In the Youtube video “China on Path For Sustainable Growth”, Yale University Senior Fellow and former Chairman at Morgan Stanley Asia Stephen Roach spoke about the future of China, and where he see’s the Chinese economy going in the near future. He spoke on many different interesting topics, such as boosting China’s social safety net (social security, private pensions, and insurance). He also spoke about how China needs to start moving away from manufacturing (which does not create enough jobs per unit of GDP), however if we look at the manufacturing that has been moving to India and Cambodia we can see that this has clearly already started to happen.
The main thing that stuck out to me in this video was his position on urbanization in China, and the moving of 10’s of millions of people each year from countryside to cities. “Beijing sees urbanization as China's next biggest engine for economic growth, with plans to turn 300 million rural folks into urban dwellers by 2030 — equivalent to relocating nearly the entire population of the United States” (foxnews.com). I feel that this has the potential to seriously help sustain China’s economy in the long-term, however if it is not done correctly it could result in a short-term boost in the economy followed by horrible consequences. It is the same bubble that has started to deflate with China’s cheap labor and export driven economy. The communist party in China has completely shifted their view on how to deal with the peasant society in their country, and need them to become more mainstream and depend more upon consuming rather than being self-sufficient. “This will decisively change the character of China, where the Communist Party insisted for decades that most peasants, even those working in cities, remain tied to their tiny plots of land to ensure political and economic stability. Now, the party has shifted priorities, mainly to find a new source of growth for a slowing economy that depends increasingly on a consuming class of city dwellers” (nytimes.com).
China is hoping for this shift to end in a new society-less self-sufficient- and more consumer based. My main issue with this plan is there are so many variables that have to go exactly according to plan, or the results could be catastrophic. For one, they are banking on the fact that these peasants and farmers will not only uproot their lives, and move into a more city type atmosphere, but that they will also be able to adjust to this new way of life. China has started to make changes to help with these adjustments, however this must remain their main focal point, because the future of their economy will be based on a new type of China focused more on urbanization and consumerism. “The coming urbanization plan would aim to solve this by giving farmers a permanent stream of income from the land they lost. Besides a flat payout when they moved, they would receive a form of shares in their former land that would pay the equivalent of dividends over a period of decades to make sure they did not end up indigent” (nytimes.com).
Urbanization could be great for China, or could result horribly. China’s 1958 to 1961 Great Leap Forward destroyed the environment and the results were death and famine. “The efforts so far have been uneven. Land grabs by local officials have sparked violent conflicts with…