AILING CHINA ON A DECLINE

Xi Jinping has yanked hard left and is making China a command economy. Large powerful state enterprises have taken precedence over a once vibrant private sector.

- LT GEN P.R. SHANKAR (RETD) CHENNAI

How did you go bankrupt? Gradually, then suddenly.

Ernest Hemingway

China's homebuyers have refused to pay mortgages. Its factories are exporting less. Its people are consuming less. Its major firms are delisted from the New York Stock Exchange. There is a rate cut out of the blue. The indicators in July are worse than in the April-June quarter. China is panicking at many levels. It does not need great insight to predict that China is ailing. The question is what are its ailments and will they lead to a permanent decline or not.

THE STUDY

In 2012, China was clocking impressive growth rates. It was the second largest economy. However, it was also showing signs of slowing down. A joint study titled "China 2030, Building a Modern Harmonious and Creative Society" was carried out by World Bank and Development Research Centre of the State Council of PRC. This illuminative study identified China's problems and offered solutions. Most importantly, it had China's acceptance stamp. It was coincidental with Xi Jinping assuming power in 2013. China's strengths were identified as: high savings, increasingly plentiful skilled labour, and potential for further urbanization. Its opportunity was in continued globalization and promising new technologies. China was advised to anticipate systemic risks and prepare appropriate responses. Prophetically, the importance of avoiding overconfidence and remaining vigilant against potential problems from social, economic, and natural causes were highlighted. Challenges included high inequality, inefficiencies in social service delivery, rapid aging of the population, shrinking labour force, high dependency ratios and managing growing economic, social, and cultural diversity. Challenges of quality and efficiency in education, health services, and in social security programs were also highlighted.