Economic Superpower: The Rise of China

Implications of China's Boom for the World

China's Economy

China is a country to be reckoned with.
The Economy of the People's Republic of China:

is the fourth largest in the world when measured by nominal GDP. Its per capita GDP in 2005 was approximately US $1,709 (US $7,204 with PPP), still low by world standards, but rising rapidly. As of 2005, 70% of China's GDP is in the private sector. The smaller public sector is dominated by about 200 large state enterprises concentrated mostly in utilities, heavy industries, and energy resources.

Since 1978 the People's Republic of China (PRC) government has been reforming its economy from a Soviet-style centrally planned economy to a more market-oriented economy but still within the political framework, provided by the Communist Party of China. This system has been called "Socialism with Chinese characteristics" and is one type of mixed economy. These reforms started since 1978 has helped lift millions of people out of poverty, bringing the poverty rate down from 53% of population in 1981 to 8% by 2001.

China as Economic Superpower

WB: China must overcome 3 major challenges to become world's top economy:

A senior World Bank official said Sunday that China is now facing the challenges of changing its economic growth mode, maintaining rapid and sustainable economic growth and managing its growing in equality in order to become the world's top economy by 2030 or 2040.




Addressing the China Development Forum 2005, Shengman Zhang, managing director of the World Bank, said China has to transform its current economic growth mode, which is characterized by low efficiency and excessive consumption of resources and energy, to an efficient one, not simply relying on high growth of investment.

China must also improve its market operating efficiency and improve corporate efficiency, he said.

Zhang said China has to maintain a rapid and sustainable economic growth while controlling the growing the negative impact on its environment through improved efficiency of energy and water consumption.

Compared with the energy-efficient industrialized nations, it costs China about 150 percent or 200 percent of energy as those nations to produce per-unit gross domestic product, he said.

The growing inequality in China remains one of the major challenges to the China, which is a by-product of China's evolution, said Zhang.

China needs the help of other members of the international community to address those challenges, said the vice-president.

China has become the world's third largest trading nation in the world and is projected to be the biggest trading nation in 2020, he said.

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China's Economic Boom and Worries

China's economic boom continues: BBC NEWS | Business | "There are still worries about agriculture and rural incomes."

China's economy grew strongly in the first nine months of the year, despite efforts by the government to put the brakes on growth.

The National Bureau of Statistics said the economy was 9.4% bigger than a year ago, but said that trade imbalances threatened economic stability.

The government is encouraging domestic demand, while trying to reducing reliance on investment and exports.

It also has concerns about agriculture, and high levels of government spending.

Dark Side of China's Economic Boom

migrant workers: Far Eastern Economic Review. A High Price to Pay for a Job. One dark side to China's economic boom is that migrant workers are owed billions of dollars in back pay despite some official efforts to help them. By Anthony Kuhn/BEIJING.

WORKING 11-HOUR DAYS mixing concrete and surviving on bread and cabbage, construction worker Wu Xinghua has no illusions about his job in Beijing. "They rip off your labour, and they rip off your skin," says the 30-year-old from Shandong province. It only got worse this autumn when his employer claimed financial difficulties and refused to pay him $146, or a third of his annual income.

Environmental Problems

China's Boom Is Bust for Global Environment, Study Warns: Stefan Lovgren for National Geographic News.

China's spectacular economic boom may be inflicting a terrible toll on the global environment, a new study warns.

According to Vital Signs, a report by the Worldwatch Institute, a Washington, D.C.-based environmental nonprofit organization.

China is now driving the consumption and production of almost everything, threatening to deplete the world's resources. As Consumerism Spreads, Earth Suffers, Study Says. China's Car Boom Tests Safety, Pollution Practices

"China is becoming the sucking force, taking raw materials from across the planet, because it alone doesn't have the resources it needs to sustain its growth," said Lisa Mastny, the project director of the study. "It remains to be seen what long-term effects the Chinese boom will have on the world's raw materials. But it is clear that China's own natural resources, its air, land, and water are already suffering terribly."

Shenzhen, Booming City

Example of "Capitalism in Socialism with Chinese Characteristics"

The one-time fishing village of Shenzhen, singled out by late Chinese paramount leader, Deng Xiaoping, is the first of the Special Economic Zones (SEZ) in China. It was originally established in 1979 due to its proximity to Hong Kong, then a prosperous British colony. The SEZ was created to be an experimental ground of capitalism in "socialism with Chinese characteristics" (an official term for the economy of the People's Republic of China which as of 2006 consists of mixed forms of private and public ownership competing within a market environment).

The location was chosen to attract industrial investments from Hong Kong since the two places share the same language, dialect and culture. The concept proved to be a great success, propelling the further opening up of China and continuous economic reform. Shenzhen eventually became one of the largest cities in the Pearl River Delta region, which has become one of the economic powerhouses of China as well as the largest manufacturing base in the world.

Economic Boom

Shenzhen:

(Sham Chun or Shamchun in old documents) is a sub-provincial city of Guangdong province in southern China, located at the border with the Hong Kong Special Administrative Region. Shenzhen is a center of foreign investment and since the late 1970s has been one of the fastest growing cities in the world. It is also the busiest port in China. In the past two decades, outsiders have invested more than $30-billion in Shenzhen for building factories and forming joint ventures.

The Rise of Activism and Political Awareness

In Chinese Boomtown, Middle Class Pushes Back: New York Times, by Ryan Pyle. SHENZHEN, China. A Chinese City's Boom.

When residents here in southern China's richest city learned of plans to build an expressway that would cut through the heart of their congested, middle-class neighborhood, they immediately organized a campaign to fight City Hall.

Shenzhen, China, was founded in 1980 as an economic model city. Its proximity to Hong Kong has made it unusually open to outside influences.

Housing costs in Shenzhen have been growing by about 30 percent a year. A buyers' boycott was organized, to the authorities' displeasure.

Over the next two years they managed to halt work on the most destructive segment of the highway and forced design changes to reduce pollution from the roadway. It became a landmark in citizen efforts to win concessions from a government that by tradition brooked no opposition.

And it was no accident that the battle was waged in Shenzhen, a 26-year-old boomtown that was the first city to enjoy the effects of China’s breakneck economic expansion and that has served as a model for cities throughout the country.
Increasingly, though, with its growing pains multiplying, Shenzhen looks like a preview, even a warning, of the limitations of the kind of growth-above-all approach that has gripped much of China.

Shenzhen’s 28 percent average annual growth rate since 1980 is likely to stand as a record in China for some time, but the price of this phenomenal success is painfully evident. Throughout most of the year its skies are thick with eye-burning smoke. Street crime is high. And the workers it has drawn so effortlessly in the past from the countryside are becoming harder to recruit, as their options increase elsewhere.

The Implications

China is an example of both the glory and the shame of capitalism. Capitalists can point with pride to China's rapid rise from third-world status to economic superpower through the implementation of capitalistic reforms. The reduction in their poverty rate and their rise in GDP has been astonishing. This could not have happened under pure communism. What's more, economic growth has also begun to have political implications, leading to more democracy and activism.

Socialists and leftists, though, will point to the dark side. This includes worker abuse, low wages, wealth disparity, pollution, and the waste of natural resources.

China is also at the forefront of the effects of globalization, good and bad. Their boom was started, after all, with both economic reforms and the availability of cheap labor. Is China a model for other third-world countries?

Further implications for the world and for the U.S. include the balance of power. This could change markedly especially as China arms itself for the twenty-first century, and begins to assert its muscle. No one knows whether China will continue to be satisfied with the status quo, or whether it could turn imperialistic. It certainly will become a player in all the world's important issues.

What Should We Do About China?

Nothing. China and its growth are a fact of life. We need to factor this in to our thinking and planning. We must grow our economy and stay strong. We should strengthen our democracy and ensure we are on a correct path for ourselves. In the best case, China will continue to reform and gradually transform into a peaceful democracy, another ally like Europe, perhaps even better. In the worst case? We'll handle that too.

What Should We Do About Globalization?

Again, globalization is a fact of life. We will have to deal with workers' rights, pollution, and the use of natural resources in ways that will help the poor with jobs, while at the same time protecting them from abuse; plus preserving our resources and environment. No small order. The challenge for the future.

The first step is understanding the issues.

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Rock

(*Wikipedia is always my source unless indicated.)

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