Will the China dream turn sour?

The great leap forward which began for real two decades after Mao Zedong’s disastrous attempt to spur industrial growth in the late 1950s has been the most important global event since the end of the Cold War. It has made more people materially better off in a short space of time than ever before in human history. But that achievement is now facing an array of challenges if the last major state on earth ruled by a Communist party is to maintain its momentum. The necessary reforms are only at an early stage, held back by those with an interest in maintaining the status quo and the political system which makes the rulers afraid that, if they change anything without due care, they may bring the whole edifice crashing down, as they saw happening in the Soviet Union.

Still, the changes that are being discussed will alter the lives of hundreds of millions of people in different and sometimes apparently conflicting ways. The Chinese, who have not known a protracted slowdown this century, face lower growth as the economy is balanced away from dependence on exports and fixed asset investment and towards consumption. The drive to move industry up the value chain through use of more sophisticated technology will put a premium on skills as the country moves away from basic low-cost manufacturing.

There will be an expansion of jobs in services. The development of factories in central and western China means that rural inhabitants there will no longer have to travel very long distances to find work in the coastal provinces that led the country’s expansion after Deng Xiaoping launched economic reform and “opening up” at the end of the 1970s.

The combination of low fertility, the one-child policy and increased longevity mean that fewer young people will be coming in to the workforce while China will need to cope with a growing army of old people—this in a country with a rudimentary pensions system and lack of care facilities for the aged. Dealing with the demographics and pressing ahead with the programme for a health service are major tests for the rest of this decade, along with the need to do something about the environmental crisis spawned by rapid industrialisation, fast expanding car use, lack of regulation and the involvement of local authorities in factories which may be among the polluters.

Weak regulation and poor safety standards have bred repeated scandals, including sale of tainted meat and milk, on top of corruption and a broad lack of accountability. Public anger is growing as seen, for instance, with two big protests against projects for potentially toxic chemical plants in western China this month. The growth model adopted in the 1980s is now seen to contain many weaknesses; what the Chinese and their rulers have to decide is whether they are ready to forsake a degree of growth and improve the quality of life—and how that is to be achieved after many false starts.

The question has resonance for the rest of the world too, given China’s central role. If the People’s Republic slows down appreciably, that would diminish the impact of the major global growth engine with effects everywhere—especially in the countries that supply China with its raw materials such as Brazil, Australia, and oil and minerals producers in the Middle East and Africa. On the other hand, if China becomes an unhappy place, it may be tempted to blame others for its woes. The new leadership is getting into its stride and proclaiming its pursuit of the “China Dream”—which could mean anything from a cleaner, less materialistic society to a country which asserts its military power as a sign of great power status. A grumpy, nationalistic China flexing its muscles abroad to distract from troubles at home is something the world does not need.