Economic growth in China creates political challenges

Formerly described by Napoleon Bonaparte as a “sleeping giant,” China has in recent decades awoken from its slumber of isolation and economic stagnation to take its place at the forefront of the global sphere. Since the 1970s, economic liberalization has been introduced with aims to “reform and open,” resulting in a modernization of infrastructure and unprecedented growth rates. In the past decade alone, China’s economy has more than tripled in size. Tens of millions have been lifted out of poverty, and from 1975 through 2000 the growth rate was a staggering 8-9% a year, about four times that of the United States during the same period.

China is considered an emerging market, part of what many countries call the BRIC (composed of Brazil, Russia, India, and China). In many ways, however, it has already emerged, and is quickly becoming a major economic superpower. When we think of China today, we often think of a country whose recent economic development poses a threat to American superiority and influence. Despite the recession in America, uprisings throughout the Middle East, and the Eurozone crisis, China has maintained a trajectory of growth. Boasting the world’s largest automobile industry, and prominent industries in steel, housing, and electricity, and more, the country’s development is staggering.

Education and information technology have particularly seen a dramatic improvement. A new survey from Dell shows that Chinese students use computers in school more than American stdents, and both students and teachers are more tech-savvy.

The latest string of cyber attacks on America from China, hitting newspaper organizations such as The New York Times, offers a glimpse of their technological power, and the potential threat it could pose for U.S. security.

Despite economic progress, China is not without difficulties. Rather, the country is plagued with problems resulting from the Communist Party’s distaste for political change. Lack of basic rights such as freedom of speech, political nepotism, and rampant corruption are several problems that will not go unattested as the country continues to liberalize economically. Public protests are a common occurrence despite efforts to curb unease, and the fluidity of the Internet is making it increasingly difficult for censors to keep dissenters from speaking their mind. After joining the World Trade Organization in 2001, Chinese party leaders have been facing increasing pressures for reform, certainly feeling the strain of the numerous calls for freedom and democracy.

Even from an economic standpoint, China has some work to do. The country must undergo significant reform before the current population ages. So far, the demographic has allowed for a higher average income, with more money to invest and save since there are fewer children per family—but this benefit will be short-lived. Incomes must rise across the board for children of the One-Child Policy to financially support their parents and grandparents in old age. Analysts will argue that what has contributed to China’s growth rate more than anything else has been the movement of employment from agriculture to more productive parts of the economy—and that this type of growth cannot be sustained indefinitely. I hesitate to say that China truly rivals the United States as a modern superpower, because in light of their economic progress, there are new causes for reform that must first be addressed.

Primarily, there is a lack of innovation due to a lack of respect for intellectual property. Thus far, China has been profiting from the spending of the United States—exporting goods and specializing in manufacturing. Due to the American financial system, it is more profitable for American companies to manufacture goods in China, resulting in much of China’s growth. However, this isn’t the highest value of work, and can’t be maintained forever, especially if Americans decide to save and invest more. The importance of manufacturing in China directly contrasts the focus being placed on education, resulting in rising unemployment. As people in China are becoming more educated, they search for white-collar jobs to match their skill level, yet blue-collar jobs are far more readily available and needed. Patent rights and enforcement for intellectual property protection must improve, and corruption must be reduced, to provide incentives for innovation. Israel, for example, has created a great environment for start-ups and innovations that China could learn from.

There are also concerns about the government increasing taxes and seizing assets, causing many of the wealthiest Chinese citizens to pull money out of the country and place it in countries such as Singapore. If faith in the Chinese political system continues to drain, I predict the economy will not be able to maintain its growth.

Some aspects of the communist regime are fostering economic growth in the short term, particularly the ability for the party to plan long term investments into the future without worrying about appeasing voters—but I don’t believe growth can be sustained without political and social change. Some of the fundamental challenges that come with economic prosperity are income disparities between the rich and poor, contrasting communist principles of income equality.and capitalist mandates of economic growth.

China has clearly accelerated and advanced the most out of the top emerging markets, but cannot stay on its current trajectory, or become a true rival of the United States in terms of economic or political power, without making significant reforms. The latest quarter has seen a recent reduction in the growth rate, and unless certain issues are reshaped, many economists believe it will continue to slow.

While economic liberalization has done great things for the Chinese society at large, its astonishing success promises a new series of challenges that must be addressed before  the country can truly become a global superpower.


—Sara Lobo ‘16 is a student at Vassar College.

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