China’s Pathways to Development – the Road from Here
The second part of the multi-part series, “China after the Olympics.” [Read Part 1]
China’s development has captivated the entire Western world, and for good reason. China has forged a development plan that has nurtured staggering levels of growth and lifted hundreds of millions of people out of poverty since the onset of reforms in 1978. As the world embraces the Beijing Olympics and China uses the international spotlight to showcase its economic, social, and to a lesser extent even political achievements since 1978, several important concerns have been excluded from this narrative. These concerns are inherent to the development process, but they present serious challenges to the sustainability of China’s long-term economic and political stability. In 2006 President Hu Jintao began to speak of “Harmonious Society” and a new approach to development that would address these long-standing development conundrums. Below we identify several (but not all) key challenges that will become central to China’s development policies in the coming years.
The first major concern is macro-level development. Though few regions have fared worse off in terms of household living standards compared with pre-1978 levels, some regions have fared much better than others. This disparity in growth can be largely attributed to nature of China’s economy as predominately export-oriented and the geography that plays into this development model. The wealthiest regions of China are the coastal provinces, a reversal of fortunes compared with the pre-reform Maoist era in which state expenditures were concentrated in heavy industry and ordnance planning in the interior provinces (a direct outcome of “Third Front” geopolitical economic development and military defense planning). Today, these interior provinces have become the great reserves of human labor – while Guangdong, Shanghai, Fujian, Jiangsu, and Beijing reap the rewards of foreign direct investment, Sichuan, Henan, and Hubei have become the prime reservoirs of migrant labor into these regions. While migrant remittances have help partially assuage these regional disparities, interior provinces continue to fall far behind coastal regions in per capita income. In the late 1990s, the central government implemented the “Develop the West” program – an ambitious agenda to help correct these disparities through increased investments in interior infrastructure and development-oriented investments, though results have been below expectations.
The environment figures critically into China’s future, immediate and long-term. Much of China’s rapid growth has been at the expense of the environment and natural resources. Pollution now ranks above direct corruption as the number one reason for rural social unrest (though the two are closely related). During the Beijing Olympics, the levels of particulate matter in the lower atmosphere in Beijing are nearly twice the WHO’s recommended maximum threshold. Cancer among rural farmers incurred through exposure to toxic river water and mercury has increased dramatically, and experts suspect asthma rates to rise at alarming rates because of early-life exposure to air pollutants. China’s resources are also being exploited at an unsustainable rate; approximately one new coal plant is built every week, and Chinese car consumption is pushing China into Africa and deep into an already unstable global oil market, with no immediate signs of retreat. The demand for coal energy has stressed the mining industry – tragic fatal accidents are now a common occurrence and the demand for cheap labor has led to numerous criminal practices (the most recent infamous case involving the kidnapping of middle schools and forced slave mining labor in Shanxi province earlier this year).
Corruption has always been a concern for Chinese leaders, but its ubiquity today is unmatched in modern Chinese history. Part of the problem is defining corruption – the exchange of gifts is a common vehicle for corruption, but often difficult to differentiate. Corruption is also an outcome of China’s political system – ambitious local officials often need to provide “gifts” to their superiors in order to reach the next level in the Chinese political system. Despite central government efforts, such as official rotations and regional term limits, local juntas remain and local corruption continues to be a cancer. The most dangerous outcomes of corruption are social – illegal or quasi-legal land expropriation, often with expansion of Chinese cities into rural regions and the kickbacks paid to local officials by local developers, have triggered rural resistance and protests. Local official siphoning of public funds has also lessened the funds available for education and public services, such as health care.
The influx of new capital and wealth has also triggered a growing disparity in gender relations. While male chauvinism was a problem during the Maoist era (despite the rhetoric and intentions of top officials), these disparities have arguable widened over the past three decades. Brothels have become a common feature of Chinese cities (often masked in the form of massage parlors) and top executive positions continue to be male-dominated. Much of this sexism is explicit – airline stewardess postings often list outright the exact physical “specifications” of the desired new female hire, which seldom relate to training and skills.
Aside from the social, economic, and environmental limits on the existing development paradigm, there are also perhaps serious political limitations. The cadre evaluation system used for performance measures of local officials is at times incongruent with the economic and social needs on the ground. Minxin Pei, in China’s Trapped Transition, argues that the incentive structure within the Party State in China encourages local officials to act on perceived short benefit horizons and seek immediate rewards through predatory behavior. Negotiating central and local demands has been characteristic across China: fiscal decentralization has led to local state coping strategies in resistance to central mandates – namely various forms of protectionism, capital hoarding (extra-budgetary revenues), and reliance on informal finance for private sector development. While local officials’ career advancement remains within the capture of the central state, there is an asymmetry of interests that puts local officials’ development planning at odds with central planners, leading to informal resistance.
The future of China, and inevitably the rest of the world, will depend largely on how the Chinese government addresses these key issues. Action is an imperative; the current pathway, while bringing unprecedented wealth to millions of Chinese people, is in need of significant reform and change.
