That there are problems with China’s rapid economic growth has been known for some years. After double-digit growth rates over many years, China is now settling for single-digit growth.
Last year it was 7.4 percent, said to be the slowest in more than two decades. This year, as announced by Chinese Premier Li Keqiang (李克強), it would be “about 7 percent,” half a percentage point down from last year’s aspiration of “about 7.5 percent,” and a “new normal” for the Chinese economy.
Speaking at the annual session of the Chinese National People’s Congress, Li was candid about the problems facing China’s economy, even though its growth rate is still the envy of many countries.
In his annual report card, Li said: “With downward pressure on China’s economy building and deep-seated problems in development surfacing, the difficulties we are to encounter in the years ahead may be more formidable than those of last year.”
After Mao Zedong’s (毛澤東) death in 1976 and the end of the Cultural Revolution, which turned China upsidedown during the 1960s and into the 1970s, China was set on a high growth trajectory during the 1980s while former Chinese president Deng Xiaoping (鄧小平) was at the helm. Despite the great convulsion of the student-led democracy movement of 1989, put down by the army, Deng managed to keep the state on an even keel, the economy growing and transforming China into a strong country.
In the process, he was prepared to discard communist ideology in favor of capitalist growth, but all under the tight political control of the Chinese Communist Party (CCP). Deng did not mind if this made some people rich and increased the rich-poor gap. It also greatly widened the gap between coastal regions as the favored development zones and the nation’s interior, as well as between urban and rural areas. Everything else was subordinated to the economic growth index.
Over the years, the high-speed industrial development led to all sorts of problems. The growth of urban industrial centers encouraged developers and their party backers to virtually expropriate rural lands on the outskirts of overlapping boundaries, with nominal or very little compensation causing social tensions. Such developments led to a tremendous boom in real-estate prices, making developers rich and contributing to a bubble-bust situation. Some apartments and estates have no buyers because of high prices.
Another serious problem from such high-speed development has been the plague of corruption from the highest to lowest levels of the party and bureaucracy. Chinese President Xi Jinping (習近平) has made the eradication of corruption a crusade and some high rollers in the party have become its victims. It sometimes has the look of a political purge and is causing some fear in the party ranks and among associated people, like relatives and cronies occupying cozy and powerful positions in state monopolies. The crackdown is also said to extend to the military. However, the high-pitched anticorruption drive seems to go well with people who have become sick of the system.
Speaking on corruption, Li said in his report to the congress: “Shocking cases of corruption still exist. Some government officials are neglectful of their duties; holding on to their jobs while failing to fulfill their responsibilities.”
As China’s pollution levels rise, the environment has emerged as an important public policy and health issue.
Li touched on it in his report when he told congress delegates that, “environmental pollution is a blight on people’s quality of life and a trouble that weighs on their hearts.”
Chinese cities, like Beijing, are blanketed with smog and one often sees people wearing masks to minimize the health dangers. China’s acute environmental problem is largely due to the overriding primacy of development over other considerations and failure to devise a comprehensive integrated national policy that takes in other factors.
However, China is not the only culprit in this regard. It has been like other developing countries; a late starter in economic development so that a lot of damage has already been done to the environment before it achieves developed status.
There are indications that China is now taking environmental issues seriously. A recent joint announcement with the US on addressing climate change suggested that China’s carbon emissions should peak by 2030, starting a downward process from then on.
It will increasingly reduce the use of fossil fuels like coal, cut energy intensity, expand trials for trading in carbon emissions, use non-fossil fuels like solar and further expand its nuclear energy sector.
The environmental pollution is of great public concern. A documentary on China’s catastrophic smog, called Under the Dome, went viral before it was ordered to be removed for fear of “hyping” people’s concerns.
Indeed, before it was ordered to be withdrawn, the documentary won praise from Chinese Minister of Environmental Protection Chen Jining (陳吉寧).
He said that China faced an “unprecedented conflict between development and environment.”
Despite the documentary being censored, Xi appears to be serious on the issue of climate change. He reportedly said the other day that China would punish “with an iron hand any violators who destroy ecology or environment, with no exceptions.”
How successful and how soon the environment becomes an important part of China’s overall development priority remains to be seen.
An important element of China’s modernization is an emphasis on updating and expanding its defense forces. China is seared by the memory of its humiliation at the hands of the West and then Japan. The two opium wars imposed on China by the British in the 19th century are an illustrative example. And Japan carried on its depredations through the 1930s and during World War II.
Now that China is strong, it is determined not to let this happen again. The flip side is that Beijing not only wants to be militarily strong to defend itself, but it also wants to turn the Asia-Pacific region into its enclave, as it believes it was historically when China considered itself the center of the world.
This is creating a lot of tension with its neighbors over the sovereignty of some of the disputed islands in the South China and East China seas.
China is determined to hold its ground and has been increasing its defense budget by double-digit figures over the past several years. Officially, Beijing’s defense budget last year was US$132 billion, the second largest after the US, which it is inching toward US$600 billion.
A spokeswoman for the congress said: “As a large country, China needs the military strength to be able to protect its national security and people.”
All in all, the picture that emerged from the congress session is of a nation confident of steering itself to revive its past glory.
Sushil Seth is a commentator in Australia.
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