I recently attended a free lecture, run by Melbourne University entitled ‘Demystifying the Chinese Economy.’ It was run by former head of the World Bank, Professor Justin Yifu Lin and I have to say that while it was interesting, I didn’t learn really anything new. That was partially because the information was quite raw economical data, speaking about growth in percentages, but also because it was actually quite difficult to understand him speak!
Professor Lin had a fairly thick accent, and I could understand most of what was said, but a couple of times, there was a key word that I just could not work out what it was – it sounded like extortions, but it wouldn’t be that, because it was said in such a way:
“And the reason the Chinese economy was able to sustain over 9% growth for over 30 years was thisdamnedwordIcantunderstand!”
Anyhow, I am glad I went regardless, as I have a continued interest in anything that relates back to China. It did amuse me though, with half the room Chinese – likely economics & business students from the university, and the other half white/westerners, it’s possible that no-one actually understood what was being said! Perhaps if he did the lecture in Chinese then at least half the room would have been crystal clear!
There were a few things that I found interesting in what Professor Lin spoke of. He mentioned that as part of the growth and economic success of China, there of course had been problems too. He felt that the biggest issue that China faced was the disparity in wealth, with vast gaps still remaining between the countries rich and poor. In fact, he said despite the countries success, many Chinese were not happy because of this money disparity.
He listed several other negatives, which escape me now, but one thing I found interesting was that there was no mention at all to the damage China has caused to its environment as part of this massive growth. Now everyone is no doubt aware of the problem China faces with pollution – all problems of its own making, but what about the neighboring countries? How do you think the Japanese feel about the smog coming across the sea from China to pollute them? How about Vietnam, which is also copping it? It’s simply unacceptable.
Getting back to the reason for China’s success, in a nutshell, it can be put down to China leveraging its strengths as a nation. Back in the late 1970’s when this all began, it couldn’t compete with the other developing economies from a technological point of view, but it could compete in manpower. This has seen China develop into what is often termed the world’s factory.
So what then happens, when all of these millions of workers become fed up with working in factories – for peanuts no less? Yes there are income disparities, but what about quality of life? China now does have the money to upgrade its technology, and while I am no expert in factory based manufacturing, I think that logically, it would follow a path of many other countries, where manual labour is replaced by robots and machines automating much of the process.
What happens to these millions of people if they decide to do something else but slave away in a factory?
He mentioned that other countries could follow the Chinese model of success, but really, I can’t see that happening. There’s no way known you’d get a typical Australian to work the amount of hours a typical Chinese factory worker does, or for such low pay.
One thing I did find interesting, was his answer to whether India would be a competitor to China. I thought that it would, but Professor Lin said that India had focused on growing its service based industry – as anyone who has had to call their phone company recently no doubt knows!
While India created 2 million service based jobs – China created 75 million. I found that really quite telling.
Professor Lin said that by 2030, China would possibly have an economy the size of the USA’s, or possibly (more accurately) twice its size. China has become an absolute beast of a nation when it comes down to the size of its moneybags. It has so much money invested in so many different parts of the world, that I think there’s going to come a time when many countries resent that. I suspect that China might find itself paying a heavy price for its success.