The reality behind China’s economic miracle

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of PLC.

China’s economic miracle is largely built on the liquidation of social and natural capital, argues Dale Jiajun Wen in a paper for the Society for International Development – adding that “the country can no longer ignore the problems created by export-oriented growth”.

Despite China’s economic growth (averaging 9 per cent each year for the last 25 years) and progress in reducing extreme poverty in monetary terms, “the number of mass incidents, including protests, demonstrations [and] direct clashes with police” is growing even faster, claims Wen. 

She expresses concern over rising poverty, particularly in rural areas, and says that the transition to a ‘lower middle income’ country is not increasing disposable income. 

Moreover, “the gap between rich and poor has grown dramatically”, and the rural-urban income gap is the highest in the world, says Wen. Rural residents face disproportionate tax burdens and have less access to education and health care, she adds. 

Regarding health, market-oriented reforms of the health care system have led to massive increases in the cost of care, but fail even to maintain the quality of the previous system, claims Wen. 

Problems include the fact that cost effective preventive measures are being replaced by expensive treatments as hospitals focus on profits, and the government has significantly reduced investment in infrastructure, particularly rural areas. Health care funds are distributed “very unequally” and insurance coverage has fallen, she says. 

Similarly, she describes the rising cost of education and reduced, unevenly distributed government funding, with the rural population again missing out. “Urban areas receive 77 percent of the educational investment, and higher education receives a larger share of funding than primary education”, she says. 

Meanwhile, export growth has not provided more manufacturing jobs, and factory workers’ income has decreased both relative to the rich and in absolute terms. “Most Chinese are experiencing lower income levels and deteriorating labour conditions”, while its working class is becoming “the slave labour of the world”, claims Wen. 

Regarding the environment, China is the world’s second-largest greenhouse gas emitter and has seven of its ten most polluted cities. 60% of the water in its major river systems is classified as unsuitable for human contact. Thus, China is becoming “the world’s waste dump”, she says – a cause of major civilian unrest. 

Wen concludes that China’s reforms have had a “huge detrimental effect” on the population, especially in the countryside, and with the media picking up on the plight of the marginalised, the government must increasingly consider alternative approaches.