Summing Up China in 1,300 Words: The View from Singapore

By Shlomo Maital   

K SHANMUGAM 

   Singapore has outstanding ministers and civil servants.  Like Barcelona’s famed youth soccer academy, bright young people are spotted and cultivated very early in their careers. Elected and appointed officials are very well paid, forestalling corruption and generating motivation and prestigate.  This is why I listen very carefully, when my friend Bilahari Kausikan, First Permanent Secretary of Foreign Affairs, speaks, or writes, and when his minister Kasiviswanathan Shanmugam, Minister of Foreign Affairs, speaks.  Shanmugam recently spoke in Turkey during an official visit there. His ethnicity is Tamil Indian, and shows how Singapore is indeed a rainbow society (Malay, Chinese, Indian).  He provides us with a tour of the world. Here is a brief summary of his views on China.   

    By 2050, Asia could account for over 50 percent of global GDP.  China and India are also likely to be among the world’s three largest economies in a matter of decades.  

   According to British historian Niall Ferguson, there are six reasons why the West overtook the East and moved ahead in the last five hundred years: 1. Encouraging competition among political entities; 2. Science; 3.  Democracy; 4. Modern medicine; 5. Consumerism; and 6. the Protestant work ethic.   We can debate if these were the only factors in explaining the predominance of the West or make an argument for other factors, but it is clear that Asia is now catching up on many of the factors which made the West successful in the last five hundred years.

      China’s per capita GDP today is less than US$6,000.  At its current rate of growth, China’s GDP in purchasing power parity terms is expected to exceed the US’ in 2016.  Based on market exchange rates, China’s GDP could triple to US$17.7 trillion by 2030.  That is only 18 years away.  While straight line projections are not very reliable, the secular trend and conclusions are clear: China will succeed and become a superpower in every sense of the word.   The Chinese have in huge abundance the central, critical element for success: high quality human potential.  In 2012, China’s universities produced 6.8 million graduates.  An estimated 600,000 are engineers, of which 10,000 hold PhDs.  The Chinese are highly intelligent, creative, with a deep sense of national pride.  They want China to take its rightful place in the world.    In recent years, China has made remarkable technological leaps.  China today boasts 9,300km of high-speed rail.  Just last week, China launched the world’s longest bullet train service from Beijing to Guangzhou.  That is slightly longer than the distance from New York to Miami.  Less than ten years ago, China’s first high-speed trains were entirely supplied by German, French, Canadian or Japanese companies.  Today, China competes for high-speed rail projects around the world, including here in Turkey. China has also made significant progress in its space programme.  The first manned Chinese space mission, the Shenzhou-5, took place in 2003.  In 2015, China will launch the first module of its space station.  This is scheduled to be completed in 2020, just as the International Space Station is due to retire.  

I have only mentioned a few examples of China’s recent achievements.  One can give many other statistics to describe China’s successes, but the real questions are how fast China will continue to move and the implications for Asia.  To assess that, we need to in turn consider the key issues China has to deal with in the coming years.

     China faces three sets of “divide” challenges, namely the rural-urban divide, the coastal-inland divide, and the income divide within cities.  These “divides” will have profound implications for China’s political and social stability in the coming years.  China’s export-oriented economic model is also unsustainable in its current form, and needs to be re-structured to focus on internal consumption as well.  At the same time, China needs to re-balance the share of its economy between the state-owned enterprises and the private sector.   China will have to address these economic challenges against the backdrop of increasing urbanisation.  China crossed a milestone in 2011 when, for the first time, there were more Chinese living in urban areas than in rural areas.  This trend will continue.  China needs to create two to three hundred million jobs over the next twenty to twenty-five years for growing numbers of people moving to the urban centres.   These are massive challenges on a scale and level of complexity that no other country, except India, faces.  

     China’s population is aging rapidly.  According to some estimates, China had 185 million people over the age of 60 in 2011.  The ratio of working-age to retired people may go from 8:1 to 2:1 by 2040.  In a few years’ time, labour market growth may decrease.  Significant resources will be needed to look after the elderly.  The need for social welfare is increasing, in key areas such as housing; healthcare; basic medical coverage; pension coverage and education. Education, for example, is estimated to cost around 2.2. trillion yuan.   China’s leadership knows that China has to make itself internally strong.   And for that, it has to deal with all of these challenges successfully.  If you look at China’s track record over the last 30 years, China will find a solution to these challenges.   China’s leaders have shown what their priorities are.  At the 18th Party Congress, President Hu Jintao called for GDP per capita to be doubled by 2020. He acknowledged the need for more equitable development, and described the need to strengthen social management to improve the delivery of basic public services.  President Hu’s administration has laid out the following as key components of his policy framework:    Social management has now been identified as a key issue.  China’s leadership has looked at various countries, including Singapore, to see what they can learn in areas such as anti-corruption, city planning, environmental management, and maintaining social order and political stability.  The Chinese leadership has also made significant achievements in improving the people’s welfare.  However, in the years ahead, China’s new leadership will have to structure a new social compact with its population.        There has been a lot of breathless coverage in the media about whether there will be political change (usually labeled as “reform”).  This is wide off the mark.  China’s leadership will not rush into change.  Instead, it will try to manage change.  President Hu’s remarks that China would “never copy a Western political system” and should not revert to the “old path that is closed and rigid” or take the “evil road of changing flags and banners” are indicative.  China’s leadership is more concerned with good governance, progress and stability.  They know most of the suggestions for political change may weaken China and impact its growth.  They look at what happened when the Soviet Union pursued glasnost before perestroika and do not want to repeat that same experience.  The Chinese look at Western prescriptions for China with much suspicion.  They see a wish on the part of some in the West for China to be weak, ineffective.  The Western media, too, often paints a distorted and superficial picture.

   China’s leadership is pragmatic and aims to choose the best people for the job.  Of course, the system is not perfect.  There will be internal politics.  But on the whole, it is a rigorous system where only tested people, many of whom have had to run provinces bigger than many European countries, can rise to the top.  I am not an apologist for China, but one must look at the facts.  In 30 years, China has achieved what no other country has achieved.  500 million people have been lifted out of poverty.  The lives of 1.3 billion people have been completely transformed.  It is safe to conclude that China’s main focus in the near future will be internal, and that its leadership will pursue a steady course in tackling the key issues.

      China alone has nearly 600 million vocal netizens.  Neither the Chinese Communist party nor leaders in the other claimant states can be seen as “soft” on sovereignty issues.  The new Japanese government, for example, has a more nationalistic approach and has made statements about beefing up its military in response.  But the Japanese government is likely to take a prudent course.  These conditions make for a potent mix.  A small act perceived as antagonistic could lead to hasty responses.  This could result in an escalating cycle of chain reactions.  The risk of miscalculation is exacerbated in countries without a strong structure for inter-agency coordination.  Such a scenario cannot be ruled out, and has in fact happened over territorial disputes in recent years. 

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