Emergic: Rajesh Jain's Blog

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China’s Growing Pains

August 21st, 2004 · No Comments

The Economist has a series of articles on the challenges China faces as it grows. An excerpt from the editorial:

The state has retreated not just from agricultureover 60% of China’s population still live in the countrysidebut from great swathes of industry and commerce, too. Inevitably, this has led to unemployment on a staggering scale. Reliable numbers are hard to come by, and the official ones are certainly gross underestimates. But there are perhaps as many as 15m unemployed in China’s cities, and ten times that number in the countryside who have little or nothing to do. Still, this is at least a problem that rapid economic growth can be expected to chip away at fast. China’s economy is clearly starting to slow, but an Economist poll of forecasts puts growth this year at 9.2%, and at a still-stellar 7.9% next.

One casualty of the freeing up of China’s economy has been its state health-care system, which has in effect collapsed. This threatens to undo one of the genuine achievements of which the Communist Party can boast: life-expectancy in parts of the country, particularly in the west, may actually now be falling. Diseases like tuberculosis and measles, which had been thought tamed, are making their return. Burdened by the costs of modernising its economy, but receiving only a modest tax take (it has risen from 12% to 18% of GDP a year, but that is not enough), the government’s deficit has been increasing. The health system has been a victim.

Pollution is an invariable consequence of development everywhere, but in China it is reaching scandalous proportions. The World Bank reckons that China is home to 16 of the world’s 20 most polluted cities, and calculates that pollution and environmental degradation together cost China as much as $170 billion annually.

Tags: Emerging Markets

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