In the United States and Europe when economic growth is 2% there is cause for celebration. If that were the growth rate in
China, it would
be cause for utter and complete dismay.
For years China
has had economic growth far better and stronger than the western countries, and
while one factor is that higher growth rates are possible because of the lower
base, that is not entirely the explanation.
A part of the explanation is that while
officially still adopts the economic religion of Communism, more and more they
are taking the best aspects of capitalism and applying it to their own
economy. They have a sovereign wealth
fund that invests in businesses, they have huge state supported infrastructure
projects and they are creating a large middle class and a much smaller
mega-wealthy class. The weird thing, they still
call all of this Communism.
The relationship between China and Taiwan is complex and beyond the scope of this post, but one aspect of it does deserve attention because it illustrates how good
becoming at capitalism. China and Taiwan,
usually enemies, are working together to develop a small island, Pingtan
which is off the coast of China
and near Taiwan. The island had the a source of contention
between the two countries, but not today
Pingtan officials now try to play down the past. They focus instead on the island’s 100km (60 miles) of sandy, mostly undeveloped, shoreline, hoping it has the same pulling power as the beaches of Hainan, a (much larger) tropical island off the southern coast that has become the playground of China’s rich. There are plans to build five-star hotels, golf courses and yacht clubs.
Yeah, Mao’s Little Red Book did talk extensively of five star hotels and yacht clubs as being the core of Communism.
But development is not all
are doing that is aping capitalism.
The island would be a duty-free enclave, with business taxes lower than most of
Residents could open bank accounts in China Taiwan
dollars and drive Taiwan-registered cars (a ferry service to the Taiwanese city
started up in November). In an exhibition hall devoted to Pingtan’s plans, a
map showing how the island might look in 2030 shows a road across the strait
linking it to Taichung .
Officials do not say whether this would involve a tunnel or a bridge, but at
around 100km in length, either would be the longest of its type in the world. Taiwan
Exactly how is this different than what would be done if the area were under the control of the
This is not to say all of this will happen; there are significant political issues to get over. But the plans provide a good insight into how
China is thinking, and it is
thinking like a Western nation might think about development. Except it is thinking about doing it better.