Friday, January 27, 2012
The paradox of prosperity
In this article, China is being examined as an economic power. However, it's being ridiculed in a way due to its continual use of a non functioning economy. "The paradox, as some within the party are coming to realize, is that for China to succeed it must move away from the formula that has served it so well." Even though China is fast moving towards establishing itself as a world superpower, both economically and militarily, it still has ties to its old communist methods. The article explains that for China to finally make that step towards becoming a world superpower, it must leave the old communist ties behind. http://www.economist.com/node/21543537
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9 comments:
I agree that China needs to move away from communism in order to become a superpower, but do you think there is anyway they could take the next step as a country if they keep their current economic system?
There's great irony in the fact that Deng recognized the economy needed to grow for the Communist party to survive, and to do so he changed the economic system to a more capitalistic one. China is still authoritarian, even more so in some ways than it was when its economic structure was Socialist. In some ways Fascism may be becoming the structure of China.
It is not surprising since this month, the Economists settles a special column for China weekly. I love the cover a lot, the modern and dreaming citis, and the beautiful natural scene in the water.
As an insider, I feel like people who worry about China's growing to a superpower are overthinking. There are so many fundemantal problems existing in China right now, and I really don't think they will be solved in the coming decade, even though I hope they do.
I think a big problem that has come with China's growth is the rising inequalities between workers in the city and those workers that come from a life of farming in hopes to make it in one of China's huge cities. These two types of citizens are treated very differently and I think it will continue to be a growing concern as their economy continues to expand.
Recently I talked to a business man who travels to China a couple times a year for his business. One of the most surprising things that he said is that some factories are shutting down partially due to workers wages which have risen at a double digit percentage rate for the past decade. Another thing that has compounded the issue of rising workers wages is that the US has decreased its demand for Chinese goods. It does seem as though China needs to start consuming to make up for the increase in demand and continue to grow at such a fast pace.
Leah, I completely agree with you. When you look at the Chinese economy, you find China A and China B. There are big differences between the agricultural regions of China and the coastal cities such as Shanghai.
I think that the Communist Party can retain power and control by slowly giving the workers what they want, their wages. The article states that worker's savings are invested in state-owned enterprises and they don't get a chance to spend their money. What if the country made small reforms with workers while reallocated the resources to increase domestic consumption with a slight decrease in investment and exports?
Admitted, there are problems existing in the economy of China. However, there is no perfect economic system as we discussed in class. I agree China is experiencing a transaction. Nevertheless, it does not mean what formula/method it employed before should be judged as a sluggish/negative factor. In reality, in a long-run term, no matter under which economic system, it is necessary to adjust economic policies in order to keep up with the pace of the world economy. Therefore, the transaction China is experiencing now is actually a natural phenomenon. It doesn’t mean it has to move away from the old formula. What we need now is how to keep improving the economy.
I agree with both Leah and Anthony. I think if economic growth is to continue, more political reform and openness will be necessary. It's a question of how much the people will demand and how much the leaders are willing to give. I think increases in consumption as Anthony suggested could provide more support for the current system as citizens see an improvement in their quality of living.
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