October 14, 2007
History repeats itself in China
When Mao Zedong ruled China, the Chinese Communist Party (CCP) was often criticized for sacrificing the livelihood of China’s weary populace for the aim of making China a military superpower.
China was of course condemned by the West; but the capitalists weren’t the only ones who criticized Mao and his ruling circle. Yugoslavia’s Tito and the Polish Communist Party also assailed the CCP for its cavalier attitude toward the misery of ordinary Chinese citizens. Millions of people died in Mao’s various modernizations drives, like the Great Leap Forward of 1958-1960.
Circumstances have certainly improved in China; but the country’s leaders still seem to be focused more on China’s international prestige than they are on the lives of their constituency. As an article in the Economist states:
CHINA will soon boast seven of the world's ten biggest shopping malls. Yet Chinese households are hardly the most eager shoppers. Consumer spending has fallen from 47% of GDP in the early 1990s to only 36% in 2006, the lowest proportion in any large economy (see left-hand chart). At the other extreme, American households consume 70% of GDP.
The decline in the ratio of consumption to GDP does not reflect increased saving; instead, it is largely explained by a sharp drop in the share of national income going to households (in the form of wages, government transfers and investment income), while the shares of profits and government revenues have risen. Most dramatic has been the fall in the share of wages in GDP. The World Bank estimates that this has dropped from 53% in 1998 to 41% in 2005 (see right-hand chart, above), and data from the industrial sector suggest it fell further in 2006. In the United States, supposedly a beacon of capitalism, wages take a much bigger 56% of national income. ---The Economist
The gist of the article is that Beijing needs to shift its focus---toward domestic consumption rather than domination of world export markets. Unfortunately, concern for the average citizen has never been a fixture of government policy in the People’s Republic of China.
