BRUSSELS — Ever since Deng Xiaoping's aphorism "Black cat, white cat, who cares as long as it can catch mice" was burned into Chinese souls by the successive horrors of the Great Leap Forward, its resulting famine and the Cultural Revolution's shambolic savagery, China has seen 10 percent-plus growth rates for three decades.
While China's population has grown by a third, its economy has grown 13 times, meaning that per-capita GDP is up by a factor of 10. The consequence is a cascade of goods from China flooding global markets, gifting enormous gains to Europeans as consumers while menacing their role as producers.
The overall balance of interests is misrepresented by the asymmetrical response. Jobs lost trigger demonstrations and demands for quotas, bans and retaliation, while no one marches to celebrate dramatically cheaper goods in the shops and the extra jobs created by the new spending inspired by these savings.
The myth is that Chinese manufacturing is low cost. Compared to Europe, it may be, but compared to the competition, it is certainly not. China marries lower pay with technology — not yet the best — to beat the competition on productivity rather than on wages. The average salary in 2006 at Shanghai's Three Gun textile and clothing company was £2,700 (1,850 euro), roughly what my father, a skilled toolmaker, earned in the 1970s in Gloucestershire.
China faces enormous problems that Hu Jintao and the leadership of the Communist Party (CCP) must tackle at the 17th National Congress later this year, but these are problems of economic success, not failure.
They are threefold, internal immigration, corruption and pollution. Today China is two countries inside one nation. Hundreds of millions in the predominately urban east have a better standard of living than the inhabitants of the two newest EU member-states, Romania and Bulgaria, after taking into account comparative purchasing power. Yet, parts of the rural west are worse than sub-Saharan Africa. The result is an immense migration. More than 100 million peasants have flooded into the cities looking to escape grinding rural poverty and seek a better life.
This is placing enormous pressure on the urban infrastructure, with overcrowding, soaring property prices and migrants outside the safety net of the state in terms of health, education and workplace protection, and leading to increasing unrest throughout China with thousands of civil disturbances occurring as people refuse to bear the unbearable anymore in fields, factories and workshops.
The 17th National Congress will have a twin-track strategy:
* Shifting resources from urban to rural areas to try to narrow the yawning income gap that makes internal migration so compelling, improving social conditions, reducing/removing education fees and abolishing agricultural taxes. Putting a television in every village was not entirely a success as it provided visual confirmation of a better life elsewhere.
* Providing basic education and welfare for the children of migrant workers in the cities. The result may slow slightly China's breakneck growth, but it will be a price worth paying if it improves social cohesion. At the same time, Beijing will strengthen the rule of law, albeit with a Draconian stamp.
China's booming economy is also inciting corruption among the cadres. The boom in real estate, massive foreign direct investment, privatization and company restructuring mean those at the top of the party in places like Shanghai, with a maximum income of 700 euro month, are making decisions worth billions. The consequence is that Qiu Xiaolong's fictional Inspector Chen has now spent four novels rooting out graft in Shanghai, while in real life dark clouds hang over parts of the administration. The selfless dedication of the past is fast eroding as the last of the revolutionary generation pass away.
The only control over the "red princes and princesses," the second and third generation children of the revolution, is the threat of ruthless punishment. The recent execution of Zheng Xiaoyu, the ex-head of the State Food and Drug Administration, for colluding in the production of counterfeit medicines that may have killed hundreds is one recent example. A similar fate is likely to befall those recently arrested in Henan and Shanxi provinces for employing slave labor.
Under current circumstances, while China is narrowing the range of offenses for which the death penalty applies and now requires final authorization from the Supreme People's Court before execution, the death penalty is more likely to be abolished for murder than economic crime.
The problem is that this is only a short-term stopgap. When top cadres can increase their salaries 50 times by moving into the private sector in the future, only the most mediocre will view promotion to top party positions as anything but a way station to wealth.
As for the environment, it's a classic case of "where there's muck there's brass." Industry and pollution have risen as one. China's cities are blanketed in acrid smog, searing throats and burning eyes, while the rivers resemble more chemical drains than flowing water. Mao's swim in the Yangtze couldn't happen today, while track events at next year's Beijing Olympics are not expected to yield too many world records with the poisonous atmosphere choking lungs.
Even so, those eager for China to fail may be disappointed. Hu Jintao and the CCP seem determined to act and start redressing the gap between city and country. This will be easier to do when the cost to the conurbations are slower growth rather than diverted resources.
As for corruption and pollution, Beijing could learn from Tokyo. In Japan public penury and private wealth are overcome by bureaucrats parachuting into the private sector after age 50 en route to retirement.
In the '60s and '70s Japan was as dirty and diseased as China is today. It was public pressure and technological change, as the best replaced the rest, that saw Japan's cities bloom with street monitors providing a public record of pollution. With each passing year the numbers tumbled and tumbled until the displays were endless lines of zeros. They then disappeared as quickly as they came.