Current Challenges to China

Session 10

ContentsI. Imbalance between Economic Great Leap

Forward & Stagnation of Political Reform

II. Imbalance between the Rich & the Poor

III. Imbalance between Wealth Increase & Integrity Decline

IV. Imbalance between Economic Growth & Environment Deterioration

V. Discussion

I. Imbalance between Economic Great Leap Forward and Stagnation of Political Reform

1. GDP has grown at an annual average rate of 9.5 % over 30 years

2. China becomes world’s second largest economy in 2011 (10th in 1978)

3. Largest exporter, second largest importer, second largest trading nation in the world in 2011

4. Foreign exchange reserves: $3.2 trillion (Mar 2011; ranked 1st) (2.3 billion in 1978)

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Political stability is the priorityThe Tiananmen Square Incident’s consequenceNo independent judiciary No independent media

Corruption in China

The People's Republic of China suffers from widespread corruption. For 2010, China was ranked 78 of 179 countries in Transparency International's Corruption Perceptions Index

China's new paramount leader, Xi Jinping, is making the fight against corruption his No. 1 mission.

He warned that corruption could lead to "the collapse of the Party and the downfall of the state."

ContinueIn 2009, according to internal Party reports, there were 106,000 officials found guilty of corruption, an increase of 2.5 percent on the previous year. The number of officials caught embezzling more than one million yuan (US$146,000) went up by 19 percent over the year. With no independent oversight like NGOs or free media, corruption has flourished.

In the past five years, China has punished 668,400 people for "Party discipline violations."

Cases of corruptionLai Changxing (赖仓星） , "China's most wanted fugitive." Within a decade he was the country's biggest private car importer. He imported foreign products like cars, cigarettes and was responsible for one-sixth of the national oil imports at one time.

The smuggling led to loss of US$3.6 billion in taxes and fees.

Zheng Xiaoyu (Chinese: 郑筱萸 ; December 21, 1944 - July 10, 2007) was director of the State Food and Drug Administration He was executed on July 10, 2007 for corruption and abuse of power.

Liu Zhijun, former minister of the Department of Railroad

Established the national high-speed railway system when he was former minister of Ministry of Railways of the PRC.

Took charge of over $100 billion budget in 2010

Received bribes of 60 million yuan.

Responsible for the two serious railroad accidents

Liu was expelled from the CCP in 2011, and sentenced death penalty with reprieve for 2 years.

Liu is said to have 18 mistresses.

case

7.23 CollisionForty people died, two hundred injured, Fifty four

private & government officials were punished

丁羽心（丁书苗）A business magnate with a property of 4.5 billion yuan.

An enterprise empire with real estate, media, railroad transportation, hotel & more.

1.5%-3.8% commission of the total project spending

3 billion commission out of 1800 billion railways projects

Possessed 374 houses

丁书苗丁羽心，原名丁书苗， 1955 生，山西沁水县人，曾在山西以煤炭运销起家。山西省政协委员，中国扶贫开发协会副会长、博宥投资管理集团有限公司名誉主席，北京市女记者协会常务理事，东方白马书画院名誉院长，华人报经济文化专刊副主编。 多年来热心公益慈善事业，曾荣获 2006 年荣获国际科学与和平周贡献奖及山西省扶贫攻坚先进个人， 2007 年当选为中国十大系列英才——诚信英才， 2008 年博宥集团荣获扶贫救灾爱心企业。曾担任北京博宥投资管理集团有限公司董事长。2008 年，丁羽心广行善举。汶川地震发生后，博宥集团先后捐资 1.14

亿元支持抗震救灾和灾后重建。2009 年 3 月，丁羽心曾向家乡晋城捐款 1000 万用于贫困山区脱贫致富等工作。 2009 年 5 月份，丁羽心又捐资 1.5 亿元，计划用 5 年时间为中西部地区购买母亲健康快车并进行综合扶贫。2010 年 5 月 5 日，在福布斯中国慈善榜上，丁羽心以 9000 万元的捐款（ 2009 年）名列第 6 。

Discussion

How to understand the case of Liu Zhijun?

How to understand the relations between Liu Zhijun and Ding Shumiao?

How to understand corruption of China?

Wen Jiabao’s talk at a news conference following the close of the National People's Congress, March

14, 2012

New problems arise, including income disparity, lack of credibility and corruption, and to resolve these problems requires economic reform and political reform,” he insisted. “This is an urgent task.”

"China has come to a critical stage," Wen said. "Without successful political structural reform, it is impossible for us to fully institute economic structure reform. And the gains we have made in this area may be lost. New problems that have cropped up in China's society will not be fundamentally resolved. And such historical tragedy as the Cultural Revolution may happen again.“

Consequences of Corruption

Corruption is a threat to the party's legitimacy.

Xi Jinping warned fellow leaders to learn from the experience of other countries where "corruption has played a big role in conflicts that grew over lengthy periods, and ... led to popular discontent, social unrest and the overthrow of the political power."

18,000 protests and riots happened in 2010.

II. Imbalance between the Rich and Poor

Gap between the rich and poor

Gap between the urban and rural areas

Gap between the costal China & inner China

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II-1. Imbalance between the Rich and Poor

Gini index of China

It was 0.16 before Reform and Opening policy

The nation’s Gini coefficient was 0.474 in 2012, down from 0.491 in 2008, Ma Jiantang, head of the National Bureau of Statistics, reported.

According to World Bank's report, only 29 countries' Gini coefficient are higher than China but 27 are from Latin America and Africa. Only 2 are from Asia and they are Malaysia and Philippines. What a grim situation!

continueThe Chinese Luxury Consumer White Paper 2012, released on Tuesday, suggested that there are 2.7 million high net worth individuals in China with personal assets of more than 6 million yuan ($950,000).

There are 63,500 ultra-high net worth individuals with assets of more than 100 million yuan, an increase of 10 percent compared with last year.

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12 million people were considered as urban poor in 1993, i.e. 3.6 per cent of the total urban population, but by 2006 the figure had jumped to more than 22 million, i.e. 4.1 per cent of the total urban population

Migrants (130,000 migrants nationwide)

II-2. Imbalance between Urban and Rural Areas

90% of poverty in China is still in rural area

In 2009, according to the China’s National Bureau of Statistics, the urban per capita annual income at US$2525 was approximately three times that of the rural per capita annual income

A City School

A school in the

countryside

II-3. Gap between Eastern and Western Regions

Western China

6 provinces (Gansu, Guizhou, Qinghai, Shaanxi, Sichuan, and Yunnan), 5 autonomous regions (Guangxi, Inner Mongolia, Ningxia, Tibet, and Xinjiang), and 1 municipality (Chongqing).

This region contains 71.4% of mainland China's area, but only 28.8% of its population, as of the end of 2002, and 19.9% of its total economic output, as of 2009.

Differences between Eastern & Western China

-Openning policy: The first open cities are all in the eastern part of China near the coast.-The geographical difference: The eastern part are almost plain and hills but the western part are almost tableland and mountains.-China is so big: Western part of China is very inland, the transportation of both products and information is not convenient.-Different mind-set between the two parts: People live in the western part are almost minority people. So there are difference in mind-set.

Physical map of China

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“Wealth Drain”

nearly 60% of people who have more than 10 million yuan ($1.53 million) claim that they either consider emigration abroad (47%) or have completed the process (27%).

III. Imbalance between Wealth Increase and Integrity Decline

Lawrence Summers has recently pointed out that during the Industrial Revolution the average European's living standards rose about 50 percent over the course of his lifetime (then about 40 years). In Asia, principally China, he calculates, the average person's living standards are set to rise by 10,000 percent in one lifetime!

Newsweek, Issue 1, 2008

III. Imbalance between Wealth Increase and Integrity Decline

In 1990, China’s average per capita national income was around $350. Within a decade, there was a threefold increase, taking the figure to $1,000. At the end of 2008, the figure tripled yet again and China’s average per capita national income reached another high of $3,000. Per capita GDP (2010): $7,600 (purchasing power parity) – US Dept. of State

If China’s average national income continues to rise at an annual rate of 8%, the country’s per capita income will reach $8,500 by 2020 and will touch the $20,000 mark by 2030. Hence, China’s average per capita income will exceed the current income of Taiwan and Korea.

A child receives treatment for kidney stones after consuming tainted milk

formula

Lean or thin voxel, is logarithmic species are mainly used to promote livestock growth of lean meat

Fang Zhouzi:Anti academic corruption

Tragedy of Little Yueyue

小乐乐的悲剧http://www.56.com/u71/v_NjQyOTU3NjQ.html

Discussion 2

Why did people’s integrity decline while their material wealth increased?

Does the death of Xiao Yueyue tell us something about modern China?

IV. Imbalance between Economic Growth & Environment Deterioration

“Made in China” is the largest brand product in the world, which made China the second largest economy globally.

What is the cost of this economic development?

IV-1. Land Challenge to China

• Only 7 % arable land supports 20 % population of the world

• 28 % of its territory turned to desert• An estimated 100 square miles of land is lost to

desert per year• 400 million people are adversely affected by

desertification • Sandstorm brings 330,000 tons sand to Beijing

one night in April 2006

IV. Water Challenge to China

Water Resources:• With 20% of the world’s population but only 7% of global

water resources (China has only one-fifth as much water per capita as the United States).

• More than half of China’s 660 cities suffer from water shortages, affecting 160 million people.

• The per capita water volume in China is one fourth of the world average.

• 90% of cities’ groundwater and 75% of rivers and lakes are polluted.

• As a result of widespread water pollution, 700 million people drink contaminated water every day.

IV-3. Energy Challenge to China

Energy crisis:• China’s development is a powerful driving force behind

the global economic growth. In 1990 2002, China was placed first, with a contribution as high as 27.1%.

• China has passed the U.S. to become the world's biggest energy consumer in 2010.

• Climate change leads to rise of sea level. A one-meter rise in sea level would inundate 92,000 square kilometres of China’s coast, thereby displacing 67 million.

• Only 1 percent of the country’s 560 million city inhabitants (2007) breathe air deemed safe by the European Union.

• The U.S. is also by far the biggest per-capita energy consumer, with the average American burning five times as much energy annually as the average Chinese citizen.

VI-4. Continue

On average Chinese steelmakers use one-fifth more energy per ton than the estimated international average. The World Bank says that cement manufacturers need 45% more power and ethylene producers need 70% more power than producers elsewhere.

IV-5. Greenhouse Gas

In 2008, China surpassed the United States as the largest global emitter of greenhouse gases by volume. (On a per capita basis, however, Americans emit five times as much greenhouse gas as Chinese.) The increase in China's emissions is primarily due to the country's reliance on coal, which accounts for over two-thirds of its energy consumption. It contributes to sulfur dioxide emissions causing acid rain, which falls on over 30 percent of the country.

Energy Footprint

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Environment pollution and related health issue cost China 9 % of the annual income in 2008, World Bank

The government received six hundred thousand environment-related complaints in 2006, a figure that has risen roughly 30 percent each year since 2002.

The Chinese Are Coming

http://www.youtube.com/watch?v=6617B1HMBak&feature=related

Discussion 3 What kind of crises and challenges is China facing?

What are the most serious imbalances in China today?

Is China’s development pattern sustainable? If not, how to change it?

What are the likely consequences forChina if these crises continue?