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Pudong, the new financial centre, is shown at night in this May 6, 2002 photo in Shanghai, China. (Eugene Hoshiko/Associated Press)
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INDEPTH: CHINA
China's economic miracle: the high price of progress
CBC News Online | April 20, 2006
Everywhere you turn these days China is being heralded as the next big thing. There's no question the country is on the rise -- witness the stunning economic growth, massive modernization programs and the rising standard of living in the cities.
But the upsides come with downsides. The growing gap between rich and poor, unrest in the countryside, persistant government corruption, and staggering environmental challenges -- all threaten to derail the country's dreams.
China's present status as a world economic power comes only after a long and often painful journey.
A brief history
A succession of dynasties ruled China from the second millennium BC to the early 1900s. Chinese history changed course, however, as Europeans expanded into Asia.
China suffered through clashes with European powers in the 1800s. Then, in 1911, Chinese revolutionaries overthrew the last dynasty. The country suffered internal strife for nearly four decades due to warlords, civil war and Japanese invasion. In 1949, the Chinese Communist party won the civil war and established China's current government.
The Communists implemented many social and political changes, starting in the 1950s with the transition to a planned economy. Leader Mao Zedong launched a "Cultural Revolution," in which young loyalists attacked intellectuals and party leaders.
In the late 1970s, the Chinese government introduced economic reforms, introducing elements of a free-market economy. The government also encouraged foreign investment. That laid the groundwork for the modern China we see today.
The "economic miracle"
China's economic engine has really been in overdrive for much of the last two decades – the payoff of the 1978 decision by Deng Xiaoping to adopt free-market reforms. But it's only in recent years that the public at large has taken notice. The China story has simply become so big that it's impossible to escape.
Its GDP is growing by 10 per cent a year. Industrial production is galloping ahead at an annual rate of 17 per cent. Its economy is now the second-biggest in the world, behind only the U.S., and there are predictions it will assume the top spot as early as 2020.
China's integration into the world economy has been astonishingly rapid. Since its adoption of the "Four Modernizations" a generation ago (agriculture, industry, science and technology, and defence) China's share of world economic output has grown from 3.4 per cent to almost 12 per cent in 2000.
Its admission into the World Trade Organization in late 2001 has only served to accelerate that growth. The World Bank now estimates that exports represent a quarter of China's GDP, five times the level of 1978.
And it's not just exports that are booming. China is consuming and importing at a frantic rate. Global trade was moribund in 2003, but China managed to boost its imports by 40 per cent that year. It is now the world's biggest consumer of copper and aluminum as its appetite for imports of raw materials shows no sign of easing any time soon.
China's economic transformation has helped to create a large middle class. Wages have risen, but still remain well below those in the rest of the industrialized world – a fact that has kept Chinese goods competitively priced and allowed China to make major inroads into markets where they were formerly bit players.
Struggling with problems
CURRENT POPULATION OF CHINA:
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1.3 billion
| POPULATION IF CHINA HAD NOT INSTITUTED ONE-CHILD POLICY IN 1978:
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1.5 billion
Source: Government of China
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China's explosive growth has come at a price. The economic gains have not been shared equally. Millions have become richer. But hundreds of millions have not. More than 60 per cent of the population still toils in agriculture; the country's "economic miracle" has yet to make an appearance in much of the country. Corruption also remains well entrenched.
The so-called "Iron Rice Bowl" has become one of the casualties of China's transition to a market economy. Where central planning once guaranteed lifetime employment for everyone in the work unit, the old guarantees are now gone.
Millions of workers have lost their jobs in the restructuring, prompting frequent protests.
The concept of sustainable development has proven to be a fleeting goal in China. Environmental concerns take a distant back seat to growth. Air pollution is among the worst in the world. The World Bank estimates that 16 of the world's 20 most-polluted cities are in China – fallout from the country's heavy use of coal-fired generating stations. Anyone who's been to Beijing can attest to the perpetual haze that hangs over the city – a problem its leaders know they must address before the city hosts the Summer Olympics in 2008.
The steady growth of its military remains a worry in the region and globally, as does its growing insistence on blocking Taiwan's independence aspirations. Human rights exist on paper only; dissidents continue to languish in jail. China leads the world in executions.
The 1989 crackdown in Beijing's Tiananmen Square may have attracted world condemnation. But China's Communist leadership offered no apologies. Since then, there has been no substantial liberalization in China's political structure. Despite the odd release of a dissident or two, official tolerance for differing views remains low.
Its one-child policy has led to accusations of forced abortions and a distinct shortage of girl babies.
POPULATION OF SHANGHAI:
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12.8 Million
| RANK OF SHANGHAI AMONG WORLD'S MOST POPULOUS CITIES:
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1st
Source: World Gazetteer
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Things aren't all bleak, to be sure. China's fashion, arts and cultural community has enjoyed somewhat of a renaissance of late. You no longer see the Mao suits that once dominated urban streetscapes. Chinese artists, with some exceptions, are enjoying unprecedented freedoms. Chinese authorities, again with some exceptions, are even allowing their citizens to access the internet.
Still, the challenges facing the modern China remain daunting. How do you keep 1.3 billion people happy while engineering an economic and social revolution? But it seems determined to press ahead with its "great revival." The world is already watching.
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Background on the pre-existing tension between China and Japan from The Hour.
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