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Despite economic ascendancy, China faces serious problems
Wednesday, 18 October 2006 11:50
By JIM GENARO

The Peopleës Republic of China is a country on the rise ÇƒÓ but also beset by serious economic, social and environmental problems, diplomat G. Eugene Martin told an audience of about 100 people Oct. 10 at UNC Ashevilleës Highsmith University Union.

Martin is a former deputy ambassador at the American Embassy in Beijing and currently works for the U.S. Institute for Peace.


The presentation, titled "United States/China Relations: Prospects and Problems," was sponsored by the World Affairs Council of Western North Carolina as part of itës 2006-07 Great Decisions lecture series.


To understand the position of China in the world today, Martin said, requires a knowledge of the countryës history ÇƒÓ particularly of its relationship with colonial European powers during the 19th century.


China, which had long enjoyed national unity under the dynastic system, initially looked down on the Europeans who arrived at its shores, hoping to establish trade routes.

"They were seen as just more troublesome barbarians," by the imperial government, which considered its own civilization the height of refinement, he told the audience.


The Qing Dynasty saw the Westerners as a threat to Chinaës stability ÇƒÓ a fear that was eventually realized as Europeans established "spheres of influence" in the country and the power of the emperor was greatly diminished by the two opium wars with England.


The aristocracy suffered from "an inability to respond to new problems," Martin said.


This reluctance to acknowledge the changing times was in stark contrast to the policies of Japan, which embraced the West and its imperialistic tendencies ÇƒÓ eventually becoming an imperial nation itself, prior to World War II, Martin noted.


The Qing Dynasty came to an end in 1911 when Sun Yat-sen led a successful revolution, establishing the Republic of China.


The leaders of this new republic rejected traditional Chinese spirituality and social order, but also turned away from the capitalistic democracies of the West, Martin noted.


"They rejected Western diplomacy because it was not going to rid them of the Western imperialism and inroads into China," he said. Instead, they turned to the young Bolshevik government in Russia. "They were, after all, communists."


The Communist Party consolidated its control of the country in 1949, declaring it the Peopleës Republic of China.


However, despite the two countryës ideological similarities, the relationship with Russia quickly soured, he noted. "Russia wanted to be top dog," Martin said. "They did not want to treat the Chinese as equals."


The Chinese turned inward, seeking to modernize through mass mobilization, he said. In 1958, Mao Zedong, the partyës leader, devised a plan known as the Great Leap Forward. A vast, sweeping set of reforms were implemented to collectivize farming and establish government control of virtually every aspect of Chinaës economy.


"The problem is, they almost destroyed the nation," Martin told the audience.


The reorganized agricultural system ÇƒÓ combined with a series of droughts and floods ÇƒÓ led to a famine that killed millions of Chinese. By the time Mao died in 1976, the country was in a state of anarchy, he noted.


What followed was a period of economic reform ÇƒÓ starting with agricultural reform ÇƒÓ under the leadership of Deng Xiaoping, the partyës new leader, Martin said.


Many of the reforms that ensued were driven by the countryës large expatriate community ÇƒÓ mostly Chinese from the south who had been living abroad and began investing in the newly liberalized economy, he noted.


"China has used its diaspora much more effectively and earlier than India did," Martin added.


"They went through several phases of experiments," he elaborated. For instance, a certain reform would be tried in a small region and if it was successful, the policy would be applied throughout China, Martin explained.


"In many ways, this was the first real liberation of the Chinese people," he said. "Not politically, but liberation financially and personally."


He termed Chinese progress since that time "phenomenal."


Chinaës poverty level has dropped from 53 percent in 1981 to just eight percent in 2001, Martin noted.

"The sense of confidence ÇƒÓ the sense that things are getting better ÇƒÓ is really quite pervasive," he said.

However, with that progress comes a number of problems, Martin added.


As more Chinese have become middle-class, demand for petroleum has skyrocketed, driving prices up worldwide, he noted.


Furthermore, not all of the countryës vast population has benefited from its economic progress. More than 200 million Chinese live on less than a dollar per day, he said.


"By 2005, China has become the most polarized income-disparity country in the world," Martin told the audience.


These people have no safety net, he added, in a country that lacks a social security system or retraining or educational opportunities for those who find themselves unemployed by a changing economy.


Many farmers are especially at risk, as land ownership is not allowed in the country. Though farmers can purchase 30-year leases, when these leases expire, they are often evicted to make way for developers, Martin explained.


Corruption is also a huge problem, he noted. "I would say corruption is Chinaës continuing cancer. It works away from inside."


And one of the biggest threats facing China is an environment that is extremely polluted, he said.

By way of example, he said, it would require seven percent of the countryës GDP to clean up all of the air and water pollution caused by Chinese industries in 2004 alone. Furthermore, 400,000 people die there as a result of air pollution each year and 300 million lack access to clean drinking water.

For the U.S., relations with China are extremely complicated ÇƒÓ and the two countriesë interests are highly intermingled, Martin said.


This is further complicated by "numerous false assumptions in the U.S. about China," he added.


One important aspect of relations between the two ÇƒÓ the much talked-about trade deficit ÇƒÓ is mired in false statistics, he said. For instance, he noted that many products that are shipped from the U.S. to Hong Kong and other neighboring regions eventually go to China, but these are not included in trade statistics.


He gave the example of a shipment of "chicken paws" ÇƒÓ the feet of chicken, considered a delicacy by many Chinese ÇƒÓ that were sent to Hong Kong by Tyson Foods in the U.S.


However, had these all been eaten by people in Hong Kong, each person there would have had to eat 20 pounds ÇƒÓ a highly unlikely scenario, he said.


In fact, Martin claimed, these were shipped to China, but never were accounted for in trade statistics.

The issue is also complicated by foreign companies that send pre-manufactured parts to China that are assembled there and sent back, a common practice that contributes to the apparent trade imbalance, he noted.

Furthermore, while the U.S. does purchase more products from China than it sells there, this has a beneficial effect here by combating inflation, he said.


Martin noted that Wal-Mart is Chinaës eighth-largest buyer ÇƒÓ larger than Canada. That means low prices for Americans, he added.


The relationship between China and the U.S. has become increasingly close in recent years, Martin said. He added that "China will soon be the largest English-speaking country in the world," with nearly 300 million people speaking the language.


"China is here to stay," he concluded. "I believe any unipolar system is unnatural ... In many ways, the U.S. and China need each other to have continued peace and prosperity in the 21st century."


However, he added that this requires an effort on the part of Americans to avoid negative stereotypes about China. "We have the most to lose from a hostile policy," he added.
 



 


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