As the Chinese nation celebrated the 70th birth anniversary on October 1, the whole world looked in awe and amazement at the most populous country on earth and how it transformed itself from an under-developed agricultural economy to an industrial superpower within a span of mere 70 years.
Following the founding of the People's Republic by the Communist Party under the leadership of revolutionary leader Mao Zedong, China faced difficulty even in feeding its huge population. Miraculously, that under-developed agro-based China has now become an essential and pervasive link in the global industrial supply chain. Ranging from daily essentials to high-speed trains, advanced AI-based applications to sophisticated 5-G networks, China now boasts of the most diverse range of industrial products in the global market.
All these have resulted in the most magical socio-economic transformation the world has witnessed over the past century. This economic miracle has led to accumulation of unprecedented wealth, albeit accompanied by a deepening inequality, but with minimum socio-political unrest or upheaval.
China was quite poor when the Communist Party ascended to power in 1949. There were no trading partners and hardly any diplomatic relations, with self-reliance being the cornerstone of the state policy. However, since 1979, China has pushed through a series of landmark market reforms by opening up the trade routes and investment flows, thereby lifting up hundreds of millions of people out of the poverty trap.
During its initial years, China had witnessed one of the biggest human disasters of the 20th century in the decade of 1950s. It undertook the 'Great Leap Forward' in an attempt to rapidly industrialise the Chinese economy. But that was not successful and over 15 million people perished in China between 1959 and 1961, during one of the most devastating famines in human history. That episode was succeeded by the economically disruptive Cultural Revolution of the 1960s, which was launched by Mao in order to rid the Communist Party of dissidents, but which caused enormous damages to the country's social fabric.
However, following the death of Mao Zedong, the economic reforms initiated by the Chinese statesman Deng Xiaoping started to reshape the economic scenario in the country. This included granting of rights to the peasants to undertake farming in their own plots, which in turn improved their living standards and eased the food shortages. The door was opened for foreign direct investments alongside re-establishing diplomatic ties with the USA. Western money then started to pour into China, especially in special economic zones, as investors became eager to take advantage of the cheap labour and low production, rent, utilities cum infrastructure costs. As a consequence, the world has witnessed the most fascinating economic miracle in human history from the 1980s.
China continued to record rapid economic growth throughout the decades of 1990s and 2000s. She joined the World Trade Organisation in 2001 that provided the country another upward push on the global platform. The trade barriers and tariffs with other countries were soon lowered and the world market was then flooded with cost-efficient Chinese products. In a way, it became the world's busiest, crowded and most productive workshop.
According to the London School of Economics, the Chinese exports were only $10 billion in 1978, which was less than 1.0 per cent of global trade. But by 1985, the figure touched $25 billion, and about two decades later, China became the largest trading nation in the world by exporting goods worth $4.3 trillion.
As the economy flourished under the impact of pragmatic economic policies, the fortunes of hundreds of millions of Chinese people also underwent radical improvement. According to the World Bank, as many as 850 million Chinese citizens have been lifted out of poverty, and the country is well on course to eliminate absolute poverty by the year 2020. Side by side, educational rates have surged rapidly. It is estimated that 27 per cent of the Chinese workforce will have university education by the year 2030, which is at par with present-day Germany.
However, the benefits of rapid economic growth have not spread evenly among China's 1.40 billion-strong population. Consequently, exceedingly wealthy individuals and a rising middle class co-exist alongside poor rural communities and lowly skilled, ageing workforces. Inequality has therefore deepened in the country, mostly along the rural and urban divides. This has resulted in massive variances between different parts, segments and classes. According to the World Bank, the average annual income in China currently stands at about $10,000, which is about one-fourth of the average for advanced economies and one-sixth of the USA.
China is currently moving through an era of slower growth after years of dependence on fast expanding exports cum manufactures as well as consumption-led growth. In the backdrop of softer global demands for its tradable commodities as well as trade-related hostilities spearheaded by the USA, the weight of demographic shifts and ageing population is also clouding her economic outlook in the short and medium terms.
However, even with a growth rate of around 6.0 per cent, China would still retain its position as the most powerful engine of global growth, as it would still have a share of 35 per cent global output. This, in turn, would be the biggest contribution by any single country and three times more contribution to global growth compared to that made by the USA.
China has also emerged as a global player in the international development arena through her 'Belt and Road Initiative' (BRI) during the present decade. Through a wave of funding for infrastructure development and investments across most continents of the world, China's nation-building and national development efforts have now assumed a cosmopolitan shape and global character. Revival of the medieval 'Silk Road' under the BRI now aims to connect almost half of the global population and one-fifth of the world GDP by establishing trade and investment linkages all over the globe. Developing countries like Bangladesh are most likely to benefit handsomely from this epoch-making Chinese initiative.
Dr. Helal Uddin Ahmed is a retired Additional Secretary and former Editor of Bangladesh Quarterly.
© 2020 - All Rights with The Financial Express