Cracks in the growth of China

21 Feb

China’s growth has been exponential with some incredible figures that are written about, for example:

  • Houses prices in Haikou jumped 54% in 2010
  • GDP increased 8.9% in the last quarter of 2011

 

But China’s success in sustainable terms is questioned as a result of three main problems. These problems can limit the driving force behind China’s growth and as a result possibly halt their progress as explained by Jonathan Fenby in his book ‘Tiger Head Snake Tails’.

 

One of the three main problems in China today is the influx of corruption on the economy. Only in 2012 Lai Changxing, an illiterate peasant-turned-billionaire was found out to have smuggled $4.3bn through a complex weave of bribery and corruption. The corruption is now so sophisticated that instead of cash bribes, which are easily traceable it is common for businessmen to buy paintings and give them to cadres and then the cadres put the paintings in auctions and anonymous agents bid up the price so they receive clean cash. Spending on cars for government officials was more than 150bn yuan in 2012 alone. The corruption present in China not only deters investment from foreign countries but also reduces the spread of wealth amongst China’s poorest.

 

The second problem is environmental damage. In 2009 a third of China’s 113 cities failed to meet the national air standards and 16 of the world’s 20 worst air polluted cities are in China, 3000 tons of waste is produced daily in Chongqing and is being tipped into a landfill that is quickly filling up. Without regulations and the officials calculating the correct level of pollution as the country grows the problem with exacerbate. The wealth of resources that are needed to continue the growth in China along with the residents of the polluted cities are being used inefficiently and so may not be as productive in the future.

 

The third being the demographics of the country. As a result of the one child policy and the increased life expectancy those in the older generation heavily weight the demographics of China. As a result less people are going into the labour force and those who are have many relatives to support in their old age. Currently there are a million more men in China who can’t marry because of the lack of young women and so they will not produce children. Therefore the population will continue to decrease.

 

It will be interesting to see how China deals with these problems in the future in order to maintain success.

 

Business Insider: http://www.businessinsider.com/15-more-mindblowing-facts-about-china-economy-2010-4?op=1#ixzz2LWhz39hp

 

BBC News: http://www.bbc.co.uk/news/business-17686247

 

NY Times: http://www.nytimes.com/2012/05/19/world/asia/chinese-tycoon-gets-life-sentence-for-smuggling.html?_r=0

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One Response to “Cracks in the growth of China”

  1. de1g11 February 22, 2013 at 3:23 pm #

    The issues raised are important and will require a dedicated response in order to prevent further harm to China. However as shown by the one child policy China is capable of planning ahead to prevent a major crisis. Combined with the governments ability to strong arm policies through the chinese nation will ready themselves before any major issues occur.

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