Feeling a way forward

The continuing financial strain that homeowners feel in the US. The weakening euro that speculators are talking about in the various corners of the world. Lots of things, including some in China, are suggesting that the world is still far from the end of the global recession. It makes one feel that it may be premature to even talk about a coordinated exit strategy at the G20 forum later this year.

Are we still in the freefall begun in 2008? To completely break away from the fear, an economy would need not just a set of government policies to boost growth, as China has pledged in its ongoing parliament session. To roll out pro-growth policies is not a hard thing to do in this country.

The more important thing is the model. People won't feel secure enough if they can't be sure in what kind of activities the economy is to build its new strengths, and to realize its new potential. Even in China, arguably the least affected country in the global downturn, we still don't have a clear picture yet. And perhaps no one will until we can have a better understanding of trends in the global market.

We know China can no longer expect to earn large sums of US dollars and other major currencies by exporting cheap manufactured goods. Nor will that make much business sense when the renminbi itself is about to grow into a world currency. We know labor can no longer be cheap in most Chinese cities. Hong Kong's business business publications are saying that mobile phone factory workers' average wage in Shenzhen, the nearby mainland manufacturing town, can be more than double that of Indian workers'. But we still don't know how such an enormous industrial base such as China's, which used to provide the world with almost every item in the consumer retail market, can be redirected to serve its own society. From a political culture which was developed from a time of poverty and backwardness, and production was regarded as of a high virtue, how can development be redefined when it has reached a point that, in many cases, producing more would mean more trouble and waste?

Admittedly, for the time being, China can still go on producing some more things - better railways, longer bridges, and eventually larger hospitals and university campuses. But all of these will be useful only when they are used by a new urban middle class that no longer earns its income from the somewhat militaristic manufacturing industry and the traditional, administratively-defined work units, but increasingly from a diverse service sector, driven by a very large number of individual and group pursuits.

In fact, the transition is bound to come anyway, as it follows the general take-off of every economy in its development process. The global crisis has only made such a long-term, step-by-step challenge an immediate task for China - and a much more complex task now that the market conditions are much less tolerant than before.

The author is business editor of China Daily.

(China Daily 03/10/2010 page14)