In the past thirty-five years, China’s second revolution from Maoism to the People’s Republic of Capitalism—for whichtriumphant PRC today seems to stand—has delivered miraculous pace of economic growth and elevation of 400 million people out of poverty, but at the same time it has also led to an alarming rise of income inequality and devastating degradation of the environment. To some, these are developmental problems, but it is a dire challenge for China to continue to grow while trying to contain and solve these problems.
During my recent trip there, China under its new administration seemed ready to move toward a new direction of development. In this new direction, the government and virtually all the development advisors I spoke with emphasize the quality of growth and sustainability of development.
Quality of growth in China nowadays refer to slower pace in economic expansion, less government investment, and more consumer-driven development. Slower pace in economic expansion means annual GDP growth targeting at 7 percent to 8 percent – this is not really a slow growth rate from any international comparative perspective, but only slower than the pace China strove for in the past two to three decades. One of the major government goals in the last decade was to reduce the high speed of economic expansion in China. The Chinese government might be considered as one of the richest in cash in the world, with a growing $1.9 trillion of annual revenue plus a possession of over $3 trillion in foreign reserves. To reinvest, the government tried to redirect its funds from industries to services, social welfare, R&D, and education in the last decade – it now spends hundreds of million dollars in funding Chinese scholars and students to study in the western countries annually. Since a decade ago China has been fostering consumer-generated development, including promoting domestic tourism by extending three annual national holidays to seven days each.
Along this line, one of the most recent and most important Chinese initiatives is urbanization of small cities and towns – it is one stone to hit two birds. It takes social and environmental pressure off megacities and re-energizes regional and local economic development. A new locomotive for development, it will generate massive waves of domestic demand for infrastructure, construction, energy, service, education, culture and recreation, as well as knowledge for sustainable development of small cities and towns.
I was pondering on my 12-hour flight returning from China: what are the opportunities for South Carolinians to tap into this new development in China? South Carolina used to export a great amount of soybeans to China, and we are now selling many BMWs there. One writer once claimed that the rising middle class in China, now already the size of the entire U.S. population, will reshape the consumption—and of course in that matter investment and production—of the world in the near future. Challenges will always create opportunities, for those who seize the moment.