China is in trouble
China, officially the People's Republic of China, is a country in East Asia, and the world's most populous nation. China, powered by near-double digit economic growth since 1979, has transformed itself from an isolated, impoverished and demoralized society into a confident, prospering global trading power. With a GDP of $4.4 trillion and total foreign trade of $2.6 trillion in 2008, China has firmly established itself as a premier world economic powerhouse. However, China faces many political, economic and social problems that prevent it from reaching it's full potential. These include slowing economic growth, third world conditions in the majority of the country, lack of social safety nets, growing political opposition and instability, regional disputes and economic recession across the globe. In this debate, I will argue that the problems China faces are great enough to characterize it as a nation in trouble, while my opponent will portray China as a country faced by problems but overwhelming good fortune and will continue it's rapid path of development. Good luck. Round #1 will be acceptance, and all other rounds will be arguments and rebuttal.
Next time you write argumentation I would highly suggest you do not create a wall of text that is more then two and a half pages long. Anyway on to business.
Some of the first points you have addressed in your argument is that China (PRC) is dealing with numerous challenges that threaten the stability of the state and economy. It is agreed by both me and you that the Xiaoping reforms have indeed helped the Chinese economy away from a centrally planned system to a more free market capitalist system. Mr. Xiaoping's reforms were indeed highly opposed to Mao's eglatarianistic idealism that had held China back from becoming a superpower. However the status of China has changed quite radically over the last 10-20 years to which I will point out that China not only has a bright future but indeed will begin to challenge the United States in terms of geopolitical domination.
The first five points that you make that currently holds the PRC back is...
1, The disproportionate balance of it's high domestic savings rate versus it's low domestic demand.
2. It's ability to sustain adequate job growth for tens of millions of migrants to the workforce.
3. Reducing corruption and other economic crimes.
4. The ability to manage the increase in wages and inequality properly.
5. It's ability to contain environmental damage and social strife caused by rapid transformation of it's economy.
On your first point you claim that the high domestic savings rate versus it's low domestic demand has become a serious issue that needs to be addressed. I however would beg to differ. A savings rate is fundamentally the outcome of intertemporal optimisation. Yet there are many different schools of thought about the role of saving in economics. Some stress saving as a core driver of economic development. Others focus on links with cycles of aggregate demand. Others see excess saving as a key source of global imbalances and even a major cause for the international financial crisis (Bernanke, 2005 and Wolf, 2008). However the statistical measurement of savings is very precise. Saving is a residual concept defined as the difference between income and consumption. Small errors in the measurement of either large aggregate can lead to significant mismeasurement of savings. The link between saving and other economic variables can run in both directions. And possible determinants of saving can be cyclical or secular. In other words we cannot look simply at the rate of domestic savings as a indicator of economic hindrance or growth. There are numerous other factors here that you have ignored that are critical in analyzing possible dangerous economic indicators even when compared to low domestic demand.
On point two you have claimed that the ability of the PRC to sustain job growth for tens of millions of migrants has also become an issue of economic hindrance. This is a non-issue. While obviously not at peak performance yet this will quickly evaporate as Chinese labor becomes more and more focused. In order to be concise on such a complex topic I will quote from a international study done by Remnin University of China. It states,
" Since the early-1990s, the Chinese economy has switched to a capital-deepening growth path. This has appeared to be capable of sustaining rapid growth and increases in labor compensation. The draw back is that its capability of job creation has been weak. Now, the sustainability of the growth path depends on whether productivity gains from capital-deepening industrialization can be channeled to the development of the labor-absorbing capacity of the services sector. By design or by default, it appears that government policies in recent years have all been consistent with, even conducive to, labor compensation expansion and capital-deepening growth. These policies include using fiscal stimuli to boost investment, promoting the market power of workers, increasing the protection of labor rights, emphasizing income redistribution to avoid worsening social polarization, and expanding social welfare provision. There thus arises the question as to whether this policy line is justifiable, or whether the government should rather shift to the alternative, more market-oriented policy line of promoting a return to the previous, labor-intensive economic growth path."
Clearly from this study this issue of workforce sustainability is blown out of proportion and not dire in the least bit.
There is no doubt that the PRC has a serious corruption problem. However your claim on the basis of economic crime is vague at best. Economic crime can constitute numerous different standards of what exactly "economic crime" is. On this issue we could go back and forth on but your lack of conciseness regarding on what exactly constitutes economic crime does not allow me to argue either way for a positive or negative change.
The Chinese goverment as adressed in point two has taken increasing measures to insure there is no increasing disparity between the two.
I am not really sure what to do with the information you presented regarding enviromental and societal issues. You present no source or evidence to support this assertive claim...
"As a result, Chinese farmers have developed an over reliance on the input of chemical fertilizers andpesticides. The consumption of chemical fertilizers and pesticides has shown a pronounced increase over the last few years. Indeed, China's consumption of pesticides far exceeds the average level worldwide and China's consumption of fertilizers per hectare far exceeds safety limits of developed countries for agricultural application. This overuse of fertilizers and pesticides could result in a serious decline of agricultural production. Additionally, industrial pollution has contributed to the arable land destruction, some estimate up to one sixth of China"s arable land is polluted by heavy metals."
In conclusion as I have adressed in the points above it seems you are creating a exaggerated situation of the PRC on a economic and societal level. You also have provided me no evidence or sources to back the claims you have made in your points. With all this in mind I rest my case and the floor goes to the pro.
Analysts of Chinese savings seem to believe otherwise. Christopher Carroll, professor of economics at John Hopkins University and NBER research associate recently published a paper entitled “How, When and Why Will China’s High Savings Rate Fall?” that was presented at the Conference on the Chinese Economy in Shanghai December 10th, 2010. In it, he says “Most analysts think that Chinese external saving (that is, saving that flows out of the country to investments in the rest of the world) is now unsustainably high, relative either to the rest of the world’s ability to absorb that saving flow productively, or relative to the size of the Chinese economy. Furthermore, however unsustainable China’s external saving had been before the beginning of the ongoing global economic crisis, such flows have become even more problematic now that weak aggregate demand (soon to be exacerbated by fiscal austerity in many countries) has left most rich countries in or near a ‘liquidity trap’ situation where China’s trade surplus can be plausibly interpreted as a “beggar-thy-neighbor” policy, exporting unemployment from a booming China to countries with already high unemployment rates and low GDP growth. So, if the Chinese saving rate is unsustainably high, how will it come down? And will that adjustment, when it comes, be as painful as the American adjustment has been? An optimistic scenario is that a combination of vigorous policy measures by the Chinese government and a natural propensity of spending eventually to catch up with income will produce a relatively rapid “glide path” to a sustainable external Chinese saving rate. Some plausible pessimistic scenarios are much more unpleasant – and will become increasingly likely if visible progress in reducing China’s imbalances is not made soon.” China’s high savings rate is indeed a unsustainable and dangerous phenomenon that could precipitate serious economic consequences much like Japan in the early 1990’s with its high savings rate and high growth rate. Its asset price bubble, which ended catastrophically in what analysts have termed the “lost decade,” had the Nikkei 225 at its all time high in December 1989 at 38,916 yen ($270.95 USD), dropping steadily over the 23 year period to a current price of (11/29/2012) 9,487 yen ($115.49 USD), with Tokyo real estate prices reaching as high as 30,000,000 yen ($217,978.67 USD) dropping to an average of 187,000 yen in 2012 ($2,276.59 USD) according to the Land Institute of Japan.
China’s labor market is, like its savings rate, unsustainable, and analysts from the IMF and World Bank have been pointing this out for decades. In a World Bank study entitled “Sources of China’s Economic Growth 1952-99: Incorporating Human Capital Accumulation” by World Bank senior economist and consultant Yan Wang and Yudong Yao, concluded “...the declining growth rate of human capital accumulation is a matter of concern, especially considering China’s need for building an innovation-based knowledge economy. Funding for basic education is unevenly distributed and insufficient in some poor regions. Government spending on education as a ratio of GDP has been stagnated since 1984. Even though private financing is rising in some cities, its availability is not distributed evenly. The distribution of educational funding is more skewed if the availability of private financing is taken into account. Therefore, China needs to address its insufficient and uneven distribution of educational investment urgently, if China is to sustain its growth and welfare improvement in the next decade.” In a recent Business Insider article, it noted “Societe Generale analyst Wei Yao says hiring is slowing and thinks the situation could worsen. The make-up of China’s labor force has changed significantly in the past few years, according to Yao. Young workers born after 1980 now account for over two-thirds of its 253 million rural migrant workers. Nearly 85 percent of those born after the 1980s have never worked on farmland. This section of the labor population has been prone to changing jobs more frequently, and often chooses no work over manual labor. This change in mentality, along with the rising dependency ratio has created a labor shortage. Moreover, declines in job opening co-exist with a shortage in labor supply. Workers are largely unhappy with wage levels and employers are unhappy with the skills in the labor pool.”
Trying to dodge the problem of corruption in China with semantics is not going to end well for you. Economic crime constitutes misuse and theft of public funds, deceptive and incorrect accounting practices, bribes, providing better services in return for illegal payment, etc. It is not very difficult to discern this. Please offer a concise rebuttal explaining why China’s corruption problem is not serious or concede this point to me.
Again my opponent dodges my argument, stating that I provide no evidence to support my “assertive” claim. In a paper produced as part of the China Environment Forum’s partnership with Western Kentucky University on the USAID-supported China Environmental Health Project, it states that “China is the world’s biggest user, producer, and exporter of pesticides. The growing use of pesticides and chemical fertilizers over the past twenty years has helped promote larger crop yields, but increasingly at a major cost to the environment (e.g., declines in soil and water quality) and human health. China has nearly one-fifth of the world population, but only seven percent of the world’s arable land. In order to meet the food requirements of its large population, increasing food production has long been the priority of the Chinese government. Many Chinese farmers over apply pesticides and fertilizers to get greater yields, in part because they fear some are actually fake—a common problem in China. Farmers thus need more pesticide information and user education to help them use pesticides and other farm chemicals properly. One China Watch report noted that every year approximately 12 million tons of China’s crops are contaminated with heavy metal residues that threaten public health. For example, many insecticides and germicides in China use bluestone solution, a copper sulfate compound that has contaminated many fruit crops and can actually poison consumers. According to State Environmental Protection Administration (SEPA) statistics, about 12 million tons of crops are polluted with heavy metal residues every year, a direct economic loss of more than $2.5 billion.” Secondly, an Epoch Times report noted “Heavy metals have contaminated one-sixth of China’s farmland, according to a scholar from the Chinese Academy of Agricultural Engineering. The amount of contaminated land is more than 300 million mu, close to 20 million hectares (one hectare is equivalent to 2.471 acres) of land. Every year 12 million tons of food is contaminated with heavy metal, resulting in 20 billion yuan ($3.15 million) in economic losses, said Professor Luo Xiwen during a seminar hosted by the Guangdong Provincial Association for Science and Technology on Oct. 10. Industrialized coastal regions have the worst pollution from heavy metal. Mercury, cadmium, and copper are among the most common toxic contaminants. “In Guangdong, only 11 percent of the soil is clean; 77 percent of the farmland is lightly contaminated, and 12 percent is heavily polluted," Luo said. "In the Tai Lake area of the Yangtze Delta plain, one-third of the land is contaminated. In Hubei Province, 40,000 hectares, accounting for 10 percent of farmland, is polluted.” Luo says that water pollution is also a very serious issue in China. Eighty-four percent of the water is not drinkable in Zhejiang Province; in Lengshuijiang City, Hunan Province, 37 percent of rice crops have been contaminated due to the heavy metal pollution in rivers; sea products in Guangdong are heavily contaminated.”
Thank you. I look forward to your response.
neilalwayswins forfeited this round.
My opponent has cancelled his account on DDO, unfortunately, and in doing so concedes this debate to me. Please vote Pro. Thank you. Ugh. Nowadays it is hard to get a good debate, or even one that lasts to the end
neilalwayswins forfeited this round.
Bleh. Vote Con. I'll quote some Minxin Pei here.
"With the United States apparently in terminal decline as the world’s sole superpower, the fashionable question to ask is which country will be the new superpower? The near-unanimous answer, it seems, is China. Poised to overtake Japan as the world’s 2nd largest economy in 2010, the Middle Kingdom has all the requisite elements of power–an extensive industrial base, a strong state, a nuclear-armed military, a continental-sized territory, a permanent seat on the United Nations Security Council and a large population base–to be considered as Uncle Sam’s most eligible and logical equal. Indeed, the perception that China has already become the world’s second superpower has grown so strong that some in the West have proposed a G2–the United States and China–as a new partnership to address the world’s most pressing problems.
To be sure, the perception of China as the next superpower is grounded, at least in part, in the country’s amazing rise over the last three decades. Powered by near-double digit economic growth since 1979, China has transformed itself from an isolated, impoverished and demoralized society into a confident, prospering global trading power. With a GDP of $4.4 trillion and total foreign trade of $2.6 trillion in 2008, China has firmly established itself as a premier world economic powerhouse.
Yet, despite such undeniable achievements, it may be too soon to regard China as the world’s next superpower. Without doubt, China has already become a great power, a status given to countries that not only effectively defend their sovereignty, but also wield significant influence worldwide on economic and security issues. But a great power is not necessarily a superpower. In world history, only one country–the United States–has truly acquired all the capabilities of a superpower: a technologically advanced economy, a hi-tech military, a fully integrated nation, insuperable military and economic advantages vis-à-vis potential competitors, capacity to provide global public goods and an appealing ideology. Even in its heydays, the former Soviet Union was, at best, a one-dimensional superpower–capable of competing against the United States militarily, but lacking all the other crucial instruments of national power.
Meanwhile, the challenges China faces in becoming the next superpower are truly daunting. Even as its economic output is expected to exceed $5 trillion in 2010, per capita income in China will remain under $4000, roughly one-tenth of the level of the United States and Japan. More than half of the Chinese population still live in villages, most without access to safe drinking water, basic healthcare, or decent education. With urbanization growing at about 1 percent a year, it will take another three decades for China to reduce the size of its peasantry to a quarter of the population. As long as China has an oversized peasantry, with hundreds of millions of low-income rural residents surviving on the margins of modernity, it is unlikely to become a real superpower.
To believe that China is the next superpower, it’s also necessary to assume that China’s super-charged economic growth will continue. Unfortunately, relying on any country’s past performance to predict its future prospects is a risky proposition. China’s stunning economic growth performance since 1979 notwithstanding, its ability to sustain the same level of growth is by no means assured. In fact, the likelihood that China’s growth will slow down significantly in the next two decades is real and even substantial. Several favourable structural factors, such as the demographic dividend (derived from a relatively younger population), virtually unlimited access to the global markets, high savings rates and discounted environmental costs, will gradually disappear. Like Japan, China is becoming an ageing society, due in no small part to the effectiveness of the government’s stringent one-child policy (which limits urban families to a single child). The share of the population 60 years and above will be 17 percent by 2020, and this ageing will increase healthcare and pension costs while reducing savings and investments. Although the exact magnitude of the reduction in the savings and the increase in healthcare and pension spending is uncertain, their combined negative effects on economic growth could be substantial.
Another obstacle to China’s future growth lies in the country’s export-led growth model. As a middle-income country with limited domestic demand, China has relied on exports to increase its growth. While this strategy, which has been employed successfully in East Asia, has served China well for the past two decades, its future viability is now deeply in doubt. As the world’s second largest exporter (although China is expected to surpass Germany as the world’s largest exporter in 2010), China is encountering protectionist resistance in its major markets (the United States and Europe). In particular, China’s policy of maintaining an under-valued currency to keep its exports competitive is now being blamed for worsening global imbalances and weakening the economies of its trading partners.
Unlike its East Asian neighbours, which are relatively small trading powers, China’s sheer size means it has the capacity to cause severe economic disruptions to its trading partners. Unless the Chinese government abandons its mercantilist strategy, a global backlash against Chinese exports can’t be ruled out. Because net export growth has provided China at least an extra two percentage points growth over the past five years, a slowdown in China’s exports in the future will mean an overall lower rate of growth. To be sure, China can compensate for the loss of its external demand by increasing domestic consumption. But this process requires a complete overhaul of China’s growth strategy, a politically difficult and painful step the incumbent government has been unable to take.
A third constraint on China’s future growth is environmental degradation. Over the past three decades, China has neglected its environment for the sake of economic growth, with disastrous consequences. Today, air and water pollution kills about 750,000 people a year. The aggregate costs of pollution are roughly 8 percent of the GDP. Official estimates suggest that mitigating environmental degradation requires an investment of an additional 1.5 percent of GDP each year. Climate change will severely affect China’s water supplies and exacerbate the drought in the north. China’s business-as-usual approach to growth, which relies on cheap energy and no-cost pollution, will no longer be sustainable.
Uncertain economic prospects aside, China’s rise to superpower status will also be constrained by a host of political factors. First and foremost, Chinese leaders will find themselves in search of a global vision and a political mission. Countries don’t become superpowers merely because they have acquired hard power. The exercise of power must be informed by ideas and visions that have universal appeal. The United States did not become a true superpower until it entered the Second World War, even though it had attained all the requisite elements of a superpower long before Pearl Harbor. The political challenge for China in the future is whether it will be able to find the political ideals and visions to guide the use of its power. At the moment, China is economically prosperous but ideologically bankrupt. It believes in neither communism nor liberal democracy. Besides depriving China of a source of soft power, the lack of appealing ideals and visions for the world is also responsible for the inward-looking mindset of the Chinese leadership, which has so far paid only lip service to calls for China to assume greater international responsibility.
neilalwayswins forfeited this round.
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