Wednesday, 18 August 2010

China: Sustainable Development & the environment

The promotion of sustainable development in China with reference to its growth and conservation


Abstract: China is experiencing one of the most extraordinary economic growth rates in world history, since the onset of its ‘open door’ policy of economic reform and liberalization. This explosive growth over the last 2 decades has left a serious scar on the environment and the prospects of sustainable development. In response to this growing dilemma, China has initiated several environmental reforms, environmental protection initiatives, and environmental policies, to ensure sustained Chinese economic growth, while at the same time ensuring environmental protection.

By: Henry Badenhorst


10 April 2010




Introduction


Due to China’s rapid rise economically and industrially, as well as its huge population, which has done serious damage to the environment, China is now facing an environmental crisis, like no country before. China’s economic reform has increased the pressure on the environment, from air and water pollution to soil erosion and desertification (Eyferth, Ho & Vermeer. 2003: 107). Economical and Environmental Sustainable development in China is being promoted by the Chinese government in various ways and through various initiatives as China is being confronted by an economic explosion on the one hand and serious environmental decline on the other. 

The current environmental problems in China are discussed under the categories of air, land, fresh water, the ocean, and biodiversity. The large-scale resettlement of the Three Gorges Dam reservoir area is discussed in terms of its environmental impact, the challenges that the Chinese government faced and their response to these challenges. Next, China’s limited forest resources and the Chinese governments’ response to this ecological dilemma receive attention. Lastly, the economic and environmental implication of China’ accession into the WTO, is discussed.

Shanghai pollution


Environmental problems in China


China faces a myriad of environmental problems, which ranges from air pollution, biodiversity losses, cropland losses, depleted fisheries, desertification, disappearing wetlands, grasslands degradation, and increasing frequency and scale of human-induced natural disasters, to invasive species, overgrazing, interrupted river flows, salinization, soil erosion, trash accumulation, and water pollution and shortages (Liu & Diamond. 2005:224). China’s environmental problems are categorized under air, land, fresh water, oceans and biodiversity and each will be discussed separately (Liu & Diamond. 2005:226).

The first category where environmental problems in China occur is air. The air quality of China is generally low with 75 percent of urban dwellers living below China’s air-quality standard with a high incidence of acid rain, caused mainly by the increasing output of industrial waste gasses (Liu & Diamond. 2005:226). Rapid industrial growth of approximately 10 percent annually has pushed China’s sulfur dioxide (SO2) levels and soot emissions to 20 billion and 11 billion tons respectively in 2000, where it led the world SO2 emissions (Ho & Vermeer. 2006:148). According to Wen (2009:24), China in 2007 overtook the U.S. as the world’s largest Carbon dioxide (CO2) emitter. “The Third Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) has clearly indicated that most of the global warming observed over the past 50 years, was likely induced by the increase in concentrations of greenhouse gases (GHGs), such as carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), due to human activities” (China’s National Climate Change Programme. 2007:4).

The second category of environmental problems within China is, land. According to the UNDP, around 38 percent of China has been affected by soil erosion and is the area of desert increasing at an annual rate of 2 500 km² (Nolan.2005:243). The Chang Jiang (Yangtze) river’s sediment discharges from soil erosion exceed that of the Nile and Amazon rivers combined (Liu & Diamond. 2005:226). Soil quality, fertility, and quantity have declined, due to long-term fertilizer use and a pesticide-related decline in soil-renewing earthworms (Liu & Diamond. 2005:227). Salinization has affected 9 percent of Chin’s lands, due to poor design and irrigation systems (Liu & Diamond. 2005:227). 

China’s cropland has been reduced by a combination of soil problems, urbanization, and land appropriation for mining, forestry, and aquaculture, threatening food security (Liu & Diamond. 2005:227). Cropland to the extent of 100 000 km² has been taken over or damaged by unrecycled and unused industrial waste and domestic trash in open fields around cities (Liu & Diamond. 2005:227).

The third category of environmental problems China faces is fresh water. Industrial and municipal wastewater discharges as well as Agri- and aqua-cultural run-offs of fertilizers, pesticides, and manure, has led to poor and declining river and groundwater sources, as well as widespread eutrophication (Liu & Diamond. 2005:227). The majority of Chinese lakes are seriously eutrophied, yet chemical fertilizer usage is on the rise (Ho & Vermeer. 2006:147). China’s emission of organic water pollutants is as large as that of the U.S., Russia, India, and Japan combined (Nolan.2005:243). China is also facing one of the world’s worst water shortages, since per capita it only has 35 percent of the world’s freshwater resources. A large number of Chinese cities, which depend on groundwater from aquifers, are starting serious water shortages in the face, since these aquifers are becoming depleted and in some cases, coastal aquifers are being filled by seawater (Liu & Diamond. 2005:227). Rising fish consumption and overfishing have also degraded freshwater fisheries, disturbing the eco-system (Liu & Diamond. 2005:227).

Another category where China experience environmental problems, is the ocean. Almost all of China’s 3 million km² sea area, extending up to 200 nautical miles of its coast, is polluted by pollutants from land plus oil spills (Liu & Diamond. 2005:227). In 2003, 20 outlets alone of the 867 identified outlets, were pumping 880 million tonnes of sewage water, containing 1.3 million tonnes of pollutants, made up of lead, cadmium, and arsenic, into the ocean, leading to an ever increasing amount of red tides (Liu & Diamond. 2005:227). Here too, fishing stocks have been severely depleted due to overfishing and pollution (Liu & Diamond. 2005:227).

The last category of China’s environmental problems is that of biodiversity. More than 10 percent of the world’s vascular plant and terrestrial vertebrate species can be found in China. In 2005, 15-20 percent of all species were considered endangered, despite concerted efforts by the Chinese government over the past two decades to protect plant and animal life through the establishment of nature reserves, zoo’s, museums and botanical gardens (Liu & Diamond.2005:228). Invading pests and weeds, such as ragweed, water hyacinth, and Amazonian snails, have furthermore, inflicted heavy losses on the agricultural, aquacultural, forestry and livestock sectors of the Chinese economy (Liu & Diamond. 2005:228).

Factors that have contributed to the cause and exacerbation of these environmental problems include; China’ huge population in the excess of 1.3 billion people; the presence of foreign multi-national companies that have their base of operations in China, producing most of the world’s consumer export goods; the rapid rate of industrialization and urbanization within China and consequent economic explosion; the fact that China is the leading consumer of fertilizer and the second largest consumer of pesticides, which leads to air, water, and land pollution; China’s transportation network’s explosive growth; energy inefficient, outdated and polluting technologies in much of China’s industry with regards to coal mining and cement, paper and chemical production; irrigation methods that rely on inefficient surface methods that waste water, cause eutrophication and wash nutrients out of the soil and sediments into rivers; China is the second largest energy consumer in the world; and the fact that China is the largest producer and consumer of coal in the world, the main cause of its air pollution and acid rain, to mention a few (Liu & Diamond. 2005:224-229).


Case Study: Three Gorges Dam project. What can we learn?


Large-scale resettlement of the Three Gorges Dam reservoir area is one of the biggest challenges facing the Chinese government, since the commencement of the Three Gorges Dam project in 1994 and estimated completion in 2009, where an estimate of at least 1.2 million people had to be resettled to areas above the inundation line of the Yangtze River Three Gorges reservoir area. The main issue is whether there is sufficient environmental and carrying capacity in the Three Gorges Dam area (Heggelund. 2006: 149). Carrying capacity refers to the maximum number of people that a given area will maintain in perpetuity under a given system of usage without land degradation setting in, while environmental capacity can be defined as linking together several issues, such as resettlement, economic development, and ecological and environmental protection of a fixed area (Heggelund. 2006:150,152).

The Three Gorges Dam resettlement process entails long-term impoverishment risks. A large and growing body of literature on risk related to the development-induced displacement of people and increasing awareness of the rights of the displaced people now exists (Heggelund. 2006:153). Cernea’s IRR (Impoverished Risks and Reconstruction) model has been one of the more influential and it presents operational tools and has identified key risks in resettlement (Heggelund. 2006:153). According to Heggelund (2006:153), this IRR model is relevant for identifying risks in the Three Gorges Dam Project.

Even though China has in many ways managed to pre-empt the potential risks of the model, by greatly improving its resettlement programmes since the 1980s, the process is not going as smoothly (Heggelund. 2006:154). Selected points or dimensions of the IRR model in the Chinese context has been identified and include landlessness and food insecurity, joblessness, and marginalization and social disarticulation each of which will be briefly discussed (Heggelund. 2006:154).

One of the biggest challenges for rural resettlement in the Three Gorges area is lack of available farmland, which ultimately leads to food insecurity (Heggelund. 2006:154). A lot of the land will be inundated, leaving very little to work with, since a lot of the land is mountainous and a large portion already under cultivation. Before inundation, population density was already high and losing land will exacerbate the problem further. Even before resettlement, adequate farmland was a problem in some areas and inundation will only aggravate the problem further (Heggelund. 2006:154).

Another dimension of the IRR model is joblessness. Many farmers will lose their land and are forced to live in towns and cities, forcing them to change their occupation and seek alternative employment in urban areas (Heggelund. 2006:156). Finding employment may seem difficult for many and without land, they may not meet their daily subsistence needs (Heggelund. 2006:156). Unemployment in urban areas, severely restrict the prospects of rural farmers moving into urban areas, engaging in non-farm work (Heggelund. 2006:156).

Relocatees, who are unable after resettlement to regain their economic strength, will be faced by marginalization (Heggelund. 2006:157). The rural population will, due to inundation, be unable to use their skills and farm the land as before (Heggelund. 2006:157). There are also secondary migrants who have lost their land due to the relocation and reconstruction of homes for primary migrants who lived below the inundation line (Heggelund. 2006:157). Again those who have lost their land are forced to seek alternative occupations within urban areas, with relatively few skills and existing unemployment in urban areas. Community solidarity, such as sharing of losses are non-existent in the Three Gorges resettlement, instead, conflicts between the host population and relocatees are common (Heggelund. 2006:158). Resettlement negatively affects relocatees in the sense that family networks are being disturbed, which traditionally is very important in China (Heggelund. 2006:158).

Limitations to the IRR model in the Three Gorges Resettlement are; absence of the rule of law, which includes, non-existent public participation in the decision making process, arrests and humiliation of protesting relocatees, exclusion of human rights; a refusal to consider population pressure, diminishing natural resources and environmental pollution when resettlement is planned; the corruption and embezzlement of resettlement funds due to decentralised authorities responsible for funds management; and little focus on the social aspects and the social trauma of broken networks when friends and families are forced to split up and ancestral land has to be abandoned (Heggelund. 2006:159-160).

The Chinese authorities responded to the resettlement problems by initiating two steps, namely to move 125 000 people out of the reservoir area and by re-issuing new resettlement regulations. Previously Chinese authorities resettled people in the vicinity of their former homes, whether it was sustainable or not, but with their new approach, they relocated people to other provinces, aiming to protect the environment, whilst also reconstructing livelihoods for the resettled population (Heggelund. 2006:161). The fact that the majority of these people will be moved to provinces that are situated in the eastern coastal provinces or along or close to the Yangtze River, has increased the chances of successful resettlement (Heggelund. 2006:161). One major change in the resettlement regulations, is the increased emphasis on environmental protection and all sections of the improved regulations have articles that have instructions regarding the rational use of natural resources, environmental protection and water and soil conservation (Heggelund. 2006:162).

Three Gorges Dam

Degradation and restoration of forest ecosystems


Over the past 4 decades, nearly half of China’s forest’s have been destroyed, leaving China with one of the most sparse forest covers in the world (Nolan. 2005:243). Deforestation is furthermore, a major cause of soil erosion and flooding (Liu & Diamond. 2005:227). China has very limited forest resources with both the forest area and forest cover well below the world average. (Wenhua. 2004:518,525) Even though the government has increasingly addressed forest resource protection, the fact remains that degradation of forests, caused by unsound exploitation, forest fires and pests, and diseases, remains a serious threat. 

Further factors that have led to the deterioration of forest and a reduction in biodiversity includes; rapid population growth and consequent pressure on land, coupled with the development of agriculture, industry, and construction; over-exploitation of forest resources; and the subsequent farming activities on steep slopes (Wenhua. 2004:518-519). Forest degradation led to a series of hazards and natural disasters, like soil erosion, desertification, and floods, so much so that 38 percent of China’s total land area was eroded by 2004 (Wenhua. 2004:519). Even though large scale plantation-style forests have increased, natural forests have declined, resulting in a loss and fragmentation of natural habitats for many plant and animal species, leading to the extinction of at least 200 plant species and the loss of habitat for more than 61 percent of wildlife species (Wenhua. 2004:519). In 1998, flash flooding as a result of the loss of vegetative cover cost the Chinese government US $ 20 billion in damages (Wenhua. 2004:519).

In response to this dilemma the Chinese government, devised a strategy of forest development under the framework of the sustainable development of the country was published, with the following points for the restoration of degraded forest systems, namely: 1. The conservation and management of natural forest resources; 2. the control of forest fires and the protection of forests from insects and pests; 3. rational forest felling and regeneration; strengthening the development of protective shelterbelts in key environmental fragile areas; 4. the conservation of biodiversity and the establishment of nature reserves; 5. afforestation and mandatory conservation of farmland to forest lands; 6. the establishment of a strategy for sustainable development of forestry; 7. forestry research, education and training; and 8. policies to regulate forestry (Wenhua. 2004:519-525).

Highlights of these strategy points include: the establishment of the NFCP (National Forest Conservation Programme), which aim to restore natural forests, planting forests for soil and water protection, increasing timber production in forest plantations, protecting existing natural forests from excessive cutting, and maintaining a multiple-use policy in natural forests; China’s aims to enhance its overall capability for fire prevention and control, with emphasis on prevention, by means of prediction and forecasting, forest fire monitoring and look-out, radio communication systems, airstrips for surveillance planes and the establishment of firebreaks; an acute reduction in forest cover and deterioration of forest resources due to an indiscriminate system of tree felling and where no attention were being paid to regeneration, has led to government intervention, whereby government strictly control tree feeling, and selective cutting instead of clear-cutting is encouraged, as well as where regeneration is required immediately after cutting; the establishment of five ecological forest projects as part their strategy to strengthen the development of protective shelterbelts in key environmental fragile regions; the conservation and utilization of biodiversity, wild fauna and wetlands by promulgating laws to regulate and protect it, such as the Forestry Law and Wild Animal Protection Law; efforts by the Chinese government to establish natural forest reserves and to save and protect rare and endangered animal and plant species; Afforestation, to rehabilitate mountain areas, highlands, abandoned land, degraded cultivated lands and dry areas and has been used with success in China; a successful program launched by the Chinese government to combat soil erosion and rehabilitate sandy areas, the “grain for green program”, whereby farmland are being transformed into forests or grassland, and farmers who have lost their land, being compensated by the central government; China’s strategy for sustainable development of forestry; it’s great achievements in forestry research and improved forestry education, especially public education, creating awareness about the uses and value of forests; Reform in the form of a legal system, to regulate forestry and ensure forestry development; and a legal framework in conjunction with the Forestry Law and the Desertification Control Law, to secure sustainable forestry development (Wenhua. 2004:519-525).


Chinese environmental policy: Successes and Challenges


Since 1998, the implementation of the Chinese environmental policy had a series of successes. However, “The state of the environment in China is unsatisfactory”, and despite some achievements, the environmental policy has not achieved the expected results (Bao. 2006:13). It must be mentioned that China’s environmental policy, unlike those of advanced industrialized countries, has been formulated and implemented from top to bottom, without grassroots participation in its formation, as a result of China’s centralized socialist political system (Bao. 2006:2).

Successes include; the lowered rate of pollution emission to unit production in some sectors; a drop in the total amount of primary pollutant emissions, such as SO2, smoke, industrial powder, CO2 and industrial solid waste; the construction of new sewage treatment plants, automatic monitoring stations for water quality testing and air; increases in the number of nature reserves; increased vegetation cover through afforestation; the protection of wetlands; restoring natural grassland vegetation; conversion of farmland into forest areas; reduction in coal burning emissions; the advancement of science and technology to combat environmental pollution, which included improved production technologies in some fields such as paper making, printing and dyeing , processing of high density organic waste water, the treatment of urban sewage, and incineration of harmful waste; improved urban environmental consciousness, including environmental awareness and education; the establishment and strengthening of environmental NGO’s; Improved co-operation and communication with international society; and the signing of International environmental conventions agreements, such as the Kyoto Protocol (Bao. 2006:10-13).

The challenges or problems China’s Environmental policy is facing, are: bureaucratic fragmentation, in the sense that the various organizations, responsible for formulating, implementing and supervising environmental policy, have overlapping functions, unclear rights, and responsibilities, and has therefore greatly interfered with policy implementation; the fact that environmental protection is in conflict with economic growth, since the CCP in its core work still focuses on the economic development of China and promotion for officials at all levels, is mainly based on their ability to promote economic growth; the presence of structural contradictions or defects within the system of law and its implementation of environmental protection standards and practices, one being the fact that China’s environmental legal system has eleven sources, thus resulting in confusion and lower efficiency of law implementation and local protection, exacerbated by the fact that judiciaries cannot make independent judgments, since local governments pay their salaries and could, therefore, influence their decisions; and lastly, the fact that peasants’ environmental consciousness has not been turned into practice, therefore lacking in playing any role in environmental decision-making and this weakness of environmental awareness amongst Chinese peasants has seriously affected the implementation of the environmental protection policy in China (Bao. 2006:13-17).

China has formulated some comprehensive environmental policies and some achievements were made during the implementation, but China needs to overcome the structural issues mentioned above if it wants to realize the unification of economic, social and environmental benefits. China’s environmental problems are not limited to scientific and technological questions, but are integrated with China’s social, economic and political development (Bao. 2006:17).

Economical and Environmental implications of the relationship between China and the WTO
Predictions were made prior to China’s accession into the World Trade Organisation (WTO), that China would not only benefit economically, but that it would receive significant environmental rewards. However, as it panned out, overall environmental benefits projected did not materialize, in fact, some of the greatest economic advances in both the industrial and agricultural sectors, due to China’s WTO membership, are seriously exacerbating China’s most severe environmental problems and some of the world’s greatest ecological crises (Jahiel. 2006:189,194).

China’s ecological condition prior to accession into the WTO seems to have been in a better state than now since joining the WTO. Gradual liberalization of trade and investment policies brought about a huge economic explosion, as well a broad improved impact on the environment (Jahiel. 2006:191). Environmental improvements during this period included: greater access to less-polluting technologies, pollution abatement equipment, and advanced environmental management practices; China’s move away from energy-intensive dirty industries towards labour-intensive light industries with less pollution; and heightened international awareness and commitment to assist addressing China’s environmental problems, which contributed towards China’s own efforts to develop an extensive environmental protection apparatus, which included environmental laws, regulations and policies. Chai (in Jahiel. 2006:192), however, notes that despite these positive developments the vastly increased scale of trade far exceeded the positive of cleaner production industries. This period was further characterized by negative effects such as: vast exploitation of China’s natural resources, in pursuit of the export market; the over-harvesting of China’ coastal resources to meet international demands; and the transfer of pollution from dirty industries and the waste trade (Jahiel. 2006:192).

With China’s accession into the WTO, these environmental problems, despite positive projections, grew worse. When China joined the WTO, it had to reduce its import tariffs and all export subsidies, lower or eliminate import quotas, and open certain sectors of the economy to foreign trade forcing structural changes to the economy (Jahiel. 2006:193). Ecological benefits that were predicted by Chinese and International environmental officials, included: the import of superior environmental protection equipment and less-polluting industrial and agricultural technologies, due to lowered subsidies and tariffs; environmentally-beneficial structural adjustments to the Chinese industrial and agricultural economies, due to heightened international competition; increased imports of consumer products and raw materials, due to greater access to low-priced foreign goods, will lead to reductions in domestic energy consumption, pollution emissions and impacts on natural resources; and the strengthening of China’s legal code, due to increased imports, to avoid an influx of pollution-intensive or environmentally-harmful products and demand the adoption of stricter domestic environmental health and safety codes based on international standards (Jahiel. 2006:193-194).

These predictions, however, did not materialize as expected. Economic growth due to WTO accession, grew beyond expectations and it must be said that certain structural adjustments, technological changes, and legal and cultural developments, did indeed benefit the environment, but for the most part, these economic changes in fact only exacerbated China’s most severe environmental problems (Jahiel. 2006:194). Economically speaking, growth has been explosive. Within 3 years of joining the WTO, Foreign Direct Investment grew almost 30 percent, foreign trade doubled, exceeding USD 1 trillion, and China passed Japan as the third largest importer (Jahiel. 2006:194).

The question, however, remains, what was the ecological and environmental impact of China’s accession into the WTO? Jahiel explored the industrial and agricultural sectors of China that have prospered most under this trade regime since WTO accession and came to the conclusion that it has caused significant harm to the Chinese environment (Jahiel. 2006:195). According to Chai (in Jahiel. 2006:195), the scale or extent of overall economic growth is more critical for the environment, than solely the shift in balance between various sectors. Even though China moved away from the capital-intensive heavy industries towards less-polluting labor-intensive industries, the fact remains that these labor-intensive industries’ growth was so substantial, that the total emissions still rose, despite the fact that pollution intensity of individual firms decreased (Jahiel. 2006:195-196). Thus the scale of light industry growth is so large that it’s having an overall negative impact on the environment (Jahiel. 2006:196).

The most important industrial and agricultural sectors in China responsible for leaving a large ecological footprint are: textiles; the automobile industry; and Fruit vegetables, horticultural products and aquaculture (Jahiel. 2006:196-201). The factors that contribute so largely to damaging the environment within these sectors, include: chemicals used in printing and dyeing processes, heavy consumption of water in the manufacturing processes and the generation of large volumes of difficult-to-treat wastewater in the textile industry; destructive manufacturing processes and car emissions as a result of consumption, in the fast-growing Chinese automobile industry; the increased use of chemical pesticides and fertilisers, antibiotics and hormones, in some cases not only detrimental to the environment, but banned internationally, the increase in genetically engineered food; and ineffective corrupt land use practices, within the agricultural sector (Jahiel. 2006:196-201).

According to Jahiel (2006:203), The Chinese government faces a dilemma. It has followed developmentalist policies, congruent with those of the WTO, which prioritize maximum efficiency and economic growth and consequently have had an economic explosion. However, the cost China is paying now includes; intensified socio-economic disparities, heightened self-serving actions by local political leaders and increased environmental harms, leading to a surge of political discontent. China will have to make a strong commitment to pursue growth in its own environmental interest and to prevent the transfer of environmental problems to the rest of the world and the WTO will have to start incorporating the environment into their legal framework and ensure the “greening of their rules” (Jahiel. 2006:205).


Conclusion


China is experiencing one of the most extraordinary economic growth rates in world history, since the onset of its ‘open door’ policy of economic reform and liberalization. This explosive growth over the last 2 decades has left a serious scar on the environment and the prospects of sustainable development. In response to this growing dilemma, China has initiated several environmental reforms, environmental protection initiatives, and environmental policies, to ensure sustained Chinese economic growth, while at the same time ensuring environmental protection. The resettlement of a huge section of Chinese people below the inundation line of the planned Yangtze River, Three Gorges Dam Project, brought about not only environmental degradation on the resettled area, due to overcapacity, but also had huge socio-economic implications for relocatees who never had a say in the matter. 

China’s forestry resources faced a real dilemma, but in response to this dilemma the Chinese government, established a strategy of forest development under the framework of the sustainable development to restore degraded forest systems, which they have accomplished with great success through conservation, afforestation, shelterbelts, conversion of farmland into forests, the establishment of nature reserves, among some of the main strategies. 

China’s environmental policy has, despite some achievements, not achieved the expected results and needs to overcome the structural issues that challenge its effectiveness if it wants to realize the unification of economic, social and environmental benefits. The accession of China into the WTO did bring about economic benefits for China as predicted, but at an environmental cost nobody foresaw and China will have to make a commitment to pursue growth in its own environmental interest, if it wants to sustain its economic growth. 

China is indeed at a crossroads and will have to balance its economic growth with environmental protection, if it desires to leave a China for future generations and an improved ecological environment for the rest of the world. Due to its scale, China’s environmental crisis not only affects China, but the rest of the world, so it’s in the whole world’s benefit for China to act now. China is acting, but is it enough to stop the freight train of disaster?


Bibliography


1. Bao, M. 2006. The evolution of environmental policy and its impact in the People’s Republic of China, in Sustainable Development: a reader, compiled by S. Treurnicht. Pretoria: University of South-Africa.
2. China’s National Climate change Programme. 2007. Prepared under the Auspices of National Development and Reform Commission: People’s Republic of China. Available at: http://www.ccchina.gov.cn/WebSite/CCChina/UpFile/File188.pdf (accessed on 30/07/2010)
3. Eyferth, J, Ho, P & Vermeer, E. 2003. Introduction: The opening-up of China’s countryside, in Analysing contemporary development debates and issues: a reader, compiled by P.D.S Stewart. Pretoria: University of South-Africa.
4. Heggelund, G. 2006. Environmental frictions? Dams, agriculture, and bio-technology. Resettlement programmes and environmental capacity in the Three Gorges Dam Project, in Sustainable Development: a reader, compiled by S. Treurnicht. Pretoria: University of South-Africa.
5. Ho, P & Vermeer, E.B. 2006. China’s limits to growth? The difference between absolute, relative and precautionary limits, in Analysing contemporary development debates and issues: a reader, compiled by P.D.S Stewart. Pretoria: University of South-Africa.
6. Jahiel, A.R. 2006. China, the WTO, and implications for the environment, in Sustainable Development: a reader, compiled by S. Treurnicht. Pretoria: University of South-Africa.
7. Liu, J, Diamond, J. 2005. China’s environment in a globalizing world: How China and the rest of the world affect each other, in Sustainable Development: a reader, compiled by S. Treurnicht. Pretoria: University of South-Africa.
8. Nolan, P.H. 2005. China at the crossroads, in Analysing contemporary development debates and issues: a reader, compiled by P.D.S Stewart. Pretoria: University of South-Africa.
9. Wenhua, L. 2004. Degradation and restoration of forest eco-systems in China. Forest ecology and management, Sustainable Development: a reader, compiled by S. Treurnicht. Pretoria: University of South-Africa.

- Soli Deo Gloria -

CHINA: Current Development & prospects for future growth and human welfare

Development in China with respect to:


  • The gains and the losses for China’s poorer classes in current Chinese development.
  • Prospects for future Economic growth and Human Welfare.


Abstract


Many years ago, Napoleon warned that when China awakens, the world will shudder. His prediction has been fulfilled over the last two decades. Thirty years ago, China had minimal contact with the international capitalist market and most of its people were based in agriculture, but since the late 1970s, when the Chinese leadership made a strategic choice to reform its economic system and to open up to the world economy, it has sustained an average annual economic growth of 10 percent, the fastest and most unprecedented in world history of economic development.

By: Henry Badenhorst


5 April 2010




Introduction


Many years ago, Napoleon warned that when China awakens, the world will shudder (in Ho & Vermeer.2006:155). His prediction has been fulfilled over the last two decades.  Thirty years ago, China had minimal contact with the international capitalist market and most of its people were based in agriculture, but since the late 1970s, when the Chinese leadership made a strategic choice to reform its economic system and to open up to the world economy, it has sustained an average annual economic growth of 10 percent, the fastest and most unprecedented in world history of economic development (Wang.2009:1). China’s rapid rise has given concern to many, especially the three musketeers of the world economy, the U.S.A., Japan, and South-Korea, so much so that in the 1990’s the perception of “China threat” arose (Wang.2009:1). In order to still suspicions and concerns, China coined the term “theory of peaceful rise”, which argues that China could take a very different route than other major powers in world history, posing an opportunity to the world, instead of a threat (Wang.2009:2). Whether it’s peaceful or not the fact remains that China is here to stay and that it will replace the U.S. according to many projections, as the largest economy by 2025-2040 (Wang.2009:1). 

This essay will explore China’s development since economic reforms with regards to China’s current success as the newest economic superpower on the block, but also the political, financial, economic, social and environmental issues that confront China’s development. In other words, what the gains and losses for the poorer classes in current Chinese development are. The argument that China should resist both a return to Maoism and a complete move to the model of a free-market democracy is also discussed. Lastly, the prospects for future economic growth and human welfare in China are discussed.


China’s current success


China has had successes over the past two decades with regards to their economic explosion, due to economic liberalization; allowing Foreign Direct Investment into the country, where other countries have exercised protectionist policies; for improving the per capita GDP, improving income and purchasing power of consumer goods by its citizens; and for its commitment towards developing high technology industries, such as electronics, specifically computers.

Since economic reforms in the late 1970s, China has enjoyed one of the most remarkable periods of economic growth (Nolan.2005:241). The world has over the past two decades, witnessed the fastest change ever and anywhere of a rural economy and society where over 200 million rural inhabitants were lifted out from absolute poverty and tens of millions became wealthier than the average urban resident (Eyferth, Ho & Vermeer. 2003:97) China has radically liberalized its economy to the effect that it now produces high technology goods, is nurturing a vibrant private  sector, and has attracted nearly US$ 500 billion in FDI, causing an economic explosion (Foreign Direct Investment) (Hale & Hughes Hale. 2003:135). 

China’s decision to open its economy by promoting trade and FDI, ensured their smooth integration into the world economy, ensuring their success, where others like Japan and Korea with strict protectionist policies have failed (Hale & Hughes Hale. 2003:136).  In 2003, China was the fifth largest recipient of FDI in the world, but was expected to leapfrog into second place in 2004 (Hale & Hughes Hale. 2003:136).  Foreign companies now hold large shares in many sectors of the Chinese economy. The foreign-invested sector, whose share of the business sector output is 15-20 percent, dominates the export sector, accounting for nearly 60 percent of all exports and 90 percent of exports designated high-tech by the Chinese government (Kroeber.2008:32-33). American companies’ investment alone is worth more than US$ 70 billion in contracts and they generate more revenue from China than any other developing country they have invested in (Hale & Hughes Hale.  2003:136).  

Deng Xiaoping has popularised the term ‘xiaokang’, which represents an ideal society that provides well for all its citizens, by translating it into a goal of US$ 800 GDP per capita before the end of the 20th century, a goal that was achieved, and which hugely improved China’s real income and living standards (Hale & Hughes Hale. 2003:138). China’s economic liberalization has led to a GDP of US$ 1.3 trillion in 2003 and seen together with the fact that China has stemmed population growth to 1 percent per year, its growth of output has translated into large gains in income per capita, leading to high penetration rates for many consumer goods, enabling many more Chinese consumers to afford technological luxuries such as TV’s, computers, refrigerators, etc (Hale & Hughes Hale. 2003:138).  Residential real estate sales in big urban centers such as Shanghai and Beijing has skyrocketed and it's estimated that 90 percent of urban Chinese now, in fact, owns a home, with only Singapore at 92 percent in a higher position in Asia   (Hale & Hughes Hale. 2003:138).  

China’s quick embrace of the information economy as part of its commitment towards the development of high technology industries, even to the detriment of the government’s control over communication networks and its distribution of information throughout China, has led to the fact that more Chinese have access to the outside world through fixed phone lines, internet access, cable television and cell phones (Hale & Hughes Hale. 2003:140). China has become a serious player in the computer hardware and – software industries with considerable growth in domestic consumption within both sectors (Hale & Hughes Hale. 2003:140). China has also become the leading producer of certain types of electronics, such as DVD players and digital cameras due to the influx of foreign investment. The electronics industry has been boosted further by world leading Taiwanese electronics firms, who have moved their base of operations to mainland China (Hale & Hughes Hale. 2003:140-141).  


The Third Way: Resisting Maoism and free-market democracy


China is at a crossroads with regards to its political economy and its unsure which direction it will take. China has four choices. It can adopt primitive capitalist accumulation or Democracy and the free market or it can go backward to Maoism or it can learn from its past. Nolan is of the view that China should neither revert back to Maoism, nor move towards a model of a free market democracy, but should, in fact, reform its system and improve the state, its level of effectiveness and eliminate corruption, the road which he refers to as the ‘choice of no choice’ (Nolan.2005:254).

Many believe that the overthrow of the CCP (Chinese Communist Party) is necessary to improve the welfare of Chinese people, an idea supported by the U.S. (Nolan.2005:247). According to Nolan (2005:247) however, this would “plunge the country into social and political chaos”. Avoidance of great turmoil has been the focus of political thought from the earliest times, and the core of the Chinese reform programme after the death of Mao followed suit, by trying to prevent China’s political economy from disintegrating and descending into ‘big turbulence’, which would ‘deprive the Chinese people of all hope’ and leading to a system meltdown as was the case in Russia, Yugoslavia, Argentina and Indonesia (Nolan.2005:247). The penetration of the US-dominated mass media, in accordance with WTO agreement, ensures that external pressure is applied upon Chinese internal ideology to convert to an ‘American’ or ‘natural’ path of development instead and which equals in American eyes, a regime change (Nolan.2005:247). 

Should China revert back to Maoism? Mao Te Dong led the CCP on an attack on social inequality in attempt to transform the people’ work motivation, to overcome the classical ‘principal-agent’ problem, by liberating the people’s productive energies from the link with material reward (Nolan.2005:248). Mao hoped to create a non-capitalist, humane society, which provided the opportunity for the whole population to fulfill their potential and indeed from the mid-1950s to mid-1970s, China’s GNP growth rate was faster than most developing countries and most people enjoyed a high degree of livelihood security (Nolan.2005:248-249). 

However, China paid a high price to suppress market forces completely, to cut China off from the global economy and society, to drastically constrain the dimensions of inequality, to eliminate material incentives and to radically limit cultural freedom (Nolan.2005:249). Maoist ideologies, the cultural revolution and Mao’s ‘Great Leap Forward”, brought suffering to many, crushed the diversity of thought, destroyed cultural expression, slowed technical progress, led to a fall in capital productivity and average per capita incomes, led to a decline or stagnation in per capita consumption, caused a dramatic rise in absolute poverty and with the ‘Great Leap Forward’, the biggest famine of the 20th century with as many as 30 million excess deaths (Nolan.2005:249). The Maoist development path left a trail of suffering and death and not many would like to return (Nolan.2005:249).

Even though China has made great technical advances, even before the West, it has failed to experience an industrial revolution and many believe that its history of traditional ‘totalitarian’ state has crushed the development of the market over its history and that it should learn from the past by reducing the economic role of the state even more (Nolan.2005:249). China has been groping for its own third way for 2000 years whereby they both stimulated and controlled the market at the same time according to a deeply thought-out system for rulers, bureaucrats and ordinary people (Nolan.2005:253).

According to Nolan, the Third way is the ‘choice of no choice’. China cannot go back to the Maoist period, nor can it choose the path of ‘state desertion’ and ‘free market fundamentalism’, since it will lead to uncontrollable tensions and social disintegration (Nolan.2005:253). China’s ‘choice of no choice’ must be to make more effective the role of the state to solve the intensifying socio-economic challenges to ensure China’s system survival, which in turn can contribute towards global survival and sustainable development (Nolan.2005:254).

China is, however, embracing capitalism, because its demographics are becoming like that of the West (Hale & Hughes Hale. 2003:139) According to Kroeber (2008:30), “China must be understood in terms of its long history as a bureaucratically administered state, which both enables and legitimises the increasingly effective modern bureaucratic state that has emerged in the last few decades” China is in economic terms, neither on a pre-ordained path to full market capitalism, nor the unitary statist ‘China Inc.’, but rather a mixed economy with a large state role and an equally heavy reliance on continued access to the liberal capitalist international order (Kroeber 2008:30). Bureaucratic authoritarianism, however repellent to the West, is a system with considerable purchase in China, which isn’t founded on discredited Communist ideology, but on well-established traditions and lastly has proved increasingly successful over an increasing range of functions (Kroeber 2008:32). “For the next decade, China’s people and the rest of the world will have to deal with the reality of a successful, effective bureaucratic state” (Kroeber 2008:32).


Issues that confront Chinese development


China is confronted by a myriad of developmental problems and challenges. As Nolan notes (2005:241-246) China “faces deep economic, political, and social challenges, which include; the vast extent of poverty and rapidly growing inequality; the challenge for Chinese businesses from the global business revolution; a deeply degraded natural environment; declining capabilities of the state; a comprehensive challenge in international relations; widespread corruption; and extreme dangers in engaging closely with the global financial system”  The mere size of China (9.6 million km²), and its population (1.3 billion people) imply a wide regional diversity  in economic, political, ecological, sociological and ethnic terms (Eyferth, Ho & Vermeer. 2003:96).


Issues that confront Chinese development: Political and Social 


The totalitarian tradition of state control over people’s lives as well as the economy, even though it has largely diminished since the 1980s, still remains in the form of state-imposed institutions and constraints on human action. Public debate and participation in any decision-making processes are excluded due to the CCP’s monopoly of political power, its ban of free speech and free association, as well as the lack of an independent judiciary  (Ho & Vermeer. 2006:150) Even though China is a bureaucratic authoritarian state that is repressive, it’s also dynamic in its ability to identify and respond to societal problems, which lends to it an important measure of legitimacy, despite the lack of civil liberties and the high degree of corruption within (Kroeber.2008:34).

The CCP’s secret to success and longevity seems to be China’s size (Kroeber. 2008:35). History has shown that as traditional agrarian societies industrialize, they exchange their despotic governments for representative governments. Early stage industrializing countries following the Bismarckian model of state-led development, tend to have bureaucratic authoritarian governments in which a technocratic elite organizes the commandeering of agricultural surplus for the purpose of high-speed industrialization, which then lasts until the country is industrialized and urbanized. In Taiwan and Korea, this process lasted only a generation, since they have smaller populations of 23 and 49 million people respectively, but China with 1.3 billion plus people will have to face a longer term (Kroeber.2008:36).

“Behind almost every aspect of China’s development process in the early 21st century, lies the harsh reality of the ‘Lewis model’ of economic development, with unlimited supplies of labor” (Nolan.2005:241). Almost 70 percent of the 1.3 billion Chinese population still lives in the countryside, with as many as 150 million ‘surplus’ farm workers (Nolan.2005:241). According to official Chinese data, there are approximately 580 million rural dwellers who have to survive on less than US$ 360 per year, calculating to less than one US dollar per day, signaling absolute poverty (Nolan.2005:241). China’s WTO membership forcing China to open the country to greater food imports, which will be competing against local food production, may further depress rural income, leading to rural-urban migration and consequent social instability of urban centers (Hale & Hughes Hale.2003:139).

Rural-urban migration was prior to political reforms, detained by household registration requirements (hukou), rural commune contracts and food rationing, but since 1990, due to the elimination of communes and the emergence of a free market for grain and other food items in the late 1980’s, rural to urban migration has picked up, first to Township and Village Enterprises (TVE’s) in rural areas, and then to the urban coastal regions (Brooks in Prasad. 2004:54-55). There are 150 million rural workers who have migrated to Coastal urban regions to find employment (Nolan.2005:241). Despite considerable progress made on reforms over the past two decades, surplus labor remains on State Owned Enterprises (SOE’s) and farms (Brooks in Prasad. 2004:56-57).

Unemployment and underemployment of a significant portion of the rural population remain pressing concerns as the Chinese economy adjusts to the effects of SOE reforms and WTO accession (Prasad & Rumbaugh.2004:4). SOE reforms in the late 1990s saw about 24 million SOE and other collective employees laid off from 1998 to 2002 as part of a xiagang program (re-employment program, which provided these workers with a three-year safety-net) (Brooks in Prasad. 2004:56). In 2005 there were 40-50 million workers who lost their jobs due to reforms in SOE’s (Nolan.2005:242). According to Eyferth, Ho and Vermeer (2003:101), is the rapid rise in urban unemployment, caused by the state-owned sector restructuring, pressurizing urban governments to reserve remaining jobs for the underemployed, limiting rural migrants’ chances on finding urban employment. Alongside the unemployed and rural migrants, a new urban ‘middle class’ is fast emerging, due to FDI by multi-national firms giving rise to clusters of modern businesses and residential areas (Nolan.2005:242).


Issues that confront Chinese development: Financial and Economic

     
In 1992, the CCP formally embraces Deng Xiaoping’s view that the market system was not incompatible with the ideals of socialism and called for the establishment of a socialist market economy (Prasad & Rumbaugh.2004:2). China’s economy, according to Kroeber (2008:32), is mixed and has three major elements, namely the state sector, the domestic private sector, and the foreign-invested sector. The state sector, whose share of business sector output is approximately one third and falling, completely dominates the upstream and network sectors of the economy, such as resource extraction, transportation and communication networks, electric power generation and distribution, finance and basic material industries, such as steel and petrochemicals. The domestic private sector, whose share of output is 50 percent and rising, dominates consumer goods manufacturing and retail. This sector virtually generates all employment growth. The last sector is the foreign-invested sector, whose share is only about 15-20 percent, but dominates the export sector, accounting for nearly 60 percent of all exports (Kroeber.2008:32).

Since the 1980s, China has implemented industrial policies aimed at nurturing a group of globally competitive large firms, but has failed fundamentally and instead of becoming the workshop of the world, it has become the workshop for the world, with over 60 percent of its industrial exports coming from foreign-invested companies (Nolan. 2005:242). As Wen (2009:5) states; “China is the kitchen and the West the dining room”. China is churning out more and more consumer goods for Western consumers, while most of the profits are amassed by multi-national corporations that control the brands and distribution channels (Wen. 2009:5). China has lacked to produce a group of internationally competitive large firms, like all successful industrializing countries, such as Korea and the U.S. before them. China does not have a single of the top 100 brands, nor has any of the 14 Chinese companies in the Fortune 500, become a truly globally competitive company that could compete without government protection (Nolan.2005:242). The likely cause seems to be that firms are state-owned and therefore subject to state interference in their operations (Nolan.2005:242).

China is facing important fiscal challenges in the course of its transition to a market economy. The government are shouldering various costs with relation to;  the restructuring of a still largely state-owned economy; the costs of recapitalising state-owned banks; the funding of social security for a rapidly aging population; possible liabilities that sub-national governments are contracting, especially large scale infrastructure projects; and significant government programs to alleviate regional disparities, including the increasing spending on health care and education (Fedeline & Singh in Prasad.2004:29) The government has to shoulder all these costs, but according to the World Bank, the central government revenue accounted for only 7 percent of the GDP, which has forced the state to look for drastically increased contributions from fees paid by people when they use health and education services (Nolan.2005:243).

  

Issues that confront Chinese development: Environmental 


Due to China’s rapid rise economically and industrially and its huge population, which has left serious damage to the environment, China is now facing an environmental crisis, like no country before. China’s economic reform has increased the pressure on the environment, from air and water pollution to soil erosion and desertification (Eyferth, Ho & Vermeer. 2003: 107). According to the UNDP, is around 38 percent of China been affected by soil erosion and is the area of desert increasing at an annual rate of 2 500 km² (Nolan.2005:243). Over the past 4 decades, nearly half of China’s forest’s have been destroyed, leaving China with one of the most sparse forest covers in the world (Nolan.2005:243). The majority of Chinese lakes are seriously eutrophied, yet chemical fertilizer usage is on the rise (Ho & Vermeer. 2006:147). China’s emission of organic water pollutants is as large as that of the U.S., Russia, India, and Japan combined (Nolan.2005:243). The massive overuse of fertilizer and pesticides has caused serious soil degradation and has undermined food safety (Wen.2009:40). According to Wen (2009:24), has China already overtaken the U.S. as the world’s largest CO² emitter in 2007, and the world’s biggest coal producer, accounting for almost 30 percent of global output (Wen.2009:24).

China is severely overpopulated, which leads to land scarcity for food production. The area of farmland per capita is low according to the world average and is aggravated by substantial losses in arable land due to rapid urbanization, industrialization and environmental problems, endangering food security (Eyferth, Ho & Vermeer. 2003: 107). China is also facing one of the world’s worst water shortages, since per capita it only has 35 percent of the world’s freshwater resources. Distribution is furthermore highly uneven, since the ‘Dry North’ has one third of the cropland, but only one fifth of the water, while the ‘Humid South’ with the same amount of cropland has four-fifths of the water, an imbalance which may be furthered by climate change (Wen.2009:5) Climate change, due to greenhouse gasses and global warming are also threatening China’s food security and according to calculations could lead to a 20-37 percent drop in the rice yield (Wen.2009:11; Nolan.2005:243)

China’s five year plan for environmental protection admits that ’ecological deterioration is not under effective control and emphasizes the linkages between economic growth, prevention of pollution and ecological conservation as parts of a needed economic restructuring, but its command and control type policies and legislation makes the reconciliation between environmental reform and economic growth, extremely difficult (Ho & Vermeer.2006:149) The absence of well-protected private land property and persistent state ownership in major industries, services, and resource exploitation, have enhanced a top-down, bureaucratic character of decisions over resource allocation and environmental control (Ho & Vermeer.2006:151). Factors that have limited the effectiveness of environmental policies are; the uneven commitment to environmental goals, the lack of effective public pressure on government and polluting enterprises, limited awareness and the state’s inadequate capacity to monitor and control (Ho & Vermeer.2006:151) While China has faced severe environmental problems, it has made considerable efforts in the direction of “green” government policy, but even though these efforts are applauded, business and government accountability still lacks (Stewart.2007:14).


Prospects for future Economic Growth and Human Welfare   

              
An issue today in China is whether rapid growth is sustainable or whether the problems produced by growth will force China to pursue a more regulated and conservative course or whether it will lead to political and economic crisis (Stewart.2007:12). “There are strong prospects that China’s rapid economic growth and trade expansion could be sustained well into the future” (Prasad &Rumbaugh.2004:1). However, a number of macroeconomic and structural vulnerabilities need to be addressed for this potential to be fully realized. 

Given the size and complexity of the Chinese economy, many of these reform challenges are interrelated (Prasad &Rumbaugh.2004:1).  “China’s traditional approach to reform has been incremental but, in view of its rapid opening up to the world economy, a more concerted and multifaceted approach to the reform process will be crucial to maintain rapid growth and manage the challenges associated with the process of global integration” (Prasad &Rumbaugh.2004:1). China’s economy has good potential for sustained robust growth over the medium term, based on its attractiveness as a destination for FDI, a high domestic saving rate, underlying improvements in productivity stemming from reduced barriers to both internal and external trade, and significant surplus labor (Prasad &Rumbaugh.2004:4).

China’s rapid economic growth and the rise in the nation’s overall wealth have been accompanied by widening income inequality both among and within regions. In addition, while successful technology innovation will help China continue to increase its agricultural productivity, China faces the great challenge of water scarcity. Water shortages, particularly in northern China, and increasing competition from industry and domestic use; do not provide much hope for large gains in irrigation expansion or in areas already under irrigation. In addition to water scarcity, there is considerable stress being put on the agricultural land base. While the use of modern technologies is essential to achieve efficient food production, inappropriate uses, such as the excessive application of fertilizers and pesticides, could result in serious environmental problems and food safety concerns. The decline in cultivated land and rising water scarcity are thus among the greatest concerns regarding national food (grain) security (Huang &Rozelle:3).

The overall prospects for China’s continued growth and development over the medium term are positive, although there are several reasons for concern, both in the international and national contexts. At the international level, there are serious imbalances in some countries’ trade, most notably current account deficits in the United States and surpluses in China and oil-producing countries (He, Li & Polaski. 2007:26).  If the imbalances were to be corrected rapidly—for example, by a sharp shift in exchange rates or a rise in protectionism—there could be strong negative effects on China’s export sector (He, Li & Polaski. 2007:26). There is excess productive capacity at the global level in labor-intensive manufactures, such as textiles, apparel, and consumer electronics, and in some capital-intensive products, such as steel and shipbuilding. This has put sustained downward pressure on prices for such goods, affecting the income for labor and capital employed in those sectors. In contrast, world energy prices have been trending higher, which accentuates the relatively inefficient use of energy in the Chinese economy (He, Li & Polaski. 2007:26). As China liberalizes its financial markets in compliance with its WTO commitments, the flow of international resources may increase, but there is also a greater risk of financial instability and contagion  (He, Li & Polaski. 2007:26).


Conclusion


China is experiencing an economic explosion and a phenomenal level of development, never seen before. Economic liberalisation due to government reforms, has taken China from an agrarian economy towards an industrial superpower who threatens the U.S. China’s successes include attracting Foreign Direct Investment into the country, ignoring protectionist policies that have failed others, improving the per capita GDP, improving income and purchasing power of consumer goods for its citizens; and its commitment towards developing high technology industries. China’s political economy is at a crossroads and there is a debate which direction it should take. Nolan is of the view that China should neither revert back to Maoism, nor move towards a model of free-market democracy, but should, in fact, reform its system and improve the state, its level of effectiveness and eliminate corruption, the road which he refers to as the ‘choice of no choice’. 

Bureaucratic authoritarianism, however repellent to the West, is a system with considerable purchase in China, which has proven increasingly successful over an increasing range of functions. China is facing many different types of developmental issues. The communist state’s single-party authoritarian leadership, widespread government corruption, poverty and inequality, unemployment, rural-urban migration, surplus rural labour, state interference in companies, lack of access to improved education, health, water and electricity, disparities in regional development, industrial pollution, water scarcity, soil erosion and desertification, gender discrimination, food security, climate change, lack of sufficient mineral and natural resource for exploration within China, land scarcity, lack of social security for its aging population and its carbon emissions. At its currents pace of industrial growth, China will have to commit to environmental conservation not only for their survival, but also for the rest of the world’s survival. 

China will need to balance economic growth with environmental protection to ensure the welfare of its citizens. Economically speaking, China faces good prospects, but macro-economic and structural vulnerabilities need to be addressed for this potential to be fully realized.  A multifaceted approach to the economic reform process will also be crucial to maintain rapid growth and manage the challenges associated with the process of global integration. China’s economic growth has led to widening income inequality both among and within regions and has exerted a huge amount of pressure on its water and land resources, posing threats to its food security and are serious issues that need attention. China has come to stay, but to ensure its sustainability, continued economic and environmental reforms are crucial if it wants to keep rising. 


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