Whatever the consequences of the global recession, there are powerful reasons for believing that the present growth model is unsustainable in the long run, and probably even in the medium term. Indeed, there has been a growing recognition amongst Chinese policy-makers and advisors that important modifications already need to be made to the model ushered in by Deng and intimately associated with his successor Jiang Zemin. [465] That process, championed by Hu Jintao, has already begun, with a shift away from the neo-liberal excesses of the nineties and towards a more harmonious society, echoing an older Confucian theme, with a new emphasis on egalitarianism, greater weight attached to social protection, a desire to lessen the importance of exports and increase that of domestic consumer spending, and a turn away from the influence of the United States – or ‘de-Americanization’, as it has become known. [466] Such changes are likely to be hastened by the global crisis and attempts to mitigate its effects.
Economic growth cannot depend upon a constantly rising proportion of GDP being devoted to investment, as is presently the case, because it would absorb an increasingly untenable proportion of the country’s resources, thereby imposing unsustainable pressures on consumption, for example. There needs to be a greater emphasis on the efficiency of capital and improving labour productivity, rather than an overwhelming dependence on investment, too much of which is wasteful: if not, economic growth will inevitably decline as the limits to higher and higher volumes of investment assert themselves. The ability to move up the technological ladder is fundamental to this. There is considerable evidence that this is already happening, with exports of cheap-end products like toys falling in the global recession and those of high-tech products rising. Similarly China will have to reduce its present level of exposure to foreign trade, which has made it highly vulner-able to cyclical movements in the global economy, as the global depression has shown. There is a danger too, especially in the context of a depression, that China ’s export drive will provoke a hostile reaction and moves towards protectionism. [467] Instead, it is already abundantly clear that China will have to attach greater weight to domestic consumption.
A growing problem is that the priority attached to breakneck economic growth above all else has resulted in China moving in a very short space of time from being a highly egalitarian society to becoming one of the most unequal in the world. [468] The causes of that inequality are threefold: the growing gulf between the coastal and interior provinces, with the richest province enjoying a per capita GDP ten times that of the poorest (compared with 8:1 in Brazil, for example); [469] between urban and rural areas; and between those in the formal economy and those dependent on informal economic activities. [470] This is leading to growing social tension – evident, for example, in the relationship between migrant workers and local residents in the cities – which threatens to undermine the cohesiveness of society and the broad consensus that has hitherto sustained the reform programme. [471] The government has already begun to pay much greater attention to promoting a more egalitarian approach, though so far with limited effect.
