The Great Leap Backward?

March 3 2008
Brazil’s lesson for China: do not ignore inequality“:
(FT) In the late 1960s and 1970s, when Brazil was a dictatorship and the economy booming, social policy was neglected. “Grow the cake now, divide it up later”, became the mantra. For the past 20 years, China has sometimes adopted a similar approach.
One of the less well-known features of China’s boom is the state’s withdrawal from providing health and education. Mao-era healthcare was far from perfect, but today most Chinese have no health insurance. In rural areas it is not hard to find a family bankrupted by medical bills. Schools are losing 1m children a year because parents cannot afford the fees. Given how often China is labelled a success and Latin America a failure, it is worth noting that in the past decade Brazil’s government has spent twice as much of its gross domestic product on health and education as communist China.
Just as surprising, inequality is fast approaching Brazil’s notorious levels, despite falling poverty levels. Using the Gini coefficient to measure income distribution, “zero” means perfect equality and “one” complete inequality. The official Brazilian figure is now 0.53 and falling, while China’s is 0.47 and rising. (The US figure is 0.41 and India’s 0.31.)
Chinese inequality is about the gap not just between urban and rural areas, but also within cities. Urban China has two classes of citizen: permanent residents get subsidised social services while poorer migrant workers often pay full price. Crime is nowhere near Latin American levels, but there are signs of tension. The rural poor see wealth only on tele­vision; the urban poor witness lavish lifestyles in the flesh.
Latin America has suffered from cosy pacts between business elites and politicians, but what sort of elite is China creating? In the early days of reform, entrepreneurs were often from the fringes of society – indeed a few had done time in prison. Today many boast their Communist party positions on their business cards. China’s rich list is dominated by real estate, where ­schmoozing to secure government contacts is essential.

Foreign Affairs, September/October 2007
by Elizabeth C. Economy
China’s environmental problems are mounting. Water pollution and water scarcity are burdening the economy, rising levels of air pollution are endangering the health of millions of Chinese, and much of the country’s land is rapidly turning into desert. China has become a world leader in air and water pollution and land degradation and a top contributor to some of the world’s most vexing global environmental problems, such as the illegal timber trade, marine pollution, and climate change. As China’s pollution woes increase, so, too, do the risks to its economy, public health, social stability, and international reputation. As Pan Yue, a vice minister of China’s State Environmental Protection Administration (SEPA), warned in 2005, “The [economic] miracle will end soon because the environment can no longer keep pace.”
With the 2008 Olympics around the corner, China’s leaders have ratcheted up their rhetoric, setting ambitious environmental targets, announcing greater levels of environmental investment, and exhorting business leaders and local officials to clean up their backyards. The rest of the world seems to accept that Beijing has charted a new course: as China declares itself open for environmentally friendly business, officials in the United States, the European Union, and Japan are asking not whether to invest but how much.