China Choking on Its Own Prosperity

The week-long congress of the modern-day Chinese Communist Party is more about style than substance. Party delegates (and ordinary Chinese) hear set-piece speeches replete with lofty principles and exhortations for the future economic, social and political development of the world's most populous country. Leadership changes (made by the party's Central Committee long before the delegates gather) are announced, and lavish praise is heaped on the President and other members of the senior leadership.

This year's congress, the party's 17th, has proved no different, but in its own nuanced way, it is perhaps one of the most important since the fourth party congress in 1975 when Zhou Enlai announced his "four modernisations" an initiative that was the basis of Deng Xiaoping's economic reforms some three years later and which marked the start of China's drive to become a great economic power.

Since Deng declared that "to be rich is glorious" just over three decades ago, China has accumulated more than $US 1 trillion ($A1.1 trillion) in foreign exchange reserves, and by some estimates, has more than 300,000 millionaires. It has averaged an annual growth rate of more than 10 percent since 2002, and recently overtook Britain as the world's fourth-largest economy. By the end of this year, China will surpass Germany as the world's third-largest economy behind Japan and the United States.

The side-effects of this astounding transformation from a rigid, centrally controlled economy to dynamic capitalist powerhouse have also been profound: rampant corruption, income inequality between the rich inhabitants of the eastern seaboard cities and the villagers in the western and northern interior, and environmental degradation on a massive scale. Such problems have always been considered secondary to the all-encompassing goal of quick economic development, and concealed, played down or dealt with haphazardly and ineffectually. So, too, the question of political and environmental reforms to defuse the anger and frustration of Chinese who have been denied a share of the country's new-found wealth or who are dying prematurely as a result of extensive air and water pollution.

Such is the extent of China's environmental problems now, and the levels of social unrest, that senior leaders now recognize they must change course.

President Hu Jintao did just that in his opening address to the congress on Monday, admitting that the party had failed to live up to the expectations of ordinary Chinese. Acknowledging that China is undergoing a "wide-ranging and deep-going transformation", Hu promised that he would address social divisions, the environment and corruption during his second and final five-year term and said the party's constitution would be amended to include the concept of "scientific development" to ensure government policies promoted more balanced, equitable and sustainable development. However, the growth-first philosophy of Deng Xiaoping looks likely to remain center stage for some time yet. In his speech, Hu forecast a quadrupling of economic output by 2020 from a base year of 2000 a clear sign that the party considers growth to be the only means of addressing China's social and environmental problems.

Further prosperity, and promises that new wealth will be spread more evenly among Chinese, may well short-circuit calls for fundamental political reform, but it remains to be seen if the country's leadership has the willingness, or capacity, to repair the environmental damage that has occurred in the past decade. China's heavy industry is very energy-intensive it is the world's leading manufacturer of cement, flat glass and aluminum and despite a commitment to nuclear energy it remains heavily dependent on coal-fired power stations. China's appetite for electricity saw the energy equivalent of 2.7 billion tons of coal burned last year, leading to a perpetual haze over much of the country, and a respiratory disease rate that is among the highest in the world.

Even if the central government was inclined to rein in the growth of heavy industry in favor of cleaner alternatives, it lacks the means to enforce immediate economic changes in the regions, where officials enjoy substantial autonomy on matters of state bank lending, taxes, regulation and land use. Attempts, led by Hu, to impose environmental yardsticks on industry and highlight the dangers of pollution have failed for similar reasons.

The inability of China's authoritarian rulers to balance economic growth and environmental protection says much about the complexity and difficulty of governing the world's most populous nation, but it also suggests that only political change can alleviate what is a systemic problem for which there is little appetite among Beijing's ruling elite. However, Hu and the other technocrats who make up that elite now recognize that China is racking up an enormous bill in its pursuit of growth-at-all-costs.

(The Canberra Times)