalized the country’s economy, integrating it into the world
economy. In 1978 China was almost completely autarkic, engaging in trade with
only its closest neighbors and political allies. Today, trade accounts for nearly fifty percent of China’s Gross
Domestic Product (GDP); imports from the United States have grown from nearly
zero to almost $20 billion in value. In
2001, China’s GDP reached close to $1.13 trillion. Although annual economic growth during this period had been
somewhat inconsistent and heavily affected by domestic political policies or
trends, it has generally remained greater than 5% for the past decade. Growth in 2001 remained strong at over 7%.
While
much larger increases have occurred in coastal areas, national per capita GDP
increased from $46 to $860 between 1978 and 2000, and average incomes are
projected to reach US $954 by the end of 2002.
China’s
reforms, targeted initially only at the agricultural sector, were later
extended to industry and are now – as the country evolves into its membership
in the World Trade Organization (WTO) – gaining momentum in the services
sector. China’s leaders have stressed a
gradual and somewhat piecemeal reform process in order to avoid large,
sweeping, and fast-paced restructuring that could potentially result in
economic and social instability, not to mention potential political
upheaval. Although Premier Zhu Rongji’s
style in the late 1990s had been less consensual and stressed more rapid
reforms than that of Premier Zhao Ziyang in the 1980s, China has managed to
avoid extending its reforms to the political system and related governing
institutions. It has been what Barry Naughton calls “institutionally
conservative,” whereby the center has avoided dramatically replacing
institutions and processes, instead slowly restructuring existing ones to
enable the economy to eventually “grow out of the plan.”
The
Chinese expression “groping for stones while crossing the river” has epitomized
the reform era and the government’s experimentation process, attempting
different policies at the local level and eventually officially adopting at the
center those that seem to work best.
Unfortunately, this has also meant that reform has been uneven and some
areas, like the eastern coast, have experienced significantly more economic
growth than others, such as the inner western provinces.
China’s
leaders are committed to integrating the country into the global economy and
are well poised to continue down such a path.
2001 was an auspicious year for creating momentum in reforms and opening
the country up to the rest of the world.
China’s capital city, Beijing, won its Olympic bid for the summer 2008
games; the country became a member of the World Trade Organization (WTO); and
Shanghai successfully hosted the APEC summit in the fall. Even in the face of the global slowdown
after September 11, the country was still able to maintain an officially
reported 7.6% economic growth rate during the last quarter of 2001 and a 7.8%
growth rate during the first half of 2002.
As China grows, so do the wants and demands of its consumers;
consumption patterns in China are beginning to look more and more like those of
a developed country
The
next year will signal a new era for China as its leadership changes hands. President Jiang Zemin is to step down at the
16th Party Congress in November of 2002, and will likely be replaced
by his successor, current Vice-President Hu Jintao. In addition, Li Peng,
Chairman of the Standing Committee, and Premier Zhu Rongji are expected to
leave their posts within the next few years.
Zhu is expected to be replaced by his protégé, present Vice-Premier Wen
Jiabao. The new leadership will be
technocrats, bureaucrats who were trained in science and technology, and who
are seemingly more driven by economics than political fervor. Hu was trained as an engineer, Wen as a
geologist. Hu has very often been
described simply as “enigmatic,” in that not much is known about him or his
leadership style and how he will perform after taking the reigns from
Jiang.
Regardless
of Hu’s physical presence, a certain priority for both Hu and Wen will
certainly be the preservation of the Communist Party and Beijing’s ability to
exert control over the provinces and municipalities. They will have to do so in the face of increased massive layoffs
as the government offloads debt-ridden state-owned enterprises (SOEs) and
increased unemployment among peasants. The Chinese Academy of Social Sciences
has estimated that China’s unemployment rate could reach as high as 15% in
coming years.[1] However,
despite some uncertainties in the next generation of the Party’s leadership and
concerns over inflated reported growth rates, the outlook for the Chinese
economy is generally good.
Demographics
Population
Despite
the crisis and famine of the Great Leap Forward during 1959 to 1961, China’s
population has more than doubled from 552 million persons in the early 1950s to
over 1.2 billion in 2000. This is due
in large part to the dramatic increase in crude birth rates coupled with a
simultaneous drop in crude death rates during the 1960s, creating a nearly 3%
population growth. During the 1970s,
however, as a result of stringent government imposed family planning policies,
birth rates began to drop off, and by 2000, the government reported actual
population growth of just one percent.[2]
Since
the introduction of the One Child Per Family Policy, and its predecessor, the “Later-Longer-Fewer,”
a policy that encouraged couples to get married later (for women, until they
reached 23 in rural areas and 25 in cities), leave longer spacing between
children and to have fewer children in total, average household size in China
has been reduced to approximately 3.5 persons. It is likely, however, that in
many areas, families are underreporting the size of their households in order
to avoid fines or punishment for exceeding the one-child quota, a problem that
has significant cumulative consequences for tax collection and
government-provided services.
In
1980, in order to ensure that couples wait to get married, the government
increased the minimum marrying age to twenty for all women. The average marrying age for women in China
has increased from 18.7 in 1950 to 20.8 in 1970 and again in 1998 to 23.6. Unlike many Western countries, almost all
women in China marry, and almost all marry by the time they reach the age 30. Also unlike many Western countries or Japan
most women are still having children, even if only one; most Chinese women have
their children between the ages 20 and 29.
In addition to creating “little
emperors” (children who are doted upon by their parents and grandparents),
there have been a number of more significant unintended side effects of the
government’s family planning policies.
First, because in rural areas boys are generally considered critical to
maintaining a family’s legacy while girls marry into another family, thereby
leaving their own, preferential treatment is generally given to producing
boys. Studies have demonstrated that in
lower income families, first-born surviving children are more likely to be
boys.[3] As the post one-child policy generation
grows up, men are outnumbering women (some estimates put the ratio at 117 or
125 men for every 100 women) and are finding it increasingly difficult to find
women willing to marry them. These
“bare sticks” (those who cannot find wives and are resigned to living alone)
are typically of lower-income and peasant origin.
As the
generation born in the 1940s and 1950s begins aging, there will be fewer
members of a younger generation to care for them and to contribute to the
social security system as it currently exists.
Chinese culture has traditionally stressed a strong sense of filial
piety, and Chinese offspring have typically cared for their parents in their
old age. As a result, there is no
current infrastructure for retirement homes or facilities as found in western
countries. Compounding this problem is
that it is socially taboo to not care for your parents, so that developing an
adequate infrastructure for elderly care facilities will likely take some time
yet to achieve. Although urban workers
have been entitled to pensions, the pension system is virtually bankrupt,
making it unlikely that these pensions will cover the costs of caring for the
elderly as the century progresses.
Urbanization and Migrant Populations
Although urbanization rates ha