Wednesday, September 14, 2005

China – big but still poor

TO say that the China phobia is spreading is probably the understatement of the century. In the 1990s, many developing Asian countries viewed the emergence of China as a serious threat to their economic development.
This sense of unjustified fear probably originated from the developed countries, in particular the US. The recent episode of political and government interference in CNOOC’s bid for Unocal bears testimony of the extent Sino phobia has spread among US politicians and policymakers. However, if one cares to take a closer look at China, then, one would find that the great fear of China is completely unfounded. Why?
This week, i Capital will share with its readers one very simple reason.
Since China started her economic reforms more than a quarter century ago, her achievements have been remarkable. The sustained strong economic growth has lifted hundreds of millions of Chinese out of abject poverty. From a very low base, China’s per capita GDP rose to surpass US$1,000 in 2003. Last year, China became the world’s third largest merchandise importer, up from 11th place in 1994. However, the majority of China’s 1.3 billion citizens are still living in unsatisfactory conditions.
China has set a target of achieving fairly comfortable standards of living by the year 2020. What is a fairly comfortable standard of living? It is a living standard that is neither affluent nor deprived. People would have enough to eat, places to stay and sufficient to live by. It is something like a middle class society. What is the progress in achieving the noble target?
Well, many cities have achieved a level of fairly comfortable standard of living. However, progress in the rural area is still less than satisfactory. Despite massive migration from the rural to the urban areas over the years, more than 70% of China’s population or more than three times the size of the entire US population, still lives in the rural area. Thus, whether China is able to realise her noble ambition would depend on the development in the rural areas.
How does one measure a fairly comfortable standard of living? In this regard, China’s National Bureau of Statistics has designed a set of standards to facilitate measurement and monitoring. The set of standards uses 18 indicators to cover six aspects of living standards. The six areas, 18 indicators and their respective weights are shown in Table 1.
As shown, Table 1 is a rather comprehensive measurement of living standards. Table 2 shows the progress in achieving the desired living standards in 2004. Sadly, about two-thirds of rural areas in China’s 31 provinces failed to attain even 30% of the required level, meaning that most of these areas are still poor. Only the rural areas of four provinces attained above 50% level of achievement in 2004.
Therefore, it is apparent that China is still a poor country. Her GDP per capita is only about a quarter that of Malaysia’s, and only about 3% of the US per capita GDP. It would be many, many decades before China can provide decent standards of living for the majority of her citizens.
Given her huge population size, achieving a fairly comfortable standard of living is a daunting challenge. It requires all the skills and concentration that the Chinese government can garner. i Capital is totally convinced that the Chinese government has neither the luxury nor the energy and interest to conquer the world, unless she is provoked or forced into acts of self-defence.
All China wants is to provide decent living conditions to her long-suffering citizens.


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