Some Basics on China

From New Age, August 2004 edition. Know China Before Comparing

The People's Republic of China is one of the major political and economic powers in the world today. It has reached sixth place in the world in terms of economic aggregate. For a country which was utterly backward, feudal and semi-colonial till the People's Revolution in 1949 and for a country which is the most populous in the world whose population (including Hong Kong, Macao and Taiwan) totals around 1.4 billion, it is not a mean achievement. The tremendous progress that is taking place in China has become a focus of attention and analysis in the world. Obviously, the developing countries including India look up to China for experience and for emulation.

At the same time there are differing views on Chinese development. It is a puzzle to some. It is a model to some who think that it can be copied or replicated. Some think that there is lack of democracy and there are violations of human rights in China. Some consider that China is no more a socialist country.

But the leadership of Communist of China (CPC) and the government seem to be clear in what they do. It is appropriate here to quote from the document of the 16th Congress of CPC, 2002.

'We must be aware that China is in the primary stage of socialism and will remain so, for a long time to come. The well-off life we are leading is still at a low level; it is not all-inclusive and is very uneven. The principle contradiction in our society is still one between the ever-growing material and cultural needs of the people and the backwardness of social production. Our productive forces, science, technology and education are still relatively backward, so there is till a long way to go before we achieve industrialisation and modernisation.'

Hence, there is a thrust to release and develop the productive forces at all levels, in industry, in agriculture, in services and all other sectors. Economy Maintains a Steady Growth rate

Chinese economy has been registering a steady growth rate. By 2002, the growth registered in industrial production was 10.2 per cent over the previous year. The total output of grain in 2002 was 457.11 million tonne, up one per cent over the previous year. It is reported that steady progress was there in animal husbandry and fishery. China is a major consumer of steel, cement, coal and crude oil, which according to estimates account for 21 per cent, 50 per cent, 31 per cent and 17 per cent respectively of the global aggregate. It shows the huge demand for the economic construction and domestic consumption. This is a reflection of the tremendous growth. The Gross Domestic Product (GDP) increased by 8 per cent in 2002 compared to the previous.

Unemployment and Poverty

However, the Chinese do not hide the fact that they have the problems of poverty and unemployment. But due to various measures of the Chinese government there is steady decline in poverty and unemployment. China's Prime Minister Wen Jiabao admitted in March 2003 that around 30 million people in China lived under the poverty line of per capita annual income of RMB 625 (one US dollar is equal to approximately 8.5 Chinese RMB). But the World Bank figures based on the income of US one dollar per day showed that China had 490 million people under the poverty line by 1981, 98 million by 1999 and 88 million by 2002. One can see the decline.

The urban unemployment was 4 per cent at the end of 2002. The number of people employed in rural enterprises totaled 133 million. A quarter of China's rural population had moved out of farming, transferring from agriculture to non-agricultural sectors. There are problems of migrant labour added to the problems of paid-off labour.

The urban-rural divide in terms of per capita income, healthcare and education etc is visible. The per capita income of urban residents is almost three times higher than the rural residents. The divide is visible in terms of modernisation and industrialisation also.

But the Party and government are quite aware of these problems. Emancipating the minds, seeking truth from fact, keeping pace with times and making innovations in a pioneering spirit are the virtues of this vibrant intervention in the situation. Reforms and opening up are to be seen in this context.

Agriculture and Industrial Growth

Then, there is shortage of foodgrains. There is shortage of water for irrigation and also in urban centres. The reforms in agriculture are quit significant, particularly the rural tax reforms. The Chinese government decided in 2003 to abolish, exempt or lower 15 charges on the country's 900 million farmers in a bid to reduce their excessive financial burdens. According to the government plan, the agricultural tax will be reduced by more than one per cent per year on an average and they will be rescinded in five years. Prime Minister Wen Jiabao promised to scrap agricultural taxes in five years.

In order to boost its industrial growth and infrastructural developments Chinese government has created free economic and technological zones. Then, there are special efforts to upgrade the skills of laid-off workers and migrant labourers and place them in employment suitably. This includes loans for laid-off workers.

FDI in Economy

China is inviting Foreign Direct Investments (FDI). In 2002, the Contracted Foreign Capital through FDI stood at 82.8 billion US dollar, up 19.6 per cent and the Foreign Capital actually utilised was 52.7 US dollar, up 12.5 per cent. By the end of 2002, China had approved 4,24,196 foreign-funded enterprises, with Foreign Contracted Investment reaching 828.06 billion and Foreign Capital actually utilised totaling 447.97 billion US dollar. The FDI is used primarily in manufacturing sector.

Foreign Capital is utilised in different forms namely, Foreign Direct Investment, Chinese Foreign Equity Joint Venture, Chinese Foreign Contractual Joint Venture, Foreign Capital Joint Enterprise, Joint Stock Foreign Investment, International Leasing, Compensation Trade and Processing and Assembly. In the first half of 2004, the foreign exchange reserves reached 470.6 billion US dollar.

These FDI will have to operate under Chinese Law. No FDI can take over any sector in China. State sector continues to be the dominant sector. Non-state sector, private sector and other joint-sectors can coexist, but state sector will continue to be the main component of the economy. Even, the FDI is overwhelmingly from overseas Chinese. There is a misconception of the utilisation of FDI in China. In India there are people who argue in favour of hiking the FDI cap in Telecom, Insurance and Civil Aviation. In China, the state holds a major share in all the telecom operators. In the three listed operators China Mobile, China Unicom and China Telecom, more than 70 per cent of the shares are non-private.

China has a huge domestic market. By the end of 2002, the total fixed-line and mobile telephone users numbered 421.04 million in China. There were 33.7 telephones per 100 persons in China. Now the figures will be more.

China is not willing to allow FDI more than 25 per cent in Civil Aviation (that too not in key security areas) and not prepared to hand-over Insurance sector to FDI. The state sector will have its predominance in insurance sector.

Having set the task of building the economy and creating wealth and prosperity as the central task, the Party and the government are in full command in directing and carrying forward the process.

Adherence to the socialist road, the people's democratic dictatorship, the leadership of the Communist Party and Marxism-Leninism and Mao Zedong thoughts are considered to be the cardinal principles on which the entire paradigm of development is supposed to operate. Now the Communist Party of China upholding Deng Xiaoping Theory, it has declared to act on the important thought of the 'Three Represents'.

What are the social contradictions in China today? How China addresses the new problems caused by reforms process? What is the present theory of socialism and its practice? How to connect the progress on material front and the progress on ethnical front? Need to be studied.

--D. Raja is the general secretary of the Communist Party of India. He Yong is a member of the Central Committee of the Communist Party of China.

New Age is a publication of the Communist Party of India.

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