DISCUSSION QUESTION #1
CHINA’S ECONOMIC GROWTH
The debate whether China’s economic growth can be considered a miracle or a myth is a complicated one. China has experienced a considerable economic boom it reformed its economy following 1978. Reforms led to the liberalization of China’s economy, brought about rapid urban development, and increased the middle class base allowing for its political and economic influence throughout the world to flourish. Some believe – and some fear – that China’s dramatic and speedy rise will advance it to a point, surpassing the United States as the world’s leading economic superpower. However, with a closer examination, it becomes evident that this may be unlikely as China is heavily dependent on developed Western states, such as the United States, for the raw materials it needs to feed its manufacturing industry. Furthermore, by 2003, fifty-five percent (Gilboy 2004) of China’s exports were from foreign funded enterprises. Therefore, China’s economic rise is not a miracle, but rather a result of opening trade barriers to businesses from advanced countries which want to take advantage of China’s inexpensive manufacturing sector.
China’s economy, although impressive, lacks a strong advanced technology sector. Without one, China will continue to rely on Western developed states and other Asian markets that can export these materials to China for manufacturing at foreign owned firms (Gilboy 2004). Preeg (as cited in Lardy 2004) argues that China’s export of high-tech goods could pose a major threat to American commercial and security interests. However, as Lardy (2004) argues, even though China’s high-tech exports have soared since 1999, most of the electronic and information technology products are not necessarily high-tech as most products are high in volume for consumer consumption while being relatively cheap. Some examples of this include mobile phones and DVD players. Lardy also argues that these exports are manufactured with high value goods which China originally imports for manufacturing. And of course, most high-tech manufactured goods are not exported by domestic Chinese firms. Furthermore, China’s successful domestic firms are largely state-owned which arguably lacks naturally-occurring innovation when compared with private enterprises. A domestic high-tech industry is thus needed in China in order to transform the state’s economy into an innovative and progressive one. This could be accomplished through investment by state, collective, and private firms in this sector – such as what was done in Japan, South Korea, and Taiwan (Gilboy 2004).
There are a number of factors responsible for China’s lack of a high-tech domestic industry. One such factor is China’s quality of education. As Salvatore Babones (2011) explains, Chinese industry will continue to be stifled without the implementation of a full democracy. China may be able to produce a great deal of skilled workers from its surge in science and engineering education investments (Hu 2011); however, the political culture in China shuns individual and free thought – thus limiting creativity and innovation (Babones 2011). Therefore, this is one reason for China’s lack of a high tech industry and it will continue to be the case if China does not take steps toward democracy.
Other factors facing China are some of its environmental and social issues. As Elizabeth Economy (2007) agues, China’s advance as one of the world’s leading polluters has led to financial and control issues for the government. While environmental degradation from pollution is estimated to cost China’s economy between 8 and 12 percent annually, local governments have largely ignored the federal government’s push to observe its warnings of environmental caution. Again, as Economy (2007) indicates, this is a structural problem stemming from the current political culture in China. As the government assumes that local governments will easily comply with environmental regulations, it is not properly enforced. Plus, the government’s restrictions on such organizations as NGO’s and other enforcement agencies in China consequently allows for a lack of accountability for industrial waste and pollution. Thus, this creates a significant expense to the economy, which is difficult to stop.