China, the other side - Dr Farrukh Saleem
China, the other side
Nearly 15 percent of Chinas population is now over 60 years old. China now has 119 million who are over 65 and of the 119 million around 33 million are disabled or partly disabled. By 2014, three years from now, China will be the only country on the face of the planet with 200 million elderly people. By 2050, because of low fertility and high life expectancy, three out of ten Chinese will be 60 or older. China is aging and aging fast-that means a large dependent, economically non-productive population. Thats bad news for future economic growth.
According to the Financial Times,
Chinas real debt-to-GDP ratio may actually be as high as 160 percent; as bad as Greece and far worse than Portugal, Italy or Ireland (Pakistans debt-to-GDP hovers around 65 percent). To be certain, Chinas economic model revolves solely around growth not profit. And Chinese growth has been
and continues to be fuelled by cheap debt not corporate profit.
State owned enterprises have been borrowing like crazy to grow. Profit has never been the primary driver. Local governments have been borrowing like crazy to build, build and build. Feasibility has never been the primary driver. Growth has been the only thing that ever mattered.
State owned enterprises are now heavily indebted. Local governments have built huge ghost towns with some 64 million empty houses and thick, vacant forests of skyscrapers. Dozens of complete cities with no one living in them.
In June, Beijing officially admitted that local governments had piled up 10.7 trillion yuan ($1.6 trillion) worth of debt. That figure by itself is 25 percent of Chinas GDP. Moodys, the global credit rating agency, stated that the debt burden held by local governments could be 3.5 trillion yuan larger than Beijings official auditors had estimated. Credit Suisse, the Swiss financial services giant, says that loan losses at Chinese banks may climb to levels equivalent to 60 percent of their equity capital as real-estate companies and local governments fail to repay debts.
According to the Ministry of Finance of the Republic of China, China this year will be spending $95 billion on internal security and $91 billion on the Peoples Liberation Army (PLA). That is so because in 2010 there were 180,000 mass incidents including strikes, demonstrations and protests (a mass incident in China is defined as at least 15 participants).
The top five reasons behind 180,000 mass incidents were:
(1) Laid-off workers demanding jobs. (2) Ethnic minorities battling police. (3) Overworked textile workers organising strikes. (4) Farmers staging protests to fight dam projects. (5) Retirees demanding pension payments.
Historically, Chinas five-year plans have had just one focus economy and not much else. The 12th Five-Year Blueprint emphasises tighter control over the populace.
The Chinese Communist Party (CCP) also plans to put together a nationwide yingji xitong or a rapid response police force to handle mass incidents and undertake social management and population surveillance.
China experts believe that there is a lack of unifying movements such as Polands Solidarity and thus a lot of small, localised expressions of discontent. Happiness, they say, is the china shop; love is the bull.
The writer is a columnist based in Islamabad. Email :
farrukh15@hotmail.com
