The vibrant Chinese economy

R Jinith de Silva

The Chinese economy advanced in a tremendous pace during the last three decades. This was possible due to the economic reforms initiated by former President Deng Xiaoping.

There are two international indices that can be used to measure the economic development of China. One is the increase of gross national product and the other is the national consumption. During the decade 2001 to 2010, the gross national product increased annually by 9.9%.

The increase during the entire 10 years was 158% according to World Bank reports. This is important as when the world economy was experiencing a recession, the Chinese economy boomed continuously. It is worth comparing this with few other countries.

During the said decade, the Chinese economy developed two fold than India, it was a 2 1/2 fold increase than Russia, three fold increase than South Korea, seven fold increase than Germany and 20 fold increase than USA.

During this period, a marked increase was recorded on the consumption segment of the people. The consumption of the people has gone up by 103.2% during this period. It is a three fold increase comparing to South Korea, 10 fold increase than USA and a 16 fold increase than Germany.

Chinese consumers are now the largest luxury consumption group in the world. In 2012, Chinese consumers bought 25% of the world's luxury products. There are several reasons for this rapid economic growth of China. This change was made possible by the economic policies of Deng Xiaoping in 1978. Prior to this, economic activity was state owned. He changed this and allowed the private sector also to get involved in the economic activities. By 2011, half of the wealth of China was earned by the private sector comprising 9.64 million entrepreneurs. About 200 million people were employed in the private sector. State owned enterprises were restricted and some were sold to the private sector.

As a result of these policies, foreign investments flooded into the country.

Free Trade Zones opened in Guangdong, Shanghai and around Behai Sea area. Out of the 500 world's largest companies, 433 have arrived in China. Even the Air bus industries of France has opened a factory in China. Many large companies of the world moved their Head Offices to Shanghai. Many leading companies have started joint ventures with Chinese companies. This is prominent in the motor vehicle production.

China has obtained advice from foreign experts in their drive towards modern science and technology for industry and architecture. The number of foreign experts which was about 10,000 in 1987 increased to 530,000 in 2011. It is said that China's present leader Xi Jinping is a firm advocate of obtaining advice from foreign experts.

A massive amount of money is spent to develop infrastructure all over the country. The entire country is covered with well developed network of roads and rail lines.

During my last visit to China in October, I saw with my own eyes the road development that has taken place in Yunan and Guangdong. This is also evident in rail travel. About 15 years ago, the average speed of a train in China was 50 kms per hour. By 1997 it was increased to 100 kms per hour. Today, they have made new trains travel at 300 kms per hour. In the new rail service installed between Beijing-Shanghai, fast trains travel at speeds of 350- 380 kms per hour reducing the travel time from 11 hours to 5 hours. China plans to introduce, 2,000 high speed trains by 2015 and 2,700 by 2020. This will interconnect all provinces of China with high speed trains covering 90% of the population.

Economic development is not confined only to urban areas. They have taken measures to develop the village areas too. The change of land policy in 1980 was one such move. With that change the peasants were allowed to own land and to till them privately. They were also allowed to sell their products privately. This resulted in a steep rise in the production.

The centre also repealed a tax system that existed for about 2000 years. The peasants were encouraged to invest the monies they paid as taxes.

This helped farmers to diversify their activities and with the expanded rail and road networks, helped them sell their products at various markets. The export horticulture projects of Yunan province is a classic example for this. These flowers are sent to various markets and today China has become one of the leading exporters of flowers to the world market.

This has resulted in a significant increase of the income of the people of that province.

All these achievement are not only due to good planning of the state but also due to the hard work of the people. The Chinese by nature are hard working and frugal in their day today life. During our visit we observed this quality everywhere. The Chinese do not eat between main meals. Most of the meetings we attended commenced at either 10 am or 3 pm. During the meetings, we were served with fruits and Chinese tea and never with short eats like in Sri Lanka. Even in the hotels we stayed, only fruits were served as desserts. When inquired they said they do not believe in wasting food and fruits are served to support the fruit growers.

Welfare of the people is one of the priorities of the Chinese state. By 2030 there will be over 355 million people in China who are over 60 years of age.

Even today the most widespread welfare system is found in China. There is a pension and health insurance scheme that covers all urban and village people.

While developing the economy they have not forgotten the old people who contributed immensely for the development of the economy.

The youths of the country seems content. This I noticed at every visit I made to China. Youths who wear western attire spend their evenings in restaurants.

I have noticed youth queuing up to enter some of these restaurants. The ocean of bicycles that was seen in the morning and evening on the streets are no more to be seen and now instead of bicycles we see new cars and motorcycles.

Today, China has the biggest foreign exchange reserve in the world.

Instead of inviting foreign investors, China has invested in many countries especially in North America, Europe, Middle East and Africa. About two years ago the Chinese purchased Volvo of Sweden.

The Sany heavy industries purchased 90% shares of the Pulqmeister's of Germany. China is expected to invest heavily in the near future in many countries.

Today, China has beaten Japan and become the second largest economy in the world. It has become the biggest exporter in the world.

The leaders behind this success were Deng Xiaoping, Jiang Zeming and Hu Jintao and the leadership they gave to China to become what it is today is admirable.

At the recently concluded 18th Congress former leader Hu Jintao said today's per capita income of US $ 5,000 should be increased to US $ 10,000 by 2020. This idea was included in the white paper of the Congress.

The new leader of China Xi Jinping plans to make China the biggest economy in the world and to make it the most beautiful country.

This I know will be good news to all peace loving people in the world.

The writer is the Secretary of Sri Lanka-China Society.