China: 30 Years of Reform

On December 18, 1978 the Chinese Communist Party decided to open the economy and country as they realized the first 30 years of the Communist reign had been a failure and the country was on the verge of collapse. It was this decision that set the path to China becoming the "world's toy factory" and an exporting powerhouse.

While yesterday may have been the formal celebration of the Reform and Opening initiative, I think its undeniable that the "real" celebration of this was back in August during the couple of weeks when Beijing hosted the Olympics.

Here are some excerpts from China's President Hu Jintao from the meeting as reported by the Shanghaidaily.com:

-----------------------------
PRESIDENT Hu Jintao said yesterday that China must continue to press ahead with its "reform and opening drive," which in the past 30 years has turned the poverty-stricken country into one of the world's largest economies.Hu said China's significant progress had proved that the path of reform was "completely correct."

His speech, at the Great Hall of the People in downtown Beijing, came during a ceremony commemorating the 30th anniversary of the Communist Party of China's decision to open up the country and reform its moribund economy.

The decision, which saved China from an economic breakdown after the chaotic "cultural revolution" (1966-1976), was masterminded by Deng Xiaoping together with "his comrades who were bold enough to change the old norms."

"At that time people didn't have enough food and clothing. Ordinary people suffered most."In the 30 years since that trip, the average annual disposable income of Chinese urban residents has grown 6.5 times, from 343 yuan (US$50.40) in 1978 to 13,786 yuan in 2007.

Over the past three decades, China has maintained average annual economic growth of 9.8 percent, more than three times the world average, Hu told the meeting.Gross domestic product rose from 360 billion yuan in 1978 to 24.95 trillion yuan in 2007, making China the world's fourth-largest economy. The country's population living in poverty was cut from 250 million in 1978 to 14.79 million in 2007.

Hu said China still faces many challenges, including a low level of industrial innovation, a weak agricultural foundation, less-developed rural areas and deficiencies within the Party and the government.
-----------------------

Here are a couple of additional comments on the topic.

The article mentions that the average annual disposable income for urban residents has risen over the last 30 years from $50.40 to about $2,000.00. Obviously a significant increase. The chart below shows the average annual income in China's rural area... from virtually nothing in 1978 to just over RMB4,000 or about $580/year. And that's not disposable income, that's total income.

So there is a growing problem that the "rich are getting richer" and leaving the rural areas behind. This is why so many "migrant" workers come from the rural areas to work as housemaids, work the various retail stores, in the manufacturing factories and in construction.

Here's an example of the conflict between the classes, between the rich city workers and the poor migrant workers. Look at this picture...
In this picture above, one of the company's factories was recently closed, but the company did not pay out its required unemployment benefits. So the workers united and stormed the headquarters building, literally trashing the entire office and destroying tens of thousands of dollars in equipment.

Another problem that China needs to address is the level of safety standards. Food safety is an obvious example of the problems they have been having. One more area is in their construction. They are building at an incredible pace... new skyscrapers, airports, bridges, tunnels, subways, etc. While it is both incredible and beautiful, for example here is the new area of Shanghai that has entirely been built since 1990:
What happens when the buildings are not up to code? Just think of all the schools that collapsed during the Sichuan earthquake because they were not built to the proper earthquake codes that they were contracted to build them to.

What happens when the tunnels and subways built underneath are not built to proper specs? Unfortunately there was a recent example of this just last month in Hangzhou, a city close to Shanghai. A tunnel that was being built for their new subway collapsed causing injury and death in the following scene:

The Reform and Opening has led to a lot of progress... that is unquestionable. But there are lots of cracks in the system that need to be addressed to maintain the progress that has been made and I commend President Hu Jintao for bringing that up in his speech yesterday.

China Miracle or China Mirage? It's definitely a bit of both. I wish them the best going forward, for their sake... and for ours as well!