CHAPTER ONE

INTRODUCTION

China’s emergence on the world scene is one of the most important and challenging developments of the 21st century. Its remarkable growth since the early 1980s has the potential to greatly expand the global economy, and with it, global wealth, more than any other nation in history. China’s more proactive global engagement and the modernization of its military have already greatly altered the economic and political balance of power in East and Southeast Asia and has added yet another actor to the world scene. Several scholars recently have speculated that China and India will emerge as two great superpowers as the twenty-first century progresses. China’s uninterrupted economic growth of about ten percent GDP per year since the late 1970s is unprecedented and there are few signs that the world’s fastest growing economy will taper off any time soon. Real per capita output in 2005 was nine times that of 1978, which is when real economic reform began. Depending on how one calculates and interprets economic data, by 2007 China had become the third or fourth largest economy in the world. While economic growth is most notable in the large cities along China’s east coast like Shanghai and Beijing, virtually everybody across China is much better off now than in 1978. Rapid economic growth has brought vast improvements in the quality of life throughout China over the past three decades. Life expectancy rose to 71 years by 2000, the last time China conducted a full census, and estimates in 2007 put the figure at 72.6 years (74.5 for females and 70.5 for males), more than double what it was in 1949. Life expectancy at birth is a measure of overall quality of life in a country and is a clear indication that life is getting better for most Chinese. Adult illiteracy, high by any standards before 1949, sank to only seven percent in 2006. According to Chinese government figures, the country’s rapid growth and its government’s targeted policies have reduced the share of the rural population living below its poverty line by nearly ninety percent, from more than 250 million in 1978 to only 26 million in 2004. Yet, despite these vast improvements and what appears to be a rosy future, many problems remain. The sad fact remains that despite its huge growth, China remains firmly among the ranks of the world’s low income economies, ranking 110 out of 182 countries—ahead of a motley list of African and the poorest of the poor Asian countries. China’s per capita GDP in 2007 was only about $2000, which compares badly to $42,000+ in the United States, a gap of more than twenty to one. There is a huge disparity of income between urban and rural China, especially between the coastal cities in the east and the rural hinterlands in the west (some economists have calculated a differential of fourteen-to-one). While an experienced school teacher in Beijing can live fairly comfortably on an income of about four hundred dollars a month, roughly half the population lives on less than three dollars a day.
I saw teaming slums and many people living in the street in Beijing along side towering middle-class and luxury apartments. Chairman Mao’s dream of an egalitarian classless society has evaporated as has his dream of a communist utopia. One Peking University economist who addressed our Fulbright group in 2006 speculated that China’s ten-percent a year GDP growth-rate would continue for another twenty-five years mainly because the country’s economic engine that has generated such growth in the east would gradually move west absorbing areas now poor and backward and generating moderate to heavy growth in these areas. Other economists we met challenge this assertion, insisting that while growth will continue, the economy will cool down in years to come. Another indicator of potential growth is the emergence of a significant middle-class, especially in eastern urban China. When one looks at other now prosperous Asian nations (like Japan, Taiwan and South Korea), their initial surge in growth came from exports, but their economies really took off when a larger middle class began purchasing domestic products in abundance. This phenomenon is beginning to take hold in China.
One telling example is that in 2005, according to one report, Chinese purchased 645,000 cars produced in China. There are one thousand more cars on Beijing’s streets every day. China’s economy is growing in interesting ways. Like most other developing Asian states, China is producing a vast array of cheap goods like textiles and toys. Other now prosperous Asian countries like Japan and South Korea quickly advanced beyond that stage to produce increasingly more sophisticated goods, but there is every indication that China will also continue indefinitely to be a major producer of low-end products. At the same time China is also becoming a major actor in heavy and ultra-modern high tech industries. The Chinese government, fueled with rapidly growing tax revenues and over fifty billion dollars of foreign investments a year in 2005 (compared to only five billion dollars in foreign investments in India), has invested heavily in expanding and upgrading domestic infrastructure. Ports are being modernized, its airports are among the most modern and efficient in the world, railroads are scaling mountain peaks all the way to Tibet, and we traveled on an ever-expanding set of highways in the remotest sectors of Qinghai Province high up on the Tibetan Plateau. Unfortunately, however, there has been less spending in social welfare and many rural areas lack adequate schools and health care facilities. Fortunately, however, there are indications that the Chinese government is beginning to act to rectify these problems, realizing that failing to address them might lead to considerable unrest that might threaten the Communist Party’s (CCP) hold on power. Unfortunately, government corruption exists at such a pervasive scale, especially at regional and local levels, that many well-intentioned decrees from above are rarely implemented below. China today is experiencing the most drastic domestic migration of people in world history. During the Maoist period (1949-76), China was predominately a rural country with only about one in five Chinese living in urban areas. Today the proportion of urban Chinese has jumped past forty percent and will soon rise to fifty percent, a shift of over three hundred million people in just a few decades. One sees a huge migrant population in each of China’s major cities, people who have quit rural areas in search of even menial jobs or economic opportunities (such as setting up a food stand). They have trouble finding adequate housing, have difficulty registering their children in good schools, and lack adequate health care, but their remittances back to rural areas have had a major impact back home. We saw many of the migrant workers sitting idly in parks and street corners or basically struggling to survive behind small stands on the street or doing basic construction. China’s environment has taken a real hit in recent years. Air pollution is not to be believed. In 2005 I visited the city of Chengdu, the huge capital of Sichuan Province, on a supposedly sunny spring day, but the streets were gray and when I looked up in the sky, the sun appeared as a small orange ball. I was told anecdotally by several Chinese scholars that breathing in the air in Chengdu or any other major Chinese city is the equivalent of smoking two packs of cigarettes a day, an appalling assertion made worse by the fact that so many Chinese men and women already have a strong addiction to tobacco. Virtually all the major rivers and other waterways of China are horribly polluted. Deforestation is a major problem all across China, especially near Beijing where the desert is moving towards Beijing at an alarming rate. The lack of water will be a very serious problem for China this century—ground water under and around Beijing is disappearing and there are times some years that the Yellow River, a torrential stream when we saw it in Qinghai Province near its source, is so depleted when it reaches eastern China that it often fails to reach the sea. The environment, however, is not the only crisis facing China today. There are a whole raft of problems including corrupt institutions, debt-ridden regional governments, insolvent state banks, unprofitable enterprises, bankrupt pension funds, failed schools, a deteriorating health care system, and overburdened hospitals, to name a few. Then there is the generational issue—the one-child policy and increased prosperity has drastically limited the number of young people who can care for an increasingly large group of older people who are today living longer due to better nutrition and health care. The question of “Human Rights” is very important for China. Today Chinese enjoy a higher degree of freedom than ever before in their history, especially if measured in social and economic terms rather than just political. Chinese today, providing they have enough capital, can travel anywhere they want within China and abroad (providing they can get a foreign visa). They can work where they please, open a new business, marry and divorcel, and, providing that they can keep a low profile, pray where and as often as they wish. It is apparent that minor protests that stay mild are being tolerated as a way of letting people blow off steam, but any major criticism of the CCP, its leaders and its policies are not tolerated. China remains very much a top-down authoritarian state, but there is every indication that CCP leaders pay very close attention to public opinion and are becoming quite concerned about the growing social and economic inequities in China today. Charges that Chinese officials maltreat political prisoners continue to circulate in the foreign press. But in a larger sense, almost universal access to the internet (mainly in internet cafes) and a half-billion cell phones mean that Chinese have access to information and can freely communicate with each other as never before. There has been a massive resurgence of intellectual life in China. There was an explosion of intellectual activity in the early 1980s after Deng Xiaoping opened the doors of economic liberalism as Chinese intelligentsia suddenly saw an opportunity to discuss ideas of cultural and political reform as well. The sudden drowning of political dissent after the Tiananmen Square demonstrations in 1989 temporarily froze the movement, but it soon picked up again in the early 1990s.1 Today China is humming with intellectual activity with vibrant discussions taking place on university campuses and in a variety of publications concerning the future of Chinese society and China’s place in the world. China has grown as a world political and military power as well. Many politicians and journalists in the United States regard China as a threat to world peace and the hegemony of the United States, but Chinese officials and scholars speaking to our Fulbright group or to me privately state that their nation depends on a maintenance of the status quo. They stress that a strong and self-confident China is a likely force for peace and stability in Asia and in the world. They point out that China’s economic growth depends on good open trade relations with the West and Asia and that they need open access to foreign supplies of energy. Any major military conflict would be a catastrophic experience China could not bear, but if Taiwan were to seek genuine independence with foreign support, China would provide a military response, regardless of the consequences. The most pressing issues between the United States and China are over trade and currency. There is currently a huge trade gap between the United States and China most definitely in China’s favor and, as a result, China is collecting huge reserves of American dollars. American officials insist that the Chinese must revalue their currency to lower the price of American goods sold in China and raise the price of Chinese goods in the U.S. But many economists demonstrate how American consumers are billions of dollars better off because China’s cheap exports have lowered prices in the United States and because Chinese investments in the United States play a critical role in financing the American trade deficit. The very fact that America’s largest retailer, Wal-Mart, gets up to 70 percent of its products from China is a clear boost to the American consumer. The future of China is uncertain. The odds are that it will continue its peaceful economic growth for years to come, but there will be problems such as a deteriorating environment, growing social unrest over inequities over income and the like, demands for greater rights and an end to rampant corruption, which is found everywhere and especially on the local level. China is also an aging society which in the not too distant future will have to find ways to support a huge elderly population with fewer and fewer younger workers to pay taxes. We have also heard traces of a debate in China over the question whether Chinese today are becoming over-materialistic. The urge for wealth is found everywhere, but many Chinese have a strong social conscience and are very concerned over the growing inequities in their society. Many Chinese are joining a growing number of domestic and international NGOs that are working effectively to aid migrant workers, impoverished rural residents, and other unfortunates throughout China. Private help is vastly supplementing the often inadequate social welfare work of the national and many local governments. The 1964 Olympics in Japan and the 1988 Seoul Olympics symbolically opened the doors of these countries to the modern industrial world and there is every indication that the 2008 summer games will do the same for China. Olympic fever is heating up all over China and is the symbol of a growing sense of patriotism and national pride. But whether China can or will enjoy greater prosperity and freedom after 2008 remains anybody’s guess.

CHINA—THE ESSENTIAL BACKGROUND

The People's Republic of China (PRC) - is the world's largest country in terms of population with 1.322 billion people in 2007. It is the fourth largest in area with territory that extends over 9.6 million square kilometers. China has a land border 22,000 kilometers long and a sea border of 18,000 kilometers. China borders 15 neighboring countries and over 6,500 islands.
China is divided into 23 provinces, 5 autonomous regions, 4 central administrative authorities and 2 special administrative areas: 23 provinces (sheng, singular and plural), 5 autonomous regions (zizhiqu, singular and plural), and 4 municipalities (shi, singular and plural) provinces: Anhui, Fujian, Gansu, Guangdong, Guizhou, Hainan, Hebei, Heilongjiang, Henan, Hubei, Hunan, Jiangsu, Jiangxi, Jilin, Liaoning, Qinghai, Shaanxi, Shandong, Shanxi, Sichuan, Yunnan, Zhejiang; (see note on Taiwan) autonomous regions: Guangxi, Nei Mongol, Ningxia, Xinjiang, Xizang (Tibet) municipalities: Beijing, Chongqing, Shanghai, Tianjin note: China considers Taiwan its 23rd province.
China’s population of 1.322 billion includes 56 ethnic groups: Han Chinese 91.9%, Zhuang, Uygur, Hui, Yi, Tibetan, Miao, Manchu, Mongol, Buyi, Korean, and other nationalities 8.1%
Languages: Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghaiese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages

Essential Demographic Information

Table 1: China’s population and area in comparison to other major nations

Nation: Area Population estimate (2007 Sq. Km. Sq. Miles

Russia 17,075,000 6,591,100 141,378,000
Canada 9,971,500 3,848,900 33,390,000
USA 9,631,418 3,755,241 301,140,000
China 9,597,000 3,600,927 1,322,000,000
India 3,287,590 1,229,737 1,130,000,000

Age structure:
0-14 years: 20.8% (male 145,461,833/female 128,445,739)
15-64 years: 71.4% (male 482,439,115/female 455,960,489)
65 years and over: 7.7% (male 48,562,635/female 53,103,902) (2006 est.)

Median age: total: 32.7 years male: 32.3 years female: 33.2 years (2006 est.)

Population growth rate: 0.59% (2006 est.)
Birth rate:
13.25 births/1,000 population (2006 est.)
Death rate:
6.97 deaths/1,000 population (2006 est.)
Net migration rate:
-0.39 migrant(s)/1,000 population (2006 est.)
Life expectancy (2007):
Male> 71.13; Female74.82; Overall: 72.88

Sex ratio: at birth: 1.12 male(s)/female under 15 years: 1.13 male(s)/female
15-64 years: 1.06 male(s)/female
65 years and over: 0.91 male(s)/female total population: 1.06 male(s)/female (2006 est.)

Literacy: definition: age 15 and over can read and write total population: 90.9% male: 95.1% female: 86.5% (2007 est.)

Urban/Rural population ratio: 40%/60% (2005)

Source: CIA World Fact Book, July 2006 and June 2007.