On Monday September 11, Hamilton hosted a panel discussion, "Debating China's Future: Two Contrasting Perspectives" presented by the Edwin Lee Fund and the Levitt Center. Two authorities on China, Minxin Pei and James Sasser, spoke, debated, and answered the questions of faculty and students on China's current and possible future economic and social status in front of a full audience in the Science Center auditorium.
Former U.S. Senator and former Ambassador to China, James Sasser spoke optimistically about China's economic growth, while Dr. Pei, the director of the China Program at the Carnegie Endowment for International Peace spoke more hesitantly about China's success, addressing social and political problems exacerbated by the growing economy. The speakers agreed that in the future China will need to overcome many political, social, and economic obstacles in order to maintain its current annual economic growth of 10 percent.
Senator Sasser began his portion of the panel discussion by giving a brief history of the conditions leading to China's remarkable economic success. He noted that China has become the fourth largest economy in the world and that China's growth in world trade represents 12 percent of the global economy. In determining what accounts for this rapid improvement Senator Sasser cited China's shift from a command economy to a market economy and commented on the positive economic results caused by opening to outside trade and investment. He theorized that the tendency for citizens to save high levels (estimated at 40 percent) of disposable income benefits the national economy and provides money for investing and modernization of infrastructure. Similar to the U.S., China's labor force has shifted away from agriculture and into industry and the service sector, releasing China from the previous goal of depending entirely on its own agriculture to meet internal demand.
Senator Sasser also noted the importance of China's investment in education and the decision to make nine years of primary education compulsory. If China's economy continues to expand at its current rate, Senator Sasser conjectured, the Chinese economy will equal the U.S.'s economy at its current rate of expansion in 2035.
Despite these economic strides, Senator Sasser said that he doubted China's economic growth rate would remain at its current high percentage, and he listed several problems China is encountering as a result of its rapid economic success. He warned that the growth in economy and income is causing social dislocation: coastal areas are becoming much richer than the interior of the country, the population has shifted drastically from rural to urban areas, and pollution continues to be a serious problem.
Dr. Pei addressed at greater length some of the economic problems Senator Sasser mentioned in relation to China's growth. According to Dr. Pei, underlying problems such as low domestic demand, excessive investments, and the quick turnover of goods to the international market make China unlikely to maintain its ten percent economic growth rate in the next five to ten years. Differing from Senator Sasser's opinion on savings, Dr. Pei said that the savings rate in China is excessively high and that the investments drawn from these savings are not ideal since there are no efficient savings systems. In agreement with Senator Sasser, Dr. Pei does not believe that China will maintain its high rate of economic growth.
Dr. Pei went on to say that he believes that the politics of China are the cause of many social problems. The government controls a large portion of the economy, and this, Dr. Pei says, is wasteful and is sure to affect future growth rates of the country.
The social costs for China's economic miracle are high. Dr. Pei spoke on how China under-invests in healthcare, forcing people to save for medical emergencies and thereby preventing a more flow of money. Access to healthcare is increasingly unequal in China: Dr. Pei reported that China is the third most unequal country in the world in regards to healthcare and that 50 percent of people who get sick cannot see a doctor. Similarly, he criticized the government's lax attention to education funding, stating that when China began becoming richer the government cut spending for education, forcing poor people to pay more and making it impossible for 50 percent of the lower class to finish middle school. By not providing money for schools, Dr, Pei estimated that an average family spends a total of one-third of its disposable income on the education of its children. He suggested that it would benefit China if the government took over some of the burdensome costs of education.
In addition, corruption in the government concerned Dr. Pei greatly. He said that China must develop a system in the government that holds officials accountable for their actions. With no political mechanism striving to provide accountability, officials have no incentives for less visible achievements like social projects and instead devote their efforts to more outwardly visible economic gains.
Both Senator Sasser and Dr. Pei imagine that China would benefit from adopting a more democratic standard of government. However, according to Senator Sasser, China, above all else desires stability and will be slow in democratizing, especially since many Chinese equate democracy with the upheaval of the Cultural Revolution. Dr. Pei also imagines that China will be slow to change and acknowledges that although China has accepted capitalism, it has so far rejected the rule of law – political democracy – that is best suited for capitalism. Although both Dr. Pei and Senator Sasser recognize the power of the current Chinese economy, both see a drop in economic development in China's future.
-- by Laura Oman '07
