and environmental conditions. Starting perhaps with the town and village enterprises of the 1980s, China has striven to become an entrepreneurial environment, with individuals increasingly mindful of the shrinking welfare state and the growth of private wealth, and of their place in that scenario. Wealth has created a demand for private cars, luxury goods and high-quality housing. For the nation as a whole it has afforded the chance to engage in large infrastructure projects, connecting the nation with high-speed communications systems, transport, and, of course, symbolic undertakings such as the Asian Games, the Olympic Games and the Shanghai World Expo. In the wake of the Tibetan uprising in 2008, Wen Jiabao again emphasized the need to increase infrastructure links between the autonomous regions in the west and the eastern seaboard provinces. He is of a new generation of politicians who recognize that a strong state and economy are underpinned by the soft power of media and events. Thus, state investment in good intra-provincial links not only increase domestic trade, but also shores up internal stability, through the movement of goods, people and acceptable ideas. China’s formal entry to the world economy was marked by its accession to the World Trade Organization in 2001. At the time the Party-State saw the WTO as a “wrecking ball” that would sort out the weak from the strong with as little political unrest as possible. The benefits of an international system include the opportunity for the State to blame overseas issues for failure and local wisdom for success. There have been several landmark moments since 2001, including the meltdown of the markets late in 2008, which had begun to shake stock markets in Shanghai several months earlier. Although the Chinese stock market does not attract personal savings to the extent it does in the West, and although the Shanghai market has a tendency to volatility, the failure of the markets in 2008 was seen as yet another example of anti-Chinese behavior by the West in the Olympic year. Outbursts of nationalism are symptomatic of the challenges the government faces in managing the economy. It wishes to retain total political power (largely based on nationalism over other ideologies) but without letting the country slip either into isolationist panic or internal scuffles over financial and social rights. The second, and related, challenge is to balance the needs of the population with a sustainable level of growth, especially in years of recession amongst China’s major trading partners. It is estimated that China requires at least 7 percent annual growth simply to keep the domestic population on an even financial keel, and more than that to sustain important reforms in education access, rural development and agricultural expansion.
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Between 1990 and 2007, China’s economy has grown by an average of 10 percent a year. In order to create a more balanced economy across China’s provinces, the government has been encouraging enterprises to move inland and to “open up to the West”, with some success. But although labor is cheaper in these areas, there are fewer skilled laborers, and transportation costs are higher. Foreign investors are so far showing little inclination to venture beyond the coastal provinces. The state’s massive investment in infrastructure has had a major impact on China’s exceptional rate of economic growth, which has, in turn, brought a significant increase in central government revenue through taxation. From 2006 to 2007, tax revenue rose by more than 30 percent. However, inflation also increased dramatically, mainly fueled by increases in the price of food.
see also page 110
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ECONOMIC DEVELOPMENT
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The entrepreneur, scion of the market-oriented economy, is fêted in popular self-help manuals and potted biographies in China’s bookshops. The re-organization and closures of state owned enterprises, the opening of China’s economy to foreign investment, and the large-scale privatization of housing has created opportunities for an “entrepreneurial class”. This group comprises both newly enriched entrepreneurs, and those who have used their business acumen and political connections to advantage in the reformed economy. Following Deng Xiaoping’s dictum “Get Rich First”, peasants moved out of grain production into specialist and luxury food production, or set up town and village enterprises. The area of land used for vegetable growing increased by 80 percent. Many of those who prospered became village leaders, chairing village enterprises management committees. The dictum “two classes, one stratum” no longer holds, as workers and peasant- farmers alike, but especially domestic migrant workers, are relegated to the bottom of the pile. Class divisions in China are stark. The urban rich are accumulating substantial wealth, while aspirational urban workers struggle to maintain access to costly services and housing. Meanwhile, the poor are caught in a cycle of deprivation. Their plight is exacerbated by the value of land, particularly for development and industrial farming. Increasing legal flexibility allows large enterprises to appropriate small plots, rendering their previous incumbents tenants, or landless. The State’s concept of “harmonious society” is designed to address the growing disparities amongst its people.
see also page 110
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ENTREPRENEURS
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There are at least 8 million new entrants a year into China’s labor market. While creating jobs is, and will remain, a daunting task, it is not just the number of entrants that is a concern, but also how to ensure that they possess the appropriate skills needed for China’s continued development. A popular saying is that there are three genders in China, male, female and those with foreign doctorates. There are two even more potent dividers: those with the potential and training to work in an advanced, mixed economy, and those who can only work in unskilled and low-paid jobs with little hope for advancement or long-term security. Wage levels across the nation are highest in the metropolitan centers on the eastern seaboard. There are anomalies in poorer regions such as Tibet, however, where inward migration of skilled labor and entrepreneurs is actively encouraged by State subsidies.
see also page 111
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EMPLOYMENT
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Agriculture
