China’s explosive rise to economic superpower status was confirmed by the West’s leading think tank recently in a new report predicting that the Asian nation would leapfrog the United States and Germany within five years to become the world’s biggest exporter.
Despite growing social strains and international concerns, the Organisation for Economic Cooperation and Development (OECD) said there would be no let-up in the communist country’s breakneck growth.
China is not a member of the OECD — a group of the world’s richest developed nations — but the Paris-based organisation last week published its first report on a country that has been transformed within a quarter of a century from struggling peasant economy to industrial titan.
It already accounts for 6% of world exports and its potential to supply the globe with low-cost manufactured goods has caused tensions in the global trading system, exemplified by the recent ”bra wars” row. The OECD said China’s share was on course to rise to 10% by 2010, by which time it would overtake the US.
Despite 25 years of gross domestic product (GDP) growth at an annual rate of more than 9%, China is not expected to slow in the near future. The think tank predicted that the world’s most populous nation would overtake Britain, France and Italy to become the world’s fourth-largest economy within five years.
Hardly a day goes by without new evidence of China’s surge up the ranks of the richest economies. Last Wednesday, Ernst & Young released a report predicting it would surpass the US as the world’s second-largest consumer of luxury goods within 10 years. The accounting firm forecast 10% to 20% annual growth rates in the sector until 2015, by which time sales are expected to exceed $11,5–billion, or 29% of the world’s total, second only to Japan. A separate study by the China Academy of Social Sciences predicted that the middle class will more than double in size by 2020 to account for about 40% of the 1,3-billion population.
If such statistics are not convincing enough, you need only look at the cityscapes of powerhouses such as Beijing, Shanghai and Chongqing, where the transformation is apparent in the forest of skyscrapers, shopping malls and roads.
But the OECD also identified areas that will have to be reformed if Beijing is to complete the transition from a centrally planned economy.
These include strengthening the financial system, further steps to allow the currency to float freely and measures to reduce inequality.
Chiming with a recent report from the United Nations, the OECD said there was evidence of a growing gulf between urban and rural China and between rich and poor on the eastern seaboard. ”Although economic dynamism has helped reduce the number living in absolute poverty, income levels are still low and inequality is on the rise, not only between the cities and rural regions, but also within the more prosperous coastal provinces,” the OECD said.
Some of the biggest problems have been in the environment and health.
According to the UN and the OECD, China’s ability to meet the Millennium Development Goal of cutting infant mortality by two-thirds is being hampered by unequal access to healthcare.
But the state is no longer the main force for change. The OECD noted that, as a result of ”profound shifts in government policies, the private sector is now driving China’s remarkable economic growth”. Well over half of China’s GDP was produced by privately controlled enterprises, it added, but more needed to be done to improve the business environment.
The OECD forecast will add fuel to the debate about Beijing’s global role. In the US, there is already talk of the ”China threat” posed by exports, rivalry over resources and increasing military power. — Â