Is China's Growth Sustainable?
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Is China's Growth Sustainable?

 
 

Fifteen years ago, APEC leaders meeting in Japan called for joint action ‘to ensure the region’s economic prosperity is sustainable.’ But is it realistic to believe that APEC’s largest member, China, can grow rapidly and sustainably? 

In 1978, Chinese leader Deng Xiaoping, frustrated by Mao Zedong’s class struggle-inspired politics, embarked on a series of economic reforms that helped China open up to the world. These reforms fuelled China’s dramatic economic rise over the past 32 years, while forming the foundation for China’s deeply-rooted belief in rapid growth. Subsequently reinforced by Zhu Rongji’s internationalization of China’s economic system and stewardship of the country into the World Trade Organization, and underscored by current President Hu Jintao’s declaration of a minimum 8 percent GDP growth rate, the Chinese leadership has always operated under the principle of 'get rich now — all other priorities can be taken care of later.  Indeed, while China’s ruthless, seemingly single-minded pursuit of growth has produced an unprecedented annual GDP rise of 9.5 percent since Deng's reforms were initiated, many observers doubt if the concept of sustainability is really commensurate with the country's goals. 

The reality is, fortunately, far removed from such perceptions. Deng’s true genius lay in his recognition that any economic reforms had to be sustainable, in the sense that they had to provide tangible benefits to the people. Part of Deng’s economic development strategy was to ensure that China would achieve the per capita GDP of a medium-developed country by 2050.

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The country is arguably on its way to achieving this, with per capita GDP this year estimated at US$3,700, placing it in the middle tier of countries. Furthermore, while rapid economic growth was the only pragmatic way out for China in 1978, the current leadership has acknowledged the negative consequences of current economic development. Hu adjusted China’s economic development policy when he took over in 2003, defining the paramount task for the government and party as 'the building of a harmonious society'. 

Sustainability, the Chinese way 

The 'harmonious society' concept stresses that the key to sustainable, long-term growth was social justice. It emphasizes the necessity of reforms in socio-economic legislation, environmental conservation and even politics, meaning the government would have to position itself as not merely the driver of the Chinese economy, but as a provider of tangible public services and defender of rights amongst the various social groups. 

Hu’s concept of sustainability is made even more relevant by the fact that China is arguably at a critical stage of development. Rapid socio-economic growth has given rise to a strong middle class, which can be further separated into new social groups such as private entrepreneurs, businessmen and professionals. And, with an increasingly large role and stake in China’s growth, they've demanded greater participation in this growth. Building on a 2004 constitutional amendment that formalized the right to own private property, the Chinese government adopted a Property Law in 2007 that made significant steps toward providing legal protection for the private economy. (This appears to be part of a larger legal movement that aims to strengthen the rule of law of China). 

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