A weak economy?

31 October 2006 - by Joi Kush

Since I am an international studies major, I have been assigned to read various articles in which intricately outline the possibility of China's economy surpassing the United States. Most of the articles argued that China's economyis growing at such a fast pace that that the United States could never catch up with the escalating GDP due to the United States rising trade deficit and outrageously large national debt. After reading fact after fact, I became convinced that China would create this transition of power sometime in my lifetime. However, now that I have witnessed and read about the vast inequalities between the rural and urban societies of China, I am now convinced that China has a long road to haul before they can supersede the United States.

It was not until a couple of weeks into my stay in Beijing that my skepticism engulfed my previous knowledge of China's economy. I remember walking through the streets of Beijing trying to associate myself better with my surroundings while reflecting on the environment around me. I found myself amazed by the disparity between one section of the city over the next. It seemed as if every other block I was transferred into a different time period of Chinese history, one block consisting of primarily degenerated buildings that lackedmodern innovation and one block consisting of high-tech postmodern skyscrapers.

My astonishment with the economic disproportion continued to grow as I traveled outside of Beijing to the province of Shanxi. During my stay in Taiyuan, Pingyao, and Datong I could not help but critically analyze the structure of the economy within these cities. I am not an economist, but it seemed as if these cities heavily depended upon a low-income industry which essentially hurttheir possibility of development within their regional economy due to lack of funds for reinvestment. However, I realized that this view was not an empirically researched thought; hence, could not be considered an educated valid analysis.

After I returned from my trip, I began to inquire about the differences in China's economy. It did not take long for me to find articles on the internet which emphasize the fact that the economic disparity in China is profound. For example, the current peasant makes an annual income of US $300 and a typical person from Shanghai makes US $4,000. In 2001, China reported that more than 29 million people were living off of less than one dollar (US) a day. Furthermore, China's current Gini coefficient (a measure of income inequality on a scale of 0 to 1) of 0.45 has suggested that economic inequality has surpassed that of the US and UK. Most surprisingly, social protests on economic inequality throughout China have grown from 58,000 in 2005 to 74,000 in 2006. Paradoxically, many of these protests end up being non-influential in neither regional or national government decisions about the economy due to thefact that most protests are stopped through bribes. Hence, the issue is only delayed and not resolved.

Overall, China has made several strategic steps forward with economic reformation since the 1970s; however, the nation still falls short when doing a comparative analysis with the United States' economy. Perhaps one day, Chinaand the United States will be throat-to-throat in claiming economic supremacy; however, the United States still holds strong.

Ironically, even though China still remains a reforming nation, the United States still depends heavily upon Chinese investment in US dept. Perhaps when reflecting upon this fact one could ponder what really constitutes a weaker economy, one in which has a large economic disparity between the rural and urban populations or one in which has more than a trillion dollars worth of national debt and a rising trade deficit ratio?

Any thoughts?

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