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Last Updated: Wednesday, 8 March 2006, 23:37 GMT
China's poor pose threat to wealthy future
By Chris Bowlby
Analysis, Radio 4

Look at China from a distance, and those huge new skyscrapers in places like Shanghai may dominate the view.

The sun rises outside Beijing's Great Hall of the People
The communists hope growth will help them hold on to power

They symbolise rapid recent growth, glitzy cities and factories flooding the world with consumer goods.

Look beyond, however, and another China comes into focus - where hundreds of millions still live in poverty, and where a communist government struggles with the contradictions of running a capitalist economy.

Last week the Chinese premier, Wen Jiabao, warned the National People's congress in Beijing of "deep-seated conflicts" and promised to spend more to ease the urban-rural divide.

Resentment and assertiveness

Oxford political scientist Steve Tsang says China is a "brittle" place.

There are fears that China's going to become the first country to get old before it gets rich
Anthropologist Elisabeth Croll

It looks strong from the outside but "the situation can disintegrate very quickly".

The communists hope continued rapid economic growth will permit their continued hold on to power.

But they are now caught between the resentment of those left behind by the boom and the assertiveness of a new middle class.

Political freedom

Take Beijing's recent deal with Google.

On the one hand, a symbol of China continuing to embrace the global economy.

But Google had to agree to block access to politically sensitive websites, something the government's 30,000 "Online police" struggle to do.

Chris Berry, a specialist on the Chinese media, points out that there are an estimated three million Chinese bloggers.

Their writings are full of criticism of official corruption and environmental cover-ups.

Economic freedom granted by the government encourages political freedom, which Beijing finds highly embarrassing.

Safety net

Pressure of a different kind comes from rural areas.

Anthropologist Elisabeth Croll, who has been visiting China regularly for several decades, says around 400 million Chinese are still living on $2 a day.

Migration and TV have made them more aware than ever of how their richer compatriots are prospering.

Demography is also posing problems.

The notorious 'one child' policy has left a population rapidly ageing.

There are fears, says Professor Croll, "that China's going to become the first country to get old before it gets rich".

Because of all this, the government dare not expose many state-owned enterprises to the rigours of the free market, as they provide not just jobs but a vital social safety net too.

They remain a huge drag on the economy.

China's impact

Chinese people, says Mr Berry, are divided between those who think their future is Californian and those who think it will be more like Russia - a place where the transition from communism has been far from happy.

Pessimists see a Chinese state ever more unstable, perhaps resorting to nationalism if it feels its power slipping and old tensions with neighbours like Taiwan and Japan come to the fore.

Some foreign investors, says Goldman Sachs chief economist Jim O'Neill, "wouldn't want to go anywhere near China", while others feel "you just can't ignore it and you have to be there".

Such is China's size that, if its growth continues smoothly, it will continue to have a huge global impact.

But its impact might be very different if the Chinas of rich and poor, young and old, communist and capitalist cannot be reconciled.

'Analysis - China's Challenge'. Broadcast on BBC Radio 4 at 8.30pm on 9 March, repeated at 9.30pm on 12 March.


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