by Tim Clissold
Even after Mao declared the founding of the People’s Republic, there were a series of policy-induced disasters, including the Great Leap Forward, which led to sixteen million starving to death, and the Cultural Revolution. So it’s only really in the past twenty-five years that China has got its act together. And the progress is spectacular.
Since the Open Door policy in 1979, China has lifted two hundred and fifty million people out of absolute poverty, probably the greatest improvement in the human condition ever. The country has attracted more than five hundred and fifty billion dollars of foreign direct investment, and currency reserves have risen from about thirty billion at the time we were first looking at the factories out in the Third Front, to nearly a trillion dollars today if one includes Hong Kong. A colossal manufacturing infrastructure has been assembled on the Yangtse Delta, which is creating the most profound challenges to businesses everywhere in the developed world. The lives of millions of ordinary Chinese have been improved beyond recognition as the effects slowly trickle down to street level. They now have choices which we take completely for granted but which would have been unimaginable two decades ago: choices in clothing, in housing, schooling for their kids, maybe the chance to buy a car or take a holiday abroad. So the progress is fantastic.
But the challenges that remain are of a completely different order to those faced by western governments; the complexity seems overwhelming and it looks as though China may have reached a key moment in its history. To use a Chinese analogy, the boat has reached the middle of the river: there is no turning back to the old Maoist certainties of the planned economy; but equally there is no chart to help that very small group of people, the seven or eight men and one woman who constitute the core Chinese leadership, to navigate more than a billion passengers safely over to the other bank.
China suffers huge wealth imbalances between the coast and the inland provinces, which have sent a hundred and fifty million itinerant workers swirling towards the sea. That’s the equivalent of the entire US workforce tramping the streets of the coastal factory towns in search of a job. Corruption in the middle ranks of the Chinese Government means that the central government has to make the most extreme efforts in order to transmit sensible national policies down to the local level and tackle the root causes of recurring unrest – forty million people took part in demonstrations in China last year, almost all of which were against corruption in one form or another, mostly involving land. There are massive challenges to core structural industries under the WTO; the protective barriers have come down and domestic industries are no longer shielded from direct competition with much larger and more powerful multinationals. In many senses, given the different stages of business development, it is difficult to imagine a more unlevel playing field. In the financial sector, integration of the Chinese banks with the global financial markets brings with it the most extreme dangers because of the astronomical sums of money that have started to flow through creaking systems in China. On top of all this, there are comprehensive foreign policy challenges as China tries to access resources it needs to grow and deal with the great sparking point over the Taiwan Straits.
Finally, further inland, in many places there is almost complete degradation of the natural environment: seven out of the ten most polluted cities in the world are in China. In places, the sun sets at two o’clock in the afternoon; the sky is black, the ground is black, the riverbeds are just smashed rocks and thorn bushes; the deforestation and dense smog that hangs over the cities are unbelievable; it will take billions and thirty years to fix. In the meantime, China has to feed nearly a quarter of the world’s population on a seventh of the planet’s arable land.
The people with their hands on the tiller – that small band of political and business leaders – are attempting to manoeuvre the boat through all these obstacles knowing that China is fragile and difficult to govern. They know that, every so often, at regular intervals in its long history, China has suffered complete system collapse and that the whole of its political economy and civil society has dissolved into chaos. If that happened again it would be a catastrophe that would render the whole of the past twenty-five years’ progress to be completely meaningless and, because of the size of China and the degree of integration with the global economy, it would be a disaster for the whole world. So it is in the context of this huge struggle to modernize China, with the knowledge that the cost of failure is so immeasurably high, that the full magnitude of the task faced by the Chinese leadership finally becomes clear. As they take on this awesome responsibility, we should hope for all our sakes that they find a way to succeed.
Tim Clissold
North Yorkshire 2005,