Published on October 15, 2014
1. Bertrand Russell and the Challenges of Contemporary China Tanweer Akram (Voya Investment Management) 12th International Post Keynesian Conference (Sep 25-Sep 27, 2014) University of Missouri Kansas City (UMKC) Kansas City, Missouri, USA
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3. Motivation More than 90 years ago Bertrand Russell wrote The Problem of China (1922). This presentation will discuss some of the key challenges of contemporary China in light of Russell’s dated but insightful and prescient analysis. Many of the issues that Russell identified still apply to contemporary China but there are other important issues crucial today that were not topical 90 years ago! 5
4. Russell in China 6
5. Bertrand Russell and China Among the first major Western philosophers who visited China Taught at Peking Government University Published The Problem of China (1922) Retained an interest in China throughout his life Corresponded with Chinese leaders, particularly during and after the Sino-Indian war (1962) 7
6. Russell appreciated the importance of China “Chinese problems, even if they affected no one outside China would be of vast importance, … the entire world will be vitally affected by the development of Chinese affairs … during the next two centuries. This makes it important … that there should be intelligent understanding of the question raised by China, even if, as yet, definitive answers are difficult to give.” (The Problem of China, 1922, p. 3). 8
7. China today is a lot different than during Russell’s visit! The world’s second largest economy (measured in purchasing-power parity terms) Important driver of global growth Vital role in international trade and global manufacturing and supply chain Strong per capita real income growth and impressive reduction of income poverty since 1980 9
8. China is the world’s second largest economy 10
9. Per capita real income in China has increased rapidly 12
10. China’s challenges today Still a lower medium income country The standard of living remains low for the vast majority of its people Problems of rebalancing aggregate demand, environmental degradation, and widening social disparities One party system 15
11. The main problems that Russell identified in 1922 1. The establishment of a stable, orderly and sovereign government 2. The industrialization and modernization of the country’s economy with Chinese control 3. The spread of education 16
12. Industrialization and economic transformation in China Russell understood that industrialization would be important for China. He believed that Chinese industrialization would occur only under socialism. Even though he thought industrialization is essential, he believed that China would remain a predominantly agrarian country in the foreseeable future. Indeed, substantial industrialization and modernization did occur after the establishment of the People’s Republic of China. But renewed impetus to strong growth came after the post-Maoist reforms in both agriculture and industry. China is a now a “mixed economy”, with substantial state ownership and control of the means of production but also with private ownership of capital. 18
13. China has undergone rapid urbanization in recent years 20
14. Challenges for contemporary China that are relevant today but were not topics of the day during Russell’s times Structural composition of aggregate demand Aging population, low fertility rate, biased sex ratio and demographic transition Environmental degradation Social disparities Health standards and food safety Banking and finance Elevated real estate prices Energy security 21
15. Both consumption and investment underlie domestic demand growth 22
16. Consumerism and consumption in China Consumption in China has risen in conjunction with growth and the rise of real income, even though household consumption as a share of national income remains low and has declined since the early 1990s. 24
17. High investment, fixed asset and infrastructure Spending Investment has been important driver of growth. Construction of industrial, commercial and residential real estate has boomed. Chinese cities have changed dramatically since Russell’s times! By 2025, in China Urban population will grow to about 250 million More than 200 Chinese cities shall have more than one million residents, compared to 35 such cities in Europe 50,000 skyscrapers is expected to be constructed (= 10 Manhattans!) Beijing’s subway (underground metro) system will exceed 1,000 km and the country will be building more subway lines that what the total of Europe’s currently installed subway systems 25
18. Impressive skyscrapers!
19. China’s population is expected to decline by mid-2030s. 29
20. China is benefiting from demographic dividend 30
21. Some indicators of human development in China Indicator of Human Capital Development People’s Republic of China (CHN) 34 South Korea (KOR) Japan (JPN) Life expectancy at birth, years, 2012 73.7 80.7 83.6 Mean years of schooling, years, 2010 7.5 11.6 11.6 Expected years of schooling, years, 2011 11.7 17.2 15.3 Maternal mortality rate, death per 100,000 birth, 2010 37 16 5 Physicians, per 1,000 people, 2005-2010 1.4 2.0 2.1 Source: UNDP, Human Development Report 2013
22. Progress in health and life expectancy has not been impressive since the beginning of economic reforms While China continues to make impressive progress in education, scientific and technological capabilities, since the beginning of economic reforms China’s life expectancy gains and health gains have been less impressive. China will need to investment in public health infrastructure, public health security and insurance, and improve food and water safety standards to improve the health outcomes of its people going forward. 35
23. China’s total CO2 emissions exceeds that of the U.S. 37
24. But China’s per capita CO2 emissions are still far below that of advanced capitalist economies 38
25. China’s oil consumption to GDP ratio is high 39
26. The peaceful rise of China 42
27. China’s dispute with Japan 43
28. Disputes in South China Seas with its neighbors 45
29. Border disputes with India 46
30. Cooperation with Russia: Tactical or strategic? 47
31. How to “recover” Taiwan? 48
32. China 3.0
33. Major long term challenges for contemporary China Governance, regime stability, and human rights. Or how to avoid an “Orange Revolution”! Industrialization and modernization of the economy Job growth and poverty reduction Inequality and social disparities Human capital development, education and health care Managing the demographic transition Improving the quality of the environment Ensuring energy security and access to resources Regulating of the financial sector, including shadow banking Ensuring the “peaceful rise” of its global power without incurring the wrath of the Western countries!
34. Conclusions China’s challenges are still formidable but the country has made impressive gains, particularly in real per capita income growth, in recent decades. Russell realized the vital importance of industrialization for China’s development and modernization, but also the role of governance, regime stability, and human capital development and scientific and technological capability. There are similarities between the problems that Russell identified years ago and contemporary China’s challenges, as well as differences and, of course, new problems. Russell hoped that China, unlike Western nations, could and would develop without resorting to ultra nationalism, militarism, and crass materialism. He was optimistic that China would be a progressive force in the community of nations. 52
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