The PRC is a country in precarious transition from one political or economic system to another. Monumental contradictions abound. Indeed, probably no nation of global significance has more unresolved issues concerning its ruling principles and structures. But what really makes forecasting China's future so difficult is not only that recent developments have so often defied prediction, but that virtually opposite, if logical, scenarios are plausible.
China emerged over the past decade-and-a-half as a paradigm of economic energy, determination and progress. Few other areas in the world have been deemed an "economic miracle" for so long. Through thick and thin, China has managed to maintain impressively high economic growth rates.
In 1989, China rose from the ashes of the Tiananmen Square Massacre. In the early 1990s, it weathered the implosion of the Japanese economic miracle, and maintained a steady course through the Asian economic crisis later in the decade.
This year it came through the SARS epidemic with banners flying. Now it seems to have repelled US efforts to force it into revaluing its currency.
Anyone who has visited China's large cities over the past few years must be impressed by the energy, pace and scale of development. The sheer number of projects -- from highways, ports, railroads and airports to skyscrapers, housing developments, telecom infrastructure, and industrial parks -- leaves even skeptics gasping in awe.
But behind the dazzling skylines and impressive statistics, another reality exists, one replete with unresolved problems and daunting numbers that suggests a far darker scenario. Consider the following:
China must create some 12 million to 15 million new jobs annually just to keep up with population growth;
? The government must deal with an estimated 270 million unemployed or underemployed people;
? A "floating population" (dis-possessed rural workers who have moved to the cities to find work) of between 100 million and 150 million is growing by almost 5 percent annually, representing the largest migration in human history. These migrants exist with no job security, no long-term housing, and no health care;
? 800 million rural peasants have been largely left out of China's latest boom, creating rising, but frustrated, expectations;
? China has no functioning pension system, and the cost of creating one is estimated in the hundreds of billions of dollars;
? New stock markets are all too often little more than elite-manipulated casinos, leaving China without the capacity to form the indigenous pools of investment capital needed to power its own development;
? State banks must provide 98 percent of all financing for local companies. But, having been used to keeping state-owned enterprises afloat for too long, the banks are essentially insolvent. Standard and Poor's estimates that it would cost around US$518 billion (40 percent of GDP) to clean up their non-performing loans;
? Environmental degradation from rapid industrialization, overpopulation and uncontrolled resource exploitation is extreme and, given the pressure to maintain high growth rates, very difficult to remedy; and
? Since 1998, the Chinese government has become increasingly reliant on ever larger bond issues for fiscal stimulus, pushing debt onto the next generation; estimates of the government's growing aggregate liabilities (bank debt, un-funded pension plans, bonded indebtedness for infrastructural projects, etc) range from 70 percent to over 150 percent of GDP.
The government's ability to collect tax revenue remains weak, yielding less than the equivalent of 15 percent of GDP.
Fears of an investment bubble caused by uncontrolled, indiscri-minate and excessively exuberant investment and growth have led many experts to worry about a meltdown akin to that experienced by Silicon Valley in the late 1990s.
These fears are compounded by the fact that China's Leninist one-party government, now almost completely dependent on its "economic miracle" for legitimacy, has shown few signs of implementing political reforms to complement economic reform.
So China's entire system is in a state of perilously balanced transition. And since every economy is cyclical in nature, even some of China's most ardent boosters are left to wonder what resources the party and government will have to draw on, should growth rates drop, even to a respectable 3 to 4 percent.
What would the government rely on for legitimacy if unemployed workers begin agitating; if angry peasants begin to besiege local government offices in large numbers; if factionalism incites a crisis in leadership; conflict erupts in the Taiwan Strait; or the global economy remains sluggish?
China may have seemed a "miracle" over the past decade. But good economic times rarely test a political system.
The real test is a political system's ability to survive the inevitable cyclical downturns, political shocks or social upheavals that almost inevitably challenge a country, particularly developing ones.
Economists and political observers who are skeptical about the durability of China's "economic miracle" -- and there are many of them -- point to the country's sclerotic political system, its precarious economic institutions, the hazardous balance of hundreds of millions of marginal Chinese, and the economy's reliance on outside capital.
They are right to wonder whether the "miracle" can continue to survive the kind of shocks that have rocked almost every other part of Asia to its foundations at one time or another over the last decade.
China has weathered much, but its big test has yet to come.
Orville Schell, a noted author on China, is a dean at the University of California at Berkeley.
Copyright: Project Syndicate
As strategic tensions escalate across the vast Indo-Pacific region, Taiwan has emerged as more than a potential flashpoint. It is the fulcrum upon which the credibility of the evolving American-led strategy of integrated deterrence now rests. How the US and regional powers like Japan respond to Taiwan’s defense, and how credible the deterrent against Chinese aggression proves to be, will profoundly shape the Indo-Pacific security architecture for years to come. A successful defense of Taiwan through strengthened deterrence in the Indo-Pacific would enhance the credibility of the US-led alliance system and underpin America’s global preeminence, while a failure of integrated deterrence would
The Executive Yuan recently revised a page of its Web site on ethnic groups in Taiwan, replacing the term “Han” (漢族) with “the rest of the population.” The page, which was updated on March 24, describes the composition of Taiwan’s registered households as indigenous (2.5 percent), foreign origin (1.2 percent) and the rest of the population (96.2 percent). The change was picked up by a social media user and amplified by local media, sparking heated discussion over the weekend. The pan-blue and pro-China camp called it a politically motivated desinicization attempt to obscure the Han Chinese ethnicity of most Taiwanese.
On Wednesday last week, the Rossiyskaya Gazeta published an article by Chinese President Xi Jinping (習近平) asserting the People’s Republic of China’s (PRC) territorial claim over Taiwan effective 1945, predicated upon instruments such as the 1943 Cairo Declaration and the 1945 Potsdam Proclamation. The article further contended that this de jure and de facto status was subsequently reaffirmed by UN General Assembly Resolution 2758 of 1971. The Ministry of Foreign Affairs promptly issued a statement categorically repudiating these assertions. In addition to the reasons put forward by the ministry, I believe that China’s assertions are open to questions in international
The Legislative Yuan passed an amendment on Friday last week to add four national holidays and make Workers’ Day a national holiday for all sectors — a move referred to as “four plus one.” The Chinese Nationalist Party (KMT) and the Taiwan People’s Party (TPP), who used their combined legislative majority to push the bill through its third reading, claim the holidays were chosen based on their inherent significance and social relevance. However, in passing the amendment, they have stuck to the traditional mindset of taking a holiday just for the sake of it, failing to make good use of
RSS