Access the significance of the different challenges to governance in contemporary China.

Access the significance of the different challenges to governance in contemporary China.

Since the establishment of the People’s Republic of China in 1949, the Chinese Communist Party (CCP) has been in sole control of that country’s government and has historically been able to maintain its legitimacy. However China’s position can be seen to be compromised given the increase in social, political and economic problems surfacing in recent years such as the worsening of ethnic relations and environmental pollution. However, corruption poses as the most significant challenge to governance in contemporary China due to its political impact on other areas such as the widening income gap and China’s debt problem.

 

  • Corruption

One of the challenges to governance to contemporary China is corruption as it has prevented effective governance. Although not new, the practice of corruption has been evident in China for thousands of years, due to the emphasis of the practice of “guanxi”. However in recent years, senior officials such as Jiang Jiemin in 2014 and former military general Guo Boxiong who held onto one of China’s top military positions in 2016 have been prosecuted for corruption under the Anti-Corruption Campaign implemented by President Xi JinPing to catch both “tigers” and “flies” — big and small corrupt officials. Despite the success of this campaign with more than 300,000 being punished as of 2015, this measure eventually led to even more detrimental problems whereby many government officials are afraid and refuse to make any decisions in construction and investment projects due to fear of being accused as corrupt. As such, this heavily slowed down China’s economy, compromising on the economic growth in China given that many infrastructure projects simply could not take place. In turn, this issue has become so severe to the extent whereby in 2016, Xi JinPing had to call on government officials to maintain links with businesses and to keep in touch with private enterprises and Chinese Premier Li Keqiang criticizing “indolent officials” and warned them against neglecting their duties. Thus, showing how this effort by the Chinese government failed as it only emphasizes on the imposing of severe consequences, and not ways to curb the root cause of corruption. Therefore, this issue of corruption poses as one of the most significant challenges due to its impacts on the economy and social as a whole.

 

  • Ethnic Relations

Another challenge to governance to contemporary China is that ethnic relations are becoming increasingly combustible in China. Using the 1982 CCP decree, “The Basic Viewpoint and Policy on the Religious Question during Our Country’s Socialist Period”, religion has come under combined administrative supervision by state approved associations and close monitoring by the State Administration and Religious Affairs which are used for Tibetans, surveillance and execution of Uyghurs, to crack down on ethnic “separatism” in order to safeguard social stability. In recent years, the Chinese authorities have been more aggressive towards its policies with regards to the country’s largest minority groups such as the Mongols, Tibetans and the Uyghurs. Furthermore, the discriminatory position of the Chinese language, as the almost exclusive language of employment opportunities for government and government-supported initiatives in regions where there are substantial minorities, has augmented the complete dominance of the Han Chinese in almost all areas of political and economic significance. Although minorities generally have access to educational institutions in their own language, there are few job opportunities unless their language is used in their language of work and this is particularly true in regions such as Xinjiang, Tibet and Mongolia. Thus this discrimination has often or so, end up oppressing them, leading to the brewing of tensions which has been more combustible in recent years whereby minorities are increasingly becoming more vocal in protesting for their rights. For instance, in 2015, protests against China still continues on the 6th anniversary of the Urumqi Riots, Therefore, this poses as a challenge to contemporary China given that it effects to social stability of China.

 

  • Environmental Pollution

China’s existing environmental pollution is too, a challenge in contemporary China. With the CCP’s maxim of ‘development first, environment second’, China today faces severe air and water pollution whereby as of 2014, only 3 out of 74 Chinese cities met air quality standards and annual average levels of PM2.5, more than 20 times the World Health Organization’s (WHO) safety limit of 10. As the world’s largest source of carbon emissions, China is responsible for 1/3 of the earth’s greenhouse gas output. Furthermore, with Beijing issuing its first pollution “red light” in 2015, it shows the severity of this environmental pollution. This has affected the lives of its people as poor air quality imposes a significant health burden of the urban population such as health complications like respiratory, cardiovascular, and cerebrovascular diseases. In 2014, according to a study published in the British Medical Journal (BMJ), scientists have found that Beijing’s smog has had significant effects on the lifespan of the city’s residents, reducing their life expectancy by an average of 15 years. Despite China’s Vice Minister for the environment Pan Yue pledging more efforts to further reduce air pollution in 2015 with the amendment of the Air Pollution Control Law, the severity of air pollution still continues to persist up till today, with China topping the WHO list of deadly outdoor air pollution in 2016. Therefore, this poses a challenges to governance in contemporary China today given that more people are becoming dissatisfied with the local government as seen from the increase in pollution protests in recent years due to its inability to resolve this environmental issue.

 

  • Widening income disparity

Another challenge to the governance of contemporary China is the widening of income disparity. With China emerging as the world’s 2nd largest economy with tremendous economic growth, it has inevitably led to greater income disparity and the widening of the urban-rural divide given that this economic growth success is not equally shared among its huge population. Despite measures taken by the government such as the Income Inequality Reform Plan in 2013 to reduce income gaps, it failed to reduce this disparity, as in 2015, the GINI coefficient for national income was 0.462, one of the worst in the world. This eventually caused unhappiness amongst the rural people as while the urban elites continue to get richer, those living in the rural areas continue to struggle due to the rising cost of living and thereby, would not be able to afford any goods and services. This inability of the government to solve the issue of widening income disparity has eventually led to increasing discontent amongst the rural people towards the Chinese government, threatening the legitimacy of the government in the long run.

 

  • Fiscal Deficit (Debt Problems)

The fiscal deficit is an important challenge to the governance in contemporary China. A fiscal deficit occurs when a government’s total expenditures exceed the revenue that it generates, excluding money from borrowings. In recent years, borrowing by all levels of the Chinese government has soared to unprecedented levels and whereby as of 2015, China’s debt to GDP ratio had reached record high, with it being 250% of its total GDP, becoming one of the highest of the world. In order to attract high levels of investments from abroad, the Chinese government have provided subsidies to make investing in certain industries or sectors more attractive and less risky than it otherwise would be. In addition, cheap credit are often made available for the industry, or the government to certain preferred projects. Inevitably, banks will eventually experience a rise in nonperforming loans. This ultimately poses as a huge threat as should its debt not be reduced, it would only result in fatal consequences such as derailing state-owned banks, triggering a systemic crisis as banks are closely linked to the government.  Therefore, China’s fiscal deficit poses as a challenge in contemporary China as it severely affect China’s future economy should the economy fail to move away from investments and exports to a more consumption driven growth model.

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How effective is China in managing the challenges to sustainable economic development?

How effective is China in managing the challenges to sustainable economic development?

Since Deng Xiao Ping’s economic reforms in 1979, China has emerged as one of the fastest growing economy in the world, and eventually being the 2nd largest economy in the world. Despite China having a relatively high Gross Domestic Product (GDP) as compared to other countries, in recent years, China’s economic growth has slowed down to a “New Normal”. As such, there are many challenges in which China has to manage in order to sustain its economic development. However, China could seem to be not effective in managing the challenges to sustainable economic development by looking into these different aspects namely, the social, economic and political factors.

 

  • Widening income disparity

China can be argued to be ineffective in managing social problems such as the widening of income disparity given that it is still widening over the years. With China emerging as the world’s 2nd largest economy with tremendous economic growth, it has inevitably led to greater income disparity and the widening of the urban-rural divide given that this economic growth success is not equally shared among its huge population. Furthermore, this eventually caused unhappiness amongst the rural people as while the urban elites continue to get richer, those living in the rural areas continue to struggle due to the rising cost of living and thereby, would not be able to afford any good and services. This inevitably affects China’s economic development given that consumption levels as a whole would be lowered due to the difference in consumption levels between the urban and rural areas. Thus, this poses as a huge challenge that China needs to address in order to prevent a spill over effect of consumption levels which would eventually affect China’s GDP and economic development. However, despite measures taken by the government such as the Income Inequality Reform Plan in 2013, income disparity still persists and worsened over the years, whereby in 2015, the GINI coefficient for national income was 0.462, one of the worst in the world. Thus, in this case, China has not been effective in managing the social challenge to sustain its economic development as the income gap still continues to widen.

 

  • Inflation

China can be argued to be ineffective given its lack of capability to curb inflation. Inflation is defined as the general increase in the general price levels and is another challenge for China to sustain its economic development as inflation would cause a decrease in consumption levels and thus, result in a slower economic growth. Therefore, inflation poses as a huge challenge to the sustainability of China’s economic development given that China needs to re balance its economy by boosting consumption because the country cannot rely on exports alone to drive economic growth. However, despite measures put in place in order to curb inflation such as raising the amount of cash banks must keep in reserve to 18½% of the money they have on deposit in order to mop up excess cash floating around the economy, China has not been effective in managing inflation to sustain economic development as inflation rates continue to rise over the years with China’s inflation rising 1.9% as of September 2016. Hence, China is not effective in managing inflation to sustain economic development as although it has measures to cope with inflation, inflation is still seen as a challenge in China, and not yet being resolved.

 

  • Ineffective in managing its environmental problems

China is ineffective in managing its environmental problem as China is using large amounts of coal due to inability to secure a long term energy source for itself, as a result, unable to sustain its economic development due to loss in trade because of environmental problems. China’s heavy reliance in coal as an energy source has led to a surge in air pollution and greenhouse gases given that China’s coal-fired power plants are one of the main causes of the rapid increase in greenhouse gases and emissions, being the world’s largest after the US. This bad environmental record of China’s has hurt the bilateral ties with its neighbours such as South Korea and Japan. In 2013, not only did the South Korean media began to refer to the smog making its way from China as “air raids” , but Japanese studies too claim that air pollution from China is responsible for the high level of mercury deposit in the iconic mount Fuji. Furthermore, in 2013, researchers claim that China is responsible for 40% of Tokyo’s annual average PM2.5 levels and 60% of Kyushu’s. Although China has imposed new laws to close down any coal factories which exceeds the amount of harmful pollutants into the air, up till today many coal factories are still up and running. Furthermore, given that relations in the region are already sufficiently strained over issues such as the Senkaku/Diaoyu Islands and air space in the East China Sea, the inability to resolve its environment problems would only serve to harm relations future, should toxic air continue to migrate across China’s borders. Therefore, not only does China has to overcome this challenge of improving the energy source of its country, but to improve its ties with other countries so as to increase its exports with them in order to sustain its economic development.

 

  • Boosting the country’s economy

However, in certain aspects China can be argued to be highly effective in sustaining its economic development. This is because China can be seen to be effective in maintaining its economic development through the maintaining of the economic stability that it has achieved. With Deng Xiao Ping’s Open Market Policy, China’s economy has seen tremendous growth in GDP and despite it slowly down in recent years, reaching a “new normal”, it still led to the improvement in the standard of living of the Chinese citizens today whereby people have more disposable income. Furthermore, China has managed to lift a total of more than 800 million people out from poverty as of today and has been effective in reducing unemployment rate whereby in 2015 China’s unemployment rate is 4.04%. In addition, Xi JinPing also pledged in the 13th Five Year Plans to end poverty in China by 2020, lifting the remaining 70-80 million people who permanently fall below the poverty line in China. Therefore, with lesser poverty and unemployment, not only does it improves the lives of the people as with employment, people would also receive income and in turn have more disposable income to spend. Thus, allowing them to be able to afford goods and services, increasing consumption levels which improves the country’s overall GDP and economic growth. As such, the CCP is effective in maintaining its economic development given its introduction of newer plans to reduce poverty rates and maintain and reduce unemployment rates. Therefore, in this aspect, the CCP can be argued to be highly effective.

 

  • Effective in international relations

Furthermore, China is indeed effective in managing its challenges in sustaining economic development as in terms of international relations, China can be seen to be making an effort to manage good trading relations with the US. Initially, the relationship between China and the US got off to a bad start at 1949 and slowly worsened, however, in recent years with China becoming the 2nd largest economy in the world, China’s relationship with the US had changed for the better, allowing China to see eye to eye with the US through economic cooperation such as trading and as of 2015, China is the largest goods trading partner of the US. However this cooperation does not come without any challenges, no matter how much China may find distaste in the actions of the US, it cannot afford to severe these ties for the sake of its own modernization due to intensive US investments. Similarly, the US cannot take such ties for granted, with China being the US’s largest foreign creditor today. Likewise, China recognizes its value towards US and thus exploits its economic role in ensuring that its own interests are sustained. Therefore China is effective in managing its challenges of maintaining good relationship with the US and sustaining its economic development.