May 26 2009

by at 2:38 am under Uncategorized

Development Vs Sustainable Development

I have carefully read Chapter 5-7 of the Globalization and Its Discontents. As a witness of the gradual development of market economy in China, it is easy for me to understand that why Russia’s transition has failed and China’s path of gradualism is a “better road to the market”. Stiglitz did a detailed argument of Washington consensus’ failure in helping Russia’s transition from arranged economy to marketed economy. But in his comparison of Russia’s failure and China’s succeed, he only told part of the story of China’s development.  

 

First, I do not agree with his calculation of development. Stiglitz approached the gains and loses of development by counting on GDP growth and average income, but what’s missed here is the trade-off of the economic growth, such as environmental costs, decline of social morality understand market competition and the fragile social stability for the lack of political democracy.  

 

China’s economic development is gradual but aggressive, its over-speed development at the cost of sustainability is a time bomb for the people and a temporary shelter for political conservatives. In the long-run, China’s exploitation and abuse of natural/human resource can hardly be paid by its capital development. Unlike the industrialization of UK and US which used early modern technology, China’s industrialization has been conducted through contemporary technology that provides higher quality for construction along with larger damage.  For example, the Three Gorges Dam project is owned and operated by the state, which has the administration power and technique resources. According to Stiglitz, the outcome of the project as economic development is creating jobs, enriching energy resource, driving GDP growth and probably increase the average income. However, what’s behind the picture is millions of people have been relocated by the government in five years, the ecological change and potential natural disaster like flooding and earthquake, and most importantly the redistribution of wealth that can only deepen the gap between rich and poor. All those elements are ignored in Stiglitz’ methodology of calculating development.  The Three Gorges Dam is a reflection of the unsustainable development of China in the last 20 years.  

Second, Stiglitz harshly criticized the fruitlessness of Russia’s democratization, but he forgot to mention that China’s stagnation in political reformation is fed by its economic development.  The high tax rate is used to keep its over-size, inefficient government rather than for social welfare. China’s education fund is less than one percent of its GDP, lower than Uganda. You will know that corruption in China is no better than in Russia if you read Losing the New China: A Story of American Commerce, Desire and Betrayal by Ethan Gutmann and Guanxi:Microsoft, China, and Bill Gates’s Plan to Win the Road Ahead by Robert Buderi and Gregory Huang. 

 

A weak democratic power is hardly comparable to a strong tyrannical power in terms of harm. Washington again, I believe, has lost the New China. China’s economic development has become a powerful leverage in foreign policy, which has been proved by the recent visit to China by Nancy Pelosi and Hillary Clinton. The WashingtonPost has put the Pelosi’s disappointing visit to China as the headline for yesterday’s paper and quickly took it off for whatever reason.  Any outside influence to China’s democracy seems weaker and more futile than ever.

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  1. D. Linda Garcia on 26 May 2009 at 1:38 pm

    A very provocative blog. Well written. I enjoyed reading it Li Nie, Linda

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