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What does it mean for the rest of the world if China’s middle class continues to grow and prosper?

<span class ="վերնագիր"> Hundreds of millions of Chinese citizens have become part of the middle class in recent decades. </ span> <span class ="վերագրում"> <span class ="աղբյուրը"> AP Photo / Ng Han Guan: </span> </span>“src =” https://s.yimg.com/ny/api/res/1.2/2_chA.NFC3Kj0PKfrqGlkA–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ2Ny4wNjI1/https://k/f – / B / aD05NTQ7dz0xNDQwO2FwcGlkPXl0YWNoeW9u / https: //media.zenfs.com/en/the_conversation_us_articles_815/67df27ececd574d2a29183a6f71b59c /YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ2Ny4wNjI1/https://s.yimg.com/uu/api/res/1.2/41f1n3Ul5OLxxqcFx2kMvQ–~B/aD05NTQ7dz0xNDQwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/the_conversation_us_articles_815/67df27ececd574d2a29183a6f71b5927 “/></div></div></div><p><figcaption class=Hundreds of millions of Chinese citizens have become part of the middle class in recent decades. AP Photo / Ng Han Guan:

China’s great achievements over the past four decades have prompted scholars and politicians to debate whether the decline of the West, including the United States, as the world’s dominant political and economic power, is inevitable against the backdrop of the East’s seemingly steady rise.

The COVID-19 virus first hit China, halting its rapid economic growth for the first time since the Great Depression. But China’s economy grew by 18.3% in the first quarter of 2021 compared to 2020, keeping it stable as the world’s second largest economy. Many now believe that China, not the United States, can accelerate global recovery from the epidemic.

It is not yet clear whether this current return means that China has resumed its previous growth rate. If that happens, I believe it will start a global competition over which dominant party will have a dominant influence on global affairs in the coming decades. Western-style democracy or a trademark of Chinese authoritarianism.

My studies of others examine two issues.

  • Will China address the biggest challenges in maintaining its four-year-old 7% -8% annual growth rate, which has pushed its growing global power?

  • If China manages to maintain this pace, will it benefit the rest of the world?

“The middle-income trap”

In 1978, Deng Xiaoping initiated transformational reforms that opened China to the international community’s “foreign investment.” In 2001, China joined the World Trade Organization and became an enthusiastic participant in world markets and value chains. As a result of these other economic policies, China has been able to move quickly from a low-income to a middle-income nation.

In other words, globalization has so far benefited China in many ways. After generations of endemic poverty, hundreds of millions of Chinese citizens have seen their wages rise, leading to an increase in resettled incomes. Now, after paying for the essentials, they have extra money to save or spend on consumer goods such as trendy clothes or accessories.

Profits are now spread beyond the urban centers, the number of citizens in a sharp decline, who are “rural” and “poor”, fell by 12.89 million from 2016 to 2017 alone. Rural consumer spending is rising. As the increase in agricultural production alleviates the fear of hunger, daily life in rural communities improves, while the expansion of the agricultural industry offers them alternative sources of income.

This growing material comfort has led to an increase in the happiness of living in China. Even if a country like China achieves a middle-income status, it can fall into a trap. Unable to compete with other nations neither in the knowledge economy, usually in the high-income state, nor in the low-wage economy. behind:

In an influential study of this “middle-income trap” for a number of countries, the World Bank found that in 1960, only 13 of the 101 middle-income countries achieved high-income status by 2008. What some call a “low productivity equilibrium” is a relatively small proportion of the total workforce working in high-skilled jobs such as healthcare providers, engineers or managers, rather than low-skilled ones such as farm workers. , factory workers, or clerks և cashiers. The other 88 countries were either poorer or seemed to be stuck in middle-income status.

In addition, many small and large manufacturing companies are responding to rising wages in China by moving their operations to lower-income countries, such as India and Vietnam. Every year, 40,000 factories in China close, eliminating the number of jobs. This means that China has milked low-skilled production for all its value; it needs a new policy to sustain growth.

The challenge of Chinese education

The world is more and more divided into two categories. Countries that have a good education և Those that do not. Since the end of World War II, industrialized nations, which have also made significant investments in improving the quality of their high schools, vocational colleges, and universities, have largely avoided the middle-income trap and moved to high-income status.

For example, in Singapore, investments of 12% -35% of the annual national budget in the education system are the basis of a well-educated, professional, thriving middle class that ensures continued economic growth. Similarly, South Korea has invested heavily in education, spending an average of 3.41% of its gross domestic product between 1970 and 2016.

Some expert observers believe that China is likely to successfully take such steps, allowing it to avoid the middle-income trap. But for that to happen, leadership must make nationwide investments in its education systems, from improving rural vocational schools to improving universities to expanding urban education opportunities. These educational investments, which economists call “human capital improvement”, usually take a long time to fully develop.

If China maintained its average annual growth rate of 7% during this transformation of its workforce, its per capita income in 2035 would be about $ 55,000, which is almost identical to the per capita income of the United States in 2014. That year, about 44% of the U.S. workforce had at least a college education and 89% a high school diploma. Even optimistic statistics show that by 2035, China’s education will be much lower.

Therefore, the Chinese government will realize its 7% annual growth expectation for the next 20 years only if China manages to create a digital connection between the “per capita income” of human capital, which is significantly higher than the usual world experience so far.

Another challenge is that China is an unequal country with the deepest rural-urban gap in the world. According to the Chinese “hukou” or household registration system, all citizens are born with either rural or urban hukou. This system, which affects almost every aspect of human life, favors urban status by providing urban owl owners with significantly greater, better educational opportunities.

As a result, 260 million Chinese rural hoppers are unable to access higher education in cities. Even when they are relocated to urban centers, they are left behind because their hukou force them to live as second-class citizens in the cities they have adopted. So China must seriously reform the hukou system if it is to have a secure foothold in the world’s “well-educated” nations.

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What would high-income China mean for the rest of the world?

Scott Rosell, a well-known Chinese scientist and professor at Stanford University, said that “a prosperous China will make the whole world much better.” He argues that the world will benefit from the continued availability of goods at very low prices, while China itself will benefit, as the growth of personal well-being will disrupt civil unrest.

But such success may suggest to developing countries that when it comes to bringing millions out of poverty, providing broad economic growth and development, Chinese socialism is a more desirable model of governance than democracy in the West.

The Chinese Communist Party wants to remain a strong authoritarian government. In China, a huge state of surveillance tracks people’s faces, scans their phones, and even tells when someone has left home.

The government’s crackdown on Uyghur citizens of its Xinjiang Muslim minority provides a glimpse of how China can interact with the peoples and nations that are dissatisfied with its dominant world order.

At the same time, China is already expanding its international influence through its Zone Road Initiative, which envisions billions in investments in Europe, Asia, East Africa, and the Western Pacific. In the process, China desperately demands և begin to gain a dominant political role on the world stage.

It is too early to say whether China will continue to maintain rapid economic growth or make the investments and social reforms necessary to relocate most of its citizens to the middle class. But given the determination and progress of the last few decades, it is certain that already in the Middle Ages, China, with its wealth, equal in political influence to the United States, could become a fact to its coalition of democracies. Such a China could have the power to divide the current international order into two opposing, incompatible visions of the future of Asia and the world.

This article is republished from a vers’s non-commercial news site dedicated to sharing the ideas of scientific experts. It was written by Amitrajeet A. Batabyal, Rochester Institute of Technology,

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Amitrajeet A. Batabyal does not operate, consult, own shares, or receive funding from any of the companies or organizations that use this article, has not identified any relevant affiliation beyond their academic background.

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