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Is the price for China's economic boom too high?

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Is the price for China's economic boom too high?


For the last four years, China’s rapid rate of growth has been dramatic. In 2006 GDP was running at an impressive 10,7% – but is the economy in danger of running out of control to the detriment of both human and natural resources? Two decades of change from a command to a more capitalistic-style economy have created new problems, particularly unemployment.

Currently 84 million people living in the cities are without work, while in the countryside it is 100 million. Each year more than 1.4 million people with degrees and other qualifications are entering the jobs market but with little prospect of finding employment.

Now 40% of the country’s wealth is in the hands of a mere 10% of the population. The discrepancy between the incomes of the rich and poor has widened and is now greater than even in firmly entrenched capitalist countries such as the US.

Statistically speaking the UN uses the so-called Gini coefficient to see if the rich-poor inequality gap is becoming a problem.
For China it stands at 0.46, well above the internationally recognised warning line of 0.4. And it is the countryside which is being hardest hit. The nationwide economic boom is firmly centred on the cities and has failed to drive out poverty in the rural areas

China’s Communist Party says it has 23.7 million members claiming state benefit and 800 million others with no means to pay for medical care. It also says that since 2006 the party has increasingly had to pick up the tab for educating the rural young as the compulsory 9 years of schooling is not free.

And strain on the country’s social cohesion is also beginning to show. In 2005 there were 84,000 protests, two thirds of them down to land being illegally expropriated from the local peasants. Lastly, if it is not the economy undermining the rural population it is numerous environmental catastrophes. Water, or lack of it, due to increased industrial use and pollution, have caused river beds to dry up. The question is, has China’s countryside paid too high a price for urban economic development?

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