Wed, Sep 27, 2006 page8

• Wealth, with PRC characteristics

  • By Sushil Seth
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  In a recent forum on Australian TV, participants debated if China was headed for a boom or bust. Many commentators around the world now regard continued economic growth of around 10 percent as a given -- and with it, the continued political monopoly of the Chinese Communist Party (CCP), which is credited for the economic miracle.

  It was therefore interesting to hear a number of informed participants in the studio audience express a healthy skepticism about those claims.

  The optimists believe that the 21st century belongs to China. It will increasingly become the engine of global economic growth, benefiting not only itself but the world. They are not concerned about the imbalance between its politics and economics, with the CCP wielding a monopoly on power. In their view, political pluralism would lead to social collapse, an argument generally made by the government in Beijing.

  Of late, some China experts or sympathizers have come to argue that economics has simply superseded politics in China.

  Economics, in their view, is the new politics, and hence all the fuss about political pluralism is irrelevant.

  The new history textbooks for high school students in Shanghai have virtually eliminated China's political history from their course content. According to a New York Times report from Beijing, "Socialism has been reduced to a single, short chapter in the senior high school history course. Chinese communism before the economic reform that began in 1979 is covered in one sentence. The text mentions Mao Zedong (毛澤東) only once -- in a chapter on etiquette."

  China's history is now all about "economics, technology, social customs and globalization." In other words, an ancient civilization going back 5,000 years was given an abrupt new beginning in 1979 and 1980, when economic reforms began.

  At the level of global politics, China's presumed emergence as a superpower is seen as a useful corrective to US unilateralism.

  However, notwithstanding the rosy picture of China's future, there are many danger signals discounting such a scenario. First of all, there is an assumption that China's economic growth is likely to continue at 10 percent or more for the foreseeable future -- which doesn't seem sustainable.

  The economy is overheating, and might be headed for a crash. In a recent survey by Caijing magazine, 56 percent of Chinese economists saw signs of overheating, up from 15 percent in April.

  But even if this weren't the case, the economy's pace is creating various social and economic imbalances. There are sectoral imbalances resulting from misallocation of financial resources. For instance, state control of financial resources has resulted in a massive transfer of funds to the property sector, leading to an overheated real estate market. Indeed, there is a view that this is where the crash might occur, creating a ripple effect.

  Inefficient use of financial resources in real estate and elsewhere has created the problem of non-performing loans. If China were an open political system, there would be a run on its banks.

  The misuse of funds is also creating severe social problems. The overheated real estate market, fueled by funds which might be productively used elsewhere, is putting a financial squeeze on the urban middle class. As beneficiaries of the urban economic boom, this class is the CCP's support base.

  If they continue to be financially squeezed with pricier real estate and higher educational and health costs, this base is likely to erode, swelling the numbers of those who have become frustrated and angry with China's rulers.

  Rural areas, which have been squeezed to support the urban boom, are experiencing large-scale, though fragmented, unrest.

  As there is not much developmental activity in the rural areas, there has been a massive influx of rural labor to the cities. It is this easy availability of seemingly inexhaustible cheap labor that has enabled China to become the factory of the world. But it has a cost.

  The country has become a volatile mix of all kinds of imbalances like the urban-rural divide, social and cultural alienation of rural workers in an unwelcome and exploitative urban environment, wide income disparities with the country's new rich and their patrons and partners from the CCP ranks acting like kings.

  This is not all. China's environmental degradation, including poisoned rivers and cities with an overhang of industrial pollution -- resulting in many people having to wear face masks -- is an example of a disaster that is already happening. And it has even reached villages. According to a recent AP report quoting Chinese state media and local officials, "At least 879 people from two Chinese villages [in northwestern Gansu Province] have been taken to hospital with lead poisoning, probably caused by airborne waste from a nearby lead factory."

  As for human rights, an example of their gross violations is the harvesting and sale of the body parts of dissidents, particularly Falun Gong prisoners. The country's judicial processes are a sham.

  The latest example is the mock trial and sentencing to four years imprisonment of the blind activist Chen Guangcheng (陳光誠), on the spurious charge of "organizing a mob to disturb traffic" and "damaging property." His real "crime" was to expose the practice of forced late-term abortions as part of China's one-child policy.

  Editorializing on this, a Canadian newspaper, the Gazette, wrote: "This too is modern China. Profound injustice, it turns out, can co-exist with dramatic economic progress."

  But for how long?

  Sushil Seth is a writer based in Australia.
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