How has it changed Chinese society?

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The Chinese Economic Miracle2

China has a population of 1,307,000,000 people. It has the largest workforce in the world.

China introduced market reforms in the early 1980s; only a third of the economy is now directly state-controlled.

Since joining the World Trade Organisation in 2001, China has rapidly become a global economic force, exporting more IT than the United States, creating the so-called economic miracle and a vast middle class.

But not all of China is booming: rural areas have lagged behind. And growth has not been without hiccups. Pollution is rife, and health care strains rural resources.

Still, the economy's recent growth is seemingly unstoppable.

What is socialism?

China, it would appear, far from being a socialist country, is one of the most ruthlessly capitalist countries in the world. Yet, the Chinese Communist Party (CCP) claims to be followers of the ideas of Karl Marx, the inventor of communism.

It believes that its reforms to free up markets and the economy will create a “socialist countryside”.

China’s reforms since the 1970s have certainly been a success on one level.

Many Chinese citizens now have a first class standard of living.

But is this socialism? It’s a bit like George Orwell’s conclusions in his novel 1984, where he claimed that the rulers of the world would rule through “truth speak”.

War, for example = Peace.

In China it seems capitalism = socialism.

Chinese Millionaire

Socialism with Chinese characteristics

“To get rich is glorious”. Deng Xiopeng

In 1979, China decided to “open its doors to the west” and encourage investment from overseas.

With attractive low production costs and China’s huge local market, foreign investments dramatically increased.

The goals of Deng's reforms were summed up by the Four Modernizations, those of agriculture, industry, science and technology and the military.

To Get Rich is Glorious5

The Chinese Communist Party (CCP) has governed China since 1949.

Deng Xiaoping, who led the party—and therefore China—from 1978 to 1997, began a policy of “socialism with Chinese characteristics”, (“to get rich is glorious”) encouraging more economic openness and foreign trade.

Although local governments can now safely ignore directives on economic growth, the CCP retains an iron grip on government.

The New Rich

Paul Merton in China

For decades, being rich in China was a crime punishable by imprisonment or death.

Then, in the early 90s it became a mere social taboo, to be furtively practised away from disapproving eyes.

But now, being wealthy is a cause for celebration, prompting thousands of Chinese millionaires to come out of the closet.

Visitors to Beijing can see at first hand the playground of the new rich.

The world's largest titanium and glass opera house opened in December 2007.

Shanghai

In 1985, Shanghai (above) had one skyscraper building.

Now it has over 3,000 buildings of 18 stories or higher. Shanghai has several luxury hotels (Shanghai Hilton, above, with Paris, attending the 2007 MTV Style Awards).

Opening the doors to the world8

Deng’s reforms have been continued by the current CCP leadership.

China’s economy is aggressively capitalist.

The number of state owned firms has fallen from 300,000 to 150,000 with millions of jobs lost in the process.

In the 1970s there was virtually no private sector to speak of in China. By 1998, 54% of China’s economy was in private hands. In 2003, this figure was 71%.

President Hu Jintao

Opening the doors to Scotland

Strengthening Links with China

Under First Minister Alex Salmond, the Scottish Government is pursuing “enlightened self-interest”.

Scottish Ballet toured China in 2010. Alex salmond visited china in 2009 to encourage Chinese students to study in our universities. He also promoted Scottish tourism (golf especially) and business links.

Special Economic Zones10

China’s Special Economic Zones enthusiastically set out to attract foreign capital and technologies.

China’s economic zones compete with each other to attract the world’s biggest global players. The regions compete with each other for foreign investment.

The Economic Zones have attractions for foreign companies because they offer low taxes and cheaper labour than the west. More global brands invest in China than they do in the United States. China is the workshop of the world.

China makes 2/3 of the world’s microwave ovens, 50% of our clothes, 50% of the world’s cameras, 30% of our computers and 25% of our washing machines.

It is estimated that in the next three to four years, China will be richer than the entire 25 countries of the European Union put together.

Special Economic Zones

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Globalism and China

More global brands invest in China than they do in the United States.

And why not? China has a population of 1.3 billion, many of whom are getting richer and more brand aware all the time.

Adidas: Made in Germany, Growth in China

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Tackling the Global RecessionWhen the global banking crisis occurred in 2008, China responded in a similar way to the UK and the USA. The CCP introduced a financial stimulus (£360 billion ) to the economy.

China avoided recession and the economy continues to grow.

The car market is an excellent example. Consumer spending was encouraged by a cut in sales tax and subsidies to buy cars.

Analysts estimate that China will overtake the USA as the world’s largest car market by the end of 2009

Volkswagen, which makes cars specifically for the Chinese market, has ¼ of its global sales in China and is selling more cars in China now than ever before.

Geely, China’s leading car manufacturer, is defying the slump in car sales, selling 3 times as many cars in 2009 than it did in 2008.

Geely

The Panda Bounces Back

Unlike the rest of the world, the challenge for the CCP has been cooling demand in the economy and slowing growth. The CCP is anxious to avoid a Dubai-style credit boom and crash. In the immediate aftermath of the fiscal stimulus, Chinese banks lent four times as much money as they did in 2008. Share prices soared by 80% from their November 2008 low.

In an attempt to thwart speculators, the CCP has imposed a sales tax on homes sold within five years, has tightened the stricter rules on mortgages for investment properties and is trying to crack down on illegal flows of foreign capital into the property market.

Today, China’s economy is growing at a steady 10%.

But, social problems continueBut, would we like China’s social problems?

20 million migrant workers are unemployed

There is no NHS

There is no welfare state

There is a complete lack of the kind of democratic freedoms we take for granted.

There are mounting environmental concerns from the economic miracle e.g. pollution and smog.

Migrant workers suffering

We do share some of China’s social problems.

There is a chronic shortage of low-cost housing and property prices property prices in Beijing and Shanghai are beyond the reach of most ordinary people. London and Edinburgh aren’t that much different!

Human Costs of the Economic Miracle15

Even the Chinese government admits that more than ½ of the rural population have no money for a doctor, even if they could find one, locally.

China’s booming economic growth in the major cities has created a demand for cheap migrant labour from the countryside.

The end of the “iron rice bowl” has meant many peasants are now prepared to leave their villages and head for the streets of Beijing, Chongqing, Guangzhou, Tianjin and Shanghai, which they hope will be paved with gold.

It has been described as the biggest movement in human population since the world began. The “floating population” of China is estimated to be at least 100 million people.

Behind the Boom

Economic Inequality16

Statistics, especially from a country as secretive as China, can be unreliable.

But economists often use a formula called the Gini coefficient, which is an internationally used measure of how equally wealth is distributed within a country.

According to official Gini statistics, China is one of the most unequal countries in the world.

Environmental Costs17

China's need to lift so many people out of poverty has been more important than long-term issues such as “sustainable development”.

Water and waste pollution is the single most serious issue.

As more people move into cities, the problem of household waste is becoming severe Only 20% of China's 168m tonnes of solid waste per year is properly disposed of.

The air is not much better. According to the World Bank, China has 16 of the world's 20 most polluted cities. Estimates suggest that 300,000 people a year die prematurely from respiratory diseases.

Environmental Costs

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Pollution

Visitors to the 2008 Olympic Games encountered Beijing’s notorious smog.

“If I worked in Beijing, I would shorten my life at least five years,”

Zhu Rongji ,Prime Minister, 1999. Beijing Smog

Rural Poverty

The economic miracle has created many winners, but there are also many losers.

According to an investigation published by the Chinese National Bureau of Statistics in June 2008, rich people, who make up 10 per cent of China's population, control 45 per cent of the country's wealth.

Poor people (those who earn less than $1 per day, also 10% of the population, only control 1.4%.

According to World Bank figures, there are 130 million poor people in China.

Migrant Labour

"As well as being exploited by employers, migrant families face discriminatory government regulations in almost every area of daily life. They are denied housing benefits and health insurance available to permanent urban residents and their children are often effectively shut out of the state education system." Amnesty International

New Year for Migrant Workers 2008

Suppression of human rights

Workers in China do have the right to join a trade union - The All China Federation of Trade Unions. (ACFTU) This is the only legally recognised trade union. Its official mandate is both to represent the interests of workers and to “take economic development as the central task, uphold the socialist road, the people’s democratic dictatorship and leadership by the Communist Party of China”.

In other words, the ACFTU is the CCP in another guise! The right to strike was removed from the Chinese constitution in 1982.

But strikes do happen in China

In May 2010 a five day strike crippled car production at the Honda plant in Foshan, Guandong. This seriously worried the CCP which ordered the media to limit it’s coverage of it. The strikers won a 24% pay rise.

There was been a 42% increase in labour disputes in Guangdong between 2008 and 2009. In Zehejiang province the increase was 160%

Honda strike May 2010

What does the future hold?

Few people predicted the remarkable credit crunch, so it is very risky to predict how China will grow.

But, the foundations of the Chinese economy are better than the UK and the USA.

•Low Government debt•Strong domestic consumer demand•Low prices = strong international demand for Chinese products

Will China replace the USA as the economic super power?