Made in China (Part 1)

Policies guided by ideology, driven by pragmatism

Christopher Tufton, Contributor

The following is the first of a two-part series on China based on observations while on a study tour of that country this month.

A random check of the label at the back of your clothing or electronics will likely reveal a made-in-China designation. For the last 30 years, China has evolved as the manufacturing centre of the world, with its low-cost labour, large potential consumer market, and a foreign-investment policy to attract capital and international brands, hoping to gain a cost advantage by manufacturing in the most populous country on the globe.

Originating from one of the ancient civilisations, China's economic existence up to the end of the 1970s represented more challenges than opportunities in a world that could afford not to take interest. Today, no country, no matter its origin, economic or political ideology, can afford to ignore China's presence and impact. This is as much because of its size as it is that country's social, political and economic strategy.

When the People's Republic of China was officially established in October 1949, its population was approximately 450 million, amid a global population of around 2.5 billion. Since then, the global head count has grown above seven billion, with China accounting for approximately one-fifth of that number, or 1.37 billion residents. So with 20 per cent of the world's population, China has a lot of mouths to feed, and its strategy to offer an opportunity to outside investors to tap into its large labour force was more pragmatic than ideological.

China's leader during the 1960s, Deng Xiaoping, seems to have been convinced at the time that the challenges faced by his country needed a response that would have to be solution oriented. As such, economic imperatives had to be at the heart of its focus.

Considered the architect of this new approach, Deng is reported to have advanced his Cat Theory to simplify the objective of the country's economic strategy to the Chinese populace, even at the risk of being criticised by his more rigid political associates.

In the early 1960s, Deng advocated that in terms of a gradual progressive economic agenda for China, he was not concerned if the cat was black or white; rather, that it caught the mice. In other words, China had to find ways to survive and prosper, and its approach towards that end had to be pragmatic and contextual to its particular circumstances rather than be driven by rigid political ideology. Most Chinese today attribute structural change in China towards greater accommodation of outside investment capital to Deng's pragmatic stance.

So context and circumstances defined China's policy perspective, and not a rigid adherence to political ideology. That context and circumstance seemed unlike any other. Apart from the large population, China is a country with 56 ethnic groups, speaking at least 54 ethnic languages, bordering and potentially impacted by 14 other independent nations with varying degrees of friendliness, and a coastline of more than 18,000 kilometres, with a marine area of three million square kilometres, including 6,500 islands. With an abundance of natural resources, but little or no know-how to exploit these resources, and no foreign exchange to purchase the necessary expertise, the task at hand must have seemed insurmountable at the time.

INFLUENCE OF CULTURE

But the possibility for progress appeared to have existed in a people with a culture that placed significant value on long-term planning, a willingness to engage in gradual but systematic, pragmatic change, and a commitment to making sacrifices for the future survival of the collective whole.

An examination of the history of the Chinese people demonstrates the many devastating periods through their existence, including hunger and starvation and invading foreign forces. These threats seemed to have instilled survival instincts that encouraged the need for collective effort and, some argue, could have given rise to that country's core political structure. Leaders had to be strong, and rules had to be followed, otherwise the entire country would be at risk. Those risks could be political, social or economic.

At the same time, the Chinese culture placed significant value on family and community. Although gradually changing today, there was a general understanding that children would grow up accepting that they would look after their parents, including having them in their place of dwelling when they retired.

The Chinese today take pride in saying that their political, social and economic structure and strategy is like none other in the world, rather a response to the likely consequences of their experiences.

POPULATION CONTROL

Their policy on population control is a case in point. China has been heavily criticised, on human-rights grounds, for its one child-per-family policy. The policy stipulates that couples, generally, should have one child as a means of controlling the country's population. There are exceptions, such as in the case of farm families in rural areas who are allowed some flexibility based on their agricultural activity. Those who are affected amount to approximately one-third of the population.

While accepting that there are downsides to this approach, such as the ageing of the population and associated economic and social consequences, the Chinese authorities defend the approach, arguing that the population would have likely spiralled by an additional 400 million residents if the policy did not exist. This means a China without a one-child policy would have a population today of almost 1.8 billion people, and the world head count would be closer to 7.5 billion.

Some argue that if this were the current situation, it would not only represent a threat to China's social and economic stability but place added pressure on the resources and capacity of the world to cope. Global experts, for example, argue that by 2050, the world population will be closer to nine billion, presenting a crisis for mankind's safety, and food and water security.

TRAFFIC WOES

But even with population control measures, the country continues to be faced with challenges from the size and internal movement of its citizens. In the last year, China, like the rest of the world, has achieved the unenviable milestone of having more of its population living in the urban areas than in rural townships. This has led to the expected consequence of traffic congestion. In Beijing, for example, there are approximately 20 million residents and six million cars, leading to massive gridlocks.

The authorities' response so far has been to control traffic flow in around the city by first coding licence plates to support a policy that allows only Beijing residents to have access within city limits. At the same time, Beijing residents are restricted from driving their cars one day per week in support of congestion and pollution control.

China will have to continue to identify solutions to its expanding population, including catering to the particular requirements brought on by age distribution. As is the case in so many countries, including Jamaica, China is challenged to provide health care and other social services for those who are living longer and becoming more reliant on the State to care for them, while providing sufficient quality training and economic opportunities for the working class to sustain themselves through to retirement.

Imagine Jamaica's current dilemma with unemployment and public-sector pension deficiency, and then think China. One country with a 2.7-million population challenge, the other seeking solutions in the same areas for its 1.37 billion citizens.

CREATING OPPORTUNITIES

There is a famous saying attributed to China's current leadership, which says even the least of challenges faced by China, multiplied by 1.3 billion people, becomes a major challenge. On the other hand, given China's large consumer marketplace and resource base, the least of opportunities, represents great potential. The solution is in converting challenges into opportunities.

There is hardly any doubt that China's leaders have manoeuvred their country's economic path well over the last 30 years. Even its detractors have to be mindful of China's growing reach and economic impact. China's success, to date, has been grounded in strong leadership, a clear, pragmatic, long-term economic and social strategy, and a people who have committed themselves to work for the greater good.

Next year, China will see a change of leader, but there are already strong signals of adjustments to the country's economic strategy.

In Part Two, I will examine how China became the second-largest economy in the world in record time of 30 years, why the economic strategy is likely to change, and what countries like Jamaica can do to benefit from investments and trade with China.

Dr Chris Tufton is a senator, opposition spokesman on foreign affairs and trade, and investments, and co-executive director of CaPRI. The views in this column do not necessarily represent those of the above-mentioned entities. Email feedback to columns@gleanerjm.com and cctufton@yahoo.com.