Monday, January 08, 2007

China - twists, turns and troubles ahead

China's long brutal march to development is staggering in it's magnitude, scale and ramifications. It's an omelet that has been millions of broken eggs in the making. It's a tale full of ironic twists: Marx is stood on his head, capitalism didn't pave the way for communism, communism paved the way for something resembling capitalism; the legacy of Mao has been a privatised health system which fails many Chinese, the legacy of Chang Kai-Shek is public health insurance, which ensures almost universal provision in Taiwan. It's a story, the outcomes of which will impact not just on Chinese, but on all of us.

At the heart of the tale is China's decades long spurt of high economic growth (averaging 8% annually for the last 25 years). Growth which followed the introduction of market based reform and the decollectivisation of rural agriculture (and was probably facilitated by previous investment in health and education). Growth which has been accompanied by dramatically rising income inequality but at the same time also accompanied by a probable fall in both absolute income and consumption poverty.

In not all areas has life improved for the Chinese, however: the privatisation of their health care system has led to a situation where half of all Chinese surveyed in a recent survey had had to forgo medical treatment because of cost; while democracy is as far away as ever, and human rights abuses still frequent; and recourse for those whose land is appropriated in the name of progress (or in the name of the Olympics for that matter) is minimal.

Economic growth has also brought with it massive environmental degradation, something that has impacted on the lives and health of many Chinese. And the rapidly rising gulf between city and hinterland has precipitated what Max Sawicky calls (and I am paraphrasing because I can't find the link right now) "the largest migration that has ever, and will ever, take place in human history." And while corruption doesn't appeared to have stopped China's growth miracle (and because of this China is uncomfortable evidence for those who believe that corruption is the sole obstacle to growth in the developing world) corruption and lack of democracy have meant denial of worker's rights, and human rights, and a political system that is straining under its own contradictions.

What does all this mean?

This has to be once of the biggest questions facing the world over the next few decades. It has ramifications not only for the people of China, but for the rest of us too – for the environment, for the global economy, for global politics. The reverberations from China’s great takeoff can even be felt in tiny Pacific States.

It’s also a question that contains within it many smaller questions, all important in their own right.

The first of these is “Can it last?” Which is a complicated question in its own right. Will Hutton, in two excellent articles in the Observer/Guardian thinks no.

To Hutton, corruption and democracy may not prevent economic take off in the short run, but in the long run they are a recipe for social turmoil. Turmoil that can already be seen in the huge number of strikes and demonstrations sweeping across China at present. Turmoil which may, ultimately, undermine China’s economic progress.

Things may not, however, be that simple as Andrew J Nathan writes in this Foreign Affairs article human rights and labour abuses are bad of their own accord, but the people running China are not – at present – crazed despots. They are ruthless, certainly, but also aware that social harmony and improved living standards are important if they wish to maintain power. Accordingly they are acting to try and address some of the problems facing the country and its people.

The key question is will it be enough.

And, if it is, what then.

Economically, for the rest of the world, a rising China will in the short-term mean increased cheap goods. A boon on one hand, but something that will – to varying extents in different countries – undermine existing manufacturing industries. In the longer term, China ought to become a significant importer, with positive benefits in most areas. Except for natural resource shortages of the kind that we are already seeing with oil.

Resource shortages will of course not be the only global environmental problem that China contributes to; China’s impact on climate change could be staggering if they continue to follow the fossil fuel model of economic development used by the west.

Politically, China, along with India is on the way to becoming something of a new super power: welcome to a multi-polar world. Quite what this will mean in the long run, other than the end of hegemony as usual for the US, is hard to say. Some authors such as Martin Jacques argue that by focusing on the Middle East not the Far East, and through its disastrous adventurism in Iraq, America has significantly hastened the waning of its power. Whether Jacques is right or not, one thing is clear, the United States is already dependent on Chinese savings to make up for the lack of its own. On the other hand China needs the US as a market for its products. Something that could all become awfully tricky for both countries in tensions flair between China and Taiwan, and China and Japan (two countries which the US is officially allied with). And in both cases, particularly the Japanese, tensions have been on the rise. The image that springs to my mind here is one of those knife fights you used to see in old western films, where two combatants, circle each other warily, knives drawn in their right hands, while their left hands are tied together with a leather strap.

In the world of international development China has recently emerged as a major donor nation. The impact of this on resource rich, yet poor, Africa is already being felt.

Similarly, in the Pacific, China is starting to donate heavily, often as part of a bidding war against Taiwan but also in exchange for resources such as fish.

On one level more aid could be a good thing; however, at present China appears to be giving aid primarily to further its own ends, rather than to genuinely help. And as the cold war showed, aid given in this way often goes no further than lining the pockets of corrupt officials.

As with everything China, the outcomes of aid to the Pacific are unclear. Just what China’s ongoing rise will mean to us is even less certain than whether it will continue or not.

No comments: