As Alex indicates in his post, productivity in China is growing by leaps and bounds. However, the economy also has many problems, exacerbated by the Chinese government’s goals of free markets without full democratization. The CS Monitor reported today on the growing income gaps in China, as well as the societal discord that is strengthening due to increased incomes. Essentially, although China has developed a middle class over the past ten years, those in the middle class are not able to purchase basic goods and services. This has created a growing demand for higher incomes and increased wages.
While there’s nothing wrong with a little healthy competition in the wage market, the enduring grasp of the Chinese government on all aspects of social life has stilted the growth of institutions that might temper the need for – and worship of – wealth:
In some ways, China’s money culture is spawning more avaricious – and unchecked – competition. There is a more intense game of keeping up with the Chans, but with no cushions like Rotary clubs, churches, or other civil or volunteer structures. Some 40 percent of wealth is controlled by 10 percent. Young people are getting diplomas in record numbers, but unemployment is 10 percent for those under 30. “Underemployment” is far higher.
CIPE works in China to foster the growth of institutions such as chambers of commerce and industry associations. However, chambers and associations can only have a limited effect under current Chinese regulations. While economic growth is always good, it must be accompanied by structural changes that can support extended periods of change in the economy.
Published Date: January 18, 2006