The social and political importance of sustained Chinese growth

2011-02-21

in Bombs and rockets, Economics, Geek stuff, Politics, The environment

Some socio-economic questions are so complex that they are probably impossible to definitively answer, since we only have one planet to work with and one human history unfolding. We can’t run a bunch of trials and work out the probabilities involved (sweet, sweet Monte Carlo method). At the moment, one such question is: “What would happen geopolitically if economic growth in China really slowed down for a while?”

The question relates to how quickly China should deploy renewable energy, to help respond to climate change.

One can imagine a benign scenario where growth slows a bit while China focuses on greenery, the air in Beijing gets cleaner for a span longer than the Olympics, and China’s importance within the global system continues to increase smoothly (though how benign that increase is is another question).

One can also imagine a less benign scenario where the Chinese economy isn’t producing enough jobs to employ the generation entering the workforce. Without jobs, they could focus in large numbers on more destabilizing things, like overthrowing the Communist Party and establishing a more credible democracy (though what the many considerations involved in any such matter would be is another question, as well).

All told, the state of the global economy now seems pretty worrying. The immediate financial crisis was staved away with giant amounts of public money. But not much actual reform seems to have taken place in the financial system. At the same time, the European Union is dealing with a crisis and Japan continues to stagnate. If you believe that growth is generally good (though greenhouse gas pollution must fall), you have good reason to worry about the state of the world economy today. Alternatively, the same is true if you think growth is generally good for global stability, and global stability is important (World Wars are nasty things).

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{ 7 comments… read them below or add one }

. February 21, 2011 at 8:16 am

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Major climate change issues >> Global politics >> China

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. February 21, 2011 at 10:32 pm

In public, the world’s financial chiefs warn of a “two-speed recovery” in which some countries, especially China, are experiencing fast-growing economies while others, notably the United States and much of Europe, are mired in debt and unemployment and barely growing at all. In private, though, the central bankers and finance ministers of the world’s 20 largest economies, gathered in Paris this weekend to confront looming global economic problems, almost all paint a picture of China’s surging economy as a powerful black hole whose inward draw is sucking up a huge share of the world’s debt, currency reserves, food, commodities and jobs.

Rather than simply surging ahead of the rest of the world, in this view, Beijing’s policies are actively holding back other developing countries and jeopardizing wealthier competitors. China’s $3-trillion pile of currency reserves, its unwillingness to purchase imports and especially its artificially low currency-exchange rate have sent much of the rest of the world spiralling into instability, in this view. “That can’t go on too long,” French Finance Minister Christine Lagarde, said of China. “As is often the case with big imbalances, a system collapses.”

R.K. February 22, 2011 at 12:36 pm

In order to create a sustainable global economy, every state may need to learn to live without growth. That would not be easy, or without violent upset.

Antonia February 23, 2011 at 8:36 am

. ‘s comment is interesting.

My initial reaction to the article was a recollection of a documentary’s statement that China’s shifts between net net importer and net exporter status have always had massive impact, shifting the availability of food and growth of other economies globally.
At the moment they have an ageing population and the workforce are starting to resist some abusive, degrading and ill-remunerated practices so its unclear how things will play out. While conservation and green practices are not visibly a major internal priority, there is still a substantial but diminishing rural population using lower-impact traditional farming techniques and the likely gradual disappearance of these as the economy grows and far-flung districts ‘modernise’ may offset their major investment in the growth area of green technnologies, even if they’re applied locally. Whatever the national practices green tech is definitely recognised and invested in as a growth sector for export so even while not domestically green they could take a forefront role in green tech markets. Whether that would result in more application of those tech.s and the underlying ethos within China is another matter.

Byron Smith February 23, 2011 at 7:40 pm

Growth may have been “good” for stability (keeping the lid on revolution through the promise of wealth, one day, if only you keep working hard), but it is increasingly terrible for ecology, which after all, owns the global economy. So growth as we currently know it cannot continue for more than a few more decades (at best) without so severely undermining the ecological health of the planet that the economic costs of ecological degradation will overwhelming any further growth.

That stability has been linked to growth has enabled the pressing question of justice and equity to be deferred, since all have had the promise of betterment while the rich get richer. If the prospect of growth becomes dim (as it is), then the question of justice must come to the fore. Whether this occurs through violent and unpredictable revolution or through reform is largely the choice of each society. Few seem to be choosing the latter, however. Indeed, globally, the rich are getting richer and only seem more intent than ever to remain in control of the reins of power. That is the path of violence, not that I am advocating or condoning it.

Of course, the absolutely poor deserve the right to develop their basic economy to a level required for the possibility of living a healthy and satisfying life. This is nowhere near present levels of western consumption, and nations that are well above this level have a moral duty to pursue justice through planned de-growth, or rather, pursuing things that are better than growth.

. February 28, 2011 at 5:45 pm

There are days when the men who rule China appear to be among the most capable governors on the planet, smoothly managing their country’s seemingly unstoppable economic rise. Other days, the Communist Party of China seems paranoid and brittle, seemingly terrified that a flicker of dissent could set the whole system afire. Both Chinas were on display Sunday, just a few kilometres apart in the centre of Beijing. In the confident and impressive China, Premier Wen Jiabao said the country would lower its economic targets in order to focus on more “sustainable” growth. The world’s second-largest economy will target 7 per cent annual expansion over the next five years, following a long stretch of higher, sometimes double-digit, growth.

Mr. Wen said the country needed to make policy changes – such as raising salaries in low-paying industries and changing the tax system – to reduce the country’s yawning gap between rich and poor. “In some places I have seen, urban construction is very fast, but as you walk along, you see shabby rural streets and housing, and some farmers are still hard pressed to pay schools the 100-yuan heating fees for their kids,” Mr. Wen said during a carefully screened online question-and-answer session hosted by the website of the official Xinhua newswire.

“Therefore, I tell local officials, wouldn’t it be better if we construct fewer high buildings and spend the funds for expanding the urban scale on raising living standards?”

It’s the China many Western leaders and businesses are familiar with. A government of solid managers recognizing the challenges they face and moving to deal with them.

But a few blocks away the other China – the unreformed police state – was in full view for anyone who happened to spend their Sunday on the popular Wangfujing pedestrian mall near Tiananmen Square.

Spooked by calls for a “jasmine revolution” in China, hundreds of police (and more than 100 police vehicles) were deployed around the expected protest site, checking passports, detaining foreign journalists and locking hundreds of bewildered shoppers inside a McDonald’s restaurant and a nearby mall for half an hour around the time the demonstration was scheduled to begin.

Foreign reporters who made it through the dragnet were chased in circles by orange-jacketed men with brooms, who seemed more intent on whacking people on the ankles than sweeping any dust. Soon there was no dust – and few pedestrians – left on Wangfujing after a row of water trucks drove up and down Beijing’s busiest shopping street giving it a lengthy and unnecessary mid-Sunday afternoon spray.

. March 30, 2011 at 6:59 pm

China’s economy
Bamboo capitalism
China’s success owes more to its entrepreneurs than its bureaucrats. Time to bring them out of the shadows

FEW would deny that China has been the economic superstar of recent years. Thanks to its relentless double-digit annual growth, it has become the world’s second-largest economy and in many ways the most dynamic. Less obvious is quite what the secret of this success has been. It is often vaguely attributed to “capitalism with Chinese characteristics”–typically taken to mean that bureaucrats with heavy, visible hands have worked much of the magic. That, naturally, is a view that China’s government is happy to encourage.

But is it true? Of course, the state’s activity has been vast and important. It has been effective in eradicating physical and technological obstacles: physical, through the construction of roads, power plants and bridges; technical, by facilitating (through means fair and foul) the transfer of foreign intellectual property. Yet China’s vigour owes much to what has been happening from the bottom up as well as from the top down. Just as Germany has its mighty Mittelstand, the backbone of its economy, so China has a multitude of vigorous, (very) private entrepreneurs: a fast-growing thicket of bamboo capitalism.

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