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EDITORIAL: Awe - and anxiety - at Chinese boom
published: Wednesday | August 22, 2007
In recent decades, China has been the object of awe. Its economy has grown at rates almost unimaginable elsewhere. A massive migration to the cities is under way, and the country's middle class is booming. Reflecting this growing prosperity, the country has become more assertive in its foreign affairs, signalling clearly to the world that it has returned from the Maoist isolation of the past.
Compared to the Russian model, which liberalised politics and the economy simultaneously, resulting in a political implosion and economic crash, the Chinese model seemed to many observers to strike a right balance: economic liberalisation, but under a state which has, if anything, strengthened its authoritarian character. This enabled the Chinese government to repress the social discontent that accompanied rising inequality, while keeping a lid on labour costs. Cheap labour, in turn, attracted investment to China from around the world. If it seemed ugly and repressive, it could be excused on the grounds that, over the long term, ordinary Chinese would benefit in the form of higher incomes.
In recent months, however, whatever lustre the Chinese model showed has begun to grow just a little more dull. China never prided itself as a producer of quality products. Its strength lay in manufacturing what anyone else could do, but more cheaply. If this meant there were trade-offs in safety procedures or workers' rights, nobody complained because the goods at Wal-Mart were so inexpensive.
However, when, earlier this year, cheap goods became dangerous goods, sentiment turned sharply. The apparent export of unsafe products from China has suddenly tarnished all its exports. The wave of reports of sub-standard goods has been so dramatic that the Chinese authorities smell an organised media campaign by their enemies abroad - organised labour, protectionists, and the like. That may well be happening.
However, as the Chinese authorities well know, the problems run deeper than that. A disease outbreak among China's pig population has curtailed the supply of this staple product to the Chinese market. Not only has this raised concerns that the Chinese do not have a handle on their public health system, but it has caused a jump in the inflation rate.
This inflation does not yet threaten the Chinese boom, but it does complicate it. Interestingly, what China's recent challenges do is cast a new light on its development model. Authoritarianism may raise saving rates and attract investment. But it also inhibits transparency. Confidence in China's ability to manage its disease outbreaks and product scares has been compromised by the lack of transparency in the Chinese administration. Equally, discontent at food shortages, rising prices and China's persistent inequality could lead to outbreaks of instability.
Democracies can be untidy when it comes to economic planning; but at least they tend to respond more quickly to public demands. This does not mean that China is about to democratise itself. That seems a long way off. But the practicality of the Chinese model will be sorely tested now. And the country will have to be aggressive in showing that it has established control over a potential disease outbreak, while quickly neutralising bad exports.
In any state, it is a challenge. In one as vast and complex as the Chinese one, it will be a monumental task. But if it is to maintain its worthiness as the world's next superpower, China will have to show a high degree of efficacy, not to mention sensitivity to the anxieties in the rest of the world.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
published: Wednesday | August 22, 2007
In recent decades, China has been the object of awe. Its economy has grown at rates almost unimaginable elsewhere. A massive migration to the cities is under way, and the country's middle class is booming. Reflecting this growing prosperity, the country has become more assertive in its foreign affairs, signalling clearly to the world that it has returned from the Maoist isolation of the past.
Compared to the Russian model, which liberalised politics and the economy simultaneously, resulting in a political implosion and economic crash, the Chinese model seemed to many observers to strike a right balance: economic liberalisation, but under a state which has, if anything, strengthened its authoritarian character. This enabled the Chinese government to repress the social discontent that accompanied rising inequality, while keeping a lid on labour costs. Cheap labour, in turn, attracted investment to China from around the world. If it seemed ugly and repressive, it could be excused on the grounds that, over the long term, ordinary Chinese would benefit in the form of higher incomes.
In recent months, however, whatever lustre the Chinese model showed has begun to grow just a little more dull. China never prided itself as a producer of quality products. Its strength lay in manufacturing what anyone else could do, but more cheaply. If this meant there were trade-offs in safety procedures or workers' rights, nobody complained because the goods at Wal-Mart were so inexpensive.
However, when, earlier this year, cheap goods became dangerous goods, sentiment turned sharply. The apparent export of unsafe products from China has suddenly tarnished all its exports. The wave of reports of sub-standard goods has been so dramatic that the Chinese authorities smell an organised media campaign by their enemies abroad - organised labour, protectionists, and the like. That may well be happening.
However, as the Chinese authorities well know, the problems run deeper than that. A disease outbreak among China's pig population has curtailed the supply of this staple product to the Chinese market. Not only has this raised concerns that the Chinese do not have a handle on their public health system, but it has caused a jump in the inflation rate.
This inflation does not yet threaten the Chinese boom, but it does complicate it. Interestingly, what China's recent challenges do is cast a new light on its development model. Authoritarianism may raise saving rates and attract investment. But it also inhibits transparency. Confidence in China's ability to manage its disease outbreaks and product scares has been compromised by the lack of transparency in the Chinese administration. Equally, discontent at food shortages, rising prices and China's persistent inequality could lead to outbreaks of instability.
Democracies can be untidy when it comes to economic planning; but at least they tend to respond more quickly to public demands. This does not mean that China is about to democratise itself. That seems a long way off. But the practicality of the Chinese model will be sorely tested now. And the country will have to be aggressive in showing that it has established control over a potential disease outbreak, while quickly neutralising bad exports.
In any state, it is a challenge. In one as vast and complex as the Chinese one, it will be a monumental task. But if it is to maintain its worthiness as the world's next superpower, China will have to show a high degree of efficacy, not to mention sensitivity to the anxieties in the rest of the world.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.