Thursday, September 16, 2010

China doesn’t yet measure up as a strong economic power - The Globe and Mail

Chinese ambassador puts a negative spin on China's economic growth, which in fact is the positive spin, trying to convince western consumers don't be threatened by us and keep consuming the Chinese goods.

From The Globe and Mail.
We don’t yet measure up as a strong economic power

Lan Lijun

From Wednesday's Globe and Mail

The news that China has overtaken Japan as the world’s second-largest economy has generated quite a few headlines of late. Undoubtedly, this is a significant moment for the country. After all, this hard-earned achievement comes from much effort by the Chinese people over decades. On the other hand, the feelings of the Chinese people are complicated.

Since its founding 61 years ago – especially during the past 30 years of reform and opening-up –China has made remarkable strides in economic, social and other fields. In 2009, its gross domestic product reached $4.33-trillion (U.S.) – 77 times what it was in 1949. China’s GDP per capita increased 32-fold. As well, China has topped the world with 13 million vehicles produced and sold; 316 million Internet users and 740 million cellphone subscribers. China’s highways extend 65,000 kilometres. High-speed railway construction has entered a new phase of fast growth. At the same time, many Chinese have a moderate lifestyle earned through hard work.

Let’s face it: These impressive statistics reflect only a part of where the country stands economically and socially. China still faces a number of challenges despite its dramatic progress. It has more than 1.3 billion people. Any problem, no matter how small, becomes enormous when multiplied by 1.3 billion. And any wealth and material resources, when divided by 1.3 billion, will look inconspicuous in per-capita terms.

China’s GDP in the second quarter this year was $1.33trillion. Granted, the number is not small. Nevertheless, China’s population is 10 times that of Japan, thus its GDP per capita is about one-10th of Japan’s. Based on the World Bank’s 2010 World Development Report, China’s national income per capita in 2008 was a mere $2,940, placing China 130th internationally. The World Bank’s 2009 report estimated that there were 254 million Chinese living in poverty, the secondmost in the world. Historically speaking, at the outbreak of the Opium War in 1840, China’s GDP was second to none, accounting for 25 to 30 per cent of the world’s total. But China’s GDP per capita, divided among 410 million people, was only one-fifth of Britain’s. Eventually, China was carved up by foreign imperial powers, becoming a semi-colonial state.

Therefore, a country’s capacity or a nation’s strength is not only judged by its GDP numbers, but also by the quality of its citizens, its creativity, as well as its industrial, agricultural, military and international competitiveness. To be honest, we still have a long way to go in all of these areas.

The reality in China today is that the country’s overall productivity is still very low. The added value of agriculture per labour unit is only $407, less than one-108th that of Canada. On a per capita basis, China is also short on resources. Its arable land and fresh water per capita are way behind the world average. Across China, there is an imbalance in economic development. The disposable personal income of urban residents is 3.3 times higher than the net income of rural residents. Rich provinces in eastern China are obligated to help underdeveloped ones in central and western China. The responsibility is tremendous. In 2008, registered unemployed individuals in urban areas amounted to 8.86-million people. Also, the country is aging but not yet rich. China has to pay a much higher price to cope with frequent natural disasters than many countries. In other words, occupying second place in the world’s GDP rankings is not enough for China to manage its own affairs well.

Ordinary Chinese are not preoccupied with GDP figures. What they really care about is how economic growth, increasing incomes and social advancement will affect their lives. They focus on solving practical problems, such as getting child care, medical services and affordable housing for raising a family. The Chinese people will be happier once these problems are resolved. Our goal is to make the country moderately prosperous by 2020.

What is certain is that China will not avoid its international obligations. These obligations, however, must be proportionate to China’s economic and social development. It is neither feasible nor reasonable to expect China to do things beyond its capacity. The truth is that China is and will remain a developing country for years to come. Instead, we must look objectively at China’s ranking in the world economy and stay sober-minded. We do “have a large mountain to climb” before we become a strong economic power. It is not going to be an easy journey.

China doesn’t yet measure up as a strong economic power - The Globe and Mail

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