Current Challenges to China

Session 6

ContentsI. Imbalance between Economic Great Leap

Forward & Stagnation of Political Reform

II. Imbalance between the Rich & the Poor

III. Imbalance between Wealth Increase & Integrity Decline

IV. Imbalance between Economic Growth & Environment Deterioration

V. Conclusion

I. Imbalance between Economic Great Leap Forward and Stagnation of Political Reform

1. GDP has grown at an annual average rate of 9.5 % from 1978 to 2010

2. China becomes world’s second largest economy in 2011 (10th in 1978)

3. Largest exporter, second largest importer, second largest trading nation in the world in 2011

4. Foreign exchange reserves: $3.2 trillion (Mar 2011; ranked 1st) (2.3 billion in 1978)

Political Reform Stagnation

Political stability is the priorityThe Tiananmen Square Incident’s impactNo independent judiciary No independent media

Corruption in China

The People's Republic of China suffers from widespread corruption. For 2010, China was ranked 78 of 179 countries in Transparency International's Corruption Perceptions Index

ContinueIn 2009, according to internal Party reports, there were 106,000 officials found guilty of corruption, an increase of 2.5 percent on the previous year. The number of officials caught embezzling more than one million yuan (US$146,000) went up by 19 percent over the year. With no independent oversight like NGOs or free media, corruption has flourished.

Xi Jinping and Barack Obama: two leaders facing very different crises

A Bloomberg investigation recently estimated the total private wealth of incoming president Xi's family at close to $1bn. A New York Times inquiry put that of outgoing premier Wen Jiabao's family at about $2.7bn. The news agency has also reported that relatives of disgraced politician Bo Xilai accumulated at least $136m in assets. - Timothy Garton Ash The Guardian, Wednesday 7 November 2012

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Zheng Xiaoyu (Chinese: 郑筱萸 ; Pinyin: Zhèng Xiǎoyú; December 21, 1944 - July 10, 2007) was director of the State Food and Drug Administration of the People's Republic of China. He was sentenced to death in the first instance trial at Beijing No.1 Intermediate Court on May 29, 2007.[1] He was executed on July 10, 2007 for corruption[2] and possibly tainted products in Mainland Chin

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Lai Changxing, "China's most wanted fugitive." Within a decade he was the country's biggest private car importer. He imported foreign products like cars, cigarettes and was responsible for one-sixth of the national oil imports at one time.

The smuggling ring fraudulently avoid US$3.6 billion in taxes and fees

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Lan Fu is a former deputy mayor of Xiamen Municipality, China. He was convicted in 2000 on corruption charges related to a US$6 billion smuggling racket and is currently serving a life sentence in prison

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Chen Liangyu, major of Shanghai and a member of the Politburo , was sentenced to 18 years in prison for accepting $340,000 in bribes

Wen Jiabao’s talk at a news conference following the close of the National People's Congress, March 14, 2012

New problems arise, including income disparity, lack of credibility and corruption, and to resolve these problems requires economic reform and political reform,” he insisted. “This is an urgent task.”

"China has come to a critical stage," Wen said. "Without successful political structural reform, it is impossible for us to fully institute economic structure reform. And the gains we have made in this area may be lost. New problems that have cropped up in China's society will not be fundamentally resolved. And such historical tragedy as the Cultural Revolution may happen again."

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The China’s 18th Party Congress

Corruption could cause” the collapse of the party and the fall of the state.”

China’s development is “unbalanced, unco-ordinated and unsustainable.”

Hu Jintao, Party Secretary-General

Consequences of Corruption

Corruption undermines the legitimacy of the CCP, adds to economic inequality, undermines the environment, and fuels social unrest.

“mass protests” – more than 180,000 in 2011.Historic stakes are higher in China than in US

FREDERICK KEMPE, REUTERS November 9, 2012

As Kenneth Lieberthal of the Brookings Institution put it during a Hong Kong debate organized by Intelligence

Squared – arguing against the motion

“China Picks Better Leaders than the West” – “You look at any mature democracy, and no one worries about the stability of the system… They worry about individual leaders, they worry about particular policies, but the system is stable… In China, they worry about the stability of the system every single day.”

Discussion 1

Why didn’t China’s economic progress bring corresponding political reform?

II. Imbalance between the Rich and Poor

Gap between the urban and rural areas

Gap between the costal China & inner China

Gap between the rich and poor

Physical map of China

II. Imbalance between the Rich and Poor

Gini index of China

According to the data publicized by World Bank, the Gini coefficient in China has increased from 0.16 before Reform and Opening policy was introduced to 0.47 at present. It has passed 0.4--the warning line and is higher than all the developed countries.

According to World Bank's report, only 29 countries' Gini coefficient are higher than China but 27 are from Latin America and Africa. Only 2 are from Asia and they are Malaysia and Philippines. What a grim situation!

continueThe Chinese Luxury Consumer White Paper 2012, released on Tuesday, suggested that there are 2.7 million high net worth individuals in China with personal assets of more than 6 million yuan ($950,000).

There are 63,500 ultra-high net worth individuals with assets of more than 100 million yuan, an increase of 10 percent compared with last year.

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12 million people were considered as urban poor in 1993, i.e. 3.6 per cent of the total urban population, but by 2006 the figure had jumped to more than 22 million, i.e. 4.1 per cent of the total urban population

Migrants (130 million migrants nationwide)

Continue90% of poverty in China is still in rural area

In 2009, according to the China’s National Bureau of Statistics, the urban per capita annual income at US$2525 was approximately three times that of the rural per capita annual income

A City School

A school in the countryside

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“Wealth Drain”

nearly 60% of people who have more than 10 million yuan ($1.53 million) claim that they either consider emigration abroad (47%) or have completed the process (27%).

III. Imbalance between Wealth Increase and Integrity Decline

Since 1978 400 million people have been lifted out of poverty in China—about 75 percent of the world's total poverty reduction over the last century.

Lawrence Summers has recently pointed out that during the Industrial Revolution the average European's living standards rose about 50 percent over the course of his lifetime (then about 40 years). In Asia, principally China, he calculates, the average person's living standards are set to rise by 10,000 percent in one lifetime!

Newsweek, Issue 1, 2008

ContinueIn 1990, China’s average per capita national income was around $350. Within a decade, there was a threefold increase, taking the figure to $1,000. At the end of 2008, the figure tripled yet again and China’s average per capita national income reached another high of $3,000. Per capita GDP (2010): $7,600 (purchasing power parity) – US Dept. of State

If China’s average national income continues to rise at an annual rate of 8%, the country’s per capita income will reach $8,500 by 2020 and will touch the $20,000 mark by 2030. Hence, China’s average per capita income will exceed the current income of Taiwan and Korea.

A child receives treatment for kidney stones after consuming tainted milk formula

Lean or thin voxel, is logarithmic species are mainly used to promote livestock growth of lean meat

Little Yue Yue

Does the death of Xiao Yueyue tell us something about modern China?

Xiao Yueyue was a 2 year-old girl ran over by two cars and ignored by 18 people before someone came to help her. She later died of her injuries.“How can I be proud of my China if we are a nation of 1.4bn cold hearts?” - Lijia Zhang

http://www.youtube.com/watch?v=hP_DzkbLs-s

Fang Zhouzi:Anti academic corruption

Discussion 2

Why did people’s integrity decline while their material wealth increased?

IV. Imbalance between Economic Growth & Environment Deterioration

“Made in China” is the largest brand product in the world, which made China the second largest economy globally.

What is the cost of this economic development?

Land Challenge to China

• Only 7 % arable land supports 20 % population of the world

• 28 % of its territory turned to desert• An estimated 100 square miles of land is lost to

desert per year• 400 million people are adversely affected by

desertification • Sandstorm brings 330,000 tons sand to Beijing

one night in April 2006

Water Challenge to China (2)

Water Resources:• With 20% of the world’s population but only 7% of global

water resources (China has only one-fifth as much water per capita as the United States).

• More than half of China’s 660 cities suffer from water shortages, affecting 160 million people.

• The per capita water volume in China is one fourth of the world average.

• 90% of cities’ groundwater and 75% of rivers and lakes are polluted.

• As a result of widespread water pollution, 700 million people drink contaminated water every day.

Energy Challenge to China (3)

Energy crisis:• China’s development is a powerful driving force behind

the global economic growth. In 1990 2002, China was placed first, with a contribution as high as 27.1%.

• China has passed the U.S. to become the world's biggest energy consumer in 2010.

• Climate change leads to rise of sea level. A one-meter rise in sea level would inundate 92,000 square kilometres of China’s coast, thereby displacing 67 million.

• Only 1 percent of the country’s 560 million city inhabitants (2007) breathe air deemed safe by the European Union.

• The U.S. is also by far the biggest per-capita energy consumer, with the average American burning five times as much energy annually as the average Chinese citizen.

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On average Chinese steelmakers use one-fifth more energy per ton than the estimated international average. The World Bank says that cement manufacturers need 45% more power and ethylene producers need 70% more power than producers elsewhere.

Greenhouse Gas

In 2008, China surpassed the United States as the largest global emitter of greenhouse gases by volume. (On a per capita basis, however, Americans emit five times as much greenhouse gas as Chinese.) The increase in China's emissions is primarily due to the country's reliance on coal, which accounts for over two-thirds of its energy consumption. It contributes to sulfur dioxide emissions causing acid rain, which falls on over 30 percent of the country.

Energy Footprint

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Environment pollution and related health issue cost China 9 % of the annual income in 2008, World Bank

The government received six hundred thousand environment-related complaints in 2006, a figure that has risen roughly 30 percent each year since 2002.

The Chinese Are Coming

http://www.youtube.com/watch?v=6617B1HMBak&feature=related

Discussion 3

Can China’s economic development model be sustainable?

ConclusionDeng’s Economic Reform overcame the critical crisis

of Mao’s era, and restored the legitimacy of the Chinese Communist Party. After the efforts of only one generation, China made a historical miracle and made China the second largest economy. However, rapid economic growth has brought a series of problems: imbalance between economic increase and political stagnation; imbalance between the rich and poor; imbalance between material wealth growth and integrity declination; imbalance between economic development and environmental deterioration. China faces a new critical crisis domestically.

Questions?

Xie XieZai Jian