Economist Andy Xie (謝國忠), formerly with Morgan Stanley, proposed last week that China trade its dollar assets for shares in US companies on a grand scale, challenging the US to overcome its financial xenophobia to avert a disaster of undercapitalization.
But many in China, from nationalist bloggers to social justice activists, advance a deeper critique of the leviathan reserve. Why bind up Chinese capital to finance the US’ debt-consumption economy, they ask, when so many needs go unmet at home?
China was one of the world’s most egalitarian societies as late as 1985. Today, it suffers one of the world’s biggest gaps between haves and have-nots. Chinese-style capitalism is flaunting its defiance of one of Confucius’ basic teachings — don’t worry about poverty, he warned, worry about inequality.
China’s physical infrastructure in booming central cities is undergoing radical modernization, but the social and environmental infrastructure is falling apart, especially in the interior and for the huge rural population. For years, the central government has talked about creating “social harmony”— with a “new-type rural cooperative medical services system,” by increasing spending on education to 4 percent of GDP and eliminating school fees, and implementing “sustainable development” models.
The promises are grand, but the actions have not measured up. And the economic costs of restricted access to healthcare and education, on top of the scarcity of clear air and potable water, will be crippling in the mid and long-term.
The challenge for China in the years to come is to divest itself of US debt, and begin investing in the health, education and environmental well-being of its own people. Growing the economy at an average annual rate of 10 percent, it turns out, may have been the easy part.
John Delury is director of the China Boom Project at the Asia Society in New York.
OPYRIGHT: PROJECT SYNDICATE
RSS