Can China Be Fixed?

China is in a bit of a quandary. The country, opened to economic growth by Deng Xiaoping, remains closed otherwise, by the current Communist Party leadership. The result: unparalleled economic growth by any country in the history of the world, and tremendous challenges on the social, environmental and political fronts, that ironically, perhaps only a strong central -- and dare I say, one party -- government, may be capable of solving without risking the economic collapse of the country. Unfortunately, the government that can fix the problems, is also the cause of the problems.

China's central government stresses economic growth above all else. To achieve these goals, local government officials dabble in industry, compromising the welfare of the state and its people. They invest heavily in local businesses -- sometimes tying business prosperity with personal fortunes of corrupt politicians. This has led to lax laws or simply laws that aren't enforced to protect China's people, environment and society.

The same policies that have been so successful at boosting the gross domestic product by developing new export industries and public works projects, it turns out, undermine initiatives that might move China's economy to a higher level. In its pursuit of growth at all costs, China skimped on investments needed to provide basic affordable health care and the regulatory machinery that can enforce environmental, safety, and corporate governance regulations nationwide. [BusinessWeek]

China needs to change, and just as rapidly as it has developed economically. The developed world has invested a lot in China for its production capability, but more and more, are demanding that China takes on the responsibility of joining the ranks of the developed nations. What China does in the coming decades will speak volumes on whether its aspirations lie tactically in production capability -- or strategically, as a world leader and a first world nation.

Further reading:

• Light on its feet
• One country, no democracy
• Smog gets in your eyes
• An Importer's Worst Nightmare