Wednesday, 2 November 2011


China has been a remarkable story of a country that has propelled into the number two global economic position behind the US. China has proved that its development is sustainable and that it can be a responsible member of the world community, as it helped retain the stimulus during the recession of 2000-2011. At the same time, China has proved that it is predisposed into collaborating with countries around the world to win market share under competitive conditions. Opening its doors to foreign investment, China attracted companies from the entire world interested in taking advantage of cheap labor values and a large domestic market with proximity to the rest of East Asia. However, the Chinese miracle has come at the cost of social justice.

On the one hand, I have no problem with China's economic nationalism, a variation of statist policies operating under a model of global economic integration and global support for international organizations from the World Trade Organization to the World Bank and IMF, and aggressive pursuit of markets (for raw materials and sale of finished and semi-finished products). At the same time, however, a domestic labor market that remains just a step above Southeast Asia and a couple of steps above sub-Sahara Africa.

China's nationalist economic development model carries with it the promise of a bright future for the nation as a whole, thus it appeals to the broader masses on nationalist grounds, but as one Chinese college student emailed me recently, most people struggle with extremely low wages and inflation, while only very very few -  mostly in large cities along the Eastern coast - enjoy the benefits of the Chinese miracle.

What good is it that China has magnificent buildings and that it will soon replace the US as the world's hegemonic economy, if it has massive labor exploitation, that it still has the world's largest peasant population and that a large percentage of its people are living under impoverished conditions in rural areas and especially away from the coastal region and the northeast?

I am not bothered that China is pursuing economic nationalism, including keeping the value of its currency artificially low, for that is in its own interest. Nor is it a problem as far as I am concerned that China is a one-party state - for we have seen that multiparty regimes are hardly the solution to social justice. However, if the Communist regime regime were benevolent toward the laboring classes and committed to social justice, and if it had made adjustments to trickle down the wealth that the country is amassing, instead of using it to buy US and European bonds, then China would have been a model worthy of praise.

Although the Communist party has been making periodic announcements to address social justice through more equitable income distribution, social security measures, education, labor rights, etc., progress along those lines has been very slow. Ten years ago, Chinese officials admitted that the Gini coefficient that measures inequality was at the dangerous level. That coefficient has improved in the past decade, but the country remains at 'Third World levels', a point that Chinese officials make and justify in the name of development. How long will the inexhaustible tolerance of Chinese workers last before we begin to see social protests for improvements in social justice remains to be seen.

No comments: