The casualties of China's rising tide

The Globe and MailChina's statistics used to be state secrets. That has been changing but even now there are doubts about how reliable official numbers are. While some experts fear that data collect

09 January 2006

The Globe and Mail

China's statistics used to be state secrets. That has been changing but even now there are doubts about how reliable official numbers are. While some experts fear that data collection is simply not scientific enough, others argue that figures on China's true population, economic growth rate and actual military expenditure are manipulated for political purposes. Few have expected the Chinese government to revise its own numbers. But that is exactly what has happened in the past two weeks, and in a very significant way.

First, Beijing announced that China's gross domestic product, revised after a major national survey, is now officially 16-trillion yuan (about $2.4-trillion) 17 per cent larger than was previously stated. To put things in context, what China just added is equal to a quarter of Canada's GDP or 40 per cent of India's annual output. Overnight, the Chinese economy's world ranking as calculated in U.S. dollars leaped from seventh place to fourth, surpassing Italy, France and Britain, and is not far behind Germany.

There are many implications. The city of Beijing, for example, just discovered that its economic strength had been underestimated by 41 per cent; China's per-capita GDP has risen from about $1,000 (U.S.) per person to about $1,200 a person; the economic growth rate over the past 25 years has been faster than the reported 9.4-per-cent annual average; and China's service industry is much bigger than previously calculated.

Never before has a fifth of the world's population moved toward prosperity at such speed. But this development is neither balanced nor equitable.

Another set of numbers, published last week in China Human Development Report 2005, shows regional disparity is threatening the country's growth potential, and the widening urban-rural distribution gap has reached a dangerous level. Compiled by a group of Chinese researchers for the United Nations Development Program (UNDP), the report concludes that China's Gini coefficient, a measurement of a country's income inequality, has doubled in the past 20 years, meaning that urban dwellers earn nearly four times that of rural residents.

The new GDP number will only make inequality worse. When systemic factors biased against the rural population are included, China's city-countryside income ratio could be as high as 6:1. As a result, a person in one of the richer cities enjoys a life expectancy of close to 80 years the same level as in a middle-income country and 10 to 15 years longer than the life expectancy of a farmer in Tibet or other remote provinces.

Today, China ranks 90th in the UNDP's 131-nation human-development index. It is ironic that while 250 million people have been lifted out of poverty in record time a proud achievement no one denies China also leads the world in creating one of the most unequal societies in history.

The single-minded pursuit of rapid economic growth has come with a hefty price tag. As acknowledged by China's official People's Daily recently, sudden public accidents (including industrial accidents and natural disasters) have caused more than one million casualties each year, leading to direct economic losses of 650-billion yuan ($93-billion Canadian), equal to 6 per cent of the national annual GDP. In 2004, these accidents killed 210,000 people and injured another 1.75 million.

To state the obvious: Most of China's economic growth each year is cancelled out by the immediate sacrifice of human lives and long-term damage to the environment. Yes, most of China is vulnerable to nature's destructive forces, but damage from natural disturbances seem to be a small portion of the total, with government figures showing just over 100-billion yuan ($15-billion) a year. That means the financial losses of some 550-billion yuan ($80-billion) every year are caused by humans.

Take the coal-mining sector: China has the world's worst record. In the past month, four separate coal-mine accidents, primarily caused by human error, claimed more than 300 lives. From 2001 to 2004, accidents in China's coal mines claimed an average of 6,282 lives a year. Unofficial estimates say the coal-mining sector's death toll could be as high as 20,000 a year (mine operators intentionally cover up the numbers to escape responsibility). Does Beijing's announcement last week that 5,290 coal mines will be closed in a safety crackdown signal a genuinely new policy direction

Meanwhile, as the rich-poor gap continues to widen and the pursuit of profits overtakes the protection of people's lives in China's primitive form of market capitalism, the nation's welfare system is collapsing. More than 80 per cent of the rural population and 45 per cent of urban dwellers have no form of medical coverage; nearly 40 per cent of patients don't seek treatment in hospital because they cannot afford the cost; and one-third of those who have fallen back into poverty in recent years have done so because of the cost of medical treatments.

Clearly, Beijing's modernization paradigm is unsustainable. China's challenge now is not higher GDP numbers but a more balanced, equitable, human-centred and environmentally friendly approach to development.

Wenran Jiang is the director of the China Institute at the University of Alberta.