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The return to economic pragmatism and money making had a galvanising effect on the People’s Republic of China. Although the Communist Party continued to rule and even today continues to pretend that it is committed to socialism, the Chinese have enthusiastically embarked on a binge of economic growth and private capital accumulation. The world suddenly has had to cope with a China intent on catching up in economic modernisation at a hitherto unimaginable speed. Many accepted the glitz of Shanghai and Beijing all too willingly as the real and only face of the new China.
However, even after a qu-arter century of impressive economic growth, the vast majority of the Chinese continue to live in very modest conditions, even poverty. In this respect, the claim of the Chinese leadership that in spite of all economic progress China remains a developing country, is appropriate. The scourge of hunger and destitution may have been ban-ned, but for hundreds of millions of Chinese, an economically decent and secure life is still a distant dream. While millions have profited from the new economic opportunities, hundreds of millions have remained on the sidelines and have been losing out in the ever more intense str-uggle for resources and livelihood. Today, the People’s Republic of China is among the countries with some of the biggest wealth disparities in the world.
The current economic crisis has not had as negative an effect on the Chinese economy as has been the case
in neighbouring South Korea and Japan. Nevertheless, China’s export industry is also suffering. The American consumer, who, in the past, has been lapping up cheap goods from China, has started to save. Exports to Europe are down. Early last winter, the Chinese government started to implement a massive programme to nurse the economy back into robust health. The leadership in Beijing is composed of technocrats who lack charisma and are no match for leaders who have to prove themselves in vibrant democracies such as India. Nevertheless, they, too, are under pressure to perform.
The “Mandate of Heaven”, which allows the present leadership to govern is based on one major foundation — strong economic growth. The Chinese leadership knows that if things turn seriously sour for the Chinese economy, they will be in trouble. This may not come from an attempt to topple the existing system.
There are enough sceptics and disgruntled elements in the Communist Party itself who have never really liked the new wave of consumer-ism and capitalism. As long as the going was good, the technocratic modernisers had their way. Once things get tougher they have to listen to more conservative and more ideological voices in the party.
At present, there are numerous signs that the enthusiasm about the opening up and the liberalisation of the Chinese economy has been waning since some time. The social question is back on the agenda and the pressure is on the government to repair the damage in the social fabric that has been the result of a relentless drive for new private wealth.
In the golden eighties and nineties, social security issues, such as old-age provision and public healthcare, did not receive the necessary attention. Now the government is looking with a fresh eye at major socio-economic challenges. In any case, the one-child policy is rapidly changing the requirements for old age. Particularly, in big cities, the traditional family network, which looked after the old and sick, is rapidly deteriorating. This is a very good reason for the government to focus its programme not only on infrastructure projects and industrial expansion, but also on the stimulation of the Chinese economy.
At present, massive amo-unts of money are made available for programmes that would enhance social security. Once people feel more secure, the government expects the Chinese would start sp-ending. China has one of the highest savings rates in the world. This is as much due to traditional values of Chinese society as well as deep-rooted fears about political and social instability.
For a long time, experts have warned China not to depend excessively on the export industry. To be the wor-ld’s most important workshop is a proud asset to most Chinese. However, what happens if the consumers in faraway countries do not or cannot consume anymore as liberally as in the past?
Boosting domestic consumption is the answer to cut this excessive dependence on foreign markets. If China really wants to become a power that can rival the US, it must first make sure that it is not the American consumer who determines the fate of its eco-nomic wellbeing.
The writer is the Far East correspondent of Swiss daily Neue Zurcher Zeitung
