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Xi Jingping’s Challenges

Business, China, Company Strategy, Economics, Environment, Managing people, Sustainability, Technology
By John Richardson on 18-Mar-2013

Chinageing.pngBy John Richardson

XI Jinping, who formally became China’s president last week during the National People’s Congress meeting, faces enormous challenges.

Life is, for example, pretty grim for hundreds of millions of people in China.

Many have lost out on the country’s “economic miracle” because a hugely disproportionate share of the country’s wealth has ended up in the hands of a poor, often corrupt, elite at the top of Chinese society.

Thus, supported by demographics that have swung in their favour, factory workers are no longer prepared to accept poor wages and bad working conditions. They are now much more willing to down tools.

As for the middle class, life, whilst economically a lot better, is blighted by food and air pollution (and, of course, this applies to the poor as well!).

Just imagine bringing up your kids in a world where you worry every day that they might be breathing in noxious air and eating contaminated food. OK, your apartment might have tripled in value since the early 2000s, but what’s the point of money when you cannot guarantee the safety of your children?

As countries get richer it always happens that the quality of life becomes as important as material wealth.

What is different in China is the size of its middle class, or more accurately the middle income proportion of its population, and the presence of the Internet. The Internet enables public dissent to spread far more quickly than in the past.

Maybe the biggest of all of China’s problems is the end of the demographic dividend, which we have already referred to above.

The slide at the top of this post neatly summarises the economically dangerous consequences of China’s one-child policy. As you can see, China falls into the same category as only one other country, Russia, in being both poor and old at the same time.

The great news is that Xi shows every sign of recognising all the difficulties. We wish him, and his colleagues, every success.

China has done it before – i.e. the economic transformation achieved by Deng Xiaoping, which lifted hundreds of millions of people out of poverty. This was a colossal achievement.

Let’s hope it can do it again.