China Incorporated (Part One)
Official numbers would place China’s
economy as one seventh of the US economy but figures such as those from the CIA
estimates it to be a third of the US. Based on the urbanization data he
provided, Fishman projected that in next the 15 years, 300 million of the
Chinese population will emigrate to the cities, implying the need to construct a
city as large as Houston every month to provide adequate housing for
them.
...Also noticeable is the deep
purchasing power and consumption capacity of the new cosmopolitan middle-class
who have access to enormous shopping centers, bookstores, restaurants, bars, and
discotheques comparable to those in New York or Paris. However, the stark gap
between the rich and poor is all too visible as poverty and inequality, and
pollution produced by decrepit factories and utility plants, lurk vividly if not
viciously in some regions.
...A few
days ago vice prime minister Zeng Peritan gave the title of "distinguished
economists" to Xue Muqiao who is 101 year old, to octogenarians Ma Hong and Lui
Guoguang, and to the relatively young Wo Jinglian who is 75 years old. All of
them have favored a market economy approach which has been credited for the fast
economic growth and the enormous wealth generated in China in the last 10
years.
The fast developing and dynamic China, with its
extraordinary rate of growth of 9.5% per year in the last decade, is the locus
of attention in economic circles and worldwide press. For samplers, just in the
last few weeks, the country hugged the cover of
The
Economist in the article, "China: The Key for
Peace in Asia." It was also featured in
The Financial Times
in the article "Power to the People," and in
The New York Times
in the article, "China, the Book’s
Greatest Market in the World."
Those
observing China from the outside have starkly identifiable and classifiable
tendencies. Some tend to magnify the country’s economic advances. Others
diminish the dramatic changes and emphasize problematic issues such as poverty,
environmental concerns and the rule of one political party. A number will
exaggerate the risks of the nascent power that is deemed to defy the United
States. Many attribute to China the loss of jobs and the disappearance of
industries in other countries. A few recognize the wealth and complexity of
China’s history and culture and the enormous dimension and diversity of
their population and territory. Others emphasize the importance of Chinese
productivity and its impact in lowering the prices of consumer goods and in
keeping worldwide inflation low. The rest tend to underline the country’s
new role as an exporter of capital and important player in fixed income and
equity markets.
Among the recently
published books on the subject, China, Inc. by Ted C. Fishman is an interesting
read. Fishman is a journalist and former stockbroker and financier. Culling
anecdotes and statistics, the author provides an independent evaluation of the
country. He mentioned the fact that official Chinese statistics deliberately
underestimate the reality. According to Fishman, GNP is deliberately set low to
appease those who consider China a risk that needs to be contained. Official
numbers would place China’s economy as one seventh of the US economy but
figures such as those from the CIA estimates it to be a third of the US. Based
on the urbanization data he provided, Fishman projected that in next the 15
years, 300 million of the Chinese population will emigrate to the cities,
implying the need to construct a city as large as Houston every month to provide
adequate housing for them.
A month ago,
I had the opportunity to visit Shanghai and to witness the impressive
development that is taking place in that city. The city’s increasing
prosperity is evident in the post-modern architecture, in the new skyscrapers,
and in the impressive length of newly built freeways inside the city. Also
noticeable is the deep purchasing power and consumption capacity of the new
cosmopolitan middle-class who have access to enormous shopping centers,
bookstores, restaurants, bars, and discotheques comparable to those in New York
or Paris. However, the stark gap between the rich and poor is all too visible
as poverty and inequality, and pollution produced by decrepit factories and
utility plants, lurk vividly if not viciously in some regions.
Many analysts have been debating the
sustainability of the Chinese model of increasing economic freedom with state
planning. Some fear that slowing growth would lead to street demonstrations,
protests, and instability. Not missed in the discussion is the inherent
difficulty in translating economic liberalization to political freedom.
So far, the success of the economic
model serves the Chinese leaders who promote it. A few days ago vice prime
minister Zeng Peritan gave the title of "distinguished economists" to Xue Muqiao
who is 101 year old, to octogenarians Ma Hong and Lui Guoguang, and to the
relatively young Wo Jinglian who is 75 years old. All of them have favored a
market economy approach which has been credited for the fast economic growth and
the enormous wealth generated in China in the last 10 years.
Given China’s increasing strategic
importance, a great number of countries, like those in the Mercosur area are
looking to forge close economic relations with China. It is a pity that Mexico
lost the special relations it has been granted for having been one of first
countries, which supported the entrance of China to the United Nations in the
early 1970s. It seems erroneous for Mexican policymakers to have decided on a
unilateral trade policy of protection and high tariffs. It would have been
preferable to bilaterally negotiate measures that stimulate Chinese investment
in Mexico and to look for voluntarily restrained actions to reduce dumping of
cheap merchandise.
Source:
Ted
C. Fishman; China, Inc.:
How the Rise of the Next Superpower Challenges
America and the World. Simon & Schuster, 2005.
Website: http://pintobooks.com
Posted: Wed - December
14, 2005 at 06:59 PM