Dateline: Beijing

Last week I promised to look at equality in China.

First, there is the stunning fact that over 200 million people have been lifted out of absolute poverty in recent decades. China is now the world’s third largest economy, yet its citizens have a per capita income of US$3,100. This is one tenth of ours - US$31,000. They are 104 in the league table; we are 28. But the Chinese have been getting wealthier year on year, as their economic growth rate has been stratospheric.

This year China is aiming for a ‘recessionary’ growth rate of 8%! In the months since the global recession hit, 20 million jobs of rural migrant workers have gone in the export factories as orders to the US, European and other shops and factories have dived. But China has not been as hard hit as Japan or the other Asian ‘tiger’ economies.

As recently as 1990, three quarters of the Chinese population lived in the countryside. Now it is down to around half. In the US the rural population is only 7%. The government is pursuing a broad strategy of moving people to urban areas as a means of increasing incomes. However, special measures have now to be put in place to help migrant workers returning to their villages to set up small businesses.

The National People’s Congress, which meets annually in March has just ratified the government’s proposal to spend 4 trillion RMB or US$ 586 billion on the economic stimulus package. More money is available if need be, says Premier Wen Jiabao. Expenditures are already flowing through via construction and infrastructure projects into the industrial economy. Some imports from Western countries are on the rise again, which is important for New Zealand, as exports to China are now substantial.

The government is making efforts, too, to persuade the Chinese, who are great savers, to spend more of their cash. A large chunk of the $586 bn is going into the health and social security systems, which are underfunded. Perhaps the most worrying aspect for China is their huge holding of US government debt. If the US struggles economically, China cannot escape. So while China is in a better position than most large economies, there remains a vast gulf between rural and urban living standards.

I am proud of my Chinese colleagues

I am very proud of my Chinese colleagues and the other foreign advisers working to reduce coal mine accidents among China’s five million miners. The number of fatal accidents in coal mines has fallen from a peak of 6,995 in 2002 to a provisional figure for 2008 of around 3,200. This means that thousands more families have their men folk alive, earning a wage which often supports all three generations of a family.
China’s coal output has increased hugely - from 998 million tonnes in 2000 to 2,720 million tonnes in 2008; so, expressed as a rate per million tonnes of coal produced, fatal accidents have fallen much more than 50%, from 5.8 fatalities per million tonnes in 2000 to 1.18 per million tonnes in 2008. But this figure remains very much higher than the rates for developed countries, especially when compared with Australia and New Zealand, whose large mines are the safest in the world.
But the story does not end here, of course. China is producing over 40% of the world’s coal. It is the fossil fuel with the highest carbon content. Oil has 80% of the carbon of coal on a energy equivalent basis and natural gas has 60% that of coal. Consequently, China’s carbon footprint is rising fast. In total, it has just overtaken the United States, which emits just over 6,000 million tonnes per year. China’s energy demand is rising in line with its 8% annual economic growth rate. Other countries are asking China to maintain this so that they can sell China their goods. China’s CO2 emissions are likely to double to 12,000 million tonnes by 2030.
The earth quite simply cannot sustain this. Consequently, the other part of our work in China is to help China to move towards a lower carbon economy – to first stabilize, then to reduce its emissions. This is no easy task. President Obama is one person who wants to help. He knows very well the US itself has a very great problem in meeting its Kyoto CO2 reduction targets. During the G20 summit in the UK early in April, the US and China discussed these issues. New Zealand and others must help them succeed. Otherwise, the frequency of extreme climate events, like one in one hundred year floods in the Whanganui region, will increase. We have a direct stake in the outcome.