When I started university a few years ago, I met a fellow student who said he was studying Business and Chinese.
China's economy is growing so quickly, he said, that it will be a very important language to know in business in years to come.
But after spending three weeks in the Communist state I've got to disagree with him. This is a country where GDP is expanding at breakneck speed - but I can't see it continuing.
Cities like Shanghai have transformed beyond all recognition - the incredible steel and glass skyline simply wasn't there in the early 1990s. Other cities across the country also have glittering office blocks for big business.
But, based on what I've seen, these glittering symbols of growth exist only on the margins. The majority of people don't go near the sleek shopping malls - they are the preserve only of the wealthy.
Young graduates with impeccable English skills find themselves working in hostels because there is no other work. High street stores and restaurants are massively overstaffed with workers standing around waiting for customers for most of the day.
The majority of people remain, and will remain, very poor. Unless the Communist Party lose their iron grip on power, Chinese growth will come shuddering to a halt.
In reaching this conclusion, I am not lazily lumping this nation together with the failed project that was the USSR.
Following the death of Chairman Mao in 1976, there have been major economic reforms - this is no pure Communist project. Xi Jinping, who becomes President early next year, is a very different man to the revolutionary who took power in 1949.
But although the party have ushered in some elements of capitalism, unless there is political reform Chinese growth will stop.
As I'm writing this on a bus to Vietnam I can see out of the window a group of farm workers hacking down bamboo with machetes. I can see an ox stood nearby.
While industrialised countries adopted tractors decades ago this labour-saving device has not arrived in this field.
There's no incentive for the Chinese government to encourage people to adapt the technology - if less labour is needed most of these workers will be out of the job.
There's no booming private sector for these people to turn to for work. The only businesses that are allowed to prosper are those supported, at least tacitly, by the Communist Party.
If farmers like those on the road to Vietnam are out of the job, mass unemployment would result and the very legitimacy of the Communist state would be called into question.
It is simpler then for the Chinese government to keep these people poor.
The streets below the high-rise towers are still swept by people with brushes made from leaves. The unseen masses remain very poor and would never step inside the western shops.
Unless China develops capitalist economic institutions it will remain poor. There is too little incentive for ingenious individuals to think creatively and start businesses.
In Britain, George Stephenson, born into poverty in 1781 and illiterate until he was 18, is credited with building the most famous early steam train in 1829. The economic system - and the profit motive - powered the Industrial Revolution.
In contrast, corrupt institutions, taxes and a lack of education are holding China's economy back. Markets are not competitive.
State sponsored growth is possible under Communism - but it has limits. It is easily forgotten that the Soviet Union grew rapidly for decades. As late as 1980, US academics were predicting that Russia would be the richest country in the world within a couple of decades.
But without economic institutions that promote individual enterprise, that growth came crashing to a halt and then the whole project collapsed.
Because of the 1.3 billion population, I fully expect the Chinese economy to become the biggest in the world. The great surge forward may continue for another 20 years before there is stagnation. But although total GDP may surge past the US, GDP per head will remain much lower.
But like in Russia, there will come a point where growth will come to a standstill - unless this becomes the world's largest democracy.
Based on what I've seen, the potential of China is hugely overstated in the western media.
Yes, this country is surging forward economically while the west struggles. But they've got a lot of catching up to do.
If this page remains online 30 years from now, my prediction may be proved emphatically wrong. The future often plays out in ways we could never have predicted.
But my view is that Chinese growth will come to the standstill without economic and political reform.
China's economy is growing so quickly, he said, that it will be a very important language to know in business in years to come.
But after spending three weeks in the Communist state I've got to disagree with him. This is a country where GDP is expanding at breakneck speed - but I can't see it continuing.
 |
| 2012? What life seemed to be like for the majority of Chinese people once you looked beyond the glittering tower blocks |
But, based on what I've seen, these glittering symbols of growth exist only on the margins. The majority of people don't go near the sleek shopping malls - they are the preserve only of the wealthy.
Young graduates with impeccable English skills find themselves working in hostels because there is no other work. High street stores and restaurants are massively overstaffed with workers standing around waiting for customers for most of the day.
 |
| Growth: The Chinese economy is soaring forward - and this is most visible in Shanghai |
In reaching this conclusion, I am not lazily lumping this nation together with the failed project that was the USSR.
Following the death of Chairman Mao in 1976, there have been major economic reforms - this is no pure Communist project. Xi Jinping, who becomes President early next year, is a very different man to the revolutionary who took power in 1949.
But although the party have ushered in some elements of capitalism, unless there is political reform Chinese growth will stop.
As I'm writing this on a bus to Vietnam I can see out of the window a group of farm workers hacking down bamboo with machetes. I can see an ox stood nearby.
 |
| Shanghai: The New York of the East |
There's no incentive for the Chinese government to encourage people to adapt the technology - if less labour is needed most of these workers will be out of the job.
There's no booming private sector for these people to turn to for work. The only businesses that are allowed to prosper are those supported, at least tacitly, by the Communist Party.
If farmers like those on the road to Vietnam are out of the job, mass unemployment would result and the very legitimacy of the Communist state would be called into question.
It is simpler then for the Chinese government to keep these people poor.
The streets below the high-rise towers are still swept by people with brushes made from leaves. The unseen masses remain very poor and would never step inside the western shops.
Unless China develops capitalist economic institutions it will remain poor. There is too little incentive for ingenious individuals to think creatively and start businesses.
In Britain, George Stephenson, born into poverty in 1781 and illiterate until he was 18, is credited with building the most famous early steam train in 1829. The economic system - and the profit motive - powered the Industrial Revolution.
 |
| Chinese dynamism: The iconic Birdsnest Stadium built for the 2008 Olympic Games |
State sponsored growth is possible under Communism - but it has limits. It is easily forgotten that the Soviet Union grew rapidly for decades. As late as 1980, US academics were predicting that Russia would be the richest country in the world within a couple of decades.
But without economic institutions that promote individual enterprise, that growth came crashing to a halt and then the whole project collapsed.
Because of the 1.3 billion population, I fully expect the Chinese economy to become the biggest in the world. The great surge forward may continue for another 20 years before there is stagnation. But although total GDP may surge past the US, GDP per head will remain much lower.
 |
| Impressive: The Shanghai skyline which has shot up in the last 20 years |
Based on what I've seen, the potential of China is hugely overstated in the western media.
Yes, this country is surging forward economically while the west struggles. But they've got a lot of catching up to do.
If this page remains online 30 years from now, my prediction may be proved emphatically wrong. The future often plays out in ways we could never have predicted.
But my view is that Chinese growth will come to the standstill without economic and political reform.
No comments:
Post a Comment